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Medical Spending Account

Plan Year: September 1, 2006 - August 31, 2007
Medical Reimbursement Plan Maximum: $2,000.00
Medical Reimbursement Plan Minimum: No minimum
Dependent Care Account Maximum: $5,000.00

REMINDER: The Internal Revenue Service (IRS) requires review of all receipts for eligible expense in a FSA, including debit card transactions and over-the-counter drugs. As a reminder, participants should keep all of their receipts for the entire plan year in the event that Gilsbar asks for documentation or the IRS request a copy of a receipt.

Flexible Spending Accounts allow you to use pre-tax dollars toward health care expenses such as prescription and over-the-counter medications, certain medical procedures, copays and more. With Flexible Spending Accounts (FSA), you can save a significant amount of money on your health and day care expenses using a Health Care and/or Dependent Care Flexible Spending Account (FSA). The frequently asked FSA questions below will help you understand how to make the most of this program and your paycheck.

General questions regarding Health Care and Dependent Care Accounts:

What is an FSA?
Provided by your employer, an FSA is a reimbursement account that allows you to set aside a certain amount of each paycheck, pre-tax, to help pay for your out-of-pocket medical expenses and/or dependent day care expenses. The amount you elect is deducted from gross earnings before federal and state taxes are calculated. By using your FSA to pay for qualified expenses you save on income tax... which means your take home pay increases.

Will I pay taxes on the money I set aside?
No. FSA contributions and reimbursements are exempt from Federal Income taxes, Social Security (FICA) taxes, and in most cases, state income taxes.

What kind of savings can I realize by participating in this program?
Actual savings depend on your tax bracket, but most people will save about 30% on their eligible health care and dependent care expenses.

Can I submit expenses I incurred before the beginning of the plan year?
No. Only expenses incurred during the plan year and while youare a participant are eligible for reimbursement.

How long do I have to file a claim with Gilsbar after the plan year ends?
You have a grace period (90 days) after the end of the plan year to submit expenses incurred durring the plan year.

Can I change the amount of my election(s) in the FSA program during the plan year? (i.e. my glasses cost more than i anticipated, I miscalculated my daycare for the year)
Generally, you may not change your FSA elections during the Plan Year. However, you may change during the annual enrollment period for the coming Plan Year. There is an exception to this rule: you may change or revoke your deferral rate in the FSA if you have a Change in Dependent Status.
Examples:
- Marriage, divorce, or legal separation
- Birth, adoption, or placement for adoption of a child
- Death of a dependent or spouse
- Change in employment status of yourself or your spouse
- A significant change caused by a third party int he cost of your dependent care coverage

If I terminate employment, or participation in the FSA, what happens to the money left in my account(s)?
Your will be reimbursed only for expenses incurred prior to your termination date, and submitted within the termination grace period. Any money remaining in your account(s) after the grace period will be forfeited.

Can I view my FSA balances online?
Yes! Visit myGilsbar.com and login to access claims infromation and FSA balances online. Once you are logged in, select the "Reimbursement Account Center" link on the left side of the screen to view your account balances. If you are new to myGilsbar.com, complete the brief site registration to login. You will need your group number (found on your ID card), social security number, and a valid email address to complete this section.

What if I have a question?
If you have any questions regarding your account balance, claim reimbursement or eligible expenses, you can access you account infomation at myGilsbar.com or you can call our Customer Contact Center at 1-800-445-7227 ext.883.

How does participating in an FSA save me money?
The following examples illustrates how a FSA saves you money. This example shows the per period savings for an employee on a bi-weekly payroll, with a tax status of "single" with one exemption:

Tax Saving This Pay Period: $63.99
Annual Tax Savings: $63.99 x 26 Pay Periods + $1,663.74

HEALTH CARE REIMBURSEMENT ACCOUNT

The Health Care FSA is simple! Provided by your employer, a Health Care FSA is a reimbursement account that allows you to set aside a certain amount of each paycheck, pre-tax, to help you pay for your out-of-pocket medical expenses. This amount your elect is deducted from gross earnings before federal and state taxes are calculated. By using your FSA to pay for qualified medical expenses you save on Income tax... which means your take home pay increases.

