Consumer Driven Health Plan Options offered by BSI Ameriflex

Benefit Solutions, Inc. (BSI) 12121 Harbour Reach Drive Suite 105 Mukilteo WA 98275 (206) 859.2600 www.bsitpa.com Consumer Driven Health Plan Options offered by BSI Ameriflex

Benefit Solutions, Inc. (BSI) 12121 Harbour Reach Drive, Suite 105 Mukilteo, WA 98275 (206) 859.2600 www.bsitpa.com Consumer Driven Health Plan Options offered by BSI Ameriflex Background Benefit Solutions, Inc. (BSI) is a technology and benefit administration company that was established in 1993. Our office is located in the Puget Sound Region. Since the company s inception BSI has provided the following services: 15+ years providing marketplace technology 30+ private exchanges 50+ carriers, benefit providers, and trading partners 100+ employees on staff 500+ broker/producer relationships 10,400+ annual data exchange feeds 25,000+ employers since inception 265,000+ active members $500,000,000+ carrier premiums collected and distributed annually Through technology, BSI provides high quality consolidated billing, enrollment, eligibility, financial services and customer service, offering employers cost savings and efficiencies, so they can focus on their core competencies and strategic initiatives. BSI has a straightforward mission: Exceed Expectations. When it comes to our clients, we not only want to support their unique mission, but go beyond it. WHAT IS A FLEXIBLE SPENDING ACCOUNT? Flexible Spending Accounts (FSAs), were developed as part of Internal Revenue Code Section 125 to provide employees with tax relief for their out-of-pocket medical and dependent day-care costs. FSAs enable employees to utilize pre-tax dollars and save federal, FICA, and, in most cases, state taxes. Although FSAs have been available for many years, the emergence of consumer-driven healthcare and increased employee cost-sharing has made them an integral benefits solution that provides substantial tax savings to both employers and employees. There are three types of Flexible Spending Accounts: 1) Medical Reimbursement Accounts: Accounts used to pay for eligible un-reimbursed medical expenses such as co-pays, deductibles, dental, vision, prescription, over-the-counter medications (prescription required), and more; 2) Dependent Day-Care Reimbursement Accounts: Accounts used to pay for the daily care of an eligible child or adult dependent (as defined by law); and 3) Commuter Reimbursement Accounts: Accounts used to pay for eligible transportation and parking expenses. To further enhance the benefits of implementing FSAs, BSI Ameriflex offers the BSI Ameriflex Convenience Card MasterCard. This single-platform debit card allows for the automatic electronic transfer of pre-tax dollars from an FSA when paying for qualified expenses. Most importantly, the BSI Ameriflex Convenience Card can accommodate and administer all three accounts on the same card without an incremental fee.

Medical Reimbursement Accounts These accounts offer employees the opportunity to utilize pre-tax dollars to pay for eligible out-of-pocket medical expenses. Medical Reimbursement Spending Accounts cover an endless list of eligible expenses for which an employee can seek reimbursement. Some examples include: Deductibles Co-insurance and office visit co-pays Prescription medication Prescribed over-the-counter drugs and medications Dental and orthodontia services Durable medical equipment Infertility treatments Psychiatric services Eyeglasses and contact lenses Key Elements Employees may only use their funds for eligible expenses as determined by the IRS. Employers are required to fund the reimbursement of an eligible expense up to the full amount of an employees annual election, regardless of the funds contributed to date by the employee. The IRS Use it or Lose it rule states that the employee forfeits any unused funds at the end of the plan year. However, the employer has the option of requesting either a grace period, which allows employees to continue to use funds for two and a half months after the plan year ends; or the option of requesting the $500 roll-over provision, which allows employees to roll over up to $500 for use in the following plan year. An employer can request one of the two provisions not both; or the employer can choose to offer neither of the provisions. Any unused funds are forfeited to the employer at the end of the year, BSI Ameriflex does not retain any unused funds. Also, please note that an employer cannot require an employee who terminates with a negative account balance to pay back the funds. Employers can set the maximum annual contribution limit for the Medical Flexible Spending Account (up to $2550 per year), as well as the employee eligibility period. Various funding options for employers to fit their individual needs. Employers can elect to make contributions to their employees accounts provided they satisfy all non-discrimination requirements.

