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HomeMy WebLinkAboutC09-053 Dependent Care_Flexible Spending AccountDEPENDENT CARE FLEXIBLE SPENDING ACCOUNT EAGLE COUNTY GOVERNMENT - January 1, 2009 - ~~C L~ C~IJ NTY TABLE C.~F CQNTENTS IMPORTANT CONTACT INFORMATION .................................................................................................... PLAN ADMINISTRATION .........................................................................................................................................2 DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT PLAN.... GENERAL INFORMATION ...........................................................................................................................................3 ELIGIBILITY .............................................................................................................................................................. .. 4 CONTRIBUTIONS ..................................................................................................................................................... ..4 CONTRIBUTION PLANNING TIPS ............................................................................................................................. .. 5 DEPENDENT CARE ELIGIBLE EXPENSES ................................................................................................................ ..6 DEPENDENT CARE FSA EXCLUDED EXPENSES .................................................................................................... .. 7 CLAIMS FILING PROCEDURE .................................................................................................................................. .. 8 Filing a Paper Claim ....................................................................................................................................... .. 8 Claim Filing Deadline ....................................................................................................................................... .9 CHANGES AND TERMINATIONS ................................................................................................................................ . 9 Special Enrollment ........................................................................................................................................... .9 Termination ...................................................................................................................................................... 10 DISCRIMINATION TESTS .......................................................................................................................................... 10 FSA EFFECT ON OTHER BENEFIT PLANS .............................................................................................................. 11 DEPENDENT CARE ACCOUNT OR FEDERAL TAX CREDIT? ..................................................................................... 11 DEFINITIONS ...........................................................................................................................................................12 SUMMARY PLAN DESCRIPTION ........................................................................................................................14 ADOPTION ................................................................................................................................................................16 Eagle County Government i Table of Contents • 1/1/09 IMPC}RTANT Gt~NTACT INF4RMATICiN PLAN SPONSOR Eagle County Government 500 Broadway P.O. Box 850 Eagle, CO 81631 Telephone: (970) 328-8790 Fax: (970) 328-8799 www. eaglecountV. us CLAIMS ADMINISTRATION CNIC Health Solutions (CNIC) PO Box 3559 Englewood, CO 80155 (303) 770-5710 (303) 770-0380 fax Toll Free: 1-800-426-7453 www. cnichs. com Eagle County Government 1 Important Contact Information • 1I1I09 P~~ ~~n~~w~s-rRaT~o~ This description of the Dependent Care FSA is the written "Plan Document" and Summary Plan Description of the "Plan." It outlines all rules on Plan operations including participation, reimbursement and operational procedures. When terms have unique definitions, those terms are found in quotation marks (i.e. "Children") and are defined in the Definitions section of this Plan. Eagle County Government is the Plan Administrator and herein referred to as the Employer or Plan Sponsor. If any interpretations orjudgments of the Plan Document are necessary, the Plan Administrator will make them. Eagle County Government reserves the right to amend or terminate all Plans at its sole discretion and to make administrative and interpretive decisions necessary to Plan operation. Eagle County Government 2 Plan Administration • 111/09 DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT PLAN GENERAL INFORMATION Dependent Care Flexible Spending Accounts (FBAs) are possible due to a provision of the IRS Code Section 125 tax law that allows "You" to deposit a portion of your before tax income into anon-taxable account which is used to reimburse you for eligible childcare or eldercare expenses you might have. The dependent care must be necessary for you (or you and your "Spouse") to be gainfully employed or in order for your Spouse to attend school full-time. For persons with these types of expenses totaling as little as $500 per year, it is not uncommon to save $150 to $200 per year due to tax savings. The higher the expenses and the higher your tax bracket, the more the savings. The Dependent Care FSA is funded with employee contributions that are made via "Salary Reduction." Through apre-tax payroll deduction, you direct money into your Flexible Spending Account instead of receiving it in the form of cash pay. In this way you avoid Federal, State and Social Security taxes that are paid when cash compensation is received. To gain these advantages there are several strict Internal Revenue Code rules for the Dependent Care FSA to follow, such as: Once you enroll you may not withdraw or change your rate of contribution for the rest of the "Plan Year," except as described under Special Enrollment. 