Untitled Document

REIMBURSEMENT ACCOUNT PROGRAMS

The Pace University Reimbursement Account programs provide you with the opportunity to set aside, on a pre-tax basis, a pre-determined dollar amount to reimburse yourself for eligible expenses.

There are two types of Reimbursement Accounts:

1. Flexible Spending Accounts for medical/dental and/or dependent daycare expenses
2. Commuter Reimbursement Accounts for mass transit and/or parking expenses

Flexible Spending Accounts (FSA)

Health Care Flexible Spending Account

This account will reimburse you with tax-free dollars for unreimbursed medical or dental expenses incurred by you, your spouse/domestic partner or your dependent.

You may elect to contribute up to a maximum of $8,000 to the Health Care FSA for the 2003 plan year. The minimum annual contribution is $200.

Examples of Eligible Medical and Dental Expenses:

Copayments, deductibles and coinsurance

Expenses that exceed usual, reasonable and customary (UCR) limits

Vision or hearing expenses not covered by your plan

Unreimbursed expenses for mental health care

Unreimbursed chiropractic expenses

Any other expense that would qualify as a medical expense deduction for federal income tax purposes

Examples of Expenses that do NOT Qualify for Reimbursement:

Health or Dental plan premiums (including COBRA)

Health club dues

Cosmetic surgery that is not medically necessary

Non-prescription medicines or vitamins

Long-Term Care insurance premiums

Any other expense that would NOT qualify as a medical expense deduction for federal income tax purposes

You can obtain a complete list of eligible expenses in IRS Publication 502-Medical and Dental Expenses. This publication is available at your local IRS office or on the IRS website, www.irs.ustreas.gov/.

Dependent Care Flexible Spending Account

This account will reimburse you with tax-free dollars for day care expenses incurred for your dependent child under age 13 while you and your spouse (if married) are at work. Day care expenses incurred for dependents age 13 or over are considered eligible only if the dependent is physically or mentally disabled, spends at least eight hours a day in your home and depends on you for at least half of his or her support. To be eligible, the child, spouse or parent must be a dependent you claim on your federal tax return.

You may elect to contribute up to a maximum of $5,000 to the Dependent Care FSA for the 2003 plan year. The maximum is $2,500 if you and your spouse file separate federal income tax returns. The minimum annual contribution is $200.

Examples of Eligible Dependent Care Expenses:

Payments for dependent care services provided in the home. The services cannot be provided by someone you also claim as a dependent, or by your child under age 19, whether or not a dependent.

Pre-school or nursery school tuition (below first grade)

Day camp

After-school programs

Child care centers

Examples of Dependent Care Expenses that are NOT Eligible:

Education expenses for the first grade or higher

Payments to a care giver while at home sick from work

Round-the-clock nursing home care

Overnight camp

Transportation to and from a care site

If you use the services of a dependent care center that provides care for at least six individuals, the center must be in compliance with state and local laws.

You can obtain a complete list of eligible expenses in IRS Publication 503-Child and Dependent Care Expenses. This publication is available at your local IRS office or on the IRS website, www.irs.ustreas.gov/.

FSA Enrollment Considerations

If you do not incur enough eligible expenses by year-end to receive all the money back from your account, the balance is forfeited as stipulated by Section 125 of the Internal Revenue Code. The unused balance cannot be carried forward to the next plan year. In addition, you cannot use money in your Dependent Care FSA to pay health care expenses or vice versa. It is important that you estimate your expenses carefully, so as not to lose the money you have elected to set aside.

You cannot be reimbursed “in advance” for your expenses. If your care is given in-network, you should save your receipts until you have a total of at least $50 in co-payment charges, and then you may submit those charges for reimbursement.

You can be reimbursed for eligible health care expenses, up to the total of your yearly contributions, even before your contributions to the Health Care FSA have been made. For instance, if you authorize $1,000 in Health Care FSA contributions, $83.33 would be withheld, from your paycheck each month. If you have $250 in eligible expenses in February, you would be reimbursed the full $250, even though your contributions to date were only $166.66.

Your dependent care expenses can be reimbursed only up to the current balance in your Dependent Care FSA. In addition, if you are reimbursed for dependent care expenses through your FSA, the same expenses cannot be applied toward a tax credit on your federal income tax return.

