Effective September 1, 2013
First Choice Health Network, Inc. Flexible Benefits Summary Plan Document www.myFirstChoice.fchn.com
v.07.01.13
Table of Contents Introduction to FCH’s Cafeteria Plan (Section 125)........................................................................1 Flexible Benefits Plan Eligibility and Participation..........................................................................2 • What is a Flexible Benefits Plan?..............................................................................................................................2 • Eligibility ...................................................................................................................................................................2 • Reasons Why You May Not Want to Participate in This Flex Plan............................................................................3 • Persons Who are Excluded From Participating in this Plan......................................................................................3 • Flexible Benefits Plan Election Form........................................................................................................................3 • Election Procedure for New Plan Years....................................................................................................................4 • Election to Participate Due to a Status Change........................................................................................................4 • Plan Year...................................................................................................................................................................4 • Grace Period.............................................................................................................................................................4 • Forfeiture of Contributions: the “Use or Lose” Rule..................................................................................................4 • Actual Medical And Dental Benefits Are Provided Under The Benefit Plans You Select...........................................5 • Other Important Considerations................................................................................................................................5
Health Flexible Spending Arrangement..........................................................................................6 • Election ....................................................................................................................................................................6 • Maximum Contribution..............................................................................................................................................6 • Eligible Medical and Dental Expenses......................................................................................................................6 • Medical Expenses Not Eligible..................................................................................................................................7 • Right of Recovery .....................................................................................................................................................7 • Reimbursement Procedure.......................................................................................................................................7 • Account Statements..................................................................................................................................................8
Limited Purpose Health FSA (Dental & Vision Only) .....................................................................9 • What is the Limited Purpose Health FSA?...............................................................................................................9 • Maximum Contribution..............................................................................................................................................9 • Eligible Dental & Vision Expenses............................................................................................................................9 • Ineligible Dental & Vision Expenses........................................................................................................................10 • Reimbursement Procedure.....................................................................................................................................10 • Account Statements................................................................................................................................................11
Health Savings Account ..............................................................................................................12 • High Deductible Health Plan...................................................................................................................................12 • Election...................................................................................................................................................................12 • Health Savings Account..........................................................................................................................................13 • HSA Eligibility Requirements...................................................................................................................................13 • Establishing Your HSA............................................................................................................................................14 • FCH Contributions...................................................................................................................................................14
• Employee Level ......................................................................................................................................................15 • Contribution Amounts .............................................................................................................................................15 • Annual Limits .........................................................................................................................................................16 • General Monthly Contribution Rule ........................................................................................................................16 • Full-Contribution Rule for Mid-Year HDHP Enrollees..............................................................................................16 • “Catch-Up” Contributions for Enrollees 55 or over..................................................................................................17 • Domestic Partners...................................................................................................................................................17 • Distributions from Your HSA....................................................................................................................................17 • IRS Reporting Issues..............................................................................................................................................18 • HSA Program is Voluntary.......................................................................................................................................18
Dependent Care Assistance Program ........................................................................................19 • Qualifying Individuals .............................................................................................................................................19 • Dependent Care Programs other than DCAPs.......................................................................................................19 • Election & Maximum Contribution...........................................................................................................................20 • Exception to Maximum Contribution based on Marital Status.................................................................................20 • Reimbursement Procedure.....................................................................................................................................21 • Eligible Dependent Care Expenses........................................................................................................................21 • Account Statements................................................................................................................................................22
Changing Your Elections During the Plan year............................................................................23 • Changing Your Election ..........................................................................................................................................23 • Court Order.............................................................................................................................................................24 • Medicare and Medicaid ..........................................................................................................................................24 • The HEART Act.......................................................................................................................................................24 • Notification of Election Changes ............................................................................................................................24 • Health Savings Account Elections...........................................................................................................................24
Family and/or Medical Leave.......................................................................................................25 • FMLA Leave ...........................................................................................................................................................26 • Paying for Continued Plan Participation While on Leave .......................................................................................26
Termination of Participation and Continuation of Coverage.........................................................27 • COBRA Coverage ..................................................................................................................................................27 • Qualifying Events and Continuation Periods...........................................................................................................28 • Who is a COBRA Qualified Beneficiary?.................................................................................................................29 • Continuation of the Health FSA or the Limited Purpose Health FSA......................................................................29 • If You Choose to Continue Health FSA or Limited Purpose Health FSA Participation ...........................................30 • Dependent Care Assistance Program ....................................................................................................................30 • Health Savings Account..........................................................................................................................................30 • Contribution Payment Requirements......................................................................................................................31
Claim Denials and Appeals..........................................................................................................32 • Flexible Benefits Plan Appeal Process for Enrollment and Elections .....................................................................32 • Health and Limited Purpose Health FSA ...............................................................................................................32
General Information about the Plan.............................................................................................35 • Amendment or Termination of This Plan.................................................................................................................35 • Plan Administration.................................................................................................................................................35 • No Contract of Employment....................................................................................................................................36 • No Guarantee of Tax Consequences......................................................................................................................36 • Severability..............................................................................................................................................................36 • Governing Law........................................................................................................................................................36
General Information about the Plan Health FSA and Limited Purpose Health FSA.....................37 • Legal Requirements for the Health FSA and Limited Purpose Health FSA............................................................38
Statement of ERISA Rights - Your Health FSA and Limited Purpose Health FSA.......................40 Plan Definitions ...........................................................................................................................42 Attachment A – Health FSA Eligible Expenses.............................................................................45 • Health Expenses Not Eligible .................................................................................................................................46
Attachment B Limited Purpose Health FSA Eligible Expenses.......................................................... 48 • Dental Treatment.....................................................................................................................................................48 • Dental Expenses Not Eligible for the Limited Purpose Health FSA........................................................................48 • Vision.......................................................................................................................................................................49
Introduction to FCH’s Cafeteria Plan (Section 125) First Choice Health Network, Inc. (hereinafter referred to as “FCH”) has established for its employees, a Section 125 Cafeteria Plan, also known as a Flexible Benefits Plan (the “Plan”). The Section 125 Cafeteria Plan allows a participating employee to direct a portion of their pre-taxed salary into the Plan to be used to pay expenses such as their part of the benefit plan contribution payment, copayments, coinsurances, deductibles, dental, vision or medical care as defined by Plan guidelines. There are several programs under Section 125 to choose from as a FCH participant: • Contribution Payment Plan - the employee monthly contribution for medical and/or dental benefits, when applicable; • Flexible Spending Arrangement: -- Health Flexible Spending Account (Health FSA)/Limited Health FSA – reimburse covered expenses associated with an employee and their dependents’ medical, vision or dental care; and, -- Dependent Care Spending Account (DCAP) – reimburse expenses for the care of a dependent child (12 years and under), for the care of a dependent elder (if in your home at least 8 hours a day), for the care of a physically or mentally disabled dependent, or for day camp (12 years and under).
• Health Savings Account (HSA) (for participants of a High Deductible Health Plan) contributions can be made by FCH as your employer, by the employee, or both. Your share of contributions (premiums) for FCH self-insured health and/or dental benefit plans are automatically deducted from your pay on a pre-tax basis. You save income tax, Social Security and Medicare tax with this plan because your W-2 taxable wages are reduced. However, your elections must be made prior to the effective date of your coverage and are binding for the entire Plan year (with a few exceptions). Please read the document carefully to determine if these programs will benefit you. The benefit plans you elect may cover you or your dependents (as defined by the Internal Revenue Code). Pre-tax contributions may be taken for yourself, your spouse and/or your dependents (as defined under Internal Revenue Code Section 152). You do not have to pay for your share of Plan contribution through this Plan. If you wish, you can pay your share of the cost of coverage on an after-tax basis outside this Plan. This Plan document also serves as the Summary Plan Description for the Health and Limited Purpose Health FSAs. Please contact your Plan Administrator if you require additional information on Section 125.
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Flexible Benefits Plan Eligibility and Participation What is a Flexible Benefits Plan? A Flexible Benefits Plan is a plan under which an employee may elect to purchase group benefits with salary reduction dollars thus reducing their taxable income. The most common type of Flexible Benefits Plan is the Flexible Spending Arrangement (FSA). The FSA is a reimbursement plan that gives employees coverage under which eligible expenses may be reimbursed, subject to certain conditions and limits. The FSA plan which may include a Health FSA, a Limited FSA and/or a Dependent Care Assistance Program (DCAP). FCH employees who elect to participate in the FCH FSA may pay for FSA coverage through pre-tax salary reduction dollars.
Eligibility You are in an eligible class if all of the following are true: • FCH classifies you as you; • You are on the W-2 payroll of FCH; • You are an active, non-contracted, non-temporary, employee who has worked at least one (1) day. You are eligible to participate in the FCH Flexible Benefits Plan on the first of the month coincident with or next following your first date of employment in an eligible class if you have completed and returned a signed Flexible Benefits Plan Election Form to Human Resources on or before the first of the month. If you submit the Flexible Benefits Plan Election Form after the first of the month, your participation will begin on the first day of the pay period following receipt of your Flexible Benefits Plan Election Form. You must complete a Flexible Benefits Plan Election Form within 31 days of becoming eligible to participate. If you do not return your Flexible Benefits Plan Election Form within 31 days, the Plan deems that you have elected to pay your share of contributions for the health benefit Plans you select on an after-tax basis. Your compensation will not be reduced on a pre-tax basis, and you will have to wait until the next Plan year to join. Note: An employee with a domestic partner who is not an IRS Code 152 dependent of that employee, must pay for their domestic partner’s medical coverage using after tax dollars.
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The Plan Administrator is entitled to rely upon information provided by participants. You are required to notify the Plan Administrator (FCH HR) immediately if you have any reason to believe that you may not be entitled to pre-tax treatment under this Plan. Participation in the Flexible Benefits Plan is voluntary, and for one (1) Plan year at a time (from September 1 through August 31.) Under IRS rules you must enroll each year you want to participate.
Reasons Why You May Not Want to Participate in This Flex Plan Some people may not wish to have their compensation reduced on a pre-tax basis under this Plan, for any of the following reasons: • Reducing your taxable compensation may reduce your Social Security benefits. • Some employees may not want to be subject to the irrevocable election rule. This rule says that if you pay for benefit plans or contribute to a Health FSA, a Limited Purpose Health FSA and/or DCAP on a pre-tax basis, you may not change your benefit plans or your pre-tax contribution amount during the Plan year, except in a few situations. See Changing Your Elections During the Plan Year.
