Flexible Spending Account (FSA) - 2021 State of New Jersey Tax$ave Essential Guide - NJ.gov (2024)

2021 State of New Jersey • Tax$ave Flexible Spending Account (FSA) Essential GuideFor more information, visit HorizonBlue.com

2021 Essential Guide Start Saving. Here’s How. Inside: A Flexible Spending Account (FSA) is an account you set up for your anticipated eligible medical services, medical supplies and dependent Welcome to Horizon MyWay® 3 care expenses not normally covered by your insurance. You can choose either, or both, an Unreimbursed Medical FSA and a Dependent Care FSA. With either FSA, you benefit from having less taxable income in each of Enrollment at a Glance 4 your paychecks, which means more spendable income to use toward your eligible medical and dependent care expenses. Once you decide how much to contribute to your Unreimbursed Medical and/or Dependent Care FSA, the funds are deducted in equal amounts Flexible Spending Accounts 6 from your paychecks during the plan year. Before signing up for an FSA, review this reference guide to understand how FSAs can save you and your family a significant amount of tax money. Horizon MyWay Visa® Card 12 Important Dates to Remember • Your Open Enrollment dates are: October 1-31, 2020 FSA Worksheets 13 • Your Period of Coverage dates are: January 1, 2021 through December 31, 2021 Election Change Events 14 Have questions? We’re here to help. Customer Service The Horizon MyWay customer service team is available from 8 a.m. COBRA 15 to 9 p.m., Eastern Time (ET), to answer your questions. You can reach our automated service 24 hours a day by calling 1-888-215-0025. Account information and helpful resources are available at HorizonBlue.com. Beyond Your Benefits 16 Written Inquiries Mail to: Horizon MyWay, P.O. Box 982814, El Paso, TX 79998-2814 Lost or Stolen Card Contact Customer Service at 1-888-215-0025, Monday through Friday, from 8 a.m. to 9 p.m., ET. HorizonBlue.com 2

Welcome to Horizon MyWayThe State of New Jersey is pleased to work with Horizon Blue Cross Blue Shield of New Jersey(Horizon BCBSNJ) in the administration of your FSA(s) through Horizon MyWay.With Horizon MyWay, you’ll get 24/7 support:• Easy-to-Use Portal – Enjoy a simple user experience when you sign in.• Mobile App – Manage your account from the palm of your hand with the Horizon Blue app.• Expert Assistance – Enjoy access to a dedicated team of experts every step of the way.Enrolling is easy:• Visit HorizonBlue.com/enrollfsa and enter your date of birth and social security number. Then click Enter to access our online enrollment tool.• You can also enroll by calling 1-866-999-3531. Remember You will have to enroll for Plan Year 2021 during Open Enrollment, which is October 1-31, 2020. Have questions? We’re here to help. If you have any questions or concerns, you can talk to a trained expert to learn more about the program. Just call 1-888-215-0025, Monday through Friday, from 8 a.m. to 9 p.m., ET. Table of Contents 3

