Benefits Officers Workshop

Benefits Officers Workshop

JW Marriott

Washington, DC

October 29, 2003

JW Marriott

Washington, DC

October 29, 2003

Welcome & Introductions 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

Today’s Agenda Today’s Agenda

FSAFEDS Background

Program Overview

FSAFEDS Communications

Plan Allotments

Enrollment

Eligible Expenses

Claims & Reimbursement

Q & A

FSAFEDS BackgroundFSAFEDS Background

FSAFEDS: A Bush Administration Initiative 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

SHPS, Inc. 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

SHPS Responsibilities as TPA SHPS Responsibilities as TPA

Communications

Enrollment

Eligibility

Payroll provider interface

Reconciliation

Claims processing

Customer service & support

Initial FSAFEDS Open Season Initial FSAFEDS Open Season

2nd half 2003

Modest expectations • Narrow window after contract award • Ongoing discussions

with agencies on fees

30,000 enrolled

Upcoming 2004 Open Season Upcoming 2004 Open Season

Most civilian Federal employees eligible to enroll: 1.8 million

Program Overview Program Overview

What is a Flexible Spending Account?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

Annual Tax Savings ExampleAnnual Tax Savings Example

WITH FSA WITHOUT FSA Annual Pay $50,000 $50,000 Pre-Tax FSA Contribution 2,000 -0- Taxable Income 48,000 50,000 Federal Income & Social Security Taxes 11,842 12,495 Post-tax Dollars Spent On Eligible Expenses -0- 2,000 Spendable Income 36,158 35,505

TAX SAVINGS WITH AN FSA: $653

Your Annual Tax Savings 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 $___________

Two types of FSAs 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.

How an FSA works 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

How an FSA works (cont.) 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

Eligibility for FSAFEDSEligibility 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

Administrative Fees Administrative Fees

Nearly all agencies pay fees for employees • HCFSA: $4/month • DCFSA: 1.5% of annual allotment

Financed by agencies’ employment tax savings

FSAFEDS Communications

FSAFEDS Communications

Dedicated Website Dedicated Website

WWW.FSAFEDS.COM

Key source of program information • What’s New, FAQs • Program literature (pdf) &

presentations (PowerPoint) • Benefits Officers mailbox

More than just information• Enrollment • Participant account management (log-in)

Educating Benefits Officers Educating Benefits Officers

Meetings & Conferences: • Workshop • Network Meetings • San Diego

Webinar

Email Blasts

Educating Employees Educating Employees

Brochures

Posters

Payroll Inserts / ELS Messages

Health Fairs

Presentations

Video

Email Blasts

New Hire Kits

Plan AllotmentsPlan Allotments

Plan YearPlan 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

Online Calculator Online Calculator

Interactive online calculator

• WWW.FSAFEDS.COM

Figure deductions and tax savings

Payroll Deduction Process 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

Availability of Funds 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

“Use it or lose it” “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

Tracking Account Balances 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

EnrollmentEnrollment

Enroll OnlineEnroll 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

Enroll By Telephone 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

Enrollment Options 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)

Enrollment Options (cont.)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

New Employee Enrollment 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

Pre-enrollmentPre-enrollment

You know in advance you can’t enroll in Open Season • Reasons outside of your control

Pre-enrollment form at WWW.FSAFEDS.COM

Deductions begin first pay date in January

Absentee EnrollmentAbsentee Enrollment

Missed Open Season Belated enrollment• Reasons outside your control

If temporary absence, enroll within 30 days of returnAbsentee enrollment form at WWW.FSAFEDS.COMMust file by October 1 of Plan YearEffective day after you submit election

Enrollment ChangesEnrollment 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

Qualified Status ChangeQualified 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

Qualified Status ChangeQualified 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

LWOPLWOP

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

SeparationSeparation

DCFSA balance available for expenses incurred until end of Plan Year

HCFSA terminates at separation• Expenses incurred prior to separation

are eligible for reimbursement

Eligible ExpensesEligible Expenses

HCFSA Eligible ExpensesHCFSA Eligible Expenses

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

dependents are eligible

Typical HCFSA ExpensesTypical 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

Typical HCFSA ExpensesTypical 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

Typical HCFSA Expenses (cont.)Typical HCFSA Expenses (cont.)

Laser eye surgery

Occupational therapy

Orthodontia

Orthotics

Prescription drugs

Preventive care

Smoking cessation programs

Typical HCFSA Expenses (cont.)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

Typical HCFSA Expenses (cont.)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

Ineligible HCFSA Expenses 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

DCFSA Eligible ExpensesDCFSA 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

Typical Dependent Care Expenses 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

Ineligible DCFSA Expenses 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

Claims & ReimbursementClaims & Reimbursement

Claim FormsClaim Forms

Available online • WWW.FSAFEDS.COM

Or by telephone• 1-877-FSAFEDS

FAX or mail claim to FSAFEDS (SHPS)

Required Documentation: HCFSA 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

Required Documentation: DCFSARequired Documentation: DCFSA

Copy of bill or receipt; or

Provider signs affidavit on claim form

Provider’s tax ID or SSN required

Availability of Funds 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

Reimbursement Reminders 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

Contact UsContact Us

WWW.FSAFEDS.COM

FSAFEDS-HR@SHPS.NET• Dedicated Benefits Officers mailbox

1-877-FSAFEDS (372-3337)–Benefits Counselors available

9am—9pm ET, Mon—Fri

Q & AQ & A

Thank you for joining us!Thank you for joining us!