How does the Health Care FSA Work?
With a Health Care FSA, you must decide on your contribution amount at the beginning of the plan year. The amount you designate will be equally divided between pay periods. To estimate the out-of-pocket that you, your spouse and your dependents may incur, consider any standard copays, prescriptions, office visits, and over-the-counter medications and planned medical expenses i.e. braces or LASIK eye surgery.

The IRS requires you to forfeit any money that is left in the FSA at the end of the year. Generally, it is better to underestimate the expenses and pay a little extra tax than to overestimate expenses and forfreit money. To help avoid forfeitures, you will receive a notice of you balances prior to the end of the plan year.

You can access information online 24/7 via myGilsbar.com. Select the "Reimbursement Account Center" link on the left side of the screento view your balances. Once you decide how much you want to contribute each paycheck, the money is automatically deposited into your account. As you incur eligible expenses, fax your completed claim form and receipts to Gilsbar for reimbursement.

What is eligible for reimbursement under the Health Care FSA?
Eligible health care expenses my include deductibles, co-payments and amounts over the maximum your plan pays, expenses for routine physicals and other expenses not covered by your health care plan.

How do I get reimbursed?

For reimbursement of expenses covered under a health care plan:
- Ensure you expenses are submitted to your health carrier
- If you also have coverage through a spousal plan, you must submit you expenses to both carriers before you submit your expense for FSA reimbursment
- Once processed by your health carrier(s), complete the Health Care Expenses Claim Form and attach a copy of the "Explanation of Benefits" showing the unpaid expenses

For reimbursement of expense not covered under a health care plan: example: over-the-counter medicines
- Complete the Health Care Expenses claim form and attach itemized bills for the expense

FAX CLAIMS AND PROOF OF EXPENSES TO 866-6351329 FOR PROCESSING.

How much will I be reimbursed?
When you submit a health care expense, you will be reimbursed for eligible expenses claims up to the maximum amount you elected for the plan year, minus any previous reimbursements.

Can I use my Health Care FSA for my family's expenses?
Eligible health care expenses incurred by you, your spouse or any dependent that you claim as a depensdent on your tax returns are allowable for reimbursement.

If I don't have any medical insurance through my company, can I still participate in the Health Care FSA?
Yes. Out-of-pocket expenses for you and your dependents are eligible for reimbursement whether or not you are insured through your company. Health related expenses are reimbursable for your dependents, if you claim them as a dependent on your income tax returns.

Is there anything I have to keep in mind when it comes time to file my taxes?
Expenses payable through you benefits program (or your spouse's, if applicable) are not eligible for reimbursement under the Health Care FSA. In addition, expenses reimbursed through your Health Care FSA cannot be claimed as a deduction on you income tax returns.

I am covered under both my health insurance plan and my spouse's. Do I have to submit medical expenses to both plans before I can file for reimbursement from my Health Care FSA?
Yes. IRS regulation do not permit reimbursement of expenses through the FSA that would otherwise be covered under your health insurance plan. Expenses should first be submitted to your health insurance plan(s), then send any remaining unpaid claims to Gilsbar for reimbursement.

The following is a brief summary of information and is intended to serve as a quick reference to help determine whether or not an expense be eligible for reimbursement. This list is not all-inclusive. This information is not tax advice. Tax advice should be obtained from a professional tax advisor.

Over-The-Counter
Over-the-counter Drugs Used Primarily for Medical Care.
THE DRUGS/MEDICINES LISTED BELOW ARE APPROVED WITH A RECIEPT FROM THE PROVIDER/STORE. A RECOMMENDATION FROM A HEALTH CARE PROVIDER IS NOT NEEDED.

The following is a brief summary of information and is intended to serve as a quick reference to help determine whetheror not an expense may be eligible for reimbursement. This list is not all-inclusive. This information is not tax advice. Tax advice should be obtained from professional tax advisior. IRS Publication 502 can be ordered from the IRS 1-800-TAX-FORM (1-800-829-3676).

