frequently asked questions health savings account021170 (01-2015) an independent licensee of the...

021170 (01-2015) An Independent Licensee of the Blue Cross Blue Shield Association 1

FREQUENTLY ASKED QUESTIONS

Premera Blue Cross provides choice, convenience and control to help you better understand Personal Funding Accounts. Personal Funding accounts include Health Savings Accounts (HSA) and Flexible Spending Accounts (Special Purpose FSA, Healthcare FSA, and Dependent Day Care FSA). The Frequently Asked Questions (FAQs) below will help you understand the Personal Funding Account options available. These FAQs are not a substitute for your employer’s summary plan description and other communications regarding your benefits. In case of a conflict between these FAQs and the materials provided by your employer, your employer’s materials will be controlling. HEALTH SAVINGS ACCOUNT Account Basics What is a Health Savings Account (HSA)? A Health Savings Account (commonly called an HSA) is an alternative to traditional health insurance; it is a savings product that offers a different way for consumers to pay for their healthcare. HSAs enable you to pay for current health expenses and save for future qualified medical and retiree health expenses on a tax-free basis. You must be covered by a qualified High Deductible Health Plan (HDHP) to be able to make contributions to an HSA. An HDHP generally has a lower premium cost than traditional health insurance. The money that you save on premiums can then be put into the Health Savings Account. 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 also decide what types of investments to make with the money in the account in order to make it grow. What are the benefits of establishing an HSA?

1. Tax Savings - An HSA provides you with triple tax savings: a. Tax deductions when you contribute to your account and/or tax free income when your employer

contributes to your account; b. Tax free earnings, if any, through investments; and, c. Tax free withdrawals for qualified medical expenses.

2. Affordability–A qualified High Deductible Health Plan–accompanied by an HSA–carries a higher deductible than traditional insurance, but lower monthly premiums. Savings from lower premiums can be put toward funding the HSA.

3. Flexibility–You can use the funds in your account to pay for current medical expenses or save the money for future needs. Money saved can be invested and your account may grow through investment earnings, which are tax-free. You also have control over how much money to contribute to the account, subject to IRS limitations, and which medical expenses to pay from the account.

4. Ownership and Portability–HSAs are owned by you, not your employer. Additionally, accounts are completely portable meaning you can keep your HSA even if you change jobs, change your medical coverage or become unemployed.

How does an HSA work?

1. Funding. You and your employer may contribute, subject to IRS limitations, to your HSA. You can change your contributions during the year. (Please refer to your Employee Benefits Handbook or call the Benefits Call Center at 844-231-3476 for a copy of your employer’s contribution schedule if applicable.) The contributions are paid to an account owned by you, which you can continue to access after your employment ends.

2. Accessing Funds. When you have eligible healthcare expenses, pay for them with your Healthcare Payment Card, or pay out of pocket and request reimbursement online. Remember to always keep your receipts. You may need them to avoid taxation of your distribution, in case of an IRS audit.


3. Requesting Reimbursement. If your payment was out-of-pocket and you choose to use your HSA funds, you will need to submit a request for reimbursement. Log on to your online account and visit the Account Claim Center.

4. Reimbursement Processing. If you pay for an eligible expense out-of-pocket, we will promptly process your request and reimburse you either by check–or by direct deposit if you sign up for that feature. Please note that you will receive your money sooner if you use direct deposit.

5. Account Management. Log on to your online account regularly to check your account balance, see your claims history, view transactions and more.

Eligible Expenses What types of medical expenses are eligible under an HSA? There are IRS rules for accessing funds in an HSA. Distributions from HSAs are tax-free if the distributions are used to pay qualified medical expenses. Qualified medical expenses under an HSA include: deductibles under the High Deductible Health Plan, medical copayments or coinsurance, long-term care costs, dental care costs, vision care costs, prescription medications and some over-the-counter medications. HSA funds can also be used to pay for COBRA or certain retiree medical insurance premiums. For a complete list of approved healthcare expenditures, please refer to IRS Publication 969, “Health Savings Accounts and Other Tax-Favored Health Plans,” which you can download from irs.gov, or order by calling 1-800-TAX FORM. What types of medical expenses are not eligible under an HSA? Examples of expenses that are not HSA eligible include gym memberships, nutritional supplements, cosmetic procedures and surgeries. Please refer to IRS Publication 969, “Health Savings Accounts and Other Tax-Favored Health Plans,” which you can download from irs.gov, or order by calling 1-800-TAX FORM. What happens if I use the account for a non-eligible expense? If you use the account for a non-eligible expense, the funds used for that expense will be taxed as gross income. In addition, if you are under the age of 65, you will also be subject to a 20% tax penalty. Can I use my HSA to pay for medical expenses incurred before I set up my account? No. You cannot reimburse qualified medical expenses incurred before your account is established. If you decide the HSA is right for you, we recommend you establish your account as soon as you are eligible to do so. Contributions and Investment Options How much can I contribute to my HSA each year? For 2015, the maximum contribution that can be made for employees with single coverage under an HDHP is $3,350 and the maximum contribution for employees with family coverage under an HDHP is $6,650. If you are married and your spouse is covered under an HDHP, this limit must be coordinated between the two spouses. Participants’ age 55 or older (and not yet enrolled in Medicare) can make additional "catch-up" contributions of up to $1,000 per person, which can provide extra financial help to many early retirees. Both individuals and Alaska Air Group can contribute to HSAs. Unspent HSA funds rollover into the next year. Please note: These amounts are indexed annually for inflation. Can I make changes to the amount I contribute to my HSA during the plan year? You can change the amount you contribute to your HSA from month-to-month at any time during the year. If you are changing the amount contributed via payroll on a pre-tax basis, check with your employer.