Persons Who are Excluded From Participating in this Plan Certain classifications of persons are excluded from participating in this Plan. You may not participate in this Plan if you are: • A “leased employee” (including but not limited to those individuals defined in Section 414(n) of the Internal Revenue Code) up to 1500 hours; • Classified by FCH as an independent contractor; • A temporary employee; or • Working outside the United States.
Flexible Benefits Plan Election Form On the Flexible Benefits Plan Election Form you may choose to pay for your share of the cost of your selected FCH benefit plans (employee contribution) on a pre-tax or after-tax basis. You may also choose to contribute on a pre-tax basis to the Health FSA, the HSA depending on your selected health benefit plans, and to contribute on a pre-tax basis to the DCAP. If you participate in an HSA, you may also choose to contribute on a pre-tax basis to the Limited Purpose Health FSA. To pay your share of the contribution for your selected benefit plans and to make your contributions to either the Health FSA, the HSA, the Limited Purpose Health FSA and/or the DCAP, your compensation will be reduced by an equal amount each pay period over the remaining Plan year, or on any other basis as set by the Plan Administrator. An election form filed by you is subject to acceptance, modification, or rejection by the Plan Administrator. The Plan Administrator may modify or reject an election in order to satisfy legal requirements or for other good cause.
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Election Procedure for New Plan Years Before each new Plan year, the Plan Administrator (Human Resources) will provide you with a Flexible Benefits Plan Election Form. To become a participant for the new Plan year, complete the Flexible Benefits Plan Election Form and return it to Human Resources by the end of the election period set by Human Resources. If you fail to complete and return the Flexible Benefits Plan Election Form within the election period, you will be deemed to have elected not to participate in any portion of the Flexible Benefits Plan.
Election to Participate Due to a Status Change If you are in an eligible class but did not enroll during an election period, you may elect to participate following a change in status (see Changing Your Elections During the Plan Year – Change in Status) or by a special enrollment in a group health plan as permitted by the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) (see Section 980.1(f) of the Internal Revenue Code).
Plan Year The Plan year is September 1 through August 31. Expenses must be incurred during the Plan year, or Grace Period (see below), and must coincide with your eligibility to participate in the Plan.
Grace Period For participants of the Health FSA or the Limited Purpose Health FSA, the Plan allows an additional 30 days, following the end of each Plan year, to incur expenses before the “Use or Lose” forfeiture rule applies (see below). Thus, expenses incurred within the 30 days after the close of the Plan year may be reimbursed with funds carried over from the prior Plan year. However, any unused amounts from the prior Plan year that are not used to reimburse expenses by the end of the grace period remain subject to the “Use or Lose” rule and must be forfeited. The Grace Period does not apply to the DCAP.
Forfeiture of Contributions: the “Use or Lose” Rule As defined under Internal Revenue Code § 125, contributions to the Health FSA, Limited Purpose Health FSA or DCAP cannot be carried over from Plan year to Plan year. This IRS rule, commonly referred to as the “use or lose” rule, requires that any money remaining in your account at the end of the Plan year will be forfeited. Forfeitures, by law, become the general assets of FCH and will be used for employee benefits or other purposes as determined by FCH. Careful planning of your contribution amounts can help you limit any chance of forfeiture. This rule does not apply to an HSA – see the section entitled Health Savings Accounts.
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Actual Medical And Dental Benefits Are Provided Under The Benefit Plans You Select Actual medical and dental benefits are provided under the benefit plans in which you enroll, not under this Plan. This Plan merely provides a tax-effective way for you to pay for your share of the contributions for the benefit plans you have selected. The medical and dental benefits available are described in separate Summary Plan Documents and are available from your Plan Administrator. If the terms of this Plan and the terms of another benefit plan (such as your medical or dental benefit plan) conflict, the terms of the benefit plan control; for example, with respect to who is eligible for benefits, dates of eligibility, conditions that must be satisfied to become covered, circumstances under which benefits terminate or change outside open enrollment, etc.
Other Important Considerations • Contributions are deducted equally, before taxes, from each paycheck after your participation begins to add up to the annual election amount you designate on your Flexible Benefits Plan Election Form. • Once you make an election, you generally cannot change it until the next Plan year except as described under Changing Your Elections During the Plan Year. • For a Health FSA, Limited Purpose Health FSA and DCAP accounts, unless you complete your claim form properly, provide FCH with your current address and submit other necessary information, your reimbursement could be delayed. • For the Health FSA and Limited Purpose Health FSA, only expenses incurred as of the effective date of your participation through September 30 (30 day grace period from the end of the Plan year) or the last day of your eligibility to participate, whichever date comes first, are eligible for reimbursement. • For the DCAP, only expenses incurred as of the effective date of your participation through August 31 (the end of the Plan year), or the last day of your eligibility to participate, whichever date comes first, are eligible for reimbursement. • Reimbursement can be made only from the account that matches the claim (for example, medical expenses can be reimbursed only from your Health FSA or HSA, depending on the specific health benefit plan you have selected.) • For a Health FSA, Limited Purpose Health FSA, DCAP or HSA, you may not seek reimbursement for benefits that have been paid by another benefit plan. • While on an unpaid leave of absence or receiving workers’ compensation disability payments, your payroll deductions to the Flexible Benefits Plan may be suspended and will not be made retroactively when you return. Your election contribution will be reduced accordingly. • If you die while enrolled in the Flexible Benefits Plan, any reimbursements you would have been entitled to receive can be paid to your surviving spouse or other beneficiary. The Plan Administrator can help your beneficiary fill out and submit the necessary claim forms.
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Health Flexible Spending Arrangement Election If you have not elected to participate in the High Deductible Health Plan (HDHP) you can elect to participate in the Health FSA for the Plan year by completing the applicable section of the Flexible Benefits Plan Election Form. Employees who elect to participate in the HDHP must waive their option to participate in the HSA in order to participate in the Health FSA. (See page 9 of this document for further information regarding HSAs.)
Maximum Contribution The maximum amount that you may contribute for the Plan year to a Health FSA is $2,500. The minimum amount is $240. The amount that you decide to contribute for the Plan year is called your “election amount.” Contributions made to the Health FSA that are not used during the Plan year may not be carried over to the next Plan year and are forfeited to the Plan.
Eligible Medical and Dental Expenses In the Health FSA, you can receive reimbursement for certain allowed medical and dental expenses that may not be covered under your health benefit plan or dental benefit plan. Reimbursement is made from your Health FSA account, which holds your pre-tax contributions. A medical or dental expense of yours, your legal spouse, or your tax dependents can be eligible only if not reimbursed by any other benefit plan. Contributions for any health benefit plan or dental benefit plan are not eligible under the Health FSA. Also, remember that expenses reimbursed under the Health FSA cannot be taken as a deduction on your Federal income tax return. To be eligible, the expense must be a charge for services provided during the same period covered by your Health FSA. See Appendix A of this document for a partial list of eligible medical and dental expenses. These items are subject to change by the IRS. You may also call FCHA Member Services.
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Medical Expenses Not Eligible Medical and dental expenses are not eligible for reimbursement from your Health FSA if the IRS does not recognize them as legitimate deductions. Expenses also are not eligible if they are for general health purposes and not to prevent or correct a specific ailment. See Appendix A for a partial list of expenses that are not eligible.
Right of Recovery Whenever benefits have been paid by FCH with respect to allowable expenses in total amount, at any time, in excess of the maximum amount of payment necessary at that time to satisfy the intent of this provision, or when Health FSA money was paid on ineligible claims, the Plan Administrator shall exercise its right to recover such excess payments from any person(s), insurer(s), or other organizations, as deemed appropriate by the Plan Administrator.
Reimbursement Procedure The Plan will reimburse you from your Health FSA for eligible medical expenses or dental expenses that you, your spouse or your tax dependents incur during the Plan year while you are a participant in the Plan. You may use your check card (debit card) at MasterCard® merchants, or you may submit your claims for reimbursement manually. The process is described below: • Use the claim form provided by the Plan Administrator. • Along with your claim form, submit a written bill or statement from an independent third party stating the date the expense was incurred, the type of service, and the amount of the expense. • Submit such other evidence, as the Plan Administrator deems necessary to substantiate the nature, amount and the timeliness of the expenses you are claiming. • Make sure the claim is for expenses that have already been incurred during the Plan year or the 30 day Grace Period. A medical expense is “incurred” at the time the medical care or service is furnished, regardless of when you are billed or pay for the service. This means, for example, that advance payments you make to an orthodontist are not an incurred expense. The expense will be incurred when the orthodontist actually performs the service; and • Submit your claim no later than 90 days after the close of the Plan year. If you are covered by another health care plan such as your spouse’s, you must submit your health care expenses to both Plans before you can claim reimbursement from your Health FSA. Attach both sets of Explanation of Benefits (EOBs) to the claim form. Your entire election amount—less the reimbursements the Plan has already paid you—is available to you at any time during the Plan year.
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The Plan will reimburse your claims for $10 or more on predetermined dates (at least monthly) and will notify you of those dates. If your claims are for less than $10, they will be held until they add up to $10 or more. At the end of the Plan year, you will be reimbursed for any remaining eligible claims under $10, as long as a claim is submitted according to the above timeframes. Health FSA participants can elect to open a debit card account for use with their Health FSA. Terms of use are fully explained in the Card Holders Agreement issued by the debit card vendor. Please read through any and all debit card account information you receive after opening your account. The debit account Card Holders Agreement does not replace or amend the provisions of the Plan document. In general, copay amounts paid with the debit card will autoadjudicate. However, certain other claims paid by debit card transaction will require a receipt as substantiation. You may open the Health FSA debit card account by completing the applicable section of the Flex Plan enrollment form. You may call the FCHA FSA Department at (206) 268-2900 for information.
Account Statements Every time you submit a claim for Health FSA reimbursement, you will receive an Explanation of Benefits (EOB) that shows if the claim was paid or denied and the balance amount remaining in your Health FSA account. Semiannually, you’ll receive a statement showing the current status of your account, even if you have not yet filed a claim. The statements show the balance remaining in your account so you can spend it by the end of the Plan year and avoid forfeiture. They also help you estimate expenses for the next Plan year Health FSA enrollment.