2. If you have any unused funds in your account at the end of the "Plan Year," Internal Revenue Service regulations prohibit the return of any excess amount to you. This is sometimes called the "use-it-or-lose-it" rule. Forfeited funds will be used by the Employer to offset administrative costs of the Plan. 3. To be eligible for reimbursement in a "Plan Year," expenses must be incurred during the Plan Year and incurred while you were enrolled in the Plan. 4. You will be reimbursed only up to the amount of funds accumulated in your account through "Salary Reductions." You should plan carefully, and then use the Dependent Care FSA to help maximize after- tax take home pay. Eagle County Government 3 Dependent Care FSA Plan • 1/1109 ELIGIBILITY The Healthcare FSA is elective and operates only if "You" enroll each "Plan Year." "Regular Full-Time" and "Regular Part-Time" "Employees" may participate. Regular Full-Time Employees are first eligible to participate on the first of the month coincident with or next following date of employment. Regular Part-Time Employees are eligible the first of the month coincident with or next following ninety (90) days of employment. You must enroll within thirty (30) days of the date you are first eligible. Your participation will begin the later of: Within thirty (30) days from the date you satisfied the required waiting period. Participation will normally be effective on the first day of the payroll period following enrollment. Your initial period of participation runs from your enrollment date and ends on the last day of the PlanYear. 2. For succeeding "Plan Years," you must re-enroll preceding that PlanYear. The enrollment period will be designated annually by the Employer. Participation will be effective on the first day of the Plan Year. CONTRIBUTIONS Prior to the start of the "Plan Year," "You" determine the amount that you wish to contribute to your Dependent Care FSA account. The minimum contribution is $10 per pay period. You may contribute up to $5,000 per Plan Year, except under the following circumstances: If you or your "Spouse" earn less than $5,000 per year, the most you can contribute is the lesser of your or your Spouse's income; 2. If you are married but file separate income tax returns, you may contribute a maximum of $2,500 each Plan Year; 3. If both you and your Spouse contribute to a Dependent Care FSA, the maximum you may contribute 'ol intly is a total of $5,000; 4. If your Spouse is a full-time student at least five (5) months a year or is disabled and incapable of self-care, the IRS considers his or her income to be $3,000 per year if you have one dependent or $6,000 per year if you have two or more dependents. Thus, the maximum annual amount you could contribute to the Dependent Care FSA is $3,000 if you have one dependent or $5,000 (the annual contribution maximum) if you have two dependents; and, Eagle County Government 4 Dependent Care FSA Plan • 1/1/09 5. If your effective date of participation in the Plan is any date other than January 1, you may contribute up to the allowed Plan maximum. Contributions may not exceed your pay. You may incur eligible expenses during the Plan Year. Your contributions to the Plan will be prorated per each pay period (26 per calendar year) during the Plan Year and made by reducing your current pay via "Salary Reduction." This means that the Dependent Care FSA contribution amounts are deducted from your gross pay prior to the calculation of taxes. CONTRIBUTION PLANNING TIPS Undistributed account balances at the close of each "Plan Year" or at termination of participation must, by law, be forfeited* (returned to the Plan Sponsor). Reasonable planning should virtually eliminate this potential for you. Forfeited funds will be used by the Plan Sponsor to offset administrative costs of the Plan. To help you estimate your contribution, please refer to the following section to determine your eligible dependent care expenses, and then fill in the chart below for expenses you think you will have in the "Plan Year." Add the estimated costs -you can elect to contribute any part of that amount into your Dependent Care FSA, up to the Plan maximum. Eagle County Government 5 Dependent Care FSA Plan • 1/1/09 Dependent Care Flexible Spending Account Worksheet (Only list care necessary for you and your "Spouse" to work or for your Spouse to attend school full-time) Exaense Type Day care provider (child or adult): Nursery school: Before-school/ after-school care: Summer day camp: Babysitter while you are at work: Housekeeper whose duties include day care: Other: TOTAL: Estimated Cost * Be sure to submit bills for reimbursement before the claim filing deadline, as forfeitures may occur at that time. Bills must be for "Incurred Expenses" during the Plan