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You can also make non-payroll contributions changes using the Contribution Center in your online account. This option allows you to make or change contributions on a recurring basis or one-time basis. Note: Contributions via the Contribution Center are made post-tax and can be deducted on your income tax return subject to IRS limitations. Can I make contributions through my employer on a "pre-tax" basis? If your employer offers a "salary reduction" plan (also known as a "Section 125 plan" or "cafeteria plan"), you (the employee) can make contributions to your HSA on a pre-tax basis (i.e., before income taxes and FICA taxes). If you do so, you cannot also take a deduction for these contributions on your personal income taxes. What catch-up contribution options are available to me if I am over 55? Individuals 55 and older who are covered by an HDHP can make additional catch-up contributions each year until they enroll in Medicare or are otherwise ineligible to contribute to an HSA. The additional "catch-up" contribution to HSA is limited to $1,000 per year. If you turned 55 this year, and had HDHP coverage for the full year, you can make the full catch-up contribution regardless of when your 55th birthday falls during the year. If you did not have HDHP coverage for the full year, you may prorate your "catch-up" contribution for the number of full months you were "eligible," i.e., had HDHP coverage, or you may use the special full-year contribution rule described above if you wish. If you and your spouse are both 55 and older, and both spouses are HSA eligible individuals, and both spouses have established an HSA in their name, then both spouses can make "catch-up" contributions. If only one spouse has an HSA, only that spouse can make the "catch-up" contribution. What investment options will I have with my HSA? You may have up to three basic choices if you decide to contribute to an HSA: 1) an interest bearing account, 2) a Money Market Account, or 3) a Mutual funds account. Does an HSA have a mandatory distribution requirement? No. Unlike 401(k)s and IRAs, there are no mandatory distribution requirements for an HSA. Can I transfer funds from my IRA to my HSA? How much can I transfer? The IRS allows a one-time transfer of IRA funds to an HSA. This amount, when combined with other HSA contributions for the year, is subject to the annual HSA maximum contribution. In other words, the amount of the rollover cannot exceed the applicable annual HSA contribution limit (which would vary depending on whether the person has individual or family HDHP coverage) when combined with any other HSA contributions you made for that year. If you have self-only coverage and you transfer amounts from your IRA to an HSA, you may later make an additional transfer if you switch to family coverage. The maximum amount of the additional transfer is equal to the difference between the amount transferred while you had self-only coverage and the maximum deductible limit for family coverage for the year. Failure to maintain eligibility for HSA contributions for a period of 13 consecutive months beginning with the month of the IRA transfer for any reason other than death or disability would result in income tax and a 10-percent additional tax on the transferred amount. What information is reported to the IRS? The HSA custodian or trustee is required to report the total contributions made to your HSA each year as well as the total amount of funds taken from the account each year. This information is reported on Form 5498 and Form 1099-SA respectively; both forms must be sent to you as the account holder and to the IRS.


Health Insurance Coverage Can I use an HSA if I have health insurance? Yes. However, you can set up and contribute to an HSA only while covered under a qualified High Deductible Health Plan. What is a High Deductible Health Plan (HDHP)? A deductible is the amount of dollars that you must pay for covered healthcare expenses before your health plan will provide coverage. A high deductible health plan (HDHP) is an insurance plan that has a higher than average deductible. These types of plans also have annual limits on how much you have to pay out-of-pocket in the form of deductible, copayments and coinsurance fees. You must have a qualified HDHP if you want to open and contribute to an HSA. What happens to the money in my HSA if I no longer have HDHP coverage? Once funds are deposited into the HSA, the account can be used to pay for qualified medical expenses tax-free, even if you no longer have HDHP coverage. The funds in your account roll over automatically each year and remain in your HSA indefinitely until used. There is no time limit on using the funds. Once you discontinue coverage under an HDHP and/or get coverage under another health plan that disqualifies you from an HSA, you can no longer make contributions to your HSA, but since you own the HSA, you can continue to use it for future medical expenses. How can I find out my account balance and review transactions? Account Balance and Claims Status information is available three ways: • Log on to your online account at any time for balance information. Your online account is secure and updated in

real time. • Customer Service representatives are available to assist you at 877-AAG-3525 How will I be able to use my HSA funds? You will receive a Healthcare Payment Card to access your HSA. You can also pay for eligible expenses with any other form of payment and request reimbursement from your account. See Healthcare Payment Card FAQs for more information about your payment card. How long do I have to use my HSA for qualified expenses? You can use your HSA to pay for qualified expenses incurred any time after you opened your HSA. There is no time limit between when you incur the qualified expenses and when you withdraw the corresponding amount from your HSA. Some people, called HSA savers, pay for current expenses out of pocket so that they can invest their HSA money and grow the account for future use. You should always save your itemized receipts and other paperwork to verify qualified expenses for when you withdraw funds, whether it is now or at some point in the future. What happens if I leave the company or retire during the plan year? HSAs are completely portable, which means you retain ownership of the funds after you leave the company. If your employer paid the administrative costs, you may become responsible for cost incurred after you terminate your employment. What happens to the money in my HSA after I turn age 65? You can continue to use your account tax-free for out-of-pocket health expenses. When you enroll in Medicare, you can use your account to pay Medicare premiums, deductibles, co-pays, and coinsurance under any part of Medicare. If you have retiree health benefits through your former employer, you can also use your account to pay for your share of retiree medical insurance premiums. You cannot use your account to purchase a Medicare supplemental insurance or "Medigap" policy.

