Section 125 Plan Flexible Benefit Please click into the section you’d like to view: 1. Flexible Benefit Plan Overview 2. Pre-Tax Group Insurance Premiums 3. Dependent Care Reimbursement Account 4. Medical Reimbursement Account 5. How to File a Claim Click “Return Home” at anytime to come back to this menu. Section 125 Plan Flexible Benefit

Section 125 Plan Flexible Benefit Plan Overview

What is a Flexible Benefit Plan? The intent of this slide presentation is to provide a brief overview of the Flexible Benefit Plan (Flex Plan). Please see your employer’s Plan Document for details of the Flex Plan rules and regulations before participating in the program. What is a Flexible Benefit Plan?

What is a Flexible Benefit Plan? Welcome to an overview of the Section 125 Flexible Benefit Plan (Flex Plan)! Flex Plans are an excellent way to increase your spendable income and reduce your federal and FICA taxes (and in most states, your state income taxes). Diversified Benefit Services, Inc. (DBS) is the third party administrator of your employer’s Flex Plan. DBS is located in Hartland, Wisconsin and has administered these plans since 1987. What is a Flexible Benefit Plan?

What is a Flexible Benefit Plan? It’s a tax reduction plan for employees! Legislation creating these plans was enacted by Congress in 1978. Use this slide in ALL presentations The regulations are recorded in Section 125 of the IRS Code. What is a Flexible Benefit Plan?

What is a Flexible Benefit Plan? Under Section 125 of the IRS Code, you as an employee, can pay for qualified expenses using money from your paycheck that is deducted pre-tax. By using pre-tax dollars, you reduce the amount you pay in taxes! Use this slide in ALL presentations Return Home What is a Flexible Benefit Plan?

What can a Flex Plan do for you? By eliminating Federal and FICA tax (and possibly state tax) on qualifying expenses, the plan saves the average participant approximately 15%-30% in taxes on those expenses. It can increase the amount of your paycheck that you get to keep! Use this slide in ALL presentations Return Home What is a Flexible Benefit Plan?

The Benefit Categories There are three main categories of expenses that qualify for pretax reimbursement. Group Insurance Premiums Dependent Care Reimbursement Account Medical Reimbursement Account The details of these categories are described in the other presentations on this website. Delete “Independent Insurance Premiums” if not available with this client Return Home What is a Flexible Benefit Plan?

What does “pre-tax” mean? You earn what is called “gross pay”. This refers to the amount your employer pays you. However, this is not what most people get to spend from their paycheck. Why? Because the government takes a percentage of your “gross pay” first (in the form of taxes). Delete “Independent Insurance Premiums” if not available with this client Return Home What is a Flexible Benefit Plan?

What does “pre-tax” mean? With the Flex Plan, the government allows you to set aside a portion of your “gross pay” to cover certain expenses before a percentage of it is deducted in taxes. The remainder of your paycheck is what the government declares subject to taxes. By deducting pre-tax monies, you pay less in taxes! The chart on the next slide illustrates this concept. Delete “Independent Insurance Premiums” if not available with this client Return Home What is a Flexible Benefit Plan?

What is a Flexible Benefit Plan? Paycheck Comparison Insurance Premiums Dependent Care Medical, Dental, Vision expense *(Total of I, II, III = $268) Return Home What is a Flexible Benefit Plan?

Does the Flex Plan affect my Social Security retirement benefits? The Flex Plan may affect your Social Security retirement benefit as you are lowering the amount of your income from which you contribute Social Security taxes. For most people, the effect is minimal. Visit the Social Security Administration website at www.ssa.gov if you have questions on how to calculate retirement benefits. What is a Flexible Benefit Plan?

Expenses must be incurred in the Plan Year The Plan Year is the time frame your employer’s plan is administered. It is important that any expenses you submit for reimbursement are incurred within the Plan Year. This means the dates of service (when the service was rendered) must fall within the Plan Year. What is a Flexible Benefit Plan?

