1. Benefits Officers Workshop JW Marriott Washington, DC October 29, 2003 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

4. FSAFEDS Background

5. 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

7. SHPS Responsibilities as TPA Communications Enrollment Eligibility Payroll provider interface Reconciliation Claims processing Customer service & support

8. Initial FSAFEDS Open Season 2nd half 2003 Modest expectations Narrow window after contract award Ongoing discussions with agencies on fees 30,000 enrolled

9. Upcoming 2004 Open Season Most civilian Federal employees eligible to enroll: 1.8 million

10. Program Overview

11. 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

12. Annual Tax Savings Example

13. Your Annual Tax Savings 1. Find your Federal income tax rate, based on your expected 2004 income: Tax Rate SingleMarried, joint returnHead 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 $___________

14. 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.

15. 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

16. 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

17. 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

18. Administrative Fees Nearly all agencies pay fees for employees HCFSA: $4/month DCFSA: 1.5% of annual allotment Financed by agencies employment tax savings

19. FSAFEDS Communications

20. 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)

21. 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

23. Plan Allotments

24. 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

26. 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 1 st 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

29. 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

30. Enrollment

31. 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

32. 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

33. 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)

34. 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

35. 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

36. 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

37. 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

38. 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

39. 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

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

41. 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

42. 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

43. Eligible Expenses

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

45. 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

46. 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

47. Typical HCFSA Expenses (cont.) Laser eye surgery Occupational therapy Orthodontia Orthotics Prescription drugs Preventive care Smoking cessation programs

48. 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

49. 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

50. 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

53. 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

54. Claims & Reimbursement

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

56. 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

57. Required Documentation: DCFSA Copy of bill or receipt; or Provider signs affidavit on claim form Providers tax ID or SSN required

58. Availability of Funds HCFSA: total annual election is available when 1 st allotment received DCFSA: only amount of current account balance is available for claim reimbursement

59. 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

60. Contact Us WWW.FSAFEDS.COM FSAFEDS-HR@SHPS.NET Dedicated Benefits Officers mailbox 1-877-FSAFEDS (372-3337) – Benefits Counselors available 9am9pm ET, MonFri

61. Q & A

62. Thank you for joining us!