Client Webinar Session/Training

2011

Flexible Spending Accounts2011 Open Enrollment

CBIZ FlexSeptember 30, 2010

Product OfferingsProduct Offerings

– Medical Reimbursement AccountMedical Reimbursement Account• Allows employees to pay for qualified medical expenses Allows employees to pay for qualified medical expenses

with pre-tax dollars. Employees reduce their federal, state with pre-tax dollars. Employees reduce their federal, state and FICA taxes receiving a 28 to 43% tax reduction. and FICA taxes receiving a 28 to 43% tax reduction. (depending on tax bracket)(depending on tax bracket)

– Dependent Care Reimbursement AccountDependent Care Reimbursement Account• Allows employees to pay for qualified child/dependent care Allows employees to pay for qualified child/dependent care

expenses with pre-tax dollars. Employees can save $1,500 expenses with pre-tax dollars. Employees can save $1,500 with an annual election of $5,000 dollars and up to $2,000 with an annual election of $5,000 dollars and up to $2,000 in a higher tax bracket.in a higher tax bracket.

Product Offerings (cont.)Product Offerings (cont.)

– Limited Flexible Spending AccountLimited Flexible Spending Account• A specialized Healthcare FSA that reimburses A specialized Healthcare FSA that reimburses

qualified expenses with pretax dollars. It is qualified expenses with pretax dollars. It is designed for those employees that are enrolling designed for those employees that are enrolling in a qualified high-deductible Health Plan (HDHP) in a qualified high-deductible Health Plan (HDHP) and who want to participate in a Health Savings and who want to participate in a Health Savings Account. (HSA)Account. (HSA)

– Premium Only PlanPremium Only Plan• The Premium Only Plan allows employees to pay The Premium Only Plan allows employees to pay

their share of premiums with pretax dollars. their share of premiums with pretax dollars. For For example:example: health, dental, vision, term life, health, dental, vision, term life, disability and cancer insurance. disability and cancer insurance.

Product Offerings (cont.)Product Offerings (cont.)

– Qualified Parking & Transit PlansQualified Parking & Transit Plans

• Transit PlansTransit Plans allow employees to set aside pretax allow employees to set aside pretax dollars to be used for qualified transit expenses. dollars to be used for qualified transit expenses. (incurred in order to travel to and from work)(incurred in order to travel to and from work)

• Parking PlansParking Plans allow employees to set aside pretax allow employees to set aside pretax dollars to be used for commuter parking expenses. dollars to be used for commuter parking expenses. (incurred for parking in order to work)(incurred for parking in order to work)

– Health Reimbursement ArrangementsHealth Reimbursement Arrangements

• Employer funded medical accounts that allow Employer funded medical accounts that allow employees to be reimbursed for qualified medical employees to be reimbursed for qualified medical expenses up to a maximum dollar amount.expenses up to a maximum dollar amount.

Employer Benefit:Employer Benefit:Employers save payroll taxes such as FICA, Medicare, FUTA & SUTA. Many employers actually totally offset their administration cost with the payroll tax savings.

EMPLOYER TAX SAVINGS EXAMPLE

Example: Employer with 10 participating employees each earning $30,000 per year, electing to “pre-tax”$3,000 each per year for health insurance, medical and dependent care expenses.

Without Flex Plan With Flex Plan Annual Payroll $300,000 $300,000 Annual Employee Flex Contributions

0.00 $30,000

Annual Taxable Payroll $300,000 $270,000 Payroll Taxes combined FICA & Medicare B (7.65%)

$22,950 $20,655

Employer’s Payroll Tax Savings $0.00 $2,295

Employee Benefit:Employee Benefit:• Flexible Spending Account Information Flexible Spending Account Information

A CBIZ Flex plan is a “win-win” for employees. Employees save all Federal, State, FICA A CBIZ Flex plan is a “win-win” for employees. Employees save all Federal, State, FICA and Medicare taxes on their contributions. and Medicare taxes on their contributions.

