Benefits Officers Workshop

1
Benefits Officers Workshop

• JW Marriott
• Washington, DC
• October 29, 2003

2
Welcome Introductions

• OPM FSA Implementation Team
• Frank Titus, Assistant Director for Insurance
  Services
• Laurie Bodenheimer, Project Leader
• Jennifer Hirschmann, Project Leader
• FSAFEDS Program Team
• Sherry Tedesco, VP, Client Services, SHPS
• Wendy Warren, Client Services Manager
• Tom Brown, Marketing Program Manager

3
Todays Agenda

• FSAFEDS Background
• Program Overview
• FSAFEDS Communications
• Plan Allotments
• Enrollment
• Eligible Expenses
• Claims Reimbursement
• Q A

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FSAFEDS Background
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FSAFEDS A Bush Administration Initiative

• President Bush is committed to enabling
  government to compete more effectively with the
  private sector for the talent needed to fill the
  ranks of the U.S. civil service
• May 2002 Kay Coles James, Director of OPM,
  decides to offer FSAs government-wide

6
SHPS, Inc.

• OPM selects SHPS, Inc. as FSA TPA
• Leading FSA administrator
• Financially strong
• 300 FSA clients nationally 800,000
  participants
• 9 service centers
• Technology leader

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SHPS Responsibilities as TPA

• Communications
• Enrollment
• Eligibility
• Payroll provider interface
• Reconciliation
• Claims processing
• Customer service support

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Initial FSAFEDS Open Season

• 2nd half 2003
• Modest expectations
• Narrow window after contract award
• Ongoing discussions with agencies on fees
• 30,000 enrolled

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Upcoming 2004 Open Season

• Most civilian Federal employees eligible to
  enroll 1.8 million

10
Program Overview
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What is a Flexible Spending Account?

• Tax-favored benefit program
• Pre-tax dollars for health and dependent care
• Key Benefit Save Money!
• Discount on eligible expenses equal to tax
  savings
• 20-40 savings
• Cash management tool
• Money available for eligible expenses when you
  need it

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Annual Tax Savings Example
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Your Annual Tax Savings
1. Find your Federal income tax rate, based on
your expected 2004 income
Tax Rate Single Married, joint return Head of Household
15 7,001 to 28,400 14,001 to 56,800 10,001 to 38,050
25 28,401 to 68,800 56,801 to 114,650 38,051 to 98,250
28 68,801 to 143,500 114,651 to 174,700 98,251 to 159,100
2. Enter your total Federal tax rate 1 PLUS
1.45 for CSRS OR 7.65 for FERS _________
This percentage is the discount you will get
using an FSA for eligible health care and
dependent care expenses. 3. Enter your planned
FSA contribution for 2004 _________ 4.
Multiply 3 by 2. This is the amount an FSA
will save you in 2004 on eligible care
expenses ___________
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Two types of FSAs

• Health Care FSA (HCFSA)
• For qualified medical, health care costs not paid
  by FEHB or any other insurance
• Dependent Care FSA (DCFSA)
• For eligible dependent care expenses (childcare,
  elder care) so you (and spouse) can work, look
  for work, or attend school full-time.

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How an FSA works

• Determine your annual contribution
• HCFSA maximum 3,000/Plan Year per individual
• DCFSA maximum 5,000/Plan Year per household
• 250 minimum either account
• including any child care subsidy received

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How an FSA works (cont.)

• Enroll in one or both FSAs
• Authorize payroll deduction
• Submit claims to plan administrator (SHPS)
• Documentation required EOB detailed receipt
  affidavit
• Reimbursement
• EFT or check
• New in 2004 Automatic reimbursement

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Eligibility for FSAFEDS

• HCFSA
• Must be FEHB eligible
• Need not be enrolled in FEHB
• DCFSA
• Almost all Federal employees eligible
• Need not be FEHB eligible
• Ineligible intermittent employees expected to
  work fewer than 180 days

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Administrative Fees

• Nearly all agencies pay fees for employees
• HCFSA 4/month
• DCFSA 1.5 of annual allotment
• Financed by agencies employment tax savings

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FSAFEDS Communications
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Dedicated Website

• WWW.FSAFEDS.COM
• Key source of program information
• Whats New, FAQs
• Program literature (pdf) presentations
  (PowerPoint)
• Benefits Officers mailbox
• More than just information
• Enrollment
• Participant account management (log-in)

