City of Chico
Flexible Benefit Plan
Plan Year: July 1, 2011 through December 31, 2011
(Please note that this will be a 6-month Plan Year)
What does this packet include?
• Flex Plan Enrollment Form
• Flex Plan Newsletter (Q&A)
• Summary of Material Modifications (SMM)
• If you are a new employee, your material includes a Summary Plan Description (SPD).
What is the maximum that I may elect?
• Medical Expense Flexible Spending Account (FSA): $3,500 ($130 min.)
• Dependent Care Flexible Spending Account (FSA): $2,500 (1) (2) ($130 min.)
(1) The maximum tax exclusion permitted for a full 12-month Plan Year is $5,000 per individual taxpayer or
married couple filing a joint tax return. The maximum amount permitted could be reduced under the
following circumstances: (1) If you are married and file a separate tax return, the maximum you may elect is
$2,500; (2) If your spouse earns less than $5,000, you may not elect more than your spouse earns during
the Plan Year; (3) If your spouse is a full-time student or incapable of self-care, the maximum you may elect
is $3,000 for one child in day care or $5,000 if you have two or more children in day care.
(2) The maximum Dependent Care FSA election has been reduced to $2,500 for the short Plan Year.
Over-The-Counter (OTC) Drugs are no longer reimbursable
without a doctor’s prescription!
• Effective January 1, 2011, a “prescription” will be required for you to be reimbursed
from your Medical Expenses FSA for over-the-counter (OTC) “drugs & medicines”.
• What does this mean for Medical FSA participants? Simply put, it means that you
may not be reimbursed tax-free for any “OTC drug or medicine” (meaning a drug or
medicine that you can legally purchase at a retailer without a prescription) unless you
have a prescription (yes, we agree this is very confusing). However, OTC medical
supplies and implements (non-drugs) are still reimbursable without a prescription.
Believe it or not, there are approximately 27,000 medical items that you can still be
reimbursed for without a prescription!
• Are there any OTC drugs or medicines that are exempt from this new law?
Currently, insulin is the only drug or medicine exempted from this new law.
• What do you mean by a “prescription”? It means a real prescription dispensed by
a “physician”. A physician is defined as a doctor of medicine, osteopathy, dental
surgery, dental medicine, optometry or a Chiropractor. Generally, a practitioner of
alternative medicine will not qualify under this definition.
• Will a simple recommendation from a physician qualify as a “prescription? No.
Following are two examples to help clarify what is required:
Example #1: Jack lives on a hill in California. On January 5, 2011, Jack gets a
headache. Jack goes to his physician, Dr. Jill (his future wife), who recommends that
he take two aspirin and call her in the morning. Jack purchases a large bottle of
aspirin for $8.00. On January 6, 2011, Jack submits a claim for the aspirin to his
administrator. The administrator must deny the claim because Jack did not have a
Example #2: Same facts, except that Dr. Jill writes Jack a prescription for aspirin.
Jack then goes to the pharmacy and presents the prescription to the pharmacist. The
pharmacist then fills the prescription and dispenses the aspirin to Jack. As with any
prescription, Jack receives a “pharmacy receipt” with his aspirin. Jack then submits
the pharmacy receipt along with a claim form to his administrator. The administrator
pays the claim because Jack had a prescription.
• What supporting documentation is required for an OTC drug or medicine to be
reimbursed under an FSA after January 1, 2011? No one is 100% sure as we are
still awaiting more guidance from the IRS. What we know for sure is a “Pharmacy
Receipt” with an Rx number will be acceptable. A Pharmacy Receipt is traditionally
provided anytime a prescription drug is filled at a pharmacy (a Pharmacy Receipt is
not the same thing as the cash-register receipt that you receive when you pay). To get
a Pharmacy Receipt, just present your doctor’s prescription for the OTC item at the
pharmacy counter and ask them to fill it as a prescription. The pharmacy attendant
should know what to do from there.
As a possible alternative, a store (“cash register”) receipt that identifies the
medicine/drug purchased, the cost and the date purchased may be acceptable
provided you include a copy of the doctor’s prescription with your receipt (must be
legible) when you submit your claim for reimbursement. Pending additional guidance,
this approach will be accepted. Please note however that this alternate approach may
be disallowed at any time by the IRS. For this reason, you should get in the habit of
obtaining a Pharmacy Receipt.
• Do I have to get a new prescription every time I make a purchase? This is
determined by your prescription. If your prescription is written for a one-time
purchase, then you may only use it once. Conversely, if your prescription is written for
a long-term or permanent condition, you can use it for as long as it is written.