• EMPLOYEE TAX SAVINGS EXAMPLEEMPLOYEE TAX SAVINGS EXAMPLELet’s look at how contributing to a Flexible Spending Account could affect an Let’s look at how contributing to a Flexible Spending Account could affect an employee’s paycheck and save taxes. employee’s paycheck and save taxes. Example:Example: Employee earning $30,000 per year Employee earning $30,000 per year and contributing $3,000 annually to the Flex plan for medical and dependent care.and contributing $3,000 annually to the Flex plan for medical and dependent care.

Without FSAWithout FSA With FSAWith FSA

Annual Salary Annual Salary $30,000$30,000 $30,000$30,000

Annual FSA Election Annual FSA Election $3,000$3,000

Taxable Income Taxable Income $30,000$30,000 $27,000$27,000

Estimated Taxes combinedEstimated Taxes combinedFederal, State & FICA (30%)Federal, State & FICA (30%)

$9,000$9,000 $8,100$8,100

After-Tax Income After-Tax Income $21,000$21,000 $18,900$18,900

Non-Taxable FlexNon-Taxable FlexReimbursementReimbursement

$0$0 $3,000$3,000

Net “spendable” Income Net “spendable” Income $21,000$21,000 $21,900$21,900

Annual Tax Savings Annual Tax Savings $0.00$0.00 + $900+ $900

Eflexonline.comEflexonline.com

• Eligibility ManagementEligibility Management– Add new employees.Add new employees.– Change benefit elections, personal information, or terminate employees Change benefit elections, personal information, or terminate employees

from the plan.from the plan.– Automatically synchronize contribution discrepancies with payroll records.Automatically synchronize contribution discrepancies with payroll records.

• Employee SupportEmployee Support– Review a single participant’s account balance.Review a single participant’s account balance.– Get a year-to-date report showing all participants and their account Get a year-to-date report showing all participants and their account

balances.balances.– Review the next payroll contribution report.Review the next payroll contribution report.

• Downloadable ReportsDownloadable Reports– Year-to-date and year-to-date by monthYear-to-date and year-to-date by month– Contribution ListingContribution Listing– Check registersCheck registers– Payroll deduction summaries at enrollmentPayroll deduction summaries at enrollment– Debit Card SettlementDebit Card Settlement– NQE (Non-Qualified Fee) Amount Repaid OnlineNQE (Non-Qualified Fee) Amount Repaid Online– Participants with Balance DueParticipants with Balance Due

• Eflex Refresher Training:Eflex Refresher Training: Please email: Please email: cbizflex@cbiz.comcbizflex@cbiz.com

Myflexonline.comMyflexonline.com

• This website allows the participant access to all of their flexible benefit This website allows the participant access to all of their flexible benefit information – medical, dependent care, transportation, and parking information – medical, dependent care, transportation, and parking election amounts; contributed year-to-date; claims filed; amounts paid election amounts; contributed year-to-date; claims filed; amounts paid and much more!and much more!

• View Account InformationView Account Information– Account BalanceAccount Balance– Election informationElection information– Plan year start/end datesPlan year start/end dates– View Debit Card transactionsView Debit Card transactions– Create Claim forms to be printed for submissionCreate Claim forms to be printed for submission– Repay NQE (Non-Qualified Fee)Repay NQE (Non-Qualified Fee)

• The website is updated each night with the current day’s transactions so The website is updated each night with the current day’s transactions so you are always accessing the most current information.you are always accessing the most current information.

How to Increase Participation in How to Increase Participation in 20112011

– Give examples during Open EnrollmentGive examples during Open Enrollment

• For every $100 the participant spends in doctor For every $100 the participant spends in doctor visits, Prescriptions, dental visits, eye doctor visits, visits, Prescriptions, dental visits, eye doctor visits, and much more, the participant can save $30.00 and much more, the participant can save $30.00 (even more if you are in a higher tax bracket!)(even more if you are in a higher tax bracket!)