What is a Flexible Benefit Plan? In Summary: Flex Plans are a great way to increase your take home pay. Please review the other presentations to learn more about the plan. Ask your employer how you can enroll in the plan and start reducing your taxes! Return Home What is a Flexible Benefit Plan?

What is a Flexible Benefit Plan? Additional questions? www.dbsbenefits.com Diversified Benefit Services, Inc. Customer Service Representatives are available Monday – Friday 8:30 a.m. – 5:00 p.m. (CST) 1- (800)-234-1229 1- (262)-367-3300 What is a Flexible Benefit Plan?

Section 125 Plan Pre-tax Premium Overview For Employer Sponsored Group Insurance Premiums Pre-Tax Premium

What is a Flexible Benefit Plan? The intent of this slide presentation is to provide a brief overview of the Pre-tax Premium area of the Section 125 Flexible Benefit Plan (Flex Plan). Please see your employer’s Plan Document for details of the Flex Plan rules and regulations before participating in the program. Pre-Tax Premium

I. Group Insurance Premiums Under Under the Section 125 Plan, group insurance premiums you pay from your paycheck through your employer for health (or other qualified group insurance premiums) may be deducted from your paycheck with pre-tax dollars. This will be done automatically by your employer through regular payroll deductions. Pre-Tax Premium

I. Group Insurance Premiums Your insurance contributions are sent by your employer to the insurance company on your behalf. By paying for your group insurance premiums pre-tax, you save approximately 15%-30% in taxes. The chart on the next slide illustrates this concept. Pre-Tax Premium

Pre-tax Illustration Pre-tax After-tax Gross Pay: $1,000 $1,000 Pre-tax Group Insurance: - 100 - 0 Taxable Income: $ 900 $1,000 Taxes (assume 25%) - 225 - 250 $ 675 $ 750 After-tax Group Insurance: 0 - 100 Take Home Pay: $ 675 $ 650 Increased Take Home Pay: $ 25 Return Home Pre-Tax Premium

I. Group Insurance Premiums With this area of the Section 125 Plan, there is nothing you need to do. There are no forms to complete. The monies will not show up on your W-2 form as taxable income. Return Home Pre-Tax Premium

Additional questions? www.dbsbenefits.com 1- (800)-234-1229 Diversified Benefit Services, Inc. Customer Representatives are available Monday – Friday 8:30 a.m. – 5:00 p.m. (CST) 1- (800)-234-1229 1- (262)-367-3300 Pre-Tax Premium

Section 125 Plan Dependent Care Reimbursement Account

What is a Dependent Care Reimbursement Account? The intent of this slide presentation is to provide a brief overview of the Dependent Care Reimbursement Account area of the Section 125 Flexible Benefit Plan (Flex Plan). Please see your employer’s Plan Document for details of the Flex Plan rules and regulations before participating in the program. Dependent Care

Dependent Care Reimbursement Account (DCRA) This category allows you to pay for qualified dependent care expenses for dependents on a pre-tax basis. With the DCRA, you set aside a conservative amount of monies pre-tax for your dependent care expenses. The monies are reimbursed to you after you submit a claim validating your expense showing services have been performed. By using the account, you save approximately 15-30% in taxes on your expenses! Return Home Dependent Care

Dependent Care Reimbursement Account (DCRA) The services must be performed within the program Plan Year to qualify. You must report the care providers Federal Tax Identification or Social Security number on your tax returns in order to use this category. Return Home Dependent Care

Who is a Qualified Dependent? A dependent on your Federal income taxes for the year in which you are filing for reimbursement under the plan and; A dependent under the age of 13 who you can claim as an exemption or your spouse, parent or child who is unable physically or mentally to care for himself/herself and; A dependent that spends at least eight hours per day at your residence and lives at your residence at least 6 months of the year. Return Home Dependent Care