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Can I borrow against my HSA? No. You cannot borrow against or pledge funds in your HSA. What happens to my HSA when I pass away? If you are legally married at the time of your death, your spouse becomes the owner of the HSA when you die unless a different beneficiary is specified. If you are not married at the time of your death, the HSA becomes part of your taxable estate. HEALTHCARE FLEXIBLE SPENDING ACCOUNT Account Basics What is a Flexible Spending Account or FSA? Flexible Spending Accounts are valuable employee benefits that you allow to use pre-tax dollars to pay for eligible expenses. Depending on your tax bracket, you may save up to 30% or more in taxes. There are two types of flexible spending accounts: a Healthcare FSA and a Dependent Day Care FSA.

• Healthcare FSA: Even with the best health plan, you are likely to have out-of-pocket medical expenses each year. A Healthcare FSA can cover medical, dental or vision expenses that you would otherwise pay for out-of-pocket. Common qualified expenses that a Healthcare FSA will usually cover include the deductible, coinsurance or copayment amounts for your health plan, eye glasses or contact lenses, dental work and orthodontia, medical equipment, hearing aids and chiropractic care. Many over the counter drugs, such as cold and allergy medicines, pain relievers and antacids, can also be reimbursed through an FSA. Your employer may limit what expenses your Healthcare FSA reimburses; please refer to your Employee Benefits Handbook or call your Benefits Call Center at 844-231-3476 for more information.

• Dependent Day Care FSA: If you have children and have to pay for child care, a dependent day care

account can help stretch your hard-earned dollars. A Dependent Day Care FSA (also known as a Dependent Day Care Assistance Program (DCAP)) covers employment-related expenses for child care. Qualified expenses must be for services that allow you to be able to go to work. Typical expenses under this account include charges for day care, nursery school and elder care (though not if it is for medical care) for your qualifying dependents. For more information, please see Dependent Day Care FAQs.

What are the benefits of a Healthcare FSA? Your biggest advantage is the tax savings. Every dollar you set aside in your account reduces how much you pay in income taxes. Plus, you can be reimbursed for eligible expenses that you are already incurring! How does an FSA work? 1. Funding. You, the employee, decide how much to contribute to your account. This amount is deducted

from your paycheck on a pre-tax basis. The contributions are tracked as a bookkeeping account, but, unlike the HSA, you do not own any particular assets.

2. Accessing Funds. When you have an eligible healthcare expense, pay with your Healthcare Payment Card, or pay out-of-pocket and request reimbursement online. Remember to always keep your receipts.

3. Requesting Reimbursement/Substantiating Purchases. Log on to your online account and visit the Claim Center found in the Personal Funding Account area. If your payment was out-of-pocket, you will need to submit a request for reimbursement by clicking “Add New Claim.” Fill out the requested information and follow directions to complete the online claims submission process. You can also submit a claim by printing out a fax cover sheet and faxing the cover sheet with your itemized receipts to the number shown on the form. If the purchase was using a Healthcare Payment Card, you may skip the request for reimbursement and simply print out the pre-filled form and fax the cover sheet with your itemized receipts to the number


shown on the form. Please remember that credit card receipts, non-itemized cash register receipts and cancelled checks are not acceptable forms of documentation.

4. Claims Processing. We will promptly process your request and reimburse you either by check or direct deposit if you sign up for that feature. Please note that you will receive your money sooner if you use direct deposit.

5. Account Management. Log in to your online account regularly to check your account balance. Eligible Expenses What types of expenses are eligible for reimbursement from a Healthcare FSA? The IRS provides the rules for accessing funds from an FSA. In general and subject to limitations discussed below, the Healthcare FSA can be used for eligible medical expenses. Qualified medical expenses are defined as: deductibles, copayments or coinsurance, dental care costs, vision care costs, prescription medications and some over-the-counter medications. Your employer may limit what expenses your Healthcare FSA reimburses; please refer to your Employee Benefits Handbook or call your Benefits Call Center at 844-231-3476 for more information. For a complete list of eligible expenses, please refer to IRS Publication 969, “Health Savings Accounts and Other Tax-Favored Health Plans,” which you can download from irs.gov, or order by calling 1-800-TAX FORM. What types of expenses are not eligible for reimbursement with a Healthcare FSA? Services that are typically not eligible or reimbursable include:

• Skin or teeth bleaching/whitening; • Health club dues; • Hair transplants; • Electrolysis; • Cosmetic surgery or treatments of any kind; • Contract fees for maintenance/replacement of contact lenses or eyeglasses; • Insurance Premiums; • Long term care insurance; • Long term care services; or • Amounts covered by your health plan or reimbursable through other insurance.

