Health Care Flexible Spending Account: How it Works

1 You have the option of opening a Health care Flexible Spending account (FSA). The advantages of an FSA are twofold: it can help you manage your Health expenses while reducing taxes on your earned Health care FSA is pre-tax money you set aside, through payroll deductions, to use for certain expenses not covered by your medical plan. You decide how much to contribute to your Health care FSA, within the limits set by your employer. Each pay period, the money is automatically deducted from your paycheck and deposited in your Health care FSA, starting with the first paycheck after your FSA goes into effect. You can open a Health care FSA whether or not you enroll in a medical plan provided by can use Health care FSA dollars to pay toward: Out-of-pocket prescription costs associated with your Humana medical plan coverage Eligible medical expenses such as doctor s office visits, X-rays, and laboratory tests Some services not covered by your Health plan and other expenses that are allowed by IRS guidelines and as determined by your employerYour employer can give you a list of Health care FSA-eligible access to your Health care FSA Using your Health care FSA is easy and convenient.

2 You will receive the HumanaAccessSM Visa card in the mail. This is a special type of card you can use at the time of service to deduct eligible expenses from your Health care FSA automatically. You may use the card to pay for medical copayments and other FSA-eligible expenses wherever Visa debit cards are accepted, which typically eliminates the need to file a claim and wait for reimbursement. If you are enrolled in a Humana medical plan and have a Personal care account (PCA) in addition to your Health care FSA, expenses are typically deducted from your FSA first. After you've used all the money in your FSA, expenses are deducted from your PCA. However, your employer decides which of the two accounts will be used first. If you have a Health care FSA but do not have a prescription drug benefit with your Humana medical plan, you cannot use your card at the pharmacy for prescription much should you contribute to your Health care FSA?

3 When establishing your Health care FSA, you need to choose the total amount you want to contribute for the entire plan year. It s important to contribute only as much as you think you will use, since any balance remaining in your Health care FSA at the end of the plan year cannot be carried over to the next year. To figure out how much will be deducted from each paycheck, divide the annual amount by the number of pay periods per year. For example: Laura is a full-time employee who decides to contribute $1,500 to her Health care FSA. She is paid every two weeks (26 paychecks per year). To find out how much she will contribute each pay period, Laura divides $1,500 by 26 and sees that $ will be deducted from each paycheck and deposited in her FSA. Health care Flexible Spending account : How it WorksGN-14149-HH 8/04 Manage your Health care expenses while reducing your income taxTax savings for youA key advantage of an FSA is that it may offer FICA, federal, and state tax savings.

4 Since your Health care FSA contributions are deducted from your pay before they are taxed, you do not report them as income which means you pay no taxes on the money you contribute to your FSA. The following example shows how an FSA can result in FICA and federal tax savings. ExampleLast year, Laura made $28,000 and contributed $1,500 to her Health care FSA. The example below shows how much she saved by using the pre-tax money in her Health care FSA for eligible Health expenses. Without an FSA, she would have paid for these expenses from her income after federal taxes were deducted. *This example is intended to demonstrate a typical tax savings based on 28% federal and FICA taxes. Actual savings will vary based on your individual tax situation. Please consult a tax professional for more information on tax implications of an and answersHere are answers to some typical questions about a Health care FSA and how it your Health care FSAQ.

5 I signed up for a Health care FSA. What else should I do?A. That s all you need to do for now. Your contributions to your Health care FSA will be deducted from each paycheck automatically, beginning with the first paycheck after the effective date of your medical How much will be deducted from each paycheck for deposit into my Health care FSA?A. The amount you choose to contribute to your Health care FSA is shown as an annual total. To figure out how much will be deducted from each paycheck, divide the annual amount by the number of pay periods per year. For example, if you contribute $1,000 per year to your Health care FSA, and you are paid every two weeks (26 times per year), your biweekly deduction will be $ ($1,000 divided by 26).Q. How do I access my FSA funds?A. It s easy and convenient to access your Health care FSA funds.

