Flexible Spending Accounts

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Flexible Spending Accounts
From Principal Life Insurance Company
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Flexible Spending Account (FSA)

• Pre-Tax savings through
• Health FSA To pay for qualified out-of-pocket
  medical expenses
• Dependent Care FSA To pay for qualified child or
  adult daycare expenses

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Flexible Spending Account Highlights

• Money youre already spending
• Contributions set aside from your pay before
  taxes are figured
• Reduces the amount of your income subject to
  state, federal and social security taxes

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Example of Potential Tax Savings
Dependent Care FSA

• Sherri and Jim Martin expect to spend 3,000 for
  daycare during the plan year.
• They decide to use the Dependent Care Flexible
  Spending Account offered by Sherris employer.

Your results may vary.
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Example of Tax Savings
Dependent Care FSA
Your results may vary.
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When can you enroll in an FSA?

• During your Open Enrollment Period
• Deadline for enrollment 430 p.m. on April 30
• Send forms to Human Resources

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When can you change your election?

• Once enrolled, your election cant be changed
  until the following plan year, unless you have a
  family status change, such as
• Marriage or divorce
• Death of a spouse or a dependent
• Birth or adoption of a child
• Spouse becomes employed or terminated
• You or your spouse change job status
• You or your spouse take a leave of absence

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Health FSA
Reimburses expenses not covered by your medical,
dental or vision insurance, such as

• Deductibles, coinsurance and/or copayments
• Physical exams
• Prescription drugs
• Dental expenses (including orthodontia)
• Vision expenses (glasses, contacts, seeing eye
  dogs)

• Hearing expenses (hearing aids, exams)
• Orthopedic expenses
• Counseling
• Travel for medical treatment
• Over-the-counter drugs (to alleviate or treat an
  illness or injury)

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Health FSA

• You decide how much to deposit in your Health
  FSA, up to the maximum allowed.
• Amount will be deducted from your pay before
  taxes are figured and deposited into your
  flexible spending account
• You can use your account for expenses, not to
  exceed your total annual election amount, anytime
  during the plan year
• Health Care minimum - 120
• Health Care maximum - 4200 (eff. 6/1/09)

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Reimbursement Example
Health FSA

• You choose to deposit 40 into your Health FSA
  each month.
• In July, you have 300 in out-of-pocket expenses.
  
• When filing for reimbursement, you would be
  eligible for the entire 300 immediately, because
  you are scheduled to contribute more than 300
  during the plan year.

• 40 x 12 months 480
• 300 claim, but only 80 in account
• 300 is paid

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Reimbursement Example
Health FSA

• As your 40 a month contributions continue to be
  set aside, the negative balance of 220 will
  decrease.
• Since youve already spent 300, only 180 will
  be available for claims the rest of the plan
  year.

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Dependent Care FSA

• Reimburses expenses for child care or adult care.
• Children under age 13
• Other physically or mentally incapable dependents
  (including adult day care)
• Care must permit you and your spouse to work or
  attend school full-time
• Must include caregivers name, dates of service
  and amount paid to receive reimbursement

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Dependent Care FSA

• Once again, you decide how much to deposit in
  your Dependent Care FSA, up to the maximum
  allowed.
• Unlike the Health FSA, you can only submit claims
  on the money currently in your account.
• Dependent Care minimum - 300
• Dependent Care maximum - 5000

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Reimbursement Example
Dependent Care FSA

• You decide to set aside 300 a month, for a total
  of 3600 for the plan year.
• At the end of June you submit a claim for 400,
  but there is only 300 in your account.

• 300 x 12 months 3600
• 400 claim on June 30
• Only 300 is paid
• 100 balance is paid later

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How to Get a Reimbursement
Health FSA

• For Health
• Submit itemized bill or statement
• Employee Request for Reimbursement form
• Reimbursements are issued weekly on Tuesday.
• 25 minimum reimbursement
• Requests can be faxed, emailed or mailed.
• Note You dont have to pay outstanding health
  care expenses in order to be reimbursed. You only
  need to have received the services during the
  plan year.