To find a general list of non-eligible expenses, please refer to IRS Publication 969, “Health Savings Accounts and Other Tax-Favored Health Plans,” which you can download from irs.gov, or order by calling 1-800-TAX FORM. What happens if I use the Healthcare FSA for a non-eligible expense? If you file a manual request for reimbursement of a non-eligible expense, the request will be denied. If you used the Healthcare Payment Card and the expense is deemed ineligible after the expense is already paid, you will be required to reimburse your account for that transaction. If you fail to reimburse the account, you may be required to pay income taxes. Contributions and Tax Information How much can I contribute to Healthcare FSA? The IRS-defined maximum contribution amount is $2,550 for the 2015 plan year. Can I transfer money from my Dependent Day Care FSA to my Healthcare FSA (or vice versa)? No, this is not allowed. What happens if I don’t claim all the money in my account? The IRS regulates Flexible Spending Accounts under Internal Revenue Code Section 125. According to the IRS



guidelines, the “use it or lose it” clause applies to any unused funds with the exception of a $500 carryover to the next plan year. The remaining funds are not transferable from one plan year to another and they are not available for other benefits. The unused funds are retained by the plan, and can be used to offset administrative costs of the plan. What information is reported to the IRS? We do not supply information to the IRS related to an individual Healthcare FSA. The plan sponsor, your employer, may be required to file an IRS form 5500 which includes aggregate participation information but does not include individual FSA information. Health Insurance Coverage What if I am not covered under my company’s health insurance plan? If you are an Alaska Air Group employee, you must participate in the medical plan to enroll in a Healthcare FSA. Can I enroll in a Healthcare FSA to reimburse my spouse’s deductible and copayment expenses? Yes. All eligible out-of-pocket expenses incurred by you and your qualified dependents can be reimbursed by your Healthcare FSA, even if such dependents are not enrolled in your employer’s health plan. Who are qualified dependents? Dependents must be either your spouse or someone who qualifies as your dependent under Section 105(b) of the Internal Revenue Code. Using Your Account How will I be able to access my Healthcare FSA funds? You will receive a Healthcare Payment Card to access your FSA. You can also pay for eligible expenses with any other form of payment and request reimbursement from your account. See Healthcare Payment Card FAQs for more information about your payment card. How can I find my account balance and review transactions? Account Balance and Claims Status information is available 24 hours a day, seven days a week:

• Log on to your online account at any time for balance information. Your online account is secure and updated in real time.

• Call 877-AAG-3525 for balance information. Can I make changes to my Healthcare FSA? Once an election for the Healthcare FSA has been made, you cannot change the amount unless you terminate employment with your company or there is an appropriate change in status and your requested change is consistent with your change in status. Valid changes in status for the Healthcare FSA include:

• Legal marital status change– marriage, divorce, death of spouse, legal separation or annulment • Change in number of dependents– birth, adoption, death of a dependent • Employment–change in employment status of employee, spouse or dependent to include termination,

switching from part-time to full time or vice versa, return from an unpaid leave of absence • Dependent eligibility–situations where a dependent satisfies or ceases to satisfy the rules for eligible

dependents due to the attainment of age, student status, or similar circumstances as provided in the plan • Change in residence

What happens if my employment terminates? Deductions for your Healthcare FSA will end when your employment ends unless your employer is obligated to offer you COBRA continuation and you elect this option. If you do not elect COBRA, you are eligible to be reimbursed for qualified expenses incurred while you were employed and the account was active. Requests for reimbursements should be submitted prior to the end of your employer’s runoff period.


DEPENDENT DAY CARE FLEXIBLE SPENDING ACCOUNT Account Basics What is a Dependent Day Care FSA? A Dependent Day Care FSA (also known as a Dependent Day Care Assistance Program (DCAP)) is a valuable employee benefit that allows you to have pre-tax dollars withheld from your paycheck to pay for un-reimbursed dependent day care expenses. If you have children and have to pay for child care, a Dependent Day Care FSA can help stretch your hard-earned dollars. Depending on your tax bracket, you may save up to 30% or more in taxes. A Dependent Day Care FSA covers employment-related expenses for child care. Qualified expenses must be for services that allow you to be able to go to work. Typical expenses under this account include charges for day care, nursery school and elder care (though not if it is for medical care) for your legal tax dependents. For a complete list of eligible expenses, please refer to IRS Publication 969, “Health Savings Accounts and Other Tax-Favored Health Plans,” which you can download from irs.gov, or order by calling 1-800-TAX FORM. What are the benefits of a Dependent Day Care FSA? Your biggest advantage is the tax savings. Every dollar you set aside in your account reduces how much you pay in income taxes. Plus, you can be reimbursed for qualified dependent day care expenses that you are already incurring! How does a Dependent Day Care FSA work?

1. Funding. You, the employee, typically decide how much to contribute to your account. This amount is deducted from your paycheck on a pre-tax basis. The contributions are tracked as a bookkeeping account, but, unlike the HSA, you do not own any particular assets.

2. Accessing Funds. When you have an eligible expense, pay out-of-pocket and request reimbursement online. Remember to always keep your receipts.

