VCS Business Services - Business Administrations

Did You Know?

• The GAO (General Accounting Office) estimates that over 70% of all employers are out of compliance in one or more areas relating to Cafeteria Plans?
• As the plan administrator you may be personally liable for your company’s COBRA compliance?
• The IRS estimates that over 90% of all employers are out of compliance with COBRA regulation

Let us help you (via our strategic partners) reduce your risk and keep you in compliance & utilize our existing technology to reduce time spent on administration for your Cafeteria Plans & COBRA / HIPAA.

Flexible Spending Accounts (FSA) Administration

A Flexible Spending Account (FSA) is a type of cafeteria plan authorized under Section 125 of the Internal Revenue Code. FSA’s provides employees the ability to purchase qualified insurance benefits (such as medical, dental & disability) on a pre-tax basis.

Cafeteria plans can provide tremendous tax savings to both employers and employees. The employers may save on the matching FICA taxes and FUTA, while the employees can reduce their Federal and FICA taxes by participating in a plan.

Some of the popular Flexible Spending Accounts are reimbursement accounts. These accounts enable the employees to set aside a predetermined dollar amount in an account to cover eligible out-of-pocket health care, dependent care and commuter expenses throughout the year. IRS rules allow employees to contribute to their account(s) through payroll deduction on a pre-tax basis – before federal income tax, social security, or (in most cases) state withholding taxes are deducted – thus reducing their taxable income. Then, as needed, employees can withdraw funds form their account to reimburse (or pay for) the eligible expenses.

Implementation of such programs requires ALL employers to follow IRS compliance guidelines. Failure to follow these compliance requirements could result in significant penalties imposed on employers by the IRS and Department of Labor (DOL).

Our administration services include:
Customized Plan Documents & DOL Filings
Without a proper plan document, the IRS could disqualify your program
• Quarterly Discrimination Testing & Reporting
Testing is required. Failure to satisfy all discrimination-testing requirements may result in adverse tax consequences for all key employees.
• Preperation of IRS Forms 5500 – Signature Ready
ERISA requires all welfare benefit plans with over 100 participants at the beginning of a plan year to file an IRS 5500.
Failure to file an IRS 5500 on time may result in daily penalties and fines.
• Direct Deposit of FSA Claims
• FSA Debit Cards for Instant Reimbursements
Reduces & possibly eliminates claim forms & processing
Employees have access to funds immediately
• Internet Account Access and Faxed Claim Submissions

To obtain a free consultation or to request a proposal call 215-257-8233

DEBIT CARDS

Has a lack of participation in your flex programs been a problem?

While there are many financial advantages to having a Flexible Spending Account (FSA) program, national participation levels in accounts with traditional flex plans remain steady, but very low.

Why?

•Employee concerns or misunderstanding the “Use it or Lose it” rule
•Cash flow concerns – “Aren’t I paying twice (pre-tax & after-tax) for my eligible expenses?”
•Claim forms – time to fill-out & process
•Delay in getting money – waiting for reimbursements
•Education & communication of programs are not adequate

Solution:
Utilize a MasterCard Debit Card that electronically pays for Flexible Spending Account eligible pretax expenses at the Point of Sale! The debit card is available for Medical Reimbursement Accounts, Dependent Care Reimbursement Accounts, Commuter Reimbursement Accounts and even Healthcare Reimbursement Accounts.

Advantages to the Card
• 24/7 account history access through the Internet
      • E-mail a statement to yourself
      • Review YTD contributions & payments
      • Report a lost card and order a replacement
      • Access to various Q&A documents
      • E-mail questions to customer service
• Unlimited lost or stolen card fraud protection
• Will not work at non-qualified vendors, such as gas stations or restaurants
• Eliminates the traditional hassles of FSAs, such as cumbersome claim forms, double out-of-pocket    payments, and waiting for reimbursement checks.
• NO TRANSACTION FEES!

Call today for more information!

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Medical Flexible Account (MFSA)

This is a Flexible Spending Account that allows employees the opportunity to pay for eligible out-of-pocket medical costs with pretax dollars. It may also be known as a Health Care Flexible Spending Account. The account is funded by the employee throughout the plan year via payroll deduction. Participation is optional.

Eligible medical expenses my include deductible, co-pays, prescriptions, dental costs, vision & hearing exams.

These accounts are subject to the “Use it or lose it” rule:
If you contribute dollars to a flexible spending account and do not use all of the monies you deposit, you will lose any remaining balance in the account at the end of the plan year.

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Dependent Care Reimbursement Account

This is a Flexible Spending Account that allows employees the opportunity to pay for eligible dependent care expenses with pretax dollars. The account is funded by the employee throughout the plan year via payroll deduction. Participation is optional.

The account is for non-medical day care expenses for children ages 12 and under, or disabled dependents provided provided that they satisfy the definition of a “Qualifying Relative” under federal tax law. Dependent day care expenses are reimbursable as long as the provider is not your spouse, another dependent or your child if age 19 or younger.

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Commuter Reimbursement Account (CRA)

This is a Flexible Spending Account that allows employees to set aside pre-tax dollars to cover two-types of work-related transportation expenses as they occur throughout the year – transportation and parking. The employee can participate in one or both of these options.

