Flexible Spending Accounts

1. Flexible Spending Accounts Savings Employees Money

2. Flexible Spending Accounts (FSAs) What is an FSA? • A flexible spending account is an employer-sponsored benefit account that allows employees to set aside pre-tax funds to help pay for eligible out-of-pocket healthcare expenses. • FSA benefits: • Lower taxable income (increased take-home pay) • Receive up to 30% savings on qualified healthcare expenses • NEW EASY FSA SYSTEM! • Starting this enrollment you will be able to link your insurance carriers to your FSA debit card. This will help you in not needing to submit receipts after the fact.

3. Why Should You Offer FSAs? • Sample Employee Savings* • FSA Employee savings: • Lower taxable income:FSA contributions are made pre-tax – before federal, social security, and most state taxes, meaning: • Employees can reduce their taxable income and maximize their take-home pay • Savings on qualified healthcare expenses:Pre-tax contributions allow employees to save up to 30% when spending pre-tax dollars they otherwise wouldn’t have. • Time Savings:With the easyFSA system and mobile and online technology the FSA is as simple as signing up and spending your money. Employee Savings *For illustrative purposes only. Based on 7.65% FICA. Individual tax situations may vary. Please consult a tax adviser.

4. How Do FSAs Work? Summary • An employee determines an annual election amount • Annual election amount is deducted evenly from each pay check – on a pre-tax basis • The full annual election is available on day 1 of the plan year for participants to spend on qualified out-of-pocket expenses • FSA debit card for spending • Online/mobile engagement tools • At the end of the plan year, participants can rollover up to $500 of unused funds into the future plan year • *You may also opt to offer a grace period in which employees are given a post-plan window to spend remaining funds

5. How do FSAs Work? Employee Contributions • During open enrollment, employees plan and select an annual election amount • Annual FSA maximum: $2,700 • Rule-of-thumb: Employees should estimate annual out-of-pocket healthcare expenses • Funding amount cannot be changed mid-year without a qualified life changing event • The annual election amount is divided evenly by paycheck, funds are deducted on a pre-tax basis and placed in the employee’s FSA • The full annual election is immediately available to the employee on day 1 of the plan year • Even though funds have not yet been withdrawn from future paychecks • *New to FSAs*Up to $500 of unused funds can be rolled forward into the future plan year.

6. How do FSAs Work? Qualified Expenses • Participants can use tax-free contributions to pay for qualified healthcare expenses • Qualified expenses include: • Co-pays, coinsurance, deductibles • Dental and orthodontia • Eye exams, contact lenses, eyeglasses • Prescriptions • Over-the-counter medical supplies • Lasik • And more! View the full list of eligible expenses:www.irs.gov/publications/p502/ • Participants can receive up to 30% savings on eligible expenses, thanks to the nature of their tax-free contributions

7. How do FSAs Work? Debit Card Spending • Debit cards give participants easy access to FSA funds • Works just like a standard debit card, but funds are spent from the employee’s FSA • Real time, on-demand access to funds • Eliminates cash purchases & reimbursement hassles • Point-of-sale purchase, provider payment, direct deposit employee reimbursement • Debit cards can be used to purchase qualified healthcare products/services at: • Physician & doctor offices • Hospitals • Pharmacies • Opticians / vision care locations • Dental offices • And, even qualifying retail stores!

8. How do FSAs Work? The New FSA Funds Rollover Policy • In 2013, the US Department of Treasury modified the long-standing FSA ‘use it or lose it’ rule • FSA participants can now rollover up to $500 of unused funds into the future plan year • Future year maximum election is notimpacted (remains $2,700) • FSA Participant benefits: • Greater flexibility - No need to precisely budget & plan healthcare expenses • Lower risk – Employees reduce the risk of losing money • Reduced waste – No more reckless end-of-year spending • More savings – Less forfeiture risk = higher elections and tax savings

9. Online FSA Access 24/7/365 Account Access & Management • Online account access for FSA participants and their family • Check your balance • File a claim • Access to account information & transaction activity • Communication and alerts management • Replace/re-order debit cards • FSA features: • Planning tools & calculators • FSA statements & transaction history • Reimbursement requests • Bill payment

10. Mobile FSA Access • For FSA participants ‘on the go’: • Supports Apple and Android smartphones and tablets • Available via the Apple App Store & Google Play • Participant engagement features: • View account balances • View transaction history • Attach receipts • Edit alerts • File a Claim • Contact administrator

11. Questions? Call 630-773-2337