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Limited Purpose Health FSA (Dental & Vision Only) What is the Limited Purpose Health FSA? If you have elected to participate in the HDHP AND you elect the Health Savings Account, you cannot participate in the Health FSA. The Health FSA is considered impermissible coverage when you also have an HSA. (See IRS Rev. Rul. 2004-45.) However, certain other types of Plan coverage are permitted including dental and vision (See HSA Eligibility Requirements). Therefore, HDHP participants with an HSA have the option of participating in the Limited Purpose Health FSA - Dental & Vision. You may elect to participate in the Limited Purpose Health FSA for a Plan year by completing the applicable election form.
Maximum Contribution The maximum amount that you may contribute for the Plan year to the Limited Purpose Health FSA is $2,500. The minimum amount is $240. The amount that you decide to contribute for the Plan year is called your “election amount.” Contributions made to the Limited Purpose Health FSA that are not used during the Plan year may not be carried over to the next Plan year and are forfeited to the Plan. For this reason, participants in the Limited Purpose Health FSA may want to use their Limited Purpose Health FSA first for all eligible dental and vision expenses.
Eligible Dental & Vision Expenses In the Limited Purpose Health FSA, you can receive reimbursement for certain allowed dental and vision expenses that may not be covered under your benefit plans. Reimbursement is made from your Limited Purpose Health FSA account, which holds your pre-tax contributions. Your expense or that of your legal spouse and your other tax dependents (as defined by Internal Revenue Code § 152 definition of dependent amended) can be eligible only if not reimbursed by any other benefit Plan. The employee’s cost of coverage (contributions) for participating in the dental benefit plan is not an eligible expense for reimbursement under the Limited Purpose Health FSA. Also, expenses reimbursed under the Limited Purpose Health FSA cannot be taken as a deduction on your Federal income tax return. To be eligible, the expense must be a charge for services provided during the same period covered by your Limited Purpose Health FSA. A complete list of reimbursable expenses can be found at the IRS website www.irs.gov/ publications/p502. See Appendix B for a partial list of eligible dental expenses.
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Ineligible Dental & Vision Expenses Dental and vision expenses are not eligible for reimbursement from your Limited Purpose Health FSA if the IRS does not recognize them as legitimate deductions. Expenses also are not eligible if they are for general health purposes and not to prevent or correct a specific ailment. In addition, prescriptions written by your dentist for dental related medical care are not an eligible expense under the Limited Purpose Health FSA. See Appendix B for a partial list of expenses that are not eligible.
Reimbursement Procedure The Plan Administrator will reimburse you from your Limited Purpose Health FSA for eligible dental and vision expenses that you, your legal spouse or your tax dependents incur during the Plan year while you are a participant in the Plan. To submit your claims for reimbursement: • Use the claim form provided by the Plan Administrator. • Along with your claim form, submit a written bill or statement from an independent third party stating the date the expense was incurred, the type of service, and the amount of the expense. • Submit such other evidence, as the Plan Administrator deems necessary to substantiate the nature, amount and timeliness of the expenses you are claiming. • Make sure the claim is for expenses that have already been incurred during the Plan year or the 30 day Grace Period. An expense is “incurred” at the time the care or service is furnished, regardless of when you are billed or pay for the service. This means, for example, that advance payments you make to an orthodontist are not an incurred expense. The expense will be incurred when the orthodontist actually performs the service; and • Submit your claim no later than 90 days after the close of the Plan year. If you are covered by another health care plan such as your spouse’s, you must submit your dental or vision care expenses to both Plans before you can claim reimbursement from your Limited Purpose Health FSA. Attach both sets of Explanation of Benefits (EOBs) to the claim form. Your entire election amount—less the reimbursements the Plan Administrator has already paid you—is available to you at any time during the Plan year. The Plan Administrator will reimburse your claims for $10 or more on predetermined dates (at least monthly) and will notify you of those dates. If your claims are for less than $10, they will be held until they add up to $10 or more. At the end of the Plan year, you will be reimbursed for any remaining eligible claims under $10, as long as a claim is submitted according to the above timeframes. There is no debit card option available with the Limited Purpose Health FSA.
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Account Statements Every time you submit a claim for Limited Purpose Health FSA reimbursement, you will receive an Explanation of Benefits (EOB) that shows if the claim was paid or denied and the balance amount remaining in your Limited Purpose Health FSA account. Semiannually, you’ll receive a statement showing the current status of your account, even if you have not yet filed a claim. The statements show the balance remaining in your account so you can spend it by the end of the Plan year and avoid forfeiture. They also help you estimate expenses for the next Plan year Limited Purpose Health FSA enrollment.
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Health Savings Account High Deductible Health Plan Sometimes referred to as a “catastrophic” health insurance plan, an HDHP is a health insurance plan that generally does not pay for the first several thousand dollars of health care expenses (i.e., “deductible”) but will generally cover you after that. The FCH HDHP is a qualifying high deductible health plan under Internal Revenue Code §223(c)(2). A HDHP is defined by the IRS as a health plan with an annual deductible of not less than a certain dollar amount determined each year. Likewise, a HDHP must not have annual out-ofpocket expenses (deductibles, copayments and other amounts, but not premiums) that exceed certain dollar amounts decided upon each year by the IRS. IRS Indexed Amounts 2013
2014
Individual
$1,250
$1,250
Family
$2,500
$2,500
Individual
$6,250
$6,350
Family
$12,500
$12,700
Minimum Deductible Amount
Maximum Out-of-Pocket Amount
Election If you have no other impermissible coverage; you can elect to establish a Health Savings Account as of the first day of the month you are covered. If you are married, you cannot be covered by your spouse on a family plan that does not qualify as a HDHP under Code §223(c)(2). Note: You are required to notify the Plan Administrator immediately of any changes in other coverage that might affect your HSA contribution eligibility.
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Health Savings Account A Health Savings Account (hereinafter “HSA”) is an account that allows you to pay for certain medical expenses on a tax-free basis. HSA contributions can be made by you or on your behalf. Contributions are non-taxable and contributions made by you will qualify for certain tax deductions (up to the maximum annual contribution allowed). Your HSA account balance is nonforfeitable and will automatically carry forward from year to year for future medical expenses. Earnings on your HSA account balance are generally not taxed while held in the HSA, which means that your account can grow on a tax-free-basis. In other words, your HSA offers three forms of tax savings: tax-free contributions, tax-free growth, and tax-free distributions. For more information on HSAs, visit http://www.treas.gov/offices/public-affairs/hsa/. Note: Neither the Plan Sponsor’s arrangement for making contributions to an eligible employee HSA nor the HSA itself is an ERISA welfare benefit Plan under the Employee Retirement Income Security Act of 1974 (ERISA).
HSA Eligibility Requirements Federal tax law requires that in order to establish an HSA and be eligible to make contributions to your HSA, you must be covered under a qualifying high deductible health plan with no other impermissible coverage. • Special Rule for Married Individuals: If you are married and your spouse has family coverage under another plan, your spouse’s family coverage must qualify as a high deductible health plan under the above referenced tax law in order for you to be eligible for an HSA. • Permitted Insurance and Permitted Coverage: The only other types of health insurance coverage that you may have, in addition to high deductible health plan coverage, are: (i) insurance in which substantially all of the coverage relates to liabilities incurred under workers compensation laws, tort liabilities, liabilities relating to ownership or use of property (e.g., home-owner or auto insurance), or similar liabilities as specified by the IRS; (ii) insurance for a specified disease or illness (e.g., cancer insurance); (iii) insurance that pays a fixed amount per day (or other period) of hospitalization (e.g., hospital indemnity insurance); and (iv) coverage for accidents, disability, dental care, vision care, or long-term care. Note: A Health FSA that is not a Limited FSA is impermissible coverage. • You also cannot be claimed as another person’s tax-dependent and cannot be enrolled in Medicare Benefits.
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Establishing Your HSA FCH has chosen to make its HSA contribution, and any contribution you choose to make, by direct deposit to a preferred HSA trustee (also known as the Custodian) under Code § 223. You will be provided with the forms necessary to establish an HSA and appropriate contact information will be provided for any questions you may have. You will be responsible for choosing how your HSA funds are invested. Once the FCH contributions have been deposited in your HSA, you will have a non-forfeitable interest in the funds and you will be free to request a distribution of the funds or to move them to another HSA trustee to the extent allowed by law.
FCH Contributions You will receive an HSA contribution from FCH based on your number of service years (the number of consecutive years you have been employed at FCH) and level of coverage you select i.e. employee only coverage under the FCH HDHP, “Employee + 1,” or “Employee + 2 or more” (which may only change mid-year if a qualifying event has occurred). The FCH employer contribution is made four (4) times during the Plan year and is subject to change with notice as deemed necessary by the Plan Administrator or as directed by the Plan Sponsor. FCH employer HSA contributions are prorated for the those employees who reach the length of service seven (7) plus years, or for new hire employees, effective after the September 1 Plan renewal date.
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Employee Level Percentage of Deductible
Family Size
Salary Level
Level A Income
80%
Single / Family
Less than $30,000 / $40,000
Level B Income
70%
Single / Family
Less than $40,000 / $50,000
Level C Income
60%
Single / Family
Less than $50,000 / $60,000
Level D Income
50%
Single / Family
between $50,000 / $60,000 to $100,000
Level E Income
40%
Single / Family
Greater than $100,000
Longevity Benefit (10-15 years of service)
90%
Single / Family
90% funded
Longevity Benefit (15+ years of service)
100%
Single / Family
100% funded
HSA Funding Levels
Contribution Amounts Contribution Level
Employer HSA Contribution
Longevity HSA Contribution 90%
Annually
EE Only
$1,260
EE+ 1
$2,250
EE + 2 or more
$2,520
Level A HSA Contribution 80%
Annually
EE Only
$1,120
EE+ 1
$2,000
EE + 2 or more
$2,240
Level B HSA Contribution 70%
Annually
EE Only
$980
EE+ 1
$1,750
EE + 2 or more
$1,960
Level C HSA Contribution 60%
Annually
EE Only
$840
EE+ 1
$1,500
EE + 2 or more
$1,680
Level D HSA Contribution 50%
Annually
EE Only
$700
EE+ 1
$1,250
EE + 2 or more
$1,400
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Level E HSA Contribution 40%
Annually
EE Only
$560
EE+ 1
$1,000
EE + 2 or more
$1,120
Annual Limits In general, the maximum annual contribution is available only for individuals who are eligible for all 12 months during the year. Additional HSA contributions into the same or a separate HSA may be made, so long as the total contributions made by you and/or made on your behalf do not exceed the maximum calendar year contribution limit that applies to you. The annual limits, as determined by the IRS, for calendar years 2013 and 2014 are as follows: The annual contribution limits for calendar years 2013 and 2014 for an individual with self-only coverage under a high deductible plan are: 2013
$3,250
2014
$3,300
The annual contribution limits for calendar years 2013 and 2014 for an individual with family coverage under a high deductible plan are: 2013
$6,450
2014
$6,550
You may start, stop or change your HSA contributions in any month, however changes are made prospectively.