Dependent Care Reimbursement Accounts These accounts utilize pre-tax dollars to pay for dependent day-care expenses for an eligible child or adult dependent up to $5,000 per family per year. Some qualified expenses include: Before- and after-school programs Nursery school or pre-school tuition Summer day camp Care in a home Key Elements Employees may contribute up to a maximum of $5,000 per family per year. Unlike the medical spending account, employers may choose to make funds available only as they are deducted from payroll and deposited into an employee s account. Generally, a qualifying individual is a dependent child aged 12 or under or a dependent adult (including a spouse) who is mentally or physically incapable of self-care and lives with the taxpayer for more than half of the year. Commuter Reimbursement Accounts (CRAs) This account is a tax-favored program (Internal Revenue Code Section 132) that allows employees to set aside pre-tax money from their paychecks to pay for eligible transportation and parking expenses. Eligible expenses include: Key Elements Mass transportation to your place of employment such as the subway or a bus Parking near your place of employment Parking at or near a location from which you commute to work via mass transit or vanpool Transportation to your place of employment via a qualified vanpooling commuter vehicle For Plan years beginning in 2013, Qualified Parking expenses are limited to $250 per month and Transit Pass & Vanpooling expenses are collectively limited to $130 per month. Key differences from traditional flexible spending accounts include no plan documents or SPDs, no required discrimination testing, elections may be changed throughout the year (usually on a monthly basis), and unused election amounts can be rolled over. Similar to the Dependent Day Care Reimbursement Account, only the amount that has been deducted to date can be reimbursed to participants.

Employer advantages Employee benefits purchased on a pre-tax basis reduce the employer wage base for purposes of calculating payroll taxes. Employers can realize direct bottom-line savings from the reduced employer FICA taxes and disability and workers compensation insurance premiums (this may vary from state by state). Total savings to the employer can be substantial and typically cover the administrative costs associated with these plans. Employee advantages When employees contribute pre-tax dollars to their FSA, their compensation is reduced for purposes of calculating wages subject to Federal and FICA (Social Security & Medicare) taxes. Based on 2013 tax rates, potential savings can range from 17.65% to 35.65% depending on an employee s individual tax bracket, and, in most states, employees can also save on state income taxes. The Convenience Card This debit card allows for the automatic electronic transfer of pre-tax dollars from an employee account when paying for qualified expenses. Employees are able to receive immediate reimbursement of their medical and dependent care expenses simply by using their card at the point of service. The normal paper claims process is eliminated, as are worries of forgotten purchases or lost receipts. A Concept of Simplicity The Convenience Card can be used wherever MasterCard is accepted, and all charges are paid electronically. The MasterCard system carves the world into more than 1,000 merchant category codes, each code reflecting whether the merchant is a restaurant, department store, gas station, pharmacy, doctor s office, etc. Therefore, the card will not work at an unauthorized MasterCard merchant (e.g. gas station, restaurant, etc.) but it will recognize applicable healthcare, dependent care, and transit MCC/SIC codes, allowing BSI Ameriflex to properly adjudicate claims according to IRS guidelines. When the debit card is swiped, the system qualifies the expense. Next, it determines if there is an adequate/available balance in the employee FSA account. Finally, pre-authorization occurs at the merchant POS terminal. At this point, the merchant will get paid via ACH and the amount of the charge is deducted from the employee s FSA account. It is important for employees to remember that in some cases further substantiation may be required, so they should always save their receipts.

IMPLEMENTATION PROCESS BSI Ameriflex has made it easy to implement an FSA with a dedicated implementation team and streamlined implementation process that can be completed in three simple steps. Please allow a minimum of three weeks for implementation, depending on your plan design and enrollment process. Step 1: Application. Complete the New Client Application with the assistance of your assigned implementation manager. The application collects all the information that is required to complete your plan documents and set up your account. Once your application has been reviewed for accuracy, you will receive your Administrative Services Agreement for review and signature. Step 2: Enrollment. BSI AMERIFLEX offers a number of electronic enrollment solutions to meet your specific needs. If your company uses enrollment software, BSI Ameriflex can automate your enrollment process and continued plan maintenance through a process referred to as EDI (Electronic Data Interchange), which can be set up in 6-8 weeks or after your initial enrollment. Step 3: WELCOME! Once the application is complete, you will be assigned a dedicated Account Executive who will work with our Account Management team to begin processing the enrollments. Your dedicated Account Executive will assist you with any day-to-day questions and needs that may arise. You can expect to receive a welcome e-mail from your new Account Executive (which will include contact information and login information for your account), followed by a phone call to review your plan and discuss any questions that you may have. Once you have this information, you can begin using the BSI Ameriflex Convenience Portal to review your plan and member information. Plan Promotion and Employee Education Your Account Executive can help provide the information needed for you to build customized communication templates to assist with plan implementation and employee education. Ongoing education and support is an important part of our services, since the more comfortable your employees are with the process, the more confident and happy they will be with your program.

