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FlexTalk Newsletters | Other Links |
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FlexTalk Spring 2000 This issue:
There’s good news in the world of Flex plans. The Office of Personnel Management has announced that Federal workers will be enrolled in a cafeteria plan later this year, and those in the Executive Branch of government may even be allowed to utilize flexible spending accounts. Why is this such good news? First of all, according to Stan Manley, “it’s a neat thing that the Fed workers will finally have this available to them. The government has seen that it does work in the private sector and it is something that federal workers should have. And, it solidifies things. By offering it to federal workers, they’re less likely to take it away from the rest of us.” The federal government’s goal is to implement the cafeteria plan no later than October 1, 2000. Industry groups have lobbied for this change for years. It appears that two main motivations finally brought about the change. First, recent increases in health insurance premiums, with more anticipated in the future. And second, the government’s lackluster position as an employer, due to lower pay and benefits. It is anticipated that this move will make it easier for the federal government to hire quality employees. Congressional hearings are scheduled for summer. We’ll keep you informed of pertinent developments. Or, you can check out the web site of the Office of Personnel Management, at www.opm.gov/asd/htm/2000/00-204.htm. Client Profile: Caprice Pine, BSQUARE Caprice Pine defines her job as “Human Resource Generalist.” She is involved in everything from benefits administration to training and development, “whatever is needed,” she says. “Our team works together to figure out what needs to happen and who’s got the time.” And because she is the most experienced at it, Caprice is the main benefits administrator for her company, BSQUARE Corporation. A software developer in Seattle, BSQUARE has enjoyed the benefits, and faced the challenges, of rapid growth over the last few years. Helping them to manage that growth, at least in their Section 125 plans, is Manley Services. “We’ve always had Manley for our Section 125 plans, since we started our benefit programs in 1996,” says Pine. “We started with just the Section 125 pre-tax premium with Manley, then we added the spending accounts in 1998. We just added COBRA administration outsourcing, Feb 1, 2000. Everything they do, we want them to do it for us.” “I contact Stan Manley and his team in Eugene, and also Alan Peksa on occasion, specifically with questions about the spending accounts, and they’re always very prompt and thorough in their response,” she says. “Our employees come up with some pretty unique questions. I can answer most of them, but once in a while I need to count on Manley for that.” Employees at BSQUARE also appreciate Manley’s service. “People love that Manley pays claims every day, they love that the claims are reimbursed promptly. And when they call to ask questions, there’s a knowledgeable and courteous staff there to help them. That’s what you need,” says Pine. “Manley is by far our favorite vendor,” Pine continues. “I can count on Manley. I’d like to be able to say that about every vendor we have. I have worked with other (Section 125) vendors, and Manley is head and shoulders above them as far as I’m concerned.” This kind of praise is obviously well-received at Manley. But Caprice Pine’s final comment really made all of us at Manley smile. It’s what we strive for in each of our client relationships. “Every time I’m with a professional HR organization and they’re asking about administrators and who we’d recommend,” she says, “I have no hesitation in recommending Manley.” Dependent Care Spending Account Rules Increase Participation in Your Dependent Care Account As an employer, you put time, thought and effort into creating a meaningful benefits package for your employees. You want to be sure that they understand, and take advantage of, the benefits you offer. At Manley Services, our job is to make it as simple for you as possible for your employees to understand and use your flex plans. One area which is often underutilized is the Dependent Care Spending Account. It works in much the same way as the Health Care Spending Account, and can have equally outstanding results for your employees. Here are answers to a few of the questions we get most often. These may help you communicate this valuable benefit to your employees. Question: How does the Dependent Care Spending Account work? As they would in the Health Care Spending Account, employees estimate their dependent care costs at the beginning of each plan year, and schedule deductions from their pay accordingly. As funds are deducted, they are sent to Manley. When the employee is billed by their care provider, they submit a copy to Manley for reimbursement. Bear in mind that Manley can only reimburse up to the amount that has been deducted from pay; we are not allowed to ’pay ahead’ as we can with the Health Care Spending Account. Of course, we work quickly to speed the reimbursement process. Question: Who is a “'dependent”? A dependent for this purpose is a child under the age of 13, or someone you can claim as a dependent on your tax return, for whom you pay for daycare, and who is physically or mentally unable to care for themself. The daycare must allow you (and your spouse, if applicable) to work. Question: Does Kindergarten count? Yes, to the extent that it is daycare. If your child below first grade is in a program that includes after school care, and the cost for each can be separated, then only the daycare portion counts. Question: Can I use it to pay for a nursing home for my elderly relative? No, it is only usable for daycare that allows you and your spouse to work. Question: What about summer camp for my children? You can use the Dependent Care Spending Account to pay for day camp, if it allows you to work, but not for sleep away camp. Question: Do I still