Summary Plan Description

SAS Institute Inc. Premium Conversion and

Flexible Spending Account Plan

Full-Time and Part-Time Employees of SAS and Eligible Affiliated Employers

Premium Conversion, Health Care Flexible Spending Account and Dependent Care Flexible Spending Account

Effective January 1, 2016

Human Resources Benefits

INTRODUCTION This booklet is a Summary Plan Description (“SPD”) of the SAS Institute Inc. Premium Conversion and Flexible Spending Account Plan (“Plan”). The SPD describes the basic features of the Plan, its rules of eligibility and coverage, and how it operates, as of January 1, 2016.

SAS Institute Inc. (“SAS”) intends for the Plan to meet the requirements of a cafeteria plan under Section 125 of the Internal Revenue Code (the “Code”), an accident and health plan under Section 105 of the Code, and a dependent care reimbursement plan under Section 129 of the Code.

The Plan is sponsored by SAS for the benefit of eligible full-time employees and part-time employees of SAS and its subsidiaries and affiliates which adopt the Plan (collectively, the “Employer”). The Plan, as described in this SPD, applies only to such eligible full-time and part-time employees as described herein.

The rules and operation of this Plan are described in this SPD as clearly as possible with minimal use of the technical terms appearing in the legal documents. However, the Plan Document remains the final authority and, in the event of conflict with this SPD, shall govern in all cases. You may request from the Plan Administrator a copy of the Plan Document.

SAS has the right to amend, modify, discontinue or terminate this Plan for all or a portion of its employees at any time, for any reason, and without the approval, consent or acceptance of any Participant or any other person, organization or entity. This SPD does not create a contract or a guarantee of employment.

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TABLE OF CONTENTS

PREMIUM CONVERSION PLAN...........................................................................................3

ELIGIBILITY ...............................................................................................................................3

ENROLLMENT ...........................................................................................................................4

Initial Election Period ...............................................................................................................4

Annual Open Enrollment Period ...............................................................................................4

COST OF COVERAGE ...............................................................................................................5

TERMINATION OF PARTICIPATION .....................................................................................5

FLEXIBLE SPENDING ACCOUNT PLAN ...........................................................................7

ELIGIBLITY REQUIREMENTS ................................................................................................7

ENROLLMENT ...........................................................................................................................8

Initial Election Period ...............................................................................................................8

Annual Open Enrollment Period ...............................................................................................8

TERMINATION OF PARTICIPATION .....................................................................................9

FORFEITURES ..........................................................................................................................10

HEALTH CARE FLEXIBLE SPENDING ACCOUNT .......................................................11

MAXIMUM ANNUAL CONTRIBUTION ...............................................................................11

ELIGIBLE MEDICAL EXPENSES...........................................................................................11

INELIGIBLE MEDICAL EXPENSES ......................................................................................13

HEALTH CARE FLEXIBLE SPENDING ACCOUNT CLAIMS FILING ..............................14

WHERE TO FILE CLAIMS ......................................................................................................18

CLAIMS RUN-OUT PERIOD ...................................................................................................18

PROCESSING OF CLAIMS ......................................................................................................18

CONTINUATION OF COVERAGE (COBRA) ........................................................................18 2

When Coverage May Be Continued .......................................................................................19

Type of Continuation Coverage ..............................................................................................20

Notice Requirements ...............................................................................................................20

Election Procedures ................................................................................................................21

Cost .........................................................................................................................................21

Keep Your Plan Informed of Address Changes ......................................................................21

If You Have Questions............................................................................................................21

HIPAA PRIVACY ......................................................................................................................22

DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT ...............................................23

MAXIMUM ANNUAL CONTRIBUTION AND SPECIAL LIMITS ......................................23

QUALIFYING DEPENDENT CARE EXPENSES ...................................................................23

QUALIFIED DEPENDENT CARE PROVIDER ......................................................................24

EXAMPLE OF NON-QUALIFYING EXPENSES ...................................................................25

DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT CLAIMS FILING ......................25

WHERE TO FILE CLAIMS ......................................................................................................26

CLAIMS RUN-OUT PERIOD ...................................................................................................26

PROCESSING OF CLAIMS ......................................................................................................26

DEPENDENT CARE SPENDING ACCOUNT AND DEPENDENT CARE TAX CREDIT .26

EMPLOYER PROVIDED/SUBSIDIZED DEPENDENT CARE .............................................27

MID-YEAR BENEFIT ELECTION CHANGES ..................................................................28

CHANGE IN STATUS...............................................................................................................28

SPECIAL ENROLLMENT EVENTS ........................................................................................30

CHANGE IN COST OR COVERAGE ......................................................................................31

CERTAIN JUDGEMENTS, ORDERS OR DECREES .............................................................31

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MEDICARE OR MEDICAID ELIGBILITY .............................................................................31

PARTICIPATION DURING A LEAVE OF ABSENCE ..........................................................32

APPEAL PROCEDURES ........................................................................................................33

APPEALING DENIED CLAIMS ..............................................................................................34

PROTECTIONS UNDER ERISA ...........................................................................................34

RECEIVE INFORMATION ABOUT THE PLAN AND ITS BENEFITS ...............................34

CONTINUE HEALTH CARE PLAN COVERAGE .................................................................35

PRUDENT ACTIONS BY PLAN FIDUCIARIES ....................................................................34

ENFORCE YOUR RIGHTS.......................................................................................................35

ASSISTANCE WITH QUESTIONS ..........................................................................................35

PLAN AMENDMENT AND TERMINATION .........................................................................36

NONDISCRIMINATORY INTENT ..........................................................................................36

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FACTS ABOUT THE PLAN PLAN NAME: SAS Institute Inc. Premium Conversion and Flexible

Spending Account Plan

PLAN SPONSOR: SAS Institute Inc. SAS Campus Drive Cary, NC 27513 (919) 677-8000

PLAN ADMINISTRATOR:

COBRA ADMINISTRATOR:

SAS Institute Inc. SAS Campus Drive Cary, NC 27513 (919) 677-8000

COBRA Direct P.O. Box 70 Sanford, NC 27331 919-352-3019 (phone) 919-774-3782 (fax)

AGENT FOR SERVICE OF LEGAL PROCESS:

SAS Institute Inc. SAS Campus Drive Cary, NC 27513 (919) 677-8000 Attn: John Boswell

PLAN SPONSOR EIN: 56-1133017

PLAN NUMBER: 501 (The Plan is a component of the SAS Institute Inc. Welfare Benefits Plan.)

PLAN YEAR: January 1 through December 31

TYPE OF PLAN: The Plan is an employee fringe and welfare benefit plan.

SOURCE OF FUNDING: The Plan is funded by employer and employee contributions and the benefits are paid by the Plan Sponsor out of general assets.

PLAN ADMINISTRATION:

The Plan is administered by SAS, the Plan Administrator, through its Benefits Department. Claims for benefits

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under the Flexible Spending Account Plan are administered by a third-party Claims Administrator.

CLAIMS ADMINISTRATOR:

Flores & Associates P. O. Box 31397 Charlotte, NC 28231-1397 Phone: (800) 532-3327

PARTICPATING SUBSIDIARIES:

Integrated Decisions and Systems, Inc.; SAS Federal LLC; and Vision Systems & Technology, Inc.

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SUMMARY The Plan consists of two components: one component, referred to as the “Premium Conversion Plan,” allows eligible employees to pay certain premiums for coverage under the SAS Institute Inc. Medical Plan, the SAS Institute Inc. Dental Plan, and the SAS Institute Inc. Vision Plan (the “SAS Health Care Plans”) on a pre-tax basis; and one component, referred to as the “Flexible Spending Account (FSA) Plan,” allows eligible employees to elect to contribute amounts on a pre-tax basis to the Health Care Flexible Spending Account and/or the Dependent Care Flexible Spending Account. The Health Care Flexible Spending Account and the Dependent Care Flexible Spending Account allow Participants to receive reimbursement for qualifying medical and/or dependent care expenses. This Plan does not govern the operation of any benefit options other than the Premium Conversion Plan, the Health Care Flexible Spending Account and the Dependent Care Flexible Spending Account. The benefits provided by the SAS Health Care Plans are outlined in more detail in the separate Summary Plan Description for each plan and are not explained in this Summary.

PREMIUM CONVERSION PLAN The Premium Conversion Plan provides eligible employees with the ability to pay premiums for coverage under the SAS Health Care Plans on a pre-tax basis.

ELIGIBILITY

You are an “eligible employee” and are eligible to participate in the Premium Conversion Plan if you are classified as a full-time employee or part-time employee of the Employer or a participating subsidiary and you are enrolled or automatically enrolled in a SAS Health Care Plan.

You are a full-time employee if you are regularly scheduled to work at least 35 hours per week. You are a part-time employee if you are regularly scheduled to work at least 20 but less than 35 hours per week. However, the following classes of individuals are not considered to be full-time or part-time employees:

• Employees who are not actively at work. The term “actively at work” means the active expenditure of time and energy in the service of the Employer. A full-time or part-time employee shall be deemed actively at work on each day of a regular paid vacation, paid company holiday or other regular non-working day if the employee was actively at work on the preceding scheduled work day.