The Commuter Reimbursement Account is allowed by Section 132 of the Internal Revenue Code. This section allows some distinct differences from Section 125:
• Each type of commuter expense has its own monthly maximum.
• You can use money from one account to pay services for the other account, as long as the monthly maximum is not exceeded.
• Your contribution amount can change monthly – no change in family status is required.

Healthcare Reimbursement Accounts (HRA)

Healthcare Reimbursement Accounts are employer-funded accounts used to reimburse medical expenses to employees. Similar to a Section 125 Healthcare Flexible Spending Account (FSA), HRAs reimburse medical expenses defined in IRC Section 213(d) as “medically necessary” including co-pays, deductibles, office visits, vision care expenses, prescriptions and dental expenses. However, unlike Healthcare FSAs, the “use-it-or-lose-it” rule does not apply to the HRA, allowing unused funds to be carried forward (contingent upon the employer’s plan design). These employer-provided funds are untaxed at the employee level and tax deductible at the corporate level.

How does an employer establish a Healthcare Reimbursement Plan?
With an HRA, employers have a variety of plan design options available. Before a plan can be implemented, the employer must decide upon the following features: roll-over options, coordination with their FSA account, determination of funds allocated to each employee, and the time frame in which contributions are accumulated. Once the plan is created and adopted, the employer must distribute a Summary Plan Description (SPD) to all eligible employees.

How does the HRA coordinate with the Flexible Spending Accounts?
An employer may offer both an FSA and an HRA. The same expense cannot, however, be reimbursed from both accounts. Special ordering rules can be designed to determine which account the reimbursement should be made from first. Alternatively, FSAs and HRAs can be structured to provide reimbursement of mutually exclusive types of medical expenses (such as permitting the FSA to cover only vision expenses and permitting the HRA to cover all other forms of medical expense).

Key Points to Remember:
• The plan must be in writing and a Summary Plan Description must be distributed to each plan participant.
• COBRA continuation forms should be provided to all terminating participants in the medical reimbursement portion of the plan.
• The plan may not discriminate in favor of highly compensated employees.
• Employers are required to pay eligible medical expenses only to the extent of an individual’s account balance.
• Generally, employers maintaining HRA plans that cover more than 100 participants must file an IRS Form 5500 each year.
• An HRA can be restricted to cover only certain benefits, like prescriptions, or co-pays and deductibles.
• Eligible expenses must be incurred during the participant’s period of coverage, but may be reimbursed at a future date.
• The HRA cannot be “cashed out” upon an employee’s termination or retirement. The fund must always be used for qualified medical expenses.

To learn more about HRAs, our administration services or to request a proposal – please call 215-257-8233.

COBRA / HIPAA Administration

COBRA and HIPAA are complex federal laws that deal with the continuation and portability of health insurance.

COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985)
COBRA Requires employers with 20 or more eligible employees who sponsor a group health plan to allow qualified beneficiaries (employees & their dependents) the opportunity to continue health benefits at their own cost if they lose coverage after a qualifying event.

HIPAA (Health Insurance Portability and Accountability Act of 1996)
HIPAA prevents employer group health plans from imposing pre-existing condition limitations on qualified beneficiaries by allowing the qualified beneficiaries the right to demonstrate credible coverage – a HIPAA Certificate.

The IRS estimates that over 90% of all employers are out of compliance with COBRA regulations. Maintaining internal administration records and staying current in the evolving area of employment law can reduce your business exposure to unnecessary risks.

Failure to comply may trigger penalties. Insurance carriers may terminate coverage continuation, with the liability of the qualified beneficiaries’ health insurance claims to be the employer’s responsibility – maximum exposure could be $1,000,000 plus.

Monthly Administration Services include:
• Preparation of letters for all qualifying events (New Hires, Terminations)
• Tracking and Monitoring 60-day elections and 45-day retroactive payment periods
• Tracking and Monitoring the monthly premium payments and 30-day grace periods
• Preparation of HIPAA Certificates with Qualifying Event Letters
• Delivering all letters with Certificate of Mailing (proof of mailing)
• Sending all letters to qualified beneficiaries as well as employees
• Providing a full staff of qualified COBRA consultants for any questions that may arise.
• Assumption of liability by vendor

Remember: COBRA / HIPAA is a FEDERAL OBLIGATION not an Option!

For more information or to request a proposal – please call 215-257-8233.

List Billing Services
Looking for a fully-integrated, consolidated billing system that will work for you?

We offer a consolidated billing and remittance service which allows for multiple products from multiple carriers to be billed and paid through one payroll deduction slot and one bill. The program simplifies the payroll deduction and reduces payroll staff time, making it easier for employers to embrace additional programs and encourage employee participation.

Some of the value-added Services include:
• 24/7 access to billing information
• Clients reconcile and pay bills on-line.
• Employer and employee contribution mixing in any format.
• Zero balance accounting on every remittance provides to-the-penny accuracy.
• No commingling of funds – separate checking accounts are established for each remitter.
• Adds / deletes can be automatically inserted in bills.
• No need to wait for bill to make EE participation changes.
• On-line product subscription rate calculator makes additions easier.
• Imaged enrollment documents are available on-line.
• Voluntary and group product records available on an individual insured basis.
• 24/7 access to standard and customer reports.
• Unrestricted carrier choices.
• Unlimited product support capabilities.
• Simple pricing structure.
• Section 125 and COBRA product tracking.

To learn more or request a proposal, please call 215-257-8233.