General Monthly Contribution Rule An individual’s annual HSA contributions may not exceed the sum of the “monthly limitations” for all months within the individual’s taxable year in which he or she actually is - or, under the fullcontribution rule discussed in the next section, is treated as - an eligible individual. An individual who ceases to be an eligible individual during a year may still contribute to his or her HSA for the months of the year in which he or she was an eligible individual. For example, Employee #1 had self-only coverage and worked for FCH from January through June of 2013. She resigned on June 30 and became eligible for other non-HDHP group health plan coverage effective July 1, 2013. During January through June she was eligible to contribute up to $270.83 each month (1/12 of $3,250). If she had not met those limits upon resignation, she may continue to make “retroactive” contributions until her HSA contribution amount equaled $1,624.99 (6 months x $270.83).
Full-Contribution Rule for Mid-Year HDHP Enrollees Mid-year enrollees into the HDHP may take advantage of the full-contribution rule which permits an individual to make a full year’s worth of HSA contributions if s/he is an eligible individual on December 1st of that year. However, there is a “testing period” that one must pass in order not to be taxed on these excess contributions. The testing period is defined as December 1 of the
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year the person becomes a mid-year HDHP enrollee through December 31st of the following year. If the individual does not remain eligible for this testing period, the excess contributions would be includible in gross income and subject to a 10% penalty in the next tax year. Rollover contributions may also be made to an HSA from another HSA, from an Archer MSA, or FSA; rollover contributions are not subject to the HSA contribution limitations.
“Catch-Up” Contributions for Enrollees 55 or over The general HSA contribution limit is increased by an additional contribution amount for HSAeligible individuals who have attained age 55 by the end of the taxable year. This additional contribution amount is $1,000 for 2009 and subsequent years. As with the general HSA contribution limit, the additional HSA catch-up contribution limit may be determined under the full-contribution rule. A married couple may make two HSA catch-up contributions, so long as both spouses are at least age 55 however, separate HSAs must be established in the name of each spouse. Note: For IRS tax purposes, HSA contributions are calculated on a calendar year basis. It is the responsibility of the employee to calculate their calendar year maximum contributions. The Plan makes no guarantee of tax consequences. Consult with your tax advisor if you have questions.
Domestic Partners FCH will not establish or administer an HSA for an employee’s enrolled domestic partner. For employees enrolled on the HDHP as employee + domestic partner, FCH limits the employer HSA contribution to the employee only amount. However, the employee may make additional contributions up to the amount of their annual HDHP deductible.
Distributions from Your HSA Distributions from your HSA will be tax-free if they are for expenses incurred for your medical care as defined in Code §213(d) or the medical care of a legal spouse or tax dependents for dates of service incurred after the establishment of your HSA. The normal method of taking distributions from your HSA will be by debit card (Benny card) transaction at MasterCard® merchants or by submitting an Account Withdrawal Request directly to the HSA Custodian, the Bancorp Bank (Bancorp). Bancorp will issue reimbursement directly to the Account Holder. The HSA Custodian may permit other methods of distribution from time to time at the Custodian’s discretion. Please call the FCHA Flex Department at (206) 268-2900 for more information.
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IRS Reporting Issues You are responsible for reporting contributions made to your HSA (whether made by you or on your behalf) and for reporting distributions from your HSA. You must determine whether your HSA distributions are taxable or whether they are used for qualified medical expenses (and, therefore, tax-free). You should also maintain records sufficient to show that any distributions that you do not report as taxable were made exclusively for qualified medical expenses. And you may not take an additional tax deduction for qualified medical expenses for which you were reimbursed through your HSA. IRS Form 8889 is available as an attachment to Form 1040 on which you will report your HSA contributions and distributions. Please consult with your tax preparer or the IRS. (www.irs.gov).
HSA Program is Voluntary Your participation in the HSA described in this Flexible Benefits Summary Plan Document is entirely voluntary and you may terminate your participation at any time by notifying FCH as provided for under Changing Your Elections During the Plan Year. Although FCH expects to continue this HSA program indefinitely, it has the right to amend or terminate all or any part of the HSA program at any time for any reason. It is also possible that changes to the program may be necessary or advisable as a result of future changes in State or Federal tax laws.
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Dependent Care Assistance Program Internal Revenue Code section 129 permits a taxpayer to exclude up to $5,000 from gross income, deducted from one’s paycheck, for dependent care assistance. This is called a Dependent Care Assistance Program, or DCAP. One is able use those dollars to reimburse expenses for the care of qualifying individuals, defined below.
Qualifying Individuals For purposes of a DCAP, under IRS Code section 21(b)(1), “qualifying individual” means: • A dependent of the taxpayer as defined in Code section 152(a)(1) (i.e., a qualifying child) who has not reached age 13; • A dependent of the taxpayer (i.e., a qualifying child or qualifying relative who (1) is physically or mentally incapable of care for himself or herself; and (2) lives in the same home as the taxpayer for more than half of the year; or • The spouse of the taxpayer, if the spouse (1) is physically or mentally incapable of caring for himself or herself; and (2) lives in the same home as the taxpayer for more than half of the year. Important note: The definition of “Qualifying Individual” for purposes of the DCAP differs from that of “Qualifying Child” and “Qualifying Relative” for purposes of Internal Revenue Code §152.
Dependent Care Programs other than DCAPs It is important to know that there are other programs allowed per the IRS for payment of dependent care. For instance, taxpayers may claim a “Dependent Care Tax Credit” under Internal Revenue Code § 21. Depending on your tax bracket, a DCAP will save most employees more tax dollars but in some cases (again, according to your tax bracket), claiming the Dependent Care Tax Credit could be more advantageous than participating in a DCAP on a salary reduction basis. To compare the two options available see the following publications: http://www.irs.gov/pub/ irs-pdf/p503.pdf and https://www.fsafeds.com/forms/dcfsa_worksheet.pdf. Please note the latter is a worksheet created by the federal government for their own employees, neither the Plan nor FCHA bears any responsibility for results yielded from use of the worksheet. (The web address was active as of the publication of this document.) Important note: In general (there are exceptions to this rule), if you take advantage of the DCAP you cannot also take advantage of the Dependent Care Tax Credit. This is known as “double-dipping”. Please seek the advice of a tax advisor with questions about which program would be more beneficial to you, or to discuss what exceptions would enable you to take advantage of both programs.
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Election & Maximum Contribution You can elect to participate in the Dependent Care Assistance Program (DCAP) for a Plan year by completing the applicable section of the Flexible Benefits Plan Election Form. The maximum amount that you may exclude from your gross income for a Plan year is $5,000 ($2,500 if you are married and file a separate Federal income tax return). The minimum amount allowed by FCH is $240. The amount you decide to contribute for the Plan year is called your “election amount.” An employee’s election amount is limited to the smallest of the following amounts: • $5,000 if the employee is married and filing a joint return or if the employee is single ($2,500 if the employee is married but filing separately); • The employee’s “earned income” for the year (as defined in IRS Publication 503); or • If the employee is married at the end of the taxable year, the spouse’s earned income. The spouse of a married employee is deemed to be gainfully employed and to have an earned income of not less than $250 per month ($500 per month if there are two or more qualifying individuals) in each month during which he or she (a) is a full-time student; or (b) is incapable of self-care and lives in the same home as the employee for more than half the year.
Exception to Maximum Contribution based on Marital Status As noted above, the maximum contribution under a DCAP for married individuals filing a joint tax return (or for an unmarried employee) is $5,000. Married individuals filing separately are subject to a lower contribution of $2,500. In some circumstances however, individuals who were married may be considered not married, and in that case, the $5,000 maximum contribution would apply. For example, if the employee is divorced or legally separated from his or her spouse, then the employee is not considered to be married and could take advantage of the maximum contribution of $5,000. Also, in certain circumstances when married individuals are living apart, they may be considered, for purposes of the Dependent Care tax Credit rules, as not married. If this is true, one of the individuals, if enrolling in a DCAP, could take advantage of the maximum contribution of $5,000. Please seek the advice of a tax advisor if the above scenarios speak to your situation. Neither the Plan nor FCHA can offer tax advice or interpret your personal situation for purposes of enrolling and/or selecting an appropriate contribution amount for your DCAP.
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Reimbursement Procedure The Plan Administrator will reimburse you for eligible dependent care expenses that you incur during the Plan year while you are a participant in the Plan. To submit your claims for reimbursement: • Use the claim form provided by the Plan Administrator. • Along with your claim form, submit a written bill or statement from an independent third party stating the range of dates over which the expense was incurred, the type of service, and the amount of the expense. Alternatively, you may simply have the dependent care provider sign the claim form where indicated. • Submit such other evidence if requested, as the Plan Administrator deems necessary to substantiate the nature, amount and timeliness of the expenses you are claiming. • Make sure the claim is for expenses that have already been incurred during the Plan year. An expense is “incurred” at the time the dependent care is provided, regardless of when you are billed or pay for the dependent care. This means, for example, that advance payments you make to a summer day camp are not an incurred expense. The expense will be incurred when the day camp visit is completed. • Submit your claim no later than 90 days after the close of the Plan year. You will be reimbursed up to the amount you have contributed to date, minus prior reimbursements. Any un-reimbursed amounts will be carried over to the subsequent months and reimbursed to you as soon as the contributions are available. The Plan Administrator will reimburse your claims for $10 or more on predetermined dates (at least monthly) and will notify you of those dates. If your claims are for less than $10, they will be held until they add up to $10 or more. At the end of the Plan year, you will be reimbursed for any remaining eligible claims under $10, as long as a claim is submitted according to the above timeframes. There is no debit card option available with the DCAP.
