The Health Care Spending Account

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The Spending Accounts

The Health Care Spending Account

You can contribute between $240 and $8,000 a year per household on a before-tax basis to pay for eligible out-of-pocket health care expenses. Any contributions you make will be deducted from your pay in equal installments throughout the year. If you begin contributing during the year (as a newly eligible employee or if you have a qualified change in status), the maximum contribution you can make is $8,000, which will be taken in equal installments over the remaining pay periods for that year.

The following example illustrates how to determine your annual and semimonthly contributions if you contribute to the Health Care Spending Account. This example shows an employee who is paid on a semimonthly basis and who chooses to contribute $8,000 during an annual benefits enrollment period. Generally, semimonthly deductions would be calculated as follows:

$8,000 ÷ 24 pay periods = $333.33 per semimonthly pay period

If you are hired on April 1 and you elect $8,000, you will contribute $8,000 for the remainder of the year. If you are a full-time employee, this means your contributions will begin on May 1 and the amount deducted each pay period will be calculated as follows:

$8,000 ÷ 16 pay periods = $500.00 per semimonthly pay period

Here are some additional key points about how the Health Care Spending Account works:

Your Expenses. If you choose the Health Care Spending Account debit card at the time you enroll, when you incur an eligible expense you may either use your Health Care Spending Account debit card at the time of service, or you may pay out of pocket and submit a claim for reimbursement from your account. If you choose the automatic claims rollover reimbursement feature at the time you enroll, you will initially pay for eligible expenses out of pocket, and your claim will be automatically submitted for reimbursement from your Health Care Spending Account after payment from the Medical or Dental Plan. However, you must submit paper claims for over-the-counter health care expenses or any eligible expenses incurred under plans that do not participate in automatic claims rollover (see "Automatic Claim Rollover Feature"). The total dollar amount of your annual contributions can be reimbursed for eligible expenses, even if the money has not yet accumulated in your account.

Your Eligible Tax Dependents. Under the Health Care Spending Account, you can pay for eligible expenses on behalf of yourself or your eligible tax dependents. Your eligible tax dependents can include your spouse, a qualified adult dependent (including a domestic partner who is your tax dependent or an extended family member), and your dependent children, including the children of your domestic partner if they are your tax dependents.

Continuing Participation. If you leave JPMorgan Chase before the end of the year, you can continue to be reimbursed for eligible expenses incurred up to your termination — as long as you submit the expenses by the applicable deadline. (Please see "Receiving Reimbursement from the Spending Accounts" for more information.) You can also elect through COBRA to continue contributing to your Health Care Spending Account on an after-tax basis for eligible expenses incurred after you leave, but only until the end of the plan year in which you leave. If you are receiving benefits under the JPMorgan Chase Severance Pay Plan, you can continue to participate in the Health Care Spending Account on a before-tax basis during your severance period. Please see the "Plan Administration" section of this Guide for more information on COBRA continuation coverage. If you continue to participate in the Health Care Spending Account while on COBRA through December 31, you are eligible to take advantage of the grace period. (Please see "Grace Period" under "Important Terms" for more information.)

Coordinating with Your Spouse. If your spouse has a Health Care Spending Account at JPMorgan Chase or at another employer, you cannot claim reimbursement for any expenses your spouse has claimed under the other plan.

How to Enroll


If You:	What You Need to Do to Enroll:
Are an Employee	During an annual benefits enrollment period, you can make your elections through the Benefits Web Center via My Rewards @ Work, or via the Benefits Call Center. At the beginning of each enrollment period, you'll receive instructions on how to enroll. You must re-enroll each year to continue participating for the following year. You should plan your choices carefully. You can't change your choices during the year unless you have a qualified change in status. Please see "Qualified Change in Status" for more information.
Are a Newly Hired Employee	If you've just joined JPMorgan Chase and are enrolling for the first time, you need to make your choices through the Benefits Web Center via My Rewards @ Work or via the Benefits Call Center within 31 days of your date of hire if you are a full-time employee, and within 31 days prior to becoming eligible if you are a part-time employee. Part-time employees will receive their enrollment materials within the 31 days prior to becoming eligible and can enroll at that time. You can access your enrollment materials online via Company Home > HR & Personal > Pay & Benefits > Enrollment Materials. (In most cases, a copy of these materials will also be sent to you via interoffice mail. However, you do not need to wait for these materials to arrive to make your enrollment elections online.)*
Have a Change in Work Status or Experience a Qualifying Event	If you're enrolling during the year because you're a newly eligible employee due to a work status change or you have a qualified change in status, you'll have 31 days from the date of the change in status to make your new choices through the Benefits Web Center via My Rewards @ Work or by contacting the Benefits Call Center and speaking with a Service Representative.* Please see "Qualified Change in Status" for more information.

