DEPARTMENT OF HUMAN
RESOURCES DEVELOPMENT
Adoption of Chapter 14-52
Hawaii Administrative Rules
(This is an UNOFFICIAL reproduction of the official
copy that was filed with the Office of the Lieutenant Governor.)
August 16, 1999
SUMMARY
Chapter 14-52, Hawaii Administrative Rules, entitled "Flexible Spending Accounts Plan", is adopted.
HAWAII ADMINISTRATIVE RULES
TITLE 14
DEPARTMENT OF HUMAN RESOURCES DEVELOPMENT
SUBTITLE 5
STATE OF HAWAII CAFETERIA PLAN
CHAPTER 52
FLEXIBLE SPENDING ACCOUNTS PLAN
Subchapter
1 Purpose and Definitions
§14-52-1 Purpose
§14-52-2 Definitions
§§14-52-3 to 14-52-9 (Reserved)
Subchapter
2 Administration
§14-52-10 Plan administrator
§14-52-11 Nondiscriminatory administration
§§14-52-12 to 14-52-19 (Reserved)
Subchapter
3 Participation in the Plan
§14-52-20 Participation; compensation
reduction agreement
§14-52-21 Administration fee
§14-52-22 Maximum annual amount of reimbursements or benefits
§14-52-23 Duration of elections
§14-52-24 Annual elections to continue participation; failure
to file
§14-52-25 Participation in the medical expense reimbursement
account while on unpaid leave of absence or unpaid FMLA leave
§14-52-26 Participation in the dependent care expense reimbursement
account while on unpaid leave of absence, unpaid FMLA leave, vacation
leave, sick leave, or other paid leaves
§14-52-27 Participation in the medical expense reimbursement
account and dependent care expense reimbursement account while
on USERRA leave
§14-52-28 Change or cancellation of elected benefits
§14-52-29 Separation from service
§14-52-30 Administrative cancellations
§14-52-31 Cessation or termination of participation
§14-52-32 Recommencement of participation
§§14-52-33 to 14-52-39 (Reserved)
Subchapter
4 Accounts and Statements
§14-52-40 Individual spending accounts
§14-52-41 Adjustments to individual spending accounts
§14-52-42 Interest on contributions
§14-52-43 Participant statements
§14-52-44 Disclosure of information
§§14-52-45 to 14-52-49 (Reserved)
Subchapter
5 Payment of Benefits
§14-52-50 Eligible expenses; reimbursement
§14-52-51 Reimbursement claim form; filing requirements
§14-52-52 Processing and payment of claims
§14-52-53 Appealing a denied or partially paid claim
§§14-52-54 to 14-52-59 (Reserved)
Subchapter
6 Use of Contributions, Forfeited Balances, and Interest
§14-52-60 Use of contributions, forfeited
balances, and interest
§§14-52-61 to 14-52-69 (Reserved)
Subchapter
7 Continuation of Coverage for Medical Expense Reimbursement Spending
Account under COBRA
§14-52-70 Continuation of coverage
for medical expense reimbursement spending account
§§14-52-71 to 14-52-75 (Reserved)
Subchapter
8 Amendment or Termination of the Plan
§14-52-76 Amendment or termination
of the plan
§§14-52-77 to 14-52-79 (Reserved)
Subchapter
9 General Provisions
§14-52-80 Effect of the plan on employment
§14-52-81 Tax effects
§14-52-82 Transfer of benefits
§14-52-83 Participants who cannot be located
§14-52-84 Heirs and assigns
§14-52-85 Computation of time
§14-52-86 Headings and captions
§14-52-87 Severability
§14-52-88 Applicable law
SUBCHAPTER
1
PURPOSE AND DEFINITIONS
§14-52-1 Purpose. (a) The
purpose of the flexible spending accounts plan is to allow eligible
employees of the State to participate, on a pre-tax basis, in
two types of benefits provided under the plan: medical expense
reimbursement spending accounts and dependent care expense reimbursement
spending accounts.
(b) The medical expense reimbursement spending account is intended
to provide reimbursement for eligible medical and health care
expenses (including dental, drug, and vision) that are not reimbursed
by health insurance plans covering the participant or the participant's
dependents. The State intends that the medical expense reimbursement
spending account qualify as an accident and health plan within
the meaning of sections 105(e) and 125 of the Code.
(c) The dependent care expense reimbursement spending account
is intended to provide reimbursement for certain eligible types
of care provided to participants' children and other dependents.
The State intends that the dependent care expense reimbursement
spending account qualify as a dependent care assistance plan within
the meaning of sections 129(d) and 125 of the Code.