• Do I have to include a copy of the prescription every time I submit a claim to
CBA? Yes. There is no way for CBA to keep track of thousands of prescriptions “on
file” for participants. If this doesn’t work for you, we recommend that you accumulate
your OTC drug & medicine expenses throughout the year and then submit a claim for
multiple purchases at the end of the year.
• Following is a sample list of the types of OTC expenses that WILL require a
prescription after January 1, 2011:
• Acid Relievers • Digestive Aids
• Allergy & Sinus Remedies • Feminine Anti-Fungal Remedies
• Antibiotics • Hemorrhoidal Remedies
• Anti-Gas Remedies • Laxatives
• Anti-Itch Remedies • Motion Sickness Remedies
• Anti-parasitic Treatments • Pain Relief Medication
• Baby Rash Ointments/Creams • Respiratory Treatments
• Cold Sore Remedies • Sleep Aids & Sedatives
• Cough, Cold & Flu Remedies • Stomach/Intestinal Remedies
• Following is a sample list of the types of OTC expenses that WILL NOT require a
prescription after January 1, 2011:
• Band Aids & bandages • Diagnostic Tests & Monitors
• Birth Control • First Aid Supplies
• Braces & Supports • Insulin & Diabetic Supplies
• Catheters • Ostomy (e.g. colostomy) Products
• Contact Lens Supplies & • Reading Glasses
• Denture Adhesives • Wheelchairs, Walkers, Canes
• How much will this affect my election for the coming plan year? That depends on
how you use your FSA account. If you use your account primarily for OTC drugs and
medicines, the new law may significantly impact the amount you should elect. On the
other hand, if you rarely use your FSA account to purchase OTC drugs and medicines,
this new law should not impact your election at all. Nationwide, only 7% of FSA
purchases are for OTC drugs and medicines. This means that 93% of all purchases
are not affected by the new law. Still, you are the best judge of how this new law will
impact your election.
• Our current plan year ends on June 30, 2011. Will I be able to purchase OTC
drugs without a prescription until the end of my current Plan Year? No. The new
law is effective for all purchases made after December 31, 2010.
• Are Medical FSA accounts still worth having after this change? Absolutely!
Remember that only 7% of all Medical FSA reimbursements are for OTC drugs and
medicines. This means about 93% of all reimbursements are not impacted by this
new law. Plus, while it may not be as convenient, you can still be reimbursed for OTC
drugs and medicines with a prescription.
Limited Use Medical FSA
• If you elect to enroll in the HSA (Health Savings Account), you may not enroll in the full
Medical FSA. However, you may elect to enroll in the “Limited Use Medical FSA”.
• The Limited Use Medical FSA works exactly like the full Medical FSA except that you
may only be reimbursed for dental & vision expenses. As an example, let’s say you
enroll in the HSA. Let’s also say you plan to have laser eye surgery for your spouse
($2,000), purchase prescription glasses for yourself ($250), plus you have to make
$100 monthly orthodontic payments for your child’s braces throughout the year
($1,200). Using this example you could elect $3,450 for the Limited Use Medical FSA.
• Why not use your HSA to pay for these expenses? There are quite a few reasons why
electing the Limited Use Medical FSA can be a great benefit. First, your entire Limited
Use Medical FSA election is available to you as of the first day of the year (whereas
you have to save up the money in your HSA). Second, your Limited Use Medical FSA
election is 100% tax-free (just like the full Medical FSA). Third, by using the Limited
Use Medical FSA for your dental & vision expenses, you won’t deplete the funds in
• You can use the Limited Use Medical FSA to pay for all your out of pocket charges for
expenses that are covered under a dental or vision insurance plan. This means
expenses such as dental/vision copayments and coinsurance may be reimbursed
through your Limited Use Medical FSA. In addition, you can use your Limited Use
Medical FSA to pay for many expenses that are not covered by many dental and
vision insurance plans. For example, you can use your Limited Use Medical FSA to
pay for extra teeth cleanings that your dental plan doesn’t cover. You can also use
your Limited Use Medical FSA to pay for your net cost for composite (white) filings, or
a tooth implant, or adult orthodontia, or even a full mouth reconstruction (TMJD). As
for vision expenses, you can use your Limited Use Medical FSA to pay for the extra
cost of designer frames, or an extra pair of glasses, or an extra supply of disposable
contacts, and of course laser eye surgery.