* Special restrictions may apply concerning the processing of spending account enrollments and payroll contributions after mid-December of any year. Please contact the Benefits Call Center for more information.

If You Do Not Enroll

If you do not enroll when you first become eligible, you won't be able to enroll until the next annual benefits enrollment period unless you have a qualified change in status. Please see "Qualified Change in Status" for more information.

When Participation Begins


If You:	When Participation Begins:
Are an Employee	The contributions you elect during the annual benefits enrollment period take effect at the beginning of the following plan year (January 1).
Are a Newly Hired or Newly Eligible Employee	The elections you make as a new hire take effect as follows: If you are a full-time employee, coverage begins on the first of the month following your date of hire. If you are a part-time employee regularly scheduled to work at least 20 but less than 40 hours per week, coverage begins on the first of the month following 90 days from your date of hire. Any contributions you make will be deducted from your pay in equal installments throughout the remainder of the year.* For example, if you are hired on June 1 and you elect $3,000, you will contribute $3,000 for the remainder of the year. If you are a full-time employee, this means your contributions will begin on July 1, and the amount deducted each pay period will be $250.
Have a Qualified Change in Status	The elections you make as a result of a qualified change in status (such as marriage, divorce, or the birth or adoption of a child, etc.) or work status change (such as adjustment to your regularly scheduled work hours that results in a change in eligibility) will take effect as of the day of the qualifying event, if you have already met the plan's eligibility requirements and if you make any eligible changes through the Benefits Web Center or by contacting the Benefits Call Center within 31 days of the qualifying event. If you miss the 31-day deadline, coverage for certain benefits will be effective as of the date you contact the Benefits Call Center.*

Changing Your Contributions

You may change your contribution amounts during the year only if you have a qualified change in status. Please see "Qualified Change in Status" for more information.

Plan carefully, because you cannot change the amount of your contribution to the Health Care Spending Account during the year except in limited circumstances as determined by JPMorgan Chase in accordance with Internal Revenue Service (IRS) guidelines. If you do not spend all the money in your account for expenses incurred during the plan year (January 1 - December 31) and the two-and-a-half-month extension (January 1 - March 15) of the following year as explained in "Special Rules" under "Some Quick Facts", the unused balance cannot be returned to you or carried forward for use during the following year. Unused balances left in your Health Care Spending Account are forfeited.

Eligible Expenses

Eligible expenses are those incurred from the effective date of participation through the date participation ends. Eligible expenses under the Health Care Spending Account include expenses that you pay out of your pocket and that you could also claim as medical deductions on your federal income tax return. Some expenses include, but are not limited to, deductibles, copayments, and coinsurance. Examples of eligible expenses under the current Internal Revenue Code (IRC) are certain dental services, certain equipment and supplies, certain over-the-counter medicines (except vitamins), hospital services, lab exams and tests, and medical treatments (including smoking cessation programs).

Please Note: Insurance contributions (i.e., premiums) are not reimbursable under the Health Care Spending Account.

The specific expenses listed below are generally considered by the Internal Revenue Service (IRS) to be deductible health care expenses for federal income tax purposes. Therefore, they're eligible for reimbursement through the Health Care Spending Account. Because the deductibility of these expenses is always subject to IRS review, JPMorgan Chase can't guarantee that the same expenses will always be eligible (or ineligible) for reimbursement from the Health Care Spending Account.

If the IRS changes its ruling concerning the deductibility of a particular expense, JPMorgan Chase will accept that ruling effective on the date prescribed by the IRS.

Please Note: Changes by the IRS to the tax-deductible status of an expense do not allow you to stop or start contributions to the Health Care Spending Account.

Examples of Eligible Expenses Under a Health Care Spending Account Under the Current Internal Revenue Code (IRC)

This list is subject to change at any time.

Dental Services

Cleaning teeth

Dental X-rays

Filling teeth

Gum treatment

Oral surgery

Orthodontia

Equipment and Supplies

Abdominal supports

Ambulance hire

Arches

Artificial teeth or eyes, to the extent they are not deemed to be cosmetic

Automobile device for a physically disabled person, but not for travel to work

Back supports

Braces

Contact lenses and supplies

Crutches

Diabetic supplies

Elastic hosiery

Eyeglasses

Fluoridation unit in the home

Hearing aids

Installation of stair-seat elevator for a person with a heart condition

Invalid chair

Iron lung

Orthopedic shoes

Over-the-counter (non-prescription) medications used to alleviate or treat an illness or injury (e.g., aspirin, Tylenol, Claritin)

