Proposal to Implement
For
GROUP NAME
Flexible Spending Account (FSA)
Dependent Care Account (DCA)
Transit and Parking Account (TRN/PKG)
Introduction to Choice Strategies
Choice Strategies is a Third Party Administrator (TPA) that was founded in 2001 on the premise of
demonstrating to employers how to dramatically reduce healthcare costs while maintaining a high
level of benefits for employees. Choice Strategies administers a wide variety of products and
services that can be customized to meet the financial goals of each employer, while offering
employees the coverage they deserve. Choice Strategies is known for extreme flexibility in plan
design, and over-the-top service for brokers, employers, and employees.
We were the first to offer a debit card-based HRA plan, and we have continued to innovate by
introducing a succession of products, services, and tools that can be easily customized for
employers and employees alike.
Choice Strategies was acquired by WageWorks, a national leader in the consumer-directed benefits
arena, in January 2012. As a division of this nationwide company, we possess added depth and
have access to human and technical resources that allow us to continuously expand our solution
set. WageWorks’ sole focus has been to provide consumer-directed benefit account solutions to
employers of all sizes. Today, WageWorks is the largest independent administrator in the United
States serving over 29,000 employers and over 3.2 million participants.
Today, Choice Strategies administrative services include:
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Industry leading service and support
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The Choice Strategies debit card for the payment of providers and other vendors
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Substantiation of card transactions
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Processing of submitted claims
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Claim payments via check or direct deposit
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Enrollment materials and employee communications
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Online portal access for employees and employers
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Plan document production
Flexible Spending Accounts (FSA) Optional
A Flexible Spending Account (FSA) is a tax-advantaged plan that an employer can offer as a
voluntary benefit to their employees. Employees can choose to contribute funds pre-tax via payroll
deductions to pay for out-of-pocket IRS-eligible medical expenses, as referenced below. Typically,
an FSA is an employee-funded account, however employers can also choose to contribute to the
employee’s FSA, and take a tax reduction for any of the employer contributions.
Features of an FSA:
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FSA contributions are tax-deductible for the employer and tax-free for the employee
FSAs are prefunded by the employer; the employee’s full annual election is available on
the plan start date
Annual elections can only be changed mid-year if there is a qualifying event
Employer can now allow up to $500 of unused FSA funds to carry over into the next
plan year (lowers risk for employee - no longer “Use it or Lose it All”)
Employers offering FSAs must also have an underlying ACA-compliant group health
insurance plan in place
Only individuals eligible for their employer’s ACA-compliant group health insurance
coverage can be offered an FSA *Note that the employee is not required to be enrolled
in their employer’s group health plan to elect the FSA –the employer just needs to be
offering a group health plan, and the employee has to be eligible for that plan
Health care reform currently limits pre-tax employee contributions to $2,500 per year
Health care reform also limits employer contributions to either $500 or an equal match
of the employee election (whichever is greater)
Eligible Expenses – 213(d) ALL IRS:
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In-Network Deductible
Co-Pays
Coinsurance
Prescriptions (Rx)
Out-of-Network Expenses
Dental
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Orthodontia
Vision
Diabetic Testing Supplies
Limited Over-the-Counter
expenses (OTC medicines require
a prescription)
**Employees should elect to contribute FSA funds to pay for predictable out-of-pocket expenses.
If the employee does not utilize their entire FSA election by the end of the plan year, the employer
can choose to offer a Grace Period, a Carryover or neither. With a Grace Period, employees can
continue to incur expenses in the first 2 ½ months of the new plan year, but use their previous plan
year funds. In a new option for 2014, employers can alternatively offer a Carryover of up to $500 of
unused funds into the new plan year (employer cannot offer both a Grace Period and a Carryover –
it has to be one or the other). Any unused funds remaining will be forfeited to the employer. The
employer will choose whether to offer a Grace Period, a Carryover or neither when filling out the
Master Application.
Dependent Care Accounts (DCA) Optional
A Dependent Care Account (DCA) is an employee-funded account that can be used to pay for
custodial care of eligible dependents while the employee is at work. Eligible dependents include
children ages 13 and under, as well as disabled children, spouse or parents.