• In order to be reimbursed under your Limited Use Medical FSA, the dental or vision
expense must be “medically necessary”. But don’t let this scare you, “medically
necessary” simply means the expense must provide some actual medical benefit. In
other words, it cannot be 100% cosmetic. As an example, laser eye surgery improves
your vision, so it is always “medically necessary”. Orthodontia for adults always
improves your teeth alignment, so this is always “medically necessary”. A second pair
of designer prescription glasses helps your vision, so it is always “medically
necessary”, even if you purchase 5 pairs of prescription sunglasses! The bottom line
is there are very few dental and vision expenses that are 100% cosmetic. What are a
few? Well….teeth whitening is the most common while veneers are also sometimes
• The maximum annual election for the Limited Use Medical FSA is the same as the full
• Just remember, a Limited Use Medical FSA election may only be used to reimburse
dental and vision expenses that you and your family incur during the plan year.
Who Administrates the Flex Plan?
• Custom Benefit Administrators (CBA) is the Third-Party Administrator (TPA) for the
Flexible Benefit Plan. CBA is located in Rocklin, California.
Can I be reimbursed for my family’s expenses?
• YES! You may save taxes on all qualified expenses incurred by you, your spouse and
your children. Generally, you may NOT be reimbursed for expenses incurred by a
domestic partner unless your domestic partner is your federal tax dependent. Refer
to your SPD for details.
How do I enroll in the Spending Accounts?
• To enroll, complete the enclosed Enrollment Form and return it to your employer prior
to your enrollment deadline.
• PLEASE NOTE – If you check the “Yes” box under the question “Will you participate in
a Health Savings Account (HSA) during the Plan Year?” on your Enrollment Form, and
you make a Medical FSA election, reimbursements will automatically be limited to
dental and vision related expenses. Be sure to take this into consideration when
making your election for the Medical FSA.
How do I file a claim for the Spending Accounts?
• After you enroll, CBA will send you a FLEX plan welcome packet (called the “Next
Steps” packet). The welcome packet includes an election confirmation, claim form and
lots of great information about your accounts, including how to make a claim and
access information via the Internet. If CBA has your email address on file, the
welcome packet will be emailed to you. If not, CBA will mail the welcome packet to
your address on record.
• You may send claims to CBA by regular mail, fax, e-mail, or you may use CBA’s online
claim filing feature. Please be aware that e-mailing information over the Internet may
not be secure.
• To be eligible for reimbursement, a medical or day care service must be “incurred”
(performed) while you are an active participant between July 1, 2011 * and December
31, 2011 *. The date you pay for a service is generally not important (except when
purchasing Over-The-Counter [OTC] drugs & medicines).
* You may NEVER be reimbursed for services “incurred” (meaning the date the service was
actually provided) prior to the date you enroll (meaning the later of the date you become eligible
to participate or the date you enroll online/sign your Enrollment Form). In addition, if you lose
your eligibility to participate during the Plan Year (e.g. you terminate employment), then you
may not be reimbursed for expenses incurred after the date you lose eligibility unless you are
offered and elect to extend your Medical FSA coverage under COBRA.
• If you are an active participant on the last day of the plan year, you have until March
31, 2012 in which to submit claims (services must be rendered by the last day of the
When will I be reimbursed?
• Reimbursements are paid every Wednesday and Friday (except holidays).
• The claims “cut-off” is noon on the previous business day (Tuesday and Thursday).
This means the entire claim (the claim form AND your supporting documentation) must
be received. If any portion of your claim is missing, it is not considered “received”.
• You may choose to be reimbursed for claims by check or Direct Deposit. Direct
Deposit is recommended as it is fast, convenient and reliable. If you choose Direct
Deposit, CBA can email you a confirmation notice every time you are paid a
reimbursement. To enroll, simply complete the “Direct Deposit Authorization” on your
Enrollment Form. That’s it! If you are already enrolled in Direct Deposit with CBA, you
do not need to provide this information again.
What happens if my employment terminates or if I retire?
• If you terminate employment or otherwise lose your eligibility to participate in the Plan,
no benefits will be payable for services rendered after the following dates (Refer to
your SPD for information about COBRA for the Medical FSA):
Medical Expense FSA - The day on which the employee lost their eligibility to
Limited Use Medical Expense FSA - The day on which the employee lost their
eligibility to participate.
Dependent Care FSA - The last day of the plan year during which the employee
was eligible to participate.
• If you lose your eligibility to participate in the Medical FSA, CBA must RECEIVE your
claims for reimbursement no later than 90 days after the date your eligibility ended
(e.g. your termination date).
How do I contact CBA (Custom Benefit Administrators)?
