UT FLEX

PayFlex Systems USA, Inc. is the administrator for the UT FLEX flexible spending accounts. Effective September 1, 2008, 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 medical and work-related dependent day care expenses while receiving a tax advantage. As you incur medical expenses and/or dependent day care expenses throughout the plan year, you submit a claim via Express Claims, fax or mail, 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 spending account 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 Dependent Day Care Expense Reimbursement Account (for care provided to your qualified dependent child or adult dependent if eligible).

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 2008–2009 during this Annual Enrollment, even if you are currently enrolled in one of the UT FLEX elections. 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) in U.T. Touch, 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 that reflects this withholding. Annual Enrollment elections will become effective 9/1/08. If you receive your paycheck monthly, then the first UT FLEX withholding for plan year 2008–2009 will be reflected on your 10/1/08 paycheck. If you discover a mistake (e.g., you intended to elect the Dependent Day Care Expense Reimbursement Account but mistakenly elected the Medical Expense Reimbursement Account), you MUST report the error to your institution Benefits Office by the end of October 2008 or UT will not approve the change.

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.
Dependent 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 institution 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 spending account(s). (See www.utsystem.edu/benefits for a "Savings Calculator.")
• During Annual Enrollment, enroll in one or both UT FLEX accounts through the U.T. Touch Online enrollment system.
• When you have a medical or dependent day care expense, use the Express Claim feature or send a claim form with your receipts to PayFlex. (See PayFlex Debit 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.
• You can 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.

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

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; and
• Stop-smoking gums and patches.

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

• Reimbursement of certain over-the-counter items;
• Convenient PayFlex Debit Card to use as a "debit card."

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.

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

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 (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 2007-2008 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 2007-2008 balance and take the additional $15 out of the 2008-2009 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 2007-2008 plan year), PayFlex would return the $50 taken from the 2007-2008 balance to cover the August 15 claim; they would then deduct the $65 claim incurred on September 10 from the 2008-2009 balance.

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, but in order to minimize the number of quarterly receipt requests UT has authorized that PayFlex automatically substantiate copayment charges and reoccurring purchases as long as the purchase price is consistent with prior purchases, and UT SELECT costs as long as the cost matches the carrier’s Explanation of Benefits (EOB) information.  It is best to keep copies of all Debit Card transaction receipts for audit purposes in the event you are asked for a receipt.

The advantages to the PayFlex Debit Card are

• Improved cash flow - You do not have to pay money 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 this card is $9. The fee is deducted at the beginning of the plan year from your annual elected amount.  The card is valid for a three-year period as long as the debit card option is re-elected in the each year. 

You must keep copies of all transaction receipts for each card purchase so 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 Dependent Day Care Expense Reimbursement Account.

IRS Rulings
Merchant Category Codes
As of September 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 (IIAS) 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 PayFlex Debit Card.  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, providing receipts for these items as part of a PayFlex audit will not be required.  Please visit the PayFlex website (www.utflex.com) for additional IIAS updates.

Dependent Day Care Expense Reimbursement Account

You can 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)

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 Dependent Day Care Expense Reimbursement 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 Dependent Day Care Expense Reimbursement account and seek advice from your tax advisor before making your final decision.

Other Important UT FLEX Flexible Spending Account 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.  PayFlex will send a notification each July to any members with more than $10 remaining in their UT FLEX account(s), providing a reminder to submit claims against those funds before forfeiting the remaining balance.

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

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