Enrollment at a GlanceFor New Hires For Open EnrollmentImportant Enrollment Information Important Enrollment InformationNew employees must complete an enrollment form within All enrollment requests for Plan Year 202130 days of their hire date to participate in either the must be submitted by October 31, 2020.Unreimbursed Medical FSA or the Dependent Care FSA. For more information, visit HorizonBlue.com/enrollfsa or contactEligibility: Customer Service at 1-888-215-0025,• There is a 30-day waiting period for Dependent Care eligibility. Monday through Friday, from 8 a.m. to• There is a 60-day waiting period for Unreimbursed Medical 9 p.m., ET. Plan eligibility.• The effective date will be the first day of the month following Enrollment will be available: eligibility. If you miss New Hire Enrollment, you must wait for • On the web at HorizonBlue.com/enrollfsa Open Enrollment. • By calling 1-866-999-3531• 10-month State college or university employees with a start date of September 1, 2020 are assumed to have had their • By completing an Enrollment Form and waiting period begin July 1, 2020. Therefore, the effective Faxing to: 1-866-231-0214 date for both the Unreimbursed Medical Plan and Dependent Mailing to: Horizon MyWay Care Program is September 1, 2020. P.O. Box 982814• 10-month State college or university employees with any start date El Paso, TX 79998-2814 other than September 1, 2020 follow the same 30- and 60-day waiting periods as outlined previously for all other employees. Tax$ave FSA initial election year example: Date of employment: 7/3/20 Enrollment form submitted: 8/2/20 (last day to enroll) Election: $2,500 Medical Expense Plan $5,000 Dependent Care Plan Effective date: 10/1/20 Medical Expense Plan – must incur expenses 10/1/20 – 3/15/21 9/1/20 Dependent Care – must incur expenses 9/1/20 – 3/15/21 Medical Plan Payroll deductions: $2,500/6 pay periods = $416.66 per pay period Dependent Care Payroll deductions: $5,000/8 pay periods = $625 per pay period Medical Dependent Total Payroll Deduction 9/20/20 $0.00 $625 $625 10/4/20 $0.00 $625 $625 10/18/20 $416.66 $625 $1,041.66 11/01/20 $416.66 $625 $1,041.66 11/15/20 $416.66 $625 $1,041.66 11/29/20 $416.66 $625 $1,041.66 12/13/20 $416.66 $625 $1,041.66 12/27/20 $416.66 $625 $1,041.66 Table of Contents 4

Enrollment at a Glance Important Dates to Remember Name Dates Activities October 1, 2020 Open Enrollment All new participants must enroll and continuing participants must 2020 through for Plan Year 2021 re-enroll each year. October 31, 2020 Participants may incur Plan Year 2020 expenses during these limited dates in calendar year 2021 and pay for them with Plan Year 2020 January 1, 2021 Grace period fund balance. First in/First out: All claims/card claims/card transactions through for Plan Year 2020 submitted during the Plan Year 2020 Grace Period will be paid out of March 15, 2021 remaining Plan Year 2020 balance until exhausted. All 2020 claims must be filed with WageWorks not Horizon. 2021 January 1, 2021 Last chance to submit reimbursem*nt requests for Plan Year 2020 Run out period through expenses incurred between January 1, 2020 and March 15, 2021. for Plan Year 2020 April 30, 2021 All 2020 claims must be filed with WageWorks not Horizon. Use your Horizon MyWay Visa Debit Card or file a paper claim. January 1, 2021 Watch service dates on Plan Year 2020 grace period card transactions. Plan Year 2021 through Once the 2020 account balance is exhausted, claims will be paid December 2021 out of 2021 funds and the service dates must be in 2021. Participants may incur Plan Year 2021 expenses during these January 1, 2022 limited dates in calendar year 2022 and pay for them with Plan Grace period through Year 2021 fund balance. First in/First out: All claims/card claims/card for Plan Year 2021 March 15, 2022 transactions submitted during the Plan Year 2021 Grace Period 2022 will be paid out of remaining Plan Year 2021 balance until exhausted. January 1, 2022 Run out period Last chance to submit reimbursem*nt requests for Plan Year 2021 through for Plan Year 2021 expenses incurred between January 1, 2021 and March 15, 2022. April 30, 2022 Additional information about the State of New Jersey Tax$ave Program can be found in the Tax$ave Fact Sheet, which is available on the New Jersey Division of Pension & Benefits website at nj.gov/treasury/pensions by clicking the Publications drop-down menu at the top of the page and choosing Fact Sheets. Table of Contents 5