3. Requesting Reimbursement/Substantiating Purchases. Log on to your online account and visit the Claim Center found in the Personal Funding Account area. Click “Add New Claim” to submit a request for reimbursement. Follow the directions to complete the submission online or print out the fax cover sheet and fax the cover sheet with your itemized receipts to the number shown on the form. Please remember that credit card receipts, non-itemized cash register receipts and cancelled checks are not acceptable forms of documentation.

4. Claims Processing. We will promptly process your request and reimburse you either by check or direct deposit if you sign up for that feature. Please note that you will receive your money sooner if you use direct deposit.

5. Account Management. Log in to your online account regularly to check your account balance. Eligible Expenses What types of expenses are eligible for reimbursement with a Dependent Day Care FSA? The IRS provides for rules for accessing funds in a Dependent Day Care FSA and mandates that these funds be used for dependent day care expenses that are incurred to allow you to work. Expenses include before school or after school care, day care, nursery and pre-schools, and custodial care for dependent adults. For a general list of approved dependent day care expenditures, please refer to IRS Publication 969, “Health Savings Accounts and Other Tax-Favored Health Plans,” which you can download from irs.gov, or order by calling 1-800-TAX FORM. What types of expenses are not eligible for reimbursement with a Dependent Day Care FSA? Services that are typically not eligible or reimbursable include: • Child support payments; • Fees for services that have yet to occur (e.g., summer day camp deposits); • Kindergarten or school tuition;



• Meals or transportation; or • Overnight camp, registration and/or activity fees.

To find a general list of non-eligible expenses please refer to IRS Publication 969, “Health Savings Accounts and Other Tax-Favored Health Plans,” which you can download from irs.gov, or order by calling 1-800-TAX FORM. What happens if I use the account for a non-eligible expense? The request will be denied. Contributions and Tax Information How much can I contribute to my Dependent Day Care FSA? For a Dependent Day Care FSA, you may not contribute more than $5,000, according to IRS regulations. The limit applies on a combined basis for married couples (i.e., the combined limit for the couple is $5,000). The limit is reduced to $2,500 per spouse per year if the spouses file separate federal tax returns. Also, the limit cannot exceed the annual income of the employee (or spouse, if less) for the year. Can I transfer money from my Dependent Day Care FSA to my Healthcare FSA (or vice versa)? No, this is not allowed. How does participating in the Dependent Day Care FSA differ from using other tax credits relating to dependents? Reimbursements under the dependent day care account must be for employment-related expenses. The IRS determines what expenses may be reimbursed. Employment-related means an expense for dependent day care that allows you and your spouse, if applicable, to be gainfully employed or to look for work, or to allow your spouse to be a full-time student. The Dependent Tax Credit is an alternative to using a Dependent Day Care FSA and is a credit against tax liability. IRS Publication 503 Child and Dependent Day Care Expenses contain detailed information for determining whether a taxpayer may claim the Dependent Day Care Credit. For some employees, the Dependent Day Care Credit may be more advantageous than participating in the Dependent Day Care FSA and care should be used in determining which method to select. What happens if I don’t claim all the money in my account? The IRS regulates Flexible Spending Accounts under Internal Revenue Code Section 125. According to the IRS guidelines, funds that are not claimed during the plan year are forfeited. This is called the "use it or lose it" clause. Funds are not transferable from one plan year to another and they are not available for other benefits. The unused funds are retained by the plan sponsor, your employer, and may be used to offset administrative costs of the plan. What information is reported to the IRS? The amount reimbursed to your from the Dependent Day Care Assistance Program will be reported to the IRS on your Form W2 at the end of the year by your employer. Health Insurance Coverage What if I am not covered under my company’s health insurance plan? You and your family can still participate in Dependent Day Care Flexible Spending Account. Who are qualified dependents? Dependents must be either your spouse or someone you can claim as an exemption for federal income tax purposes. To be covered through your Dependent Day Care FSA, the individual must meet one of the following criteria:

1. Your qualifying child under Internal Revenue Code Section 152 who is under age 13 and for whom you are the custodial parent;

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2. Your dependent as defined under Internal Revenue Code Section 152 who is physically or mentally incapable of caring for him or herself; or,

3. Your spouse who is physically or mentally incapable or caring for him or herself. Using Your Account How will I be able to access my Dependent Day Care FSA funds? You can pay for eligible expenses with any form of payment and request reimbursement from your account. How can I find my account balance and review transactions? Account Balance and Claims Status information is available 24 hours a day, seven days a week:

• Log on to your online account at any time for balance information. Your online account is secure and updated in real time.