Dependent Care Reimbursement Account To qualify, the care must be for services that allow you (and your spouse, if you’re married) to be gainfully employed or to attend college on a full-time basis or seek employment during the hours your dependent is with the care provider. Use this slide in ALL presentations Return Home Dependent Care

What is the Maximum I Can Contribute? If you are single (or married & filing a joint Federal tax return), you may contribute up to $5,000 (not to exceed $5,000 in any given calendar year per family). You are limited to the amount of your annual earnings if you or your spouse earns less than $5,000 in a calendar year. If you are married but filing separate tax returns you are limited to the lesser of $2,500 or your earned income. Use this slide in ALL presentations Dependent Care

What is the Maximum I Can Contribute? If you or your spouse are a full-time student, not working, and have one child in daycare, you may contribute $3,000. If you or your spouse are a full-time student, not working, and have two or more children in daycare, you may contribute $5,000. The maximums listed in the previous slides are per family maximums not to be exceeded in any given calendar year. Use this slide in ALL presentations Dependent Care

How does the DCRA work? Estimate your cost during the Plan Year. The maximum annual per family deduction allowed by IRS in most cases is $5,000. Authorize your employer to deduct this amount from your paycheck in equal installments throughout the Plan Year. Submit claims to DBS for reimbursement as you incur expenses. Use this slide in ALL presentations Dependent Care

How does the DCRA work? DBS reviews your claim and reimburses you directly for your expenses. With dependent care expenses, you can only be reimbursed the dollar amounts that have been deducted from your paycheck as of the date of your claim. Always submit the total amount of dependent care expenses incurred (even if you have not had that much deducted from your paycheck). Use this slide in ALL presentations Return Home Dependent Care

How does the DCRA work? The excess amount claimed will be entered into a “pending account”. The “pending” amounts will be reimbursed after your payroll deductions are credited to your account. Use this slide in ALL presentations Dependent Care

Dependent Care Reimbursement Account An alternative way to save on dependent care expenses is by taking a tax credit when you file your income tax return. The tax credit is based on your adjusted gross income. As your income goes up, the percent of credit you receive on your expenses goes down. You should ask your tax advisor which method is best for you. DBS does not provide tax advice. You may not use the same expenses for both the Flex Plan and the Tax Credit. Use this slide in ALL presentations Dependent Care

Dependent Care Reimbursement Account You must file Federal Tax Form 2441 with your income taxes if you participate in the DCRA. Use this slide in ALL presentations Return Home Dependent Care

! Important Note The Dependent Care Reimbursement Account and the Medical Reimbursement Account are separate categories. Pre-tax dollars from one account may not be used for expenses in the other account. Use this slide in ALL presentations Return Home Dependent Care

What happens if I don’t use all my DCRA money? By Federal law, unused monies are forfeited at the end of the Plan Year’s run-out period. Because of this rule, you need to plan conservatively. For most people, it is easy to estimate the amount for the DCRA as they spend the same amount each week on dependent care. Note: Most people do not leave any money in this account. Use this slide in ALL presentations Return Home Dependent Care

In Summary The DCRA is an excellent way to reduce your taxes. Consult your tax advisor to see if this account can benefit you. Please review the other presentations to learn more about the plan. Ask your employer how you can enroll in the plan and start reducing your taxes! Dependent Care

Additional questions? www.dbsbenefits.com 1- (800)-234-1229 Claim forms may be downloaded from our website. Diversified Benefit Services, Inc. Customer Service Representatives are available Monday – Friday 8:30 a.m. – 5:00 p.m. (CST) Use this slide in ALL presentations 1- (800)-234-1229 1- (262)-367-3300 Dependent Care

Section 125 Plan Medical Reimbursement Account

Medical Reimbursement Account What is a Flexible Benefit Plan? The intent of this slide presentation is to provide a brief overview of the Medical Reimbursement Account area of the Section 125 Flexible Benefit Plan (Flex Plan). Please see your employer’s Plan Document for details of the Flex Plan rules and regulations before participating in the program. Medical Reimbursement Account

