Pretax Employee Benefits

1
Pre-tax Employee Benefits

• Introducing a partnership with
• eflexgroup.com,
• an industry leader in nationwide pre-tax
  employee benefits

2
Pre-tax Employee Benefits

• Cafeteria Plansand Debit cards

3
Cafeteria Plans

• Cafeteria plans
• A choice between cash and a qualified benefit
• Premium only plan
• Flex Spending Accounts (FSAs)
• Menu of benefits
• Truly a win-win benefit
• Employee saves 30 percent on pre-tax dollars
• Employers save 7.65 percent on pre-tax dollars
• Administrative costs usually covered

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Types of Cafeteria Plans

• Premium Only Plans
• Flexible Spending Plans
• Full Cafeteria Plans
• Medical Expense Reimbursement Plans

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Flexible Spending Accounts

• 3 Kinds
• Health FSA
• Daycare/Dependent Care
• Individual Premiums paid at home that are non
  group related

6
How to get employeesto participate

• Two reasons they will not
• Claim turnaround
• Use it or lose it rule
• Discuss each
• Employee education tools
• Videos, PowerPoint, website

7
Getting Increased Participation

• 24 hour web/phone access of accounts
• On-line enrollment
• 24 our claims payment quality standard
• New eFlex Convenience Card

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Full Flex Plans Section 125

• Employer pays a fixed amount into plan
• Employer group health plan is one component

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Full Flex Plans Section 125

• Employees elect to take coverage, AND/OR
• Take other benefits, vision, dental, AND/OR
• Shift the benefit dollars into the 401k plan,
  AND/OR
• Buy vacation days,AND/OR
• Take the benefit dollars as cash (taxed!)
• Full Flex Plans has been the closest thing
  recently to the Pure DC model, its what has been
  working in current market and regulatory
  framework

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Use or Lose it Rule Gone !?

• Revenue Ruling 2003-102
• Allows Over the Counter (OTC) drugs and items to
  be purchased with pre-tax dollars through Health
  FSA
• Aspirin, band-aids, Pediacare, etc
• Standard, items for use by employee and family to
  address sickness or personal injury
• See employee handout
• See www.eflexgroup.com

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Debit Cards

• eFlex Convenience Card
• Pay instantly at point of service
• MasterCard technology
• Merchant codes
• IRS - Revenue Ruling 2003-43

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Enrollment

• Enrollment form
• Web enrollment
• Phone enrollment
• Communication materials
• Receipt submission

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Distribution

• 2 to 3 weeks
• Mailed to participants home
• Be on the lookout
• Spouse cards

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Using the Card

• Qualified vendors
• Receipts
• Plan co-pays
• Recurring claims

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Using the Card

• eFlex receipt request
• Postcard/e-mail
• Second request
• Shut off the card
• Recouping expenses

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Account Lookup

• Mbi website
• Eflexgroup link
• Self selected passcodes
• Account information

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Revenue Ruling 2003-43

• May 6, 2003
• IRS Guidance gives green light to debit cards for
  FSAs and HRAs
• Claims substantiation requirements must be
  satisfied for each claim (no sampling)
• Pays providers at point of service

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Rev. Rul. 2003-43

• Guidance under Prop. Reg. 1.125-2, Q/A-7(b)(5)
• Debit Card/Credit Card
• Administrators must have procedures for
  adequately substantiating each claim

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More Rev. Rul. 2003-43

• Participant Certification
• Only use card for appropriate medical expenses
• Printed on Card
• Participants must keep documentation
• Card balance limited
• Merchants restricted

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Rev. Ruling 2003-43

• Claims substantiated
• Can be automatic- 3 examples
• Claim amount plan co-pay
• Recurring expense that matches previously
  approved expense
• Charges substantiated in real time, at point of
  sale
• After the fact substantiation adj.
• All other charges are conditional charges
• 3 criteria service performed, amount, date

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Other Aspects

• Meaningful correction procedures for improper
  payments
• Withhold from pay (applicable law!)
• Offset from future claims
• Turn off the card
• Regular debt
• Traditional claims submission
• Sampling not permitted

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Summary

• Cuts time down for filing claims
• Increases participation
• System that meets IRS requirements
• Employees love it
• The future is now

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Thank you!

• Questions/
• Comments
• Tom Jacobs, J.D.
• tomj_at_eflexgroup.com
• Ric Joyner, CFCI
• ricj_at_eflexgroup.com
• www.eflexgroup.com