Can I make changes to my account? Once an election for the Dependent Day Care FSA has been made, you cannot change the amount unless you terminate employment with your company or there is an appropriate change in status. Valid changes in status for the Dependent Day Care FSA include:

• Legal marital status change–marriage, divorce, death of spouse, legal separation or annulment • Change in number of dependents - birth, adoption, death of a dependent • Employment– change in employment status of employee, spouse or dependent to include termination,

switching from part-time to full time or vice versa, return from an unpaid leave of absence • Dependent eligibility– situations where a dependent satisfies or ceases to satisfy the rules for eligible

dependents due to the attainment of age, student status, or similar circumstances as provided in the plan • Changes in cost of coverage (e.g., due to change in providers)

If my child turns 13 during the plan year, may I still use my Dependent Day Care FSA through the end of the plan year? No. You are no longer eligible to be reimbursed for care for a child once the child turns 13, unless they are physically or mentally incapable of caring for themselves. Having a child attain age 13 is a qualifying event and a reason to terminate your contributions to the Dependent Day Care FSA. What happens if my employment terminates? For a Dependent Day Care FSA, your deductions will end when your employment ends. You are eligible to be reimbursed for qualified expenses that were incurred before your termination date. HEALTHCARE PAYMENT CARD Why did I receive this card? The Healthcare Payment Card is offered as an enhancement to your benefits package. It provides a convenient way to access your HSA or Healthcare FSA and pay for qualified medical expenses quickly, easily and with almost no paperwork. How do I activate my card? Your card will be automatically activated the first time you use it. When paying for eligible expenses, simply swipe the card anywhere your card type (example: Visa) is accepted; no personal identification number (PIN) is needed. Is this a regular credit card? No, the Healthcare Payment Card is a stored-value, restricted-use card to access funds from your HSA or Healthcare FSA (as applicable). It is provided to give you quick access to the funds in your account and should only be used at eligible locations for qualified plan expenses.


What can I purchase with my card? The IRS requires that health account funds be used only for healthcare expenditures. There are many products and services that meet the approved healthcare expenditures requirements as defined by the IRS. Depending on your account, these expenses may include deductibles, coinsurance, copays, prescription drugs, over-the-counter drugs, vision care and dental care. Where can I use my Healthcare Payment Card? Your Healthcare Payment Card can be used nationwide at a qualified service provider that accepts your card type (Visa or MasterCard, etc.). The card is programmed to work only at merchant locations that are designated as healthcare merchants based on their Merchant Category Code (MCC). Examples of qualified merchants include pharmacies, doctor and dentist offices, vision centers and hospitals. Your Healthcare Payment Card will only be accepted at supermarkets, grocery stores, department stores and wholesale clubs that comply with an IRS-required Inventory Information Approval System (IIAS). IIAS compliant stores automatically check to ensure items purchased with a Healthcare Payment Card are qualified healthcare account expenses, reducing the need to submit receipts or worry about rejected claims.

• For a list of Retailers Accepting Healthcare Payment Cards, see premera.com/merchants • Pharmacies are also required to comply with IIAS in order to accept Healthcare Payment Card. • Doctor and dentist offices, vision centers and hospitals will continue to accept Healthcare Payment Cards

with no requirement to comply with IIAS. How does the card work? Provide your card to a qualified merchant or provider, and they will swipe your card like any other credit card to pay for your purchase. Some merchants may require a personal identification number, or PIN, to use this card. Your card includes a preset PIN which is the last four digits of your card number. To select a different PIN, call 888-999-0121. To use this card without a PIN, select “credit” at the payment terminal. Funds for eligible expenses will be transferred directly to the provider or merchant from your healthcare account. Please ask for an itemized receipt in case it is required for substantiation. An itemized receipt should include the date of service, name and address of the provider, and the cost and description of the service provided. What are the benefits of the card? The main benefit of the Healthcare Payment Card is convenience. It allows you immediate access to your Healthcare Flexible Spending Account (FSA) or Health Savings Account (HSA) funds. Rather than paying out-of-pocket for qualified expenses, filing a claim and then waiting for reimbursement, using the card will allow you to access your funds directly and pay the provider. While you may still need to fax receipts for substantiation purposes, you will not have to wait to be reimbursed. Another benefit is that when you swipe the card, a claim is created for you eliminating the need to fill out a claim form, either online or manually by paper. When our claims system recognizes a card swipe, it also automatically sends a reminder about receipts. You can use that reminder as the claim fax cover sheet, attach your receipts and fax to the claims department. If you use another form of payment, it will be up to you to remember to send the receipts and file the claim. An additional benefit is that some payment card purchases can be auto-substantiated without your receipts. Examples of transactions that should not require receipts include:

1. Copayments that match your employer’s group health insurance plan; 2. Copayments that match your employer’s group pharmacy benefit; 3. Recurring expenses of the same dollar amount and same location that have been previously substantiated; 4. Purchases made at certain supermarkets, grocery stores, department stores and wholesale clubs that

automatically provide substantiation through an inventory control system. Do I still need to keep my receipts? Yes! Third party documentation is required any time you use your payment card or request reimbursement except

http://www.premera.com/merchants


for the instances listed above. Therefore, always hold on to your receipt* in case further documentation is requested. The receipt must contain the following information:

• Date of service; • Name and address of service provider or merchant; • Description of the service or expense provided; and • Amount charged.