Year and while you were a participant in the Dependent Care FSA. DEPENDENT CARE ELIGIBLE EXPENSES Eligible Dependent Care expenses are those that enable "You" (or you and your "Spouse") to be gainfully employed or in order for your Spouse to attend school full-time. Gainful employment may be full or part-time, inside or outside of the home. Volunteer work does not meet the definition of gainful employment. The following core criteria must be met for an expense to be eligible for reimbursement by the Plan: 1. The claim is an eligible expense under IRS rules; 2. The claim was incurred while "You" were an active Dependent Care FSA participant; 3. The claim was incurred within the "Plan Year"; 4. The claim was submitted prior to any claim filing deadlines; Eagle County Government 6 Dependent Care FSA Plan • 1/1/09 5. The claim is for an eligible "Dependent"; and 6. The claim is not excluded for any other reason as described under Dependent Care FSA Excluded Expenses. EXAMPLES OF ELIGIBLE EXPENSES 1. A child care or adult care center that complies with state and local regulations; 2. A nursery school or summer day camp; 3. Dependent care duties performed by a housekeeper; 4. Someone to care for an elderly or incapacitated dependent; 5. A relative who cares for your dependents, as long as he or she is age 19 or older; 6. A babysitter (either inside or outside your home). If the care is provided outside your home, your "Dependent" must spend at least eight (8) hours each day in your home. You will have to report the Social Security number of the caregiver when you file a claim. If you use a child or adult care center, you will have to report the center's Taxpayer Identification Number (TIN). The amount of your Dependent Care Account deposit will automatically be reported on your W-2 form. This is not a complete list of the types of expenses that are eligible for reimbursement. You may want to consult your tax advisor for further information on the types of dependent care expenses that qualify for reimbursement. DEPENDENT CARE FSA EXCLUDED EXPENSES Babysitting expenses for non-work related reasons. 2. Overnight camp. 3. School costs for the first grade and higher. 4. Nursing home expenses for dependents who don't live with you. 5. Dependent care, if: a. Care is provided by a Spouse; b. Care is provided by a person for whom the employee claims a personal tax deduction; Eagle County Government 7 Dependent Care FSA Plan • 1/1/09 c. Care is provided by a child or relative of the employee who is under age 19; d. Any expense for care that is deducted on your personal income tax filing; e. The "Dependent" "Child" is age 13 or over; Care provided to an eligible "Dependent" whose annual gross income exceeds the exemption amount as defined in IRS Code §151(d) (in 2005 is $3,200 and indexed in future years). 6. Other expenses not allowed under Internal Revenue Code regulations or guidelines including but not limited to IRS Code §129. 7. Claims filed after any claim filing deadlines state herein. CLAIMS FILING PROCEDURE As "You" accumulate Dependent Care expenses, you should file claims for review and appropriate reimbursement with the Claims Administrator. All reimbursements will be made directly to the participating employee and the employee is responsible for paying those persons who provided services or care. Filin_g a Paper Claim A completed Claim Reimbursement Form substantiate the claim(s). You may obtain Resources Office or Claims Administrator. must be submitted, along with receipts to a claim form from the Employer's Human The receipts that accompany the Claim Reimbursement Form must include: Description of services provided and receipt showing the amount paid. 2. Name of person for whom services were provided and relationship to "You." 3. Complete name, address and Tax ID # or Social Security Number of those providing services. 4. Date or period for which services were provided. Please submit all Dependent Care FSA claim forms to the Claims Administrator (refer to Important Contact Information section for details). "You" will be reimbursed only up to the amount of money accumulated in your account through "Salary Reductions." You should, however, still claim the full amount of the expenses you paid. The balance of unpaid claims will be carried forward to future months within the "Plan Year" and processed in the sequential order in which they were submitted. Eagle County Government 8 Dependent Care FSA Plan • 1/1/09 Dependent Care FSA reimbursements will normally be made within fifteen (15) days from the date the claim is properly submitted. Claim Filing Deadline End of Plan Year All claims for "Expenses Incurred" in a "PlanYear" must be submitted no later than ninety (90) days following the end of that Plan Year. Claims received after this deadline, are not covered by the Plan and any undistributed amounts will be forfeited. Termination of Employment Upon termination of employment, all claims for "Expenses Incurred" may only be submitted for services provided prior to the date of termination and while you were a participant in the Plan. Claims must be submitted within ninety (90) days from the date of termination. Claims received after this deadline, are not covered by the Plan and any undistributed amounts will be forfeited. CHANGES AND TERMINATIONS Special Enrollment Once you have made your contribution election for the "Plan Year," that election will stay in effect for the entire Plan