• Web Site: www.cbadministrators.com
• Telephone Hours: 8:30 AM to 4:30 pm (PST)
• Telephone Numbers: (916) 303-7090 / Long distance (800) 574-5448
• E-Mail Address: email@example.com
• FAX Numbers: (916) 303-7083 / Long distance (800) 584-4591
• Mailing Address: CBA, P.O. Box 2170, Rocklin, CA 95677
Flexible Benefit Plan Enrollment Form JULY 1, 2011 PLAN YEAR
Administered by CBA
EMPLOYER: City of Chico PLAN YEAR ENDING: December 31, 2011
1 Employee Information - Please print clearly
FIRST NAME LAST NAME SOCIAL SECURITY NUMBER
MAILING ADDRESS CITY STATE ZIP CODE
DATE OF BIRTH DAYTIME PHONE NUMBER E-MAIL ADDRESS (optional)
2 Make Your Elections - Enter your election for each account.
Medical FSA Dependent Care FSA
I elect to participate in the Medical FSA. The amount I I elect to participate in the Dependent Care FSA. The amount I
elect for the PLAN YEAR is (maximum $3,500 min $130): elect for the PLAN YEAR is (maximum $2,500 * min $130):
$ / Plan Year $ / Plan Year
Your annual election will be deducted from your pay in equal Your annual election will be deducted from your pay in equal
installments throughout the plan year. installments throughout the plan year.
* $2,500 max due to Short Plan Year of 6 months
3 Will you participate in a Health Savings Account (HSA) during the Plan Year? If yes, check box below.
YES. If checked, the Medical FSA may only reimburse you for DENTAL and VISION related expenses.
Direct Deposit Authorization – Complete the banking information if you wish to establish direct deposit with CBA (or change your
4 current direct deposit banking information on file with CBA).
By completing the banking information below, I hereby authorize CBA to deposit all reimbursements directly into my personal bank account at
the financial institution named below. I understand that I may cancel this authorization at any time by notifying CBA in writing. I further
understand that I am responsible to notify CBA if, for any reason, my bank account information changes. If I do not sign up for Direct Deposit,
I understand all reimbursements will be paid to me by check.
Check this box if you are already signed up for and wish to continue Direct Deposit with CBA during the new Plan Year.
If you do NOT check this box, your direct deposit will be cancelled and you will be reimbursed via check.
Name of DEPOSITORY (Name of Financial Institution)
Bank Routing Number Account Number
5 By signing below, you are agreeing to the terms and conditions printed on the back of this form.
I, the undersigned employee, hereby certify that I have read and agree to all the “Terms & Conditions for Participation in the Flexible Benefit
Plan” printed on the back of this Election Form. I hereby authorize my employer to deduct the amounts listed above from my compensation.
EMPLOYEE SIGNATURE: DATE: / /
6 To be completed by Employer
AUTHORIZED EMPLOYER SIGNATURE BENEFITS EFFECTIVE DATE (May not DATE OF DATE OF 1ST
precede the date employee signed form) HIRE DEDUCTION
P.O. Box 2170, Rocklin, CA 95677 ■ Fax (916) 303-7083 ■ Phone (916) 303-7090
Flexible Benefit Plan Enrollment Form JULY 1, 2011 PLAN YEAR
Administered by CBA
Terms & Conditions for Participation in the Flexible Benefit Plan
I fully understand and agree that:
• I may never be reimbursed for expenses “incurred” (the date services are actually performed) prior to
the later of, the date I am eligible to participate or the date I complete the enrollment form.
• Once made, my elections are “irrevocable” during the plan year unless I experience a “qualifying and
related change in status”. I understand that I must refer to my SPD for details.
• If I am an active employee as of the last day of the plan year, I will forfeit any remaining balance left
in my reimbursement account(s) unless CBA “receives” my claim for qualified expenses by the last
day of my “run-out period”.
• If I terminate employment, or otherwise lose my eligibility to participate in the reimbursement
accounts during the plan year, I may be required to submit claims for reimbursement shortly after
losing my eligibility (refer to your SPD for the filing deadline if you terminate participation during the
plan year). If I do not submit my claim for reimbursement by the deadline, I understand and agree
that I will forfeit any remaining balance left in my reimbursement account(s).
• I may only receive reimbursements for qualified expenses incurred (date services are performed)
during the plan year and while I am an active employee (unless coverage is extended under
• I may be reimbursed for expenses incurred by myself, my spouse, my dependent children, and any
other individual who qualifies as my federal tax dependent.
• I may not be reimbursed for expenses incurred by my domestic partner and/or their dependent
children, unless my domestic partner and/or their children also qualify as my federal tax
• I may never seek reimbursement before an expense is “incurred” (performed).
• By participating in my flexible benefit (cafeteria) plan, I may reduce my Social Security tax
contribution, and therefore, could potentially reduce my future social security benefits.
• My employer may modify or revoke my elections at any time if required to maintain the Plan in
compliance with all applicable provisions of the Internal Revenue Code (IRC).
• This agreement is subject to the terms and conditions of the Plan and revokes any prior agreement I
may have completed.