(d) These rules implement the plan and are intended to comply
with the requirements of the Code. If there are any conflicts
between the Code and these rules, the Code shall prevail. [Eff
] (Auth: HRS §78-61)(Imp: HRS §78-61)
§14-52-2 Definitions. As used in
this chapter, unless a different meaning clearly appears in the
context:
"COBRA" means the Consolidated Omnibus Budget Reconciliation
Act of 1985, Pub. Law 99-272, as amended.
"Code" means the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder.
"Compensation" means wages and all other earnings of
a participant reported as federal taxable wages on a W-2 form.
"Compensation reduction agreement" means the voluntary
written agreement between an eligible employee and the State in
which the eligible employee agrees to reduce the employee's pre-tax
compensation to obtain the benefits offered under the plan.
"Dependent" means an individual who can be claimed by
an eligible employee as a dependent for federal tax purposes (under
section 152(a) of the Code).
"Director" means the director of the State of Hawaii
department of human resources development.
"Elected benefits" means the medical expense reimbursement
spending account or dependent care expense reimbursement spending
account, or both, selected by the participant.
"Eligible dependent care expenses" means expenses for
qualifying dependent care services incurred by the participant
or the participant's spouse, or the cost of sending a child of
the participant to a qualified day care center or qualified caregiver.
"Eligible employee" means a person who is an employee
of the state executive branch and who is eligible for the State
of Hawaii employees' retirement system.
"Eligible medical expenses" means those expenses incurred
by the participant, or the participant's spouse or dependents,
for qualifying medical, dental, drug, and vision services allowable
under section 213 of the Code (without regard to the limitations
contained in section 213(a) of the Code); provided that this shall
not include an expense incurred for the payment of premiums under
a health insurance plan
or for the purpose of cosmetic surgery as defined by section 213(d)
of the Code.
"Enrollment period" means the period of time designated
by the State prior to the beginning of the plan year in which
eligible employees may participate in the plan by completing the
compensation reduction agreement.
"FMLA" means the Family and Medical Leave Act of 1993,
29 U.S.C. section 2601, as amended.
"FSA" or "plan" means the State of Hawaii
flexible spending accounts plan which includes the medical expense
reimbursement spending account and the dependent care expense
reimbursement spending account described in this chapter.
"Highly compensated individual" means any employee defined
as such in sections 105(h) and 414(q) of the Code.
"Key employee" means any employee defined as such in
section 416(i) of the Code.
"Participant" means any eligible employee who participates
in the plan in accordance with this chapter and part II of chapter
78, HRS.
"Plan year" means each twelve-month period commencing
July 1 and ending on June 30.
"Qualified caregiver" means an individual who provides
qualifying dependent care services and is not: a dependent of
the participant; the participant's spouse; or a child of the participant
who is under age nineteen (19) at the close of the plan year in
which the services are rendered.
"Qualified day care center" means a day care center
which provides full-time or part-time care for more than six individuals
(other than individuals who reside at the day care center) on
a regular basis during the participant's taxable year; receives
a fee, grant, or payment for providing these services to any individual;
and complies with all applicable state and local laws.
"Qualifying dependent care services" means services
related to the care of a qualifying individual, that are performed
while the participant and the participant's spouse are both gainfully
employed, and that are performed:
(1) In the home of the participant; or
(2) Outside the home of the participant for the care of a dependent
of the participant under the age of thirteen (13), or the care
of any other qualifying individual who spends at least eight (8)
hours per day in the participant's home.
"Qualifying individual" means, for purposes of the dependent
care expense reimbursement spending account, a:
(1) Dependent of the participant who is under the age of thirteen
(13); or
(2) Dependent or spouse of the participant who is physically or
mentally incapable of caring for himself or herself.
"Spouse" means an individual who is legally married
to a participant; provided that this shall not include an individual
legally separated from a participant under a decree of legal separation.
"State" means the State of Hawaii.
"Third-party administrator" means the outside party
contracted by the director to perform the day-to-day operations
of the plan.
"USERRA" means the Uniformed Services Employment and
Reemployment Rights Act of 1994, 38 U.S.C. section 4301, as amended.
[Eff ] (Auth: HRS §78-61)(Imp: HRS §78-61)
§§14-52-3 to 14-52-9 (Reserved).
SUBCHAPTER
2
ADMINISTRATION
§14-52-10 Plan administrator.
(a) The State, through the director, shall be the named fiduciary
responsible for administration of the plan.
(b) The director shall be the administrator of the plan and may
contract with a third-party administrator to perform recordkeeping,
communications, and the day-to-day operations of the plan. The
director may delegate any of the director's powers or duties under
the plan in writing to the third-party administrator or any other
person or entity.
(c) The delegated representative shall have a fiduciary responsibility
for only that part of the administration which has been delegated
by the director and any references to the State or director shall
instead apply to the delegated representative. [Eff ] (Auth: HRS
§78-61)(Imp: HRS §78-61)
§14-52-11 Nondiscriminatory administration.
