Flexible Spending Accounts - My Lowe's Life

Flexible Spending AccountFlexible Spending Accounts (FSAs) let you set aside a portion of your annual earnings on a before-taxbasis to pay for many of the out-of-pocket health and dependent care expenses that you incur during theyear. Lowe’s offers spending accounts through its Health Flexible Spending Account (Health FSA) andDependent Care Spending Account (DCSA), for its regular full-time employees and their dependents.You can use the Health FSA for expenses not covered by the medical, vision care and dental options,including:• Your deductibles and co-payments;• Charges that exceed reasonable and customary levels;• Other-the-counter (OTC) medications taken for medical care; and• Expenses not covered by Lowe’s medical or dental options, such as routine eye exams.The DCSA lets you save on the cost of care for your eligible dependents so that you and your spouse, ifyou’re married, can work or attend school.In This SectionSee PageHow Spending Accounts Work ............................................................................................................................................................... 2Health FSA .............................................................................................................................................................................................. 2Child (Dependent) Care Spending Account ............................................................................................................................................. 3Impact on Other Benefits ......................................................................................................................................................................... 5Account Statements ................................................................................................................................................................................. 5Filing Claims ........................................................................................................................................................................................... 61

How Spending Accounts WorkThe Health FSA and DCSA are administered by WageWorks.You may enroll in both the Health FSA and the DCSA. Yourenrollment elections must remain in effect during the entirecalendar year. The amount you choose to contribute to yourspending account(s) will be deducted from your regular pay inequal amounts throughout the year.All eligible Health FSA and DCSA expenses must be incurredduring the year for which you make your account deposits. Anexpense is considered incurred when the service is provided,not when you are billed or when you pay for it.Unused Account BalanceBefore you enroll in either the Health FSA or DCSA, you mustestimate carefully your health and dependent care expenses forthe next year because the Internal Revenue Service (IRS)requires that you forfeit any account balance not used to payeligible expenses incurred during the year. In addition, youcannot:• Receive a refund of any unused balances;• Transfer your funds from one account to the other;• Carry funds over from one year to the next; or• Stop making deposits until the following January 1 unlessan eligible family status change occurs.Changing Your ElectionsIn exchange for the tax advantages provided by the Health FSAand DCSA, the IRS limits your ability to make changes duringthe year. As a result, you can only change your Health FSA andDCSA elections during the course of the year if you have aneligible change in status. The type of change you can makemust be consistent with your change in status. See “Change inStatus Events” of the Plan Overview section for more detailsabout changing your election.Spending Account Tax AdvantagesYou don’t pay federal or Social Security (FICA) taxes, and, inmost locations, state or local income taxes, on the portion ofyour pay that you defer into your spending accounts.If you’re a highly compensated employee (as defined by theIRS), the maximum amount you can contribute to the DCSAmay be limited. You’ll be notified if and how these limits applyto you.Health FSAThe Health FSA lets you pay for eligible health care expenseswith before-tax dollars, thereby reducing your taxable income.How Much Can You Deposit?You may deposit a minimum of $250 and up to $9,999 a yearin your Health FSA. The amount will be deducted on a pre-taxbasis in equal amounts from each paycheck you receive duringthe year.Eligible DependentsFor the Health FSA, you may claim eligible health careexpenses for anyone you claim as a dependent on your federalincome tax return (e.g., dependent