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The spending accounts benefit has been set up to help you set aside money to use on your expenses without paying taxes.

By using spending accounts, you save money because you don't pay taxes on money you put aside for health care and dependent care expenses.

Most employees will save at least 22 percent on the expenses they pay through the spending accounts (based on a 15 percent federal income tax rate and a 7.65 percent FICA tax rate).

If you're in a higher tax bracket or pay state income tax, you may save even more. For example, if you're an Oregon employee and pay 9 percent income tax, you could save more than 30 percent.

It is important to remember that you must re-enroll in spending accounts each plan year during open enrollment in October.

The health care spending account can be used to cover health care expenses that are not covered by another benefit plan.

The dependent care spending account saves you taxes on day care expenses for your children or other dependents. You can set aside money in your dependent care spending account to pay for day care at home or in a center. The care must be necessary for you (and, if you are married, your spouse) to work. You can also use the account if your spouse is a full-time student. To be eligible, dependents must be 12 years of age or younger, or be a disabled parent or spouse who lives with you for at least eight hours a day.

The minimum annual amount you can elect to contribute to spending accounts is $100.00.

Your Claims administrator will provide you with statements during the year to help you keep track of your transactions and account balances. (If you elect this benefit at some time other than the beginning of the year, a smaller, pro-rated maximum amount will be calculated for you.)

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Health care spending account limits

To be eligible for reimbursement, the claims you submit must meet these requirements:

• Each claim must be for a minimum of $20.00. (Except at the end of the year, when you may submit a claim for less than $20.00.)
• Any expenses you claim must be incurred during the plan year and while you are enrolled in the health care spending account.
• Each claim must be for an expense that has been incurred already. Claims cannot be made for pre-payment of anticipated expenses.
• Claims must be received by your Claims Administrator no later than 90 days after the end of the plan year.

Dependent care spending account limits

To be eligible for reimbursement, the claims you submit must meet these requirements:

• If you are married, your spouse must work or be a full-time student
• The expenses must be for a qualifying person. A qualifying person is a dependent 12 years of age or younger whom you claim as a dependent for tax purposes, or a spouse or dependent who is physically or mentally not able to care for him/herself.
• The expenses must be for the well-being and protection of a qualifying person so that you (and your spouse, if you are married) can work.
• The expenses cannot be for diapers, late payment charges, food, clothing, education, or entertainment. These expenses are not covered under the plan.
• If the care is provided outside your home, the qualifying person must spend at least eight hours each day in your home.
• Expenses for services outside the home, such as camp, where the dependent stays overnight are not covered.

In order to qualify, the person or place providing the care must meet these requirements:

• If care is provided at a dependent care center--a facility that provides care for seven or more individuals and receives a fee--the center must comply with all state and local regulations.
• The care provider cannot be your dependent for tax purposes.
• The care provider cannot be your child under age 19.
• The care can be provided by a relative who lives in your home as long as the care provider is not your dependent for tax purposes.

Here are some points to keep in mind when you are planning your dependent care account.

• If you are married, the total amount of reimbursement for the plan year cannot exceed the income of the lower-paid of you or your spouse.
• The amount you are reimbursed cannot be claimed by you as a tax credit on your tax return.
• The maximum amount you can claim as a tax credit on your tax return will be reduced by the amount that is reimbursed to you under this account.
• Unless the care provider is a tax-exempt organization, you must provide the name, address, and social security number (or other taxpayer identification number) of your dependent care provider on your tax returns.
• If you participate in a dependent care spending account, it is required you complete an IRS form 2441 when completing your tax return.

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Forfeitures

It is important to plan carefully the amount of money you have withheld for your spending accounts. Any money left in your accounts at the end of the year is forfeited to the plan, so it's probably better to underestimate, rather than overestimate, your expenses.

Forfeited funds are used by the plan to pay administrative expenses and, in the case of health care spending account funds, to pay for any benefits paid to employees in excess of their contributions.

Establishing and Using Your Spending Account in Four Easy Steps

Step 1. During the enrollment period, estimate the annual amount of eligible expenses you will have the following year by using the healthcare spending account or dependent care spending account worksheet. These expenses include the following:

• Health-care expenses that your medical, vision, and dental plans do not cover
• Your dependent-care expenses for your child, disabled parent, or spouse

Step 2. Enter your annual election in the online enrollment system.