need to file Form 2441 if I use the DCSA? Yes. The Internal Revenue Service still wants to know the name of your daycare provider, so you are still responsible to file Form 2441 with your tax return. Question: Should I use the DCSA or take the child care tax credit on my 1040? Of course, you should consult your tax advisor to get an answer to this one. But we can tell you from experience that many people benefit more from paying for dependent care on a pre-tax basis than they do from the tax credit - some by double. Manley Services wants to help you encourage your employees to utilize the benefits you offer. If you need help communicating this program, contact us. We can get you copies of articles, or schedule an employee meeting. Call us at (541) 485-7488 or (800) 422-7038, or email your request to sales@manleyserv.com. We are pleased to say “welcome back!” to Kim Apo. Formerly a renewal coordinator in our Seattle office, Kim left Manley for a while, but has now returned. She is working in our Eugene office, in the sales department with Stan. You can contact her at extension 106. For most of our clients, it is almost time to file 5500’s. As always, we are happy to help you prepare the forms, including Schedule F. Please keep in mind, though, that it is the company’s responsibility to sign and file the forms. They must be filed within seven months after the end of the Plan Year, which for most companies means a due date of July 31. If you have questions about filing your 5500, please call Bonni Strong at extension 106. Need some help communicating your flex plans to employees? Manley Services can provide your company with sample articles for use in your company newsletter. Call or email with your request. For customer service, call us at (541) 485-7488 or (800) 422-7038, extension 107. You can email us with questions or requests at sales@manleyserv.com. Either way, we’re happy to hear from you. Like the other employees at Manley Services, Kady Potts is versatile. Although this six-year employee works “primarily” in claims, Kady says that Manley has trained her to perform many of the functions required by their clients. That’s one of the reasons she likes her job - it’s never boring. Kady was hired a year or so after high school. Experience? “I didn’t have a whole lot of it!” she laughs. But the company saw the potential in her, and “they just trained me from the start.” Besides her claims department role, Kady, like most everyone at Manley, has been trained in billing and customer service. “We rotate that. And when I first started out, I started doing filing and helping stuff the reimbursement checks, and just a little bit of everything.” Born in Springfield, Oregon, Kady has been a small town girl all her life. “Most of my family is in town, in or around Springfield,” she says. “My grandma lives in La Pine, so usually when she comes into town we all get together and have dinner and gossip.” A big part of Kady’s family life are her two children, seven-year-old daughter Kejana and four-year-old son Bryant. On the weekends, she says, she enjoys just being with them, doing the things moms and kids do. “We like to go to movies; we like comedies. My daughter’s really into Pokemon, but she doesn’t have a lot of the stuff. It’s mostly just talk. The kids like bike riding, roller blading, watching cartoons. Kind of the typical kid stuff.” When Kady looks ahead to her future, she sees opportunity. “What I’d really like to do eventually,” she says, “is get into college and just further my education a little bit.” She is interested in work-related subjects, like business, and also “other things not even related to work, like history. I’d just like to continue my education a little bit because I kind of skipped that part of it.” Kady is very happy that she came to work for Manley Services. “I was really lucky to get this job, because it’s just helped me out so much. I love it,” she says. The best thing about it? “The teamwork. Everyone really works together to get things done.” With Manley, she says, clients expect—and get—professionalism and friendly service at the same time. “We really try to work on customer service,” says Kady. And that’s one reason clients stay with Manley. Kady herself is another. Questions: That’s Kind of Personal Isn’t It? Sometimes you or your employees may wonder why we need to ask certain questions when we process claims on your flex plan. The short answer is, ’to keep your plan in compliance with Internal Revenue Service rules.’ Of course, we think the long answer is much more interesting, so here it is. Internal Revenue Code section 125 requires certain things of plan administrators (generally the employer) and plan service providers (like Manley Services). Before we can reimburse a claim, we must use a good faith effort to make sure that the expense was 1) incurred during the plan year, and 2) medically necessary. We must also verify the amount, by reviewing a receipt. In general, prescription drugs are eligible for reimbursement. However, any drug prescribed for cosmetic purposes is not eligible. Any drug available over the counter is not eligible, even if your doctor writes a prescription for it. Some over the counter products are eligible, if the provider (ie, doctor) confirms medical necessity. For instance, orthotics to correct a problem with high arches are eligible with a doctor’s prescription, even though they are available over the counter. While employees plan ahead for the coming year, they can call us to confirm whether or not an anticipated prescription or procedure is eligible. We are happy to let them know ahead of time, with complete confidentiality. We realize that medical information of any kind is sensitive. We want employees—and you, as employer—to know that we keep this information strictly confidential, between us and the individual employee. These requirements protect them and you, because they allow the plan to keep its tax qualified status. We strive to handle this privilege in a secure, professional manner.
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