Flexible Spending AccountsYou can manage and check your account through your Horizon MyWay account or over the phone. The onlineStatement of Activity page details all of your account activity and will even alert you if any card transactions arein need of verification. For the latest information, visit HorizonBlue.com and sign in to your account 24/7.In addition to reviewing your most recent account activity, you can:• Update your account preferences.• View your transaction and account history Horizon Blue app for current and past plan years. The Horizon Blue app offers members• Check the complete list of eligible medical expenses a range of tools to manage their health at HorizonBlue.com/expenses. spending and savings accounts. Download the free Horizon Blue app• Order additional Horizon MyWay Visa Debit Cards by texting GetApp to 422-272 or visit for your family. the App Store® or Google Play.• Manage your account while on the go.FSA EligibilityUnreimbursed Medical and Dependent Care FSAs are available to State employees through the State EmployeesTax Savings Program, Tax$ave, a benefit program available under Section 125 of the Federal Internal Revenue Code.An eligible employee is any employee of the State, a State college or university or other State agency who is eligible toparticipate in the State Health Benefits Program, except those part-time employees made eligible under P.L. 2003, c. 172.Additional information about Tax$ave and the State Health Benefits Program is available from your employer or bycontacting the New Jersey Division of Pensions & Benefits.Your Unreimbursed Medical FSA may be used to reimburse eligible expenses incurred by yourself, your spouse,your qualifying child or adult child or your qualifying relative. You may use your Dependent Care Flexible SpendingAccount to receive reimbursem*nt for eligible dependent care expenses for qualifying individuals under 13; eligibilityends on the child’s 13th birthday.There is no age requirement for a qualifying child if they are physically and/or mentally incapable of self-care. An eligiblechild of divorced parents is treated as a dependent of both, so either or both parents can establish an UnreimbursedMedical FSA. Only the custodial parent of divorced or legally separated parents can be reimbursed using the DependentCare FSA.Civil Union and Domestic Partnerships How does termination or leave affect my FSA?The Internal Revenue Service (IRS) recognizes a marriage of Termination of FSA benefits typically occurs on the last daysame-sex spouses for federal tax purposes, including the tax of the month in which employment is terminated unless thesaving benefits available through Tax$ave. participant enrolls in COBRA for FSA. However, if you terminate employment or go on unpaid leave, your eligibility for either orThe IRS does not recognize New Jersey civil union partners both FSAs may change. While your Dependent Care FSA cannotor same-sex domestic partners as dependents for tax purposes be continued following termination or the start of unpaid leave,in the same way it recognizes a spouse or the dependent you may be able to change or continue your Unreimbursedchildren of an employee. As a result, a civil union partner Medical FSA election upon completion of the appropriate formsor same-sex domestic partner must be able to qualify as a and requirements. To begin the process for this change or to“tax dependent” of the employee for federal tax filing continue coverage, contact Customer Service within 30 days ofpurposes — under Internal Revenue Code Section the event by calling 1-888-215-0025.152 — before an out-of-pocket medical expense incurredby the partner can be reimbursed under the Unreimbursed Specific guidelines about your employer’s termination andMedical FSA or Dependent Care FSA. The same applies to leave policies can be obtained from your employer. In addition,receiving the benefit of paying premiums on a pre-tax basis. the Family and Medical Leave Act (FMLA) may affect your rights to continue coverage while on leave. Please contact your employer for further information. Table of Contents 6

Flexible Spending AccountsFSA Fund Availability Annual Contribution Limits“Use-It-Or-Lose-It” Rule For Unreimbursed Medical FSA:Be conservative in estimating your annual contribution Minimum Annual Deposit $100since any money remaining in your accounts cannot be Maximum Annual Deposit $2,500returned to you or carried forward to the next plan year. For Dependent Care FSA:This is based on the Use-It-Or-Lose-It Rule for Section 125 Minimum Annual Deposit $250Cafeteria Plans, including Flexible Spending Accounts. The maximum contribution depends on your tax filing status.For Unreimbursed Medical FSA • If you are married and filing separately,The maximum annual amount of reimbursem*nt for eligible your maximum annual deposit is $2,500.health care expenses is available throughout your period • If you are single and head of household,of coverage, so you don’t have to wait for the cash to your maximum annual deposit is $5,000.accumulate in your account. • If you are married and filing jointly, your maximum annual deposit is $5,000.For Dependent Care FSA • If either you or your spouse earn less thanThe funds available to you depend on the actual funds in $5,000 a year, your maximum annual deposityour account. Unlike an Unreimbursed Medical FSA, the is equal to the lower of the two incomes.entire maximum annual amount is not available until after • If your spouse is a full-time student or incapableyour payroll deductions are received. of self-care, your maximum annual deposit is $3,000 per year for one dependent and $5,000 per year for two or more dependents. Table of Contents 7