Medical Reimbursement Account This category allows you to pay for your (and your legal dependents’) qualified medical, dental, vision, and other eligible expenses on a pre-tax basis. The expenses need to be for out-of-pocket expenses that are not reimbursed or paid for by any other sources. The services must be performed within the Plan Year (meaning dates of service must be within the Plan Year). Return Home Medical Reimbursement Account

What expenses qualify in the Medical Reimbursement Account? Eligible Out-of-Pocket Expenses Include: Medical insurance deductibles, co-pays and co-insurance Dental insurance deductibles and co-insurance Dental expenses such as exams, caps, crowns, bridges & fillings Orthodontia Vision exams, glasses, frames, contact lenses & supplies Laser eye surgery Hearing aids (including batteries) Routine exams/physicals/mammograms Chiropractor costs Prescription drugs Mileage for medical care Medical Reimbursement Account

Medical Reimbursement Account Expenses which are NOT eligible include: Surgery for cosmetic reasons Breast pump rental Medical supplies that are not medically necessary Teeth bleaching/whitening/bonding Health club membership dues Over-the-counter vitamins and other dietary supplements for general health purposes Cosmetic drugs Marriage counseling Group insurance premiums deducted from your paycheck Use this slide in ALL presentations Return Home Medical Reimbursement Account

How does the Medical Reimbursement Account work? Estimate your family’s out-of-pocket cost for qualified medical expenses during the Plan Year. Ask your Human Resources department for the medical maximum that is allowed for the Plan Year. Authorize your employer to deduct this amount from your paycheck in equal installments throughout the Plan Year. Enter the appropriate maximum Medical Reimbursement deduction for this client Submit claims to DBS for reimbursement as you incur expenses. Return Home Medical Reimbursement Account

How does the Medical Reimbursement Account work? DBS verifies the expense based on IRS guidelines and reimburses you directly. Note: other methods for accessing your account may be in place at your employer. Reimbursement is NOT limited to the current account balance. Your entire annual election is available for reimbursement when you incur the expenses. Monies in the Medical Reimbursement Account can be used for any expense that qualifies within the category. For example, money set aside for your glasses can be used for your child’s dental care. Enter the appropriate maximum Medical Reimbursement deduction for this client Return Home Medical Reimbursement Account

Benefits of the Medical Reimbursement Account Tax-free money – you save approximately 15%-30% in taxes. Flexible – use the money anywhere within the category. Ability for reimbursement of the full Plan Year amount if expenses are incurred early in the Plan Year. Enter the appropriate maximum Medical Reimbursement deduction for this client Return Home Medical Reimbursement Account

What if I don’t use all my money? According to the Federal rules, unused money is forfeited at the end of the Plan Year, if all claims are not submitted during the run-out period. However, most people do not leave money in the plan because… …they only set aside money for predictable expenses. …they submit their smaller expenses for items such as diabetic supplies, contact lens saline solution, and medical mileage, to use up their monies. Enter the appropriate maximum Medical Reimbursement deduction for this client Return Home Medical Reimbursement Account

Medical Reimbursement Account Can I claim the expenses in the Medical Reimbursement Account from my income taxes? No, the expenses reimbursed under the Medical Reimbursement Account cannot be used toward Medical Itemization (Schedule A) on your Federal Tax return. Consult your tax advisor to see which method benefits you most. DBS does not provide tax advice. Use this slide in ALL presentations Medical Reimbursement Account

Medical Reimbursement Account ! Important Note The Dependent Care Reimbursement Account and the Medical Reimbursement Account are separate categories. Pre-tax dollars from one account may not be used for expenses in the other account. Use this slide in ALL presentations Return Home Medical Reimbursement Account

Medical Reimbursement Account In Summary: The Medical Reimbursement Account is an excellent way to reduce your taxes. Consult your tax advisor to see if this account can benefit you. Please review the other presentations to learn more about the plan. Ask your employer how you can enroll in the plan and start reducing your taxes! Medical Reimbursement Account