children or elderly parents).These dependents do not have to be covered by the Lowe’sCompanies, Inc. Group Medical or Dental Plan Options. Seethe “Plan Overview” section for more information on eligibledependents.How the Health FlexibleSpending Account WorksYou can use your Health FSA spending account to pay on apre-tax basis for healthcare expenses incurred by you and youreligible dependents if the expenses are not reimbursable orcovered by any medical, vision care or dental insurance option.The IRS specifies the kinds of expenses that may be paidthrough a healthcare spending account. You cannot take adeduction on your federal income tax return for any healthcareexpenses for which you have been reimbursed through yourHealth FSA spending account.The following general listings of eligible—and ineligible —healthcare expenses are based, in part, on Internal RevenueService information. Call the IRS toll-free at 1-800-829-3676,or visit the IRS website at www.irs.gov for more information.You can also find an extensive list of eligible and ineligibleexpenses on the Health FSA portion of the WageWorksspending accounts web site, accessible via the employee portalat www.myloweslife.com (My Lowe’s Life > My Health >2

Flexible Spending AccountHealth Related Quick Links > Flexible Spending AccountBalance > Health Care > View What’s/Who’s Covered).To be eligible for reimbursement from your Health FSA,expenses must be incurred during a coverage period (see“When Coverage Starts” Section in the Plan Overview sectionand “End of Year Claims” section in this booklet for moreinformation). Payment timing rules and IRS guidelines are notthe same for when expenses are incurred for purposes of aHealthcare FSA.Eligible Healthcare ExpensesYou may receive reimbursement from your Health FSAspending account for healthcare expenses that have not beenreimbursed from other sources. Here are some examples ofeligible healthcare expenses:• Your deductibles and co-payments (including those fromother employers’ plans);• Fees for doctors, dentists, and hospital services not coveredby a medical or dental option (e.g., routine eye exams);• Charges that exceed usual and customary amounts. SeeDefinitions for an explanation of the terms usual andcustomary, usual, customary and reasonable, and allowedamount;• Medical equipment and supplies (must be prescribed andnot available over the counter);• Reconstructive cosmetic surgery (surgery that is medicallynecessary to correct a deformity from a hereditaryabnormality, a personal injury resulting from an accidentor trauma, or a disfiguring disease);• Birth control pills or other birth control items prescribed byyour doctor (if not covered by your health plan option);• Infertility treatment(s);• Capital expenses to install special equipment or makehome improvements if the main purpose is medical care(such as installing entrance and exit ramps);• Equipment and materials required for using contact lenses,such as saline solution and enzyme cleaners; and• Over-the-counter (OTC) drugs taken for medical care. AnOTC drug is for medical care if it is taken to treat amedical condition or to affect a function or structure of thebody.You can also find an extensive list of eligible expenses on theHealth FSA portion of the WageWorks spending accounts website, accessible via the employee portal atwww.myloweslife.com (My Lowe’s Life > My Health > HealthRelated Quick Links > Flexible Spending Account Balance >Health Care > View What’s/Who’s Covered).Ineligible Healthcare ExpensesYou may not receive reimbursement from your Health FSAspending account for expenses that are not considereddeductible for income tax purposes. Following are someexamples of ineligible expenses:• Payroll deduction amounts and/or premiums for your oryour spouse’s coverage;• Athletic club expenses to keep physically fit (even ifsuggested by a doctor);• Cosmetic surgery of a nonreconstructive nature (i.e., notnecessary to correct a deformity arising from, or directlyrelated to, a hereditary abnormality, a personal injuryresulting from an accident or trauma, or a disfiguringdisease);• Work-related transportation costs of a disabled person;• Medical/dental expenses of a former spouse and formerdependent;• OTC drugs taken and products used only for the person’sgeneral health (e.g., multivitamins and toiletry items(toothpaste, shampoo, etc.)); and• Any medicine or drug that is not legally procured or thatviolates the federal Food, Drug and Cosmetic Act.You can also find an extensive list of ineligible expenses on theHealthcare FSA portion of the WageWorks spending accountsweb site, accessible via the employee portal atwww.myloweslife.com (My Lowe’s Life > My Health > HealthRelated Quick Links > Flexible Spending Account Balance >Health Care > View What’s/Who’s Covered).Dependent Care SpendingAccountThe DCSA lets you deduct money from your pay before taxesto cover your eligible dependent care expenses.3

