Revised_ATTM 1a_PERFORMANCE WORK STATEMENT 2025-05-08.docx

Revised 5/8/25 ATTACHMENT 1a

PERFORMANCE WORK STATEMENT (PWS)

Flexible Spending Account (FSAFEDS) Administration

BACKGROUND

Objective The U.S. Office of Personnel Management (OPM) requires the services of a qualified third-party administrator to administer health and dependent care flexible spending accounts on a self-supporting basis for active Federal civilian employees and eligible uniformed service members (Federal employees). Federal employee enrollment in Flexible Spending Accounts (FSAs) will be voluntary.

OPM’s Role/Need for Flexible Spending Accounts (FSAs) OPM is the executive branch agency with primary responsibility for the Federal Government’s human resources management policy and structure. As part of its basic mission, OPM administers the Civil Service Retirement System (CSRS), Federal Employees Retirement System (FERS), Federal Employees Health Benefits (FEHB) Program, Federal Employees Dental and Vision Insurance Program (FEDVIP), Federal Employees’ Group Life Insurance (FEGLI) Program, and the Federal Long Term Care Insurance Program (FLTCIP). OPM also exercises a leadership role in the development of new benefit programs for Federal employees.

At the direction of the President, OPM implemented a Health Insurance Premium Conversion Plan in October 2000 for approximately 1.6 million executive branch employees who participate in FEHB. OPM also conducted a study of design and pricing options for implementation of medical and dependent care flexible spending accounts across the executive branch. These accounts – also referred to as reimbursement accounts – provide tax advantages authorized under the Internal Revenue Code and are widely used by both private and public employers in the United States. In the years since their development, flexible spending account programs have become an expected benefit that is popular among employees. Additionally, in June 2023, the President directed the Department of Defense to coordinate with OPM to establish flexible spending accounts for the care of military dependents.

From the employee's perspective, flexible spending accounts offer an attractive opportunity to convert some health care and dependent care expenses from an after-tax expense to a pre-tax expense or to provide for benefits that may not be provided on a pre-tax basis through the employer’s health benefit program. On benefit attitude surveys for individual employers, the robustness of the employer's health benefit package regularly ranks in the top two or three factors in importance of employee attitudes toward flexible spending accounts relative to other benefits.

It is important for the Federal Government to provide FSAs for likely participants because the demographics of the Federal workforce show that we can anticipate substantial retirements in the next few years. The Federal Government must compete energetically to recruit high-quality workers and to retain gifted and experienced workers. With many Federal employees eligible to retire by the year 2026, the Government must be able to attract and keep an excellent and high-performing workforce.

Many private and public sector employers have offered FSAs and other pre-tax benefits to their employees for years and now consider health care and dependent care flexible spending accounts an integral component in making their benefits packages attractive to both prospective and current employees. Employees who have worked in the private sector or in parts of the public sector have come to expect that FSAs for medical and day care expenses will be available. The Federal Executive Branch must remain competitive with private employers and state and local governments. Continuing to offer pre-tax spending accounts as a component of the Federal benefits package will help us to recruit and retain the top-performing employees the Government needs.

This PWS is intended to describe the requirement for third party administration services for the Federal Flexible Spending Accounts Program (FSAFEDS) to allow OPM to continue offering this benefit to Federal employees.

The Federal Flexible Benefits Plan In 2000, OPM implemented pre-tax premium conversion benefits for the Federal Executive Branch and other adopting agencies. The Federal Flexible Benefits Plan (FedFlex), as currently structured, allows employees to allot on a pre-tax basis from their pay the amount of their share of premiums paid for participation in FEHB. OPM adopted the plan on behalf of the Federal Executive Branch and accepted adoption agreements from other agencies with eligible employees.

FedFlex is a cafeteria benefits plan under Section 125 of the Internal Revenue Code. OPM enhanced FedFlex to implement health care and dependent care flexible spending accounts in 2003.

Features and operation of the premium conversion plan and FSAs are described in the FedFlex plan document at Appendix A and in regulations issued by OPM. These regulations may be found at 5 CFR Part 892.

Profile of Employees/Enrollment History Refer to Appendix G for enrollment data for each of the three FSA types covered by FSAFEDS; Healthcare FSA (HCFSA), Limited Expense Healthcare FSA (LEX HCFSA) and Dependent Care FSA (DCFSA) since 2010. Refer to Appendix B for demographics available for active Federal employees eligible to participate in FSAFEDS.

INFORMATION SECURITY AND PRIVACY

1. Basic The Contractor shall maintain the security and confidentiality of all records and files. The Contractor shall comply with Health Insurance Portability and Accountability Act of 1996 (HIPAA) Electronic Data Interchange (EDI), the Privacy Act of 1974, and all other applicable privacy and security laws, rules, clauses, and regulations.

Additional Requirements for the Intelligence Community The Contractor shall comply with any/all additional security and confidentiality requirements of intelligence community agencies listed in Appendix E.

