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Proposal to Implement For GROUP NAME Flexible Spending Account (FSA) Dependent Care Account (DCA) Transit and Parking Account (TRN/PKG)

Introduction to Choice StrategiesChoice Strategies is a Third Party Administrator (TPA) that was founded in 2001 on the premiseof demonstrating to employers how to dramatically reduce healthcare costs while maintaining ahigh level of benefits for employees. Choice Strategies administers a wide variety of productsand services that can be customized to meet the financial goals of each employer, while offeringemployees the coverage they deserve. Choice Strategies is known for extreme flexibility in plandesign, 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 byintroducing a succession of products, services, and tools that can be easily customized foremployers and employees alike.Choice Strategies was acquired by WageWorks, a national leader in the consumer-directedbenefits arena, in January 2012. As a division of this nationwide company, we possess addeddepth and have access to human and technical resources that allow us to continuously expandour solution set. WageWorks’ sole focus has been to provide consumer-directed benefitaccount solutions to employers of all sizes. Today, WageWorks is the largest independentadministrator in the United States serving over 29,000 employers and over 3.2 millionparticipants.Today, Choice Strategies administrative services include:  Industry leading service and support  The Choice Strategies debit card for the payment of providers and other vendors  Substantiation of card transactions  Processing of submitted claims  Claim payments via check or direct deposit  Enrollment materials and employee communications  Online portal access for employees and employers  Plan document production

Flexible Spending Accounts (FSA) OptionalA Flexible Spending Account (FSA) is a tax-advantaged plan that an employer can offer as avoluntary benefit to their employees. Employees can choose to contribute funds pre-tax viapayroll 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 tocontribute to the employee’s FSA, and take a tax reduction for any of the employercontributions.Features of an FSA:  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  Pre-tax employee contributions to FSA are limited to $2,550 for plans effective in 2015  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:  Orthodontia  Vision  In-Network Deductible  Diabetic Testing Supplies  Co-Pays  Limited Over-the-Counter  Coinsurance  Prescriptions (Rx) expenses (OTC medicines  Out-of-Network Expenses  Dental require a prescription)**Employees should elect to contribute FSA funds to pay for predictable out-of-pocketexpenses. If the employee does not utilize their entire FSA election by the end of the planyear, the employer can choose to offer a Grace Period, a Carryover or neither. With a GracePeriod, employees can continue to incur expenses in the first 2 ½ months of the new plan year,but use their previous plan year funds. 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 aCarryover – it has to be one or the other). Any unused funds remaining will be forfeited to theemployer. The employer will choose whether to offer a Grace Period, a Carryover or neitherwhen filling out the Master Application.

Dependent Care Accounts (DCA) OptionalA Dependent Care Account (DCA) is an employee-funded account that can be used to pay forcustodial care of eligible dependents while the employee is at work. Eligible dependents includechildren ages 13 and under, as well as disabled children, spouse or parents.Features of a DCA:  DCA contributions are pre-tax for employer and employees  DCA contributions are “use it or lose it” for the employee  “Pay as you go” - not prefunded by the employer, funding becomes available to the employees as it is contributed through payroll deductions  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)  Elections can only be changed if there is a qualifying eventEmployees 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, anemployer offers an FSA and DCAbenefit and employees elect tocontribute $32,500 pre-tax.The employer does not have topay the 7.65% payroll tax on theemployee contributions. This leads to an annual taxsavings of $2486.25. After paying a year’s worth ofChoice Strategies administration fees, the employersaves 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 some dependent care providers with their Choice Strategies debit card.

Transit and Parking Accounts (TRN/PKG) OptionalA Transit and Parking Account is a tax-advantaged plan that is funded by employees oremployers, to be used to pay for eligible commuter-related expenses. Using pre-tax dollars topay for the expenses to commute increases employees’ take-home pay, and reduces the taxliability to the employer.Features of a Transit and Parking Account:  Transit and Parking Account contributions are pre-tax for employer and employees  The 2015 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.

Operation and Functionality of the Choice Strategies PlanPlan Start-Up Process (Implementation)There are three main components to implementing a new plan with Choice Strategies: theMaster Application, the ACH Authorization Form and the employee enrollment information.1. 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:  Contact information  Administrator contacts for the employer  Eligibility information  Plans to be offered  Funding amounts  Eligible expenses2. 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.3. 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 : [email protected]  Fax : 1-888-4156471  Mail : Choice Strategies P.O. Box 2205 South Burlington VT 05407When Choice Strategies receives the Master Application, a confirmation email from theImplementation Department is sent to the employer and producing broker.

