Tax Saver Benefit (TSB) Plan

The TSB plan is designed to save tax dollars when an eligible employee pays for certain IRS-eligible expenses. When an employee elects to set aside salary contributions into one or both TSB expense reimbursement accounts, the contributions are not subject to federal, state, local, or FICA taxes. This results in substantial savings to the employee. Full-time employees may elect to participate in either or both reimbursement accounts.

• Health Care Reimbursement Account - for health care expenses incurred by the employee or the employee’s eligible tax dependents that are not eligible for health plan reimbursement.
• Dependent Care Reimbursement Account - for child or elder day care (not health care) expenses that allow the employee to work.

The TSB expense reimbursement accounts are administered by The Nyhart Company.

Enhancements

1. Grace Period
The IRS regulations for Section 125 plans, like the TSB Plan, require that any unused dollars at the end of the year are forfeited by the employee. This is the so-called “use it or lose it” rule. However, the IRS recently released a new provision that allows the university to provide a grace period following each tax year. Beginning with 2005, employees can use any remaining 2005 health reimbursement account balances to pay for qualified expenses incurred in January and February 2006. Likewise, unused balances for 2006 health reimbursement accounts can be used to pay eligible expenses in January and February 2007. This grace period applies to paper claims only, not to those claims processed under the optional TSB debit card.

2. Deadline Extended
In previous years, the deadline for submitting claims to the plan administrator, Nyhart, was March 31. This deadline has been extended to April 15.
2006 Claim Forms

Employees can obtain new claim forms for the 2006 account year from the university’s Benefits forms section of the Web. Employees must clearly indicate on a claim form if they want January/February 2006 expenses to be reimbursed from their 2005 account. (Purchases made in 2006 using the IU TSB debit card will be paid from the employee’s 2006 reimbursement account.) Once a claim is submitted the account year cannot be changed.

Examples of reimbursable health care expenses

• Prescriptions
• Deductibles and copays
• Routine care/physical exams
• Transportation for medical services
• Vision exams, prescription lenses, frames, and contacts
• Radial keratotomy
• Hearing aids and related expenses
• Weight-loss programs and services for obesity
• Stop-smoking programs
• Dental care and orthodontia
• Acupuncture
• Over-the-counter medicines

Examples of expenses not allowed by IRS

• Cosmetic procedures or medicines prescribed for cosmetic purposes
• Expenses paid but not yet incurred
• Kindergarten
• Overnight camp

Contact Nyhart with questions about whether specific expenses are eligible.

TSB Card Option

The TSB card is a debit-type MasterCard that allows participants to pay for purchases and services from their TSB health care reimbursement account. The card may be used at any physician’s office, hospital, or service provider that accepts MasterCard—including grocery and discount stores—for eligible expenses only. The card does not apply to the TSB Dependent Care Reimbursement Account.

The card is voluntary and only issued upon request to those who do not already have one. Requests must be made between December 22 and January 15 using the www.Nyhart.biz Web page. Participants who obtained cards last year may continue to use them for expenses in 2006—a new card is not needed. The TSB card is effective for three years.

Detailed information is at www.indiana.edu/~uhrs/benefits/tsb.html and will also appear in the Open Enrollment packet mailed in early November.

Health Care Plan Coverage while on Leave without Pay

In order to be eligible for health care plan coverage, a new employee must be actively at work. Coverage becomes effective on the first day of active employment, if the employee has enrolled within 60 days of such employment. If an employee is placed on leave at the time of initial employment, then the employee’s coverage is not effective until the first day of active employment.

Active employment means that the employee is being paid regular earnings and performing the main duties of his or her position.

Next article: Military Service and Employee Rights