Eligible Dependent Care Expenses Eligible dependent care expenses meet all the requirements listed below: • The claim is for expenses incurred for the care of a dependent (defined below), or for related incidental household services. • The expenses are incurred for services rendered on or after the day you begin to participate in the DCAP and during the Plan year to which your election applies. • The expenses are incurred so you (and your spouse, if you are married) can work or look for work. Exception: If your spouse is not working or looking for work when the expenses are incurred, he or she may be a full-time student or may be physically or mentally incapable of caring for him or herself. • If the expenses are incurred for services outside your household for the care of your spouse or dependent who is physically or mentally incapable of caring for himself or herself, he or she must regularly spend at least 8 hours per day in your household.
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Account Statements Every time you submit a claim for DCAP reimbursement, you will receive an Explanation of Benefits (EOB) that shows if the claim was paid or denied and the balance amount remaining in your DCAP. Semiannually, you’ll receive a statement showing the current status of your account, even if you have not yet filed a claim. The statements show the balance remaining in your account so you can spend it by the end of the Plan year and avoid forfeiture. They also help you estimate expenses for the next Plan year DCAP enrollment.
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Changing Your Elections During the Plan year Changing Your Election During annual open enrollment, you have an opportunity to make new election choices. Decisions made during open enrollment become effective on September 1 of the next Plan year. You may not change your Flexible Spending Arrangement election amount or stop your contributions during a Plan year unless you have a qualifying status change (listed below) as defined by the IRS. Election changes must be consistent with the change in status and must be made within the required 31 days of the event. Changes to the Health FSA or Limited Purpose Health FSA may be made only if the change affects eligibility to participate in the Health or Limited Purpose Health FSAs. Qualifying status changes include: • Change in legal marital status; • Change in the number of your eligible dependents; • Changes in your or your spouse’s employment status; • Returning from an unpaid leave of absence; • Spouse’s open enrollment. • A change in the cost of day care expenses is a qualifying event for the Dependent Care Assistance Program. When your election amount increases due to a qualifying event, in certain situations, expenses submitted for reimbursement must be for services provided on or after the new effective date of your higher election amount. This would occur only when the original election amount has already been reimbursed to the election limit before the change. Subsequent claims will be reimbursed only from the increased election amount. If you make a change in group health plan coverage for you, your spouse or legal tax dependent under the special enrollment rights provided in the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), you can make a corresponding change in your pre-tax contribution amount. Please refer to the group health plan description for an explanation of special enrollment rights. Coverage for you and your dependents will begin retroactive to either the date of birth of a natural newborn, the date of placement of an adoptive child, or in the case of marriage, on the first day of the month after FCH has received written notification of the event.
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Court Order The Plan Administrator may change your election to comply with the terms of a judgment, decree, or order that requires you to provide health coverage for a child. You may also change your election to cancel coverage for a child if such an order requires you to provide health coverage for a child and that coverage is provided.
Medicare and Medicaid You may cancel your Health FSA if you or your dependent becomes entitled to Medicare or Medicaid. You may begin a Health FSA if you or your dependent loses eligibility under Medicare or Medicaid.
The HEART Act The Heroes Earnings Assistance and Relief Tax Act of 2008 allows qualified employees who are ordered or called to active duty in the military to receive a distribution (called a “qualified reservist distribution”) of all or a portion of their FSA account balances. A qualified reservist distribution is a distribution of all or a portion of the balance in an employee’s account that is made during the period that begins on the date of the order or call up, and ends on the last date that reimbursement could otherwise be made under the health FSA for the Plan year. To be qualified an employee must be a member of a reserve component and must be ordered or called to active duty either for a period of at least 180 days or for an indefinite period. Qualified reservist distributions can be made at any time from the date of the employee’s order or call through the last date on which reimbursements could otherwise be made under the health FSA for the plan year that includes the date of the order or call. Please see the Plan Administrator for more information.
Notification of Election Changes The Plan Administrator has the authority to decide if an event allows for an election change and whether that change is on account of and consistent with that event. You must notify the Plan Administrator of your requested election change in writing within 31 days of the event. The change in your pre-tax election amount becomes effective on the first day of the month following the event.
Health Savings Account Elections You may elect to start or stop your contribution, or increase or decrease your contribution, at any time during the Plan year as long as the change is effective prospectively (after the request for change is received by the Plan Administrator).
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Family and/or Medical Leave Under the Family and Medical Leave Act of 1993 (FMLA) and the Washington Family Care Act, eligible employees have the right to take unpaid family or medical leave for a limited time. In 1995 the IRS announced rules that allow Flexible Spending Arrangement participants, who take unpaid leave under FMLA to revoke an existing election of health insurance, which would include the Health or Limited Purpose Health FSA: • FMLA leave is considered a change in family status, which entitles you to revoke your existing Health or Limited Purpose Health FSA election. • If your Health or Limited Purpose Health FSA participation ends (by revocation or nonpayment of contributions) while you are on FMLA leave, you will be reinstated on the same terms as before your leave. You must contact the Plan Administrator and complete the necessary paperwork within 31 days of reinstatement. • You are entitled to continue Health or Limited Purpose Health FSA participation during FMLA leave; however, you are responsible for the share of contributions you were paying while working. Detailed information about your FMLA rights is available from the Plan Administrator.
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FMLA Leave While on FMLA leave, you may discontinue your Health FSA, Limited Purpose Health FSA or DCAP contributions and resume your contributions when you return from leave. While on an unpaid leave of absence, your payroll deductions to the Flexible Benefits Plan may be suspended and will not be made retroactively when you return.
Paying for Continued Plan Participation While on Leave While on FMLA leave, special rules apply to how you pay for your Health or Limited Purpose Health FSA contributions. To the extent required by FMLA, FCH will continue to maintain your benefits as though you were still at work. You may choose to continue coverage by: • Paying your contribution with after-tax dollars while on leave (or pre-tax dollars to the extent you receive compensation from FCH during the leave); • Pre-paying all or part of your contribution for the expected duration of the leave on a pretax salary reduction basis out of your pre-leave compensation (to do this, you need to contact the Plan Administrator to make arrangements before the date the compensation would normally be available; these pre-tax dollars may not be used to pay for coverage during the next Plan year); • Agreeing on other arrangements with the Plan Administrator. As an alternative, you may choose to discontinue your Plan coverage for the duration of your leave or the rest of the Plan year. When you return from leave, you may re-enter the Plan on the same basis you were participating before your leave, or as FMLA otherwise requires. If you elect to continue Health or Limited Purpose Health FSA coverage while on FMLA leave, your eligible medical or dental expenses under Health or Limited Purpose Health FSA rules will continue to be reimbursed so long as your coverage does not end while you are on leave. If your coverage does end, the Plan Administrator will reimburse only eligible medical or dental expenses incurred while you were covered.
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Termination of Participation and Continuation of Coverage Your participation in the FCH Flexible Benefits Plan generally ends: • When you leave the organization; • When you no longer meet the eligibility rules; or, • On the first day you stop making any contributions. Eligible claims can continue to be submitted if the dates of service coincide with your prior coverage dates under the Plan or you elect to continue this coverage under COBRA on an after-tax basis. (See COBRA details below.) You may not submit expenses for services received before you were eligible or after your benefits stop. You have 90 days after the last day of the month your participation ends to file claims under this Plan. Any money remaining in your accounts after this period will be forfeited.
COBRA Coverage If you experience an event that would cause you to lose coverage under a group health plan, known as a qualifying event, COBRA may give you the right to continue benefits for a limited time at your expense. For purposes of COBRA, “group health plan” also includes the Health FSA and Limited Purpose Health FSA. If your coverage terminates under this group plan (the “Plan”), you may be eligible to continue your same group medical/dental or dental only coverage that you were covered under at the time coverage was terminated. Coverage would be for a period of time to the extent required by Federal law and regulations, called COBRA (Consolidated Omnibus Budget Reconciliation Act of 1986). COBRA requires that continuation of coverage under the Plan as indicated above be made available to covered persons (called “qualified beneficiaries”) in the instance of a qualifying event. This Plan provides no greater COBRA rights that what COBRA requires. Nothing in the Summary Plan Document is intended to expand your rights beyond COBRA requirements. Continuation of coverage under COBRA is not automatic: you must elect COBRA by completing and properly providing to FCH a COBRA notice of election form. You will also be required to pay applicable contributions for you and/or your dependent(s) directly to your group. Please contact your group benefit administrator for additional information concerning your rights to continue medical benefits.
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Qualifying Events and Continuation Periods Qualifying Events and Continuation Periods include, but are not limited to the following: • Death of employee. Covered dependents may continue coverage under the Plan for up to 36 months. • Separation or divorce. If you and your spouse divorce or separate, the employee’s spouse and their covered dependent children may continue coverage under the Plan for up to 36 months. • Employee becomes entitled to Medicare. The Medicare ineligible covered dependents may continue coverage under the Plan for up to 36 months. • Ineligibility of dependent child. When a covered dependent child no longer meets the Plan definition of dependent child, the dependent child may continue coverage under the Plan for up to 36 months. • Termination of employee employment. If employment terminates (voluntary or involuntary), the covered employee and covered dependents may continue coverage under the Plan for up to 18 months unless the employee is terminated for gross misconduct. • Reduction in employee work hours. If your hours of work are reduced resulting in loss of group coverage, you and your covered dependents may continue coverage under the Plan for up to 18 months. • Uniformed service. An employee who is absent from employment for uniformed service may elect to continue Plan coverage for up to 24 months. (See Legal Requirements for the Health FSA and Limited Purpose Health FSA.) When the qualifying event is termination of employment (other than by reason of gross misconduct), reduction in hours of employment, or the covered employee’s death, the Plan Administrator will notify the qualified beneficiary of the right to continue coverage within 14 days of the qualifying event. You need not notify the Plan Administrator of any of these qualifying events. For the other qualifying events (divorce or legal separation of the employee and spouse or a dependent child losing eligibility for coverage as a dependent child), a COBRA election will be available to you only if you notify the Plan Administrator in writing within 60 days after the later of (1) the date of the qualifying event; or (2) the date on which the qualified beneficiary loses (or would lose) coverage under the terms of the Plan a result of the qualifying event. If you have a qualifying event while you are a Health FSA or Limited Purpose Health FSA participant and have a positive account balance (considering all claims submitted before the qualifying event), you may continue to participate in the Health FSA or Limited Purpose Health FSA through the Plan year. If you want COBRA coverage, you must elect it within 60 days after your coverage under the group health plan would otherwise end or the date you are notified by the Plan Administrator of losing coverage. Your contributions during COBRA coverage can be made on a pre-tax basis if you are still employed during that period. This could happen, for example, if you lost coverage because of a reduction in hours. Your COBRA coverage for the Health FSA or Limited Purpose Health FSA will stop at the Plan year-end and cannot be continued for the next Plan year.