HEALTH CARE FLEX DEBIT CARDS

As an added benefit, your employer has decided to offer you a debit card fro your Health Care Flexible Spending Account (FSA). Please read this carefully to find out how the debit card can give you faster access to your Health Care FSA funds.

What is a Health Care FSA Debit Card?
The FSA debit card is like your bank debit card except that the FSA debit card is linked to your Health Care FSA. You can use the card to pay health care providers directly out of your FSA at the time of purchase.

How does the Flex Debit Card work?
Shortly after the start of the plan year, you will receive your FSA Debit Card to use to pay for your eligible medical expenses. When you incur an eligible health care expense, you simply swipe your debit card at the point of purchase, select the "CREDIT" option on the card reader, and the amount of the purchase is deducted directly from you Health Care FSA acount balance. You do not have to pay cash, write a check or provide another means of payment. Your health care provider is paid automatically from your Health Care FSA.

What kinds of services can I purchase with the debit card?
The debit card can be used to purchase health care services from may medical providers, including physicians offices, pharmacies, dental providers, vision providers, hospitals, and online service providers or retailers.

Where can I use my FSA Debit Card?
Your FSA Debit Card will only be accepted at authorized vendors, i.e. medical clinics, hospital, dental offices, vision care centers and pharmacies that have the appropriate merchant codes.

Do I have to apply for the FSA Debit Card?
No. If you participate in the Health Care FSA, you will receive a debit card by U.S. mail at your home address. If you do not want to use the care for your eligible health expenses, simply destroy the card upon receipt.

Do I have to use the FSA debit card for all my health care expenses?
No, the FSA debit card is provided to you as a convenience. You make the choice every time you purchase health care products or services if you would like to use the debit card. If you dont use your debit card, you can submit any health care expenses manually by fax for reimbursement to Gilsbar at 866-635-1329 along with a completed claim form and receipts.

If I use my FSA Debit Card, is verification of claim still required?
Beginning January 1, 2008, new IRS rules have simplified the use of Flex Debit Cards. These rules now require drug stores and supermarkets to identify FSA-eligible item at checkout and require the drug store or supermarket to only use the card for FSA eligible items. That means you can use your Card at participating stores tha offer this feature for the total FSA-eligible amount and NO receipts are needed to verify the eligiblity of the purchase. And of course, you can continue to use your Card at pharmacies and other health care providers.

Please visit http://www.sig.is.org/imwp/download.asp?ContentID=12418 for the lastest list of participating merchants.

Important Points to Remember

If your use your Card on or after January 1, 2008, in a discount store or supermarket that is not participating - even if you purchase FSA-eligible items in the stor prior January 1, 2008, your card may be declined.

Here's how your FSA Card works at participating stores:

1. Bring prescriptions and vision products, OTC's and other purchases to the register at checkout to let the clerk ring them up.
2. Present your Card and swip it for payment.
3. If the Card is swipe transaction is approved (e.g. there are sufficient funds in the account and at least some of the purchases are FSA-eligible), the amount of the FSA-eligible purchases is deducted from the account balance and no receipt follow-up is required. The clerk will then ask for payment for the nonFSA-eligible items.
4. If the Card swipe transaction is declined, the clerk will ask for another form of payment for the total amount of the purchase.
5. The receipt will identify the FSA-eligible items and may also show a subtotal of the FSA-eligible purchases.

What should I do to pay for an expense that is more than my account balance?
You should tell the merchant to swipe your card for the amount equal to what is left in your accont, then use another payment method to pay the remaining balance.

FAX CLAIM S AND PROOF OF EXPENSE TO 866-635-1329 FOR PROCESSING (PLEASE KEEP YOUR ORIGINALS)
Questions? Call Gilsbar's Customer Contact Center at 1-800-445-7227 ext. 883

If you prefer to submit claims by mail, please send claim from and receipts to:
Claims Processing Center
P.O. Box 26046
Tampa, FL 33623

DEPENDENT CARE REIMBURSEMENT ACCOUNT

The Dependent Care FSA helps you pay fro child cared services which make it possible for you and your spouse (if applicable) to work. It also may be used to help pay for the care of a disabled spouse or dependent. The Dependent Care FSA creates tax savings on up to $5,000 of daycare expenses. That can mean $1,500 in tax savings enough to pay for weeks of eligible child or adult care.

