UT FLEX

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 medical and work-related dependent day care expenses. As you incur medical expenses and/or dependent day care expenses throughout the plan year, you can submit a claim using online Express Claims, fax or mail, and you will be reimbursed from your corresponding 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 can use your card at the time of service, and the payment will be automatically deducted from your UT FLEX Medical Expense Reimbursement Account.

PayFlex Systems USA, Inc. is the administrator for the UT FLEX flexible spending accounts.

There is an annual administrative fee of $12.00 per UT FLEX account (Medical Expense Reimbursement Account and Dependent Day Care Reimbursement Account). The administrative fee is the first deduction from your UT FLEX account(s) and is prorated for mid-year elections.

Due to recent Federal health care legislation, reimbursement rules for OTC are changing effective January 1, 2011. Any OTC medication expense (except OTC insulin) incurred after December 31, 2010, must be accompanied by a prescription. This change will not qualify as a mid-year change in status.

Based on prior plan history, the impact of this change should be minimal for most UT FLEX participants. As you can see from the chart below, only about 1% of the claims dollars reimbursed are for OTC products. Please see the “Savings Calculator” to estimate your reimbursable medical expenses for Plan Year 2010–2011.

 

The UT FLEX plan has two types of accounts available for tax savings opportunitiess:

• The Medical Expense Reimbursement Account; and
• The Dependent Day Care Reimbursement Account (for care provided to your qualified dependent child or adult dependent if eligible).

Tax Savings Examples
(Based on 2010 tax year, 15% tax bracket & 7.65% FICA)

Example 1:

Employee A, Single, no children	UT FLEX Participant	Without UT FLEX
Annual Salary	$40,000	$40,000
Medical Expense Election Amount	($1,500)	($0)
Dependent Day Care Election Amount	($0)	($0)
Taxable Income After Election Amount	$38,500	$40,000
Estimated Taxes Withheld (22.65%)	($8,720)	($9,060)
Post-Tax Income	$29,780	$30,940
Money Spent After-Tax on Health Care & Dependent Care Expenses	($0)	($1,488)*
Take-Home Pay	$29,780	$29,452
Savings	$328	$0/

*Assuming $1500 - $12 Administrative Fee

Example 2.

Employee B, Married, 2 children	UT FLEX Participant	Without UT FLEX
Annual Salary	$28,000	$28,000
Medical Expense Election Amount	($500)	($0)
Dependent Day Care Election Amount	($500)	($0)
Taxable Income After Election Amount	$27,000	$28,000
Estimated Taxes Withheld (22.65%)	($6,116)	($6,342)
-Tax Income	$20,884	$21,658
Money Spent After-Tax on Health Care & Dependent Care Expenses	($0)	($976)*
Take-Home Pay	$20,884	$20,682
Savings	$202	$0

*Assuming $500 - $24 Administrative Fee for both accounts
How the Plan Works

• Decide how much you want deducted from your paycheck and transferred to your UT FLEX spending account(s). (See "Savings Calculator.")
• During Annual Enrollment, enroll in one or both UT FLEX accounts through the online My UT Benefits enrollment system.
• When you have a medical or dependent day care expense, you can file for reimbursement from PayFlex by completing the Express Claims form online on the PayFlex website at www.utflex.com, and either send the completed form electronically or print, sign and fax the claim form with your receipts to PayFlex toll free at (866) 932-2567.
• A reimbursement check will be mailed to your home, or the funds can be directly deposited to your bank account.

"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.

UT FLEX: You MUST Enroll During Annual Enrollment or within 31 days of your hire date
Don’t forget you must make your UT FLEX elections (for both Medical and Dependent Day Care) for Plan Year 2010–2011 during this Annual Enrollment, even if you are currently enrolled in one of the UT FLEX accounts. Your election(s) in this current plan year will not automatically carry forward to the next plan year.

Important: After you make your UT FLEX election(s) online at My UT Benefits, be sure to verify both your election(s) and the amount(s) to be withheld. In compliance with the IRS Code, corrections will not be allowed after 31 days following receipt of your first paycheck in the new plan year that reflects this withholding. Annual Enrollment elections will become effective September 1, 2010. If you receive your paycheck monthly, then the first UT FLEX withholding for plan year 2010–2011 will be reflected on your October 1, 2010 paycheck. If you discover a mistake (e.g., you intended to elect the Dependent Day Care Reimbursement Account but mistakenly elected the Medical Expense Reimbursement Account), you must report the error to your institution Benefits Office by October 31, 2010.

FLEX Benefit Summary

UT FLEX Reimbursement Account	Your Monthly Payroll Contributions and Limits	Eligible Expenses
Medical Expense	$15 minimum contribution per month. Total contributions cannot exceed $5,000 per plan year	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.
Dependent Day Care	$15 minimum per month up to a maximum of $5,000 per plan year; or up to a maximum of $2,500 per plan year 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 federal income 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.