Authorization To Operate (ATO) The Contractor cannot start administering the Federal Flexible Spending Account Program without first obtaining an authorization to operate (ATO) from the designated OPM Authorizing Official. This could be up to a 6-month process. All costs for obtaining an ATO shall be included in the price quoted for Start-Up Period/Start-Up Pricing, Contract Line Item Number (CLIN) 00001. Refer specifically to OPM Clauses 1752.239-74 and 1752.239-75 for further detail on ATO, Federal Risk and Authorization Management Program (FEDRAMP) and Cloud Computing requirements.

In accordance with OPM Clause 1752.239-74(c), the Contactor shall submit the signed Security Assessment and Authorization (SA&A) to OPM at least sixty (60) days prior to operation of the IT system. In order to meet the deadline to go live with operation on January 1, 2026, the Contractor shall submit its signed SA&A no later than October 30, 2025. In addition, the Contractor shall participate as requested by OPM in the completion of a Privacy Impact Assessment, which must be approved and signed by OPM’s Chief Privacy Officer prior to obtaining the ATO.

Once the Contractor submits their documentation for review and approval for the initial ATO, the OPM CIO Cybersecurity office will utilize OPM’s Security Authorization Policy and Procedures which are based on the National Institute of Standards and Technology (NIST) Risk Management Framework (RMF). The supporting OPM Information System Security Officer (ISSO) will advise the Contractor throughout the process to help ensure the documentation is adequate.

The duration of the ATO is determined by the OPM Authorizing Official. The length of ATO is based on the risk the Authorizing Official is willing to accept, up to three years. As such, the ATO will expire at least once within the performance period to be covered by this contract. The ATO must be renewed before expiration, as indicated in OPM Clause 1752.239-74. At least 90 days before the expiration of an existing ATO for security review and verification of security controls. The Contractor shall plan ahead for ATO renewal to be required at least once during the period of performance of this contract and shall price its performance during the entire ordering period accordingly. Ultimately, failure to timely achieve and/or maintain an ATO throughout the term of the contract may be considered by the Government as grounds for Termination for Cause.

Additional IT Compliance Requirements Refer to the OPM Specific IT Clauses included in this contract for additional compliance requirements that may apply. The Contractor shall comply with all IT clauses included unless otherwise instructed in writing by the Contracting Officer (CO). Furthermore, FSAFEDS systems must provide architecture flexible enough to support technical, business, and mandatory Federal requirements, including all current and future cybersecurity and privacy Executive Orders, without inhibiting or limiting functionality or user experience.

In order to comply with Executive Order 14028, system logs required by the Executive Order must be provided to the OPM Chief Information Security Officer (CISO).

The OMB Memorandum M-23-22 (OMB M-23-22), Delivering a Digital-First Public Experience (Sept. 22, 2023), requires agencies to generally use a .gov domain name for public-facing websites and digital services that are used for official communication. The Contractor shall comply with direction from OPM regarding use of the appropriate domain name in accordance with OMB M-23-22.

The Contractor is responsible for the costs to meet evolving government IT requirements and maintain certifications.

Right to Terminate for Security Non-Compliance If at any time during Contract performance it is determined that the Contractor is not in full compliance with any of the security or privacy requirements of the awarded contract, the Government reserves the right to terminate this contract for cause under FAR 52.212-4(m).

SCHEDULE/PERIODS OF PERFORMANCE

This requirement is limited regarding the maximum contract length because of the need for inclusion of the Service Contract Act (FAR 22.1002-1). Because of the long start-up period required to achieve an ATO, the expiration of the existing contract on December 31, 2025, and the plan years being set to begin on each calendar year by Internal Revenue Service (IRS) regulation, the actual performance under this contract will encompass a maximum of only 54 months, broken down as a 6-month Startup Period, and a 48-month ordering period.

1. Startup Period – (approx. 6 months) Date of contract award through receipt of ATO. During this period, the Contractor shall perform all tasks required to take over administration of FSAFEDS participant accounts with the completion by December 31, 2025 when the current contract expires. Additional details about the tasks required for Start-Up are located in the Contract Transition section of this PWS.

Performance/Administration Periods From receipt of Authorization to Operate (ATO) through end of contract, the Contractor shall provide an IRS compliant, healthcare flexible spending account and/or dependent care flexible spending account for all eligible government employees choosing to enroll. Details of performance are listed in the section titled Performance later in this document.

1. Open Season Enrollment Period – annually, generally beginning Monday of the second full workweek in November through the Monday of the second full workweek in December.

2. Health Care FSA Plan Year – each Health Care FSA plan year runs from January 1, or first day of coverage if enrollment is outside of Open Season through December 31 or last day of coverage if eligibility is terminated before December 31.

3. Dependent Care FSA Plan Year – plan year runs from January 1 or the first day coverage if enrollment is outside of Open Season through March 15 of the following year or last day of coverage if eligibility is terminated before March 15 of the following year.

4. Carryover periods – Carryover is available for participants enrolled in Health Care (HCFSA) and Limited Expense Health Care (LEX HCFSA) FSAs who meet requirements stated elsewhere in this PWS. Carryover allows eligible participant may utilize a limited amount of excess HCFSA or LEX HCFSA funds from the previous benefit period/calendar year for expenses incurred in the new benefit period/calendar year.

