Flexible Spending Accounts

1. Flexible Spending Accounts San Mateo County Paul Hackleman

2. What is a Healthcare FSA? • Allows Participants to Recover Out-of-Pocket Payments for Healthcare • Accounts Are Funded from the Participant’s Pre-Tax Payroll Deductions

3. How Do FSAs Work? • Participant Determines Payroll Deduction • Employer Takes Deductions to Fund Selected FSA Accounts • Participant Submits Eligible Claims and Documentation to Mangrove Employer Services for Reimbursement

4. How Do FSAs Work? • Mangrove Reviews / Processes Claims • Mails / Directly Deposits Bi-Weekly Check • Use of Debit Card • County pays for first two cards • Additional cards are $5 each. • Quarterly Statements • 24 hour online access to FSA account – up to the minute information

5. How Will FSAs Benefit You? • Pre-Tax Payroll Deductions Reduce Your Taxable Income • Increases Your Spendable Income Since Services Are Paid For from Pre-Tax Dollars

6. A True Pre-Tax Deduction • Contributions are tax free including: • Federal • FICA • State

7. No FSA FSA Gross Monthly Income$5,000 $5,000 Pre-TaxMed. Expenses0 100 Taxable Income$5,000 $4,900 Federal Tax (28%) 1,400 1,372 State Tax (7.3%)365 358 FICA Tax (7.65%)383 375 After-Tax Healthcare Expenses 100 0 Monthly Spendable Income $2,752 $2,795 FSA SAVINGS TOTAL $43 mo./$516 yr. Example - $60,000 Income

8. Who is Eligible? • Regular Employees 20+ Hours per Week • Participation Begins: • Current Employees – January 1 (enroll during open enrollment) • New Employees – First of a Month Following 28 Days of Employment

9. Reimbursement Account • Reimburses Out-of-Pocket Healthcare Expenses • Incurred by Employee, Spouse, or Dependents • Benefit Is Pre-Funded By Your Employer

10. How Much Can I Contribute? • Healthcare Account • Minimum $25 per year • Maximum $5,000 annually

11. What are Eligible Expenses? • Incurred for the diagnosis, cure, mitigation, treatment, or prevention of disease, and for treatments affecting any part or function of the body • Incurred within the plan year • Expenses to promote general health are generally not deductible

12. Fees/Co-Pays for Physician Psychiatrist Psychologist Surgery X-Rays Diagnostic Acupuncture Ambulance Anesthetist Chiropractor Dental Glasses & Contacts Eye Exams Hospitalization Laboratory Eligible Healthcare Expenses

13. Fees/Co-Pays for: Vaccines Artificial Teeth Birth Control Pills Modifications to home or car due to disabilities Guide Dog cost and maintenance Fertility Treatments Nursing Services Medical monitoring and testing devices Psychoanalysis Travel Expenses @ 22 cents per mile Lodging $50 per person ($100 per day max.) Smoking Cessation Eligible Healthcare Expenses

14. Fees/Co-Pays for: Prescriptions Hearing Aids & Batteries Nursing Obstetrician Sterilization Limb/Breast Reconstruction Nursing Home Orthopedic Shoes Orthodontic Therapy for Drug/Alcohol Addiction Tuition for Learning Disabled Lasik Surgery Over-the counter drugs* Eligible Healthcare Expenses

15. Over-The-Counter Drugs • Revenue Ruling 2003-102 (9/3/03) • Product must: • Be for medical care • Satisfy definition of eligible expense • Cannot be merely beneficial to health. (Vitamins / Supplements excluded) • Be medicine or drugs (no toiletries / cosmetics) • Be documented by receipts showing name and type of product purchased

16. Ineligible Expenses • Unless Prescribed By Physician and Documented - requires letter of medical necessity from physician • Smoking Cessation Programs • Lamaze Classes • Exercise Equipment • Cosmetic Services • Weight Loss Programs

17. Ineligible Expenses • Estimated Expenses • Premiums for Insurance Benefits • Already Pre-Tax • Expenses Paid By An Insurance Company or Submitted to Spouse’s Employer Sponsored FSA • Expenses incurred prior to the start date of the FSA plan – or incurred after your termination from the FSA plan.

18. Termination of Employment • Once an employee terminates employment: • No more incurred expenses are eligible • Need to submit receipts within 60 days • Importance of Planning • Retirement / Termination • Calculation of contribution

19. Benny Makes Them EASY to Use! Introducing The Benny Debit Visa Cardfor All Your Qualified FSA Expenses

20. Benny Debit Card • Other than for approved co-pays, receipts may be required • Letter will be sent in 30 days from transaction if receipts are required. • If receipts are required and not received in 60 days letter is sent and the card is turned off and purchase may be deemed ineligible.

21. How Does It Work? Simply Present Benny™. The Card gets SWIPED... • At the time of payment for prescription or office visit… And, payment is automatically deducted from your FSA account. Then, save your receipts in an envelope. It’s that EASY!

22. Benny Debit Card • For Current Participants • A new card will not be sent • If enroll dependent one additional card at no charge • Active January 1, 2008 – New Balance

23. Benny Debit Card • No required receipts* for co-pays: • Doctor’s offices • Pharmacies • Hospitals *Co-pay amount must match your health plan. Copies of receipts should be kept.

24. Benny Debit Card • Can be used at the following as long as they accept Visa: • Doctor’s office • Pharmacy • Hospital • Dentist • Vision provider

25. Benny Debit Card Two cards will be received at no cost to you. If additional cards cost. You Need to ACTIVATE and SIGN the Cards • To activate call the number on the sticker on the Card or log onto www.benefitone.com • Each eligible user signs his or her name.

26. Benny Debit Card Improvements over Prior Debit Card – More Automatic Adjudication: • Data Matching • Retrospective Files • Recurring Expenses • Enhanced Co-pay Matching System

27. Plan Rules • Expenses Must Be Incurred (Services Rendered) While An Active Participant • Funds Left In the Account at the End of the Plan Year Are Forfeited • Run Out Period (90 days) • Reduction in Taxable Income May Result in Reduced Social Security Benefits

28. Plan Rules • Cannot Change Deduction Unless You Experience a Family Status Change: (must be reported within 30 days of the event) • Marriage or Divorce • Birth or Adoption • Death of Spouse/Dependent • Change in Employment Status of Spouse or Self • Involuntary Change in Medical or Dental Coverage • FMLA or Non-FMLA Leave

29. How Do I Enroll? • Complete the Estimated Expenses Worksheet • Return a Completed Election Form to Human Resources - Pony HRD-133* *Current Participants – Re-enrollment Process

30. The Better You Plan The More You Will Save!