(a) The plan shall be administered by the director and third-party
administrator in a nondiscriminatory manner and in accordance
with the Code and other applicable state laws.
(b) The plan is intended to not discriminate in favor of highly
compensated individuals or key employees with respect to eligibility
to participate, contributions, and benefits. If, in the judgment
of the director, the operation of the plan results in such discrimination,
the director may exclude highly compensated individuals or key
employees from participating in the plan, or limit their participation
in the plan. [Eff ] (Auth: HRS §78-61)(Imp: HRS §78-61)
§§14-52-12 to 14-52-19 (Reserved).
SUBCHAPTER
3
PARTICIPATION IN THE PLAN
§14-52-20 Participation;
compensation reduction agreement. (a) To participate in the plan,
an eligible employee shall submit a completed compensation reduction
agreement to the third-party administrator before the close of
the enrollment period for each plan year or within ninety (90)
days of becoming eligible. The compensation reduction agreement
shall be provided by the third-party administrator.
(b) In the compensation reduction agreement, the
eligible employee shall provide the following:
(1) The eligible employee's name, address, and social security
number;
(2) The type(s) of benefit(s) or spending account(s) selected;
(3) The amount of pre-tax compensation the eligible employee wishes
to contribute during the period covered by the compensation reduction
agreement, provided that:
(A) The maximum amount of contributions shall be subject to the
reimbursement limitations specified in section 14-52-22; and
(B) Except as otherwise provided in this chapter or law, the pre-tax
compensation contribution shall be made by payroll reduction;
(4) Whether the eligible employee wants the reimbursement amount
deposited in a checking or savings account, or sent by check to
the eligible employee's address; and
(5) Any other information reasonably required by the director
or third-party administrator.
(c) Participation in the plan shall commence on the first day
of the next plan year for compensation
reduction agreements received and approved during the enrollment
period.
(d) Participation in the plan during the plan year for newly eligible
employees shall commence on the first day of the month following
the third-party administrator's receipt and approval of the compensation
reduction agreement, provided that the compensation reduction
agreement is received by the third-party administrator within
ninety (90) days of becoming eligible.
(e) By becoming a participant, each eligible employee agrees to
make the monthly contribution specified in the compensation reduction
agreement, pay the monthly administration fee, and abide by the
provisions of the plan. [Eff ] (Auth: HRS §78-61)(Imp: HRS
§78-61)
§14-52-21 Administration fee. (a)
Each participant shall pay a monthly administration fee, if required
by the State. The amount of the fee shall be determined by the
director.
(b) Except as otherwise provided in the Code or this chapter,
the fee shall be paid on a pre-tax basis and shall be made by
payroll reduction.
(c) Each participant shall pay one monthly administration fee
regardless of whether the participant enrolls in one or both types
of spending accounts.
(d) The administration fee shall be paid for the entire month
regardless of when, during the month, the participant voluntarily
cancels coverage, separates from service, or is administratively
canceled as provided in this chapter. Upon cancellation of the
participant's coverage or separation from service, the fee shall
be deducted from the participant's account balance and paid until
contributions are exhausted or until ninety (90) days following
the date participation is terminated, whichever comes first.
(e) A participant who takes an unpaid leave of absence or unpaid
FMLA leave in accordance with section 14-52-25 and elects to make
payments using the
prepayment method or pay-as-you-go method shall be required to
pay the administration fee on an out-of-pocket basis. [Eff ] (Auth:
HRS §78-61)(Imp: HRS §78-61)
§14-52-22 Maximum annual amount
of reimbursements or benefits. (a) The maximum annual amount of
reimbursement or benefits a participant may receive for eligible
medical expenses shall be $2,400.
(1) If both husband and wife are eligible employees and become
participants of the plan, each may contribute a maximum annual
amount of $2,400.
(2) The $2,400 shall not include the participant's monthly administration
fee.
(b) The maximum annual amount of reimbursement or benefits a participant
may receive for eligible dependent care expenses shall be as follows:
(1) If the participant is not married at the close of the plan
year, the maximum annual reimbursement shall be the lesser of
$5,000 or the participant's compensation for the plan year; and
(2) If the participant is married at the close of the plan year,
the maximum annual reimbursement shall be the lesser of:
(A) $5,000 (or $2,500 in the case of a married participant filing
a federal tax return separately from the participant's spouse);
(B) The participant's compensation for such plan year; or
(C) The compensation of the participant's spouse for such plan
year; provided that if the participant's spouse is a full-time
student or is incapable of caring for himself or herself as provided
in the Code, and has no earned income, the spouse shall be deemed
to have compensation of $200 per month if the participant has
one dependent, or
$400 if the participant has two or more dependents.