Plan Configuration and Plan Document CreationChoice Strategies plans will be configured and plan documents created based on employerdecisions indicated on the Master Application.Plan Documents Include:  Adoption Agreement (Outline)  Plan Document - for employer reference  Summary Plan Description - to hand out to all participants  HIPAA Privacy NoticeDuring the implementation/set-up process, plan documents will be created and uploaded to asecure online Administrative Guide. This Admin Guide will be a central location where plandocuments, amendments, invoices and helpful employee forms and audio-visual presentationscan be accessed at any time by the employer or broker.Once implementation is complete, employers and brokers will receive an email containingcontact information for their Client Service Account Manager or Regional Team as well as thesecure login information for administrative access to the employer’s Admin Guide.Enrollment ProcessOnce Choice Strategies receives the initial enrollment forms or templates, employee accountsare established in our system and Choice Strategies debit cards will be produced and mailed toeach participating employee and spouse (if applicable). Cards come in plain white envelopesand are mailed with a welcome letter to the employee’s home mailing address by default. TheChoice Strategies debit card is activated upon first use.After initial implementation, the employer contacts/administrators can provide futureenrollments, changes in status or employee terminations to Choice Strategies via oureligibility 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 orchanges, eligibility information can also be sent via our enrollment template to:  Email: [email protected]  Fax : 1-888-415-6471  Mail : Choice Strategies P.O. Box 2205 South Burlington VT 05407

Online Open Enrollment:At plan renewal, employees that have, or are planning toadd an FSA, DCA, Transit or Parking account will be ableto easily enroll online and enter their payroll electionsduring the Open Enrollment period. Online OpenEnrollment at renewal is now the default for most FSA,DCA, Transit and Parking plans. Groups may alternativelychoose paper enrollment or auto-renewal upon request, ifenrolling online is not convenient for their employees.To enroll online, employees will only need internetaccess and an Employer ID which is created uponthe group setup. Employers will be provided aresource handout to share with their employeesthat can be customized with the group planinformation. The handout also includes links to astep-by-step video walking them through the onlineenrollment process.At the close of open enrollment, employers will receive an email notification at which time theycan run the appropriate payroll reports (using instructions provided).While Online Open Enrollment is not standard for new groups, it may be available upon requestat implementation for select groups that have sent in a completed application a minimum of 2-3months before their plan’s effective date. Availability will be determined dependent on timelyreceipt of all necessary documentation and timeframe available before the plan’s effective date– please submit your request at time of application.

Debit Card FunctionalityChoice Strategies offers a convenient, vendor-specificMasterCard for employees to access their plan(s) funding.The Choice Strategies debit card can contain multiple planson one card by designating merchant category codes thatare eligible on a specific plan and placing priority on whichaccount 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”, aDoctor’s office, is considered “Doctor’s Office,” and a Hospital is coded as “Hospital.” ChoiceStrategies limits the open codes on each of the plans, based on what eligible expenses theEmployer designates. Limiting the credit card codes prevents employees from using the card atnon-eligible facilities, such as a gas station or restaurant.Choice Strategies will automatically issue debit cards to each participating employee andspouse (if applicable) If an employee needs an additional debit card for another dependent onthe account, such as a college-aged child, the employee can contact Member Services torequest an additional card at no charge. The employee, spouse and dependent(s) cards pullfrom the same balance and can be used for any eligible participant on the plan, regardless ofthe name on the individual debit card.

Substantiation and Adjudication ProcessThe IRS stipulates that the plan sponsor (employer) ensure that plans are properlysubstantiated. In other words, purchases made with Choice Strategies debit card must beproven to be eligible under the plan.Choice Strategies substantiates purchases made with Choice Strategies debit card via thefollowing 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 ineligibleitems at the point of purchase. Simply put, Choice Strategies debit card only works for eligibleprescriptions and limited OTC purchases at participating retailers. Ineligible purchases will bedenied at the cash register. This system eliminates the need to request receipts for point of salepharmacy purchases. Co-Pay MatchingThe Choice Strategies debit card can be set to match the co-pay(s) of the underlying health plandesign. Requests for documentation are not generated for transactions in which co-pays havebeen matched as the expense has been deemed substantiated. Request for Documentation ProcessRequests for Documentation, also called receipt requests, are generated and sent to employeesfor those transactions that cannot be substantiated through other listed methods. Employeesare requested to provide the necessary documentation (generally Explanations of Benefit (EOB)or provider statements) for substantiation of transactions and/or claims. Substantiation ServiceChoice Strategies offers a voluntary substantiation service to all employees that will help to limitthe number of documentation requests sent to employees for medical transactions on theirChoice Strategies. Through this voluntary service, employees grant Choice Strategies access toreview their health insurance account online. When a transaction occurs or a claim issubmitted, Choice Strategies logs in to the employee’s online insurance account and views theinformation necessary to substantiate the medical services paid for with the card.Documentation is not requested for these transactions if the information from the health planmatches the transaction and if the services are eligible under the plan. Enforcement of Substantiation RequirementsOccasionally an employee will disregard receipt requests or forget to send in requesteddocumentation. To protect employer money and keep the plan in compliance, employees’Choice Strategies debit cards are automatically deactivated in cases in which participants donot send in requested documentation after multiple requests. The cards are reactivated uponreceipt of requested documentation. Employers may choose to waive the card deactivationfeature on a plan-wide level on the Master Application; however, employers should note that inthe event of an IRS audit the plan may be found to be non-compliant. Employers can alsocontact their client service team to reactivate a specific employee’s card at any time.

