NCFLEX

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NCFLEX

• Health Care Spending Account
• Dependent Day Care Spending Account
• Vision
• Accidental Death Dismemberment
• Dental
• Supplemental Medical

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Office of Human Resources NCFlex Orientation
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NCFLEX

• Pre-tax premiums are deducted prior to FICA, FICA
  Medicare, Federal and State taxes
• You have an immediate tax savings

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Office of Human Resources NCFlex Orientation
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Health Care Spending Accounts

• You are reimbursed with the pre-tax dollars you
  set aside to pay for medical, dental, vision or
  other health care expenses not covered by your
  insurance plans but eligible for a deduction on
  your tax return including
• Deductibles
• Co-pays
• Co-insurance
• Out-of-Network Expenses
• Uncovered Procedures

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Office of Human Resources NCFlex Orientation
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Out-of-Pocket Expenses

• DEDUCTIBLE
• 350 / person / year
• 1,050 / family / year
• CO-INSURANCE 20
• After deductible, Plan pays 80 of allowable
  charges
• Annual Maximum is 1,500 / person 4,500 /
  family
• CO-PAYMENTS - 15 / office visit
• - 100 / emergency room
  visit
• - 50 / out-patient
  hospital visit
• - 100 / in-patient
  hospital admission

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Office of Human Resources NCFlex Orientation
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Prescription Drug Co-pays

• 10 Generic Drug
• 25 Preferred Brand Name Drug with no generic
  available
• 35 Preferred Brand Name Drug with a generic
  available
• 40 Non-preferred Brand Name Drug

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Office of Human Resources NCFlex Orientation
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New This Year

• Qualifying over-the-counter drugs can include
• Pain relievers and sleep aids (e.g.
  acetaminophen, ibuprofen, diphenhydramine)
• Claritin, Loratadine, and other allergy
  medicines/eye drops
• PrilosecOTC and other OTC heart burn medications
  (e.g., Zantac, Tagament, and some antacids)

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Office of Human Resources NCFlex Orientation
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New This Year OTCs

• Over-the-counter medications for yeast
  infections, contraceptive products with a drug
  ingredient
• Dental treatment (e.g. Orabase B)
• Cold medicines, cough syrups (e.g. Nyquil,
  Triaminic, Pedia-Care)
• Topical antibiotics (e.g. Triple Antibiotic
  Ointment, Bacitracin)
• Topical Steroids (e.g. Hydrocortisone cream)

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Office of Human Resources NCFlex Orientation
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Additional Guidance

• More detail on eligible expenses can be found
• NCFlex booklet
• IRS Publication 502
• www.irs.gov/pub/irs-pdf/p502.pdf

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Office of Human Resources NCFlex Orientation
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Health Care Spending Accounts

• Minimum
• 10.00 per month
• 120.00 annually
• Maximum
• 300.00 per month
• 3,600.00 annually

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Office of Human Resources NCFlex Orientation
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How Much to Contribute?

• Four office visits at 75 / visit
• One emergency room at 200 / visit
• Twenty-four 24 generic prescriptions at 25 /
  prescription
• 740 annual out-of-pocket expenses

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Office of Human Resources NCFlex Orientation
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Out-of-Pocket Paid with Pre-Tax Dollars

• The example throughout this presentation is an
  individual earning 30,000, married, two
  allowances, electing family coverage
• Putting 740.00 in Health Spending Account
  actually costs 557.48 because 182.52 less is
  paid in taxes annually

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Office of Human Resources NCFlex Orientation
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The Difference in Taxes
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Office of Human Resources NCFlex Orientation
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NCFLEX

• Dependent Day Care Spending Account

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Office of Human Resources NCFlex Orientation
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Dependent Day Care Accounts

• You are reimbursed with the pre-tax dollars you
  set aside to pay for child care or dependent
  adult care expenses which allows you (and your
  spouse) to continue to work or attend school
  full-time

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Office of Human Resources NCFlex Orientation
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Who is Eligible?