Year. Changes in Dependent Care FSA elections may only be made mid-year if the changes are allowed under the IRS Code and are on account of and consistent with a change in status as defined by the IRS. You must enroll, or request the change in writing within thirty (30) days of the change in status. Changes will be effective on the first day of the payroll period following the date your written request is received by the Human Resources Department. Qualified changes in status include: A change in marital status (marriage, death of spouse, legal separation, or annulment); 2. A change in the number of dependents (as the result of birth, death, adoption, or placement for adoption); 3. A change in employment status (commencement or termination of employment, approved leave of absence, strike or lockout, change in worksite, or change in eligibility status for the plan); 4. Dependent ceasing to satisfy eligibility requirements; Eagle County Government 9 Dependent Care FSA Plan • 1/1/09 5. Conforming to a judgment, decree, or order resulting from a divorce, legal separation, annulment, or change in legal custody for a dependent child or foster child; 6. Entitlement of the participant or the participant`s spouse or dependent child to coverage under Medicaid or Medicare, or loss of such coverage; 7. Any other change in status permitted under Treasury Regulations §1.125-4 and the regulations thereunder. CAUTION: Claims incurred during periods of time forwhich you do not make contributions are not eligible for reimbursement. Termination Your contributions to the Dependent Care Flexible Spending Account will cease on the last day of the pay period in which you cease to be an eligible employee due to: Termination of employment (voluntary or involuntary), retirement or death; or 2. Your reduction in hours worked below the minimum required to participate. 3. Revocation of your election to participate when such a change is permitted under the terms of this Plan. Contributions will also stop at the end of the "Plan Year." You must re-enroll for subsequent Plan Years during the Plan's open enrollment period. Upon termination of employment, all claims for "Expenses Incurred" may only be submitted for services provided prior to the date of termination and while you were a participant in the Plan. Claims must be submitted within ninety (90) days from the date of termination. Claims received after this deadline, are not covered by the Plan and any undistributed amounts will be forfeited. DISCRIMINATION TESTS Internal Revenue Code rules require that benefits under this plan be received by a broad cross section of employees. Should actual plan operations result in violation of those rules, the Plan reserves the right to reduce benefits to any individual to cause the Plan to be in compliance with applicable laws. Eagle County Government 10 Dependent Care FSA Plan • 1/1/09 FSA EFFECT ON OTHER BENEFIT PLANS FSA participation will reduce your cash pay in each PlanYear of participation. Any Social Security, Workers' Compensation and Unemployment Insurance contributions and benefits will be based upon the lower pay level and, could, over time, result in lower benefit payments. For other benefit plans the employer may sponsor (for example: Life Insurance, Long Term Disability, 401(k), 457, etc) that may be income-based, benefits will continue to be based on your regular pay, prior to FSA contributions. DEPENDENT CARE ACCOUNT OR FEDERAL TAX CREDIT? Eligible expenses for the Dependent Care FSA are generally the same expenses that would give you a dependent care tax credit on your federal income tax return. You will need to decide if you want the tax advantages of the Dependent Care FSA or if you want to take the federal dependent care tax credit. Briefly, here are the differences between the two: Using the Dependent Care FSA reduces your taxable income. 2. The federal dependent care tax credit reduces your federal income tax by a percentage of your qualifying dependent care expenses. That percentage will vary according to your family income. 3. Expenses reimbursed through the Dependent Care Account are not eligible for . the federal dependent care tax credit. They reduce your maximum tax credit dollar for dollar. Please seek advice from your tax professional if needed to choose which option is better for you. Eagle County Government 11 Dependent Care FSA Plan ~ 1I1I09 DEFINITIfJNS As used in this Plan, the following words shall have the meaning indicated in this section: "Child(ren)" shall mean the employee's unmarried: 1. Natural children; 2. Lawfully adopted children, or children in the process of being legally adopted from the time of placement in the employee's home; 3. Stepchildren; 4. Children for whom the employee has been appointed legal guardian, legal ward, a ward by court decree or a dependent by affidavit of dependency. Such Children must be: 1. Under the age of 13; 2. Have the same principal residence as the Employee for more than half the calendar year. In the case of divorced parents, the Child shall be treated as a qualifying individual of the parent with whom the child lived the longest time during the year, or if the time was equal, the parent with the highest adjusted gross income (AGI). "Dependent" shall mean: 1. The Employee's Spouse who is physically and/or mentally unable to care for himself or herself; 2. An Employee's or Spouse's elderly parent whom the Employee cares for and: a. Claims as a dependent on their federal income tax filing; and b. Whose annual gross income does not exceed the exemption amount as defined in IRS Code §151(d) (in 2005 is $3,200 and indexed in future years). 