End of Contract

1. In the final period of performance, the Contractor shall continue to perform ALL functions through the end of the calendar year of this contract, including Open Season activities for the upcoming calendar year, and performance shall be maintained at the same level of effort and quality regardless of whether the Contractor has been awarded a new contract to perform in the upcoming calendar year, or a different contractor has received the next award.

2. At the end of the contract, the outbound contractor shall transfer administration of the FSAFEDS program, website, phone numbers, and all accounts to the incoming contractor as detailed in the Contract Transition section of this PWS.

a. The app(s) will not be transferred from Contractor to Contractor. Each new Contractor is expected to develop their own app(s).

b. The same web address (www.fsafeds.gov) shall transfer from Contractor to Contractor.

c. The same phone number (1-877-372-3337) shall transfer from Contractor to Contractor.

I. GENERAL INFORMATION

1. Basic

1. The Contractor shall conduct and process all enrollment activities for eligible persons.

2. The Contractor shall interface with more than a hundred federal payroll interfaces in a wide variety of formats, usually through BENEFEDS. BENEFEDS will interface on the Contractor’s behalf.

3. The Contractor must invoice the appropriate Agencies directly for Administrative Fees and Risk Reserve fees.

4. The Contractor shall handle enrollment, interactive voice response (IVR) systems, customer service, and other customer service functions.

5. The Contractor shall provide basic administrative training and materials approved by OPM to OPM and applicable personnel at other participating agencies.

6. The Contractor shall utilize BENEFEDS reconciliation processes to ensure that the participants and allotments from each payroll interface accurately reflect the Contractor’s records, and to contact employees and make adjustments as needed.

7. The Contractor shall perform the applicable discrimination tests for FSAFEDS.

8. The Contractor shall provide a seamless link from Employee Express, an online portal where Federal employees can check their payroll deductions and elect health coverage, and any other requested benefit interface or agency website to the Contractor’s website for FSAFEDS.

9. The Contractor shall provide auto-adjudication for greater than 80% of FSAFEDS claims.

10. The Contractor shall determine if a requested change in a participant’s election is permitted as an IRS approved Qualifying Life Event (QLE).

11. The Contractor shall provide each participant with a statement of the amount of any balance subject to forfeiture in his or her account no later than 60 days before the deadline to incur eligible expenses, each benefit year.

12. The Contractor shall provide an email confirmation notice to each participant stating the participant’s election, change in election, account balance, amount subject to forfeiture, etc., upon participant or OPM request.

13. The Contractor shall provide the enrollment, financial, reconciliation, and other files to BENEFEDS as described elsewhere in this PWS.

14. The Contractor shall migrate all claims history from the previous Contractor for the year they begin contract administration and the previous calendar year. Two years’ history of claims must be searchable for the purposes of responding to inquiries from program participants, OPM and congressional inquiries. The outgoing and incoming contractors will need to coordinate on the format.

15. The Contractor shall evaluate, process, and respond to any requests by an individual for access and amendment to their records made pursuant to the Privacy Act of 1974.

16. OPM adopted the plan to for the Federal Government, including all Federal Executive Branch agencies. Other Federal agencies, branches or related employers that employ persons eligible for this plan may become Adopting Employers of the plan by executing an adoption agreement. Adopting employers may adopt the plan with a different effective date than that for the Federal Executive Branch. The Contractor shall facilitate the process to bring these adopting employers and their employees into the program.

B. Ownership and Place of Performance Restrictions

1. The Prime Contractor and all subcontractors must be U.S. Owned, physically doing business within the 50 United States or the District of Columbia.

2. All performance under this Contract must be conducted within the 50 United States or the District of Columbia.

3. All employees (and subcontractor employees) supporting performance of this Contract must be physically located within the 50 United States or the District of Columbia.

PERFORMANCE

1. Plan Design The following summarizes the MINIMUM key elements of the plan design the Contractor’s plan shall deliver.

Eligible Employee Population OPM expects the total eligible population for FSAFEDS to be approximately 2 million people at present. That figure is subject to change.

· Eligible participants for the Health Care FSA (including LEX HCFSA) include those described in Section 2.12, Paragraph (a) of the FedFlex.

· Eligible participants for the Dependent Care FSA include those described in Section 2.12, Paragraph (b) of the FedFlex.

Employee Eligibility Date

· For the Health Care FSA, all eligible Federal employees of Executive Branch agencies and Adopting Employers may participate immediately upon hire, with the exception that Temporary Federal employees are eligible upon completion of one year of continuous service in the job position.

· For the Dependent Care FSA, all Federal employees of Executive Branch agencies and Adopting Employers are eligible immediately upon hire.

Covered Employee Choices Each covered employee will be able to elect one or both of the following:

· A Health Care Flexible Spending Account to a maximum annual election of $3,300 per participant,

· A Dependent Care Flexible Spending Account to a maximum annual election of $5,000 per household ($2,500 if married filing separately).

(Note: These maximum elections may change based on IRS regulation)

1. Covered Services Eligible Health Care Expenses and Eligible Dependent Care Expenses are defined in the FedFlex Plan Document, Sections 4.3.1(c) and 4.4(c) respectively.

