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Sample Employee Communication Booklet
LEARN HOW TO REDUCE
YOUR TAXES AND INCREASE
YOUR SPENDABLE INCOME!
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It is an I.R.S. Approved vehicle
to convert eligible expenses
that you incure from a PostTax to a Pre-Tax basis. You
save money by reducing your
Federal, FICA, and most State
Income Tax (excluding N.J.).
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IT IS NOT
AN
INSURANCE
POLICY.
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1. Qualified group insurance premiums. (Section 125 Plan)
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2. Qualified unreimbursed Medical, Dental and Vision
expenses (Medical Expenses for an individual who has
been certified as chronically ill are not eligible through
the unreimbursed medical plan). (Section 105 Plan)
3. Qualified child and adult unreimbursed Dependent Care
expenses. (Section 129 Plan)
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• By converting eligible expenses from an After-Tax
basis to a Pre-Tax basis you will reduce your
FICA, State (N.J. does not currently allow for a
State Tax deduction) and Federal Income Tax.
• The net result is a reduction in the taxes you pay
and an increase in your spendable income!
$2,500 per year to the
Unreimbursed Medical Plan.
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$5,000 to the Unreimbursed
Dependent Care plan if married
and filing a joint return or a
single custodial parent.
$2,500 if married filing a separate
return.
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Contributions are deducted in equal installments from your
paycheck during the Plan Year, which runs from January 1
through December 31st of each year. The maximum annual
deduction that can be contributed to each Flexible Spending Plan
is indicated on the enclosed Salary Reduction Agreement.
If you enter into the plan other than January 1, your
contributions will be pro-rated over the remaining payroll cycles
in the Plan Year.
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A participant may change his or her Pre-Tax
election(s) under only certain Limited Qualified
conditions as outlined in your Summary Plan
Description/Plan Information Summary, as
well as in accordance with the I.R.S.
consistency rules.
Sample Life Event Changes
Legal Marital Status – Marriage, death of a spouse, divorce, legal separation or annulment
(Example: If Employee gets Married, FSA election can be increased)
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Change In Number of Tax Dependents – Birth of a child, adoption or placement for adoption
of a dependent or death of a dependent
(Example: If Employee has birth of a child, FSA election can be increased)
Change In Employment Status – Termination or commencement of employment, strike or
lockout, commencement of or return from an unpaid leave of absence, change in worksite,
switching from salaried to hourly paid, union to nonunion or part-time to full-time
(Example: If Employee loses full-time status, FSA election can be decreased)
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* Election changes must be made within 30 days of the event or during the annual election period, which takes
place each December by completing a Change of Status form. A sample Change of Status form is enclosed.
Please see your Human Resources Department for an original.
The above events represent a mere sampling of the types of conditions in which a change in
election is permissible and what action to take. Please consult your Summary Plan
Description/Plan Information Summary, which should or will be distributed to you by your
employer. For further guidance on other permissible events/actions, please visit
www.ChangeofStatus.com.
* You can also change your pre-taxed medical, dental or other premium elections once a year during the open enrollment period for any
reason. If you wish to continue or change your FSA Medical or Dependent care deductions, these elections MUST be re-elected each
year.
WHAT DOES IT COST TO
PARTICIPATE IN THE SECTION
125 CAFETERIA PLAN?
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NOTHING!
IS THERE ANY RISK?
YES
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Revocation of Election:
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A Participant can not make any changes to his or her PreTax election(s) under the plan except for election changes
which are permitted within the Section 125 Cafeteria Plan
as outlined in your Summary Plan Description/Plan
Information Summary.
Use-It-Or-Lose-It Rule:
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If a Flexible Spending participant does not utilize their
entire Unreimbursed Medical and/or Unreimbursed
Dependent Care annual election(s) within the plan year
and submit within the 90 day Run Out Period, the
unclaimed portion of that election will be forfeited.(See
example on next page which includes information about
the Grace Period.)
There is a potential for Social Security retirement
benefits to be reduced slightly for those individuals
nearing retirement.
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Only qualified unreimbursed FSA Medical
expenses incurred during the plan year
or
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during the 2 ½ month Grace Period are
eligible for reimbursement. You will have a
90 day Run Out Period from the end of
your plan2 year to submit eligible expenses
for reimbursement.
Example:
Plan Year
Run Out
12/31/2007
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Grace Period
01/01/2007
01/01/2008
03/15/2008
01/01/2008
03/31/2008
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All dates listed above change during a
leap year.
In leap years Run Out ends 03/30
1 - 2 ½ month Grace Period not to exceed 75 days.
2 - Not from the 2 ½ month Grace Period.