Medical Reimbursement Account Additional questions? www.dbsbenefits.com Claim forms may be downloaded from our website. Diversified Benefit Services, Inc. Customer Service Representatives are available Monday – Friday 8:30 a.m. – 5:00 p.m. (CST) 1- (800)-234-1229 1- (262)-367-3300 Use this slide in ALL presentations Medical Reimbursement Account

Filing a Section 125 Flexible Benefit Plan Claim How to File a Claim

Overview for Claim Filing and Reimbursement Incur your medical, dental, vision, dependent care and other expenses as you normally would. As you incur expenses, save documentation from the service providers that verifies your expenses. At any time during the Plan Year, you may choose to submit your expenses for reimbursement. Complete a 125-FSA Claim Form and submit it to DBS, Inc. with copies of your documentation. DBS, Inc. substantiates the claim and reimburses you for your expenses. Retain this slide if check is sent to employee and Direct Deposit is not an option How to File a Claim

Completing the 125-FSA Claim Form Make sure to complete and sign the top section of the 125-FSA Claim Form by printing your full name, e-mail address (if you have one), name of your employer and your participant ID number (assigned by DBS, Inc.) or Social Security number. In addition, complete Dependent Care Reimbursement Account box for your dependent care expenses and/or the Medical Reimbursement Account box for your medical, dental, and vision type expenses. Claim forms may be mailed or faxed to DBS, Inc. The address and fax number are shown on the form. The next slide illustrates how to complete the claim form. Retain this slide if check is sent to employee and Direct Deposit is not an option How to File a Claim

Claim Form 125-FSA Example Jon Doe Return Home Diversified Benefit Services, Inc. How to File a Claim

Claim Form – Dependent Care Section Show the amount of expense incurred, the care provider name and Social Security or Federal tax ID number, and the dates during which you incurred the expense. NOTE: you can only claim services that have been performed. If a representative of the care provider signs the form, a receipt does not have to be included with your claim. How to File a Claim Diversified Benefit Services, Inc.

Claim Form – Medical Reimbursement Section Along with your claim form, include copies of your insurance EOB forms or itemized bills, that show the date(s) of service, the amount of your out-of-pocket expense, the name of the Provider and the type of expense. Retain the originals for your records. How to File a Claim Diversified Benefit Services, Inc.

Types of documentation Always submit copies of your expense documentation. Keep the originals for your records. For the Medical Reimbursement Account, your documents must show: 1) The type of expense 2) The date of service – not billing date 3) Name of the service provider 4) Your out-of-pocket cost for the expense Examples of proper documentation to submit include: Explanation of Benefits forms (EOBs) from insurance companies Dental or vision invoices showing the above items (not balance forward statements) Drug copay slips from the pharmacy Use this slide if there is NOT a Grace Period Return Home How to File a Claim

Where do I submit claims? Submit your signed Claim Form and expense documentation to: Diversified Benefit Services, Inc. P.O. Box 260 Hartland, WI 53029 Or fax claims to: 1- (262)-367-5938 Use this slide if there is NOT a Grace Period How to File a Claim

Other Claims Information Claims must be for services rendered during the Plan Year. Claims must be submitted by the end of the claims run-out period after the end of each Plan Year. All claims are confidential and will only be seen by a DBS representative. You may submit claims as you incur expenses or submit a claim with multiple expenses and multiple dates of service. Filing a claim is easy! Using the Plan saves you approximately 15-30% in taxes on your expenses. Use this slide if there is NOT a Grace Period Return Home How to File a Claim

Additional questions? www.dbsbenefits.com 1- (800)-234-1229 Claim forms may be downloaded from our website. Diversified Benefit Services, Inc. Customer Service Representatives are available Monday – Friday 8:30 a.m. – 5:00 p.m. (CST) 1- (800)-234-1229 1- (262)-367-3300 Use this slide in ALL presentations How to File a Claim