Step 3. When you have an eligible expense, pay it as you normally would and send in a claim form. Your claims must total at least $20 for each submission. Reimbursements are processed weekly.

Note that you have until March 31 of the following year to submit claims for expenses incurred in any given year -for example, for expenses incurred in 2004, you can submit claims until March 31, 2005. During this grace period, there is no minimum claim amount.

Step 4. You receive a reimbursement check from your account.

Note: For health care expenses, you'll receive the full amount of your claim, up to the amount you elected to deposit during the year. For dependent care expenses, you will be reimbursed only up to the amount available from your account at the time of your claim

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Submitting a Claim

Claim forms are located in your Human Resources department. To be eligible for reimbursement, claims must be incurred while you are covered under a spending account. Pre-payment of services is not allowed; services must have been performed to be eligible.

Click here for Dependent Care Claim Form

Click here for Health Care Claim Form

You can use the accounts for your expenses, as well as your dependents' expenses, even if you have elected not to cover yourself or your dependents under the other FlexAbility plans. Submit claims to:

Benefit Administration Company
P.O. Box 550
Seattle, WA 98111-0550

For customer service, call (800) 967-3709. Employees in the Seattle area may call (206) 625-1800. Claims can also be faxed to (206) 682-8016. (NOTE: Dependent care claims where the only verification of services is the daycare provider's original signature, MUST ONLY be mailed.)

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What Is Covered

Here is a partial list of eligible health care account expenses:

• Acupuncture
• Alcoholism and drug-dependency payments to a treatment center
• Alopecia - any personal use items used to alleviate the symptoms of the illness
• Ambulance Service
• Artificial limbs/Prosthesis
• Autoette/Wheelchair - if used mainly for the relief of sickness or disability and not just to provide transportation to and from work.  The cost of operating and upkeep is also allowable.
• Birth control pills and condoms
• Braille books and magazines for use by a blind or visually handicapped person, but only the part of the cost that is greater than the cost of regular books and magazines
• Capital Expenses - amounts paid for special equipment installed in your home if the main reason is for medical care, reduced by the increase in value of the property
• Car - cost of special equipment and special design for the use of a handicapped person
• Charges in excess of reasonable and customary
• Chiropractors
• Contact lenses, eyeglasses - if needed for medical reasons.  Includes prescription sunglasses, disposable lenses, and the cost of solutions and cleaners
• Crutches - cost of renting or buying
• Deductibles, copayments, and coinsurance
• Dental Treatment - fees to dentists for dental work, x-rays, fillings, braces, extractions, dentures, bridges and crowns 
• Doctor's fees - including psychiatric care
• Drugs/medicines - prescription; non-prescription over-the-counter items including aspirin, antacid, allergy medicine, pain relievers & cold remedies; used to alleviate or treat personal injuries or sickness
• Guide dog - for the blind or deaf.  Include the cost of a dog or other animal trained to assist persons with physical disabilities and the cost of the care of the dog
• Elastic hose, medically prescribed
• Eye surgery to correct myopia, hyperopia, and astigmatism
• Hearing aids and the batteries you buy to operate it
• Hospital Services
• Immunizations
• Infertility services
• Laboratory fees that are part of your medical care
• Massage therapy - if you have a prescription from a physician and the treatment is for a physical condition
• Midwife services
• Modifications to a car required for the driver's medical condition, as long as they do not increase the value of the car
• Naturopathic doctors - but not their prescriptions if purchasable over the counter
• Nursing home - for you, your spouse or dependents.  Include only the part of the cost that is for medical or nursing care
• Nursing services
• Orthotics - including shoes and hose prescribed by a doctor
• Orthodontia (Contact Benefit Administration Company to discuss orthodontia claims.)
• Oxygen - include amounts paid for oxygen and oxygen equipment to relieve breathing problems caused by a medical condition
• Personal use items - items that are ordinarily used for personal, living and family purposes if they are used primarily to alleviate a physical or mental defect or illness
• Psychoanalysis - payments for psychoanalysis, excluding marital counseling, can be included.  Do not include payments for psychoanalysis that you must get as a part of your training to be a psychoanalyst
• Radial Keratotomy - to surgically correct vision 
• Smoking-cessation programs, including prescrived drugs, but not over-the-counter drugs such as nicotine gum and patches
• Sterilization
• Surgery - including fertility procedures, cosmetic surgery that treats a congenital abnormality or disfigurement from disease or accident, etc.
• Telephone/Television - Include the cost and repair of special telephone equipment that lets a deaf person communicate over a regular telephone.  Include the cost of equipment that displays the audio part of television programs as subtitles for the deaf
• Therapy - if received as medical treatment.  Payments for patterning exercises for a mentally retarded child are allowable
• Transplants - payments you made for surgical, hospital, laboratory and transportation expenses for a donor or possible donor of a kidney or other organ
• Transportation - if primarily for an essential to medical care, including bus, taxi, train or plane fare or ambulance service.  You may include parking fees and tolls and $0.13 per mile for each mile that you use your car for medical reasons.
• Tuition fees - you may include charges for medical care that are included in the tuition of a college or private school if the cost is separately stated in the bill or given to you by the school
• Weight Loss Program - fees to join program only if prescribed by a physician to treat a medical illness (e.g. heart disease or obesity)
• Wigs - when there is an underlying medical condition
• X-rays