SAMPLE EXPENSES ELIGIBLE FOR
REIMBURSEMENT UNDER THE
FLEXIBLE SPENDING PLANS
• Chiropractic Fees
• Prescription Drugs
• Birth Control Pills
• Physician Co-payments
• In-Vitro Fertilization
• Day Care expenses for eligible
dependent as necessary for
employment so long as the
primary purpose of the care
giver is NOT for education
• Certain types of over-thecounter items (i.e. band-aids,
and heating-pads)*
• Noncosmetic Dental
services/braces
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• Insurance Deductibles
• Individual Psychiatric Care
• Lasik Surgery
• Insulin and syringes
• Prescription eyeglasses
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• Routine Exams
• Blood-sugar test kits and test
strips
• Contact Lenses/Solution
• Travel expenses for person to
receive medical care
• Physical Therapy
• Hearing devices and
batteries
• Wheelchair
• Immunization/Flu Shots
*As of January 1st, 2011 over-the–counter medications such as Aspirin, cold medicine, antacids, etc are no longer
eligible under the FSA plan unless accompanied by a Doctor’s note explaining why they are medically necessary.
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1. Determine if you can benefit from either the Premium
Conversion Plan, Unreimbursed Medical Plan and/or
Unreimbursed Dependent Care Plan. If you can, fill out the
appropriate Salary Reduction Form.
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2. Use the guide on the following page to help you determine if
either the Unreimbursed Medical Plan and/or Unreimbursed
Dependent Care Plan will help you reduce your taxes and save
you money. Be conservative with your estimates.
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3. On your Salary Reduction Form, fill in the amount you want to
set aside for your applicable Unreimbursed Medical and/or
Dependent Care Plans on a per pay period basis.
4. Sign and date the forms. They must be returned with the rest of
your benefit forms to your Human Resources Department prior
to your effective date.
THE MAGIC FORMULA!
UNREIMBURSED MEDICAL EXPENSES
ESTIMATE ALL KNOWN EXPENSES FOR
THE PLAN YEAR (Medical, Dental, Vision)
ESTIMATE ALL ANTICIPATED
EXPENSES FOR THE PLAN YEAR
$_______
$_______
b) Co-insurance (% not paid by insurance)
$_______
$_______
c) Vision care (eye exams, contacts, glasses)
$_______
$_______
d) Exams (OB-GYN, school physicals, etc)
$_______
$_______
e) Travel costs related to medical care
$_______
$_______
f) Prescription drugs
$_______
$_______
g) Medically required equipment
$_______
$_______
h) Wheelchairs, crutches, medical
appliances
$_______
$_______
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a) Health insurance deductibles
$_______
$_______
j) Braces, retainers, fillings, etc.
$_______
$_______
k) Orthodontics, implants, inlays, other
$_______
$_______
l) Other
$_______
$_______
TOTAL (A): $_______
(Use 100% of this number)
TOTAL (B): $_______
(Use 50% of this number)
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i) Dental exams, cleanings, x-rays, etc.
Add the two totals together and divide by the number of pay periods you have remaining
in your plan year to arrive at your contribution amount:
_____________ + _____________ = _____________ / _____________ = ____________
Total (A)
Total (B)
# Pay Periods
Contribution Amt
DEPENDENT CARE ASSISTANCE
If you are a single parent or your spouse works or is a full-time student, how much do
you pay for dependent day care for children 12 years or younger?
$_______
Divide this number by the number of pay periods you have remaining in your plan year to
arrive at your contribution amount: _____________ / _____________ = _____________
Child Care Amt
# Pay Periods
Contribution Amt
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1. Fully and accurately complete an Unreimbursed Medical
and/or Unreimbursed Dependent Care request form. The
request form should be forwarded to O.C.A. Benefit Services
accompanied by the appropriate third party documentation.
2. Unreimbursed Medical and Unreimbursed Dependent Care
claim forms are available in your Human Resources
department, as well as on myRSC.com.
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3. As a helpful reminder, make a copy of your request form and
third party documentation for your records prior to
forwarding them to O.C.A. Benefit Services.
4. We process claims within 48 hours upon receipt*. The 48 hours
does not include weekends and holidays.
(90% of claims received are processed same day)
* Processing means just that – it does not mean you will receive reimbursement
within in 48 hours. However reimbursements are generated daily.
Benefit Administration
you can Depend On!
Fill Out Claim Forms Online
Take claim entry into your control!
You can now go to www.OCA125.com to fill out your claim forms online. Log in, complete the form, print and fax the
transmittal to OCA. No more filling out forms by hand!
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1.
Log in to www.OCA125.com
2.
Click the Online Claims Entry option in
the menu.
3.
Click Add a New Claim Form and then
select which form you need. You will
see links to add Medical (FSA or HRA),
Dependent Care, and Parking/Transit.
