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Instructions for Completing the Compensation Reduction Agreement
Section A: Employee Information - Complete all of Section A.
Section B: Dependent Care Spending Account – Complete only if you wish to enroll in the Dependent Care Spending Account
Section C: Medical Spending Account – Complete only if you wish to enroll in the Medical Spending Account.
Section D: Employee Signature – Sign and date this section.
Return the completed form to: National Benefit Services (NBS)
Plan Highlights
I understand that with the Dependent Care and Medical Spending Accounts:
• I must pay a monthly administration fee to participate. The fee will be deducted from my paycheck on a BEFORE-TAX basis. Whether I
participate in one or both flexible spending accounts there will be one monthly fee.
• If I only have rollover funds and am not currently contributing, the monthly fee will be withheld from my rollover balance instead of deducted
from my paycheck.
• My election is irrevocable for the plan year, unless I have an allowable status change. Examples of allowable status changes include, but
are not limited to: changes in legal marital status, changes in the number of dependents, and changes in employment status.
• The election change must be consistent with the status change and may be made on a prospective basis only after NBS’s receipt and
approval of the required status change forms.
• I must submit a written status change form to NBS within 90 days of the status change event. Otherwise, my election cannot be changed.
• My accumulated receipts must total at least $25 before I am reimbursed on my claim. The only exception is at the end of the plan year if
my available balance is less than $25, or if I mark my last claim as “FINAL CLAIM.”
• I will have until September 28
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following the end of the plan year to file claims for expenses incurred during the plan year.
• All receipts must contain complete information before my reimbursement can be processed, and this should be submitted before
September 28. Otherwise, corrected claim forms (i.e., additional or follow-up supporting documents) received after September 28
shall not be reimbursed.
• I will inform NBS when I go out on any leaves of absence without pay or if I terminate my employment with the State.
I understand that with the Dependent Care Spending Account:
• Dependent care expenses are reimbursable if my spouse (if I am married) and I are both employed or if my spouse is a full-time student.
• I may not claim for services for periods I (or my spouse if I am married) did not work or while not on duty, (e.g., leaves of absence,
vacation, sick leave, etc.).
• Dependent care expenses must be for my dependent child under age 13 or other dependents (e.g., a physically or mentally handicapped
relative or other person living in my home who is unable to care for himself/herself and over half of whose support I pay).
• I can contribute up to $5,000 per year if I am a single parent, or married and filing a joint return. This maximum is the total family
contribution allowable and must include the annual administration fee. My maximum may be lower if:
• I or my spouse earns less than $5,000
• My spouse is a full-time student or incapable of self-care, or
• I am married, but file a separate federal tax return.
If any of the above exceptions apply, please call National Benefit Services (NBS), at 465-2284 or (855)399-3035.
Care cannot be provided by my spouse or anyone I claim as a tax dependent.
• I cannot claim as a tax credit the same dependent care expenses that are reimbursed under this plan.
• My claims will be reimbursed for the amount of my eligible "out-of-pocket" expenses up to the amount in my account balance after service
has been rendered.
• I will be required to identify the person or agency performing the child care services to the IRS by providing his/her federal I.D. number or
social security number.
• Any money left in my account after September 28
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(after I have claimed all eligible expenses for that year), will not be reimbursed to me
and will be forfeited to the State pursuant to the IRC. The IRS considers the date of a claim as the date the service is rendered, not
when the bill is actually paid.
I understand that with the Medical Spending Account:
• Health-related expenses are reimbursable if they can be considered "deductible" medical expenses on my tax return as defined under
section 213(d) of the Internal Revenue Code ("IRC"). Insurance premiums and unnecessary cosmetic surgery are examples of ineligible
expenses. See, IRS Publication 502 for guidelines. I cannot claim on my tax return the same health care expenses that are reimbursed
under this plan.
• The maximum I may contribute is $2,400 per plan year, plus the annual administration fee. If my spouse and I are eligible for the Island
Flex Medical Spending Account, we may each contribute up to $2,400 per plan year.
• My claims will be reimbursed for the amount of my eligible "out-of-pocket" expenses up to my annual election, minus previous claims paid.
• I may be eligible to continue in the Medical Spending Account on an after-tax basis through COBRA if a qualifying event occurs, such as
separation from service.
• After September 28
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, any amount left in my account up to $500 will carry over to the new plan year to be used towards expenses incurred
in that new plan year.
• Any money which exceeds $500 left in my account after September 28
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(after I have claimed all eligible expenses for that year), will not be
reimbursed to me and will be forfeited to the State pursuant to the IRC. The IRS considers the date of a claim as the date the service is
rendered, not when the bill is actually paid.
For more information on the Plan, please read the Hawaii Administrative Rules, Chapter 14-52 and the Island Flex employee informational booklet, or call NBS.