• Employees with
• dependent children under age 13
• an incapacitated spouse or dependent adult who
  lives with the employee at least 8 hours a day

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Office of Human Resources NCFlex Orientation
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What Expenses are Covered

• Licensed nursery schools, day care centers or
  individuals for care of preschool children
• Before school and after school care for children
  under age 13
• Summer day camp or other summer programs (not
  overnight)

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Office of Human Resources NCFlex Orientation
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DDCFSA or Tax Credit

• The Dependent Day Care Flexible Spending Account
  (DDCFSA) may be preferred to taking a Tax Credit
  if
• 2004 net taxable income greater than 38,900
  (single), 58,100 (married) OR
• Family income greater than 16,000 AND
• Dependent care expenses for one dependent will be
  greater than 3,000 OR
• Eligible for Earned Income Tax Credit and have a
  dependent child

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Office of Human Resources NCFlex Orientation
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Additional Information

• Refer to the NCFlex booklet
• IRS Publication 503
• www.irs.gov/pub/irs-pdf/p503.pdf

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Office of Human Resources NCFlex Orientation
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Dependent Day Care Amounts

• Minimum
• 10.00 per month
• 120.00 annually
• Maximum
• 416.66 per month
• 5,000.00 annually
• if single or married filing jointly

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Office of Human Resources NCFlex Orientation
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Dependent Day CarePaid with Pre-Tax Dollars

• Using the same example(30,000, married, 2
  exemptions)
• Putting 3,000.00 in a Dependent Day Care
  Spending Account actually costs 2,260.44 because
  739.56 less is paid in taxes annually

University of North Carolina Chapel Hill
Office of Human Resources NCFlex Orientation
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Use it or Lose it Rule

• You must incur claims during the calendar year
  (2004)
• You must submit claims no later than March 31,
  2005
• ANY UNUSED AMOUNT GOESTO THE STATE

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Office of Human Resources NCFlex Orientation
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Reimbursement Timing

• Health Care Expenses are reimbursed in full
  whether or not the amount has been deposited
• Dependent Day Care Expenses are reimbursed after
  the amount has been deposited

University of North Carolina Chapel Hill
Office of Human Resources NCFlex Orientation
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How Claims Work

• Submit claim to Aon (get claim forms from
  Benefits office or on-line)
• Aon processes claims and makes payment once a
  week
• Aon will direct deposit claim unless you have
  declined the option

University of North Carolina Chapel Hill
Office of Human Resources NCFlex Orientation
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NCFLEX

• Vision

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Office of Human Resources NCFlex Orientation
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Plan Provisions

• Plan 1 with vision exam every 12 months (20.00
  co-payment)
• Plan 2 without vision exam
• In-network and out-of-network benefits
• Administered by Superior Vision

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Office of Human Resources NCFlex Orientation
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Coverage
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Office of Human Resources NCFlex Orientation
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Coverage
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Office of Human Resources NCFlex Orientation
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Rates
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Office of Human Resources NCFlex Orientation
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Paying with Pre-Tax Dollars

• Using the same example(30,000, married, 2
  exemptions)
• Paying family premiums of 242.88 per year
  actually costs 183.00 because 59.88 less is
  paid in taxes annually

University of North Carolina Chapel Hill
Office of Human Resources NCFlex Orientation
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NCFLEX

• Accidental Death Dismemberment

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Office of Human Resources NCFlex Orientation
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Plan Provisions

• If you suffer a loss as the result of a covered
  accident
• If you suffer certain disabling injuries
• Administered by Unum

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Office of Human Resources NCFlex Orientation
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Coverage and Rates
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Office of Human Resources NCFlex Orientation
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Coverage
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Office of Human Resources NCFlex Orientation
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Paying with Pre-Tax Dollars

• Using the same example(30,000, married, 2
  exemptions)
• Paying family premiums of 36.00 per year
  actually costs 27.12 because 8.88 less is paid
  in taxes annually(Coverage selected was
  Employee Family, 75,000)