• Nonresident aliens.

• Contract or leased employees.

• Students.

• Seasonal, substitute, temporary or temporary agency employees.

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To the extent permitted under the SAS Health Care Plans, if you are enrolled as a participant, you may also enroll your eligible dependents.

NOTE: The law does not allow an eligible employee to pay the cost of coverage under the SAS Health Care Plans for a domestic partner or the child of such an individual (or any other individual) on a pre-tax basis, unless the individual qualifies as the eligible employee’s dependent under federal tax law.

ENROLLMENT

The Plan has two regular enrollment periods: (1) The initial election period and (2) the annual open enrollment period.

Initial Election Period

If you wish to participate in a SAS Health Care Plan when you first become eligible, you must enroll during your initial election period. Your initial election period begins on the day you are hired and ends 60 days thereafter.

To elect to participate during your initial election period, you must complete the form provided by the Plan Administrator in the manner specified. An eligible employee who enrolls in a SAS Health Care Plan and who is required to contribute to the cost of such coverage is automatically enrolled in the Premium Conversion Plan and is deemed to have elected to pay for the cost of such coverage on a pre-tax basis, generally as of the first day of the eligible employee’s date of participation in the applicable SAS Health Care Plan.

Participation in the Premium Conversion Plan is effective on your date of hire and will end on December 31 of each year and elections generally cannot be changed or cancelled during the Plan Year unless you experience certain qualifying events.

Annual Open Enrollment Period

The Plan operates on a calendar year cycle (January 1 to December 31), referred to as the “Plan Year.” Before the beginning of each Plan Year, the Plan Administrator holds open enrollment. During open enrollment, you may change your elections for the upcoming Plan Year, or elect to enroll in a SAS Health Care Plan for the first time. This is the Plan’s “annual open enrollment period,” and each year it will be set and announced in advance by the SAS Benefits Department.

To participate during the annual open enrollment period, you must enroll through an online benefits self-service enrollment, within the designated annual open enrollment period. If you are unable to complete your enrollment online, you may contact the Benefits Department during the open enrollment period for a paper form.

If you do not actively make changes to your benefit elections during the annual open enrollment period, your benefit elections under the applicable SAS Health Care Plans and the pretax premium portion of the Premium Conversion Plan will carry over automatically into the new Plan Year,

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unless you are notified that re-enrollment is required. Your elections for the Working Spouse/Domestic Partner Premium Waiver and for the Health Care Flexible Spending Account and Dependent Care Flexible Spending Account will not automatically carry over into the next plan year; you must actively re-enroll each year if you wish to continue participation.

The benefits you elect (or are deemed to have elected) to pay on a pre-tax basis during the initial enrollment period or annual open enrollment period will remain in effect for the entire Plan Year unless you experience an event that qualifies you to make an election change. For more information about these qualifying events, see the section entitled “Mid-Year Benefit Election Changes.”

COST OF COVERAGE

You are required to pay a portion of the cost of coverage for yourself and any Dependent(s) that you enroll in a SAS Health Care Plan. The monthly cost of coverage (“health premium”) is communicated when you first enroll via your new hire benefits packet and during each annual open enrollment period. The current health premiums can also be found online under the SAS Benefits Department website at http://sww.sas.com/hrweb/Benefits.jsp.

The Premium Conversion Plan allows eligible employees to pay health premiums on a pre-tax basis. This means the amounts are deducted from gross pay before federal and state (in those states where this provision will apply) taxes are subtracted. When you enroll in (or are automatically enrolled in) a SAS Health Care Plan, you are making an election to participate and to pay your health premiums under the rules of this Plan. This Plan lets you pay your share of the health premiums with pre-tax dollars.

The cost of coverage for any individual who does not qualify as your dependent under federal tax law, which may include a domestic partner (same or opposite sex), or the child of such individual, must be paid on an after-tax basis.

Because the health premium is deducted from your wages on a pre-tax basis under the Premium Conversion Plan, this may mean you will be paying less Social Security tax, which could reduce your Social Security benefits when you begin to receive such benefits.

TERMINATION OF PARTICIPATION

Your participation in the Premium Conversion Plan shall terminate on the earliest of the following dates:

• The last day of the month in which you terminate employment or otherwise cease to be an eligible employee.

• The date on which you fail to make a required contribution under the Plan.

• The date on which you commit fraud against the Plan, as determined by the Plan Administrator.

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• The date the Premium Conversion Plan is terminated.

If you terminate participation in a SAS Health Care Plan because your employment with the Employer ends, and you are rehired within 31 days, your pre-termination benefit elections and consent to participate in the Premium Conversion plan will be automatically reinstated.

See the section entitled “Continuation of Benefits (COBRA)” for coverage continuation options.

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FLEXIBLE SPENDING ACCOUNT PLAN The Flexible Spending Account (FSA) Plan allows you to pay for certain health care and dependent care expenses with pre-tax dollars. Pre-tax dollars are those amounts deducted from your gross pay before federal and state (in those states where this provision will apply) taxes are subtracted.

The FSA Plan offers two benefits: A Health Care Flexible Spending Account (“Health Care FSA”) for reimbursement of out-of-pocket Eligible Medical Expenses for you and your eligible dependent(s), and a Dependent Care Flexible Spending Account (“Dependent Care FSA”) for reimbursement of Eligible Dependent Care Expenses. The Health Care FSA and the Dependent Care FSA are two separate accounts. You cannot use your Health Care FSA contributions to reimburse yourself for dependent care expenses and you cannot use your Dependent Care FSA contributions to reimburse yourself for health care expenses, even if you have excess contributions in one account and a shortage in the other.

When you enroll in the FSA Plan, you specify the amount of health care reimbursement and/or dependent care reimbursement you wish to pay for with pre-tax dollars for the Plan Year. Participation in both the Health Care FSA and the Dependent Care FSA is completely voluntary and you may choose to participate in one or both programs, if eligible, or not to participate in either program. If you choose to enroll in an FSA, you authorize SAS to deduct a specific amount of pre-tax dollars from your paycheck in equal increments for each pay period during the calendar year. The amount deducted from your pay, otherwise known as your "contribution," is automatically credited to your Health Care FSA and/or Dependent Care FSA.

Once enrolled, your contributions cannot be changed or cancelled unless you experience an event that qualifies you to make an election change. For more information about these qualifying events, see the section entitled “Mid-Year Benefit Election Changes.” You should choose your FSA amounts carefully because any amount that is not used to reimburse Eligible Medical Expenses (for the Health Care FSA) or Eligible Dependent Care Expenses (for the Dependent Care FSA) incurred during the year will be forfeited, with the exception of the allowable $500 rollover for the Health Care FSA, as described in the Health Care FSA section of this SPD.

ELIGIBLITY REQUIREMENTS

Full-time and part-time employees are eligible to participate in the Health Care FSA beginning on their date of hire. Full-time employees are eligible to participate in the Dependent Care FSA beginning on their date of hire. Part-time employees are NOT eligible to participate in the Dependent Care FSA.

You are considered to be a full-time employee if you are regularly scheduled to work at least 35 hours per week. You are a part-time employee if you have been classified by the Employer as a part-time employee and are regularly scheduled to work at least 20 but less than 35 hours per week. However, the following classes of individuals are not considered to be full-time or part-time employees:

• Employees who are not actively at work. The term actively at work means the active expenditure of time and energy in the service of the Employer. A full-time or part-time

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employee shall be deemed actively at work on each day of a regular paid vacation, paid company holiday or other regular non-working day if the employee was actively at work on the preceding scheduled work day.

• Nonresident aliens.

• Contract or leased employees.

• Students.

• Seasonal, substitute, temporary or temporary agency employees.

If you are absent from work due to an unexcused, non-health related absence, as determined by SAS, when your participation would otherwise take effect, you will not be eligible to participate in this Plan until you are actively at work.

ENROLLMENT

The FSA Plan has two regular enrollment periods: (1) the initial election period and (2) the annual open enrollment period.

Initial Election Period

If you wish to participate in the FSA Plan when you first become eligible, you must enroll during your initial election period. Your initial election period begins on the day you are hired and ends 60 days thereafter. Rehired employees will be treated the same as any other newly hired employees and are eligible to participate in the FSA Plan as of their date of hire, as described above.

To elect to participate during your initial election period, you must complete the form provided by the Plan Administrator in the manner specified.

Participation in the FSA Plan is effective on your date of hire and will end on December 31 of each year and elections generally cannot be changed or cancelled during the Plan Year unless you experience certain qualifying events. As a general rule, if you fail to make an election during the initial election period, you will not be enrolled in the FSA Plan and you will not have another chance to enroll until the following Plan Year (i.e., until the following January 1).

Annual Open Enrollment Period

The Plan operates on a calendar year cycle (January 1 to December 31), referred to as the “Plan Year.” Before the beginning of each Plan Year, the Plan Administrator holds open enrollment. During open enrollment, you may change your elections for the upcoming Plan Year, or elect to enroll in the Health Care FSA or Dependent Care FSA for the first time. This is the Plan’s “annual open enrollment period,” and each year it will be set and announced in advance by the SAS Benefit Department.