Features of a DCA:
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DCA contributions are pre-tax for employer and employees
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DCA contributions are “use it or lose it” for the employee
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“Pay as you go” - not prefunded by the employer, funding becomes available to the
employees as it is contributed through payroll deductions
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Maximum contribution for a household per calendar year is $5,000 if single or married
and filing a joint tax return or $2,500 if married filing separately (per IRS guidelines)
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Elections can only be changed if there is a qualifying event
Employees Save 25% to 40% on Day care Expenses
 Nanny expenses, for services provided inside the home, are eligible to the extent they
are attributable to dependent care expenses and expenses of incidental household
services
 Dependent care expenses incurred for services outside the home provided they are
incurred for the care of a qualifying dependent that regularly spends at least eight hours
per day in the home
 Registration fees to a day care facility are eligible as long as the fees are attributable to
actual care and not described as materials or other fees
 Pre-kindergarten or nursery expenses are eligible even if the school also furnishes
lunch and educational services
 Before- and after-school care through age 12
 Day camp expenses through age 12 are eligible
 Food and incidental expenses (diapers, activities, etc.) may be eligible, if part of
dependent care charge
 Expenses paid to a relative, e.g. child, parent, or grandparent of participant, are eligible.
However, the relative cannot be under age 19 or a tax dependent of the participant.
Why add an FSA or DCA?
Employer Savings with FSAs and DCAs:
In the example, to the right, an
employer offers an FSA and DCA
benefit and employees elect to
contribute $32,500 pre-tax.
The employer does not have to pay
the 7.65% payroll tax on the
employee contributions. This leads
to an annual tax savings of $2486.25. After paying a year’s
worth of Choice Strategies administration fees, the employer
saves a total of $1084.25.
Employee Savings with FSAs and DCAs:
With FSAs and DCAs,
employees receive
considerable tax
savings. In the example
to the left, an employee
elects to contribute
$1800 into a FSA and
$3600 into a DCA
annually. With an
approximate federal tax
rate of 20% and state
income tax of 7%, the
employee would save
more than $1500
annually by using the
FSA and DCA plans
rather than post-tax
dollars.
FSA and DCA plans can be administered via:
 Claim Submission – Employees can submit a claim online, via mobile app or via a paper form.
Choice Strategies will process the claim and send the correct payment to either the employee or the
care provider, at the member’s request.
 Debit Card - Employees can pay for their prescriptions and IRS eligible expenses at the
pharmacy point of sale or pay their dependent care provider with their Choice Strategies debit card.
Transit and Parking Accounts (TRN/PKG) Optional
A Transit and Parking Account is a tax-advantaged plan that is funded by employees or employers,
to be used to pay for eligible commuter-related expenses. Using pre-tax dollars to pay for the
expenses to commute increases employees’ take-home pay, and reduces the tax liability to the
employer.
Features of a Transit and Parking Account:
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Transit and Parking Account contributions are pre-tax for employer and employees
The 2014 indexed maximum contribution amount is $130 per month for Transit, and $250
per month for Parking
“Pay as you go” - not prefunded by the employer, funding becomes available to the
employee as it is contributed through payroll deductions
Payroll elections for Parking and Transit Accounts can start, stop or change at the
employee’s discretion
Dependents are not eligible – the employee is the only person eligible for Transit or Parking
expenses
Funds can be rolled over year-to-year. Unlike an FSA, employees do not lose unused funds
in the account.
Eligible Expenses:
Transit expenses are eligible if they are used for transportation to work.
 Metro Cards
 Commuter Rail
 Bus or Subway vouchers
 Ferry Passes
 Vanpool
**Tolls, Gas or other driving-related costs are not eligible expenses
Parking expenses are eligible if they are work-related. This includes parking at work or near a
location from which the employee commutes to work.
 Monthly or Daily Parking
 Metered Parking
 Parking at a Mass Transit Facility
**Parking for business meetings, parking reimbursed by the company and parking costs already
deducted from employee’s paycheck are not eligible expenses.
Transit and Parking plans can be administered via:
 Claim Submission – Employees can submit a claim online, via mobile app or via a paper form.
Choice Strategies will process the claim and send the correct payment to the employee.