The maximum annual reimbursement amount above shall be reduced
by the participant's monthly administration fee and the amount
of any tax-exempt dependent care assistance benefits received
by the participant or the participant's spouse from any other
employer during the plan year.
(c) If the maximum annual reimbursement amount for the dependent
care expense reimbursement account is increased or decreased by
the Code, the maximum annual reimbursement amount in subsection
(b) shall be automatically increased or decreased by an identical
amount. [Eff ] (Auth: HRS §78-61)(Imp: HRS §78-61)
§14-52-23 Duration of elections. A completed and submitted compensation reduction agreement and the elections thereunder shall remain in effect until the end of the plan year for which they are made, unless a change is made pursuant to sections 14-52-25, 14-52-26, 14-52-27, and 14-52-28. [Eff ] (Auth: HRS §78-61)(Imp: HRS §78-61)
§14-52-24 Annual elections to continue
participation; failure to file. (a) During each plan year, an
eligible employee shall affirmatively reelect to continue participation
in the plan by filing a new compensation reduction agreement during
the annual enrollment period.
(b) The new compensation reduction agreement shall become effective
on the first day of the plan year which commences after the compensation
reduction agreement is properly signed, dated, submitted by the
eligible employee, and received by the third-party administrator
during the annual enrollment period.
(c) If any participant fails to file a new compensation reduction
agreement during the enrollment period, the participant shall
be deemed to have elected to receive cash compensation in lieu
of the
benefits under the plan and shall not be considered a participant
in the plan. [Eff ] (Auth: HRS §78-61)(Imp: HRS §78-61)
§14-52-25 Participation in the
medical expense reimbursement account while on unpaid leave of
absence or unpaid FMLA leave. (a) A participant who takes an unpaid
leave of absence or unpaid FMLA leave may elect to continue participation
in the medical expense reimbursement account by making the required
contributions and administration fees under the plan during the
period of unpaid leave or unpaid FMLA leave. The participant may
make the payments using either the:
(1) Prepayment method: the participant may prepay the entire contribution
due during unpaid leave or unpaid FMLA leave; or
(2) Pay-as-you-go method: the contributions due during the unpaid
leave or unpaid FMLA leave period may be paid out-of-pocket based
on the same schedule that would have been used if the participant
had not been on unpaid leave or unpaid FMLA leave, and under the
State's existing rules for payment by employees on leave without
pay.
A participant on unpaid leave or unpaid FMLA leave who fails to
make the required contributions and administration fees shall
be administratively canceled from the medical expense reimbursement
account in accordance with section 14-52-30.
(b) A participant who takes an unpaid leave or unpaid FMLA leave
for ten (10) or more working days may elect to change or cancel
the medical expense reimbursement account elected benefits in
accordance with section 14-52-28.
(c) A participant who is administratively canceled or elects to
cancel participation in the medical expense reimbursement spending
account under subsection (b), and returns from unpaid leave or
unpaid FMLA leave during the same plan year, may recommence participation
in the medical expense
reimbursement account in accordance with section 14-52-20. The
election may be the same as or different from the benefit that
was in effect at the time the participant began the unpaid leave
or unpaid FMLA leave, in accordance with section 14-52-28.
[Eff ] (Auth: HRS §78-61)(Imp: HRS §78-61)
§14-52-26 Participation in the
dependent care expense reimbursement account while on unpaid leave
of absence, unpaid FMLA leave, vacation leave, sick leave, or
other paid leaves. (a) A participant in the dependent care expense
reimbursement account who takes an unpaid leave of absence, unpaid
FMLA leave, vacation leave, sick leave, or other paid leaves (e.g.,
sabbatical leave, funeral leave, administrative leave, industrial
injury leave, accidental injury leave, family leave, or compensatory
time off) shall not be entitled to submit a claim for dependent
care expenses incurred during the unpaid leave of absence, unpaid
FMLA leave, vacation leave, sick leave, or other paid leaves.
(b) A participant who takes an unpaid leave of absence or unpaid
FMLA leave may elect to continue participation in the dependent
care expense reimbursement account by making the required contributions
and administration fees under the plan during the period of unpaid
leave or unpaid FMLA leave in the manner prescribed under section
14-52-25(a). A participant who fails to make the required contributions
and administration fees shall be administratively canceled from
the plan in accordance with section 14-52-30.