Claims Funding, Payment, and Notification Information BSI Ameriflex offers three different Automated Clearing House ("ACH") debit options to provide clients with greater flexibility and choice when it comes to payment of participant claims. The employer can select one of three frequencies with which BSI Ameriflex will debit the employer's account: Daily Debit, Weekly Debit, or Monthly Debit. How it Works BSI Ameriflex will e-mail a claims report to the employer on a daily, weekly, or monthly basis through the Invoice Manager system, which allows employers to see all claims activity prior to debit of the employer s bank account. Within 24 hours of receipt of the e-mail notification, BSI Ameriflex will debit the employer s pre-designated claims account to pay the cumulative claims amount. Please note, BSI Ameriflex will require an initial deposit (or pre-fund) that will be automatically drafted during the first month of the indicated plan year. All deposits are returned upon client termination of services with BSI Ameriflex, less any balances or fees owed. If you require further details about this please reach out to your sales manager. BSI Ameriflex will not spend down the deposit to pay claims. Pre-fund calculations are as follows: Daily Debit: Employer pre-funds an amount equal to 1/26 of the annual elections Weekly Debit: Employer pre-funds an amount equal to 1/12 of the annual elections Monthly Debit: Employer pre-funds an amount equal to 1/4 of the annual elections

ADMINISTRATIVE FEES Flexible Spending Accounts with the BSI Ameriflex Convenience Card Account Setup Account Setup / Annual Renewal Fee Waived epop Plan Document $225 Annual Monthly Fees Minimum Monthly Fee Reimbursement Checks and ACH Deposits 2.5 Month Grace Period Extension $500 Balance Roll-Over 90 Day Run Out Period Dependent Care Reimbursement Transit/ Commuter Reimbursement Discrimination Testing Portal Access Plan Document Amendments Information provided for IRS Form 5500 Schedule C Flex Card (FSA,DCAP,CRA,HRA,HSA) Replacement Flex Cards for Participants Employer/Employee Webinar-Open Enrollment EDI File Feeds Mobile App Toll Free Number and IVR System 12 Month Fee Guarantee Educational and Enrollment Support FSA Education Video Enrollment materials (PDF via e-mail) Enrollment materials (hard copy) $5.50/PEPM* Waived Cost to print & ship *The monthly fee is based on number of participants and is inclusive of all debit card charges incurred (no transaction fee per swipe or incremental debit card charges). Fee Guarantee Fees are guaranteed for a period of 12 months following the effective date of the plan. BSI Ameriflex reserves the right to change fees/services without notice after 30 days from the date of this proposal if a signed Administrative Services Agreement has not been submitted to BSI Ameriflex in the meantime

OTHER SERVICES PROVIDED Healthcare Reimbursement Accounts (HRAs) Health insurance premiums are rising due to the ever-increasing cost of care. Employers and employees must cope with higher co-payments, higher deductibles and increased provider restrictions. Many employers are now exploring alternatives to standard medical care that combine high-deductible health plans (HDHP) with a Healthcare Reimbursement Account to ease this burden. HRAs are employer-funded accounts that can be designed to help offset the increase in employees out-of-pocket expenses due to the implementation of the HDHP. HRA administrative costs and HRA contributions are not subject to federal income taxation. The hat-trick created by combining the savings from LOW-COST, highdeductible health plans with the associated tax savings and even the ability to deduct HRA administrative costs, make HRAs a valuable option worth considering for your employee benefits package. Health Savings Accounts (HSAs) Maybe you're a small business owner and you need a good insurance plan to attract top-notch employees. Maybe you run a multi-million-dollar company and are looking to provide better insurance for your team - and cut costs. If you re offering a High Deductible Health Plan to your employees, an HSA just might be the perfect solution for you. A HSA makes health coverage more like insurance what health care coverage should be. After all, you buy car insurance to protect yourself in the event of a catastrophe. You don't "insure" routine maintenance and minor repairs like a flat tire or a new turn-signal bulb. HSAs can be funded by either an employee or an employer. The savings roll over into subsequent years, earning interest. This low-cost, tax-free alternative to traditional insurance is one of the biggest developments in health coverage in decades.