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YOUR FLEXIBLE SPENDING ACCOUNTSPROGRAM
STATE OF GEORGIASUMMARY PLAN DESCRIPTION
ADP, Inc.11405 Bluegrass ParkwayLouisville, KY 40299
Has issued Group Policy Number 10029/10829Contract Anniversary: January 1 of each year
THE EMPLOYEE BENEFIT PLAN COUNCIL STATE OF GEORGIA
The Flexible Spending Accounts Program operates under Regulations set forth by theEmployee Benefit Plan Council on behalf of the State of Georgia under rules written and enforced by the Internal Revenue Service (IRS). The Employee Benefit Plan Council reserves the right to amend or terminate the Program at any time, in accordance withProgram rules and within the parameters established by federal law and the Internal Revenue Service.
This booklet is issued by the Employee Benefit Plan Council on behalf of the State ofGeorgia for delivery to employees who elect Spending Account coverage under the Flexible Benefits Program. The contract rights of an eligible employee who electsSpending Account coverage will be governed by the contract between the EmployeeBenefit Plan Council and the Plan Administrator.
This booklet is a summary plan description of the Flexible Spending Accounts Program.If there should be any conflict between the information contained in this booklet and the provisions of the Program, as set out in the formal Program documents, the latter will govern.
This booklet is provided only when you are entitled to the coverage provided by the group contract as an eligible employee, you elect this coverage, and you retain coverage in accordance with the terms and conditions of the group contract.This booklet supersedes and replaces all booklets previously issued to you for SpendingAccount coverage under the State of Georgia, Flexible Benefits Program. This booklet describes the coverage in effect as of January 1, 2011
NOTICEIf you have a disability and need assistance, please notify the Flexible Benefits Programat (404) 656-2730, or for TDD Relay Service only: 1-800-255-0056 (Text-telephone) or1-800-255-0135 (Voice).
TABLE OF CONTENTS
INTRODUCTION PAGEHow Spending Accounts Save you Money 4How Two Separate Accounts Make Up the Program 5- Health Care Spending Account 5- Dependent (Child) Care Spending Account 5Forfeiture: Use it or Lose it 5Grace Period 6
GENERAL PROVISIONSGlossary of Terms 7Enrollment in the Program 8Coverage Effective Date 9/10Coverage Termination Date 10Leave of Absence 10/11
HEALTH CARE SPENDING ACCOUNT (HCSA)How the HCSA Works 12Who is Covered 12Eligible Expenses 12/13Exclusions 14/15
DEPENDENT CARE SPENDING ACCOUNT (DCSA)How the DCSA Works 15/16Who is Covered 16Eligible Expenses 16/17Exclusions 17
CLAIM REIMBURSEMENTUsing the Electronic Payment (Debit) Card 18/19Filing Claim Forms 20Electronic Funds Transfer (EFT) 21
INFORMATION ABOUT YOUR SPENDING ACCOUNT(S)Call AccountLINK (1-800-893-0763) 22Internet Web site (http://myspendingaccount.adp.com)
ADMINISTRATIVE INFORMATIONReporting a Change in Status Event 23How to File an Appeal 23How the HCSA Can be Extended Under COBRA 24Eligibility for COBRA Coverage 24/25
4INTRODUCTIONHow Spending Accounts Save Your Money
A very important feature of your Flexible Benefits Program is the Spending Accounts Program. This special option allows you to pay for certain health care and dependent care items with pre-tax dollars, and thus saves on your state and federal income taxes. TheSpending Accounts Program operates as a salary reduction arrangement. When you instruct your Department to transfer contributions from your paycheck to one or both spending accounts, you effectively reduce your taxable compensation by the amount of your contributions for that Plan Year. Money is transferred from your salary into the spending accounts without ever being taxed. Then that money is reimbursed to you from the Spending Accounts Program for certain qualifying health care and dependent care expenses incurred by you and your eligible dependents.
The Program exists to let you pay some of your health care and dependent care expenses with untaxed dollars and thereby allows you to save money that youd otherwise pay out as federal income tax, state income tax, and FICA (Social Security) tax. There are numerous rules that govern the Program, of course. There are exceptions and exclusions, and youll find them farther on.