 Debit Card - Employees can pay for their eligible expenses at the point of sale, when applicable,
with their Choice Strategies debit card.
Payroll-Deducted Insurance Premiums
The Section 125 Premium Only Plan (POP) saves your company and your employees money by
reducing payroll taxes. It works by making a simple adjustment in the payroll process. Employees
may choose to have elected contributions deducted from their payroll on a pre-tax basis to pay their
portion of premiums or to be deposited into to a Health Savings Account established on their behalf.
Employers may also contribute matching or other employer contribution amounts through this Plan.
In order to allow HSA contributions and insurance premium and medical expense reimbursement
deductions from the employee’s payroll pre-tax, a formal Plan Document and Summary Plan
Description are required by the Internal Revenue Code. The penalty for non-compliance can be
great – including disallowance of all deductions and payment of all delinquent taxes plus daily
interest and penalties. By electing this plan, Choice Strategies will provide the documents required
to keep your plan compliant.
Benefits Eligible for POP Employer-Sponsored Plans
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Health plans including medical insurance, dental insurance, vision care insurance, critical
illness insurance, accidental death/dismemberment insurance, and cancer insurance
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Group-term life insurance up to $50,000
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Disability insurance. Although short- and long-term disability premiums may be deducted
on a pre-tax basis, there may be negative consequences when and if a claim is made.
That’s because when disability insurance is payroll deducted on a pre-tax basis, any
benefits received in the future will be taxable to the employee
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Health Savings Account (HSA). Employees may payroll deduct, on a pre-tax basis,
elected contributions to a Health Savings Account established on their behalf. Employers
may also contribute matching or other employer contribution amounts through this Plan
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Accident or Accidental Death Dismemberment (ADD) coverage
Employers save Taxes
Your taxable payroll is reduced by the total amount of employee contributions to the applicable
benefits. So that for every $100 employees deduct (pre-tax) from their payroll checks to pay their
portion of insurance premiums or contributions to an FSA or HSA, the employer saves $7.65 in
FICA taxes.
Employees Save 25% to 40% on Their Share of Contributions to
Insurance and HSAs
Employees do not pay FICA, federal, or where applicable, state or local taxes on money used to
pay for their portion of employer-sponsored insurance premiums, or contributions to their Health
Savings Account (HSA).
**There is no charge for your Premium Only Plan when you sign up for any other
flexible benefit plan.
Operation and Functionality of the Choice Strategies Plan
Plan Startup Process (Implementation)
There are three main components to implementing a new plan with Choice Strategies: the Master
Application, the ACH Authorization Form and the employee enrollment information.
 Master Application
The Master Application is used to collect information about what plans the employer would like to
implement, and how the employer would like the plan designed and administered. The employer
can complete the application electronically or by filling out a paper application. Information collected
on the application includes:
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Contact information
Administrator contacts for the employer
Eligibility information
Plans to be offered
Funding amounts
Eligible expenses
 ACH Authorization
Choice Strategies bills the initial setup fees, monthly administrative fees, and annual renewal costs
by debiting the designated employer bank account. The same account or a different bank account
can be set up to be debited for the utilization of the employee’s individual accounts.
The ACH Authorization can be filled out as part of the Master Application or by completing a
separate paper form and submitting it to Choice Strategies by email, fax or mail.
 Employee Enrollments
In order to set up individual accounts for each of the employees, and keep the plan in compliance,
Choice Strategies needs information from each participating employee and any dependents that will
be participating in their plans. Enrollment information can be provided to Choice Strategies via our
Enrollment Template.
All implementation documents can be sent via the following methods:
 Email : installation@choice-strategies.com
 Fax : 1-888-415-6471
 Mail : Choice Strategies
76 McNeil Rd, 2nd Floor
Waterbury Center VT 05677
When Choice Strategies receives the Master Application, a confirmation email from the
Implementation Department is sent to the employer and producing broker.
Plan Configuration and Plan Document Creation
Choice Strategies plans will be configured and plan documents created based on employer
decisions indicated on the Master Application.