Portable air conditioner if needed for relief from allergy or difficulty in breathing

Prescriptions

Reclining chair if prescribed by a physician

Repair of telephone equipment for the deaf

Sacroiliac belt

Special mattress and plywood bed boards for relief of spinal arthritis

Splints

Truss

Wig, if advised by a physician for the mental health of a patient because of hair loss from disease

Hospital Services

Anesthetist

Operating room usage

Oxygen mask and tent

X-ray technician

Laboratory Exams/Tests

Blood tests

Cardiographs

Metabolism tests

Spinal fluid tests

Sputum tests

Stool examination

Urine analysis

X-ray examinations

Medical Treatments

Acupuncture

Blood transfusion

Diathermy

Electric shock treatments

Hearing services

Injections

Insulin treatments

Organ transplants

Pre-natal and post-natal care

Psychotherapy

Radium therapy

Sterilization

Ultra-violet ray treatments

Vasectomy

X-ray treatments

Professional Services

Chiropodist

Chiropractor

Dentist

Dermatologist

Gynecologist

Midwife

Neurologist

Nursing

Obstetrician

Oculist

Optician

Optometrist

Orthopedist

Osteopath

Pediatrician

Physician

Physiotherapist

Podiatrist

Psychiatrist

Psychoanalyst

Psychologist

Registered nurse

Surgeon (except for cosmetic surgery)

Miscellaneous

Alcoholism inpatient and outpatient care

Birth control pills or other birth control items prescribed by a physician

Braille books (just the excess cost of Braille books and magazines over the cost of regular editions)

Child-birthing classes

Convalescent home, if for medical treatment

Drug treatment center inpatient and outpatient care

Guide for a blind person

Hair transplant operation, if medically necessary

Health institute fees, if services are prescribed by a physician to alleviate a physical or mental defect or illness

Kidney donor's — or possible kidney donor's — expenses

Legal fees that are necessary to authorize a medical treatment for a mentally ill dependent

Nurse's board and wages, including Social Security taxes you pay

Remedial reading for a child with dyslexia

Sanitarium and similar institutions

School costs for physically and mentally disabled children

Seeing-eye dog and its maintenance

Smoking cessation classes

Telephone-teletype costs and television adapter for closed caption service for a deaf person

Travel expenses related to medical treatment

Weight-loss program if prescribed by a physician to treat a diagnosed medical condition such as obesity, hypertension, or heart disease

Any other expense you can claim as a medical deduction on your federal income tax return, except insurance premiums, can also be reimbursed from your Health Care Spending Account. For more information about eligible expenses, visit the Internal Revenue Service (IRS) web site at www.irs.gov, or call the Internal Revenue Service (IRS) at 1-800-TAX-FORM (1-800-829-3676) and ask for Internal Revenue Service (IRS) Publication 502, "Medical and Dental Expenses." While certain sections of the Publication do not apply for purposes of the Health Care Spending Account, you may find the section entitled "What Medical Expenses Are Deductible" helpful in that it lists certain expenses eligible for the federal health care tax deduction, and which may be eligible for reimbursement from your Health Care Spending Account.

Expenses Not Eligible

Expenses not eligible for reimbursement under the Health Care Spending Account include expenses that you generally cannot claim as medical deductions on your federal income tax return. Such ineligible expenses include, but are not limited to, cosmetic surgery, electrolysis, over-the-counter vitamins, health club membership dues, and insurance premiums. Therefore, they're not eligible for reimbursement through the Health Care Spending Account.

Please Note: This list may change at any time based on Internal Revenue Service (IRS) guidance.

Examples of Expenses Not Eligible Under a Health Care Spending Account

Athletic or health club expenses to maintain or improve physical fitness

Baby-sitting expenses incurred while you go to the doctor

Boarding school fees paid for a child while the parent is recuperating from an illness

Body piercing

Bottled water

COBRA continuation contributions

Contributions to a retiree benefits plan

Cosmetic surgery, treatment, or procedures (including prescription drugs used in cosmetic treatments or procedures)

Dance lessons, even if advised by a physician

Diaper service

Divorced spouse's health care bills

Domestic help, even if needed because of a spouse's illness

Electrolysis or hair removal

Food or beverage substitutes, except the cost of special foods over what would ordinarily have been spent on food, if necessary because of allergy

Funeral and burial expenses

Health and beauty supplies

Illegal operations and drugs

Insurance contributions (including contact lens insurance)

Legal fees for divorce

Life insurance contributions

Marriage or family counseling

Maternity clothes

Patent medicines

Rogaine/Minoxidil

Scientology fees

Shampoo (unless prescribed by a doctor, i.e., prescription shampoo)