2. Government Contribution to FSA accounts None. Employees pay all via allotment taken pre-tax via payroll deductions.

3. Allotments Minimum annual allotment of $100. See Appendix H - Definitions for a definition of the term allotment.

4. Open Season Period for Enrollment Applicants may enroll as part of the annual Federal Benefits Open Season in the fall of each year with elections effective the following calendar year. The section on Customer Service has more detail on the Open Season period. Each year, Open Season runs from the Monday of the second full workweek in November through the Monday of the second full workweek in December.

5. Claim Payments Weekly payments, with a minimum of at least $10. At their discretion, the Contractor may choose to utilize a payment schedule that is more frequent than (exceeds) the minimum, or which uses a lower dollar threshold for payments. This minimum does not apply to debit card transactions.

Education, Marketing, And Enrollment The Government intends to maintain and increase FSAFEDS enrollment in 2026 and beyond.

The Contractor shall focus on targeting the major education and marketing campaign to integrate with the Fall 2025 Federal Benefits Open Season activities and materials. Please refer to OPM’s web site www.opm.gov/openseason for the types of information we provide about the annual open season in general, and each of our health, dental, and vision carriers specifically. In addition, Contractors should review the OPM-sponsored FEHB/FEDVIP plan brochures in the Appendix D.

1. Education and Marketing The Contractor shall provide education and marketing services as required below.

a. The Contractor shall conduct a multi-dimensional, cost-effective and creative FSAFEDS education and marketing campaign for the entire contract term. The campaign may include printed materials, web-based materials, in-person presentations, videos, webcasts, webinars and other media resources.

b. The Contractor shall provide a detailed plan for the annual enrollments that occur during the Federal Benefits Open Season.

c. The Contractor shall conduct enrollment of newly eligible persons throughout the plan year and shall provide a detailed plan for successful ongoing enrollment activities.

d. Enrollment in the plan shall be through the following vehicles and methods: (a) web based interactive enrollment that must, to a reasonable degree, be compatible with current web browsers and mobile devices; (b) customer service representatives; and (c) paper-based enrollment forms.

e. The Contractor shall provide information about the availability of FSAFEDS to all employees (mainly via their agencies).

f. Enrollment opportunity shall be provided to all eligible Federal employees, including employees located in other countries.

g. The Contractor shall provide all communication and enrollment materials. OPM reserves the right to review and approve all literature, materials, forms, presentations, etc. The Contractor shall discuss, plan, and schedule all communications events with OPM and participating agencies’ human resources personnel before implementation. All materials must be branded as FSAFEDS.

h. The Contractor’s customer service staff shall be knowledgeable about the OPM Sponsored FEHB Program and the FEDVIP Program (see Appendix D for plan brochures) and be able to assist eligible persons to make informed decisions about whether to participate in FSAFEDS and what amount to contribute.

i. The Contractor shall provide web-based educational material, including the ability for individuals to model potential tax savings. OPM reserves the right to review and approve in advance any information to be included on the FSAFEDS’s website for FSA education, customer service, and enrollment.

j. No later than the Federal Benefits Open Season in November 2025 and each year of performance thereafter, the Contractor shall provide the following information as part of an educational campaign and/or part of product specific marketing materials:

· The principal benefits and coverage available under FSAFEDS.

· How the Health Care FSA can be used effectively;

· How Dependent Care FSA benefits and coverage compare to the available childcare tax credit and current government subsidized day care programs.

· Forfeitures, and how to minimize them.

· Representative examples of the potential income tax and FICA savings. The information shall also include the projected effect on social security retirement benefits of pre-tax reductions.

· Description of the changes in family status that will allow enrollees to change their elections.

k. The Contractor shall host and operate a specific website for FSAFEDS. The website must include at least the following services and information: secure participant login, account information, claim information status, online claim submission, enrollment portal, list of eligible expenses, program information, claim forms, laws and regulations, link to OPM’s website, customer service contact information, website privacy policy and Privacy Act statement approved by OPM, and a tax savings calculator.

l. The Contractor shall propose the best use of the vehicles listed in Appendix C, Communications Vehicles.

2. Enrollment The Contractor will provide various means of participant enrollment as follows:

a. Through a toll free FSAFEDS telephone number

b. On the FSAFEDS.gov website

c. Through a belated enrollment (available through online and phone)

Administration and Systems

1. General Administration There are a number of unique challenges in managing the Federal Flexible Spending Account Program (FSAFEDS). First, while the same Federal benefits are applied to a broad population of Federal employees, they are administered and tracked very differently depending upon the capabilities of the responsible payroll office. That payroll office may be quite removed from the employee and from the local human resource office, posing communication challenges. Second, the eligible Federal population includes many whose work involves issues important to our national security. While information regarding these individuals must be protected, we want to ensure that all eligible Federal employees have the opportunity to participate in FSAFEDS.