Plan Documents Include:
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Adoption Agreement (Outline)
Plan Document - for employer reference
Summary Plan Description - to hand out to all participants
HIPAA Privacy Notice
During the implementation/set-up process, plan documents will be created and uploaded to a
secure online Administrative Guide. This Admin Guide will be a central location where plan
documents, amendments, invoices and helpful employee forms and audio-visual presentations can
be accessed at any time by the employer or broker.
Once implementation is complete, employers and brokers will receive an email containing contact
information for their Client Service Account Manager or Regional Team as well as the secure login
information for administrative access to the employer’s Admin Guide.
Enrollment Process
Once Choice Strategies receives the initial enrollment forms or templates, employee accounts are
established in our system and debit cards will be produced and mailed to each participating employee
and spouse (if applicable). Cards come in plain white envelopes and are mailed to employee’s home
mailing address by default. The Choice Strategies debit card is activated upon first use. Welcome
brochures are also emailed or mailed to employees.
After initial implementation, the employer contacts/administrators can provide future enrollments,
changes in status or employee terminations to Choice Strategies via our eligibility e-forms. A link
to the forms can be found at http://www.choice-strategies.com/forms-2.
If the employer is unable to access the internet, or has a large amount of enrollments/changes,
eligibility information can also be sent via our enrollment template to:
 Email: eligibility@choice-strategies.com
 Fax : 1-888-415-6471
 Mail : Choice Strategies
Attn: Eligibility
76 McNeil Rd, 2nd Floor
Waterbury Center VT 05677
Online Open Enrollment:
At plan renewal, employees that have, or are planning to add an FSA, DCA,
Transit or Parking account will be able to easily enroll online and enter their
payroll elections during the Open Enrollment period. Online Open
Enrollment at renewal is now the default for most FSA, DCA, Transit and
Parking plans. Groups may alternatively choose paper enrollment or autorenewal upon request, if enrolling online is not convenient for their
employees.
To enroll online, employees will only need internet access and an
Employer ID which is created upon the group setup. Employers
will be provided with a resource handout to share with their
employees that can be customized with the group plan
information. The handout also includes links to a step-by-step
video walking them through the online enrollment process.
At the close of open enrollment, employers will receive an email notification at which time they can
run the appropriate payroll reports (using instructions provided).
While Online Open Enrollment is not standard for new groups, it may be available upon request at
implementation for select groups that have sent in a completed application a minimum of 2-3
months before their plan’s effective date. Availability will be determined dependent on timely receipt
of all necessary documentation and timeframe available before the plan’s effective date – please
submit your request at time of application.
Debit Card Functionality
Choice Strategies offers a convenient, vendor-specific MasterCard for
employees to access their plan(s) funding. The Choice Strategies debit
card can contain multiple plans on one card by designating merchant
category codes that are eligible on a specific plan and placing priority
on which account should pull first.
Each credit card machine has a specific code associated with what
industry that business is in. For example, a Shoe Store is considered “Retail”, a Lawyer is
considered “Legal Services”, a Doctor’s office, is considered “Doctor’s Office,” and a Hospital is
coded as “Hospital.” Choice Strategies limits the open codes on each of the plans, based on what
eligible expenses the Employer designates. Limiting the credit card codes prevents employees from
using the card at non-eligible facilities, such as a gas station or restaurant.
Choice Strategies will automatically issue debit cards to each participating employee and spouse (if
applicable) If an employee needs an additional debit card for another dependent on the account,
such as a college-aged child, the employee can contact Member Services to request an additional
card at no charge. The employee, spouse and dependent(s) cards pull from the same balance and
can be used for any eligible participant on the plan, regardless of the name on the individual debit
card.
Substantiation and Adjudication Process
The IRS stipulates that the plan sponsor (employer) ensure that plans are properly substantiated.
In other words, purchases made with Choice Strategies debit card must be proven to be eligible
under the plan.
Choice Strategies substantiates purchases made with Choice Strategies debit card via the following
methods:
 IIAS (Inventory Information Approval System)
Under this inventory control system merchants such as grocery stores, discount stores,
pharmacies, department stores, etc. must be able to differentiate between eligible and ineligible
items at the point of purchase. Simply put, Choice Strategies debit card only works for eligible
prescriptions and limited OTC purchases at participating retailers. Ineligible purchases will be
denied at the cash register. This system eliminates the need to request receipts for point of sale
pharmacy purchases.