Tattooing

Toothpaste

Transportation costs of a disabled person to and from work

Travel for reasons of health, even if prescribed by a physician

Tuition and travel expenses to send a child to a particular school for a beneficial change in environment

Veterinary fees

Vitamins, tonics, etc., unless they can only be purchased with a doctor's prescription and are used to treat a specific medical condition

Weight-loss program if not prescribed by a physician to treat a diagnosed medical condition such as obesity, hypertension, or heart disease

Reimbursement Amount

Your Health Care Spending Account covers your eligible health care expenses in full up to the total amount you're scheduled to contribute to the account for the year, no matter how much money you have actually contributed to your account at the time you request the reimbursement. Contributions will continue to be deducted from your pay throughout the year, up to the amount of your annual elected contribution. If your employment terminates, the full amount is available for expenses incurred prior to the date of termination.

Your account will only cover expenses for supplies and services that have actually been received, not future expected services or expenses. In addition, you may only receive reimbursement for expenses that have not been covered or reimbursed by insurance.

Please refer to "Receiving Reimbursement from the Spending Accounts" for details on how to use your Health Care Spending Account to pay for eligible health care expenses.

When Participation Ends

In general, your participation under the Health Care Spending Account will end if:

You stop making required contributions;

Your employment with JPMorgan Chase is terminated for any reason;

You no longer meet eligibility requirements;

The Health Care Spending Account is discontinued for any reason;

You choose not to re-enroll for the following year during the annual benefits enrollment period; or

The year ends after you begin receiving benefits under the JPMorgan Chase Long-Term Disability Plan.

You may be permitted to make contributions to the Health Care Spending Accounts on an after-tax basis under the Consolidated Omnibus Budget Reconciliation Act of 1985 as amended (COBRA) after your participation on a before-tax basis ends. (Please see the "Plan Administration" section of this Guide for more information on COBRA continuation coverage.)

Federal Income Tax Deduction

The Health Care Spending Account is an alternative to applying your out-of-pocket expenses toward a deduction on your federal income tax return. You cannot use the same expenses for both purposes. The chart below provides a brief comparison of the two alternative tax treatments under current tax law. Only you can determine which approach is best for you. JPMorgan Chase cannot provide tax advice. You are advised to consult your own tax advisor.

At-a-Glance Comparison


Using the Health Care Spending Account	Using Expenses as a Tax Deduction
Minimum contribution is $240 a year	Deduction is allowed only for expenses that exceed 7.5% of your adjusted gross household income for the year
Maximum contribution is $8,000 a year	No maximum deduction
Contributions reduce your taxable income	Deduction amount is excluded from your adjusted gross income
Contributions are free from Social Security taxes	Deduction amount does not reduce Social Security taxes
No need to itemize tax return	Must itemize tax return
Must decide contribution amount before expenses are incurred and forfeit unused contributions	Deductions after all expenses incurred; no risk of "forfeiture"

Coordination of Health Savings Account with the Health Care Spending Account

Because of the tax advantages offered by Health Savings Accounts and the Health Care Spending Account when used for medical expenses, the government places certain restrictions on these types of benefit plans when offered together. IRS guidelines permit employees who have an outstanding Health Care Spending Account balance at year-end to apply reimbursable expenses incurred through March 15 of the following year against that balance. As a result, if you participated in the 2007 JPMorgan Chase Health Care Spending Account and you enrolled in the Consumer Driven Health Option for 2008, you cannot begin contributing to the Health Savings Account prior to April 1, 2008 unless you have submitted and have been reimbursed for all of your 2007 Health Care Spending Account contributions as of December 31, 2007 (i.e. your Health Care Spending Account balance must have been $0 as of December 31, 2007 in order to begin contributing to the Health Savings Account as of January 1, 2008). If you have a balance in your Health Care Spending Account as of December 31, 2007, your total contributions for 2008 to the Health Savings Account will be limited to 9/12ths of the annual deductible ($900 for employee coverage/$1,800 if you cover any dependents). In addition, if you enroll in the Consumer Driven Health Option and contribute to the Health Savings Account and the Health Care Spending Account for 2008, your Health Care Spending Account will be limited to reimbursement of dental and vision expenses only. You will not be able to use your Health Care Spending Account to pay for medical expenses, so please plan your contributions accordingly. In addition, you cannot use a Health Care Spending Account debit card or the automatic rollover feature to pay for dental and vision expenses; you will need to submit a claim form for these expenses if you have both a Health Savings Account and a Health Care Spending Account for 2008. Special claim forms are available by contacting ADP.