Any OTC medication expense (except OTC insulin) incurred after December 31, 2010, must be accompanied by a prescription.

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, copayments, coinsurance
• Prescription drugs, allergy shots, insulin and 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

Important! Reimbursement Policy for Over-the-Counter Items to Change
You may be reimbursed for certain over-the-counter (OTC) items. Please note: Due to recent Federal health care legislation, reimbursement rules for OTC are changing effective January 1, 2011. Any OTC medication expense incurred after December 31, 2010, must be accompanied by a prescription.

UT FLEX Medical Expense Reimbursement Account Grace Period

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

All medical expenses incurred during the current plan year that are filed for reimbursement after August 31, must be submitted with a PayFlex Claim Form or through the Express Claim system. You have until November 30 following the end of the plan year to file all prior year claims. Claims for expenses incurred during the Grace Period (September 1–November 15) will be paid from the prior year election first until your balance is exhausted. This includes both the PayFlex Debit Card and manual claims. Once your previous year’s balance is exhausted, expenses incurred during the Grace Period will be paid out of your next year’s election. If you file additional claims with dates of service from the prior year after your balance is exhausted due to Grace Period claims, PayFlex will automatically reconcile your account to ensure the maximum benefit from the prior plan year is received. Taking advantage of the Grace Period requires little effort on your part because of PayFlex’s automatic adjustment process. Please continue to use your PayFlex Debit Card or submit claims to PayFlex to make the necessary adjustments to ensure you maximize the benefits from your UT FLEX Medical Expense Reimbursement Account.

For example, a member has $50 remaining in their 2009–2010 plan year account on August 31 (the end of the plan year). On September 10 (during the Grace Period), the member incurs a claim for $65. PayFlex would subtract the $50 remaining in the 2009–2010 balance and take the additional $15 out of the 2010–2011 plan year election amount to cover this claim. If, on September 15, the member discovers an outstanding claim for $50 incurred on August 15 (during the 2009–2010 plan year), PayFlex would return the $50 taken from the 2009–2010 balance to cover the August 15 claim; they would then deduct the $65 claim incurred on September 10 from the 2010–2011 balance.

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

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. The IRS requires that PayFlex, on behalf of UT FLEX, obtain substantiation for most debit card purchases. UT has authorized PayFlex to automatically substantiate copayment charges and reoccurring purchases, provided the purchase price is consistent with prior purchases and UT SELECT costs, and the cost matches the carrier’s Explanation of Benefits (EOB) information. It is best to keep copies of all Debit Card transaction receipts for substantiation purposes in the event you are asked for a receipt.

The PayFlex Debit Card advantages are:

• Improved cash flow - You do not have to pay out-of-pocket when you use the card at participating merchants and providers;
• Ease of use - You do not have to complete a claim form when paying for purchases with your PayFlex Debit Card. PayFlex will request receipts to verify that certain expenses are eligible under the plan; therefore, you MUST save your receipts. (IRS guidelines require appropriate documentation of qualifying expenses.)

The annual fee for the debit card is $9. The fee is deducted from your annual elected amount on your first paycheck of the plan year. The card is valid through the expiration date shown on the card. New cards will be mailed to your address on file upon card expiration.

You must keep copies of all transaction receipts for each card purchase so these can be provided to PayFlex upon request for claim substantiation. This includes itemized cash register receipts that list the merchant name, name of the item/product, date and amount.

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

Effective January 1, 2011, the PayFlex Debit Card cannot be used to purchase OTC medications. If a debit card is presented to purchase an OTC item after January 1, 2011, the transaction will be denied at the point-of-sale. The purchase will need to be made out-of-pocket and a claim can be submitted to PayFlex accompanied by a prescription in order to receive reimbursement.

Dependent Day Care Expense Reimbursement Account

You may be reimbursed for qualified dependent day 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 Day 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)

IMPORTANT: Coordination with Federal Child and Dependent Care Expenses Tax Credit

If you plan to use a combination of the UT FLEX Dependent Day Care Reimbursement Account and the “Credit for Child and Dependent Care Expenses” on your federal income tax return, the amount you deposit in your Dependent Day Care Reimbursement Account will offset dollar-for-dollar the amount of expenses you are eligible to claim as a tax credit on your federal income tax return. 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 Income Tax Credit with the benefits of the UT FLEX Dependent Day Care Reimbursement Account. If you are not sure how this may impact you, consult your personal tax advisor before making your elections.

Tips:

Express Claims! This feature enables your paper claims to be processed within three hours! Simply visit www.utflex.com

You can upload scanned receipts via Express Claims.