How Much Can You Deposit?Generally, you may contribute a minimum of $250 and up to$5,000a year to your DCSA. The amount will be taken in equalamounts from each paycheck you receive during the year.If you’re married and you and your spouse file separate taxreturns, the maximum you can set aside for DCSAreimbursement is $2,500. If you file a joint tax return, theamount you can contribute to your DCSA cannot exceed thelesser of your earned income or your spouse’s earned income.“Earned income” means your annual gross earnings (lesscertain pretax deductions) less your annual deposit to theDCSA. Your earned income and your spouse’s earned incomemust each be greater than the DCSA contribution.If your spouse doesn’t work, you cannot use the DCSA unlessyour spouse is disabled, is a full-time student for at least fivemonths of the year. or is looking for work. In these cases, thelaw assumes that your spouse has a monthly income of $250 ifyou have one dependent, or $500 if you have two or moredependents. If your spouse works part-time, you can bereimbursed for dependent care expenses, but only for workrelatedtime, such as the time he/she spends at work andcommuting to and from work.How the Dependent CareSpending Account WorksYou can use your DCSA to pay for eligible dependent careexpenses necessary for you—and your spouse, if married—towork. DCSA expenses are often regular, budgeted expenses,such as the cost of daycare while you and your spouse work. Bybeing reimbursed for these expenses through the DCSA, youcan increase your take-home pay.Eligible Dependent CareExpensesThe following general listing of eligible dependent careexpenses is based on Internal Revenue Service information.Call the IRS toll-free at 1-800-829-3676, or visit the IRSwebsite at www.irs.gov for more information. You can alsofind an extensive list of eligible and ineligible expenses on theDependent Care portion of the WageWorks spending accountsweb site, accessible via the employee portal atwww.myloweslife.com (My Lowe’s Life > My Health > HealthRelated Quick Links > Flexible Spending Account Balance >Dependent Care > View What’s/Who’s Covered).Expenses eligible for payment through your DCSA includeexpenses for:• Wages or salary paid to a care provider (whether inside oroutside your home) who is not a dependent and who isage 19 or older;• Household services, such as preparing meals, related to thecare of an eligible dependent;• FICA and other taxes you pay on behalf of the care-serviceprovider; and• Nursery schools, pre-kindergartens, day camps, anddaycare centers that meet state or local regulations, providecare for more than six nonresident people and receive feesfor services provided.You can also find an extensive list of eligible expenses on theDependent Care portion of the WageWorks spending accountsweb site, accessible via the employee portal atwww.myloweslife.com (My Lowe’s Life > My Health > HealthRelated Quick Links > Flexible Spending Account Balance >Dependent Care > View What’s/Who’s Covered).Ineligible Dependent CareExpensesServices that do not qualify for reimbursement through yourDCSA include:• Dependent care provided by a spouse, by a dependentunder age 19, or by anyone you list as a dependent on yourfederal income tax return;• Dependent care for non-work-related reasons;• Dependent care provided if your spouse does not work orworks different hours than you, unless your spouse isdisabled or a full-time student;• Any expense you plan to take as a credit on your incometax return;• Transportation to and from a dependent care location ifcare is provided in a full-time residential institution;• Overnight care expenses, unless the parents work nights;• Late payment fees;4