*Please note that non-itemized cash register tapes, credit card receipts and cancelled checks alone do not provide proper substantiation. How will I know if I need to submit a receipt for substantiation? If a receipt is needed, you will be notified by email or letter. You can also check online to see if your claim requires receipts by logging on to your account and selecting your personal funding account. If you see a notice, you need to submit receipts. What if I don’t submit my receipts? You must provide the receipts within the time requested or the transaction will be deemed ineligible, and you will be required to refund the amount of the transaction. If you fail to submit required receipts within 45 days, your payment card will be deactivated. If you fail to reimburse the account, the amount of the ineligible expense(s) may be withheld from your pay or added to your W-2. Under current regulations, we do not need receipts for HSA transactions. However, the IRS may require you to present receipts to verify your tax return, so hold on to these receipts as well. Will the card know which expenses are eligible and which are not? While the card can identify a healthcare location based on the Merchant Category Code, it cannot identify the items or services purchased. That is why, in some instances, you will be required to submit documentation to verify that the card was used to pay for an eligible expense. Always save your receipts! What happens if I use the card for an ineligible expense? For most types of accounts, such as Flexible Spending Accounts (FSAs), if you use the card for an ineligible expense, you will be required to reimburse your account for that transaction. If you used a Health Savings Account (HSA) to pay for an ineligible expense, you may be required to pay income taxes and an additional penalty tax. What happens if I’m at a legitimate provider and my Healthcare Payment Card doesn’t work? You should first check if the provider swiped your card as a "credit" transaction or “debit” transaction. If swiped as “debit”, confirm you entered the PIN correctly. If the card still does not work, pay for the charge another way and contact Customer Service afterwards to determine the reason for the denial. You can go online to request reimbursement for any eligible expenses in which the card was not used. What are some reasons my card may be denied? The IRS has set up rules regarding when payment cards can be used. The Healthcare Payment Card utilizes the merchant code of the provider to determine if the location typically sells or dispenses legitimate healthcare expenses. Valid locations include pharmacies, doctors’ offices and hospitals. If the card is not approved, then the provider is either not a qualified merchant or they have not properly set up their merchant code. Your card may also be denied if the amount requested from your card is more than your available balance. If your balance is less than the cost of the service or expense, you can ask the merchant to swipe the card for the available amount and then use another form of payment to pay the difference. Can the Healthcare Payment Card identify how much will be paid by my health plan for the product or service? No, you still need to submit your expense through your regular claims procedure used by your health plan to determine what your share of the cost will be. If it’s not a simple copayment, you should wait for the claim to go through your insurance company and you receive your Explanation of Benefits (EOB) showing your financial


responsibility. You should only charge the amount that your insurance company doesn’t cover. Copays can usually be paid with the Healthcare Payment Card at the point-of-service. I used my payment card at the doctor’s office, a qualified merchant, but you still requested receipts–why? While most procedures performed in a doctor’s office are eligible expenses, some procedures are not. For instance, some doctors sell nutritional supplements and vitamins which are not eligible. Therefore, the IRS requires that we receive documentation to identify the service performed is an eligible expense. I used my payment card at the dentist’s office, a qualified merchant, but you still requested receipts–why? While most procedures performed in a dentist’s office are eligible expenses, some services such as teeth whitening are not. Therefore, the IRS requires that we receive documentation to identify the service performed is an eligible expense. Can I use my Healthcare Payment Card to pay for services incurred in the previous plan year? No. If the current plan year has expired, you should file claims manually. A card transaction is processed with an assumed date of service equal to the date of the card swipe; therefore it would pull money from the current plan year instead of the previous plan year. Keep this in mind if you incur services or expenses towards the end of a plan year and are waiting for the EOB from your insurance company. What if my provider doesn’t have a charge card terminal? You can still use funds from your account. However, you will have to pay with another form of payment and then submit a request for reimbursement. How do I pay for dependent day care expenses? Unfortunately, you may not use your card at dependent day care locations. If you enrolled in a Dependent Day Care FSA, you may pay for qualified dependent day care expenses out of pocket, then enter a reimbursement request online and submit your itemized receipts. Itemized receipts must be provided to substantiate dependent day care expenses in compliance with IRS guidelines. Receipts must contain the following information:

• Date of service • Name, address, and taxpayer identification number of provider • Description of the service provided • Amount charged • Name and age of the dependent

Please note, non-itemized cash register tapes, credit card receipts and cancelled checks alone do not provide proper substantiation.

An independent licensee of the Blue Cross Blue Shield Association 037397 (11-06-2019)

Discrimination is Against the Law

Premera Blue Cross (Premera) complies with applicable Federal civil rights laws and does not discriminate on the basis of race, color, national origin, age, disability, or sex. Premera does not exclude people or treat them differently because of race, color, national origin, age, disability, sex, gender identity, or sexual orientation. Premera provides free aids and services to people with disabilities to communicate effectively with us, such as qualified sign language interpreters and written information in other formats (large print, audio, accessible electronic formats, other formats). Premera provides free language services to people whose primary language is not English, such as qualified interpreters and information written in other languages. If you need these services, contact the Civil Rights Coordinator. If you believe that Premera has failed to provide these services or discriminated in another way on the basis of race, color, national origin, age, disability, or sex, you can file a grievance with: Civil Rights Coordinator ─ Complaints and Appeals, PO Box 91102, Seattle, WA 98111, Toll free: 855-332-4535, Fax: 425-918-5592, TTY: 711, Email [email protected]. You can file a grievance in person or by mail, fax, or email. If you need help filing a grievance, the Civil Rights Coordinator is available to help you. You can also file a civil rights complaint with the U.S. Department of Health and Human Services, Office for Civil Rights, electronically through the Office for Civil Rights Complaint Portal, available at https://ocrportal.hhs.gov/ocr/portal/lobby.jsf, or by mail or phone at: U.S. Department of Health and Human Services, 200 Independence Ave SW, Room 509F, HHH Building, Washington, D.C. 20201, 1-800-368-1019, 800-537-7697 (TDD). Complaint forms are available at http://www.hhs.gov/ocr/office/file/index.html.