You may want to compare your tax savings for dependent care under the FSA plan with the tax credit you could receive at year-end when you file your federal income tax return. You can claim the tax credit only for expenses that were not reimbursed through your Dependent Care FSA. You should speak with a tax advisor to determine which option is best for you.

Your 2003 Flexible Spending Account(s) can only be used to reimburse you for services performed in 2003. A bill that you receive in 2003 for services performed in 2002 will not qualify. On the other hand, to accommodate any delayed billings, you will be permitted to submit bills for reimbursement up to March 31, 2004, as long as the bills are for services rendered in 2003 and there is sufficient money left in your 2003 account.

Filing A Claim

In order to receive a reimbursement for eligible health care or dependent care expenses a claim form with appropriate documentation must be filed with our third-party administrator, Benefit Concepts Systems (BCS). The claim forms are available at our website, www.pace.edu/hr.

Commuter Reimbursement Accounts (CRA)

Commuter Reimbursement Accounts provide employees with pre-tax reimbursements for out-of pocket mass transit and parking expenses. If you participate in a CRA, you will reduce your federal, state and local income tax liability because your elected contributions are not subject to these taxes.

Tax Advantage

If your taxable income is $50,000 and you put $100 a month into a CRA for mass transit expenses, your annual federal tax savings alone would be approximately $336 (28% tax bracket). Although you still pay $1,200 in mass transit expenses for the year, you are not paying taxes on that amount. As you can see, the impact on your tax liability can be considerable.

There are two types of Commuter Reimbursement Accounts:

1. The Transportation Reimbursement Account (TRA) allows you to now set aside up to $100/month from your paycheck on a pre-tax basis to cover mass-transit expenses on any public transit commuter system. This includes New York City Transit Authority buses and subways, Long Island Railroad, Metro North Commuter Railroad, New Jersey Transit, Staten Island Rapid Transit, Port Authority Trans-Hudson Corp. (PATH), commuter and suburban bus services, Amtrak, and certain ferry and registered van pool services.

2. The Parking Reimbursement Account (PRA) allows you to set aside up to $190/month in 2003 from your paycheck on a pre-tax basis for parking expenses incurred near your place of employment while at work. It will also cover expenses incurred for parking near a location where you board mass transit.

Enrolling in the CRA

SHPS is the current administrator of Pace University’s CRA plans. Eligible employees may enroll in a CRA by calling SHPS at 1-800-778-0054. You will be prompted to an Interactive Voice Response (IVR) System to designate which account(s) you want to enroll in and your monthly contribution. This must be done with a touch-tone phone. If you do not have a touch-tone phone, a SHPS customer service representative will be available to take this information from you Monday through Friday 8am to 5pm EST (except holidays). A confirmation of your enrollment election(s) will be mailed to your home address by SHPS.

The monthly amount(s) you elect will be evenly deducted from your semi-monthly paychecks. In order to receive a reimbursement, you must mail to SHPS a completed “Transportation & Parking Reimbursement Request” form along with the appropriate receipts. If the receipts are not available, you are required to complete the “Affidavit of Transportation Expenses”, which is included on the claim form. The form is available at our website, www.pace.edu/hr. Any contributions unused during a particular month cannot be paid as taxable compensation. However, balances can be deferred from month to month or year to year.

Making a Change to Your CRA Elections

Once you are enrolled in the CRA program, you can make the following changes:

change or temporarily discontinue your monthly contributions

switch to the transportation or parking reimbursement account

cancel your participation

Changes can be made at any time by calling the SHPS IVR system at 1-800-778-0054. This system is available 24 hours a day, 7 days a week. A confirmation of the change will be mailed to you.

All changes made by the 15th of the month will be effective on the 1st of the following month and subsequently reflected in your paycheck. For example, if you make a change to your CRA by October 15th, your change is effective on November 1st and will be reflected in your November 15th paycheck. If you make a change on October 16th, your change is effective on December 1st and will be reflected in your December 15th paycheck.

You can obtain information on the status of your account by calling the SHPS Call Center at 1-800-678-6684 or visiting their website, www.shps.net.