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Who is a COBRA Qualified Beneficiary? Qualified beneficiaries include: • An employee who is enrolled in the FCH group health plan on or before the date of the event that causes him or her to lose that coverage (called the “qualifying event”); • An employee’s spouse who is enrolled in the FCH group health plan on the day before the qualifying event; • The employee’s dependent children who are enrolled in the FCH group health plan on the day before the qualifying event; • Dependent children born to, or placed for adoption with, the employee while the employee has COBRA coverage; or, • Under special rules that apply if the employee does not return to work at the end of an FMLA leave, some individuals may be entitled to elect COBRA even if they were not covered under the Plan during the leave. Contact your Plan Administrator for more information about these special rules. Note: Domestic partners are not eligible for COBRA or other continuation of coverage. FCH will send you a notice that explains all of your rights and obligations, including the length of continued coverage if you’re eligible for COBRA.
Continuation of the Health FSA or the Limited Purpose Health FSA When Flexible Benefits Plan coverage would normally end, you or your dependents may continue Health FSA or Limited Purpose Health FSA coverage under certain circumstances prescribed by Federal law (see COBRA). To continue this coverage, you must pay your elected contribution with after-tax dollars and: • FCH will charge you a 2% administrative fee for each dollar you place in your Health FSA or Limited Purpose Health FSA. • If you don’t elect to continue participation, you may be reimbursed for eligible medical or dental expenses incurred through the end of the month you terminated or stopped being eligible, up to your election amount (minus prior reimbursements). You must submit your claims within 90 days after the end of the month your participation terminated. • If you die, your beneficiary may submit claims for eligible medical or dental expenses incurred through the date of your death, up to your election amount (minus prior reimbursements).
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If You Choose to Continue Health FSA or Limited Purpose Health FSA Participation Coverage for you and your eligible dependents can continue to the Plan year-end of the qualifying event (defined below) if you lose Flexible Benefits Plan coverage because your: • Employment ends for any reason (except gross misconduct); • Hours of employment are reduced below the amount required to continue coverage. Coverage for your eligible dependents can continue to the Plan year-end of the qualifying event if they lose coverage because: • You die; • You become entitled to benefits under Medicare; • You and your spouse divorce; • Your dependent child no longer meets eligibility requirements for coverage under this Plan (for example, the child no longer depends primarily on you for support). If your participation in this Plan ends and you again become eligible to participate during the same Plan year, you may make new elections if you’re rehired more than 30 days after you terminated employment. If you are rehired within 30 days or less, your prior elections remain in effect for the rest of the Plan year.
Dependent Care Assistance Program You cannot continue dependent care contributions under COBRA. You may be reimbursed for eligible dependent care expenses incurred through the end of the Plan year you terminate employment or stop being eligible, up to the current amount of your contributions minus prior reimbursements. The requirements outlined under the Dependent Care Assistance Program section continue to apply for the rest of the Plan year. You must submit your claims within 90 days after the last of the month your participation ended. If you die, your beneficiary may submit claims for eligible dependent care expenses incurred through the end of the Plan year, up to the amount of your contributions minus prior reimbursements.
Health Savings Account FCH will no longer make its contributions to your HSA when your employment ends. However, as long as you continue to meet the HSA eligibility requirements, you may maintain your HSA independent of FCH (on your own) and continue to make contributions and to take tax-free distributions from your HSA for expenses incurred for your medical care as defined in Code § 213(d), or the medical care of a legal spouse or tax dependents.
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Contribution Payment Requirements You are required to pay all applicable contributions for your coverage and for your covered dependents. Contributions consist of the full cost of coverage, plus 2%. Failure to make payments within the designated time frame will result in automatic termination of coverage to the last day of the month for which a complete payment was made. All payments need to be sent directly to the Plan Administrator.
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Claim Denials and Appeals Medical and dental benefit claim denials and appeal rights under FCH benefit plans are governed by the claim procedures described in the Plan documents. If the claim is denied in whole or in part, you are entitled to a full review. The steps to this review process are outlined below. If your claim is denied, you will normally receive a written notice within 30 days after filing and the notice will explain: • Specific reason or reasons for the denial; • Specific reference to pertinent Plan provisions on which the denial is based; • Description of any additional material or information needed to review the claim again, and why the material or information is necessary; • Steps you need to take to appeal the Plan determination.
Flexible Benefits Plan Appeal Process for Enrollment and Elections An appeal must be made in writing within 60 days of your receiving the initial notice of denial, or you will lose the right to appeal. State the reasons you feel your claim should not have been denied and include any additional facts and/or documents that support your claim. You may also ask additional questions or make comments, and you may review pertinent documents. The Plan will review and decide your appeal generally within 60 days after its submitted, and will notify you of the decision in writing. If the decision affirms the initial denial of your claim, this notice will include: • Specific reasons for the denial; • Specific Plan provisions on which the decision is based. If you haven’t received a decision on your appeal within 60 days after you submitted it, and you have not been notified that the Plan needs more time to complete the review, consider your appeal denied.
Health and Limited Purpose Health FSA For your Health FSA or Limited Purpose Health FSA claims, you will be notified of a claim denial within a reasonable period but not later than 30 days after receiving the claim. This period may be extended once for up to 15 days if necessary due to matters beyond the Plan’s control if the Plan notifies you before the end of the initial 30 days of the circumstances requiring an extension and the date the Plan expects to decide. If an extension is necessary because you failed to submit information necessary to decide the claim, the extension notice will specifically
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describe the required information and you will have 45 days from receiving the notice to provide the information. In this case, the period for deciding the claim will be suspended from the date the extension notice is sent until the date you respond to the request for information. If a claim is denied under the Health FSA or the Limited Purpose Health FSA, the denial notice will also contain this information: • If an internal rule, guideline, protocol or other similar criterion was relied on in deciding the claim, the notice must state the specific rule, guideline, protocol or other similar criterion and confirm that a copy will be provided free on request; • If the claim denial was based on medical necessity, experimental treatment or a similar exclusion/limit, the notice must either explain scientific or clinical judgment for the decision applying Plan terms to your medical circumstances or state that the explanation will be provided free on request. With respect to a request for review of a denied Health FSA or Limited Purpose Health FSA claim, these additional requirements apply: • You’ll have at least 180 days after receiving the notice of denial to request a claim review. • The review will not give deference to the initial claim determination and will be conducted by a fiduciary who is neither the individual who made the initial decision nor that person’s subordinate. • If the initial claim denial was based in whole or in part on a medical judgment, including determinations on whether a particular treatment, drug or other item is experimental, investigational or not medically necessary or appropriate, the fiduciary will consult with a health care professional who has appropriate training and experience in the field involved in the medical judgment. This will not be an individual consulted in connection with the initial decision or a subordinate of that person. • The Plan will identify to you any medical or vocational experts whose advice was obtained in connection with the initial claim decision, without regard to whether the advice was relied on in making the initial decision. • The notice of the decision on review will include this statement: “You and your Plan may have voluntary alternative dispute resolution options, such as mediation. One way to find out what may be available is to contact your local US Department of Labor office and your State insurance regulatory agency.” • The Plan will notify you of the review decision within a reasonable period – not later than 60 days after receiving the request for review. No extension will be allowed. • The scope of any subsequent review of the benefit claim, judicial or otherwise, will be limited to determining whether the Plan acted arbitrarily or capriciously in exercising its discretion. In no event will any such further review be on a de novo basis as the Plan has discretionary authority to determine eligibility for benefits and to construe Plan terms. • The Plan will establish administrative processes and safeguards to ensure and verify that claim determinations are made in accordance with the Plan and that Plan provisions have been applied consistently to similarly situated claimants, as required by law.
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Submit written appeals to: First Choice Health Administrators Attention Medical Management – Appeals & Grievances 600 University Street, Suite 1400 Seattle, WA 98101
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General Information about the Plan Amendment or Termination of This Plan FCH has established this Plan with the intent of maintaining it for an indefinite period of time. Nonetheless, FCH reserves the right to terminate the Plan at any time, by action of the authorized representative designated by FCH, and may modify, alter, amend or terminate this Plan at any time in whole or in part, without liability. If FCH terminates the Plan, you must submit Health or Limited Purpose Health FSA and DCAP claims incurred through the date of termination to the Plan Administrator within ninety (90) days after the date of termination. Claims submitted after that date will not be reimbursed. If FCH terminates the Plan, the amount of your contributions to the Health or Limited Purpose Health FSA or DCAP may be greater than the amount you have been reimbursed for the period ending on the date of termination. If this is the case, the Plan forfeiture rules apply as if the date of termination were the last day of the Plan year.
Plan Administration The principal duty of the Plan Administrator is to see that this Plan is carried out, in accordance with its terms, for the exclusive benefit of persons entitled to participate in this Plan without discrimination among them. The Plan Administrator has the power and authority necessary or convenient, at its discretion, to administer this Plan, including the exclusive authority to: • Construe and interpret this Plan and to decide all questions of eligibility and participation; • Make all findings of fact incident to the administration of this Plan, including payment of reimbursements; • Prescribe procedures to be followed and the forms to be used by employees pursuant to this Plan; • Request and receive from all employees such information as the Plan Administrator determines is necessary for the proper administration of this Plan; and • Appoint and employ such individuals or entities to assist in the administration of this Plan as the Plan Administrator determines to be necessary or advisable, including benefits consultants and legal counsel. FCH bears all costs of administering this Plan. If you have any general questions regarding this Plan, please contact the Human Resources Department, which acts on behalf of the Plan Administrator.
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No Contract of Employment This Plan is not intended to be, and may not be construed as constituting, a contract or other arrangement between you and FCH to the effect that you will be employed for any specific period of time.