• I must make a new election each year for my FSA accounts. My FSA elections will not automatically
• My health insurance premium and HSA contributions will automatically be deducted from my pay
before-tax to the extent permitted by law (insurance benefits and HSA contributions may only be paid
for with before-tax dollars). I will automatically save all taxes on my health insurance premium
contributions and all federal taxes on my HSA contributions.
• I am responsible to determine if the tax benefits provided by the Dependent Care FSA are superior to
the federal tax credit.
• I am responsible to reimburse my employer for any benefits received, taxes, penalties or interest that
may be imposed if I knowingly violate the terms of the Plan.
• I have received a Summary Plan Description (SPD) for the Flexible Benefit Plan.
P.O. Box 2170, Rocklin, CA 95677 ■ Fax (916) 303-7083 ■ Phone (916) 303-7090
Custom Benefit Administrators
City of Chico
7/1/11 – 12/31/11 Benefit Plan Newsletter
Read All About It!
of expenses with before-tax (tax- these plans are referred to as
Pg. 2 Medical Expense FSA
free) dollars. The expenses “cafeteria” plans.
Over-The-Counter (OTC) permitted in your Flex Plan are
Pg. 3 Items & Supplies
explained in this outline. If you While your Flexible Benefit Plan
Pg. 5 Dependent Care FSA choose to participate, you will provides you with great tax
lower your taxes. When you savings there are some important
Custom Benefit Administrators
lower your taxes you will have rules. Two of the most important
P.O. Box 2170
Rocklin, CA 95677 more money to spend! are: (1) before-tax elections can
916.303.7090 Customer Service not be changed during a plan
800.574.5448 Toll Free
Your Flex Plan provides several year except under very limited
www.cbadministrators.com ways to save taxes. First, you pay circumstances; and, (2) FSA
no taxes on your out-of-pocket reimbursements are based solely
cost for health insurance. In on the date services are rendered
This outline provides general
addition, your Flex Plan offers without regard to when you pay
information about your Flexible
two Flexible Spending Accounts for a service.
Benefit Plan (Flex Plan), also
(FSAs). FSAs provide you with
known as a “Cafeteria Plan”. Another important rule is that
a great way to save taxes on most
Participating in the Flex Plan can you may save taxes on expenses
out-of-pocket medical expenses
save you thousands of dollars in for a domestic partner only “IF”
incurred by you, your spouse or
taxes every year. Quite simply, your partner qualifies as your
your Dependent children (this is
if you don’t participate in your federal tax dependent.
called a Medical Expense FSA)
Flex Plan you could be
and day care expenses (this is
voluntarily over-paying taxes! While you are restricted from
called a Dependent Care FSA).
making changes during the year,
The primary benefit of a Flex You may choose to participate in
you can make new elections prior
Plan is the elimination of taxes one or all of the accounts offered
to the beginning of each future
on money you are already in your Flex Plan. This ability to
plan year during your annual
spending. How? Under Federal select in which accounts you
“open enrollment” period.
law, your employer can offer you want to participate is the reason
the option to pay for certain types
SAVE! SAVE! SAVE! SAVE! SAVE!
. . . . . . . . . . . . . . . . . . . . . . . . 1
CBA Medical Flexible Spending Account
What is a Medical pocket medical, dental Account). However, if your
Expense FSA? & vision related Flexible Benefit Plan includes a
A Medical Expense FSA (or expenses. Services special “Limited Use” FSA (it is
“Health FSA”) allows you to set must be “incurred” called “Limited Use” because it
aside tax-free dollars that will (provided) before will only reimburse you for dental
reimburse you for you may be and vision category expenses),
out-of-pocket reimbursed. In addition, the you may elect to participate in the
medical, dental & service must be rendered while Limited Use FSA and make HSA
vision expenses you are an active participant contributions at the same time.
“incurred” during during the plan year.
Can I claim out more
the plan year. “Incurred” means
the service must be performed
Is documentation than I have contributed?
required to be Yes. Your Medical Expense FSA
during the plan year. The patient
reimbursed? is “pre-funded”, meaning your
can be you or any Federal Tax
Yes. Supporting documentation is annual election is available for
always required (except for certain reimbursement at any time during
How does a Medical expenses paid for with a qualified the plan year, regardless of the
debit card). Supporting amount you have contributed!
Expense FSA work?
documentation must be provided Great tax savings and the ability to
First, you elect the amount you
by your insurance carrier, health claim your entire election at any
want available for the plan year
service provider or retailer (for time are the reasons Medical
(up to the Plan maximum
Over-The-Counter [OTC] items) FSA’s are so popular.
established by your employer).