To participate during the annual open enrollment period, you must enroll through an online benefits self-service enrollment, within the designated annual open enrollment period. If you are unable to

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complete your enrollment online, you may contact the Benefits Department during the open enrollment period for a paper form.

The elections you make during the annual open enrollment period will become effective the first day of the next Plan Year. The election will remain in effect for the entire Plan Year (i.e., until December 31) and generally cannot be changed or cancelled during the Plan Year unless you experience certain qualifying events. If you fail to make an election during the annual open enrollment period, you will not be enrolled in the FSA Plan for the upcoming Plan Year and generally will not have another chance to enroll until the following Plan Year.

Employees must submit a new election during the annual open enrollment period prior to the beginning of each Plan Year in order to participate in the FSA Plan for the next Plan Year. Unlike the Premium Conversion Plan, elections under the FSA Plan do not roll over from year to year.

TERMINATION OF PARTICIPATION

Your participation in the FSA Plan will end on the earliest of the following:

• The last day of the month in which you cease to be employed by the Employer.

• The last day of the month on which you cease to be actively at work with the Employer (unless you are on an approved Leave of Absence, in which case your participation may continue as described below in the section entitled “Participation During a Leave of Absence”).

• The date the FSA Plan is amended to terminate the eligibility of the class of employees of which you are a member.

• The date the FSA Plan is terminated.

• The date on which you cease to be classified as a full-time employee, if enrolled in the Dependent Care FSA.

• If employed by an affiliate or a subsidiary that participates in the Plan, the date such entity terminates participation in the Plan.

• Each December 31, unless you re-enroll for the next Plan Year, or

• The date you fail to pay a required salary contribution that is due under the FSA Plan.

You may submit FSA Plan claims incurred prior to your termination of participation through the end of the three month claims run out period (January 1 – March 31) following the end of the Plan Year in which you terminate participation.

If you terminate employment, you may have the opportunity for a temporary extension of coverage under the Health Care FSA Plan (called “Continuation Coverage”). For information on continuing your contributions to the Health Care FSA following termination, please refer to the section entitled

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“Continuation of Coverage (COBRA).” If you terminate employment but are rehired within 31 days, your elections under the FSA Plan that were in effect prior to your termination will be automatically reinstated. If you cease to be classified as a full-time employee but are rehired or reinstated as a full-time employee within 31 days, your Dependent Care FSA Plan elections that were in effect prior to your change in classification will be automatically reinstated.

FORFEITURES

If you do not use all the money in your FSA Plan account(s) during a Plan Year, you will not be able to use it in the next Plan Year, with the exception of the right to use up to $500 in your Health Care FSA in the following Plan Year, as more fully described in the Health Care Flexible Spending Account section. The IRS requires that you forfeit any other unused balance. Therefore, the amount of money you contribute should not exceed the amount of expenses you and your family expect to incur. You should monitor your actual health care and dependent care expenses during the year to avoid losing the benefit of your contributions.

You may submit FSA Plan claims incurred prior to your termination of participation through the end of the three month claims run out period (January 1 – March 31) following the end of the Plan Year in which you terminate participation.

If both you and your spouse are employees of SAS and one spouse becomes ineligible to continue to participate in the FSA Plan because of a change in employment status, the Health Care and/or Dependent Care FSAs cannot be transferred to the other employee.

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HEALTH CARE FLEXIBLE SPENDING ACCOUNT The Health Care FSA enables you to pay, on a pre-tax basis, certain health care expenses incurred by yourself, your spouse, and your dependents, that are not covered by your group medical insurance.

Under the Health Care FSA:

• Your “spouse” is the person to whom you are legally married, as recognized under state law and the Internal Revenue Code. A domestic partner is not considered your “spouse” for purposes of the Plan.

• Your “dependents” are your children under age 26 and any other individuals whom you could claim as dependents on your federal income tax return (which is determined under Section 152 of the Internal Revenue Code).

You can claim medical expenses incurred by you and your eligible dependent(s), even if the dependent(s) are not covered under a SAS Health Care Plan, provided the expenses are not claimed under another plan. You may not be reimbursed for the expenses of your domestic partner (same or opposite sex) unless he or she also qualifies as your tax dependent.

MAXIMUM ANNUAL CONTRIBUTION AND ROLLOVER LIMIT

When you enroll in the Health Care FSA, you specify the amount of health care reimbursement you wish to pay for with pre-tax dollars for the Plan Year. Each pay period, your wages will be reduced by an amount equal to a pro-rata share of the annual amount you elect.

The maximum contribution which you can make each year to your Health Care FSA is $2,550. This amount shall be automatically adjusted to reflect an increase or decrease in the maximum permissible amount announced by the Internal Revenue Service for any future Plan Year.

Effective January 1, 2014, you may carry over to the following Plan Year up to $500 in your Health Care FSA remaining unreimbursed at the end of the period for submitting eligible expenses (March 31). The amount carried over may be used only to pay or reimburse Medical Expenses incurred during the plan year to which the amount is carried over.

You should choose your Health Care FSA amount carefully because any amount over $500 that is not used to reimburse Eligible Medical Expenses incurred during the Plan Year will be forfeited.

ELIGIBLE MEDICAL EXPENSES

Under the Health Care FSA, an “Eligible Medical Expense” is an expense that has been incurred by you, your spouse, or your eligible dependent that satisfies the following conditions:

• The expense is for “medical care” as defined by Internal Revenue Code Section 213(d); and

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• The expense has not been reimbursed by any other source and you will not seek reimbursement for the expense from any other source.

The Internal Revenue Code generally defines “medical care” as any amounts incurred to diagnose, treat or prevent a specific medical condition or for purposes of affecting any function or structure of the body.

The cost of over-the-counter drugs or medicines other than insulin may not be reimbursed from your Health Care FSA unless you (or your dependent) have a prescription for such drug or medicine.

The following is a sample list of medical expenses which the IRS has typically considered deductible for income tax purposes under Section 213(d) of the Internal Revenue Code and which can be reimbursed through your Health Care FSA. Please note that the list below is subject to change based on modifications to the Internal Revenue Code. You may contact the Claims Administrator for questions regarding services not listed or refer to IRS Publication 502 for eligible expenses.

• Acupuncture • Alcoholism Treatment • Ambulance Service • Anesthetist • Artificial Limbs • Automobile modifications if it is for physically handicapped persons • Birth Control Pills/Contraceptive Devices • Breast Pumps • Capital Expenses (special equipment installed in home or for improvements if main reason is for

medical care) • Charges above Plan Maximum Dollar Limits • Charges above usual, customary & reasonable charges (as determined by the Participant’s

Health Plan) • Chiropractors • Christian Science Practitioner for medical care • Contact Lenses (prescription lenses not covered by insurance; not cosmetic lenses) • Co-payments and deductibles (not covered by insurance plans) • Cost for Physical or Mental Illness • Confinements • Crutches • Dental Fees (not covered by insurance; excluding cosmetic services) • Dermatologists • Eyeglasses (lenses, frames, exams not covered by insurance) • Hearing Devices (batteries and repairs) • Hospital Fees (not covered by insurance; excluding services for cosmetic procedures) • Immunizations • Insulin • Laboratory Fees • Medical Monitoring & Testing Devices such as blood pressure monitors (for diagnosis of

high blood pressure) and glucose kits and syringes (for diagnosis for diabetes)

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• Mileage (Requires that the member keep a log showing the date they drove to an appointment or pharmacy to pick up prescription and number of miles driven. The log must match dates

on physician and pharmacy receipts.) • Nursing Home (medical portion only) • Nursing Services • Obstetrical Expenses • Orthodontia (adult orthodontia requires a letter of dental purpose; excludes cosmetic only orthodontia) • Osteopaths (licensed) • Over-the-counter medications prescribed by a medical provider • Oxygen • Physician Fees (excluding cosmetic services) • Pregnancy Test (over-the-counter) • Prosthetics and Orthotics • Psychiatric Care • Radial Keratotomy and Lasik surgery (and any other vision correction surgery) • Routine Physicals and Other Non-Diagnostic Service or Treatment • Smoking Cessation Programs • Special Diets for necessary medical treatment (requires annual letter of medical purpose each

year) • Sterilization • Surgical Fees (including experimental and reconstructive procedures when medically

necessary) • Telephone (specially equipped for person who is deaf; requires letter of medical purpose) • Therapeutic Care for Drug and Alcohol Addiction • Therapy (physical or occupational when medically necessary) • Transplants (including donor’s costs) • Transportation essential to medically necessary care • Vasectomy • Weight Loss Programs when prescribed by a physician for a weight related medical

condition (Documentation is required each new year and must include diagnosis, type of exercise and how the patient is to do the required exercise.)

• Wheelchair • Wound Care Supplies when required after major surgery or when medically necessary • X-ray Fees INELIGIBLE MEDICAL EXPENSES

The following is a sample list of health care expenses which may not be reimbursed through the Health Care FSA, even if they otherwise qualify as “medical care” expenses. Please note that the list below is subject to change based on modifications to the Internal Revenue Code. You may contact the Claims Administrator for questions.