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Educating Benefits Officers

• Meetings Conferences
• Workshop
• Network Meetings
• San Diego
• Webinar
• Email Blasts

22
Educating Employees

• Brochures
• Posters
• Payroll Inserts / ELS Messages
• Health Fairs
• Presentations
• Video
• Email Blasts
• New Hire Kits

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Plan Allotments
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Plan Year

• Participants must enroll each Plan Year
• FSAFEDS Plan Year Jan 1 thru Dec 31
• Salary contribution deducted equally among pay
  dates in Plan Year
• Can elect accelerated deduction

25
Online Calculator

• Interactive online calculator
• WWW.FSAFEDS.COM
• Figure deductions and tax savings

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Payroll Deduction Process

• Employee identifies agency employer at enrollment
• FSAFEDS submits electronic file to payroll agency
  with employee info, allotment amounts
• Payroll agency confirms employee info and
  allotments
• FSAFEDS must resolve discrepancies prior to
  making reimbursements

27
Availability of Funds

• HCFSA total annual election is available when
  1st allotment received by FSAFEDS
• DCFSA only amount of current account balance is
  available for claim reimbursement

28
Use it or lose it

• You must forfeit money unspent after Plan Year
• IRS Rule
• Must file claims by 120 days after Plan Year end
• Plan carefully when making elections

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Tracking Account Balances

• Secure online account access
• WWW.FSAFEDS.COM
• Call toll-free
• 1-877-FSAFEDS (372-3337)
• FSAFEDS EOBs sent when claims processed
• Email or mail
• Account statements sent October and January

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Enrollment
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Enroll Online

• Enroll Now at WWW.FSAFEDS.COM
• Complete online form
• Name, address, DOB, agency
• Contribution to HCFSA / DCFSA
• Election options EFT Automatic reimbursement
  Accelerated deductions
• Personalized confirmation

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Enroll By Telephone

• FSAFEDS Benefits Counselors
• Toll-free 1-877-FSAFEDS (372-3337)
• TTY line 1-800-952-0450
• Provide required information
• Name, address, DOB, agency
• Contribution to HCFSA / DCFSA
• Election options EFT Automatic reimbursement
  Accelerated deductions
• Personalized confirmation

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Enrollment Options

• Electronic Funds Transfer (EFT)
• Faster reimbursement than by check   
• Accelerated deductions
• Larger deductions from fewer paychecks
• Full allotment deducted sooner (use for LWOP)

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Enrollment Options (cont.)

• Automatic reimbursement
• New in 2004
• File single claim with FEHB carrier
• Little or no paperwork to file claim
• Often no out-of-pocket payment
• Reimbursement directly to your bank account

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New Employee Enrollment

• New employees have 60 days to enroll
• Must enroll by October 1 of Plan Year
• After October 1 wait for next FSAFEDS / FEHB
  Open Season

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Pre-enrollment

• You know in advance you cant enroll in Open
  Season
• Reasons outside of your control
• Pre-enrollment form at WWW.FSAFEDS.COM
• Deductions begin first pay date in January

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Absentee Enrollment

• Missed Open Season ? Belated enrollment
• Reasons outside your control
• If temporary absence, enroll within 30 days of
  return
• Absentee enrollment form at WWW.FSAFEDS.COM
• Must file by October 1 of Plan Year
• Effective day after you submit election

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Enrollment Changes

• May change elections any time during Open Season
• Qualified Status Change required after Open
  Season
• Requested change must be consistent with event
  that prompts change, e.g.
• Increase DCFSA or HCFSA election after birth or
  adoption of baby
• Decrease DCFSA election for day care if spouse
  stays home with child

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Qualified Status Change

• QSCs defined by IRS
• Change in marital status
• Change in number of dependents
• Change in dependents eligibility, e.g.
• Child at 13 not eligible for DCFSA coverage
• Change in cost of coverage, e.g. care fee
  increase
• Change in employment or residence status
• Must notify FSAFEDS of change request from 31
  days before to 60 days after event

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Qualified Status Change

• Must notify FSAFEDS of change request from 31
  days before to 60 days after event
• Download QSC form at www.fsafeds.com
• FSAFEDS will verify QSC
• Change is effective 1st pay after approval and
  verification
• QSC for birth / adoption of child is retroactive
  to date of event