The Contractor must develop linkages with all Federal payroll systems via BENEFEDS (see below for more information about BENEFEDS), encompassing numerous file layouts. These requirements are outlined in the Appendix A. Much of the work gathering detailed information on the various systems has already been done by BENEFEDS, who is administering the Federal Employees Dental and Vision Insurance Program (FEDVIP) and the Federal Long Term Care Insurance Program (FLTCIP). That information will be shared with the successful Contractor post award. Similar to the FLTCIP contractor, the FSAFEDS Contractor will need to focus enrollment and reconciliation activities on the individual covered employee/participant. Once the covered employee has been enrolled, the Contractor shall communicate the employee’s name, social security number, and amount of allotment(s) to BENEFEDS. Each payroll office will transmit allotments to the Contractor on its specified pay date. Allotments will continue to be withheld from each covered employee’s pay until the earliest of the:

· end of the Plan Year;

· date the covered employee terminates service with the Government; or

· the effective date of a change in allotment on account of a Qualifying Life Event (QLE).

If the Contractor determines that a covered employee has a QLE (visit http://www.opm.gov/healthcare-insurance/life-events/ for a complete list) that will allow a change in election, the Contractor must notify the appropriate payroll office of the change in allotment(s) via BENEFEDS.

The Contractor is required to match up allotments from each payroll office to the correct covered employee. With the support of BENEFEDS (see below), the Contractor will develop exception reports that match up expected allotments from a particular payroll office for a payroll cycle with the actual allotments from that payroll office. If an employee’s allotment is missing, then the Contractor must try to match that employee up with other payroll office allotments. If at the end there is still no allotment from an employee, the Contractor must contact the employee directly to try and resolve the discrepancy.

The Contractor’s focus must be on the individual covered employee. The payroll office may not always know why an employee’s pay has changed, including why the employee is not receiving pay. This is perhaps nowhere more apparent than when a Federal employee transfers between agencies. While their years of Federal service, eligibility for benefits, etc. move with them, this individual is very much like a new employee from a payroll perspective.

Reconciliation will be particularly challenging. Unlike other programs, where participants may be direct billed if premiums are not transmitted, FSAFEDS contributions must come via an allotment. When a Federal employee transfers to another agency, there can be a significant lag time for appropriate paperwork documenting an individual’s eligibility for certain benefits to be sent to the receiving agency. Under IRS rules, an employee who elects to participate in an FSA has made an irrevocable election, and that the account(s) must be funded. If the Contractor is unable to gain the cooperation of the employee, the original payroll office and/or human resource office will provide limited assistance in locating the employee and working with the Contractor to adjust allotments as needed.

2. Coordination with BENEFEDS The Contractor MUST coordinate and exchange data with BENEFEDS, a contracted payroll deduction and enrollment reconciliation module with a separate administrator (currently Long Term Care Partners, LLC dba FedPoint). Each day, the Contractor shall create and transmit enrollment files to BENEFEDS. Upon receipt, BENEFEDS will create new participant accounts, update existing accounts, and reject non-compliant enrollment data. BENEFEDS will send an enrollment error file back to the Contractor and will process compliant data.

BENEFEDS will send a daily update file containing changes made to participants’ accounts. This file will provide participant status codes (e.g., leave without pay, insufficient funds, terminations, retirements, and transfers) to assist the Contractor with managing enrollment and suspending claims.

The Contractor shall process a pre-funding file to enable it to pay health care claims before receiving payment. This pre-funding file will contain participants for which BENEFEDS has validated their enrollment.

The Contractor shall process a weekly coordination of benefits file that will provide enrollment demographic data for FSAFEDS participants who are also enrolled in the Federal Employees Health Benefit Program (FEHB) and the Federal Employees Dental and Vision Insurance Program (FEDVIP). Under Federal law, claims must first be processed by FEHB and FEDVIP before FSAFEDS claims adjudication can occur.

The Contractor shall process allotment reconciliation files generated and sent by BENEFEDS with a frequency that aligns to each respective payroll cycle. As part of the payroll payment process, the Contractor receives the funds directly from the payroll provider and shall report all received funds to BENEFEDS to assist with reconciliation.

The Contractor shall send refund and account funds transfer requests to BENEFEDS for processing. For refunds, the Contractor shall send funds to payroll providers and/or properly accounting for refunded monies that are recouped on the payment files from the payroll providers. The recouped funds are then to be passed as negatives on the reconciliation file to FSAFEDS. The Contractor shall properly account for current year and prior year refunds and account funds transfers.

To ensure accuracy BENEFEDS and the Contractor shall perform 28 reconciliations annually include the following:

· 10 monthly enrollment reconciliations

· 6 refund reconciliations

· 6 account fund transfer reconciliations

· 2 YTD allotment reconciliations

· 2 agency/payroll demographic data reconciliations

· 2 BENEFEDS fee reconciliations

Note: Participating employees may submit claims directly to FSAFEDS for Over the Counter (OTC) and other items that are not normally processed through FEHB or FEDVIP.

3. Processing Services The Contractor will accept and use data from the OPM’s designated third party system (BENEFEDS) at intervals, mutually agreed upon by OPM and the Contractor for the purposes of updating, among other elements, demographic, payroll deduction information and changes to participant allotments.

