Benefits for Participants

TO:                Schools and Participants in the Rainbow Plan

FROM:          Brian C. Meekhof, Benefits Administrator

Reduction in Rainbow Plan Fees

      We are pleased to announce a reduction in fees for the preparation of the school’s IRS Form 5500, Form 5500C and the Summary Annual Report.  The annual fee charged to the school for these items is reduced to $100 (the fee for Form 5500R remains at $100).

IRS Update on Healthcare Flexible Spending Account (FSA) Election Changes

      As recently confirmed by the IRS, reimbursement for expenses incurred prior to an election change due to a “change in family status” is limited to the amount of the annual election in effect at the time the expense is incurred.

      Previously, if a participant changed their election due to a change in family status, the new annual election amount was available regardless of when the expense was incurred.  New guidance indicates that reimbursement for expenses incurred in the prior coverage period is limited to the original annual election amount (less reimbursements to date).

      For example, a participant elects $600 at the beginning of the plan year for the 12-month period from September 1, 1998, to August 31, 1999.  On January 5, the participant has a child.  On January 15, the participant contacts the school office indicating she wants to increase the Health Care Flexible Spending Account (FSA) to an annual election amount of $1,200.  Since changes are effective the first of the month following the date the school receives the Change in Benefit Election form, the change in election would be effective February 1, 1999.  If the participant were to submit expenses incurred for the birth of the child on January 5, the reimbursement would be limited to the $600 election amount (less reimbursements to date).  Only expenses incurred on or after February 1, 1999, would relate to the new $1,200 annual election amount.

Submitting Claims by Fax

      HRM, the claim administrator for the Rainbow Plan, will accept claims by fax for Dependent Care claims only.  The fax number for Dependent Care claims is (616) 383-2804.  Please mail your Healthcare Flexible Spending Account (FSA) claims to the address at the top of the Request for Reimbursement form.