• Expenses for a provider’s food, clothing, andentertainment;• Expenses that are primarily educational, such askindergarten; and• Expenses for family members other than your childrenunder age 13, when that family member has a gross incomeover $3,100 (as indexed) per year.You can also find an extensive list of ineligible expenses on theDependent Care portion of the WageWorks spending accountsweb site, accessible via the employee portal atwww.myloweslife.com (My Lowe’s Life > My Health > HealthRelated Quick Links > Flexible Spending Account Balance >Dependent Care > View What’s/Who’s Covered).To receive reimbursements from your DCSA, you must providewritten receipts showing the caregiver’s name and taxpayeridentification number or Social Security number. However, ifthe provider is a charitable organization, such as the YMCA, achurch or similar organization, it is not necessary to provide theorganization’s taxpayer identification number.Using the DCSAMaximum annualcontribution is $5,000($2,500 if married, filingseparately)Contribution excludedfrom taxable incomeContributions free fromSocial Security taxesYour must decidecontribution amountbefore expenses areincurred and you forfeitany unused amountFlexible Spending AccountTaking the FederalIncome Tax CreditMaximum annualexpense applicabletoward credit is $3,000 forone child and $6,000 fortwo or more childrenA percentage ofexpenses is applied as acredit against taxes owedTax credit doesn’t affectSocial Security taxesYou determine tax creditat the end of the yearafter all expenses areincurred, so there’s norisk of forfeiture.Tax Credit vs. Dependent CareSpending AccountYour participation in the FSAs can affect the way you calculateyour federal income tax at the end of the year. For every dollarof reimbursement you receive through the DCSA, yourdependent care tax credit is reduced by one dollar. So if youelect to participate in the DCSA, you are making a decisionNOT to take the federal dependent care tax credit for thoseexpenses.In many cases, the DCSA will offer you the greater taxsavings—especially if you only have one dependent. However,be aware that in some cases your tax savings may be greater ifyou take the dependent care tax credit rather than your DCSAfor part or all of your dependent care expenses.The following table compares the use of a DCSA versus takingthe federal income tax credit. You may want to consult yourpersonal tax advisor to see which method makes the most sensefor you.Using the DCSAMinimum annualcontribution of $250Taking the FederalIncome Tax CreditNo minimum annualexpensesImpact on Other BenefitsYour spending account participation has no effect on yourLowe’s-sponsored benefit amounts. Although spending accountcontributions lower your pay for tax purposes, your othercompany benefits under the Plan, such as disability insurance,are based on your earnings before spending account depositshave been withheld.Please keep in mind that if you pay less Social Security (FICA)tax because of your participation election, then your SocialSecurity benefits at retirement, death, or disability may also belower. You will pay less FICA tax if your pay is at or below thewage base for Social Security taxes. However, whether yourSocial Security benefits will actually be lower depends on anumber of factors, such as your current age, your earningsbefore participation in the accounts, and future pay levels.Account StatementsTo help you keep track of spending account balances, WageWorks will provide you a monthly account statement. Thestatements will show your deposits, payments made, andaccount balances as of the end of the period. In addition, youcan find information regarding your spending account claimsand account balances at any time on the Health FSA and DCSA5

portions of the Wage Works spending accounts web site,accessible via the employee portal at www.myloweslife.com(My Lowe’s Life > My Health > Flexible Spending Accounts >WageWorks). You can also telephone WageWorks at1-877-924-3967.Filing ClaimsThe easiest and fastest way to receive reimbursement of yourhealthcare FSA expenses is to use your WageWorks debit cardto pay for eligible products and services. You should retain acopy of the receipts you receive at the time of purchase in theevent WageWorks requires you to provide additionaldocumentation.The card is not available for use for dependent care FSAexpense reimbursement.You can submit Health FSA and DCSA reimbursement claimsonline at the Health FSA and DCSA portions of the WageWorks spending accounts web site, accessible via the employeeportal at www.myloweslife.com (My Lowe’s Life > My Health> Flexible Spending Accounts > WageWorks > choose HealthCare or Dependent Care). You can also file a paper claim orauthorize a “pay my provider” payment. You can authorize a“pay my provider” payment at the Health FSA and DCSAportions of the Wage Works spending accounts web site,accessible via the employee portal at www.myloweslife.com(My Lowe’s Life > My Health > Flexible Spending Accounts >WageWorks > chose Health Care or Dependent Care).If you wish to submit a paper claim, claim forms for the HealthFSA and DCSA are on the Health FSA and DCSA portions ofthe Wage Works spending accounts web site, accessible via theemployee portal at www.myloweslife.com (My Lowe’s Life >My Health > Flexible Spending Accounts > WageWorks). Youcan also obtain a claim form by contacting the WageWorksCustomer Service Center at 1-877-924-3967. Complete andsubmit the form, together with written proof of payment of theexpenses, online at the Health FSA and DCSA portions of theWage Works spending accounts web site, accessible via theemployee portal at www.myloweslife.com (My Lowe’s Life >My Health > Flexible Spending Accounts > WageWorks >choose Health Care or Dependent Care), or return the form andwritten proof of payment of the expenses to:WageWorksClaims AdministratorP.O. Box 14053Lexington, KY 40511Or, fax your claim to 1-877-353-9236.Health FSAUse your WageWorks debit card to pay for your eligibleunreimbursed health care expenses. You can also authorize a“pay my provider” payment at the Health FSA portion of theWage Works spending accounts web site, accessible via theemployee portal at www.myloweslife.com (My Lowe’s Life >My Health > Flexible Spending Accounts > WageWorks >Health Care > Request Pay My Provider). Or send acompleted Health FSA claim form and proof of payment,including an Explanation of Benefits (EOB) form or itemizedreceipt for nonreimbursed expenses, to WageWorks at theaddress or fax number above. Reimbursements from the HealthFSA will equal the lesser of:• The actual amount of your claim*, or• The total amount you’ve elected to put in the account forthe year, less any reimbursement you’ve already received.* If you submit claims by mail for less than $25, WageWorks will hold them untilthey total $25 before making a payment, except at the end of the year when youcan submit smaller claims in order to clear the funds in your account.WageWorks processes Health FSA reimbursement checks on adaily basis, provided that there are sufficient deposits in theemployee’s account. If there are not sufficient deposits, thepayment will be pended until notification of deposit.DCSAYou can authorize a “pay my provider” payment at the DCSAportion of the Wage Works spending accounts web site,accessible via the employee portal at www.myloweslife.com(My Lowe’s Life > My Health > Flexible Spending Accounts >WageWorks > Dependent Care > Request Pay My Provider).Or send a completed DCSA claim form and proof of paymentto WageWorks at the address or fax number above.Reimbursement from the DCSA will equal the lesser of:• The actual amount of your claim*, or• The amount of your account balance at the time thereimbursement is made.* If you submit claims for less than $25, WageWorks will hold them until theytotal $25 before making a payment, except at the end of the year, when you cansubmit smaller claims in order to clear the funds in your account.WageWorks processes DCSA reimbursement checks on a dailybasis, provided that there are sufficient deposits in the6

Flexible Spending Accountemployee’s account. If there are not sufficient deposits, thepayment will be pended until notification of deposit.End of Year ClaimsYou’ll have until May 31 of the following year to file a claimfor Health FSA claims, including Health FSA expenses youincur during the period January 1 to March 15 of the followingcalendar year. You’ll have until March 31 st of the followingyear to file a claim for DCSA expenses incurred during theprior year. After those dates, you will forfeit any amounts leftin your Health FSA or. These moneys will be used to offsetfuture costs of administering the FSAs, and then according toapplicable rules and regulations.By January 31 st of each year after you participate in the DCSA,you’ll receive a statement showing the amount of assistanceyou received during the prior calendar year. You will have tofile a Form 2441 and attach it to your 1040 federal income taxreturn if you participate in the DCSA.Termination of Employment andSpending Account BenefitsWhen you terminate employment from the Company, you willhave until May 31 st of the year following the termination ofyour employment to submit for reimbursement eligible HealthFSA expenses incurred prior to your termination date. You willhave until March 31 st of the year following the termination ofyour employment to submit for reimbursement eligible DCSAexpenses incurred prior to the termination date. You may elect,through COBRA, to continue your Health FSA participation onan after-tax basis through the end of the calendar year in whichyou terminate employment. If you do so, you will have untilMay 31 st of the year following the termination of employmentto submit for reimbursement eligible Health FSA claims forexpenses incurred prior to your COBRA termination date.Reimbursement checks that are not cashed within 120 daysfrom the date that the check was printed will be voided.7