4. Invoicing and Collection Services The Contractor shall invoice each participant agency directly for some or all of the Administrative Fee for the HCFSA, LEX HCFSA, and DCFSA services provided.

· “Fee Buydown”: At OPM’s discretion, OPM may designate a portion of the Administrative Fee (per participant per month) to be paid from the Risk Reserve Account, with the balance due from the participant agency. If this happens, OPM will direct the Contractor to split its quarterly invoicing for that calendar year, and what portion of the Administrative Fee will be paid from the Risk Reserve. (Any deductions from invoicing relative to poor performance in accordance with the QASP will be deducted from the invoice sent to OPM for the portion designated for payment from the Risk Reserve)

· Invoicing of Administrative Fees payable to the Contractor are discussed in the section entitled Service Fee Collection/Billing/Payment.

· Reserve Fee Billing Services: The Contractor shall prepare and distribute Risk Reserve Account Fee invoices (see Exhibit A) payable directly to OPM by the participating agencies quarterly. The Contractor does not facilitate OPM’s collection of the Risk Reserve Fees aside from creating and delivering the invoices.

5. Management Reports The Contractor shall provide to OPM the listed reports indicated in the section entitled Reporting Requirements.

6. Claims Administration The Contractor shall:

a. Develop enrollment, claims forms and explanation of benefits reimbursed forms, to include Privacy Act statements where applicable, for review and approval by OPM.

b. Administer appropriate program provisions.

c. Administer paperless reimbursement process with FEHB and FEDVIP carriers and auto-adjudicate paperless reimbursement claims when possible.

d. Allow Spousal Linking: If one spouse’s account has exhausted its funds, submitted claims will automatically be reimbursed out of the other spouse’s account provided the participant(s) have requested this link and unused funds are available.

e. Adjudicate all requests for reconsideration (first level appeals).

f. Further review the denied claim using procedures outlined by the Contractor and agreed to by OPM if after reconsideration, the claim is not reimbursed in full.

g. Subcontract for a vendor to provide independent review of claims decisions through a binding arbitration process.

h. Upon written request of the participant, submit a disputed claim for resolution through a binding arbitration process mutually agreed upon by OPM and the Contractor. Establish quality assurance guidelines and audit procedures for independent vendors contracted with the program.

i. The Contractor is prohibited from paying commissions, establishing quotas, offering incentives or taking any other action(s) to reward its employees/subcontractors for denying or approving claims (incentives for prompt and accurate payment of approved claims are allowed).

j. Review Contract Transition Section for additional requirements regarding the end of performance.

k. Translation Services. The Contractor will provide translation services for all claims submitted in a foreign language (i.e., non-English) with the same level of accuracy and timeliness as all other manual claims.

l. Claim Payments to Participants

· EFT. All claim payments made to participants by the Contractor will be by Electronic Funds Transfer (EFT), or, if unavailable, by check drawn on an account (“the Contractor’s Account”) established by the Contractor and funded by participating agencies for this purpose. When the amount of requested claims payments exceeds the amount of deposits received, the Contractor will follow the policies set forth in Funding Claims Payments section below.

· Acceptance of Paper Claims and Paperless Reimbursement Claims. The Contractor will accept claims submitted directly by participants using mutually agreed upon claim formats. The Contractor will also accept claims submitted by Paperless Reimbursement from OPM sponsored FEHB Program carriers and FEDVIP carrier(s). If a Paperless Reimbursement Claim cannot be processed based on the information received from OPM’s listed insurance carrier(s), then the Contractor will manually process the claim. The contractor must also provide participants information about which paperless claims have been denied and for what reason within their online accounts and/or by phone if requested. In either case, the Contractor will make payments directly to the participant in accordance with the FedFlex Plan Document. The Contractor will pay claims as approved, as long as the reimbursement exceeds any OPM specific minimum required claim amount for health care and dependent care reimbursements, as established by OPM and provided to the Contractor. Refer to the section entitled Paperless Reimbursement later in this document for further detail.

· Debit Card. Participants must have the ability to make payments for their claims with a debit card if they Opt-In. Each proposal must include a debit card solution for health care flexible spending accounts. A proposal may include a debit card solution for dependent care flexible spending accounts. The Contractor shall comply with the Government-approved implementation process and administration procedures. OPM does not require FSAFEDS branding for the debit card solution but FSAFEDS branding is acceptable. OPM does not have any additional specifications for the debit card and is not able to provide details about the approval process. The FSAFEDS debit card must be a chip-based debit card. OPM is open to a nominal fee for any replacement debit card after the first replacement.

· Spousal Linking. Acceptance of spousal linkages and spousal processing of healthcare FSA accounts. The Contractor will allow for married participants that both individually signed up for FSAFEDS accounts to link to each other’s accounts. This linkage will allow for spousal processing. If one spouse’s account of the same type has exhausted its funds, submitted claims will automatically be reimbursed out of the other spouse’s account, provided the participants have both requested this link and unused funds are available.