4.
Print and fax claim, along with receipts,
to OCA at 609-514-2778.
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As claims are added, you will see them listed.
An individual claim can be edited or deleted,
until the Transmittal Form is printed.
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O.C.A. Benefit Services
3705 Quakerbridge Road, Suite 216
Mercerville, NJ 08619
www.OCA125.com
609.514.0777
Online Claim Entry
Receipt Cover Page
Date Printed: 6/13/2008
Fax this page along with receipts for services
Fax to:609-514-2778
Plan Service Provider Info:
Account Holder Info:
Plan Service Provider: OCA Benefit Services
Employer: Commercial Printing
Account Holder: Jennifer
Address: 3705 Quakerbridge Road
Carlson
Suite 216
Access ID: 776423428186
Hamilton, NJ 08619
Address: Moon
Voice: 609-514-0777
SIOUX FALLS
, CA 57110
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SSN: ***-**-0000
Email Address: [email protected]
Card
Type
N/A
Claimant
Medical
Dates of Service
Jennifer Carlson 6/19/2008
6/19/2008
Amount Service
123.23 Prescription/RX
Provider
Receipt
Attached
dr. jones
Note:
Total:
123.23
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I certify that the expenses for reimbursement indicated on this substantiation form were incurred by me (and/or my spouse and/or eligible
dependents), and were not reimbursed by any other plan nor will I seek reimbursement from any other source. To the best of my knowledge
and belief, the expenses are eligible for reimbursement under my Reimbursement Plans. I (or we) will not use the expense reimbursed
through this account as deductions or credits when filing my (our) individual income tax return.
Any person who knowingly and with intent to injure, defraud, or deceive any insurance company, administrator, or plan service provider, files
a statement of claim containing false, incomplete, or misleading information may be guilty of a criminal act punishable under law.
Account Holder Signature
Date
OCE3329
Page 1
mySource Debit MasterCard
and Your FSA!
1. Your mySource card should ONLY be used for purchases deemed eligible under Section 213(d) of the IRS
Code. For a list log onto www.myRSC.com.
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2. When using your card at a pharmacy, always show your health insurance identification card. This will
ensure the pharmacist runs your prescription through your insurance and is applied appropriately.
(Remember the mySource card is simply a vehicle to make your purchase. It does not replace your
insurance card.)
3. By Government requirements in order for the mySource card to work, be sure the merchant is considered
I.I.A.S. (Inventory Information Approval System) certified. There are two different ways I.I.A.S. certified
merchants transmit the purchase information:
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a. If the pharmacy supports what is called “Prescription Subtotals” (*Category 10 & 11), then the
pharmacy will transmit back to our system all the information about the prescription we will need
(and in most cases) to auto-substantiate the debit transaction with no further information required
from you.
b. If the pharmacy does NOT support “Prescription Subtotals” (Category 10 Only), then these
pharmacies will transmit all eligible Section 213(d) healthcare items (including prescription
purchases) back to our system coded strictly as a healthcare items. When this happens our system
cannot differentiate between a prescription from a bottle of vitamins, thus requiring you to submit
paperwork supporting the purchase to ensure that it is FSA eligible.
c. Dental, Vision and other “services” within the medical arena currently do not auto-substantiate in
accordance with I.R.S. rulings. Therefore, you will be required to submit paperwork to O.C.A. to
support those charges
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4. Depending on which merchant you choose to use, your mySource card purchase may or may not necessitate
the need to submit a claim form. In any event, you will always receive auto-generated system color-coded
emails informing you what action, if any, needs to be taken each and every time you use your card. Those
emails would be received as follows:
a. GREEN – Your transaction was resolved (via auto-substantiation, paper claim supporting the
purchase or off-set from another claim reimbursement) and no action is necessary.
b. YELLOW - Your transaction did not auto-substantiate and you will have 14 days from the date of
purchase to submit the proper supporting documentation to substantiate the charge.
c. ORANGE - Your transaction is still outstanding and you have 7 days remaining to submit the
supporting documentation to substantiate this charge.
d. RED - Your transaction is still unresolved and your debit card has been temporarily timed out. Once
we receive the proper substantiation, or if this was for an ineligible item and the amount was paid
back to your employer then the card becomes reactivated by the next day.
* Category 10 and 11 refers to the specific information I.I.A.S. merchants transmit to third-party administrators across the country.
Category 11 is specific to prescription information, where Category 10 relates to all Section 213(d) healthcare items. When a
merchant is classified as Category 10 only, it lumps prescription information in with all healthcare items. Therefore, third-party
administrators are unable to determine whether you purchased a prescription from an over-the-counter item, thus requiring
paperwork to support the purchase.
