Cafeteria Plan, HSA, and FSA Benefits Summary

1. Overview

Impact Development Fund offers a Cafeteria Plan that allows eligible employees to pay for certain benefits using pre‑tax dollars, lowering taxable income. Employees may enroll in the following components:

• Premium Payment Benefits (pre‑tax payroll deductions for medical, dental, and other insurance)
• Health Flexible Spending Arrangement (Health FSA)
• Health Savings Account (HSA) Contributions
• Dependent Care Assistance Program (DCAP)

Employees may choose pre‑tax or after‑tax payment methods for eligible benefits.

2. Eligibility

You are eligible to participate if:

• You are a common‑law W‑2 employee, and
• You are eligible for the employer’s medical plan.

Not eligible:

• Independent contractors
• Leased employees
• Temporary agency workers
• Owners of certain business structures (e.g., 2%+ S‑Corp shareholders)

Dependent eligibility varies by benefit type.

3. When Participation Begins

Participation begins when you:

1. Meet eligibility requirements, and
2. Submit your Election Form/Salary Reduction Agreement during Open Enrollment or when first eligible.

If you miss your enrollment window, you must wait until the next Open Enrollment unless you experience a qualifying event.

Participation ends when:

• Employment ends,
• Eligibility ends due to reduced hours,
• The plan ends, or
• You revoke coverage after a qualifying event.

4. Open Enrollment & Plan Year

• Open Enrollment: Held annually and announced by HR.
• Plan Year: December 1 – November 30 each year.
• Applies to the Cafeteria Plan, HSA elections, Health FSA, and DCAP.

5. Changing Elections Mid‑Year

Most elections cannot be changed during the year unless you experience a qualifying event such as:

• Marriage, divorce, or legal separation
• Birth, adoption, or placement for adoption
• Change in dependent eligibility
• Change in employment status for you or a spouse
• Change in cost or coverage
• Loss of Medicaid/CHIP or new eligibility
• Special enrollment rights
• FMLA changes
• Change in HSA contribution amount (allowed anytime prospectively)

You must notify HR within 30 days of a qualifying event (60 days for Medicaid/CHIP events).

6. Premium Payment Benefits

Employees may pay their share of medical, dental, and other insurance premiums using pre‑tax payroll deductions, which reduces taxable income.

7. Health Flexible Spending Account (Health FSA)

The Health FSA lets employees set aside pre‑tax dollars to pay for qualified medical expenses not covered by insurance.

Types of Health FSA Coverage

• General‑Purpose FSA
• Limited‑Purpose FSA (for employees contributing to an HSA; covers dental, vision, and preventive care)

Key Features

• Funds are available up‑front at the start of the plan year.
• Unused funds may carry over up to the maximum allowed by the plan.
• Any unused amount beyond the carryover limit is forfeited (“use‑or‑lose” rule).
• Only expenses incurred during the Plan Year are eligible.

Not Eligible for Reimbursement

Examples include:

• Insurance premiums
• Long‑term care
• Cosmetic procedures
• Household help
• Funeral/burial expenses
• Vitamins, toiletries, cosmetics
• Marijuana or controlled substances (even if legal locally)

8. Health FSA Carryovers

You may carry over remaining unused FSA funds up to the plan’s allowable maximum.

Important rules:

• You must be an FSA participant on the last day of the Plan Year to use carryovers.
• If participating in an HSA next year, any carryover moves automatically to a Limited‑Purpose FSA, unless you waive carryover.
• Waiving carryover is required for HSA contributions the following year.

9. Health FSA Claims

To receive reimbursement:

1. Submit a claim form with receipts or EOBs.
2. Submit within 90 days after the Plan Year ends (or 90 days after loss of eligibility).
3. Expenses must be “incurred” (service performed), not simply paid.

Electronic payment card systems may be available for real‑time payment validation.

10. Forfeiture Rules (Health FSA)

You will lose any unused amount remaining after:

• The carryover is applied, or
• The 90‑day claim submission window closes

Forfeitures are used by the employer to offset plan costs.

11. Health Savings Account (HSA)

Employees covered under a qualified High‑Deductible Health Plan (HDHP) may elect pre‑tax HSA contributions via payroll.

Eligibility Requirements

You must:

• Be enrolled in the employer’s HDHP
• Not have other disqualifying coverage (including spouse’s general FSA)
• Not be enrolled in Medicare
• Not be claimed as someone else’s dependent

Key Notes

• HSAs are individually owned accounts held outside the employer plan.
• Employer only facilitates pre‑tax payroll contributions.
• You can change HSA contribution elections at any time prospectively.
• You choose and manage your own HSA provider.

12. Dependent Care Assistance Program (DCAP)

DCAP allows employees to set aside pre‑tax dollars for employment‑related dependent care expenses.

Eligible dependents include:

• Children under age 13
• Spouse incapable of self‑care
• Adult dependents incapable of self‑care

Common Eligible Expenses

• Daycare
• Preschool (not kindergarten or schooling)
• Before/after school programs
• Day camps
• Caregiver wages (non‑household employees)

Not Eligible

• Overnight camps
• Tutoring
• Care provided by your spouse or dependent
• Non‑work‑related care
• Dependent’s medical costs

Important

• DCAP has a strict use‑or‑lose rule; no carryovers.
• Grace period: You may use unused funds for expenses incurred up to 2 months + 15 days after the Plan Year ends.

13. DCAP Claims

• Only reimburses up to the current account balance.
• Must be incurred, not prepaid.
• Claim deadline: 90 days after Plan Year ends (or 90 days after loss of eligibility).

14. COBRA Rights (Health FSA Only)

Under limited conditions, COBRA continuation for the Health FSA is available only if your account is “underspent.”

COBRA for FSA lasts only until the end of the Plan Year unless carryover applies.

15. FMLA & Other Leaves

During FMLA leave:

• Coverage may be continued.
• Premiums may be paid pre‑tax (if on paid leave) or after‑tax (if unpaid).
• Employees may elect to discontinue certain benefits and reinstate upon return.

16. ERISA Rights

The Health FSA and insured benefits are governed by ERISA, which grants rights such as:

• Requesting plan documents
• Receiving fiduciary protection
• Filing appeals and legal claims
• Continuation coverage through COBRA
• Nondiscrimination protections

17. General Plan Information

• Plan Name: Impact Development Fund Cafeteria Plan
• Plan Number: 501
• Plan Year: December 1 – November 30
• Plan Sponsor: Impact Development Fund
• Plan Administrator: Human Resources Manager
• Address: 200 E 7th Street, Suite 412, Loveland, CO 80537