Flexible Spending AccountsUnreimbursed Medical FSA Dependent Care FSAAn Unreimbursed Medical FSA is used to pay for eligible The Dependent Care FSA is a great way to paymedical expenses which aren’t covered by your insurance for eligible dependent care expenses such asor other plan. These expenses can be incurred by yourself, after-school care, summer day camp, babysittingyour spouse or a qualifying child or relative. fees, daycare services, nursery school and preschool. Eligible dependents include your qualifying child, spouse and/or relative.Typical FSA-Eligible ExpensesUse your FSA to save on hundreds of products and services for you and your family.Eligible expenses are defined by the IRS and your employer.Eligible Medical Expenses Eligible Dependent Care ExpensesTypically, your medical expense FSA covers: Your dependent care FSA typically covers:Acupuncture Licensed day care facilitiesBirth control pills and devices Preschool programsChiropractic care After-school programsDental fees and orthodontic treatment In-home child and dependent care servicesDiagnostic tests/health screenings Elder careDoctor fees (NOTE: Dependent care expenses for tax dependents over the age of 13 require proof of medical necessity.)Drug addiction/alcoholism treatmentEyeglasses and contact lenses (corrective) Special day camp expensesFeminine care products (New!) Access a list of eligible and ineligible dependent careHearing aids and exams expenses at HorizonBlue.com/dependentcare.Over-the-counter medications (New!)Prescription medicationsWeight-loss programs/meetingsAccess a searchable list of all eligible medical expenses at HorizonBlue.com/expenses.FSA Savings Example* Typical FSA-Ineligible ExpensesBy using an FSA to pay for anticipated recurring expenses, For Medical Expense FSA:you convert the money you save in taxes to additional • Insurance premiumsspendable income. That’s a potential annual savings of • Vision warranties and service contracts$491.25 in this example! • Cosmetic surgery not deemed medically necessary to alleviate, mitigate or prevent With FSA Without FSA a medical conditionAnnual Gross Income $31,000.00 $31,000.00 For Dependent Care FSA:FSA Deposit for Eligible Expenses - 2,500.00 - 0.00 • Overnight campTaxable Gross Income $28,500.00 $31,000.00 • Kindergarten tuitionFederal, Social Security Taxes - 5,600.25 - 6,091.50 • Lunches and food itemsAnnual Net Income $22,899.75 $24,908.50 • Education programsCost of Eligible Expenses - 0.00 - 2,500.00 • Activity feesSpendable Income $22,899.75 $22,408.50NOTE: Budget conservatively. No reimbursem*nt or refund of medical expense FSA fundsis available for services that do not occur within your plan year and grace period.*Based upon a 19.65% graduated tax rate (12% federal and 7.65% Social Security,married with zero allowances) calculated on a calendar year. Table of Contents 8

Flexible Spending AccountsOver-the-Counter (OTC) Expenses Orthodontia Services• The IRS requires that a merchant-generated Orthodontic treatment designed to treat a specific receipt or statement be provided as supporting medical condition is reimbursable through your documentation for each item purchased. The Unreimbursed Medical FSA if the proper receipt or statement must include the date of documentation is provided. For fastest processing, purchase, name of the OTC item and the amount submit a claim along with: paid (not handwritten). • A written statement, bill or invoice from the treating• The item must be purchased in a reasonable dentist/orthodontist showing the type and date the quantity with the intent that it will be used within service was incurred, the name of the eligible the current calendar year. individual receiving the service and the cost for• OTC expenses that have both a cosmetic/general the service health use and a medical use will require a Letter • A copy of the patient’s contract with the of Medical Necessity (F9090) signed by your health dentist/orthodontist for the orthodontia care provider. treatment (only required if a participant requests reimbursem*nt for the total program cost spreadVision Services over a period of time)• If you have a vision benefit plan, the provider receipt must indicate the vision benefit or Reimbursem*nt of the full or initial payment amount discount (not handwritten or an estimate). may only occur during the plan year in which the braces are first installed. For reimbursem*nt options• If the expense is covered by your insurance plan, available under your employer’s plan, including care include a copy of the Explanation of Benefits that extends beyond one or more plan years, refer (EOB) from your vision benefit. to the information provided following your enrollment,Dental Services or call Customer Service at 1-888-215-0025.• The documentation submitted with your claim You must keep your documentation for a minimum must indicate when the service was received, of one year to submit upon request. not billed.• Balance forward or account payment statements will not be accepted as documentation.• If the provider statement indicates an estimate of coverage submitted to the dental plan or payment pending, include a copy of the Explanation of Benefits (EOB) from your dental plan. Table of Contents 9