Your election is then deducted and must include the name of the
(tax-free) from your pay in equal service provider, the date of Following is a sample of
installments throughout the plan service, a description of the permitted expenses:
year. service, patient’s name (patient ♦ Acupuncture
name is not required for OTC ♦ Allergy treatments
There are a variety of ways to be purchases) and your cost for the ♦ Chiropractic
reimbursed for qualified expenses. ♦ Contact lenses & supplies
service. A claim form will be
♦ Counseling (no marriage/ family)
Refer to the section entitled “How provided after you enroll. ♦ Dental (no teeth whitening)
do I file a claim for the Spending ♦ Doctor office visits & exams
Accounts?” in the summary What if I don't claim my ♦ Glasses (prescription)
document at the front of your entire election? ♦ Hearing aids
material. CBA will also send you Choose your annual election ♦ Hospital services & surgery
detailed claim filing information wisely as you will forfeit any ♦ Insulin & Insulin supplies
after you enroll. unclaimed benefits after the end of ♦ Insurance co-pays & deductibles
♦ Laboratory fees
the plan year. This rule is called
If you have insurance coverage for ♦ Laser eye surgery
"use it or lose it". To avoid the
an expense, your insurance carrier ♦ Medical mileage
risk of forfeiting money, limit the ♦ Orthodontia (child & adult)
must process your claim before
amount you elect to known ♦ Over-The-Counter medical items &
you submit for reimbursement
expenses. supplies (see next page for
from your Medical Expense FSA. restrictions)
Can I participate in an ♦ Prescriptions (medically
What are “qualified necessary)
FSA and HSA at the ♦ Psychiatric care
Qualified medical expenses
same time? ♦ Sterilization
No. If you participate in an FSA, ♦ Vaccines (including Flu Shots)
include most “medically
you will be ineligible to contribute ♦ Vision exams
necessary” (non-cosmetic) out-of- ♦ Well-child services
to an HSA (Health Savings
. . . . . . . . . . . . . . . . . . . . . . . . 2
CBA Medical Flexible Spending Account
Over-The-Counter Drugs, Medicines & Medical Supplies
Saving taxes on your Over-The-Counter (OTC) drugs, medicine, and medical supply purchases is a great way to
maximize the benefits of your Medical FSA. However, getting reimbursed for your OTC purchases is not a
“free-for-all”. There are important rules and restrictions that you are responsible to understand and abide by.
First, as of January 1, 2011, OTC drugs & medicines will require a prescription from a physician to be
reimbursed through your Medical FSA. This new rule only applies to “drugs & medicines”; medical items and
supplies can still be purchased without a prescription. Of the 42,000 OTC products on the approved list in
2010, 27,000 will still be available for purchase without a prescription in 2011.
Second, the amount of any one item that you purchase must be reasonable. In addition, the maximum dollar
amount you can spend on OTC items that DO NOT require a prescription is $250 per day.
Third, your store receipt must include the name or a clear description of the product (e.g. “band aids”). Your
receipt must also include the date of purchase and the name of retailer. Sales tax and shipping charges may
qualify if the charges are reasonable and incurred exclusively for the purchase of qualified items.
Following is a sample list of items divided into three categories: (1) eligible; (2) needs a prescription or letter
from a physician; and, (3) not eligible under any circumstances. The sample list is intended to help you
understand what is and is not reimbursable. There are tens of thousands of OTC products that may be
reimbursed through your Medical FSA.
THE FOLLOWING LIST IS EFFECTIVE AFTER DECEMBER 31, 2010
NO Prescription Required WILL Require a Prescription Items that Require a Letter from
After January 1, 2011 After January 1, 2011 your doctor:
Band Aids Acne Medications Foot Spa
Birth Control Anti-Diarrhea Medications Herbs
Blood Pressure Monitor Anti-Inflammatory Treatments Herbal Remedies
Braces & Supports Anti-Itch Treatments Massages
Canes Antifungal Treatments Minerals
Catheters Antiseptics & Topical Antibiotics Multivitamins
Colostomy Products Allergy Medications Supplements
Contact Lens Supplies & Solution Arthritis Pain Reliever Vitamins
Contraceptives Asthma Medications
Defibrillators Bunion/Blister Treatments Not Eligible Under ANY
Denture Adhesives Cold & Flu Medications Circumstance
Ear Wax Removal Treatment Cold Sore & Fever Blister Medications Aromatherapy products
First Aid Kits Corn & Callus Removal Medications Baby bottles, cups, oil, wipes
Glucose Meters Cough & Cold Medications Cosmetics
Home Screening Tests (Cancer, Cholesterol, Diaper Rash Ointment Cotton swabs or pads
Fertility, Hepatitis C, HIV, Prostate, Dental floss
Thyroid) Deodorants & antiperspirants
Hot & Cold Packs Eye Drops Facial care
Hydrogen Peroxide, Iodine Hemorrhoid Relief Feminine care
Insulin & Diabetic Supplies Laxatives Fragrances
Liquid Adhesive Lice Control Hair re-growth
Medicated Bandages Nasal Sprays, Drops & Strips Low “carb”/low calorie/dietary foods
Nicotine Gum or Patches Motion Sickness Tablets Oral care (e.g. Sonicare)
Pregnancy Tests Oral Pain Remedies Shampoo and conditioner
Reading Glasses Pain Relievers Skin care
Rubbing Alcohol Spa salts
Sleeping/Snoring Appliances Sun tanning products
Vapor rub Tooth brushes
Throat Pain Remedies
Wheelchairs & Walkers Wart Removal Medications
. . . . . . . . . . . . . . . . . . . . . . . . 3
CBA Medical Flexible Spending Account
How Much Will Your Family Spend on Medical Services?