Depending on your earnings, your family situation, your tax rate, and various other factors, you stand to save somewhere between 26% and 42% on the money you choose to put into the Spending Accounts Program. The amount of savings will vary, as youll see on the next few pages.
Heres a general example of how a spending account saves money for you:
With a Without aSpending SpendingAccount Account
Say your annual State salary is $22,000 $22,000
And your spending account deposit is $ 2,000 $0.00
Now deduct for taxes at a 29% rate $ 5,800 $ 6,380
And your available annual pay is now $14,200 $15,620
Now pay off your family-care bills $0.00 $2,000
So your pay, net of bills and taxes, was $14,200 $13,620
5By channeling your family care expenses through the tax-exempt spending account, rather than paying them with after-fax dollars, you have increased your annual take-home pay by $580! And thats the way each of the two spending accounts is designed to work.
How Two Separate Accounts Make Up the Program
The Spending Accounts Program is divided into two separate spending accounts. The two accounts are totally separate. Each is administered and maintained independently; no money can be moved from one account to the other. While the underlying principles are similar, the actual operation of the accounts is very different.
The Health Care Spending Account (HCSA) lets you set aside pre-tax dollars from your paychecks to cover excess health care expenses not reimbursed by any medical, dental, or vision care plan you or your dependents may have.
The Dependent (Child) Care Spending Account (DCSA) lets you set aside pre-tax dollars from your paychecks to cover eligible dependent care expenses incurred so you can work or, if you are married, so you and your spouse can work, look for work, or your spouse can attend school full time.
Forfeiture: Use it or Lose it
The IRS determined that an element of risk must be involved in any kind of benefit protection that provides a substantial tax savings.
The following restrictive requirement was added by the IRS based on their determination.When you deposit money in a Health Care or Dependent (Child) Care Spending Account, you must use it or lose it. Theres no refund at the end of the year; anything thats left over in your account is forfeited and goes to help offset the costs of the SpendingAccounts Program.
Eligible expenses that you incur while you are covered in a Plan Year must be claimed in that Plan Year (January 1 through December 31). You have a 2 month grace period, until March 15, to incur expenses for that Plan Year. You have until April 30 to file incurred expenses. Any money remaining in your account(s) after April 30 will be forfeited whether you terminate employment, transfer to another State job, or continue to participate in the Spending Accounts Program.
NOTE: If you terminate or retire from State employment, your coverage period will stop at the end of the month following your last full month of employment or contribution. You may be able to extend your coverage temporarily under COBRA. See page 24 of this booklet for details.
6To avoid forfeitures, we recommend planning wisely when determining the amount to contribute to your account(s). When you set your contribution amount for the coming year, be realistic. Write down and carefully analyze those recurring expenses each week or each month, and plan for them in the year ahead. Youll find that you can come amazingly close to your actual expenditures if you just budget. Planning is the key!
The State has adopted a Grace Period for the following account:
Health Care Spending Account
The Employer has established a grace period that follows the end of the Plan Year, during which amounts you have allocated to the applicable spending account(s) that are unused at the end of the Plan Year may be used to reimburse eligible expenses (with respect to the applicable spending account) incurred during the grace period.
The grace period will begin on the first day of the next Plan Year and will end two (2) months and fifteen (15) days later. For example, the Plan Year endsDecember 31, 2012, the grace period begins January 1, 2013 and ends March 15, 2013.
In order to take advantage of the grace period, you must be: A Participant in the applicable spending account(s) on the last day of the Plan
Year to which the grace period relates, or A Qualified Beneficiary who is receiving COBRA coverage under the Health
Care Spending Account on the last day of the Plan Year to which the grace period relates.
The following additional rules will apply to the grace period:
Eligible expenses incurred during a grace period and approved for reimbursement will be paid first from available amounts that were remaining at the end of the Plan Year to which the grace period relates and then from any amounts that are available to reimburse expenses incurred during the current Plan Year. Claims will be paid in the order in which they are received. This may impact the potential reimbursement of eligible expenses incurred during the Plan Year to which the grace period relates to the extent such expenses have not yet been submitted for reimbursement. However, the Employer reserves the right to reprocess claims to change the order in which