UT FLEX

PayFlex Systems USA, Inc. is the administrator for the UT FLEX flexible spending accounts. Effective September 1, there are no changes to the maximum UT FLEX election amounts or to the $9 Debit Card fee.

Authorized by the IRS, the UT FLEX Flexible Spending Account plans let you set aside money from your pay before taxes are withheld. You can use money from these accounts to pay for certain out-of-pocket health care and work-related day care expenses while receiving a tax advantage. As you incur medical care expenses and/or dependent day care expenses throughout the plan year, you submit a claim, and you will be reimbursed with tax-free dollars from your UT FLEX flexible spending account. This reduces the amount you pay in taxes and increases your spendable income. If you elect the PayFlex Debit Card, you will use your card at the time of service and the payment will be automatically deducted from your UT FLEX account.

Your UT FLEX elections must be renewed each Annual Enrollment. Your election amounts are not continued from the previous year.

The UT FLEX plan has two types of accounts:

The Medical Expense Reimbursement Account; and
The Day Care Reimbursement Account.

FLEX Benefit Summary

UT FLEX Reimbursement Account	Your Monthly Payroll Deduction¹	Eligible Expenses
Medical Expense	$15 minimum to $416 maximum	Medically necessary health care expenses, including dental and vision related expenses and certain over-the-counter medications incurred and paid during your period of coverage. These expenses should not be paid by other benefit plans.
Day Care	$15 minimum to $416 maximum or ($208 maximum if married filing separate federal income tax returns). IMPORTANT: In any given calendar year (Jan. 1 – Dec. 31), the dependent day care deductions cannot exceed $5,000 for tax-filing purposes.	For children under age 13 or qualified disabled dependents of any age who are claimed as dependents for federal income tax purposes. Dependent day care expenses that are necessary for you and your spouse (if married) to work or attend school full-time, such as child care services in a home, licensed day care, and adult day care.

¹ Nine-month employees may deduct a maximum of $555 monthly. If your UT campus has chosen to allow for an annual amount calculated over the deduction period, the maximum amount is $5,000 per plan year.

How the Plan Works

Decide how much you want deducted from your paycheck and transferred to your UT FLEX account. (Use the PayFlex Savings Calculator)
During Annual Enrollment, you enroll in one or both UT FLEX accounts through the UT Touch enrollment system.
When you have a medical expense or day care expense, send a claim form with your receipts to PayFlex. (See Flex Convenience® Card information below for medical expenses.)
A reimbursement check will be mailed to your home, or the funds can be directly deposited to your bank account.

Tips:

Plan carefully as any amount left in your account after the claims run-out period will be forfeited.
If you choose “Direct Deposit,” be sure to fill out and submit a special PayFlex Direct Deposit authorization form with a “voided” check.

Medical Expense Reimbursement Account

Eligible Medical Expenses

Eligible medical expenses are amounts paid for the diagnosis, cure, mitigation or treatment of a disease, or for treatments affecting any part or function of the body. The expense must be primarily to alleviate a physical or mental illness.

The following are examples of eligible expenses:

Deductibles, co-pays, coinsurance
Prescription drugs, allergy shots, insulin & syringes, annual physicals, contraceptives
Chiropractor treatments, psychiatric/psychologist fees
Smoking cessation programs
Wheelchair/crutches or other durable medical equipment
Dental exams, x-rays, fillings, crowns, bridges, dentures, orthodontia
Eye exams, prescription eyeglasses and prescription sunglasses, LASIK surgery
Contact lenses and cleaning solutions
Hearing aids and batteries

Eligible Over-the-Counter Items

You can be reimbursed for certain over-the-counter items, such as:

Antacids
First-aid antibiotic ointments and creams
Anti-fungal ointments and creams
Cold remedies, including nasal sprays and cough syrups
Eye drops
Hemorrhoid ointments and creams
Pain relievers, such as aspirin, and acetaminophen
Stop-smoking gums and patches

The Medical Expense Reimbursement Account offers two conveniently accessible features for your health care needs:

Certain over-the-counter items are eligible for reimbursement;
PayFlex Debit Card is available to use as a "debit card."

All claims must be submitted by November 30 following the end of each plan year to be eligible for reimbursement.

If you enroll in the Medical Expense Reimbursement Account, you can be reimbursed for eligible out-of-pocket expenses you incur during the plan year (September 1 through August 31) and grace period (September 1 through November 15), up to the amount you have elected and while you are covered by the plan.

The UT FLEX Medical Expense Reimbursement Account Grace Period

UT FLEX Medical Expense Reimbursement Account participants have an additional 2-1/2 months each year to incur eligible expenses at the end of each plan year. This means that instead of forfeiting any UT FLEX contributions that are not spent by August 31, you may be reimbursed for eligible health care expenses incurred through November 15.