• If the participant’s Dependent Care annual election is If the participant’s Dependent Care annual election is $5,000 they could save $1,500 annually and up to $5,000 they could save $1,500 annually and up to $2,000 in a higher tax bracket!$2,000 in a higher tax bracket!

How to Increase Participation in How to Increase Participation in 2011 (Cont)2011 (Cont)

– If you offer the Take Care Card, promote the If you offer the Take Care Card, promote the convenience of not having to pay out of pocket. convenience of not having to pay out of pocket. ***Inform participants to keep all receipts even when ***Inform participants to keep all receipts even when using the Take Care Card!***using the Take Care Card!***

– Inform employees that claims received by 5:00pm ET on Inform employees that claims received by 5:00pm ET on Wednesday, are processed by Friday! Wednesday, are processed by Friday!

Open Enrollment 2011 Client Options:Open Enrollment 2011 Client Options:• Online Enrollment:Online Enrollment:

– If you elect this option, CBIZ Flex will send you the If you elect this option, CBIZ Flex will send you the website address with the user ID and password your website address with the user ID and password your employees will need to enter into the enrollment website. employees will need to enter into the enrollment website. Your review and verification of this information is needed Your review and verification of this information is needed no later than five business days after the enrollment no later than five business days after the enrollment period has closed to ensure timely uploading of period has closed to ensure timely uploading of participant elections.participant elections.

• Enrollment File:Enrollment File:– The enrollment file will be sent to the Secure FTP site. The enrollment file will be sent to the Secure FTP site.

The enrollment file will include demographic information The enrollment file will include demographic information and participant elections. and participant elections.

• Enrollment Forms:Enrollment Forms:– Please understand that there is an additional fee of $5.00 Please understand that there is an additional fee of $5.00

per form (up to a maximum of $500) per form (up to a maximum of $500)

Enrollment Options (Detail)Enrollment Options (Detail)

• Online Enrollment:Online Enrollment:– The latest closing date for online enrollment is: The latest closing date for online enrollment is: December December

6, 20106, 2010– Clients will review elections and approve through FlexEnroll Clients will review elections and approve through FlexEnroll

Enrollment File:Enrollment File:

– File sent to CBIZ Via Secure FTP Site by: File sent to CBIZ Via Secure FTP Site by: December 6, 2010December 6, 2010– Clients will receive an election report via Secure FTP to Clients will receive an election report via Secure FTP to

review.review.

Enrollment Forms:Enrollment Forms:

– Paper Enrollment forms faxed to CBIZ by: December Paper Enrollment forms faxed to CBIZ by: December 6, 2010 6, 2010

– Clients will receive an election report via Secure FTP Clients will receive an election report via Secure FTP to review.to review.

– Note:Note: There is a fee of $5.00 per form for manual There is a fee of $5.00 per form for manual processing.processing.

Plan Document Updates:Plan Document Updates:

– Health Care Reform:Health Care Reform:• Debit Cards and Health Care ReformDebit Cards and Health Care Reform• Over the Counter MedicationOver the Counter Medication

– Plan Changes:Plan Changes: • Plan MaximumsPlan Maximums• 2 ½ month grace period and/or run off period2 ½ month grace period and/or run off period• Adding Debit CardsAdding Debit Cards• Adding Section 132Adding Section 132

Take Care Card:Take Care Card:

– The Take Care Card is an extra benefit to participants. The Take Care Card is an extra benefit to participants. The debit card is now the preferred way to pay for The debit card is now the preferred way to pay for qualified plan expenses. The IRS regulations qualified plan expenses. The IRS regulations mandating the IIAS system for retailers have improved mandating the IIAS system for retailers have improved the use and ease of debit card transactions.the use and ease of debit card transactions.

Take Care Debit CardTake Care Debit Card• Is accepted only at qualified locationsIs accepted only at qualified locations• The Take Care Card Program is not a paperless process. Plan participants are required to The Take Care Card Program is not a paperless process. Plan participants are required to

retain all receipts in accordance IRS guidelines. Because of the tax benefits that FSA plans retain all receipts in accordance IRS guidelines. Because of the tax benefits that FSA plans provide, the Internal Revenue Service (IRS) requires verification that all FSA debit card provide, the Internal Revenue Service (IRS) requires verification that all FSA debit card transactions are for eligible expenses.transactions are for eligible expenses.