Claims SubmissionEmployers can choose whether to offer a debit-card based plan or require employees to submitclaims for reimbursement instead of having access to a debit card. Even with Choice Strategiesdebit card-based plans, some members choose to submit claims for reimbursement rather thanuse the debit card. How Employees Submit Claims for ReimbursementClaim forms are available on our website or if an employee does not have internet access, theycan contact Member Services to have a claim form mailed to their home address.Employees can submit claims and documentation:  Online: www.choice-strategies.com by logging into their online account  Mobile App: claims can be submitted via mobile devices or tablets  Email : [email protected]  Fax : 1-888-415-6471  Mail : Choice Strategies P.O. Box 2205 South Burlington VT 05407Employees 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 (this option available for online submission only) Average processing time for submitted claims is 2 business days from receipt.

ServiceChoice Strategies is known for our commitment to exceptional service and constant innovationto provide the best resources to all our constituents: brokers, employers and employees.Client ServicesChoice Strategies Client Service teams are an excellentresource for employers and brokers. Client Servicerepresentatives answer employer and broker questionsabout existing plan designs, day-to-day planadministration and compliance concerns, questions aboutreporting and invoicing, new hire and termination inquiriesand much more.Choice Strategies Client Service Department is split intoregional teams to best serve each employer/client andprovide a personalized experience.Training DepartmentChoice 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 howto terminate an employee from the Choice Strategies Plan among other helpful topics. To viewthe webinar schedule or request a webinar, employers can go to www.choice-strategies.com tothe Employer tab and check the Employer Education Center or contact Client Services for moreinformation.At the employer’s request, the Training Department also develops plan-specific webinars thatcan be scheduled for employees at enrollment or any time during the plan year. Plan-specificwebinars can be a great educational resource for employers and employees.Member ServicesChoice Strategies prides itself on exceeding all service expectations for our employer clientsand employee members. Our Member Service team receives extensive on-going training inmultiple internal Choice Strategies departments, as well as training on the most recenthealthcare changes.Choice Strategies Member Service Representatives answer a wide variety of questionsanywhere from basic balance and forgotten passwords to resolving claim denials, or ineligibleexpense refunds. Member Service Representatives are strong patient advocates, and willconference call a provider or carrier with the member to help educate all parties, and resolve asituation 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 toolsChoice Strategies recognizes the importance of education for all of our constituents and strivesto offer the most comprehensive suite of tools and resources in the industry.WebsiteChoice 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 Tools and 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 PortalEach 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 otherreports on an as-needed basis.

Member PortalEach employee can set up their individual online account to manage their Choice Strategiesplans 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. Theemployee will also have the opportunity to provide answers to security questions in the instancethat 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 InformationMobile AppAvailable for iOS (Apple) and Android-enabled mobile devices and tablets, the ChoiceStrategies app can be downloaded free of charge. Members can create an account, checkaccount balances, view recent transactions, submit claims and upload a receipt or supportingdocumentation.

Administration FeesFees are based on the number of participating employees as outlined in our Fee Schedule: Initial Setup Fee (All Plans):Setup Fee for All Plans $250 plus $3.00 per employeeMonthly Administration Fee: Per Enrolled EmployeeFSA / DCA / TRN / PKG Plans $5.25Plan Changes and Renewal:Renewal Fee $100 plus $3.00 per employeeThe following are Included with Plans at No Additional Fee: Dependents are included in all applicable plans at no additional cost 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 ServiceFor More InformationThank 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 donot hesitate to contact:Debbie Dillenschneider, CBCSMB Sales ExecutiveChoice Strategies: 888-278-2555 | Direct: 856.912.7442 | Fax: 888.415.6471Email: [email protected]