FLEXIBLE SPENDING ACCOUNTS

Health Care FSA

Many kinds of expenses may be reimbursed through a Health Care FSA, but they all must be:

• Medically necessary,
• Deductible for federal income tax purposes,
• Incurred by you or an eligible dependent while you are participating in the FSA program and during the plan year in which your FSA contributions are made, and
• Not reimbursable by any other benefit plan or health care plan (such as your own medical, dental or vision care plan or your spouse’s health care plan or flexible spending account).

Eligible Expenses
Please see the WageWorks website for a detailed list of expenses. Examples of eligible expenses may include:

• Deductibles, copays and coinsurance
• Dental fees above plan limits
• Doctors’ fees above plan limits
• Eye exams, eyeglasses, contact lenses and contact lens cleaning solutions (when not covered by the vision care plan)
• Guide dogs
• Hearing aids—including batteries
• Home modifications for medical reasons (e.g., installing a wheelchair ramp for an eligible dependent)
• Laboratory fees
• Medical appliances (e.g., crutches, wheelchairs, braces)
• Nurse—private duty
• Nursing home—for treatment of illness or injury
• Nursing services supplied at home
• Office visit copays
• Prescribed medicine's coinsurance and coypayments

Debit Card
You can pay your out-of-pocket pharmacy and medical expenses quickly, easily and automatically from your healthcare flexible spending account (FSA) with your debit card. When you visit a participating pharmacies, you can pick up your prescription and pay nothing out-of-pocket at the point of purchase, just provide your debit card for payment. Then, your copay is drawn directly from your FSA account balance, and processed instantly through the real-time interface available 24 hours a day, 7 days a week. You may also use your debit card for copayments and other qualified expenses. Please see the WageWorks website for important information on using a debit card.

Important Note: Only dental and vision expenses are qualified under the limited purpose health care FSA.

Ineligible Expenses
The IRS determines what expenses are eligible for reimbursement from an FSA. Health care expenses are not eligible for reimbursement from an FSA if they do not qualify as a deduction for federal tax purposes or if they are fully covered under a health insurance plan.

Some examples of expenses that are not eligible for reimbursement include:

• Premiums you or your spouse pay for medical, dental, vision or COBRA coverage
• Cosmetic expenses, including plastic surgery, hair transplants and treatments for baldness (such as Rogaine), Retin-A treatments (unless prescribed by a physician for the treatment of acne) and cosmetic dentistry (such as tooth bleaching)
• Vitamins and nonprescription drugs
• Maternity clothes or diaper services
• Health club memberships (These expenses may qualify if prescribed by a physician for the treatment of obesity.)
• Expenses paid by any other health care plan
• Expenses that you are already claiming as a deduction on your income tax return
• Reduced-calorie diet foods

The Internal Revenue Service publishes a booklet that provides guidelines for claiming health care expenses on your taxes. To receive a free copy, contact the IRS directly at 800-829-3676 and request Publication 502, Medical and Dental Expenses. You can also review or download this information from the IRS Web site at www.irs.gov. You can also visit the WageWorks website for additional information on ineligible expenses.

Verification of Expenses

If you use your debit card and receive a Card Use Verification (CUV) form along with your account statement, you will need to take action within 90 days of the transaction or risk the possibility of having your card suspended.

You should review your account statements regularly for unverified transactions. You can do this by logging on to Wageworks' website:

1. Go to www.wageworks.com
2. Enter your User Name and Password (or click on the "First Time User?" link and follow the simple process to register to use this site)
3. Click on the Health Care tab
4. Select the View Claims & Payments link
5. Select Card at the top of the page
6. Review the Card transactions with an amount under Receipt of Repayment Needed

If you don't resolve an unverified transaction after 90 days, the amount will be deducted from your next approved reimbursement check(s) and/or your card privileges will be suspended.

If you have a transaction that needs to be verified:

1. Print out the pre-filled Card Use Verification Form (included in your monthly statement)
2. Review the form for information about how and where to submit your receipts and/or payments.
3. Complete, sign and fax the form, along with the detailed receipt, to the fax number indicated on the form.

Important Note: If you reach 75% of your elected balance, your card will be suspended until receipts are received by Wageworks.

Federal Tax Deduction for Health Care Expenses
Under current IRS regulations, you may deduct uninsured health care expenses that exceed 7.5% of your adjusted gross income from your federal income taxes if you itemize deductions. If your out-of-pocket health care costs are less than 7.5% of your adjusted gross income, you cannot deduct those expenses. If you expect your health care expenses to exceed 7.5% of your adjusted gross income, you will need to choose between a tax deduction and participating in a Health Care FSA. You may either take a tax deduction or submit the expenses for reimbursement from your Health Care FSA. You cannot take advantage of both.

You may wish to consult a tax advisor to help you decide which approach is best for your personal situation.