 Co-Pay Matching
The Choice Strategies debit card can be set to match the co-pay(s) of the underlying health plan
design. Requests for documentation are not generated for transactions in which co-pays have been
matched as the expense has been deemed substantiated.
 Request for Documentation Process
Requests for Documentation, also called receipt requests, are generated and sent to employees for
those transactions that cannot be substantiated through other listed methods. Employees are
requested to provide the necessary documentation (generally Explanations of Benefit (EOB) or
provider statements) for substantiation of transactions and/or claims.
 Substantiation Service
Choice Strategies offers a voluntary substantiation service to all employees that will help to limit the
number of documentation requests sent to employees for medical transactions on their Choice
Strategies. Through this voluntary service, employees grant Choice Strategies access to review
their health insurance account online. When a transaction occurs or a claim is submitted, Choice
Strategies logs in to the employee’s online insurance account and views the information necessary
to substantiate the medical services paid for with the card. Documentation is not requested for
these transactions if the information from the health plan matches the transaction and if the services
are eligible under the plan.
 Enforcement of Substantiation Requirements
Occasionally an employee will disregard receipt requests or forget to send in requested
documentation. To protect employer money and keep the plan in compliance, employees’ Choice
Strategies debit cards are automatically deactivated in cases in which participants do not send in
requested documentation after multiple requests. The cards are reactivated upon receipt of
requested documentation. Employers may choose to waive the card deactivation feature on a planwide level on the Master Application; however, employers should note that in the event of an IRS
audit the plan may be found to be non-compliant. Employers can also contact their client service
team to reactivate a specific employee’s card at any time.
Claims Submission
Employers can choose whether to offer a debit-card based plan or require employees to submit
claims for reimbursement instead of having access to a debit card. Even with Choice Strategies
debit card based plans, some members choose to submit claims for reimbursement rather than use
the debit card.
How Employees Submit Claims for Reimbursement
Claim forms are available on our website or if an employee does not have internet access, they can
contact Member Services to have a claim form mailed to their home address.
Employees can submit their completed claim form and documentation:
 Online: www.choice-strategies.com by logging into their online account
 Mobile App: with online account, claims can be submitted via mobile devices or tablets
 Email : claims@choice-strategies.com
 Fax : 1-888-415-6471
 Mail : Choice Strategies
76 McNeil Rd, 2nd Floor
Waterbury Center VT 05677
Employees can be reimbursed for submitted claims via:
 Direct Deposit / Electric Fund Transfer (EFT) – Direct Deposit information provided
through the employee’s online account
 Check – made out and mailed to the employee
 Check – made out and mailed to the provider
For online claim submission, typical processing times are between 1-2 business days.
For e-mailed, faxed, or mailed claims, average processing times vary between 3-7 business
days.
Service
Choice Strategies is known for our commitment to exceptional service and constant innovation to
provide the best resources to all our constituents: brokers, employers and employees.
Client Services
Choice Strategies Client Service teams are an excellent
resource for employers and brokers. Client Service
representatives answer employer and broker questions
about existing plan designs, day-to-day plan administration
and compliance concerns, questions about reporting and
invoicing, new hire and termination inquiries and much
more.
Choice Strategies Client Service Department is split into
regional teams to best serve each employer/client and
provide a personalized experience.
Training Department
Choice Strategies offers new employer training webinars to review employer online resources, how
to generate a report, where invoices are located, new employee enrollment forms and how to
terminate an employee from the Choice Strategies Plan among other helpful topics. To view the
webinar schedule or request a webinar, employers can go to www.choice-strategies.com to the
Employer tab and check the Employer Education Center or contact Client Services for more
information.
At the employer’s request, the Training Department also develops plan-specific webinars that can
be scheduled for employees at enrollment or any time during the plan year. Plan-specific webinars
can be a great educational resource for employers and employees.
Member Services
Choice Strategies prides itself on exceeding all service expectations for our employer clients and
employee members. Our Member Service team receives extensive on-going training in multiple
internal Choice Strategies departments, as well as training on the most recent healthcare changes.