• Accident and other health care/dental insurance premiums • Adoption Expenses • Athletic Club Membership (unless incurred primarily for medical care) • Babysitting Fees

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• Carbon Monoxide Detectors • Cosmetic Surgery (any procedure or product intended to improve a patient’s physical

appearance but not to meaningfully promote the body’s proper functioning or to prevent or treat illness or disease)

• Dental Bonding and Bleaching • Dust Elimination System • Electrolysis • Expenses for which the Participant received benefits from any other health care, dental,

vision, hearing or prescription plan • Food (unless taken to alleviate specific ailment) • Guardianship of Mental Patient • Hair Transplants • Heating System (installed to ease allergy) • Illegal Drugs, Surgery and Treatments • Living Expenses • Maternity Clothes • Nurse Caring for Healthy Child • Nutritional Supplements • Over-the-counter medications (unless prescribed) • Power Steering in Automobiles • Prepayment of services • Retirement or Rest Home (no proof of medical services rendered) • Social Activities (even if recommended by doctor to improve general health) • Special Diet (when prescribed as substitute for regular diet to provide ordinary nourishment) • Swimming Pool (installed for general health) • Vacation Expenditures (even if recommended by a doctor) • Vitamins (non-prescription) HEALTH CARE FLEXIBLE SPENDING ACCOUNT CLAIMS FILING

You may be reimbursed for Eligible Medical Expenses incurred during the Plan Year. So long as your coverage remains effective, the full annual coverage amount you have elected, reduced by the amount of previous reimbursements for Eligible Medical Expenses incurred during the Plan Year, will be available for reimbursement. The benefit to you is that you do not have to wait until the amount you have actually contributed to your Health Care FSA is sufficient to cover an out-of-pocket medical expense before you actually incur the expense. Your subsequent contributions will be used to repay the Employer for the reimbursement.

Under the Health Care FSA, you have two reimbursement options. You can complete and submit a written claim for reimbursement after incurring the expense (see “Traditional Paper Claims” below for more information), or you can use a debit card (see “Electronic Payment Card” below for more information) to pay the expense. You can use either method.

Traditional Paper Claims: After you incur an Eligible Medical Expense, you may file a claim with the Claims Administrator by completing and submitting a reimbursement form. You may obtain a form from the SAS Benefits Department or online from the SAS Benefits website or the Claims Administrator’s website. You must include with your reimbursement form a written statement from

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an independent third party (e.g., an itemized statement, receipt, explanation of benefits (EOB), etc.) associated with each expense that indicates the following:

• The nature of the expense (e.g. what type of service or treatment was provided). If the expense is for an over-the-counter drug, you must submit the prescription, a copy of the prescription, or other documentation that a prescription has been issued, such as a receipt identifying the patient, the date and amount of the purchase, and an Rx number.

• For expenses covered partially by health insurance, a copy of your EOB showing the amount your insurance did not pay.

• The date(s) the service or expense was incurred.

• The name and address of the provider or entity to which the expense was or is to be paid.

• The amount of the expense, and

• The patient’s name.

The Claims Administrator will process the claim once it receives the reimbursement form from you. If the expense is determined to be an Eligible Medical Expense, you will be reimbursed as soon as practicable after your claim is processed (but only up to the annual amount you have elected to contribute to your Health Care FSA). If the expense is determined to not be an “Eligible Medical Expense,” you will receive notification of this determination.

Electronic Payment Card: The debit card allows you to pay for Eligible Medical Expenses at the time that you incur the expense. The debit card works as follows:

• You must make an election to use the card. In order to use the debit card, you must agree to abide by the terms and conditions of the debit card program as described in the cardholder agreement. Among other things, the cardholder agreement may impose limitations as to card usage, and it may give your employer the right to withhold amounts from your wages or to reduce future reimbursements to offset amounts paid or reimbursed for ineligible claims. In addition, debit card fees may apply. The cardholder agreement will be provided to you, and you may be required to sign a new cardholder agreement each year.

• You must certify proper use of the card. You must certify that the card will be used only for Eligible Medical Expenses, that you will not use the card for expenses that have already been reimbursed and that you will not seek reimbursement for expenses paid for with the card.

• Use of the card is limited to health care providers (including pharmacies) and certain other qualifying vendors. Use of the card for Health Care FSA Plan expenses is limited to merchants that are health care providers (doctors, pharmacies, etc.), and certain other vendors that qualify under federal tax rules.

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• Swipe the card at the health care provider like you do any other credit or debit card. When you incur an Eligible Medical Expense at a doctor’s office or pharmacy or other eligible vendor, you can use the Health Care FSA Plan debit card much like you would any other debit card or a typical credit card. The provider or vendor is paid for the expense up to the maximum reimbursement amount available under the Health Care FSA Plan (or as otherwise limited under the cardholder agreement) at the time that you use the card. Every time you use the card, you certify to the Plan that the expense for which payment under the Health Care FSA Plan is being made is an Eligible Medical Expense, that the expense has not already been reimbursed and that you will not seek reimbursement for the expense.

• Substantiation of over-the-counter drug purchases. The cardholder agreement may impose special rules for purchases of over-the-counter medicines or drugs, or prohibit such purchase altogether.

• Obtain and retain a receipt/third party statement each time you swipe the card. Each time you use the debit card, you must obtain a statement from the health care provider or vendor (e.g., receipt, invoice, etc.) that includes the following information:

• The nature of the expense (e.g. what type of service or treatment was provided). If the expense is for an over the counter drug, you must submit the prescription, a copy of the prescription, or other documentation that a prescription has been issued, such as a receipt identifying the patient, the date and amount of the purchase, and an Rx number.

• The date(s) the service or expense was incurred.

• The name of the provider or entity to which the expense was or is to be paid.

• The amount of the expense, and

• The patient’s name.

You must retain this receipt for one year following the close of the year in which the expense is incurred. Even though payment is made under the debit card arrangement, you may be required to submit to the Claims Administrator a written third-party statement to substantiate the expense. If you receive a request for a third-party statement from the Claims Administrator, you must provide the statement to the Claims Administrator within 45 days of the request (or such longer period provided in the request from the Claims Administrator).

• You must pay back any improperly paid claims. If you are unable to provide adequate or timely substantiation as requested by the Claims Administrator, you must repay your employer for the unsubstantiated expenses. In addition, your usage of the card may be terminated. If you do not repay the unsubstantiated expenses, they may be treated as taxable income to you.

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• The debit card will be turned off when employment or coverage terminates. The debit card will be turned off when you terminate employment or your coverage under the Health Care FSA Plan ends. You may not use the card during any applicable COBRA continuation coverage period.

Failure to abide by the debit card rules and procedures will result in termination of card use privileges.

Claims for which the debit card has been used cannot be submitted as traditional paper claims.

Excess Reimbursements

If, as of the end of any Plan Year, it is determined that you have received payments under this Health Care FSA Plan that exceed the amount of Eligible Medical Expenses that have been properly substantiated during the Plan Year or reimbursements have been made in error (e.g. reimbursements exceeding the amount available in your Health Care FSA), the Employer may recoup the excess reimbursements in one or more of the following ways:

• Following notification of such excess amount, you will be required to repay the excess amount to your employer within 60 days.

• Your Employer may offset the excess reimbursement against any other Eligible Medical Expenses submitted for reimbursement (regardless of the Plan Year in which submitted).

• Your Employer may withhold such amounts from your wages (to the extent permitted under applicable law).

If your Employer is unable to recoup the excess reimbursement by the means set forth above, your Employer will treat the excess reimbursement as it would any other bad business debt. This means any erroneous or excess reimbursements that you may have received may be treated as taxable income to you.

Orthodontics Reimbursement Policy

Qualified orthodontia expenses that are paid up front, in a lump sum may be eligible for Health Care FSA reimbursement in full (up to Plan limits) provided the lump sum is paid during the same Plan Year from which reimbursement is being requested and while the participant is covered under the Plan. Proof of payment is required.

Participants that do not pay up front and opt for monthly payments can be reimbursed by the Health Care FSA as those monthly payments are made (provided the monthly payment is paid during the same plan year from which reimbursement is requested and while the Participant was covered under the Plan).

If you are seeking reimbursement under the Health Care FSA Plan for orthodontic treatment that requires installment payments, benefits will be paid as follows:

• The orthodontist should send a treatment plan to the Third Party Administrator for determination of payment.

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• Any initial upfront payment is eligible for reimbursement during the Plan Year in which the payment is made. This usually coincides with the time that the braces are placed.

• Scheduled monthly payments are eligible for reimbursement during the Plan Year in which they are scheduled to be made. For example, if you had six scheduled payments due from the previous Plan Year and you pay the orthodontist those payments in the current Plan Year, you cannot be reimbursed using your current year available funds.

A paid receipt must be submitted with the claim

Orthodontic reimbursements must otherwise comply with the claims filing procedures detailed in this section.