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Reimbursement of OTC Drugs
Health FSA

• Over-the-counter drug expense reimbursement
  requires an itemized receipt that includes
• Name of the provider
• Name of product purchased
• Cost of the item
• Date it was purchased.
• We will not be able to reimburse the participant
  for an OTC drug expense that is missing any of
  the information above.

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How to Get a Reimbursement
Dependent Care FSA

• For Dependent Care
• Youll need a written statement from the provider
  showing
• Dates of service
• Amount of expenses
• That youve paid for those services
• Send statement, along with a completed Request
  for Reimbursement.
• Requests can be faxed, emailed or mailed.
• Reimbursements are issued weekly on Tuesday.
• 25 minimum reimbursement

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Other Things to Consider...

• Health and Dependent Care FSA
• Unused dollars are forfeited
• Health and dependent care accounts are separate
• Tax implications
• Refer to your enrollment materials for more
  detailed information on our FSAs and how to
  enroll
• Visit www.principal.com/fsa to review covered and
  excluded charges and access our FSA calculator

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Debit Card

• Provides convenient access to your pre-tax
  dollars at qualified merchants that accept
  MasterCard and offer eligible products or
  services for reimbursement.
• Pay for eligible expenses directly at the point
  of service.
• Avoid paying cash for services, filling out and
  submitting a claim form and waiting for a
  reimbursement check.

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Debit Card Need to Know

• The card can not be used at the super market,
  discount store and pharmacy that does not have an
  IIAS.
• Inventory Information Approval System store
  data base that tracks items by SKU number and
  whether it is a FSA eligible item.
• The IIAS will only allow the card to pay for the
  eligible FSA items
• Ineligible items must be paid by another means
  such as cash or personal bank card.

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Debit Card Need to Know

• The card can be used at your doctor, dental or
  vision clinic.
• It may also be used for mail-order drugs and/or
  online drug stores.
• Dependent Care only participants no card
  available

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Debit Card 2009 Merchants

• Pharmaceutical Preparations
• In-Vitro and N-Vitro Diagnostics
• Optical Instruments and Lenses
• Orthopedic and Prosthetic Appliances
• Eyeglasses and Eye Safety Shields
• Ambulance Services
• Dental/Lab/Medical/Ophthalmic Hospital Equip
  Supp

• Ophthalmic Supplies
• Hearing Aids
• Orthopedic Goods, Prosthetic Devices
• Doctors NEC
• Dentists, Orthodontists
• Osteopathic Physicians

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Debit Card 2009 Merchants

• Chiropractors
• Optometrists, Ophthalmologists
• Opticians, Optical Goods Eyeglasses
• Optical Goods and Eyeglasses
• Chiropodists, Podiatrists
• Hospitals
• Psychiatric Hospitals

• Specialty Hospitals, except Psychiatric
• Medical and Dental Laboratories
• Dental Laboratories
• Specialty Outpatient Facilities, NEC
• Medical Services Health Practitioners, NEC

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Debit Card

• Save ALL RECEIPTS, as Principal Life audits your
  account throughout the plan year.
• You are responsible for adhering to requests from
  Principal Life in regards to submitting further
  documentation for substantiation purposes.
• Do not throw your card away once youve used your
  current plan year balance. It is good for three
  years and will be updated with your new election
  at renewal.

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Questions?

• This presentation is an overview of the FSA
  being offered by your employer. FSA contributions
  can impact your federal and state taxes and
  Social Security benefits. This publication is
  intended to provide accurate and authoritative
  information in regard to the subject matter
  covered. The accuracy of the information is not
  guaranteed and is provided with the understanding
  that The Principal is not rendering legal,
  accounting, or tax advice. While this
  communications may be used to promote or market a
  transaction or an idea that is discussed in the
  publication, it is not a marketing opinion and
  may not be used to avoid penalties under the
  Internal Revenue Code. You should consult with
  appropriate counsel or other advisors on all
  matters pertaining to legal, tax, or accounting
  obligations and requirements.

Principal Life Insurance Company, Des Moines,
Iowa 50392 GP 48462-2 03/2007