Flexible Spending Accounts

1. Flexible Spending Accounts Revised 6/25/2014 Information for the Plan Year of: January 1 – December 31, 2014

2. The State of Maine’s Flexible Spending Accounts are administered by: HR Support & Consulting Services, Inc. 159 Watkins Shores Road Casco, ME 04105-4309 (207)655-5396 1-866-655-5397 Fax: (207)655-6636 www.hrscflex.com

3. Two Account Options • Medical Spending Account: Allows eligible employees to set aside pre-tax dollars biweekly to pay for out-of-pocket medical, dental & vision expenses for the participant (employee), legal spouse and dependent child(ren). • Dependent Spending Account: Allows eligible employees to set aside pre-tax dollars biweekly to pay for day care or elder care services for eligible dependents.

4. Medical Care Spending AccountContributions • The annual minimum contribution allowed is $260 • The annual maximum contribution allowed by IRS is $2,500 • The annual election is then divided over the 26* pay periods of the calendar year and withheld on a pre-tax basis. *26 pay periods would apply with annual enrollment. If you are a newly hired employee, the maximum election is pro-rated and deducted over the remaining pay checks of the calendar year.

5. Is There a Fee? • Yes, there is a fee to participate in the plan • The amount of the fee is $1.85 per pay period and per account • The fee is deducted from the employee’s pay check • The fee is withheld pre-tax

6. Medical Care Spending AccountAllowable Expenses • Some common examples of allowable out-of-pocket expenses that are eligible for reimbursement are: • Office visit copays to your primary care doctor or specialist • Prescription copays • Deductibles & coinsurance • Dental • Prescription eye glasses (or sunglasses) and/or contact lenses

7. Medical Spending AccountOrthodontics • Because orthodontics (e.g. braces) is generally not completed during the 12-month plan year, there are special IRS rules for reimbursement of on-going treatment. • Additional information can be found at www.maine.gov/deh

8. Medical Spending AccountWhen Are the Funds Available? • The annual amount pledged is available for reimbursement January 1st (for annual enrollment) or the first day you become benefit eligible (e.g. newly hired employee).

9. Medical Care Spending AccountExpenses Not Allowed • Some common types of expenses that are not eligible for reimbursement are: • Over-the-counter medications* • Gym memberships • Cosmetic procedures (e.g. teeth whitening) • Vitamins/supplements *Effective 1/1/2011, over-the-counter medications are only reimbursable if the drugs are purchased with a prescription. In most instances, a Letter of Medical Necessity from the doctor will also be required. The Letter may be found at www.hrscflex.com.

10. Medical Spending AccountHow Much Should You Set Aside? • Review your expenses over the past 12 months • Remember to include those expenses not only for yourself, but also for your legal spouse and dependent children (enrollment in the State Health Plan is not required) • Plan for the items you are certain about for the upcoming calendar/plan year • Review the Tax Savings Illustrations at www.maine.gov/deh • If you’re new to this benefit, it’s wise to budget low to avoid contributing too much

11. Medical Care Spending AccountTermination of Employment • If you terminate your employment or retire from the State of Maine, COBRA will be offered to you for the plan year in which your employment ended and you have a positive account balance. • A positive balance would be if you have contributed more to the account than you have actually withdrawn or been reimbursed. • The COBRA amount will be 102% of the contribution level while employed and will be billed to you by the Division of Employee Health and Benefits. • This is not a benefit available to our retirees (once the COBRA period has ended). • If the account has a negative balance, it is closed.

12. Dependent Spending AccountEligibility • In order to be eligible to participate in the Dependent Spending Account, the participant and spouse must: • Work part or full time or • Attend school full time or • Be actively seeking work and • The childcare/eldercare provider must be reporting the income for income tax purposes • Eligible dependents include: • Your children under age 13 • Any other dependent who is physically or mentally incapable of self-support and whom you claim as a dependent on your Federal tax return.

13. Dependent Spending AccountContributions • The maximum annual amount you may contribute (as determined by the IRS) is $5,000 per household or $2,500 if you are married but file separate tax returns. • The annual election is then divided over the 26* pay periods of the calendar year and withheld on a pre-tax basis. *26 pay periods would apply with annual enrollment. If you are a newly hired employee, the maximum election is pro-rated and deducted over the remaining pay checks of the calendar year.

14. Dependent Spending AccountAllowable Expenses • Some examples of expenses that are reimbursable are: • Day care expenses incurred in order to work or attend school on a full or part-time basis • Before and after school programs (through age 12) • Most day camps (overnight camp expenses are ineligible)

15. Dependent Spending AccountWhen are the Funds Available? • You may be reimbursed up to the amount you have actually contributed to date for services rendered within the plan year. • Unlike the Medical Spending Account, the State does not upfront the annual election on the Dependent Spending Account. • Funds become available once the biweekly contribution is made.

16. Flexible Spending AccountsHow & When to Enroll • Complete a Benefit Election Form which can be found at www.maine.gov/deh • The Election Form must be submitted: • During the open enrollment period (typically held in mid-November each year for the new calendar year) • Within 60 days of date of hire • Within 60 days of a qualifying life event • Birth, death, marriage, divorce • Employment change of employee or spouse that affects eligibility • Change in day care (for Dependent Spending only) • The requested change (life event) must coincide with the event itself. • Life events require a Change in Status Form found at www.maine.gov/deh

17. Flexible Spending AccountsFrequently Asked Question • Q. If I don’t use all of my account balance, does it roll from year-to-year? • A. No, it does not. Per the IRS, the amount you set aside for the calendar year may only be reimbursed for services received during that same calendar year. For example, you may only be reimbursed from your 2014 account for dates of service performed in 2014. Any funds left in the account which reimbursement cannot be made are forfeited. Plan carefully! You have 90-days after a Plan Year ends to submit claims incurred for the Plan Year ended.

18. Flexible Spending AccountsFrequently Asked Questions • Q. I am already enrolled; do I have to re-enroll each year? • A. Yes; you must complete a Benefit Election Form each year you wish to participate. • Q. Can I be reimbursed for insurance premiums from my Medical Spending Account? • A. No. Premiums are deducted pre-tax under the Cafeteria Plan rules and regulations.

19. Flexible Spending AccountsHow to Get Reimbursed • Complete a Reimbursement Request Form. This form can be found at www.maine.gov/deh • Include a copy of your receipt(s)* or bill which must include: • Name of the provider • Date of service (Not Date of Payment) • Dollar amount owed or paid • Description of the service *Per IRS regulations, a cancelled check or credit card receipt is not considered a valid receipt of services rendered. • Reimbursements are done by a paper check which will be mailed to your home address. Reimbursement checks are mailed weekly (on Thursdays) by HR Support and Consulting. • On the Dependent Spending Account only, you also have the option of submitting one Reimbursement Form for the entire year to establish automatic reimbursements every 2 weeks.

20. Reimbursements (continued) • When to submit for reimbursement • As soon as you have gathered the documentation (e.g. receipts) – reimburse as you go throughout the year • Before the end of the plan year (December 31st) • “Run-Out Period” (March 31st) • You have an extra 90 days after the end of the plan year • Dates of service must be within the plan year • Example: You visit your doctor on December 29, 2014 (“date of service”) and pay a copay. You then have until March 31, 2015 to submit your receipt for reimbursement from your 2014 medical spending account. Any services incurred in 2015 are not eligible to be reimbursed from your 2014 account.

21. Questions? Division of Employee Health & Benefits (207)624-7380 or 1-800-422-4503 www.maine.gov/deh OR HR Support and Consulting 1-866-655-5397 www.hrscflex.com