WHERE TO FILE CLAIMS

Flexible Spending Account claims should be submitted to the Claims Administrator: Flores & Associates P.O. Box 31397 Charlotte, NC 28231-1397 Fax: 1-800-726-9982

CLAIMS RUN-OUT PERIOD

Flexible Spending Account claims incurred during the Plan Year (January 1 – December 31) can be filed up to three months after the end of the Plan Year. Claims received after March 31 of the year following the Plan Year will not be processed.

PROCESSING OF CLAIMS

Reimbursement checks or direct deposit reimbursements will be issued and deposited on a weekly basis.

You will receive written notice of the determination within 30 days of the Claims Administrator receiving the Flexible Spending Accounts claim for reimbursement. If additional information is needed to process the claim, the Claims Administrator will notify you. You then have 45 days to provide the requested information. If for reasons beyond the control of the Claims Administrator, an extension of time is required to process your claim, you will receive written notice of the extension, an explanation of the circumstances requiring extension and the expected date of the decision prior to the end of the 30-day period. In no event shall the extension exceed a period of an additional 15 days from the end of the initial 30-day period. If your claim is denied, you are entitled to appeal the decision as detailed in the section entitled “Appeal Procedures.”

CONTINUATION OF COVERAGE (COBRA)

A federal law (known as “COBRA”) requires SAS to offer its employees who make salary reduction contributions to a Health Care FSA, and their eligible dependent(s), the opportunity to temporarily

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continue coverage (called “continuation coverage”) if they lose coverage due to a “qualifying event” (as described below). The persons who are entitled to continue such coverage are referred to as “Qualified Beneficiaries,” and the events entitling an individual to continued coverage are referred to as “Qualifying Events.”

The continuation coverage described below applies only to your Health Care FSA, and does not apply to the Dependent Care FSA. Contributions for Health Care FSA continuation coverage must be paid with after-tax dollars and will be subject to a 2% administrative charge.

Your right to COBRA continuation coverage with respect to the Health Care FSA is separate from your right to COBRA continuation coverage under a SAS Health Care Plan. You must file separate election forms and pay separate premiums to continue coverage under a SAS Health Care Plan and the Health Care FSA. Your right and your covered dependents’ rights to continue coverage under a SAS Health Care Plan is described in the summary plan description for each plan.

When Coverage May Be Continued

If the Health Care FSA is an under-spent account (as explained below), a Qualified Beneficiary has the right to continue coverage if he or she loses coverage (or should have lost coverage) as a result of certain Qualifying Events. A “Qualified Beneficiary” is the Participant, covered spouse and/or covered dependent child at the time of the qualifying event. The table below identifies the events that may entitle a Qualified Beneficiary to continuation coverage. The event is a “Qualifying Event” for a covered person if a check mark appears in the appropriate box.

Qualifying Event (Reason for Loss of Coverage)

Covered Employee

Covered Spouse

Covered Dependent Child

Covered Employee’s Termination of employment or reduction in hours of employment

X X X

Divorce or Legal Separation X X Death of the covered employee X X Covered employee becomes entitled to Medicare (Part A, Part B, or both)

X X

Covered Child ceases to be an Eligible Dependent

X

COBRA coverage with respect to the Health Care FSA Plan is only available to a Qualified Beneficiary if the Health Care FSA is an under-spent account. The Health Care FSA is considered an under-spent account only if the cost of COBRA coverage for the remainder of the coverage period does not exceed the maximum amount that would be available to the Qualified Beneficiary for reimbursement. If available, COBRA coverage will be in an amount equal to your applicable coverage amount for the Plan Year, less amounts reimbursed or paid through the date of the Qualifying Event.

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Note: The domestic partner and the children of such an individual are not eligible for continuation coverage under the terms of COBRA unless they qualify as the employee’s dependent under federal tax law.

Type of Continuation Coverage

If you choose Health Care FSA Plan continuation coverage, you may continue the level of coverage you had in effect immediately preceding the Qualifying Event. The maximum period of coverage is the end of the Plan Year in which the Qualifying Event occurred. However, continuation coverage is subject to earlier termination in the event you fail to pay for the coverage, you become covered under another employer’s group health plan, you enroll in Medicare, or this Health Care FSA Plan is terminated.

If you do not choose continuation coverage, your coverage under the Health Care FSA Plan will end on the date you would otherwise lose coverage.

Notice Requirements

The Health Care FSA Plan will offer COBRA continuation coverage to Qualified Beneficiaries only after the COBRA Administrator has been notified that a Qualifying Event has occurred. When the Qualifying Event is the end of employment or reduction of hours of employment, death of the employee, or the employee's becoming entitled to Medicare benefits (under Part A, Part B, or both), SAS will notify the COBRA Administrator of the qualifying event.

You Must Give Notice of Some Qualifying Events. You or your covered dependents (including your spouse) must notify the COBRA Administrator of a divorce, or a child losing dependent status under the Health Care FSA within 60 days of the later of (i) date of the event (ii) the date on which coverage is lost because of the event.

Notice of the Qualifying Event must be provided to the COBRA Administrator at:

COBRA Direct P.O. Box 70 Sanford, NC 27331 919-352-3019 (phone) 919-774-3782 (fax)

. Your written notice should identify the Qualifying Event, the date of the Qualifying Event and the Qualified Beneficiaries impacted by the Qualifying Event. The COBRA Administrator will then notify you that you have the right to choose continuation coverage by sending you the appropriate election forms. Notice to an employee’s spouse is treated as notice to any covered dependents who reside with the spouse.

You may be required to provide additional information or documentation to support that a particular Qualifying Event has occurred (e.g. divorce decree). If such information is requested and it is not provided within 15 business days of the request, the notice will not be considered timely and

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continuation coverage may not be available. The notice and required documentation must be postmarked no later than the applicable deadline for giving the notice.

An employee or covered dependent is responsible for notifying the COBRA Administrator if he or she becomes covered under another group health plan.

Election Procedures

After receiving notice of a Qualifying Event, the COBRA Administrator will send COBRA election materials (including a description of COBRA rights and other pertinent information) to each Qualified Beneficiary. Each Qualified Beneficiary is entitled to make a separate election for continuation coverage under the Health Care FSA Plan if they are not otherwise covered as a result of another Qualified Beneficiary’s election. In order to elect continuation coverage, the Qualified Beneficiary must complete the election form(s) and return the form(s) to the COBRA Administrator within 60 days of the later of (a) the date coverage terminates because of the Qualifying Event; or (b) the date the notice of continuation is sent to you, your spouse or your other eligible dependent. Coverage will be effective retroactive to the date of the Qualifying Event.

The failure to timely elect continuation coverage or to make each contribution in full on a timely basis will automatically result in the termination of COBRA coverage under the Health Care FSA Plan. The Company does not assume any responsibility for the non-delivery or untimely delivery of any COBRA election form or contribution.

Cost

You will have to pay the entire cost of your continuation coverage on an after-tax basis. The cost of your continuation coverage will not exceed 102% of the applicable premium for the period of continuation coverage. The cost of coverage in your case will be specified in the COBRA election materials.

The first contribution after electing continuation coverage will be due 45 days after you make your election and your contributions must be made for the entire period from the date of the Qualifying Event to the date of your first payment. Subsequent contributions are due the first day of each month. The Employer will not provide billing statements for subsequent contributions. Your coverage will automatically be cancelled and the balance of your Health Care FSA forfeited if the entire amount of each contribution is not received within 30 days of its due date.

Keep Your Plan Informed of Address Changes

In order to protect your family’s rights, you should keep SAS informed of any changes in the addresses of family members. You should also keep a copy, for your records, of any notices you send to SAS or the COBRA Administrator.

If You Have Questions

Questions concerning the Plan or your COBRA continuation coverage rights should be addressed to the COBRA Administrator at the address listed above.

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HIPAA PRIVACY

A federal law, the Health Insurance Portability and Accountability Act of 1996 (HIPAA), requires that health plans protect the confidentiality of your private health information.

The Plan will not use or further disclose information that is protected by HIPAA (“protected health information”) without your authorization except as necessary for treatment, payment, health plan operations and plan administration, or as permitted or required by law. By law, the Plan requires all of its business associates to also observe the HIPAA privacy rule. In particular, the Plan will not, without authorization, use or disclose protected health information for employment-related actions and decisions or in connection with any other benefit or employee benefit plan of SAS. The Plan may disclose your protected health information to the Employer in certain limited circumstances.

Under HIPAA, you have certain rights with respect to your protected health information, including certain rights to see and copy the information, receive an accounting of certain disclosures of the information and, under certain circumstances, amend the information. You also have the right to file a complaint with the Plan or with the Secretary of the U.S. Department of Health and Human Services if you believe your rights under HIPAA have been violated.

The Plan maintains a privacy notice (the “Privacy Notice”) that contains a more detailed description of your rights under the HIPAA privacy rule. For a copy of the Privacy Notice, please contact Michelle Jones Manager, Benefits (the “Privacy Official”). If you have questions about the privacy of your health information or wish to file a complaint under HIPAA, please contact the Privacy Official.

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DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT The Dependent Care Flexible Spending Account (or “Dependent Care FSA”) may be used to pay, on a pre-tax basis, those qualifying dependent care expenses which are necessary because you (and your spouse, if married) work.