No Guarantee of Tax Consequences This Plan is intended to permit you to pay for benefit coverage on a pre-tax basis and to make pre-tax contributions toward a Health FSA, Limited Purpose Health FSA, HSA and/or DCAP. This Plan is intended to comply with current Federal income tax laws and regulations. The laws and regulations are changed from time to time, and could be changed to reduce or eliminate the tax benefits you may realize by using this Plan. The Plan Administrator does not guarantee that the amounts you pay for your benefit Plans or that you contribute toward the Health or Limited Purpose Health FSA, Health Savings Account or DCAP will be excluded from your gross income for Federal or State income tax purposes. Consult your tax advisor for further information. Plan participants will indemnify the Plan for any liabilities that may occur if a participant is not entitled to the benefits offered under this Plan.
Severability If any provision of this Plan is determined to be invalid, all other provisions of this Plan shall remain in effect.
Governing Law To the extent not superseded by Federal law, this Plan is governed by and construed in accordance with the laws of the State of Washington.
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General Information about the Plan Health FSA and Limited Purpose Health FSA Facts
For purposes of the disclosure requirements of ERISA Section 102 (relating to contents of Summary Plan Descriptions), the following information for the Health FSA and the Limited Purpose Health FSA is provided:
Plan Name:
First Choice Health Network, Inc. Health and Welfare Plan
Plan Year:
September 1- August 31
Plan Number:
502
Source of Contributions:
Employee pre-tax salary reduction contributions under an Internal Revenue Code Section 125 Cafeteria Plan.
Funding:
Reimbursements are paid directly out of the general assets of the Company. Employee contributions are placed in the general assets of the Company and accounted for separately in the accounting records of the Company. Employee contributions shall only be used for reimbursements to the employee.
Plan Sponsor:
First Choice Health Network, Inc. 600 University Street, Ste. 1400 Seattle, WA 98101 (206) 292-8255
Plan Sponsor’s Employer Identification Number:
91-1272766
Third Party Administrator:
First Choice Health Administrators 600 University Street, Ste. 1400 Seattle, WA 98101 (206) 292-8255 Attn: Plan Administrator
Named Fiduciary:
First Choice Health Network, Inc. 600 University Street, Ste. 1400 Seattle, WA 98101 (206) 292-8255
Plan Administrator:
FCH Human Resources Department
Agent for Service of Legal Process: Ken Hamm, President & CEO First Choice Health 600 University Street, Ste. 1400 Seattle, WA 98101 (206) 292-8255
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Legal Status of this Plan:
This Plan is intended to qualify as a “Cafeteria Plan” under Section 125 of the Internal Revenue Code. This document is intended to comply with the written Plan requirement of Section 125(d)(1) of the Internal Revenue Code. The Health and Limited Purpose Health FSA is intended to qualify as a self-insured medical reimbursement Plan under Section 105(h) of the Internal Revenue Code and as a flexible spending arrangement within the meaning of the Treasury Regulations. It is a welfare benefit Plan subject to the Employee Retirement Income Security Act of 1974 (“ERISA”), and is intended to satisfy the written Plan requirement of ERISA Section 402 and the summary Plan description requirement of ERISA Section 102. The DCAP is intended to qualify as Dependent Care Assistance Program under Section 129 of the Internal Revenue Code. If this Plan conflicts with any applicable provision of the Internal Revenue Code or ERISA, the Internal Revenue Code or ERISA provision controls.
Legal Requirements for the Health FSA and Limited Purpose Health FSA To the extent the Health and Limited Purpose Health FSA constitute group health Plans under ERISA §609, the following requirements apply: • The Health and Limited Purpose Health FSAs provide benefits in accordance with the requirements of a qualified medical child support order as defined in ERISA §609(a). • If you or your beneficiary is eligible for Medicaid benefits: Benefit Payments under the Plan will be made in accordance with any assignment of rights made by or for you or your beneficiary, to the extent the assignment is required by a State Medicaid program. In enrolling any individual as a participant or beneficiary, or in determining or making any benefit payments to or for any individual the Health and Limited Purpose Health FSAs will not take into account the fact the individual is eligible for or receives medical assistance under a State Medicaid program. To the extent a State Medicaid program has made payments the Health or Limited Purpose Health FSA is legally responsible for, the Health FSA benefit payments will be made in accordance with any State law providing that the State has acquired the participant’s rights with respect to those benefit payments. • A child under the age of 18 placed with a participant for adoption is eligible for coverage as the participant’s dependent from the date of placement, regardless of whether the adoption has become final. The Health and Limited Purpose Health FSAs will comply with the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) and not provide any greater
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rights than those provided under USERRA. The USERRA provisions contained in 38 USC §4301 et seq are incorporated by reference. To the extent that the Health FSA and the Limited Purpose Health FSA are group health Plans, it is also subject to COBRA continuation of coverage requirements.
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Statement of ERISA Rights Your Health FSA and Limited Purpose Health FSA As a participant in the Health FSA or the Limited Purpose Health FSA you are entitled to certain rights and protection under the Employee Retirement Income Security Act of 1974 (ERISA). ERISA provides that all Health FSA and Limited Purpose Health FSA participants shall be entitled to: • Examine, without charge, at the Plan Administrator’s office and at other specified locations, such as work sites, all Health and Limited Purpose Health FSAs documents, and copies of all documents if any, filed by the Health and Limited Purpose Health FSAs with the U.S. Department of Labor, such as detailed annual reports and Health and Limited Purpose Health FSA descriptions. Obtain copies of all Health FSA and Limited Purpose Health FSA documents and other Health FSA or Limited Purpose Health FSA information upon written request to the Plan Administrator. The Plan Administrator may make a reasonable charge for the copies. Continue health coverage for yourself, spouse, or dependents if there is a loss of coverage under the Plan as a result of a qualifying event. You or your dependent may have to pay for such coverage. • In addition to creating rights for Health FSA and Limited Purpose Health FSA participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit Plan. The people who operate this Health FSA and Limited Purpose Health FSA, called “fiduciaries” of the Health FSA and Limited Purpose Health FSA, have a duty to do so prudently and in the interest of you and other Health FSA or Limited Purpose Health FSA participants and beneficiaries. No one, including your employer or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a Health FSA or Limited Purpose Health FSA benefit or from exercising your rights under ERISA. • If your claim for a benefit under the Health FSA or Limited Purpose Health FSA is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to obtain any denial, all within certain time schedules. Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request materials from the Plan Administrator and do not receive them within 30 days, you may file suit in a Federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reason beyond the control of the Plan Administrator. If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a State or Federal court.
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In addition, if you disagree with the Plan decision or lack thereof concerning the qualified status of a medical child support order, you may file suit in Federal court. If it should happen that FSA fiduciaries misuse the FSA money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a Federal court. The court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim frivolous. • If you have questions about your FSA, you should contact the Plan Administrator. If you have any questions about your rights under ERISA or if you need assistance in obtaining documents from the Plan Administrator, you should contact the nearest office of the Employee Benefits Security Administration U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue NW, Washington, D.C. 20210. You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.
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Plan Definitions Beneficiary is a person designated by the participant or by the terms of a Plan who is or may become entitled to receive a benefit under the Plan. Cafeteria Plan is a benefit plan, often called a Flexible Benefit Plan, that meets Internal Revenue Code §125 requirements and offers participants a choice between cash and particular non-taxable benefits such as health insurance, creating a funding mechanism for participants to pay for the benefits they choose on a pre-tax basis. Child Tax Credit, under Internal Revenue Code §24, means a credit against tax liability that a taxpayer may be able to claim for a qualifying child, regardless of whether any dependent care expenses are incurred. COBRA means the Federal Consolidated Omnibus Budget Reconciliation Act of 1985; COBRA established, among other things, ERISA,s group health plan continuation of coverage rules. Deductible is the amount a person must pay toward their Plan covered benefits before any benefits are payable from the Plan. Dependent means any individual who is the participant’s tax dependent as defined in Internal Revenue Code §152 dependents as modified by Code §105(b) and by IRS Notice 2004-79 (hereinafter Code §152). Under Code §152 a dependent includes a relative for whom the participant provides over half the support for the calendar year or an individual who, for the entire calendar year, has the participant’s home as their principal place of residence, is a member of the participant’s household and receives over half their support from the participant. The following exceptions apply: • For the Health FSA, Limited Purpose FSA and HSA, a dependent is defined as (1) in Code §152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof; and (2) any child that Internal Revenue Code §152(e) applies to (child of divorced parents, where one or both have custody for more than half the calendar year and where the parents together provide more than half the child’s support for the calendar year) is treated as a dependent of both parents. Regardless, the Health FSA will provide benefits according to applicable requirements of any qualified medical child support order as defined in ERISA §609(a), even if the child does not meet the definition of dependent. • For the Dependent Care Assistance Program, a dependent means a qualifying individual as defined in Internal Revenue Code §21(b)(1) for the participant; in the case of divorced parents the child will, as Stated in Internal Revenue Code §21(e)(5), be treated as a qualifying individual of the custodial parent (under Internal Revenue Code §152(e)(3)(A)) and not of the non-custodial parent. Dependent Care Assistance Program (DCAP) is a Plan that meets Internal Revenue Code §129 requirements where employees have dependent care assistance benefits. The FCH DCAP is provided under the Flexible Benefits Plan. Election Amount means the amount you decide to contribute to the Flexible Benefits Plan for the Plan year.