O.C.A. Benefit Services
Account Rules and Claim Filing Instructions
Rules for Both Dependent and Medical Accounts
1.
2.
3.
4.
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You cannot submit a claim unless you are participating in the Cafeteria Plan.
You can be reimbursed only for eligible expenses occurring during the coverage period in which your contributions are
made.
You can submit a claim at any time during the plan year and for a specified period after the plan year as described in the
Summary Plan Description.
If you terminate employment, you can submit a claim for a specified period after the date of termination if so stated in the
Summary Plan Description as long as the service occurred before your date of termination.
IRS rules stipulate that any money left in your account(s) after all reimbursements for the plan year have been processed
cannot be carried forward or returned. Money in one account can not be used for expenses incurred in another account.
For instance, any unused amounts left in the medical account can not be used to reimburse dependent care expenses.
You cannot receive payment from any other source for expenses reimbursed by claim, and you certify that you are not
eligible to bill any other source for the reimbursed expenses.
If you have received reimbursement for expenses, you cannot claim the expenses for income tax purposes.
You cannot bill for a service period that begins in one plan year and ends in the next plan year. File two reimbursement
claims, one for each plan year covering the period during that plan year.
Complete ALL the information on the claim form for each amount claimed for reimbursement.
Attach copies of receipts from service providers or the Explanation of Benefits Form from Insurance Carriers to the claim.
Sign and date the claim form.
Make a photocopy of the claim for your records.
Submit the Claim with attached receipts to O.C.A. Benefit Services according to the procedures provided. Additional
Claims are available from your employer.
5.
6.
7.
8.
9.
10.
11.
12.
13.
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Dependent Care Expense
1. You can use a Dependent Care Spending Account only if you pay dependent day care expenses to be able to work. Your
day care services can take place either inside or outside of your home. If you are married, your spouse must also work, go
to school full time, or be incapable of self-care for you to be eligible.
2. Only (a) dependents under the age of thirteen or (b) dependent adults or children thirteen years or older who are mentally
or physically incapable of self-care are covered.
3. Your Maximum Contribution Amount can not be more than the smaller of (a) or (b)
a. Your income or your spouse’s income, whichever is smaller. If your spouse if a full-time student or incapable of
self-care, your spouse is considered to earn $3,000 per year with one dependent or $6,000 per year with two or
more dependents.
b. $5,000 per year if your tax filing status is married filing jointly and or single head of household or $2,500 per year
if your tax filing status is ‘married filing spearately’.
4. You cannot claim expenses if the service provider is your child or stepchild and are under age 19 or if you claim the
service provider as a dependent for Federal income tax purposes.
5. To be reimbursed, you must include the facility’s name, address, and tax identification number or the Social Security
number of the individual providing the dependent day care service.
6. The maximum amount you can be reimbursed during the time you are covered in the Plan Year can not exceed the salary
reduction amounts you have elected and made under the Dependent Care Assistance Plan less any previous
reimbursements paid.
Unreimbursed Medical Expenses
1. The total annual election for eligible medical expenses (less any previous reimbursements paid) is available when
requested for covered expenses.
2. Refer to the provisions in the Unreimbursed Medical Expense Spending Account Plan document for the maximum annual
election amount.
3. To be reimbursed, you must include the dependent’s name, date expenditure incurred, name of Service Provider,
description of the expense, and the amount of the claim less any amounts that have been or will be paid by insurance or
other sources.
REGISTER YOUR ACCOUNT AT
myRSC.COM WITH YOUR mySource Card
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1. Go to www.myRSC.com and click the mySource Card picture on the
bottom right of the screen.
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2. Type in the entire 16-digit mySource Card number from the primary card,
and click next.
3. Fill in the primary card holders entire Social Security Number, and click
next.
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4. You will now need to setup your personal Login ID
a. First create your personal Login ID
b. Select an email address to use for security. You can use either the
existing email address you supplied O.C.A. with or you can choose
another if you prefer.
c. Create your security question by using either a predefined question
or you can create your own. When completed click Submit.
5. Enter in your password. Please make sure to read the recommendations
in order to make your password as secure as possible.
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If you should have any questions, do not hesitate to contact
us at (609) 514-0777 during our hours of operation
Monday thru Friday 9AM - 5PM EST.
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Your account balance and claims status is available 24
hours a day, 7 days a week by using our Interactive Voice
Recognition (I.V.R.) system.
You can also access your personal claims account by
visiting www.OCA125.com
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Sample Company, Inc
123 Main Street
Anytown, NJ 08880
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This brochure is designed to give you only the highlights
of your Section 125 Cafeteria Plan. For a complete
description of the terms and conditions, please refer to
the Summary Plan Description/Plan Information Summary
which is the legal document governing this plan.