If you are married, you can use the Dependent Care Flexible Spending Account only if both you and your spouse are employed, unless your spouse is disabled or is a full-time student for at least five months in the calendar year. Under the Dependent Care Flexible Spending Account, your “spouse” is the person to whom you are legally married, as recognized under state law and the Internal Revenue Code. A domestic partner is not considered your “spouse” for purposes of the Dependent Care Flexible Spending Account.

MAXIMUM ANNUAL CONTRIBUTION AND SPECIAL LIMITS

Unlike the Health Care FSA, your total annual contribution under the Dependent Care FSA is not available for reimbursement at any time during the Plan Year. You are only eligible to be reimbursed on a particular date for what you have actually contributed to the Dependent Care FSA as of that date.

Your dependent care reimbursement for a taxable year (and the amount you contribute to your Dependent Care FSA) may not exceed the least of the following limits:

(a) $5,000 per family (if you are single; or, you are married and filing a joint return or filing as head of household), or $2,500 (if married filing separate tax return).

(b) Your taxable compensation (after all compensation reduction arrangements), or

(c) If you are married, your spouse’s earned income.

For purposes of (c) above, if your spouse is a full-time student at an education institution or is physically or mentally incapable of caring for himself or herself, your spouse will be considered to have earned income of $3,000 per year or $6,000 per year if there are two or more dependents.

As discussed below, Dependent Care FSA maximums are reduced by the value or cost of Employer provided day care.

QUALIFYING DEPENDENT CARE EXPENSES

Reimbursement is available for “qualifying dependent care expenses” as described in Section 129 of the Internal Revenue Code. Generally, an expense must meet all of the following conditions for it to be reimbursable under the Dependent Care FSA:

• The expense must be incurred at a time when you are participating in the program (i.e., during the Plan Year, after your participation becomes effective and before your eligibility ends).

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• The expense must be incurred for a “Qualifying Individual.” A Qualifying Individual is defined as your qualifying child under age 13; or your spouse or other dependent who is physically or mentally incapable of caring for himself or herself. Note: There is a special rule for children of divorced parents. The child is generally a Qualifying Individual of the “custodial parent” as defined in Internal Revenue Code Section 152(e).

• The expense must be incurred for the care of a Qualifying Individual (as described above), or for related household services, and it must be incurred to enable you (and your spouse, if applicable) to be gainfully employed.

• If the expense is incurred for services outside your household and such expense is incurred for the care of a Qualifying Individual who is age 13 or older, the Qualifying Individual must regularly spend at least 8 hours per day in your home.

• If the expense is incurred for services provided by a dependent care center (i.e., a facility that provides care for more than 6 individuals not residing at the facility), the center must comply with all applicable state and local laws and regulations.

• The expense must not be paid or payable to a child of yours who is under age 19 at the end of the year in which the expense is incurred, to your spouse; or to an individual for whom you or your spouse is entitled to a personal tax exemption as a dependent.

Examples of expenses that cannot be reimbursed through the Dependent Care FSA include:

• Food, clothing, or entertainment for a spouse or dependent. • Expenses for overnight camps or specialty camps. • Nursing home expenses, unless the spouse or dependent spends at least eight hours a day

in your household. • Tuition expenses for kindergarten. • Expenses for education for qualified spouse or dependents. • Transportation to get the spouse or dependent to and from a daycare outside of you

home. • Services provided by your spouse, a dependent, or by your child who is under age 19.

You must notify the Administrator if you have reason to believe that any expense for which you have obtained reimbursement is not an eligible expense under the Dependent Care FSA.

QUALIFIED DEPENDENT CARE PROVIDER

The following are common categories of dependent care providers:

• A licensed child care or adult day care center. • Child care inside your home or someone else’s home. • Dependent adult day care inside your home or someone else’s home. • Specialty day camps for which no educational credit is received.

A dependent care center qualifies if the center:

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• Cares for more than 6 individuals excluding those who reside at the facility; • Receives a fee, grant, or payment for services; and • Complies with all applicable local and state laws.

In-home care qualifies if the individual daycare provider or babysitter:

• Does not care for more than 6 individuals; • Is not the employee’s spouse, child under age 19, or someone for whom the employee

(or the employee’s spouse) could claim a tax deduction for. EXAMPLE OF NON-QUALIFYING EXPENSES

Certain expenses cannot be reimbursed through the Dependent Care FSA. These include, but may not be limited to:

• Expenses for boarding or overnight camps, even if the camp is willing to split out the daycare portion from the overnight portion or summer school programs for which your child receives educational credit.

• Child care or babysitting services provided by your spouse, or someone you claim as an exemption on your federal income tax return, or by one of your children under age 19.

• Housekeeping expenses. • Health care expenses for a dependent (these may be reimbursed only through your

Health Care FSA). • Food or clothing expenses for a dependent. • Transportation expenses. • Dependent care expenses you claim on your federal or state tax return. • Convalescent nursing home expenses for disabled spouse or dependent parent. • Kindergarten. • Activity Fees.

DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT CLAIMS FILING

You may be reimbursed for Eligible Dependent Care Expenses, up to the amount in your Dependent Care FSA Account at that time. To submit a Dependent Care FSA claim, you must complete the claim form (available from the SAS Benefits Department, online through the SAS Benefits website, or the Claims Administrator’s website) and submit a paid receipt from your dependent care provider that includes:

• Provider’s tax ID or social security number. • Provider’s address. • Provider’s signature. • Dependent’s name that received care. • Dates on which the provider cared for your dependent. • Amount of Dependent Care Expenses.

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Services are eligible for reimbursement only after your dependent actually received care, even if you prepaid for the services.

Individual daycare providers are also required to file these payments on their own income tax return upon receipt.

WHERE TO FILE CLAIMS

Flexible Spending Account claims should be submitted to the Claims Administrator: Flores & Associates P.O. Box 31397 Charlotte, NC 28231-1397 Fax: 1-800-726-9982

CLAIMS RUN-OUT PERIOD

Flexible Spending Account claims incurred during the Plan Year (January 1 – December 31) can be filed up to three months after the end of the Plan Year. Claims received after March 31 of the year following the Plan Year will not be processed.

PROCESSING OF CLAIMS

Reimbursement checks or direct deposit reimbursements will be issued and deposited on a biweekly basis.

You will receive written notice of the determination within 30 days of the Claims Administrator receiving the Flexible Spending Accounts claim for reimbursement. If additional information is needed to process the claim, the Claims Administrator will notify you. You then have 45 days to provide the requested information. If for reasons beyond the control of the Claims Administrator, an extension of time is required to process your claim, you will receive written notice of the extension, an explanation of the circumstances requiring extension and the expected date of the decision prior to the end of the 30-day period. In no event shall the extension exceed a period of an additional 15 days from the end of the initial 30-day period. If your claim is denied, you are entitled to appeal the decision as detailed in the section entitled “Appeal Procedures.”

DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT AND DEPENDENT CARE TAX CREDIT

Under Section 21 of the Internal Revenue Code, persons maintaining a household for a Qualifying Individual are entitled to a credit against income of between 20% and 35% of qualified expenses, with up to $3,000 for one Qualifying Individual, or $6,000 for two or more Qualifying Individuals taken into account for this purpose. Under a dependent care flexible spending account, you may reduce your salary by up to $5,000 ($2,500 if you are married filing separately) for the same kind of expenses. Both the credit and salary reduction are limited to the lesser of your earned income or your spouse’s earned income. You cannot use the same expenses for both the credit and salary reduction,

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and to the extent paid under the Dependent Care FSA, your ability to use the credit is reduced dollar for dollar.

Before deciding what to do, you should compare the credit and salary reduction to see which provides the greater tax benefit to you, based on your particular facts. To assist in this decision, it is recommended that you perform a projection of your expected tax situation under both options and seek the advice of your tax consultant.

EMPLOYER PROVIDED/SUBSIDIZED DEPENDENT CARE

Employer provided or subsidized dependent care benefits will offset any dollars that you can contribute to a Dependent Care FSA and will offset the amount you may claim under a dependent care tax credit. If the sum of the value of Employer provided dependent care or the Employer subsidy exceeds $5000 (maximum allowed under a dependent care flexible spending account), then you will not be eligible to elect to participate in the Dependent Care FSA. If the Employer value or subsidy is less than $5000, then the difference between the value or subsidy and the $5000 maximum for the Dependent Care FSA is the amount that you can elect to contribute to your Dependent Care FSA.

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MID-YEAR BENEFIT ELECTION CHANGES You may make mid-year changes to your Premium Conversion Plan, Health Care FSA, and Dependent Care FSA elections only in limited circumstances prescribed by law. These circumstances may include:

• Events that qualify as Changes in Status.

• Events that trigger special enrollment rights under the Health Insurance Portability and Accountability Act (HIPAA).

• Certain significant Changes in Cost.

• Certain Changes in Coverage.

• Certain judgments, decrees and orders.

• Medicare and Medicaid Eligibility.