(c) A participant in the dependent care expense reimbursement
account who takes unpaid leave of absence or unpaid FMLA leave
of ten (10) or more working days may elect to change or cancel
the dependent care expense reimbursement account elected benefits
in accordance with section 14-52-28. A participant who cancels
participation in the dependent care expense reimbursement account
shall not be allowed to recommence participation in the dependent
care expense reimbursement account for the remainder of the plan
year. [Eff ] (Auth: HRS §78-61)(Imp: HRS §78-61)
§14-52-27 Participation in the
medical expense reimbursement account and dependent care expense
reimbursement account while on USERRA leave. (a) Notwithstanding
the provisions of sections 14-52-25 and 14-52-26, a participant
who takes an unpaid leave of absence under USERRA may elect to
continue participation under the medical expense reimbursement
account and dependent care expense reimbursement account by making
the required contributions and administration fees under the plan
during the period of unpaid USERRA leave using one of the methods
specified under section 14-52-25(a). A participant who fails to
make the required contributions and administration fees shall
be administratively canceled from the plan in accordance with
section 14-52-30.
(b) A participant on unpaid USERRA leave of ten (10) or more working
days may elect to change or cancel participation in the medical
expense reimbursement account or dependent care expense reimbursement
account in accordance with section 14-52-28.
(c) A participant who is administratively canceled or elects to
cancel, and who returns from unpaid leave of absence under USERRA
during the same plan year, may recommence participation in the
medical expense reimbursement account and the dependent care expense
reimbursement account for the remainder of the plan year upon
return from the USERRA leave. The participant may recommence participation
in accordance with section 14-52-20 and under the same conditions
and with the same rights that applied prior to the USERRA leave.
[Eff ] (Auth: HRS §78-61)(Imp: HRS §78-61)
§14-52-28 Change or cancellation of elected benefits. (a)
Except as otherwise provided in this chapter, once an eligible
employee has elected benefits under the plan and the plan year
has begun, the eligible employee may not change or cancel the
elected benefits unless there is a change in status authorized
under the Code. Examples of a change in status authorized under
the Code include, without limitation:
(1) A change in legal marital status (including marriage, death
of a spouse, divorce);
(2) A change in the number of dependents (including birth, adoption,
or death of a dependent);
(3) A change in employment status (including commencement or termination
of employment of the spouse); or
(4) A change in work schedule (including an increase or decrease
in the number of hours of employment by the eligible employee
or spouse, a switch between full-time and part-time status, or
commencement of an unpaid leave of absence).
(b) To change or cancel elected benefits, a participant shall
submit a written request on a form prescribed by the director
to the third-party administrator fully describing the change in
status, within ninety (90) days of the change in status.
(1) An allowable change in elected benefits shall be effective
on the first day of the month following the third-party administrator's
receipt and approval of the required forms and shall be consistent
with the status change.
(2) The cancellation of elected benefits or an election of new
benefits may be made by a participant only for the remainder of
the plan year, shall be effective prospectively, shall be consistent
with the status change, and shall be done in accordance with this
chapter. An allowable cancellation of elected benefits shall be
effective on the last day of the month following the third-party
administrator's receipt and approval of the required forms. [Eff
] (Auth: HRS §78-61)(Imp: HRS §78-61)
§14-52-29 Separation from service.
(a) If a participant separates from service with the State during
a period in which the participant is covered under the plan, coverage
shall terminate on the same date as the participant's separation
from service.
(b) A participant who separates from service shall be entitled
to reimbursement for claims for qualified benefits incurred up
until the participant's separation from service, only if the participant
or the participant's estate applies for the reimbursement on or
before the end of ninety (90) days following the date of the separation
from service and the administration fees are paid during the ninety
(90) day period in accordance with section 14-52-21. Thereafter,
any unused contributions shall be permanently forfeited to the
State. [Eff
] (Auth: HRS §78-61)(Imp: HRS §78-61)
§14-52-30 Administrative cancellations.
(a) If a participant fails to make the monthly contribution specified
in the compensation reduction agreement, or fails to pay the monthly
administration fee, the third-party administrator may administratively
cancel the employee's participation in the plan.
(b) The third-party administrator shall notify the participant
of the cancellation in writing.
(c) The administrative cancellation shall be effective retroactively
to the beginning of the pay period in which the participant failed
to make the monthly contribution or pay the monthly administrative
fee.
(d) Once the administrative cancellation becomes effective, any
unused contributions shall be permanently forfeited to the State.
[Eff
] (Auth: HRS §78-61)(Imp: HRS §78-61)
§14-52-31 Cessation or termination
of participation. A participant shall cease to be a participant
as of the earliest of:
(1) The date on which the plan terminates;
(2) The date on which the participant ceases to be eligible for
the plan;
(3) The effective date of a voluntary cancellation due to an allowable
change in status pursuant to section 14-52-28, or unpaid FMLA
or USERRA leave pursuant to sections 14-52-25, 14-52-26 or 14-52-27;
or
(4) The date an administrative cancellation becomes effective
under this chapter. [Eff
] (Auth: HRS §78-61)(Imp: HRS §78-61)
§14-52-32 Recommencement of participation.
