Limitations to the Reimbursement Accounts

Reimbursement accounts have some limitations. These limitations are based on federal regulations required because of the tax-exempt feature of the accounts. For example:

• You must re-enroll in the accounts during each annual open enrollment period. You do this by completing a new enrollment form. If you do not complete a new enrollment form, your participation in the accounts will cease at the end of the plan year, and you will not be able to enroll again until the next open enrollment period (unless there is a qualified change in your family status).

• Reimbursement accounts can be used only for the purposes for which they are set up—that is, dependent care expenses or health care expenses, respectively.

• Your decisions regarding how much money you will contribute to the accounts for the plan year are fixed (unless there is a qualified change in your family status). You cannot choose to stop, reduce, or increase your contributions during the year.

• If the full values of the accounts are not used up during the year, you forfeit the remaining balances.

Because of the requirement to forfeit any unused account balances, reimbursement accounts should be used only for predictable expenses. You should, therefore, estimate conservatively.