Flexible Spending AccountsAppeal ProcessIf you have a request for a mid-plan year election Your appeal and supporting documentation will bechange, FSA reimbursem*nt claim or other similar reviewed upon receipt. You will be notified of therequest denied, in full or in part, you have the right results within 30 business days from receipt of yourto appeal the decision by sending a written request appeal. In unusual cases, such as when appealswithin 30 days of the denial for review to: require additional documentation, the review maySheila Birmingham take longer than 30 business days. If your appeal isPlan Administrator, Tax$ave approved, additional processing time is requiredN.J. Division of Pensions & Benefits to modify your benefit elections.P.O. Box 295 NOTE: Appeals are approved only if the extenuatingTrenton, NJ 08625-0295 circum­stances and supporting documentation areYour appeal must include the date of the services, within your employ­er’s, insurance provider’s andwhy you think your request should not have been the IRS’ Regulations governing the plan.denied and any additional documents, informationor comments you think may have a bearing onyour appeal. Table of Contents 10

Using Your FSA DollarsWhen you pay for an eligible health care or dependent care expense, you want to put youraccount to work right away. Horizon MyWay gives you several convenient reimbursem*nt options.Follow these steps to submit documentation for your expense:1. Sign in to HorizonBlue.com and click My Accounts. In the top right corner, click Horizon MyWay, then go to your account.2. A notification is displayed on your account home page when there’s a claim that requires documentation. Click Go to Claims Summary in the notification.3. Select the appropriate account from the Account drop-down menu.4. In the Debit Card Claims Requiring Documentation section, click the Needs Receipt link next to the claim for which you want to provide documentation. 5. Click Upload Documentation. 6. Click Choose File. 7. Select the file you wish to upload and click Open. 8. Click Continue. 9. Review your request to make sure it’s correct.10. Click Submit.Or, to submit a paper claim by email, fax or mail:Click on Print Form and fill out the form. Choose one of these options: • Send by email to HorizonMyWay.Documents@HelloFurther.com • Send by fax to 1-866-231-0214 • Send by mail to Horizon MyWay, P.O. Box 982814, El Paso, TX 79998-2814Important FSA Notes• You have a 120-day run-out period (ending April 30, 2022) after your plan year ends to submit reimbursem*nt requests for all eligible FSA expenses incurred during your plan year.• You may continue using your Unreimbursed Medical FSA and/or Dependent Care FSA during the grace period, which is two months and 15 days after the end of your plan year (January 1, 2022 through March 15, 2022).• Claims will be processed in the order in which they are received by Horizon MyWay. Your account(s) will be debited accordingly. This is true for both paper claims and Horizon MyWay Visa Debit Card transactions. Any funds remaining in an appropriate account from the prior plan year will be used first until exhausted. All subsequent claims will be deducted from your new plan year account balance. Table of Contents 11