(a) Except as otherwise provided in this chapter, a former active
participant who is reemployed during the same plan year in which
the participant separated from service:
(1) May recommence participation in the medical expense reimbursement
account in accordance with section 14-52-20. The election may
be the same as or different from the benefit that was in effect
at the time the participant separated from service with the State,
in accordance with section 14-52-28; and
(2) Shall not be allowed to recommence participation in the dependent
care expense reimbursement account for the remainder of the plan
year.
(b) A former active participant who has a change in status pursuant
to section 14-52-28 in the same plan year in which the participant
terminated enrollment in the plan due to the change in status
may recommence participation in accordance with section 14-52-20.
(c) A former active participant who recommences participation
in accordance with this section, shall not be entitled to any
forfeited balances. The participant shall be required to establish
a new spending account. [Eff ] (Auth: HRS §78-61)(Imp: HRS
§78-61)
§§14-52-33 to 14-52-39 (Reserved).
SUBCHAPTER
4
ACCOUNTS AND STATEMENTS
§14-52-40 Individual spending
accounts. Upon receipt and approval of a completed compensation
reduction agreement, the third-party administrator shall establish
and maintain an individual spending account or accounts for each
participant for recordkeeping and reporting purposes. [Eff
] (Auth: HRS §78-61)(Imp: HRS §78-61)
§14-52-41 Adjustments to individual spending accounts. Each individual spending account shall be credited with the amount of contributions made and shall be adjusted whenever a reimbursement is made. [Eff ] (Auth: HRS §78-61)(Imp: HRS §78-61)
§14-52-42 Interest on contributions. A participant shall not be entitled to any interest earned on the pre-tax compensation amounts contributed by the participant. [Eff ] (Auth: HRS §78-61)(Imp: HRS §78-61)
§14-52-43 Participant statements. (a) The third-party administrator
shall send each participant a quarterly statement within thirty
(30) days after the end of the calendar quarter that shall contain
the following:
(1) Amounts of pre-tax compensation contributed to the plan and
credited to the participant's spending account(s);
(2) Amounts and dates of any reimbursements;
(3) Remaining balance in the participant's spending account(s);
and
(4) Any other information reasonably required by the director.
(b) The third-party administrator shall mail the quarterly statements
to the participant's last known address on file with the third-party
administrator. [Eff ] (Auth: HRS §78-61)(Imp: HRS §78-61)
§14-52-44 Disclosure of information. Information about a participant shall only be disclosed to the participant, the third-party administrator, the State, or a person authorized in writing by the participant unless otherwise authorized or required by law. [Eff ] (Auth: HRS §78-61)(Imp: HRS §78-61)
§§14-52-45 to 14-52-49 (Reserved).
SUBCHAPTER
5
PAYMENT OF BENEFITS
§14-52-50 Eligible expenses;
reimbursement. (a) A participant shall only be entitled to reimbursement
for eligible medical expenses and eligible dependent care expenses
incurred after becoming a participant and for the remainder of
the plan year.
(b) The director shall determine, in accordance with the Code
and other applicable state laws, whether a submitted dependent
care expense is an eligible expense. An expense shall be an eligible
dependent care expense only if the service is provided by a person
who is a qualified caregiver.
(c) The director shall determine, in accordance with the Code
and other applicable state laws, whether a submitted medical expense
is an eligible expense.
(d) Eligible medical and dependent care expenses shall be considered
incurred when the goods or services giving rise to such eligible
expenses are provided, irrespective of when such eligible expenses
are billed to the participant.
(e) Reimbursement shall not be made for any amount that does not
qualify as an eligible medical or dependent care expense, and
no participant or former participant shall receive a reimbursement
amount which exceeds the amount actually paid for eligible medical
and dependent care expenses. [Eff ] (Auth: HRS §78-61)(Imp:
HRS §78-61)
§14-52-51 Reimbursement claim form;
filing requirements. (a) To receive benefits under the plan, a
participant shall submit a written claim for reimbursement to
the third-party administrator. The claim shall be filed and received
by the third-party administrator in accordance with the Code and
other applicable state laws:
(1) At any time during the plan year, provided the participant
maintains eligibility;
(2) Within ninety (90) days after the end of the plan year, provided
the eligible medical or dependent care expense was incurred during
the plan year;
(3) Within ninety (90) days following the date a participant separates
from service, provided the eligible medical or dependent care
expense was incurred during the plan year and prior to separation
from service; and
(4) Within ninety (90) days after the employee ceases to be a
participant, provided the eligible medical or dependent care expense
was incurred during the plan year and prior to cessation of participation.
(b) The claim shall be on a form prescribed by the director and
shall include the following:
(1) The name, address, and social security number of the participant;
(2) The type of benefit claimed;
(3) The amount of reimbursement being requested; and
(4) Any other information reasonably required by the director
or third-party administrator.