· Grace Period/Carryover Claims. IRS regulations governing flexible spending accounts change frequently, and the Contractor must be able to offer participants all features of flexible spending accounts permitted by the IRS. To that end, the Contractor may be required to, and must be capable of, administering both a 2 ½ month grace period for DCFSA accounts (allowing eligible expenses for one benefit year to be incurred in the subsequent benefit year) and carryover of up to $660 for HCFSA and LEX HCFSA accounts (allowing unreimbursed funds to roll over to the next benefit year), as permitted by the IRS and described in the FedFlex Plan document provided to the Contractor. The Contractor will utilize a claims payment process mutually agreed upon by the parties.

· Reissued Checks. The Contractor will reissue checks to participants whose uncashed checks, in an amount of at least ten ($10) have become ‘stale’ 180 days after issue. The Contractor will send correspondence to participants notifying them of an uncashed check, and either automatically reissue all outstanding “stale” checks (they may be combined for one reissue) or ask that participants contact the Contractor to request their outstanding “stale” check be re-issued. The Contractor shall perform this service once per calendar year (for a maximum of two times), at a time of the year agreeable to both parties, and when requested by a participant.

· FSA Claim Appeals. The Contractor will follow mutually agreed upon written procedures for appeals as may be amended from time to time.

m. Funding Claims Payments Claim payments will be funded by payroll allotments collected by payroll providers for each agency’s official pay date. Payroll providers will transfer collected allotments to the Contractor via BENEFEDS as soon as reasonably possible.

The Contractor must pay valid claims using sources to fund claims set forth as stated below. OPM recognizes there may be times when it is necessary to balance the speed of claims payments with the availability of cash.

While the allotments from participants are provided at regular intervals, demands for claim payments are not regular and may exceed cash allotment contributions. The Contractor has the responsibility for paying claims that are not funded and may request temporary assistance from OPM’s Risk Reserve fund if needed. If OPM asks the Contractor to pay claims for participants before their first payroll allotment, this action may accelerate the need for funds advancement.

In addition to providing cash flow reporting on a regular basis to OPM, the Contractor will alert OPM when a funding shortfall happens, as indicated in the table on the next page. The Contractor can neither completely predict claims demand nor be responsible for disruptions in the receipt of funds from the payroll providers. OPM agrees to act within a few business days on any requests from the Contractor to make additional funding sources available at no additional cost to the Contractor.

To maintain positive cash flow, the Contractor recognizes OPM’s right to request the Contractor to slow down the payment of claims. If instructed to do so, the Contractor shall be relieved of its performance deduction regarding claims turnaround and Call Center responsiveness for a mutually agreed upon number of days following the requested interruption of timely claims payment.

n. Sources Available to Pay Claims The following sources are available to the Contractor to pay claims:

· First – Payroll allotments from the current Plan Year.

· Second – Remaining payroll allotments from the prior Plan year (Forfeitures not already surrendered to the Risk Reserve).

· Third – Risk Reserve Fund. Upon OPM approval, Risk Reserve funds held by OPM at the U.S. Treasury may be used to fund current claims when cash forecasts indicate five days or less of cash on hand and must be reimbursed to the Risk Reserve Fund once cash forecasts exceed five days of cash on hand, or as mutually agreed.

· Fourth - Line of Credit. If available, and when the first through the third funding sources have been exhausted or are not feasible to use, a line of credit may be used upon OPM approval. The Contractor will manage the need for these funds and will make all attempts to limit the costs associated with a line of credit. The Government will not be responsible for fees or interest costs associated with the Contractor obtaining a line of credit.

7. Investment Income and Bank Fee Reconciliation.

Procedures:

· Daily

· Contractor shall maintain all bank accounts and sweep available funds into identified investments.

· Monthly The Contractor shall:

· Obtain the invoice for all FSAFEDS bank accounts

· Review the bank statements for accuracy

· Pay the bank for fees incurred

· Prepare the accounting statement of fees paid and interest earned

· Transfer funds to the Claims Reimbursement account if interest earned exceeds bank fees

· Contractor is responsible for bank fees not covered by the interest

· Contractor shall not assess OPM a separate management fee related to investing idle funds

· Contractor is responsible for income tax liability. The bank accounts that support the FSAFEDS program will be in the Contractor’s tax ID.

· Contractor is responsible for paying bank fees in excess of the interest earned from the management of OPM’s account.

· Ongoing

· All interest income, derived though the investment of idle funds, belongs to the FSAFEDS program. The funds invested are payroll deductions received and used for the payment of FSAFEDS claims. It is assumed that the greatest net return to the FSAFEDS program is derived through investing 100% of idle funds, not by reducing bank fees through earnings credits for funds not invested. No specific guidance will be given regarding permitted investments.

· Bank fees are charged by banks providing contracted services associated with service delivery. There are fees assessed for 1) having an account, 2) bank account services (i.e. fraud protection services, online account access, investment and reporting) and 3) fees per transaction (i.e. per check issued, per ACH originated). A complete list of bank fees is provided via a monthly statement. The monthly statement of fees incurred is called the account analysis statement.

· There are no guarantees of investment earnings.

· There is no guarantee bank fees will not change.

