Abel Business Services is proud to announce the addition of a new employee benefit - Unreimbursed Medical Expense Accounts - starting January 1, 2002.

This announcement contains valuable information explaining what an Unreimbursed Medical Expense Account is and what benefit it gives to you, the employee.

Definition

An Unreimbursed Medical Expense Account (URM) is a payroll deduction elected by the employee. This money is deposited into a special account. The employee will be reimbursed from this account upon proper documentation to Abel in the amount up to the full yearly elected amount to be deposited.

Receipts must be for qualified medical and dental expenses approved by the IRS. (click here)

The exciting benefit of a URM is that the payroll deduction is made BEFORE TAXES, therefore your gross payroll is reduced by this amount and you don't have to pay taxes on it. 

For example, your daughter needs braces so you decide to set aside $100 a month into your URM. Each month, when you get your receipt from the orthodontist, you submit it to Abel and receive reimbursement. Total reimbursement will be a maximum of $1,200 ($100 x 12 months). That's $1,200 tax free.

Why go to the trouble of submitting receipts and getting a reimbursement? The answer is because you do not have to pay taxes on that $1,200. Your tax savings will be 15% up to 39% (depending on your tax bracket) and equals about $200 to $400 for the year.

Please see the list at the end of this letter for examples of approved and ineligible expenses.

Special features of Unreimbursed Medical Expense Accounts:

• Payroll deduction may be any amount up to the maximum. The maximum deduction for year 2002 cannot exceed $200 per month ($2,400 for the year).
• Expenses that can be reimbursed are listed in the IRS federal guidelines, Publication 502.
• Employee must provide a receipt and a written statement that this expense has not and will not be reimbursed by any health plan.
• Employees may submit receipts at any time and be reimbursed up to the full amount of their year's commitment. Abel is mandated to bear the risk of employee's leaving employment before the year's end.
• On December 31, 2002, all money remaining in the account must by Federal regulations revert to Abel Business Services to be distributed at its discretion. This is the "Use it or lose it" clause. Employees must exercise caution in choosing their payroll deduction amount. 

 The Federal Revenue Act of 1978, Code 125, Regulations granted large corporations new benefits in "Flexible Compensation" to employees. Medical Savings Accounts and Dependent Day Care Accounts were two key provisions that allowed employees a payroll deduction and new tax benefits. Companies are required to maintain on file records of Section 125 Plan Documentation and to submit to full auditing procedures and non-discrimination testing. A group of top Fortune 500 companies called the Employers Council on Flexible Compensation (ECFC) lobbied in Congress for tax relief for their employees in 1981.

Process of Enrollment

You may sign up for an Unreimbursed Medical Savings Account on the enrollment form called a "salary redirection agreement". Call Jim Stephens, toll-free at 1-966-997-9927 to request a copy.

It is our hope that this new benefit will save each employee who participates several hundred dollars to spend on his/her own family rather than needlessly going to the IRS. Abel is taking on this extra administrative burden at NO additional expense to our client companies or their employees. It is just one of our attempts to help families offset the ever increasing costs of healthcare.

Sincerely,

Kevin Smith
President, 
Abel Business Services

Examples of Approved Expenses

Ambulance hire * Artificial limbs and breasts (only if reconstructive) * Braille books and magazines * Contact lens solution * Crutches * Elastic hose (medically prescribed) * Eye glasses/contact lens * Fees for: Acupuncture, Anesthetist, Chiropodist, Chiropractor, Clinic, Dentist, Examination, Gynecologist, Hospital, Laboratory, Nurse, Obstetrician, Ophthalmologist, Optometrist, Oral Surgery, Orthodontics, Osteopath, Pediatrician, Physician, Physiotherapist, Podiatrist, Psychiatrist, Psychoanalyst, Psychologist, Sanitarium, Surgeon, Surgery, Therapy, X-ray * Needles, syringes and other diabetic-related supplies * Nursing care * Oxygen equipment * Rental of medical or healing equipment * Seeing-eye dog and hearing-assisting cat * Smoking cessation program (must require physician prescription) * Telephone for deaf * Support or corrective devices * 
Medically prescribed therapy treatments.

Examples of Ineligible Expenses

Exercise programs and health spa membership (even if prescribed by a physician) * Weight loss programs (even if prescribed by a physician) * Elective cosmetic surgery * Medical insurance premiums * Health club dues * Dancing lessons * Rogaine * Maternity clothing * Nonprescription drugs * Diaper service * Swimming lessons * Household help * Over-the-counter medical supplies and pharmaceuticals, (including vitamins and drugs available without a prescription) * Marriage counseling * Swimming pools, sauna or exercise equipment.

This list is intended to be representative of the types of expenses that may not be reimbursed. It is not intended to be complete. Other expenses may also be unreimbursable under federal tax law.