Your Horizon MyWay Visa Debit CardWith the convenient Horizon MyWay Visa Debit Card, you can pay for health Make debit transactionscare expenses, and access your account whenever and wherever you need to. even easier with Digital PayNo waiting. No claims to file. Digital Pay allows you to add yourSimply use your card when you want to pay for eligible health care expenses. Horizon MyWay Visa Debit Card toMoney for the expense is transferred directly from your account to your Apple Pay, Google Pay and Samsungprovider or merchant. You don’t have to pay cash up front, submit a claim Pay digital wallets. It eliminates theform or wait to be reimbursed. need to carry a physical card. Instead,Easily monitor your account you can pay for qualified purchasesYou can check account balances, view transactions and use our online or expenses using your mobile wallet,planning tools at HorizonBlue.com. giving you added convenience andHow to use your card: security. To learn more, visit Digital• You can use your debit card to pay your portion of eligible medical, Pay online. dental, prescription and vision expenses.• You can use your debit card at provider offices.• For medical claims usually processed by your health plan, simply write your debit card number on your doctor’s bill and return it to the provider.• You can also call your health care provider with your debit card number.If further documentation is requestedThe Horizon MyWay Visa Debit Card can be used at all authorized medicalproviders. Most providers supply products and services that are known to beeligible medical products and services. When you buy a product or servicefrom a provider in this category, medical claims are approved immediatelyand don’t require any further documentation.Some providers sell both eligible and ineligible products and services(e.g., dermatology and counseling services). When using your debit cardwith this type of provider, the debit card is accepted when you pay,but Horizon MyWay may request more information about the expense.Visit HorizonBlue.com/expenses for a searchable list of eligiblemedical expenses. Table of Contents 12

Flexible Savings Account WorksheetHorizon BCBSNJ wants to make sure you have the information you need to get the most out of your benefits.Use this worksheet to help you plan your Horizon MyWay FSA so you can keep your out-of-pocket costs low.Any unused funds at the end of the year or grace period will be returned to your employer, so it’s important to estimatehow much you’ll need for the year. Use the chart below to estimate how much you should set aside for your FSA.Medical Expense Worksheet Estimate your medical expenses (The IRS allows a maximum contribution of $2,650 per individual) Estimate your annual cost for out-of-pocket medical expenses • Out-of-pocket costs up to your deductible, along with copays or coinsurance $ • Prescription drugs $ • Over-the-counter medications $ • Medical supplies (e.g., insulin and diabetic supplies) $ Out-of-pocket dental, vision and hearing expenses • Checkups and cleanings $ • Fillings, X-rays, crowns, bridges, dentures, inlays $ • Orthodontia $ • Eye exams $ • Prescription eyewear – glasses, contact lenses and cleaning solution $ • Corrective eye surgery – LASIK, cataract, etc. $ • Hearing aids and batteries $ Estimated total out-of-pocket health care expenses $ Estimate your annual tax savings from a Medical FSA Enter your estimated total out-of-pocket health care expenses from above $ Enter your tax rate and multiply 1 x % This is your estimated annual tax savings by using a Medical FSA $Dependent Care Worksheet Estimate your dependent care expenses (The IRS allows a maximum contribution of $5,000.) Dependent care expenses • Licensed day care, nursery or preschool $ • Before and after school care2 $ • Summer day camps (not overnight camp)2 $ • Eldercare3 $ • Other: $ Estimated total out-of-pocket dependent care expenses $ Estimate your annual tax savings from a Dependent Care FSA Enter your estimated total out-of-pocket health care expenses from above $ Enter your tax rate1 and multiply x % This is your estimated annual tax savings by using a Dependent Care FSA $1 Depends on your tax filing status. Please consult your tax advisor with questions. Before and after-school care by a licensed provider are considered child care by the 2IRS. Summer day camps also count as child care. Expenses for overnight summer camps and tuition for kindergarten and first grade (or higher) generally do not qualify fordependent care credit. 3 When an elderly or disabled parent is considered a dependent on your taxes and you are covering more than 50% of their maintenance costs. Table of Contents 13