(c) The minimum amount of a claim for reimbursement shall be $15;
provided that at the end of the plan year, the minimum amount
may be less than $15.
(d) The maximum amount of a claim for reimbursement of eligible
medical expenses shall be the amount specified in the participant's
compensation reduction agreement; provided that whenever a participant
receives a reimbursement, the maximum amount shall be reduced
by the amount of the reimbursement. The maximum amount of a claim
for eligible dependent care expenses shall be the amount of contributions
remaining in a participant's spending account.
(e) A participant shall provide whatever proof the director or
third-party administrator may reasonably require to verify the
claim. [Eff
] (Auth: HRS §78-61)(Imp: HRS §78-61)
§14-52-52 Processing and payment
of claims. (a) Claims shall be processed on a semi-monthly basis
and subject to the approval of the director or third-party administrator
in accordance with the Code and other applicable state laws.
(b) If a participant's claim is approved, the participant shall
be reimbursed the approved amount. Participants shall only be
entitled to be reimbursed from:
(1) The remaining balance in the participant's dependent care
expense reimbursement spending account; or
(2) The total amount specified in the compensation reduction agreement
for the participant's medical expense reimbursement spending account
less any prior reimbursements for that plan year.
(c) Upon approval, the third-party administrator shall:
(1) Deposit the reimbursement amount into the participant's checking
or savings account; or
(2) Issue a check in the reimbursement amount and mail the check
to the participant's last known address on file with the third-party
administrator.
(d) If the participant's claim is rejected for any reason, the
third-party administrator shall notify the participant in writing
within two (2) business days of the rejection, clearly explaining
the basis for the rejection and informing the participant of the
appeal procedure set forth in section 14-52-53.
(e) If a claim is authorized for an amount different from the
request for reimbursement, the third-party administrator shall
provide the participant written notification of the reason within
five (5) business days of the authorization and shall inform the
participant of the appeal procedure set forth in section 14-52-53.
[Eff ] (Auth: HRS §78-61)(Imp: HRS §78-61)
§14-52-53 Appealing a denied or
partially paid claim. (a) Within sixty (60) days after a participant
receives notice denying a claim in whole or in part under section
14-52-52, the participant or the participant's duly authorized
representative may
request in writing a full and fair review of the claim by the
director.
(b) The director may extend the sixty-day (60) period where the
nature of the benefit involved or other attendant circumstances
make such extension appropriate.
(c) The appeal shall include all pertinent information related
to the claim and shall be submitted to the director, who shall
make the final decision.
(d) The director shall render a final decision within sixty (60)
days after receipt of the appeal; provided that if special circumstances
require an extension of time, the director shall render a final
decision within one hundred twenty (120) days after receipt of
the appeal. The director's decision shall be in writing and shall
include specific reasons for the decision.
(e) Except as otherwise provided by law, all decisions on appeals
by the director shall be final and conclusive upon all participants.
[Eff
] (Auth: HRS §78-61)(Imp: HRS §78-61)
§§14-52-54 to 14-52-59 (Reserved).
SUBCHAPTER
6
USE OF CONTRIBUTIONS, FORFEITED BALANCES, AND INTEREST
§14-52-60 Use of contributions,
forfeited balances, and interest. (a) Contributions shall be used
for the benefit of the participants and the plan.
(b) Any balance remaining in a participant's spending account(s)
after ninety (90) days following the end of the plan year or ninety
(90) days following a cancellation in accordance with this chapter
shall be forfeited by the participant, and the participant's spending
account balance shall be reduced to zero for that plan year.
(c) Except as otherwise provided by law, the forfeited balances
and interest earned on contributions shall revert to the State.
[Eff
] (Auth: HRS §78-61)(Imp: HRS §78-61)
§§14-52-61 to 14-52-69 (Reserved).
SUBCHAPTER
7
CONTINUATION OF COVERAGE FOR MEDICAL EXPENSE REIMBURSEMENT SPENDING
ACCOUNT UNDER COBRA
§14-52-70 Continuation
of coverage for medical expense reimbursement spending account.
(a) Pursuant to COBRA, participants and their dependents who would
lose coverage under the medical expense reimbursement spending
account as a result of a qualifying event may be entitled to continue
coverage for the medical expense reimbursement spending account.
Examples of a qualifying event include, without limitation: separation
from service, death of the participant, or divorce.
(b) Eligible participants and their dependents shall be given
a written notification of COBRA eligibility by the third-party
administrator.
(c) The election to continue participation in the plan shall be
made within sixty (60) days from the date the eligible participants
or their dependents receive the written COBRA notification.