Plan carefully–any amount left in your account after the claims run-out period will be forfeited

You may choose “Direct Deposit” for your reimbursements by providing your bank account information at www.utflex.com or by submitting a special PayFlex Direct Deposit authorization form with a “voided” check

Read additional information about plan features and exclusions in the UT FLEX Benefits Guide or from your institution Benefits Office.

Frequently Asked UT FLEX Questions and Answers
PayFlex Systems USA, Inc.

1. What is UT FLEX?
   
   UT FLEX is a plan authorized by the IRS that lets you set aside money from your pay before taxes are withheld to pay certain group insurance premiums and for placement in medical and/or dependent day care expense reimbursement accounts. As you incur medical and/or dependent day care expenses throughout the plan year, you will be reimbursed with tax-free dollars from your UT FLEX accounts. This reduces the amount you pay in taxes and increases your spendable income.
2. Where can I see a detailed list of eligible and ineligible expenses?
   
   This information is available at www.utflex.com.
3. If I elected a UT FLEX Flexible Spending Account for the past benefit plan year (2009–2010), will it continue for the new year if I do nothing at Annual Enrollment?
   
   No. You must re-enroll in each UT FLEX spending account plan during this Annual Enrollment period if you want to continue to participate during the 2010–2011 plan year.
4. How can I be reimbursed from the UT FLEX account for my out-of-pocket medical expenses?
   
   You may receive reimbursement for any qualified health care expenses in one of two ways: a) elect the PayFlex Debit Card for an annual fee of $9.00 and swipe the card after receiving services at an authorized provider’s location. You may choose to have your reimbursement either direct deposited into your bank account or mailed to your mailing address b) complete the Express Claims form online on the PayFlex website and either send the completed form electronically to PayFlex or print out the completed claim and fax to PayFlex using their toll free number. The maximum amount of your reimbursement cannot exceed the amount of your UT FLEX annual election.
5. What if I do not use all the money in my UT FLEX spending accounts?
   
   The UT FLEX Medical Reimbursement Account grace period allows for an additional 2 ½ months for you to incur eligible medical expenses and to file for reimbursements (see information above regarding the Grace Period). Therefore, you may incur eligible medical expenses until November 15, 2010, and receive reimbursements from your 2009–2010 plan year contribution amounts. The due date to file for reimbursements on those medical expenses is November 30, 2010. Any unused funds in your account will be forfeited. There is no similar Grace Period for the Dependent Day Care Reimbursement Account. Only eligible expenses incurred during the plan year between September 1 and the following August 31 can be reimbursed. Any unused funds in your account will be forfeited.
6. How can I determine how much to contribute to my UT FLEX account?
   
   To determine the amount of your contributions for the 2010–2011 plan year, please utilize helpful PayFlex tools such as the FSA Savings Calculator at www.utflex.com.
7. How much money can I put in a Medical Expense Reimbursement Account or a Dependent Day Care Reimbursement Account?
   
   You may elect any amount from a minimum of $15 per month up to a maximum annual contribution of $5,000 per plan year for the Medical Expense Reimbursement Account. If you elect a Dependent Day Care Reimbursement Account, IRS regulations limit you, or if married and filing jointly, you and your spouse are also limited to the maximum amount of $5,000 for the account in any calendar year. If you are married and filing a separate income tax return from your spouse you are limited to a maximum of $2,500 for the account per calendar year. If you are hired during the plan year, the maximum annual election cannot exceed approximately $416 per month if a 12-month employee (or $555 per month if a 9-month employee) multiplied times the number of remaining months in the plan year. Important: The IRS maximum amounts for contributions to Dependent Day Care accounts are based on a calendar year (January 1 through December 31). Your paycheck contributions are tracked by UT FLEX and your employing institution on a fiscal year (September 1 through August 31) basis. You and, if applicable, your spouse, not UT FLEX or your employing institution, are responsible for making sure that you do not exceed the IRS limits during each calendar year.
8. Can I use the PayFlex Debit Card for both the Medical Expense Reimbursement Account and the Dependent Day Care Reimbursement Account?
   
   The PayFlex Debit Card can only be used for the Medical Expense Reimbursement Account.
9. Must I re-elect the PayFlex Debit Card?
   
   If you currently have the PayFlex Debit Card for plan year 2009–2010 and you make a UT FLEX Medical Account election for 2010–2011, My UT Benefitswill automatically select “YES” for the debit card option. If you re-enroll in UT Flex Medical Expense Reimbursement for 2010–2011, currently have the debit card, but do not want the debit card in 2010–2011, you must actively select “NO, I DO NOT want to add the Debit Card to my UT FLEX Medical benefit.”
10. What do I do with the PayFlex Debit Card I have now?
    
    If you have a PayFlex Debit Card with an expiration date of 08/10, you will receive a new card prior to September 1, 2010. If your Debit Card has an expiration date of 08/10 or later, you will continue to use the same card during the 2010–2011 plan year.