Election Change EventsAt the beginning of the plan year, you elect a dollar amount to contribute to your account. This election canonly be changed if you experience a life change that qualifies as an Election Change Event.After experiencing an Election Change Event, you have 30 days from the date of the event to contact youremployer and change your election amount.There are two restrictions to changes made as a result of an Election Change Event:1. The change must correspond with the type of change (e.g., getting married increases the election amount; divorce decreases the amount).2. The new dollar amount can’t be less than the amount that you’ve already contributed or been reimbursed in the current plan year.Events that allow you to change your Medical FSA electionEvents that increase election• Marriage• Birth or adoption of child• Child who gains dependent statusEvents that decrease election• Divorce• Child no longer qualifies as a dependent• Death of dependentEvents that increase or decrease election• Your spouse or dependent starts or ends a job• Your spouse or dependent has an increase or decrease in work hours• You gain or lose eligibility for employer-sponsored health insurance or health flexible spending coverage• You receive a court order requiring you or another person to provide health coverage for an eligible child• You, your spouse or dependent gain or lose Medicare or Medicaid coverage• You go on or return from FMLA leave as allowed by FMLA requirements and plan rulesTo request a change in your election, download the Qualifying Event Notification Form. Fill out the formand give it to your employer or benefits administrator, who will send it to Horizon MyWay. Table of Contents 14

COBRAFederal law requires that most group health plans, including Medical Flexible Spending Accounts (Unreimbursed Medical FSAs), giveemployees and their families the opportunity to continue their health care coverage when there is a qualifying event that would resultin a loss of coverage under an employer’s plan. Qualified beneficiaries can include the employee covered under the FSA, a coveredemployee’s spouse and dependent children of the covered employee. Each qualified beneficiary who elects continuation coveragewill have the same rights under the plan as other participants or beneficiaries covered under the plan. COBRA is only available forUnreimbursed Medical FSAs. The Tax$ave Plan is an “excepted” plan, and therefore offers only a limited COBRA option. One of thefeatures of a limited COBRA option is that it is only offered for the remainder of the Plan Year and not the full 18 months of COBRA.Also, limited COBRA is only offered if the account is underspent. This occurs when the contributions paid to date are more than claimspaid out. Be aware that an account is considered overspent (ineligible to participate in COBRA) if the contributions paid to date areless than the claims paid out.COBRA Election Example Election for Continuation Coverage Periodic Payments for Continuation CoverageArnold’s FSA annual election is $1,000 The COBRA Notice and Election Form willfor the current plan year. He breaks with be mailed to each eligible participant by After you make your first payment foremployment in July. He has paid in $500 the company administering the N.J. State continuation coverage, you will bein payroll (pre-tax) contributions, but has Tax$ave Unreimbursed Medical FSA. You required to pay for continuation coveragereceived only $200 in reimbursem*nt. This have 60 days from the date of receipt for each subsequent month of coverage.$300 balance ($500 contribution-$200 of the COBRA Notice or the last date of Under the Plan, these periodic paymentsclaims) is considered underspent and coverage, whichever is later, to elect to for continuation coverage are due on theallows Arnold to participate in COBRA. continue coverage by completing and first day of each month. Instructions forIf Arnold was overspent, he could not submitting the COBRA Election Form. sending your periodic payments forparticipate in COBRA. continuation coverage will be shown on First Payment for Continuation Coverage your COBRA Notice and Election Form.Coverage will terminate on the date that If you elect continuation coverage, youemployment ends. If Arnold doesn’t Grace Periods for Periodic Payments do not have to send any payment forsign up for COBRA, the $300 will be continuation coverage with the Although periodic payments are due onforfeited (unless he can submit $300 of COBRA Election Form. However, you the dates shown above, you will be givenclaims incurred prior to termination). must make your first payment for a grace period of 30 days to make each continuation coverage within 45 days periodic payment. Your continuationArnold chooses to participate in COBRA after the date of your election (this is the coverage will be provided for eachsince he has no qualified expenses that date the Election Notice is postmarked, coverage period, as long as payment forhe can submit against the $300 balance. if mailed). If you do not make your first that coverage period is made before theHe will complete and return the COBRA payment for continuation coverage end of the grace period for that payment.Election Form and send in the first COBRA within that 45 days, you will lose all If you pay a periodic payment later thanpayment. Once his first payment has continuation coverage rights under the its due date but during its grace period,been received, he is eligible to submit Plan. Your first payment must cover your coverage under the Plan will beclaims that were incurred after his break in the cost of continuation coverage from suspended as of the due date and thenemployment. Arnold can continue to incur the time your coverage under the Plan retroactively reinstated (going back toand submit claims until he has exhausted would have otherwise terminated up to the due date) when the periodic paymenthis original election for Unreimbursed the time you make the first payment. is made. This means that any claim youMedical FSA benefit of $1,000. You are responsible for making sure submit for benefits while your coverage isArnold’s form W-2 will show $500 Section that the amount of your first payment is suspended may be denied and may have125 Medical Expense Contributions. enough to cover this entire period. to be resubmitted once your coverage is You may contact Horizon MyWay, to reinstated. If you fail to make a periodicNOTE: Dependent care election is not confirm the correct amount of your first payment before the end of the graceeligible for continuation coverage payment. Instructions for sending your period for that payment, you will loseunder COBRA. first payment for continuation coverage all rights to continuation coverage under will be shown on your COBRA Notice the Plan. and Election Form. All COBRA payments are made with after-tax dollars, which For more information about your negates the tax savings advantage aspect COBRA rights, please contact of the FSA plan. COBRA is not a tax Horizon MyWay at 1-888-215-0025 savings plan and is only intended to prevent participants from forfeiting contributions made prior to termination. . Table of Contents 15