(d) Eligible participants and their dependents shall pay for continued
coverage under this section on an out-of-pocket basis and shall
be subject to the terms and conditions of the plan. [Eff
] (Auth: HRS §78-61)(Imp: HRS §78-61)
§§14-52-71 to 14-52-75 (Reserved).
SUBCHAPTER
8
AMENDMENT OR TERMINATION OF THE PLAN
§14-52-76 Amendment or
termination of the plan. (a) The State or the director may amend
or terminate the plan, in whole or in part, for any reason, and
at any time without the consent of any employee, participant,
or other person.
(b) The director may amend or modify this plan retroactively to
enable the plan to provide non-taxable medical expense reimbursement
benefits under section 105 of the Code or non-taxable dependent
care reimbursement benefits under section 129 of the Code.
(c) Except as otherwise provided in the plan, no amendment shall
deprive any participant or beneficiary of any benefit to which
the participant or beneficiary is entitled under the plan. [Eff
] (Auth: HRS §78-61)(Imp: HRS §78-61)
§§14-52-77 to 14-52-79 (Reserved).
SUBCHAPTER
9
GENERAL PROVISIONS
§14-52-80 Effect of the
plan on employment. (a) The plan shall not be deemed to constitute
a contract of employment between the State and any participant,
or to be a consideration or an inducement for the employment of
any participant or eligible employee.
(b) Nothing contained in this plan shall be deemed to give any
participant or eligible employee the right to be retained in the
service of the State or to interfere with the right of the State
to terminate any participant or eligible employee at any time
regardless of the effect which such termination
will have upon the eligible employee as a participant of this
plan. [Eff ] (Auth: HRS §78-61)(Imp: HRS §78-61)
§14-52-81 Tax effects. Neither the State, the director, nor the third-party administrator makes any warranty or other representation as to whether or not any benefits received by a participant under the plan shall be treated as includable in gross income for federal and State income tax purposes. [Eff ] (Auth: HRS §78-61)(Imp: HRS §78-61)
§14-52-82 Transfer of benefits. Except as otherwise provided in this chapter, benefits under the plan shall not be voluntarily or involuntarily transferred, assigned, or alienated. [Eff ] (Auth: HRS §78-61)(Imp: HRS §78-61)
§14-52-83 Participants who cannot be located. If a participant or other distributee is entitled to a reimbursement under this chapter and cannot be located, the reimbursement amount shall be deemed unclaimed or abandoned in accordance with the Uniform Unclaimed Property Act, chapter 523A, HRS. The unclaimed or abandoned reimbursement amount shall be handled in accordance with chapter 523A, HRS. [Eff ] (Auth: HRS §78-61)(Imp: HRS §78-61)
§14-52-84 Heirs and assigns. The plan shall be binding upon the heirs, assignees, transferees, beneficiaries, executors, administrators, successors, representatives, and agents of the participant. [Eff ] (Auth: HRS §78-61)(Imp: HRS §78-61)
§14-52-85 Computation of time.
Except as otherwise provided in this chapter, whenever a period
of time is stated in terms of days, the period shall
mean calendar days. [Eff ] (Auth: HRS §78-61)(Imp: HRS §78-61)
§14-52-86 Headings and captions. The headings and captions set forth in these rules are provided for convenience only, and shall not affect the construction or interpretation of the plan. [Eff ] (Auth: HRS §78-61)(Imp: HRS §78-61)
§14-52-87 Severability. If any provision of these rules or the plan is declared to be invalid or unenforceable by a court, such invalidity or unenforceability shall not affect the validity or enforceability of the remaining provisions of these rules or the plan, and these rules or the plan shall be construed and enforced as if such provision had not been included. [Eff ] (Auth: HRS §78-61) (Imp: HRS §78-61)
§14-52-88 Applicable law. The plan
shall be construed and enforced according to the Code, and the
laws of the State to the extent not preempted by federal law.
[Eff ] (Auth: HRS §78-61)(Imp: HRS §78-61)
DEPARTMENT OF HUMAN RESOURCES DEVELOPMENT
Chapter 14-52, Hawaii Administrative Rules, on the Summary Page dated August 16, 1999, was adopted on August 16, 1999, following a public hearing held on July 26, 1999, after public notice was given in the Hawaii State & County Public Notices which are circulated in the State of Hawaii, Sun Press community and military newspapers and MidWeek which are circulated in the City and County of Honolulu on June 21, 1999.
The adoption of chapter 14-52 shall take effect ten (10) days after filing with the Office of the Lieutenant Governor.
_____________________________
Director, Department of
Human Resources Development
APPROVED:
_____________________________
Benjamin J. Cayetano
Governor
State of Hawaii
Dated: _____________________
APPROVED AS TO FORM:
________________________
Deputy Attorney General
_____________________________
Filed