To see a complete listing of eligible health care expenses, contact Human Resources.

What Is Not Covered

Here are examples of expenses you may not cover through your health care spending account:

• Medical or dental cosmetic surgery, unless it is required to treat an illness, injury, disfiguring disease, or birth defect
• Funeral and burial expenses
• Household and domestic help
• Custodial care in an institution
• Health club dues, YMCA and YWCA dues, and the cost for steam baths
• Social activities such as dance lessons or classes, even when recommended by a physician to improve general health
• Bottled water
• Vitamins and dietary supplements  taken for general health improvement
• Premiums for health care plans, medical coverage (including medical coverage under automobile insurance), life or accident insurance policies, or any other kind of benefits coverage
• Services performed prior to the effective date or after the termination of the health care spending account

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If Your Claim Is Denied

The Claims Administrator will process your claim within 60 days of when it is received. Whenever a claim is denied, the Claims Administrator will send you written notification, which will include a brief reason for any denial.

If your claim is denied in whole or in part and you want the decision reviewed, you must file a written request to your Claims Administrator for a review within 60 days of the date your claim was denied. Explain why you believe the service should be covered and include any supporting information. Your employer's Human Resources department can provide you with the address of your Claims Administrator.

The Plan Administrator must respond to your appeal within 60 days, or send you a notice of delay within that same time period. If you are dissatisfied with the response to your complaint, you have 30 days to file a written request of appeal to:

Employee Benefits Committee
PeaceHealth
15325 SE 30th Place Suite 300
Bellevue, WA 98007

The Employee Benefits Committee must respond to your appeal within 90 days, or send you a notice of delay within the same period of time. If your claim is denied by the Employee Benefits Committee, no additional appeal will be considered unless accompanied by additional supporting information.

End of Coverage

Your coverage terminates at the end of the month in which you cease to be an eligible employee. (See Health Benefit Protection in the "What You Need to Know" section of this book.)

Important Reminders

Coverage of dependents terminates at the end of the month in which your coverage terminates, or the dependent ceases to be an eligible dependent, whichever occurs first.

Again, it's important to carefully plan how much money to put into the accounts. Internal Revenue Service (IRS) rules govern the spending accounts as follows:

• You lose any money left in your accounts at the end of the year. The idea is that you should use the money you put in the accounts during the year. So it's probably better to underestimate, rather than overestimate, your expenses.
• You cannot change the amount you've chosen to deposit in the dependent care account unless you have a change in family status, such as marriage, divorce, death, birth or adoption of a child, or loss of your spouse's job.
• No changes are allowed to the health care account, regardless of status change.
• You cannot transfer money between the two accounts.
• You must submit proof of your expenses.
• You cannot use a dependent care spending account and a federal income tax credit for the same expenses.

It's also important to know that:

You can enroll in one or both accounts. You can submit health care expenses for eligible dependents even if they are not enrolled in one of the medical plans.

If you have questions about your health care or dependent care spending accounts, call the Customer Service number of the Claims Administrator.

Claims Administrator

Benefit Administration Company
P.O. Box 550
Seattle, WA 98111-0550

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