8. Paperless Reimbursement The contractor shall accept health care, dental and vision flexible spending account claims electronically from participating carriers through Paperless Reimbursement. The Contractor’s Paperless Reimbursement system shall be fully operational beginning the first day of the Contractor administration of the program to ensure no disruption to participant benefits.

While more carriers may be added in 2025 and beyond, the carriers participating in Paperless Reimbursement as of November 2023 are:

· Aetna

· APWU Health Plan

· BCBS Service Benefit Plan

· Compass Rose Health Plan

· Foreign Service Benefit Plan

· Government Employees Health Association, Inc. (GEHA) Benefit Plan

· Kaiser Permanente

· Mail Handlers Benefit Plan

· M.D. Individual Practice Association, Inc.

· NALC Health Benefit Plan

· Rural Carrier Benefit Plan

· SAMBA Health Benefit Plan

· SelectHealth

· United Health Care

· UPMC Health Plan

· Aetna Dental

· Aetna Vision

· Delta Dental

· Dominion Dental

· Emblem Health Dental

· FEP BlueDental

· FEP BlueVision

· GEHA, Inc. Dental

· Humana Dental

· Metlife Dental

· MetLife Vision

· UnitedHealthcare Dental

· United Concordia Dental

· UHC Vision

· Vision Service Plan (VSP)

The Government may add new carriers to the list at any time. New carriers shall be added to the Contractor’s Paperless Reimbursement Program at no additional cost unless the carrier(s) require unreasonable special programming or handling as agreed by OPM and the Contractor. The Contractor will copy OPM on any unusual, unreasonable, or non-standard requests. All specialized programming requested by carriers must be approved by OPM in advance through the work/change order process. However, payment for specialized and/or unreasonable programming will be negotiated between the Contractor and the carrier. Typically, the carrier will pay the FSAFEDS contractor for special requests. Sometimes, the carrier will ask for programming that they feel is needed but the FSAFEDS Contractor may feel is not needed. In these cases, the carrier will have to pay the FSAFEDS contractor.

The Contractor shall maintain consistency across all areas of the Paperless Reimbursement Program for participating carriers to the maximum extent possible. Consistency includes, but is not limited to, file formats, types of claims received, and descriptive materials.

The Contractor shall annually report its Paperless Reimbursement claim file requirements on participating carriers for OPM’s review and approval.

The Contractor shall provide Paperless Reimbursement Program maintenance at no additional cost to OPM. Requested enhancements will be made as may be agreed to by the parties. Any enhancements needed by OPM or requested by the Contractor must be agreed to by both OPM and the Contractor.

9. Customer Service The Contractor shall provide mechanisms to provide participants with immediate access to their account balance information including web, IVR and customer service representatives.

The account information available to participants shall include at a minimum: date and amount of most recent allotment; recent claims paid; any outstanding claims submitted but not yet reimbursed; and current balance. Paper confirmation shall be available upon participant request.

a. Telephone

i. The Contractor shall provide a toll-free telephone number for use by participants. The Contractor shall provide benefit counselors (BCs), who will answer calls from 9:00 a.m. to 9:00 p.m., Monday through Friday, Eastern time, except for specified holidays noted below.

· The Contractor shall ensure domestic and international access.

· The Contractor shall provide a toll-free Teletypewriter (TTY) number.

· The Contractor shall provide prompts in Spanish, as well as English.

· The Contractor shall provide translation support for Spanish, French, Hindi, Mandarin Chinese, Japanese, German, Arabic, and other languages as needed to prospective and actual participants.

· BCs shall provide high quality customer service.

· The Contractor must obtain OPM approval of the training program to be provided to service personnel prior to implementation.

ii. Holidays – The Contractor need not provide telephone services answered by live BCs on the following holidays or the day on which the specific holiday is observed if the holiday falls on a weekend (based on Eastern time). Any Federal holidays subsequently added by Congressional action are also included.

· New Year’s Day (January 1)

· Martin Luther King Day (3rd Monday in January)

· President’s Day (3rd Monday in February)

· Memorial Day (Last Monday in May)

· Juneteenth (June 19)

· Independence Day (July 4)

· Labor Day (1st Monday in September)

· Columbus Day (2nd Monday in October)

· Veterans Day (November 11)

· Thanksgiving Day (4th Thursday in November)

· Christmas Day (December 25)

iii. The Government requires a separate toll-free number and dedicated personnel to service questions from OPM and HR departments at the agencies. These customer service call centers must be staffed and open for sufficient hours to support a Federal workforce that operates around the clock across the globe.

b. Interactive Voice Response (IVR) OPM’s participants may obtain account information by calling the Contractor’s IVR twenty-four (24) hours per day, seven (7) days per week, excluding routine maintenance or unforeseen/unforeseeable events. Participants must be able to elect to exit the IVR and speak with a BC during hours as set forth above.

c. Website The Contractor shall host and operate a specific website for FSAFEDS. The website must include at least the following services and information: secure participant login, identity verification, phishing resistant multi-factor authentication for account access, account information, claim status, online claim submission, enrollment portal, list of eligible expenses, program information, claim forms, laws and regulations, link to OPM’s website, website privacy policy and Privacy Act statement approved…