6 Once your Humana coverage begins, you will receive the HumanaAccess card in the mail. You can use this card for Health care FSA eligible expenses wherever Visa debit cards are accepted, such as participating pharmacies, doctor s offices, and hospitals. When you use the card at a pharmacy, eligible charges are automatically deducted from your FSA fund. If your plan requires you to pay a copayment for doctor s offices or other provider visits you can present your card at the time of service for payment. If you receive a medical bill with a "Patient Balance Due," write the card number on the provider s bill and return it. The card typically eliminates the need to submit claims forms and wait for reimbursement. Example of annual tax savings *Laura s taxable incomeAmount she deposited into her FSA before taxesLaura s remaining taxable incomeMinus federal and Social Security taxesIf Laura had used after-tax dollars (instead of FSA dollars) for eligible Health would have less spendable incomeLaura s tax savings with an FSA With FSA$28,000-$1,500$26,500-$9,447-$0$17,05 3$535 Without FSA$28,000-$0$28,000-$9,982-$1,500$16,51 8Q.

7 Does all the money I contribute need to be in my Health care FSA before I can use it?A. No. At the beginning of the plan year, you will have access to the full annual amount of your Health care What if I decide later this year that I want to establish an FSA?A. You may not establish an FSA during the plan year unless you experience a qualifying life event such as marriage or birth of a about the HumanaAccess cardQ. When will I receive my HumanaAccess card?A. You will receive your card prior to the effective date of your plan if you enrolled during open enrollment. Otherwise, you will receive your card within two weeks of your enrollment. Q. Do I need to activate the HumanaAccess card?A. Yes. Activate your card as soon as you receive it. You can use your card immediately after activation. To activate the card, you can call 1-888-894-2201 and follow the instructions enclosed with the card.

8 (If you receive two or more cards, you need to activate only one for all of them to work.)Q. Do I have to sign a contract or agreement before using the Health expense card?A. No but please read the cardholder agreement enclosed with the card. By activating and signing the card, which you are required to do, you are agreeing to the terms outlined within the cardholder agreementQ. Where can I use the HumanaAccess card?A. You can use the card to cover eligible Health care expenses that are reimbursable by your FSA at merchants that accept Visa debit cards, such as medical offices, laboratories, medical supply stores, and hospitals. Simply swipe the card, at retail establishments and select Credit (not Debit ) to have eligible expenses deducted from your Health care FSA. Or write the card number on the doctor's offices bills for office visits as you would with any credit or debit My doctor s office doesn t accept credit cards.

9 How do I pay for services with funds in my FSA?A. In this case, you will need to pay for services with cash or a check and then manually file for reimbursement. Whether you pay in cash or by check, be sure to obtain a receipt showing the date of service, the service provided, and the amount you paid. You cannot be reimbursed unless you submit a receipt (not a cancelled check) as proof of If I don't use my HumanaAccess card how do I get reimbursement forms?A. If you have internet access: - Log on to MyHumana via , go to MyPlan Benefits section, then select FSA from the drop down box - Go to file a claim - Double click on the reimbursement form pdf, print it, fill it out and return to : Humana Spending account Administration Box 19068 Green Bay, WI 54307 If you do not have internet access: Call Humana s FSA Spending account Administration customer service line at 1-800-604-6228 or your employers human resource representative to request a hard copy form to fill out and send back.

10 Q. How do I use the card at the pharmacy?*A. Here s how to use your card to pay your out-of-pocket costs for prescription drugs: - Activate your card. - Swipe the card and select Credit (not Debit ) as the type of transaction. (No PIN number is required with the HumanaAccess card.) - Use the card for the amounts you owe for prescriptions covered by your Humana medical plan and/or your Health care FSA. - Use your card only for individuals covered under your Humana medical plan. Managing your Health care FSAQ. What if I have a Health expense that exceeds the amount in my FSA?A. If the expense exceeds your Health care FSA balance and the merchant puts through a request for the entire expense, by Visa rules, the request will be declined. If the declined expense is for a prescription, you must pay the entire amount by means other than your HumanaAccess Visa card and submit a paper reimbursement form.