Use this worksheet to help calculate how much your entire family will spend on medical services during the course of the plan year.
Only include services/expenses that will be rendered (provided) during the plan year. IRS Publication 502
(http://www.irs.gov/pub/irs-pdf/p502.pdf) offers a lot of helpful information as to what qualifies as a medical expense. However, be
advised that Publication 502 should only be used as a helpful guide and not as an authoritative source of what can be reimbursed under
your Medical FSA. Many expenses listed in publication 502 may not be reimbursed under your Medical FSA (such as premiums). In
addition, your Medical FSA reimburses you based on the date a service is rendered, without regard to the date you pay for a service.
Office Visits & Co-Payments Do NOT include
Medical office visits $
expenses for the
Acupuncture office visits $
Chiropractic office visits $ following services:
Counseling (no marriage or family)$
Homeopathic office visits $ Access Fees (“Membership”
Prescription Drugs (Legal) fees paid to have access to a
Allergy treatments $
Birth control pills $ Capital expenses (including
operating & maintenance
Other prescription drugs $ costs)
Vision and Related Eye Care Expenses Cosmetic services
Eye exams $
Contact lenses $
Expenses for your general
Prescription eyeglasses $ health
Prescription sunglasses $
Expenses paid by another
Laser Eye surgery $ plan
Dental and Related Expenses
Health club membership
Deductibles $ dues
Examinations $ Insurance premiums
Teeth cleaning $
Massage & massage
Crowns, caps, bridges, root canals $ therapy (unless “prescribed to
Orthodontia $ treat a medical condition)
Over-the-Counter Medical Supplies Marriage & family
Band Aids, First Aid Kits, etc. $ counseling
Other Expenses Vitamins, supplements &
herbal remedies (unless
In vitro fertilization $ “prescribed” by a physician)
Insulin and insulin supplies $ OTC Drugs & Medicines
Psychiatric care $ (unless you can get a prescription
for the item after Jan. 1, 2011)
Medical mileage $
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CBA Dependent Care Flexible Spending Account
What is a Dependent After you enroll, CBA will send account balance. The excess
Care FSA? you instructions for submitting portion of your claim will then be
claims and for using the online reimbursed automatically as you
The Dependent Care FSA allows
system. continue to make payroll
you to save taxes on up to $5,000
As you incur expenses, you contributions.
of "qualified" day care expenses
every year. The annual simply complete a claim form,
tax savings can add up attach third party documentation What if the amount of
to more than and send to CBA. CBA will my day care expense
$2,000! review and process your tax-free
reimbursements. If your day care changes during the
The maximum provider does not provide a year?
amount you may statement of charges, they can In most cases, if you experience a
elect is reduced for verify your expense by simply change of status or the cost for
couples that file separate returns, signing your completed claim care changes during the plan year
when one spouse is a student or form. Third party documentation you may be permitted to adjust
when a spouse earns little or no must include the name, address your election. However, there are
income. and tax ID number (or SSN) of significant restrictions.
the day care provider, as well as Therefore, you need to choose
How does a Dependent the dates of service and name of your election wisely because you
Care FSA work? your child(ren). will not be permitted to change
your election simply because you
The first step is to determine At no time can you be
elect too much, make a mistake,
your election for the entire plan reimbursed more than you have
or even if you just decide to
year. Do NOT elect more than actually contributed to your
change to a lesser expensive
your actual expenses. Your Dependent Care account. If you
provider. In any event, you must
annual election is then deducted submit a claim for more than the
notify your employer within 30
(tax-free) from your pay in equal amount in your account, you will
days of the event that is causing
installments throughout the plan be reimbursed up to your
For more information call CBA,
review your SPD, or visit
Qualified Day Care Expenses Include:
− Care for children under age 13 OR for a disabled adult dependent that lives with you.