Language Assistance ATENCIÓN: si habla español, tiene a su disposición servicios gratuitos de asistencia lingüística. Llame al 800-722-1471 (TTY: 711). 注意：如果您使用繁體中文，您可以免費獲得語言援助服務。請致電 800-722-1471（TTY：711）。 CHÚ Ý: Nếu bạn nói Tiếng Việt, có các dịch vụ hỗ trợ ngôn ngữ miễn phí dành cho bạn. Gọi số 800-722-1471 (TTY: 711). 주의: 한국어를 사용하시는 경우, 언어 지원 서비스를 무료로 이용하실 수 있습니다. 800-722-1471

(TTY: 711) 번으로 전화해 주십시오. ВНИМАНИЕ: Если вы говорите на русском языке, то вам доступны бесплатные услуги перевода. Звоните 800-722-1471

(телетайп: 711). PAUNAWA: Kung nagsasalita ka ng Tagalog, maaari kang gumamit ng mga serbisyo ng tulong sa wika nang walang bayad.

Tumawag sa 800-722-1471 (TTY: 711). УВАГА! Якщо ви розмовляєте українською мовою, ви можете звернутися до безкоштовної служби

мовної підтримки. Телефонуйте за номером 800-722-1471 (телетайп: 711). ប្រយ័ត្ន៖ បរើសិនជាអ្នកនិយាយ ភាសាខ្មែរ, បសវាជំនួយខ្ននកភាសា បោយមិនគិត្ឈ្ន លួ

គឺអាចមានសំរារ់រំបរ ើអ្នក។ ចូរ ទូរស័ព្ទ 800-722-1471 (TTY: 711)។ 注意事項：日本語を話される場合、無料の言語支援をご利用いただけます。800-722-1471（TTY:711）まで、お電話にてご連絡ください。

ማስታወሻ: የሚናገሩት ቋንቋ ኣማርኛ ከሆነ የትርጉም እርዳታ ድርጅቶች፣ በነጻ ሊያግዝዎት ተዘጋጀተዋል፡ ወደ ሚከተለው ቁጥር ይደውሉ

800-722-1471 (መስማት ለተሳናቸው: 711). XIYYEEFFANNAA: Afaan dubbattu Oroomiffa, tajaajila gargaarsa afaanii, kanfaltiidhaan ala, ni argama. Bilbilaa 800-722-1471 (TTY: 711).

.(711: والبكم الصم هاتف رقم) 800-722-1471 برقم اتصل. بالمجان لك تتوافر اللغوية المساعدة خدمات فإن اللغة، اذكر تتحدث كنت إذا: ملحوظةਧਿਆਨ ਧਿਓ: ਜੇ ਤੁਸੀਂ ਪੰਜਾਬੀ ਬੋਲਿੇ ਹੋ, ਤਾਂ ਭਾਸ਼ਾ ਧਵਿੱਚ ਸਹਾਇਤਾ ਸਵੇਾ ਤੁਹਾਡੇ ਲਈ ਮੁਫਤ ਉਪਲਬਿ ਹੈ। 800-722-1471

(TTY: 711) 'ਤੇ ਕਾਲ ਕਰੋ। ACHTUNG: Wenn Sie Deutsch sprechen, stehen Ihnen kostenlos sprachliche Hilfsdienstleistungen zur Verfügung.

Rufnummer: 800-722-1471 (TTY: 711).

ໂປດຊາບ: ຖ້າວ່າ ທ່ານເວົ້າພາສາ ລາວ, ການບໍລິການຊ່ວຍເຫຼືອດ້ານພາສາ, ໂດຍບໍ່ເສັຽຄ່າ, ແມ່ນມີພ້ອມໃຫ້ທ່ານ. ໂທຣ 800-722-1471 (TTY: 711).

ATANSYON: Si w pale Kreyòl Ayisyen, gen sèvis èd pou lang ki disponib gratis pou ou. Rele 800-722-1471 (TTY: 711). ATTENTION: Si vous parlez français, des services d'aide linguistique vous sont proposés gratuitement. Appelez le 800-722-1471 (ATS : 711). UWAGA: Jeżeli mówisz po polsku, możesz skorzystać z bezpłatnej pomocy językowej. Zadzwoń pod numer 800-722-1471 (TTY: 711). ATENÇÃO: Se fala português, encontram-se disponíveis serviços linguísticos, grátis. Ligue para 800-722-1471 (TTY: 711). ATTENZIONE: In caso la lingua parlata sia l'italiano, sono disponibili servizi di assistenza linguistica gratuiti. Chiamare il numero

800-722-1471 (TTY: 711). .ديریبگ تماس TTY: 711)-722-800) 1471 با. باشد یم فراهم شما یبرا گانيرا بصورت یزبان التیتسه د،یکن یم گفتگو فارسی زبان به اگر: توجه

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