The determination of whether a mid-year benefit election change is permitted is made by the SAS Benefits Department on behalf of the Plan Administrator, in its sole discretion consistent with Section 125 of the Internal Revenue Code. If you wish to make a mid-year benefit election change, you must notify the SAS Benefits Department by making a request, in writing, either on the form provided by the SAS Benefits Department or through the SAS online benefits self-service website, within 60 days of a change. The Plan Administrator retains the right to request any relevant documentation. If the request for the change and any required documentation are not timely and properly provided, then the request will not be considered timely and coverage for your dependent(s) may not be available.

If, during the Plan Year, you change your election(s) for coverage under a SAS Health Care Plan, the Health Care FSA and/or the Dependent Care FSA, you will be deemed to have made a corresponding change in your election to pay for such coverage on a pre-tax basis under the Premium Conversion Plan. The change in your election to pay for coverage must be consistent with and on account of the Special Enrollment Event, Change in Status, Change in Coverage or Change in Cost.

If an employee does not enroll his or her domestic partner or such individual’s children in one of the SAS Health Care Plans during their initial eligibility or during the annual open enrollment period, the employee may enroll them or terminate their coverage if the reason for the change is comparable to an event which qualifies as a Change in Status, Change in Cost or Change in Coverage described above, as determined by the Plan Administrator in its sole discretion.

CHANGE IN STATUS

You are permitted to change your elections if there is a Change in Status that affects coverage eligibility for you or your dependent(s). The change in your elections must be on account of and consistent with the Change in Status. The “Change in Status” events include:

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• A change in your legal marital status including marriage, death of spouse, divorce, legal separation, or annulment, as recognized under both state law and the Internal Revenue Code.

• A change in your number of dependents for income tax purposes, including birth or death of a child, or adoption or placement for adoption of a child.

• Any of the following events that changes your employment status or the employment status of your dependent: termination or commencement of employment, a strike or lockout, commencement of or return from an unpaid leave of absence, a change in worksite, or any other change in employment status that causes the individual to become eligible for or to cease to be eligible for coverage under a SAS Health Care Plan.

• If you were reasonably expected to average at least 30 hours of service per week, changes in your employment status such that you will reasonably be expected to average less than 30 hours of service per week following such change, even if the reduction does not result in termination of eligibility for a SAS Health Care Plan.

• If you are eligible to enroll during a Special Enrollment Period in a Qualified Health Plan through a Marketplace based on guidance issued by the Department of Health and Human Services and any other applicable guidance, or you seek to enroll in a Qualified Health Plan through a Marketplace during the Marketplace’s annual open enrollment period.

• Any event that causes your dependent to satisfy or cease to satisfy an eligibility requirement for a SAS Health Care Plan, the Health Care FSA or the Dependent Care FSA.

• A change in your, your spouse’s, or your dependent’s place of residence that affects your or your dependent’s eligibility, or

• Any other event authorized under Section 125 of the Internal Revenue Code.

If you wish to make a change to your election based on a Change in Status, you must inform the Plan Administrator and complete a new election within the period that begins 60 days before the event and ends 60 days after the event. A new election may be made only if the election change is on account of and corresponds with the Change in Status event. The Plan Administrator (in its sole discretion) will determine whether a requested change is on account of and corresponds with a Change in Status.

Enrollment resulting from birth, adoption or placement for adoption may be retroactive up to 60 days. In all other cases, changes in your benefit coverage elections are prospective and will be effective the day following the date that the election change form and supporting documentation are received by the Plan Administrator. If the Plan Administrator is not notified of a change until after health premiums have been deducted from your wages, the paid premium will not be refunded to you.

Special rules apply to the Change in Status events described below:

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• Health Care FSA: You may increase or terminate your election under the Health Care FSA only if the election change is on account of and corresponds with a Change in Status that affects eligibility for coverage under this Plan, or, in certain cases, a plan sponsored by the employer of a dependent. Note, for instance, that a reduction in hours below an average of 30 hours that leads to a change in status event, as described in more detail above, does not permit you to change your Health Care FSA election. If you have a Change in Status event, you may elect to revoke or to increase, but not decrease, your contributions to the Health Care FSA.

• Dependent Care FSA: You may change or terminate your election upon a Change in Status if the election change is on account of and corresponds with the Change in Status event that affects the eligibility of dependent care expenses for the tax exclusion available under Code Section 129.

SPECIAL ENROLLMENT EVENTS

If you or your dependents are entitled to special enrollment rights under a group health plan, you may change your elections under the SAS Health Care Plans to correspond with the special enrollment right. For example, you may change your elections under this Plan to enroll yourself and your eligible dependents in group health plan coverage in the following situations:

• If you declined coverage under a SAS Health Care Plan for yourself or your eligible dependent because of other health care coverage and eligibility for such other coverage is subsequently lost due to certain reasons (e.g., due to divorce, death, termination of employment, reduction in hours, or exhaustion of COBRA), you may change your Plan elections to enroll the affected individuals in a SAS Health Care Plan provided that you do so within 60 days of the loss.

• If you or your eligible dependent is covered under a Medicaid plan or a state child health insurance plan (CHIP) and the Medicaid or CHIP coverage of such individual is terminated as a result of loss of eligibility for such coverage, you may change your Plan elections to enroll the affected individuals in the applicable SAS Health Care Plan provided that you do so within 60 days after the date the Medicaid or CHIP coverage terminates.

• If you or your eligible dependent becomes eligible under a Medicaid or CHIP plan for premium assistance with respect to paying for coverage under a SAS Health Care Plan, you may change your Plan elections to enroll the affected individuals in the SAS Health Care Plan provided that you do so within 60 days after the date such individual is determined to be eligible for such assistance. Or,

• If you gain a new dependent as a result of marriage, birth, adoption, or placement of adoption, you may change your Plan elections to enroll in a SAS Health Care Plan provided that you do so within the period that begins 60 days before the event and ends 60 days after the event.

If you or your eligible dependent loses other coverage as a result of your failure to pay premiums or for cause, such as making a fraudulent claim, you will not have a special enrollment right.

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An election change that corresponds with a special enrollment is prospective, unless the special enrollment is due to birth, adoption, or placement for adoption of a child, which may be retroactive to the date of the event, up to 60 days. If you elect retroactive coverage, your first pre-tax contribution after such election may be increased to pay for the coverage for the period prior to your election.

For information about special enrollment rights, see the coverage booklet for the SAS Medical, Dental and Vision Plans.

CHANGE IN COST OR COVERAGE

If there is an increase or decrease in the cost of coverage under the Plan your wage withholdings will be automatically adjusted to reflect the change in cost. However, if the Plan Administrator determines that the cost of coverage under the Plan has significantly increased during the Plan Year, the Plan Administrator in its discretion may allow you a choice between authorizing a corresponding increase in your salary reduction agreement, or revoking your existing election for such coverage and making a new election under another benefit option which provides similar coverage, if one is available, or in certain cases, you may cancel your election for coverage under the Plan altogether. If the Plan Administrator determines that the cost of coverage under the Plan has significantly decreased during the Plan Year, the Plan Administrator in its discretion may allow you to revoke your election under another benefit option which provides similar coverage and to elect coverage under the option that decreased in cost.

The change in cost rules apply to the Dependent Care FSA only if the dependent care provider is not your relative.

If the Plan Administrator determines that your coverage under a SAS Health Care Plan has been significantly curtailed, you may change your election to drop such coverage. You may also elect coverage under another benefit option which provides similar coverage, provided the new election is consistent with the reason the change is permitted.

If the Plan adds a benefit option during the Plan Year, you may change your elections to enroll in the new option.

CERTAIN JUDGEMENTS, ORDERS OR DECREES

If a judgment, decree or order resulting from a divorce, separation, annulment or custody change requires your dependent child (including a foster child who is your tax dependent) to be covered under a SAS Health Care Plan or the Health Care FSA, you may change your election to add such coverage for the dependent child. If the judgment, decree or order requires that another individual (such as your former spouse) provide accident or health coverage for the dependent child, and such coverage is actually provided, you may change your election to drop such coverage for the dependent child under this Plan.

MEDICARE OR MEDICAID ELIGBILITY

If you, your spouse, or your dependent becomes entitled to Medicare or Medicaid (other than coverage consisting solely of benefits under Section 1928 of the Social Security Act that provides

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for the distribution of pediatric vaccines), you may change your elections under this Plan to cancel coverage for the person affected. Similarly, if you, your spouse, or your dependent who has been entitled to Medicare or Medicaid loses eligibility for such coverage, you may change your elections under this Plan to begin or increase coverage under the Plan for the person affected.

PARTICIPATION DURING A LEAVE OF ABSENCE

The term “Leave of Absence” shall mean any absence authorized by the Employer under its standard personnel practices or under the Family and Medical Leave Act of 1993 (FMLA), as applied in a uniform and nondiscriminatory manner to all persons similarly situated. Eligible Leaves of Absence include short-term and long-term disability, paternity leave, adoption leave, workers’ compensation leave of absence, personal leave of absence, military leave and FMLA leave.

If you are on a paid Leave of Absence you will continue to participate in the Plan for the duration of the Leave of Absence.

If you are on an approved unpaid Leave of Absence, other than a Personal Leave of Absence, you may continue to participate in the Plan for the duration of the Leave of Absence unless the unpaid Leave of Absence qualifies as an event that permits a mid-year election change, in which case you may change your election as described in the section entitled “Mid-Year Benefit Election Changes.”