Beyond Your BenefitsDeferred Compensation (457 Plan) Social SecurityParticipating in the Flexible Benefits Plan may affect Social Security consists of two tax components:your maximum annual contribution to the 457 plan. the FICA or OASDI component (the tax for old-age,That is, Flexible Benefits Plan contributions reduce survivors and disability insurance) and the Medicareincludible compensation* from which the maximum component. A separate maximum wage to whichdeferrable amount is computed. You should contact the tax is assessed applies to both tax components.the Deferred Compensation vendor or the Tax There is no maximum taxable annual wage for Medicare.Deferred Annuity (TDA) provider about the specific The maximum taxable annual wage for FICA is subjecteffect of the Flexible Benefits Plan. to federal regulatory change. If your annual salary after* Includible compensation is the gross income shown on your W-2 form. salary reduction is below the maximum wage cap for FICA, you are reducing the amount of taxes you payNotice of Administrator’s Capacity and your Social Security benefits may be reduced atThis notice advises FSA participants of the identity retirement time.and relationship between your employer and its However, the tax savings realized through the FlexibleContract Administrator, Horizon MyWay. We are Benefits Plan generally outweigh the Social Securitynot an insurance company. We have been authorized reduction. Call Customer Service at 1-888-215-0025by your employer to provide administrative services for more information or contact your tax advisor.for the FSA plans offered herein. We will processclaims for reimbursem*nt promptly. In the event Have questions? We’re here to help.there are delays in claims processing, you willhave no greater rights in interest or other remedies The Horizon MyWay customer service team is availableagainst us than would otherwise be afforded to from 8 a.m. to 9 p.m., ET to answer your questions.you by law. You can reach our automated service 24 hours a day by calling 1-888-215-0025. Account information and helpful resources are available at HorizonBlue.com. Horizon Blue Cross Blue Shield of New Jersey is an independent licensee of theBlue Cross and Blue Shield Association.The Blue Cross® and Blue Shield® names and symbols are registered marks of the Blue Cross and Blue Shield Association.The Horizon® name and symbols and MyWay® are registered marks of Horizon Blue Cross Blue Shield of New Jersey.All other trademarks and service marks are the property of their respective owners.There is no charge to download the Horizon Blue app, but rates from your wireless provider may apply.Apple and the Apple logo are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a servicemark of Apple Inc., registered in the U.S. and other countries. Google Play and the Google Play logo are trademarks ofGoogle LLC.Read about Horizon BCBSNJ’s nondiscrimination policy.© 2020 Horizon Blue Cross Blue Shield of New Jersey, Three Penn Plaza East, Newark, New Jersey 07105. ECN00742 (0820)