PayFlex Debit Card

If you enroll in the Medical Expense Reimbursement account, you have the option to use the PayFlex Debit card for qualified medical expenses. This card works like a debit card. The IRS requires that PayFlex, on behalf of UT FLEX, audit debit card purchases. Keep copies of all Debit Card transaction receipts for audit purposes.

The advantages to the PayFlex Debit Card are:

Improved cash flow - You don't have to pay money when you use the card at participating merchants and providers.
It's easy to use - You don't have to complete a claim form. PayFlex will request receipts to verify that expenses are eligible under the plan; therefore, you must save your receipts. (IRS guidelines require appropriate documentation of qualifying expenses.)

The annual fee for this card is $9. The fee is deducted at the beginning of the plan year from your annual elected amount.

You must keep copies of all transaction receipts for each card purchase so that these can be provided to PayFlex upon request. This includes itemized cash register receipts that list the merchant name, name of the item/product, date and amount. PayFlex sends receipt request letters on a quarterly basis to participants of the UT FLEX program.

You can use this card only for the UT FLEX Medical Expense Reimbursement Account. It cannot be used for the Day Care Reimbursement Account.

All medical expenses incurred during the 2006-2007 plan year that are filed for reimbursement after August 31, 2007 must be submitted with a PayFlex claim form. If you use your PayFlex Debit Card during the grace period your claim will be deducted from your 2007-2008 election. Following the end of the run-out period (November 30) if you had a 2006-2007 account balance remaining, PayFlex will automatically adjust the balance for expenses incurred during the grace period. In other words, your 2006-2007 account will be reduced and your 2007-2008 account balance will be increased by the corresponding amount.

New IRS Rulings

Beginning January 1, 2008, all grocery stores, supermarkets, large discount, department and general merchandise stores that do not have specified health care-related merchant category codes (MCCs) will need to have an inventory information approval system or designate that their registers at departments such as in-store pharmacies and optical centers be recognized as health care-related merchants in order to accept your UT FLEX card. Additionally, after December 31, 2008, merchants with drug store and pharmacy MCCs must also have the inventory information approval system in place in order to accept the card. Although new and still evolving, the inventory information approval systems only accept pre-approved eligible items. By doing so, further expense substantiation is not required.

DAY CARE REIMBURSEMENT ACCOUNT

You can be reimbursed for qualified dependent care expenses that meet the requirements described below.

Reimbursements can be made up to the amount actually contributed to your account, less prior reimbursements.

Eligible Dependent Day Care Expenses

Work-related expenses incurred so that you and, if married, your spouse can work;
Custodial care for qualified tax dependents;
Before/after school care;
Preschool/nursery school for pre-kindergarten;
Day care center expenses for custodial care
Au pair or nanny dependent care expenses; adult day care expenses
The annual expense reimbursement may not exceed the lesser of:

your earned income,
if married, your spouse's earned income; or,
$5,000 ($2,500 if married, filing separate income tax returns).

Ineligible Dependent Care Expenses

Educational/tuition - kindergarten, first grade or higher
Registration/reservation/holding fees
Activity fees or fees for supplies or materials/field trip expenses
Overnight camp
Transportation expenses, food, clothing, entertainment expenses
Payment of services not yet provided (advance payments)

The amount which you may consider in calculating the tax credit under the Federal Tax Credit is reduced, dollar-for-dollar, by any amount that you place into the Day Care account. The tax credit limits are $3,000 for one qualifying dependent, and $6,000 for two or more qualifying dependents. You should carefully review the benefits of the Federal Tax Credit with the benefits of the Day Care account and seek advice from your tax advisor before making your final decision.

Other Important UT FLEX Plan Features

"Use it or lose it." To qualify as a tax exempt plan, the UT FLEX flexible spending accounts plan must comply with all applicable Internal Revenue Service requirements including forfeiture of non-reimbursed funds. In other words, these UT FLEX spending account plans are "use it or lose it" plans. Any amounts you do not use throughout the plan year and during the grace period for health related expenses will be forfeited, so it is very important to plan carefully. Review your prior year's expenses to estimate your medical and dependent day care expenses for the upcoming plan year. Be conservative and plan only for predictable expenses.

Your UT FLEX spending account elections must be renewed each Annual Enrollment. Your election amounts are not continued from the previous year. However, if more than $10 remains in your UT FLEX account(s), you will receive a notification and reminder during July 2008.

Read additional information about plan features and exclusions in the Flexible Spending Plan guide, also available from your campus Benefits Office.

UT FLEX Spending Account Plans (PayFlex Systems USA, Inc.)
www.utflex.com
Phone: (866) 887-3539 (UTS-FLEX)
Fax: (877-230-4283)