University of North Carolina Chapel Hill
Office of Human Resources NCFlex Orientation
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NCFLEX

• Dental

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Office of Human Resources NCFlex Orientation
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Plan Provisions

• TWO PLANS
• High
• Orthodontia for dependent children under 19
• Low
• No orthodontia
• No Major service covered
• Administered by Pacific Dental

University of North Carolina Chapel Hill
Office of Human Resources NCFlex Orientation
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Coverage
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Office of Human Resources NCFlex Orientation
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Service Definitions

• Diagnostic and Preventive
• oral exams, cleanings, x-rays, fluoride,
  sealants, etc.
• Basic
• fillings, extractions, endodontics, periodontics
• Major
• crowns, inlays, dentures, bridges
• Orthodontia
• covered for dependent children under age 19

University of North Carolina Chapel Hill
Office of Human Resources NCFlex Orientation
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Waiting Periods
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Office of Human Resources NCFlex Orientation
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Rates
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Office of Human Resources NCFLes Orientation
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Paying with Pre-Tax Dollars

• Using the same example(30,000, married, 2
  exemptions)
• Paying family premiums of 1,243.68 per year
  actually costs 942.72 because 300.96 less is
  paid in taxes annually
• This means that high option actually cost 78.56
  per month instead of 103.64
• (Coverage selected was High Option, Family)

University of North Carolina Chapel Hill
Office of Human Resources NCFlex Orientation
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NCFLEX

• Supplemental Medical

University of North Carolina Chapel Hill
Office of Human Resources NCFlex Orientation
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Plan Provisions

• This is not medical insurance
• It supplements medical insurance by paying you
  when you seek medical services
• Administered by Kanawha Insurance Co.

University of North Carolina Chapel Hill
Office of Human Resources NCFlex Orientation
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Coverage
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Office of Human Resources NCFlex Orientation
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Rates
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Office of Human Resources NCFlex Orientation
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Paying with Pre-Tax Dollars

• Using the same example(30,000, married, 2
  exemptions)
• Paying family premiums of 617.52 per year
  actually costs 471.60 because 145.92 less is
  paid in taxes annually
• Coverage selected was Family, ages 18-50

University of North Carolina Chapel Hill
Office of Human Resources NCFlex Orientation
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Be Aware

• Any benefits received from the Supplemental
  Medical plan that exceed actual medical expenses
  incurred are considered taxable income by the IRS

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Office of Human Resources NCFlex Orientation
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NCFLEX

• Administrative Rules

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Office of Human Resources NCFlex Orientation
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IRS Rules

• Section 125 of the IRS Code
• Pre-tax deductions
• No mid-year changes unless a qualified family
  status change

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Office of Human Resources NCFlex Orientation
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No Changes

• No changes to spending account amounts
• No changes in options from low to high option or
  high to low for dental
• No new enrollments in any plan
• No dis-enrollments from any plan

University of North Carolina Chapel Hill
Office of Human Resources NCFlex Orientation
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Qualifying Status Changes

• Marriage
• Divorce or legal separation
• Death
• Birth, adoption or placement for adoption
• Spouse becomes employed or unemployed
• You or spouse change from part to full-time
• You or spouse take a leave of absence
• Incapacitated adult becomes your dependent
• (See NCFlex web site for further details)

University of North Carolina Chapel Hill
Office of Human Resources NCFlex Orientation
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Qualifying Status Changes

• Changes due to a family status changes must be
  done within 30 days of the change
• within 30 days of marriage, adoption, etc

University of North Carolina Chapel Hill
Office of Human Resources NCFlex Orientation
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Additional IRS Rules

• Use it or lose it rule
• Medical reimbursed in full even though full
  deposit not yet made
• Dependent care reimbursed after deposit

University of North Carolina Chapel Hill
Office of Human Resources NC Flex Orientation
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Recap
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Office of Human Resources NCFlex Orientation
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• Plan Carefully

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Office of Human Resources NC Flex Orientation
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• Save Money

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Office of Human Resources NC Flex Orientation
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