− Care provided while parents are working or looking for work.
− Care that has been incurred (services provided) during the plan year.
− Care paid to a provider who is neither a dependent NOR your child under age 19.
− Actual day care expenses (separate fees for services such as transportation, meals, classes, lessons, trips
or supplies are not reimbursable unless the charges are included as part of your base fee - not itemized).
− Day camps, including day camps that focus on specific activities, such as sports & arts (overnight
camps are excluded even if the camp apportions the day camp and & over night charges).
− Reportable (“above the table”) day care expenses.
− Educational (tuition) charges for kindergarten and over are NOT eligible for reimbursement.
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CBA Dependent Care Flexible Spending Account
Can I still claim day $60,000 and you spend $5,000
care expenses for the Which is better, the FSA for the care of one child, your
credit will be $600 (20% of
child care credit? or the federal tax $3,000). Conversely, if you use
You may not claim a credit on credit? the FSA, you could expect to
the same dollars that you receive Generally, the FSA is much save as much as $2,000 in taxes
tax-free through your FSA. better but it depends on a on the same $5,000 expense.
However, you may be able to combination of your income, This is why most families choose
claim the credit on qualified whether you have one or two to participate in the Dependent
expenses that exceed the amount children in care, and how much Care FSA.
you elect in your FSA. you pay for care. The credit is
calculated as a percentage of
your day care expense. The Do I have to file an
How much will I save by
percentage that you receive additional form with my
participating in the
depends on your Adjusted Gross federal tax return?
FSA? Income (AGI). Use the
When you participate in the You must file a Form 2441 with
following chart to locate your your federal tax return. Form
Dependent Care FSA, you pay percentage. To determine the
NO Federal income tax, NO CA 2441 is simply an informational
value of your credit, multiply form on which you report the
income tax, NO Social Security your percentage by the LESSER
tax, NO Medicare tax and NO amount and who you have paid
of the amount you pay for day for day care. Refer to IRS
CA State Disability Insurance care or $3,000 if you have one
(SDI) on up to $5,000 of Publication 503, “Child and
child in care or $6,000 if you Dependent Care Expenses" for
expenses every year! The have two or more children in
maximum is reduced for married detailed information. Publication
care. 503 is available at
couples that file a separate return http://www.irs.gov/pub/irs-
($2,500), if your spouse is a full- For example, if your AGI is pdf/p503.pdf
time student and if one spouse
makes less than $5,000. It Federal Tax Credit
doesn’t matter if you have one Am I eligible to
or more children in care. For Adjusted Gross Applicable
Income Percentage participate if I am
most families this results in a
savings of 25% to 45%! Your $0 – 15,000 35% not the
tax savings will depend on the
$15,001 – 17,000 34% “Custodial
$17,001 – 19,000 33%
amount you pay for childcare Parent”?
$19,001 – 21,000 32%
and your combined highest $21,001 – 23,000 31% NO!!! Only the
(“marginal”) tax bracket. $23,001 – 25,000 30% “Custodial Parent” is
In addition, your FSA saves $25,001 – 27,000 29% eligible to participate in
you taxes each and every $27,001 – 29,000 28% the Dependent Care
payday. The tax credit does $29,001 – 31,000 27% FSA. In the case of
not help until you file your tax $31,001 – 33,000 26% divorce, the Custodial
$33,001 – 35,000 25% Parent is the parent with
$35,001 – 37,000 24% whom the child lives for
For more information visit $37,001 – 39,000 23% MORE THAN 50% of
www.cbadministrators.com or $39,001 – 41,000 22% the year. Only one
contact CBA Customer Service $41,001 – 43,000 21% parent can qualify as the
at (800) 574-5448. $43,001 or more 20%
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Summary of Material Modification (SMM)
City of Chico Flexible Benefit Plan
The following Material changes to your Flexible Benefit Plan (“Plan”) will take effect on July
1, 2011. This SMM serves to notify you of this change. You should attach this SMM to
your current Summary Plan Description for the Plan.
• Commencing July 1, 2011, the Flexible Benefit Plan Year will change to a calendar
Plan Year (from the previous July 1 through June 30 period). The Plan Year
commencing July 1, 2011 will be a transitional (or “short”) Plan Year ending
December 31, 2011.
• Effective July 1, 2011, the Entry Date for newly eligible employees to commence
participation in the Plan will change from “date of hire” to “the first day of the month
following date of hire”.
• Effective July 1, 2010, your employer will make an annual contribution to qualified
HSA’s. The amount and timing of the employer contribution will be communicated to
eligible employees during your annual benefits enrollment period.
There are no other material changes for the Plan Year commencing July 1, 2011.