There are special rules that apply if you take an approved unpaid Leave of Absence pursuant to the Family and Medical Leave Act (“FMLA”) or the Uniformed Services Employment Reemployment Rights Act (“USERRA”).

If you take unpaid FMLA leave or unpaid USERRA leave, you may elect to either continue your participation or discontinue your participation in the Health Care FSA for the duration of the Leave of Absence. In other words, you do not have to satisfy the rules governing mid-year election changes in order to revoke your election to participate.

If you continue to participate in the FSA during an unpaid Leave of Absence, your coverage will terminate if you fail to make a required payment for coverage. In addition, if you take unpaid USERRA leave, your coverage will terminate if you are required to apply for or return to a position or employment and fail to do so. Upon termination of USERRA coverage, you may be entitled to continue coverage under the Health Care FSA Plan pursuant to COBRA; any period of COBRA coverage will be reduced by the period of USERRA coverage you already received during your military Leave of Absence.

You must notify the SAS Benefits Department if you desire to make a change to your FSA election on account of a Leave of Absence.

If you revoke your participation in the Health Care FSA during an approved unpaid FMLA Leave or unpaid USERRA Leave and upon return from the Leave of Absence you elect to resume your participation in the Health Care FSA, you may (1) resume coverage at the original level and make up the salary contributions that were not paid during the Leave of Absence, or (2) resume coverage at a level that is prorated to reflect the non-payment of premiums during your Leave of Absence and resume your salary contributions at the level originally elected.

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If the Leave of Absence is unpaid, you can pay the required salary contributions with pre-tax dollars before the Leave of Absence begins, pay the required salary contributions while you are on the Leave of Absence with after-tax dollars, or upon return to work, pay outstanding contributions with pre-tax dollars. Since the IRS does not allow reimbursements for dependent care expenses while you are not working, you cannot claim reimbursement under the Dependent Care FSA for expenses incurred during your Leave of Absence.

The FMLA requires employers to provide up to a total of 12 weeks of unpaid, job-protected leave during a 12-month period to eligible employees for certain family and medical reasons. Your rights under the FMLA are described in greater detail in the other SAS policies and procedures. This provision is intended to comply with the law and any pertinent regulations, and its interpretation is governed by them. For more information, contact the SAS Benefits Department.

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APPEAL PROCEDURES APPEALING DENIED CLAIMS

If a claim is denied, in whole or in part, you will receive a written explanation of the denial that includes the specific reason or reasons for the denial, specific reference to the Plan provision on which the denial is based, a description of additional information necessary to perfect the claim, a description of the Plan’s claims review procedures and the time limits applicable to such procedures, including a statement of your right to bring a civil action under ERISA following an adverse determination on review, a statement of any internal rule, guideline, protocol or other similar criterion that was relied upon in making the claim determination or a statement that a copy of such rule, guideline, protocol or other criterion will be provided free of charge to you upon request, and, if the claim determination was based on medical necessity or experimental treatment or similar exclusion or limit, either an explanation of the scientific or clinical judgment for the determination, applying the terms of the Plan to your medical circumstances, or a statement that such explanation will be provided free of charge upon request.

You may request that your claim be reviewed. If you want to appeal the denial of your claim, you must write to Flores & Associates within 180 days of the date of the denial at P.O. Box 31397 Charlotte, NC 28231-1397.

In connection with an appeal, you have the right to review pertinent documents, records, and other information relevant to your claim and to submit written comments, documents, records, and other information relevant to the appeal of your claim for benefits. Copies of all relevant information relevant to your claim, will be provided free of charge by Flores & Associates, upon request.

Your claim will be given a full and fair review. The Claims Administrator will reconsider your claim, taking into account all comments, documents and other information that you have submitted in support of your claim and will notify you of its determination within 60 days after receipt of the request for review. The decision on review will not give deference to the initial adverse claim determination and will be conducted by an individual who is not the same individual who made the initial adverse claim determination or a subordinate of such individual. If the claim determination is based in whole or in part on a medical judgment, including a determination with regard to whether a particular treatment, drug or other item is experimental, investigational, or not Medically Necessary or appropriate, the Claims Administrator will consult with a health care professional who has appropriate training and experience in the field of medicine involved in the medical judgment. This professional will be an individual who is neither an individual who was consulted in connection with the initial claim determination nor a subordinate of such an individual.

The Claims Administrator has the exclusive discretionary authority to construe and to interpret the Plan, to decide all questions of eligibility for benefits and to determine the amount of such benefits, and its decisions on such matters are final and conclusive. Any interpretation or determination made pursuant to such discretionary authority shall be upheld on judicial review, unless it is shown that the interpretation or determination was an abuse of discretion (i.e., arbitrary and capricious). Benefits under the Plan will be paid only if the Claims Administrator decides in its discretion that the claimant is entitled to them.

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PROTECTIONS UNDER ERISA As a Participant in this Plan, you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974, as amended (ERISA).

ERISA provides that all Plan Participants shall be entitled to:

RECEIVE INFORMATION ABOUT THE PLAN AND ITS BENEFITS

Examine, without charge, at the Plan Administrator’s office and at other specified locations, such as worksites, all documents governing the Plan, including contracts and a copy of the latest annual report (Form 5500 series) filed by the Plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration.

Obtain, upon written request to the Plan Administrator, copies of documents governing the operation of the Plan, including contracts, and copies of the latest annual report (Form 5500 series) and updated SPD. The Plan Administrator may make a reasonable charge for the copies.

Receive a summary of the Plan’s annual financial report. The Plan Administrator is required by law to furnish each Participant with a copy of this summary annual report.

CONTINUE HEALTH CARE PLAN COVERAGE

Continue health care coverage if there is a loss of coverage under the Plan as a result of a qualifying event. The Participant (or his or her dependent(s)) may have to pay for such coverage. Review this SPD and the documents governing the Plan on the rules governing COBRA continuation coverage rights.

PRUDENT ACTIONS BY PLAN FIDUCIARIES

In addition to creating rights for Plan Participants, ERISA imposes duties upon the people who are responsible for the operation of the Plan. The people who operate the Plan, called “fiduciaries” of the Plan, have a duty to do so prudently and in the interest of Participants and other Plan beneficiaries. No one, including the Employer or any other person, may fire an employee or otherwise discriminate against you in any way to prevent that person from obtaining a benefit or exercising their rights under ERISA.

ENFORCE YOUR RIGHTS

If a claim for a benefit is denied or ignored, in whole or in part, a Participant has a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.

Under ERISA, there are steps a Participant can take to enforce the above rights. For instance, if a Participant requests materials from the Plan and does not receive them within 30 days, the Participant may file suit in a federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay the Participant up to $110 a day until the person receives the materials, unless the materials were not sent because of reasons beyond the control of

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the Plan Administrator. If a Participant has a claim for benefits which is denied or ignored, in whole or in part, the Participant may file suit in a state or federal court. In addition, if a Participant disagrees with the Plan’s decision or lack thereof concerning the qualified status of a medical child support order, the Participant may file suit in federal court. If it should happen that Plan fiduciaries misuse this Plan’s money, or if a Participant is discriminated against for asserting his or her rights, the Participant may seek assistance from the U.S. Department of Labor, or may file suit in a federal court. The court will decide who should pay court costs and legal fees. If the Participant is successful, the court may order the person who was sued to pay these costs and fees. If the Participant loses, the court may order the Participant to pay these costs and fees (for example, if it finds the person’s claim is frivolous).

In no event shall a Participant be allowed to file suit in state or federal court until the Participant has exhausted the administrative remedies available under the Plan, including following the procedure for filing claims described below.

ASSISTANCE WITH QUESTIONS

If a Participant has any questions about this Plan, the person should contact the SAS Benefits Department, which acts on behalf of the Plan Administrator. If a Participant has any questions about this statement or about their rights under ERISA, or if a Participant needs assistance in obtaining documents from the Plan Administrator, that person should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in the telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 20210. A Participant may also obtain certain publications about his or her rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.

PLAN AMENDMENT AND TERMINATION

The Plan Sponsor has established the Plan with a bona fide intention and expectation that it shall be continued indefinitely, but the Plan Sponsor shall not have any obligation whatsoever to maintain the Plan for any length of time. The Plan Sponsor reserves the right at any time to amend, modify, reduce, suspend or terminate or partially terminate the Plan, on behalf of any or all Employers, provided that no such action shall in any manner impair the right of a Participant who has incurred Covered Expenses or is entitled to benefits under the Plan upon adoption of an amendment to receive benefit payments provided for herein or under the Plan prior to such amendment.

The Plan Sponsor does not promise the continuation of any benefits or level of benefits provided herein nor does it promise any specific level of benefits or coverage at or during retirement.

NONDISCRIMINATORY INTENT

The Plan is designed to satisfy the nondiscrimination requirements of the Internal Revenue Code. The Plan Administrator has the authority to operate the Plan so that the nondiscrimination requirements are satisfied, including the ability to modify or revoke elections made by Participants.

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