How Does a Dependent Care FSA work?
A Dependent Care FSA is a reimbursement accont that allows you to set aside a certain amount of each paycheck on a pre-tax basis to pay for your eligible dependent day care expenses. The amount you elect at the beginning of each plan year, is deducted from your gross earnings before federal and state taxes are calculated. By using your FSA to pay for qualified expenses you save on income tax... which means you have more money in your pocket.

Am I eligible to use the Dependent Care FSA?
To be eligible, you must be at work during the time your eligible dependent receives care. You must also meet one of the following eligibility quidelines:

• You and your spouse are both employeed;
• You are a single parent;
• Your spouse is a full-time student at least five months during the year while you are working;
• Your spouse is physically or mentally unable to provide his/her own care; or
• You are divorced or legally separated and have custody of your child most of the time even though your former spouse may claim the child for income tax purposes.

Who is an eligible dependent?
An eligible dependent is defined as any person who can be claimed as a dependent for federal tax purposes and who:

• Is a child under 13 years of age;
• Is a child over the age of 13 who is physically or mentally incapable of caring for himself or herself;
• Is your spouse who is physically or mentally incapable of caring for himself or herself;
• An elderly parent who resides with you and is physically or mentally incapable of caring for himself or herself.

What is covered?
Eligible dependent care expenses are those which allow you and your spouse, if you are married, to work or attend school full-time. Below are some examples of eligible dependent care expenses:

• Day care facility fees
• Before/after school care
• Summer day camp (not overnight)
• Nursery school or preschool, if child is too young for kindergarten
• In home babysitting fees, if not provided by another dependent and claimed as income by the care provider
• Private school tuition, K4 and above is not eligible for reimbursement
  

Is there anything I should keep in mind when it comes time to file my taxes?
You are required to provide the name, address and taxpayer indentification (or Social Security number) of the dependent care provider on you income tax return. If you are unable to provide this infromation, both the tax credit and the exclusion for the spending account reimbursment may be denied by the IRS. Verify that this information is avaible before you elect to participate in the Dependent Care FSA.

Expenses reimbursed from this FSA cannot be used to claim a Federal Income Tax credit; therefore, you will have to determine which approach for you. You may even be able to combine the expense account and tax credits to reduce your overall dependent care expenses. However, the maximum expenses you can claim when using both the tax credit and FSA is the tax credit limit.($2,400 for on dependent and $4,800 for two or more dependents), minus the amount reimbursed under the Dependent Care FSA).

How do I get reimbursed?
As you incur eligible expenses you must submit a completed Dependent Care FSA claim form to Gilsbar with proof of payment from your day care provider or from the individual who provides the care. Dependent Care FSA claims must include the federal tax identification number or Social Security number, name and address of the provider, dates of service, type of service rendered and name of dependent. The individual who provides the care cannot be you spouse or a dependent under the age of 19.

With a Dependent Care FSA, you will be reimbursed as you set funds aside. If you submit a claim for more than what has been set aside for that account, the unreimbursed claim portion will be placed in "pending" status until funds are received through payroll deduction at which time you will receive reimbursement.

FAX CLAIMS AND PROOF OF EXPENSE TO 866-635-1329 FOR PROCESSING

Can I pay my in-home daycare provider through the Dependent Care FSA?
Yes. You can be reimbursed from your Dependent Care FSA for any qualified daycare expenses, whether performed in your home, the provider's home or a "daycare center." Receipts for the expenses and the caregiver's Tax ID number or Social Security number must be provided.

I'm divorced; my ex-spouse claims our child as a deduction for tax purposes. I pay for child care. Can I use the Dependent Care FSA?
If your child resides with you most of the year, you can use the dependent care account to pay for child care services. However, you might want to call your tax advisor to discuss you particular circumstances before you elect to participate in the account.

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