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Employee (or participant) Contributions are amounts, other than union dues, that you (or beneficiary) pays to an employer, or amounts you have withheld from wages by the employer, for contribution to a Plan. The term includes salary reductions, COBRA premiums and retiree premiums. ERISA is the Federal Employee Retirement Income Security Act of 1974, as amended, which governs the administration, supervision and management of Pension Plans and Welfare Benefit Plans. Exclusions are the conditions, treatments or situations not covered under a Plan. Explanation of Benefits (EOB) is a statement from a Plan explaining what portion of a benefit claim was paid. Fiduciary is a person who exercises discretionary authority or control over the management of an ERISA Plan or its assets, renders investment advice for a fee or has discretionary authority or responsibility in administration of the Plan. Flexible Benefits Plan is the FCH Plan where a participant may purchase benefits with salary reduction dollars (pre-tax contributions). The FCH Flexible Benefits Plan has two options/parts: the Health Flexible Spending Arrangement (Health FSA) and Dependent Care Assistance Program (DCAP). Flexible Spending Arrangement (FSA) is a pre-tax reimbursement Plan where eligible expenses may be reimbursed, subject to certain conditions and maximums. FMLA is the Family and Medical Leave Act of 1993. The Act allows eligible employees to take up to 12 weeks of unpaid, job-protected family and medical leave each year and requires employers to continue providing group health plan benefits during the leave. Forfeiture means the unused contributions remaining under the Flexible Benefits Plan as of the end of a Plan year and after the run-out period, which must be forfeited under the “use it or lose it” rule. Group Health Plan is a Welfare Benefit Plan maintained by an employer that provides medical and other care to participants. Health FSA is a Flexible Spending Arrangement where participants may be reimbursed for eligible medical expenses that can’t be paid or reimbursed through group health plan coverage. Health FSA is subject to the use it or lose it rule. Health Savings Account (HSA) is an account that allows you to pay for certain medical expenses on a tax-free basis. HSA contributions can be made by FCH as your employer, by you, or both. HSAs offer three forms of tax savings: tax-free contributions, tax-free growth, and tax-free distributions. HSAs are not subject to the use it or lose it rule. You must be covered by a High Deductible Health Plan (HDHP) to be able to take advantage of HSAs. You own and control the money in your HSA. Decisions on how to spend the money are made by you without relying on a third party or a health insurer. You will also decide what types of investments to make with the money in the account in order to make it grow. Limited Purpose Health FSA is a Flexible Spending Arrangement where participants with an HSA may be reimbursed for eligible dental or vision expenses that can’t be paid or reimbursed through group health plan coverage. The Limited Purpose Health FSA is subject to the use it or lose it rule.
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Medical Reimbursement Plan is a self-insured employer-sponsored Plan designed to reimburse employees and their families for their medical expenses. Medical Reimbursement Plans that are Flexible Spending Arrangements are called Health FSAs. Participant is you or a former employee who is or may become eligible to receive Plan benefits. Plan Administrator under ERISA is the person or entity designated to act as Plan Administrator in governing Plan documents and being responsible for many statutory duties imposed by ERISA. The Plan Administrator is typically an agent of the employer. For FCH, the Human Resources Department is Plan Administrator. Plan (with a capital P) means the FCH group health plans. Plan Assets are the monies or properties of a Plan including participant contributions. Plan Document means the instrument or instruments that set forth and govern the duties of Plan Sponsor and eligibility and benefit provisions of the Plan which provide for the payment or reimbursement of covered services. Plan Sponsor is the employer that maintains a Plan – FCH, for these Plans. Plan Year is the 12-month period on which the Plan’s records are maintained. The FCH Plan year is September 1 – August 31. Pre-tax Contributions are contributions made under a participant’s written agreement to reduce salary on a pre-tax basis. Qualified Beneficiary under COBRA means the covered employee, spouse or former spouse or dependent child of the covered employee who has lost Plan coverage due to a qualifying event. Qualifying Event under COBRA is the triggering event that causes a loss of coverage under a group health plan. Qualifying events include termination of employment, reduction in hours, death or divorce. Run-out Period is the time after the close of the Plan year when Flexible Benefits Plan participants may submit claims to be reimbursed for expenses incurred during the Plan year. Summary Plan Description is an ERISA-required summary of benefit plan terms that must be furnished to participants. Third Party Administrator (TPA) is the entity that handles certain Plan administrative responsibilities for the Plan Sponsor or Plan Administrator. First Choice Health Administrators is the TPA for FCH. UMB is the custodian bank for the FCH HSA. “Use or lose,” Rule is an IRS requirement where participants cannot be permitted to carry over unused contributions from one Plan year to the next and must forfeit the unused balance. This rule applies to the FCH FSA and Dependent Care Assistance Programs.
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Attachment A – Health FSA Eligible Expenses A partial list of eligible expenses follows. These items are subject to change by the IRS. • Acupuncture; • Alopecia – any personal use items to alleviate the symptoms of this illness; • Ambulance service; • Artificial limb/prosthesis; • Autoette/wheelchair if used mainly for the relief of sickness or disability and not just to provide transportation to and from work; the cost of operating and upkeep is also eligible; • Charges above usual, customary and reasonable limits; • Charges for covered services that go beyond Plan limits; • Chiropractors; • Coinsurance (a cost-sharing arrangement where a covered person pays a specified percent of the cost for a specified care or service, such as 20% of a doctor office visit); • Contact lenses/eyeglasses if needed for medical reasons; includes prescription sunglasses, disposable lenses and the cost of solutions, cleaners, etc.; • Copayments (cost-sharing arrangements where a covered person pays a specified dollar amount of the cost for a specified care or service, such as $15 for a prescription); • Cosmetic surgery that treats a congenital abnormality or disfigurement from disease or accident; • Crutches – renting or buying; • Dental fees for x-rays, fillings, braces, extractions, dentures, bridges, crowns; • Doctor fees – including psychiatric care; • Drugs/medicines that require a prescription and insulin, but not vitamins or food supplements; • Hearing aids and batteries; • Hospital services; • Lab fees that are part of your medical care; • Massage therapy if prescribed by a physician for a specific physical condition; • Medical information Plan – amounts paid to a Plan that keeps your medical information so it can be retrieved from a computer data bank; • Naturopathic doctors, but not prescriptions if they can be purchased over the counter; • Nursing home cost for yourself or dependents that is for medical or nursing care, not custodial;
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• Nursing services; • Orthotics, including shoes and hose prescribed by a doctor; • Over-the-counter drugs and medicines to treat an existing or imminent medical condition, such as: -------
Allergy medicines; Antibiotics; Aspirin and pain medicines; Cold medicines; Creams and ointments; and, Vitamins and nutritional supplements to treat a specific condition.
Note: a written prescription from a physician is required for reimbursement of over-thecounter drugs and medicines. • Oxygen and oxygen equipment to relieve breathing problems caused by a medical condition; • Radial keratotomy to surgically correct vision; • Radiology fees; • Sterilization; • Surgery including fertility procedures and abortion; • Therapy as medical treatment, including patterning exercises for mentally retarded children; and, • Wigs – where there is an underlying medical condition.
Health Expenses Not Eligible Medical and dental expenses are not eligible for reimbursement from your Health FSA if the IRS does not recognize them as legitimate deductions. Expenses also are not eligible if they are for general health purposes and not to prevent or correct a specific ailment. A partial list of expenses that are not eligible under your Health FSA follows: • Bottled water; • Contraceptives that do not require a prescription; • Cosmetic procedures such as electrolysis, hair transplants, teeth bleaching, face lifts, etc.; • Cosmetics, toothpaste or other toiletries; • Custodial care in an institution; • Health club or YMCA/YWCA dues, or costs for steam baths; • Household or domestic help, even if recommended by a qualified physician because of inability to perform housework; • Illegal operation or treatment; • Insurance premiums for health/auto/life coverage, providing repayment for loss of earnings or accidental loss of life, limb or sight; First Choice Health
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• Lost wages; • Marriage or family counseling; • Maternity clothes or diaper services; •
Membership fees or costs associated with health clubs/weight loss for general health and well-being;
• Over-the-counter drugs or medicines for general health purposes, such as: --------
Band-Aids or other non-medicines; Cosmetic supplies; General hygiene items (toothpaste, deodorant, etc.); Herbs; Large supply of qualifying items, not for existing or imminent condition Nutritional supplements; and, Vitamins.
• Sending a child to a special school for benefits the child may receive from the school’s prescribed course of study or disciplinary methods; • Services obtained before you are eligible for FCH benefits; • Social activities such as dance lessons or classes even if recommended by a qualified physician to improve general health; • Transportation expenses to or from work, even though a physical condition may require a special means of transportation; • Uniforms; and, • Vacation or travel taken for general health reasons or to relieve physical or mental discomfort not related to a particular disease or physical defect.
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Attachment B Limited Purpose Health FSA Eligible Expenses Only participants in the HSA may elect to participate in the Limited Purpose Health FSA. The Limited Purpose Health FSA is available only for the care and services provided by a dentist for routine dental care or vision care and services as described in the FCH Summary Plan Documents and which are not already covered through the medical benefits. I.e. Drugs prescribed by a dentist are subject to your medical plan coverage and therefore may be reimbursed through your HSA, not your Limited Purpose Health FSA. Or prescription eye drops that are subject to your medical plan coverage and therefore may be reimbursed through your HSA, not your Limited Purpose Health FSA. The Limited Purpose Health FSA is subject to change per the Plan Administrator who retains the right to interpret Limited Purpose Health FSA eligibility and reimbursement procedures. A partial list of eligible expenses follows:
Dental Treatment • Charges by your dentist that are above usual, customary and reasonable limits; • Charges for covered dental services that go beyond the dental Plan limits; • Dental coinsurance (a cost-sharing arrangement where a covered person pays a specified percent of the cost for a specified care or service); • Dental copayments (cost-sharing arrangements where a covered person pays a specified dollar amount of the cost for a specified care or service); • Cosmetic dental (determined not to be medical) surgery that treats a congenital abnormality or disfigurement from disease or accident; and, • Dental fees for x-rays, fillings, braces, extractions, dentures, bridges, crowns.
Dental Expenses Not Eligible for the Limited Purpose Health FSA Dental expenses are not eligible for reimbursement from your Limited Purpose Health FSA if the IRS doesn’t recognize them as legitimate deductions. Expenses also are not eligible if they are for general health purposes and not to prevent or correct a specific ailment. A partial list of expenses that are not eligible under your Limited Purpose Health FSA follows: • Cosmetic procedures such as teeth bleaching, teeth whitening, etc.; • Cosmetics, toothpaste or other toiletries; • Illegal operation or treatment;
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• Over-the-counter drugs or medicines for general health purposes, such as: -----
Cosmetic supplies; General hygiene items (toothpaste, deodorant, etc.); Nutritional supplements; and, Vitamins and Fluorides.
• Services obtained before you are eligible for FCH benefits; and, • Premiums for any dental benefit Plan are not eligible under the Limited Purpose Health FSA.
Vision A partial list of eligible expenses follows: • Charges above usual, customary and reasonable limits; • Charges for covered services that go beyond Plan limits; • Copayments; • Contact lenses/eyeglasses if needed for medical reasons; includes prescription sunglasses, disposable lenses and the cost of solutions, cleaners, etc; • Fees paid for eye examinations; and, • The amount you pay for inpatient care at a hospital or similar institution if for eye surgery to treat defective vision, such as laser eye surgery, and the principal reason for being there is to receive medical surgery or radial keratotomy.
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