Dependent Care flexible spending account (FSA) administered through Kaiser Permanente

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1 Dependent Care flexible spending account (FSA) administered through Kaiser Permanente Funds from a Dependent Care flexible spending account (FSA) can be used to pay for any qualified expenses as defined in IRS Publication 503, Child and Dependent Care Expenses. FSA effective date It is recommended that employers align their FSA effective date with the effective date or renewal date of the associated Kaiser Permanente health plan. Changes to the FSA can only be made at renewal and, in order to allow corresponding changes to both the health plan and the FSA, it is best to keep these dates aligned. In the event that a group is requesting a midyear election to the FSA administered through Kaiser Permanente, it is recommended that a short contract period be initiated in order to align the FSA and the associated health plan upon the following health plan renewal. FSA fees, banking, and funding Monthly administrative fee The monthly administrative fee is $3.75 per account per month. This fee is paid by the employer for all FSAs for any account holder (i.e., active, COBRA, retiree). The monthly administrative fee is charged during the month of the FSA administrative services and debited via Automated Clearing House (ACH) from the employer s account on the 26th business day of the month. Setup fees Standard setup: No fee Nonstandard/custom setup: Setup fees for a custom or nonstandard installation will be determined based on assessment of the customer s specific request. Custom or nonstandard requests will be any request for an option or capability not presented in this document. 1

2 Banking arrangements Kaiser Permanente Health Payment Services manages both claims funding and monthly administrative fees via ACH transactions. During the onboarding process, the employer will indicate which bank account they would like to have the ACH transactions debited from by completing and signing an ACH form to that effect. For FSA claims, which are manually filed claims, our system will batch the total claims daily and notify the employer of the total amount to be debited via ACH 24 hours prior to the debit being initiated. For FSA monthly administrative fees, which are debited on the 26th of each month, employers will receive an Employer Fee Funding Notification 24 hours in advance of the ACH transaction. Employers will have access to multiple reports via the Employer Administration Portal that can be used to reconcile all ACH transactions each month. Account holder fund access Point-of-care payment: Pay out of pocket. Employees have the option of requesting reimbursement from their FSA for out-of-pocket expenses using the electronic or paper reimbursement options below. Electronic reimbursement: The KP HRA/HSA/FSA Balance Tracker mobile app and Health Payment Online Portal are available to all account holders whether or not they have single sign-on access to kp.org. Paper reimbursement: All account holders can access the FSA Reimbursement Request Form from the Health Payment Online Portal and can submit requests via fax/mail/ . Employee funding and employer options All accounts will be funded via a daily ACH pull as claims are incurred. Monthly administrative fees will be pulled via an ACH transaction. Accounts are notional and funds will be pulled from the employer s account only as claims or monthly administrative fees are incurred. Funding schedule All accounts will be funded via a daily ACH pull as claims are incurred. Scheduled funding: Employees with a Dependent Care FSA will only have access to the amount they have contributed to date via payroll withholdings. 2

3 Contribution limit The IRS sets maximum contribution limits each year for Dependent Care FSAs. Single employees and couples filing jointly are capped at $5,000, while married employees who file their taxes separately can contribute only up to $2,500. Grace period A grace period allows FSA holders to incur expenses eligible for payment or reimbursement from the FSA during the two months plus the first 15 days of the third month following the end of the FSA coverage period. Run-out period The run-out period is a time frame following the FSA coverage period in which reimbursement claims for qualified expenses incurred during the FSA coverage period may be submitted. Once this time frame has exhausted, no claims for the FSA coverage period may be submitted. The run-out period begins upon the end of the FSA contract year or employee termination. 90 days FSA election and contribution file submission FSA elections via payroll FSA elections made via payroll are submitted via an enrollment file provided to Kaiser Permanente Health Payment Services. The enrollment file indicates the applicable employees/election amounts for the FSA coverage period. Enrollment file provider: Employer group Third-party administrator (TPA) Enrollment file type: The enrollment file is sent in one of the following formats. The appropriate format will be determined during onboarding. CSV file format: This file is uploaded to the Employer Administration Portal. SFTP: Available to employer groups with 200 or more employees. This file is uploaded to a Secure File Transfer Protocol (SFTP) site that would be provided to the employer during onboarding. 3

4 Employees whose Kaiser Permanente health plan coverage terminates Employees who are terminated from the Kaiser Permanente health plan associated with the FSA will lose single sign-on access to their account via kp.org and kp.org/healthpayment within 90 days from termination. The monthly administrative fee will continue to be billed for terminated employees throughout the run-out period (see: Run-out period), and approved claims filed prior to the end of the run-out period will continue to be funded from the employer s account. COBRA Employers have the option of funding the FSA for any of their employees enrolled onto the associated health plan through COBRA. Account access and administrative fees would remain the same for employees enrolled through COBRA. Employer reporting There are several reports available to all Kaiser Permanente employer groups via the Employer Administration Portal. Access to these reports will be discussed during onboarding. Payment History Report The Payment History Report summarizes the amount issued in checks and direct deposits, and debit card transactions (if applicable) for the previous month. The report is available on the Employer Administration Portal on the second calendar day of the month. Account Balance Detail Report The Account Balance Detail Report encompasses each employee s election, claims paid, deposits, and available balance. This report is an overall snapshot (at the time of report generation) of employee accounts for each specific plan year. Reconciliation by Batched EFTs Report The Reconciliation by Batched EFTs Report provides information to reconcile bank statements and is generated on a weekly basis. Enrollment Report The Enrollment Report includes data regarding employees annual elections, employer contributions (if applicable), and payroll deduction amounts. Account Statement by Participant Report The Account Statement by Participant Report includes all consumer account statements for an employer for a chosen plan year and specified date range. 4

5 If additional reports or reporting data are needed, employers can contact Kaiser Permanente Health Payment Services to submit a request. Onboarding Time frame: Once an employer has decided to select the FSA administered through Kaiser Permanente, they will move into the onboarding phase. During the onboarding phase, the employer will be provided with the required forms and agreements to sign and will be guided on where and how to send eligibility and contribution files for the FSA. Provided all onboarding steps required of the employer are completed on schedule, the process can be expected to take 20 business days from the date forms and agreements are returned to Kaiser Permanente to the date when account holders will receive welcome letters. Employers with a January 1 effective date should anticipate a time frame of 45 business days. Required forms: Administrative Services Agreement for Employment-Related Financial Account Programs Administration and Recordkeeping Services for Flexible Spending Accounts (FSAs) Administrative Fees for Flexible Spending Accounts (FSAs) Business Associate Agreement ACH form Stacked accounts Multiple options exist for stacking a flexible spending account with a health reimbursement arrangement. Account access and administrative fees would remain the same in a stacked FSA/HRA offering; however, member experience would vary based on the account types selected by the employer. Employee online account management Employees will have multiple support resources available to them, including the Health Payment Online Portal, the KP HRA/HSA/FSA Balance Tracker App for ios and Android devices, 24/7 access to a bilingual IVR phone line where they can check their account balance, and the support of a dedicated team of specialists at Kaiser Permanente Health Payment Services. Kaiser Permanente can also provide FAQs specific to the health plan and the Dependent Care FSA, a Health Payment Account online user guide, and online tools to help employees understand and use both their health plan and their FSA. 5 Business Marketing December 2014