3. The Employee's Child(ren); 4. The Employee's Child(ren) of any age who are physically and/or mentally unable to care for himself or herself. Eagle County Government 12 Definitions • 1/1/09 To be physically and/or mentally unable to care for oneself shall mean that the person cannot dress, clean, or feed themselves because of physical and/or mental problems. Also, a person who must have constant attention to prevent them from injuring themselves or others are considered to be unable to care for themselves. The Dependent must also regularly spend at least eight (8) hours each day in the Employee's household and be financially dependent upon the Employee for over one-half of their support. "Employee" shall mean a person employed by the Employer on a regular basis and who is included in a class or group of employees to which the Plan extends. "Expenses Incurred" shall mean, for the purposes of this Plan, that an expense shall be considered to be incurred at the time the service for which such expense incurred is rendered or at the time the supply for which such expense incurred is furnished. "Plan" shall mean the plan of benefits detailed in the Plan Document. "Plan Document" shall mean this document detailing the plan of benefits. "Plan Year" shall mean the twelve (12) month period as described in section Summary Plan Description, Item #4. "Regular Full-Time" shall mean an employee regularly scheduled to work an average of thirty-six (36) hours per week. Duly elected County officials are eligible without regard to scheduled hours. "Regular Part-Time" shall mean an employee who is employed in a position which normally requires more than 30 hours, but less than 36 hours per week, and such person is not classified by Eagle County Government as temporary, occasional or seasonal or Regular Full Time. "Salary Reduction" shall mean an employer-sponsored arrangement in which employees may elect to have some portion of their salaries be contributed to atax-qualified plan on their behalf. "Spouse" shall mean an Employee's lawful spouse or common-law spouse, provided a notarized affidavit of common-law marriage is submitted to the Plan Sponsor's Human Resources Department. "You" and "Your" shall mean an employee of the Plan Sponsor who is actively participating in this Plan. Eagle County Government 13 Definitions • 1/1/09 SUMMARY PLAN DESCRIPTION 1. Names of the Plan and Plan Number: Eagle County Government Dependent Care Flexible Spending Account The Plan is for the benefit of employees of Eagle County Government 2. Employer Identification Number 84-9804908 3. Name and Address of Employer who's Employees are Covered by the Plan: EAGLE COUNTY GOVERNMENT 500 Broadway P.O. Box 850 Eagle, CO 81631 4. Plan Year: The Plan Year is the twelve (12) month period beginning January 1 and ending on December 31. 5. Plan Administrator: HUMAN RESOURCES DIRECTOR EAGLE COUNTY GOVERNMENT 500 Broadway P.O. Box 850 Eagle, CO 81631 6. Agent for Service of Legal Process: Plan Administrator 7. Funding: The Dependent Care Flexible Spending Account is self-funded by voluntary employee pay reductions. Eagle County Government 14 Summary Plan Description • 1I1I09 8. Your Rights to Information About the Plan Eagle County Government feels strongly about all Plan participants having access to complete information about the Plan. You are entitled to: A. Examine, without charge, at the Plan Administrator's office and at other specified locations, such as work sites, all Plan Documents. B. Obtain copies of all Plan Documents and other Plan information upon written request to the Plan Administrator. The Administrator may make a reasonable charge for the copies. C. Receive a Summary of the Plan's annual financial report. In addition, the people who operate your plan, called fiduciaries of the Plan, have a duty to do so prudently and in your interest as well as that of other Plan participants and beneficiaries. If your claim for a welfare benefit is denied in whole or in part, you will receive a written explanation of the reason for the denial. You have the right to have the Plan review and reconsider your claim. Eagle County Government 15 Summary Plan Description • 1/1/09 AC~QRTIC?N Sponsor. Eagle County Government Plan Document: Dependent Care Flexible Spending Account Summary Plan Description: Dependent Care Flexible Spending Account Replacement: This Plan replaces Eagle County Government's Dependent Care Flexible Spending Account Plan dated January 1, 2008 which is hereby terminated. Legal Compliance: The Plan is intended to comply with all applicable federal or state laws and findings of their regulatory authorities and by this provision is automatically amended to be in minimal compliance as necessary. Claims Filing Deadline: If due to provider error or administrative delay, claims are not filed by the Plan's claim filing deadline, the Plan Administrator may, at its sole discretion and without setting any precedent, accept and process such claims as covered by the Plan provided such claims are submitted no later than twelve (12) months after the end of the Plan Year in which services are provided. Effective Date: Adopted: January 1, 2009 Date: ~ ~ ~~'~~ Signature: Title: ~~ ~ QM0.t/~ Eagle County Government 16 Adoption ~ 1/1/09