• Participants are notified by E-mail or United States Postal Service approximately the fifth Participants are notified by E-mail or United States Postal Service approximately the fifth business day of the month after the card is swiped if a receipt is required or by logging on to business day of the month after the card is swiped if a receipt is required or by logging on to myflexonline.com.myflexonline.com.

• Notification will continue to be sent each month until adequate documentation to Notification will continue to be sent each month until adequate documentation to substantiate the charge is received.substantiate the charge is received.

• If adequate documentation is not received by the 3If adequate documentation is not received by the 3rdrd month after the card was swiped the month after the card was swiped the debit card will be deactivated.debit card will be deactivated.

• If the charge is not substantiated in 120 days, the purchase is marked as non-qualified If the charge is not substantiated in 120 days, the purchase is marked as non-qualified expense and the participant must repay the amount.expense and the participant must repay the amount.

• Once appropriate documentation is received or repayment for the transaction has occurred Once appropriate documentation is received or repayment for the transaction has occurred the card is reactivatedthe card is reactivated

• We (CBIZ Flex) order the participants initial debit card.We (CBIZ Flex) order the participants initial debit card.• Participants can order extra debit cards by logging on to myflexonline.com. The first initial Participants can order extra debit cards by logging on to myflexonline.com. The first initial

extra card order by the participant is at no extra cost. Additional cards cost a $ 5.00 fee.extra card order by the participant is at no extra cost. Additional cards cost a $ 5.00 fee.• During the last sixty days of a plan year no new debit cards can be ordered for participants. During the last sixty days of a plan year no new debit cards can be ordered for participants.

This is called the “black out” period. Cards for the new plan year will be ordered during the This is called the “black out” period. Cards for the new plan year will be ordered during the open enrollment period for the new year.open enrollment period for the new year.

Take Care Card (Cont)Take Care Card (Cont)

• FAQ’s about Take Care Cards:FAQ’s about Take Care Cards:

• How will my employees be notified if they have Non-Qualified How will my employees be notified if they have Non-Qualified Expenses (NQE)?Expenses (NQE)? A statement will be mailed to the participants A statement will be mailed to the participants approximately the fifth day of the month following the card swipe requesting approximately the fifth day of the month following the card swipe requesting receipts and/or payments for the NQE’s. The participant has 30 days to submit receipts and/or payments for the NQE’s. The participant has 30 days to submit receipts and/or payment. A second statement will be mailed approximately receipts and/or payment. A second statement will be mailed approximately the fifth day of the second month requesting receipts/payment and notifying the fifth day of the second month requesting receipts/payment and notifying them of past due status. The card will be suspended the 15them of past due status. The card will be suspended the 15thth day of the third day of the third month following the swipe. These statements will only be generated if the card month following the swipe. These statements will only be generated if the card swipe requires receipt verification. Example:swipe requires receipt verification. Example: Participant swipes card on May Participant swipes card on May 77thth. First statement mailed on June 5th. Second Notice mailed on July 1. First statement mailed on June 5th. Second Notice mailed on July 1stst. Card . Card suspended on August 15suspended on August 15thth..

• How are debit card swipes handled during the 2 ½ month grace How are debit card swipes handled during the 2 ½ month grace period?period? Debit Cards are good for 1 year and participants will receive a new Debit Cards are good for 1 year and participants will receive a new debit card at the start of every new plan year. During the 2 ½ month grace debit card at the start of every new plan year. During the 2 ½ month grace period debit cards swipes are applied to any available balance from the prior period debit cards swipes are applied to any available balance from the prior year first. If there is not a balance available, the swipe will be applied to the year first. If there is not a balance available, the swipe will be applied to the new plan year. new plan year.

QUESTIONSQUESTIONS