Choice Strategies Member Service Representatives answer a wide variety of questions anywhere
from basic balance and forgotten passwords to resolving claim denials, or ineligible expense
refunds. Member Service Representatives are strong patient advocates, and will conference call a
provider or carrier with the member to help educate all parties, and resolve a situation for the
member.
Member Help is available:
 24/7: Members can access account balance, card status and order
replacement cards 24/7 through IVR (Interactive Voice Response)
 Phone: 1-888-278-2555 #2 Mon – Fri 8am-8pm EST
o Assistance is available in more than 200 languages
Online tools
Choice Strategies recognizes the importance of education for all of our constituents and strives to
offer the most comprehensive suite of tools and resources in the industry.
Website
Choice Strategies’ website www.choice-strategies.com is an excellent resource for employers,
employees, and any of their participating family members.
Website resources include:
 Extensive FAQs
 Interactive Videos
 Eligible Expense Search Engines
 Savings Calculators
 Helpful links and forms
 Audio-Visual Presentations such as,
“How to Submit a Claim Online” or
“How to Create an Online Account
with Choice Strategies”
Employer Portal
Each employer contact/administrator can access specific account information at any time.
Employers have password protected access to:
 General Account Information
 Employee Account Status
 Employee Account Balances
 Plan Documents
 Invoices
 Employer Funding Report
 Enrollee Account Balance Report – This report indicates YTD usage on employer plan(s)
The employer contact/administrator can use the online reporting system to generate other reports
on an as-needed basis.
Member Portal
Each employee can set up their individual online account to manage their Choice Strategies plans
at www.choice-strategies.com.
Employees will need the following information to set up their online account:
 Employee First and Last Name
 Social Security # (referred to as Employee ID)
 Choice Strategies Card # or Employer ID (provided to the employer at installation)
Once employees set up an online account, they will have a User ID and Password. The employee
will also have the opportunity to provide answers to security questions in the instance that they
forget their password in the future.
Through their online account, employees can:
 Check Account Balances
 Submit Claims Online
 View Transaction History
 Upload Documentation
 Change Direct Deposit Information
Mobile App
Available for iOS (Apple) and Android-enabled mobile devices and tablets, the Choice Strategies
app can be downloaded free of charge. Members can check account balances, view recent
transactions, submit claims and upload a receipt or supporting documentation.
Administration Fees*
Fees are based on the number of participating employees as outlined in our Fee Schedule:
Initial Setup Fee (All Plans):
1-24 Employees
25-49 Employees
50+ Employees
Monthly Administration Fee:
$250 plus $5.00 per employee
$500 plus $5.00 per employee
Contact Sales Representative
Per Enrolled Employee
FSA/DCA/TRN/PKG Only Plans
50+ Employees
Plan Changes and Renewal:
$8.00
Contact Sales Representative
Setup of Additional Plan(s) at a later date
$250
Renewal Fee
$100 plus $5.00 per employee
Renewal Fee for 50+ Employees
Contact Sales Representative
The following are Included with Plans at No Additional Fee:
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Dependents are included in all applicable plans at no additional cost
No Additional Monthly Admin Fee for bundled plans – choose single or multiple plans for one flat rate
Full-Time Dedicated Compliance Team
Plan Documents
Plan Amendments / Updates
Summary Plan Description (SPD)
Non-Discrimination Testing (up to 3 times per year, as requested by employer)
Debit Cards / Replacement Debit Cards
Electronic Enrollment Materials
Employer and Employee Custom Webinar Training Sessions
24/7 Employer Web Portal Access (Account Information, Plan Documents, Invoices, Reports, Resources)
24/7 Employee Web Portal Access (Account Information, Claim Submission, Training Videos, Resources)
Mobile App
Client Services Dedicated Regional Account Team
Member Service Assistance via phone and IVR
Multilingual Language Line, allowing for Member assistance in more than 200 different languages
Plan Substantiation Service
*Fees are net of commission.
For More Information
Thank you for considering Choice Strategies for your tax-advantaged plan administration needs.
If you have any additional questions or concerns after reviewing the above document, please do not
hesitate to contact the Choice Strategies Sales team via email: sales@choice-strategies.com or by
calling 1-888-278-2555 #6 for your regional Sales Representative.