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LWOP

• LWOP is a QSC only if due to military deployment
• Can prepay allotments prior to LWOP
• Accelerate deductions
• Per pay deductions are larger
• Or FSA account will be frozen
• No reimbursement until end of Plan Year or return
  to pay status
• Catch-up after return
• Deduction doubled until you are current

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Separation

• DCFSA balance available for expenses incurred
  until end of Plan Year
• HCFSA terminates at separation
• Expenses incurred prior to separation are
  eligible for reimbursement

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Eligible Expenses
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HCFSA Eligible Expenses

• Health care expenses not paid by insurance or
  other.
• Expenses incurred by you and your dependents are
  eligible

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Typical HCFSA Expenses

• New in 2004 Over-the counter medications
• Acupuncture
• Childbirth classes
• Chiropractic care
• Co-payments, coinsurance and deductibles (but not
  premiums)
• Expenses that exceed medical, dental, vision
  plan limits
• Dollar or visit maximums out-of-network providers

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Typical HCFSA Expenses

• Dental care
• Including crowns, endodontic services, implants,
  oral surgery, periodontal services, sealants
• Eye exams, glasses, contact lenses
• Including prescription sunglasses
• Hearing aids
• Home medical equipment (wheelchairs, oxygen,
  respirators, etc.)
• Infertility treatments

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Typical HCFSA Expenses (cont.)

• Laser eye surgery
• Occupational therapy
• Orthodontia
• Orthotics
• Prescription drugs
• Preventive care
• Smoking cessation programs

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Typical HCFSA Expenses (cont.)

• Specialized equipment or services for disabled
  persons
• Automobile equipment
• Braille books and magazines
• Guide or companion animals
• Home alert systems for visual/hearing impaired
  persons
• Note takers or ASL interpreters
• Tape recorder and typewriter for visually
  impaired

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Typical HCFSA Expenses (cont.)

• Psychotherapy
• Speech Therapy
• Transportation expenses related to medical care
• Well-baby and well-child care
• Whirlpool baths
• Wigs for hair loss from disease
• With M.D.s certification

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Ineligible HCFSA Expenses

• Cosmetic services (unless required by disease or
  illness)
• Expenses you claim on your tax return
• Expenses reimbursed by other sources(e.g.
  insurance)
• Fees for exercise or health clubs
• Hair transplants
• Insurance premiums, including LTC
• Weight loss programs for general well-being

51
DCFSA Eligible Expenses

• Dependent care expenses that let you (and
  spouse)
• Work
• Look for work
• Attend school full-time.
• Services cannot be provided by your dependent

52
Typical Dependent Care Expenses

• Child care at day camp, nursery school, by a
  private sitter
• Late pickup fees
• Before- and after-school care (but not tuition)
• Care of an incapacitated adult living with you
• A housekeeper who also cares for an eligible
  dependent

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Ineligible DCFSA Expenses

• Education or tuition fees
• Late payment fees
• Overnight camps
• Agency fees for finding a care provider
• Sports lessons, field trips, clothing
• Transportation to/from the care provider

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Claims Reimbursement
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Claim Forms

• Available online
• WWW.FSAFEDS.COM
• Or by telephone
• 1-877-FSAFEDS
• FAX or mail claim to FSAFEDS (SHPS)

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Required Documentation HCFSA

• Explanation of Benefits form (EOB)
• From FEHB carrier
• Co-pays require receipt and notation on claim
• Receipts acceptable with signed affidavit on
  form

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Required Documentation DCFSA

• Copy of bill or receipt or
• Provider signs affidavit on claim form
• Providers tax ID or SSN required

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Availability of Funds

• HCFSA total annual election is available when
  1st allotment received
• DCFSA only amount of current account balance is
  available for claim reimbursement

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Reimbursement Reminders

• Expenses are incurred on date of service, not
  when expense is paid
• Expense must be incurred in Plan Year
• Claims must be postmarked by April 30 after Plan
  Year end
• Unclaimed funds are then forfeited

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Contact Us

• WWW.FSAFEDS.COM
• FSAFEDS-HR_at_SHPS.NET
• Dedicated Benefits Officers mailbox
• 1-877-FSAFEDS (372-3337)
• Benefits Counselors available
• 9am9pm ET, MonFri

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Q A
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Thank you for joining us!