FSAFEDS - PWS 11-12-19 final.pdf

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PERFORMANCE WORK STATEMENT (PWS)

Flexible Spending Account Administration (FSAFEDS)

I. BACKGROUND

A. 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 civilian Federal employees. Employee enrollment in Flexible Spending Accounts (FSAs) will be voluntary. The Contractor will be paid through administrative fees paid by participating Federal agencies.

B. 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.

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 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.

Why is it important for the Federal Government to provide FSAs for likely participants? 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 so many Federal employees eligible to retire by the year 2020, the Government must be able to attract and keep an excellent high performing workforce.

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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.

C. 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 also accepted adoption agreements from other agencies with employees participating in FEHB.

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.

D. Profile of Employees / Enrollment History Refer to Appendix G for a ten (10) year 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). Refer to Appendix B for demographics available for active Federal employees eligible to participate in FSAFEDS.

II. INFORMATION SECURITY AND CONFIDENTIALITY

A. Basic The Contractor shall maintain the security and confidentiality of all records and files. The Contractor shall comply with HIPAA EDI, and all applicable privacy and security laws, rules, clauses, and regulations.

B. 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.

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C. 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 OPM Chief Information Officer (CIO). This could be an up to a 6-month process. The Contractor is responsible for any and all costs associated with obtaining an ATO and/or implementing any current or future CIO requirements.

NOTE: In the event the Contractor is unable to achieve ATO approval before August 31, 2020, the Government may be forced to delay the Contractor’s performance in 12-month increments, and instead obtain the required services from the incumbent contractor for that period. Ultimately, failure to achieve an ATO timely may be considered by the Government as grounds for Termination for Cause.

III. 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 to achieve an ATO, the expiration of the existing contract on August 31, 2020, and the plan years being set to calendar years by IRS regulation, the actual performance under this contract will encompass maximum of only 58 months, broken down as a 6 month Startup Period, Four Base Periods totaling 40 months, and one (1) twelve month Option Period. The Option Period may each be unilaterally exercised at the discretion of the Government (FAR 52.217-9), based on the Contractor’s performance during each previous period of performance.

Start-Up Period Not to exceed 6 months Award through August 31, 2020

BASE Period One 4 months September 1, 2020 through December 31, 2020 BASE Period Two 12 months January 1, 2021 through December 31, 2021 BASE Period Three 12 months January 1, 2022 through December 31, 2022 BASE Period Four 12 months January 1, 2023 through December 31, 2023 OPTION Period One 12 months January 1, 2024 through December 31, 2024

A. 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 August 31, 2020 when the current contract expires. Additional details about the tasks required for Start-Up are located in the Transition section of this PWS.

B. Base Period One – (4 months) September 1, 2020 through December 31, 2020. During this period, the incoming Contractor has assumed full administration of FSAFEDS participant accounts for the 2020 calendar year, and has taken over all operations in the Performance / Administration Periods as described below, except Total Agency Fee is set at levels of the previous contractor. Refer to Section H of this PWS for additional details.

C. Performance / Administration Periods (Base Periods Two, Three, Four and the Option

Period)

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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, on 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.

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.

4. Carryover periods – Carryover is available for participants enrolled in Health Care (HC) FSAs who meet requirements stated elsewhere in this PWS. Carryover period provides a 2 ½ month grace period (or otherwise as dictated by changes in IRS regulation) during which the eligible participant may utilize a limited amount of excess HCFSA funds from the previous benefit period / calendar year for expenses incurred in the new benefit period / calendar year.

D. 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, apps, and all accounts to the incoming contractor as detailed in the Transition section of this PWS.

IV. General Information

A. Basic

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

b. The Contractor shall interface with approximately 160 federal payroll interfaces in a wide variety of formats, usually through BENEFEDS. (BENEFEDS will interface on the Contractor’s behalf.) The Contractor must invoice the appropriate Agencies directly for Agency Fees and Risk Reserve fees.

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

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

e. 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.

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

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g. 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.

h. The Contractor shall provide auto-adjudication for the vast majority of FSAFEDS claims.

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

j. 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.

k. 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.

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

m. 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.

n. 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.

V. PERFORMANCE

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

1. Eligible Employee Population We expect the total eligible population for FSAFEDS to be approximately 2 million people.

• Eligible participants for the Health Care FSA (including LEXFSA) are Federal employees eligible to enroll in the FEHB Program and who are: employed by an Executive Branch agency that has elected to participate with the Contractor and set up payroll deductions with BENEFEDS; or employed by another agency or organization that has adopted the FSAFEDS plan document (FedFlex).

• Eligible participants for the Dependent Care FSA include those Federal employees whose agency or organization adopts the Plan Document (FedFlex) except certain temporary, seasonal, and intermittent employees.

2. Employee Eligibility Date

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

3. Covered Employee Choices

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

• A Health Care Spending Account to a maximum annual election of $2,750 per participant,

• A Dependent Care 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)

4. 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.

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

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

7. 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.

8. Claim Payments Weekly payments, with a minimum of at least $10.

B. Education, Marketing, And Enrollment

The Government intends to maintain and increase FSAFEDS enrollment in 2020 and beyond.

The Contractor shall focus on targeting the major education and marketing campaign to integrate with the Fall 2020 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 plans specifically. In addition, Contractors should review the OPM-sponsored FEHB/FEDVIP plan brochures in the appendices.

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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.

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 2020, 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, PWS, Page 8 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, 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.com website

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

C. 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 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.

If the Contractor determines that a covered employee has a Qualifying Life Event (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.

http://www.opm.gov/healthcare-insurance/life-events/

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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 a 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.). 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.

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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

3. FSAFEDS Administration

a. Schedule of FSA Services

i. 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.

ii. Agency Fee Invoicing and Collection Services. The Contractor shall invoice each participant agency directly for some or all of the Total Agency Fee for the HCFSA, LEXFSA and DCFSA services provided.

• “Fee Buydown”: At OPM’s discretion, OPM may designate a portion of the Total Agency 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 Total Agency 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

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

iii. 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 twice per calendar year. The Contractor does not facilitate OPM’s collection of the Risk Reserve Fees aside from creating and delivering the invoices.

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

v. Claim 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.

vi. 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.

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• Debit Card – (Optional Requirement) OPM is considering implementing a debit card reimbursement process. This is an option that is not currently offered to FSAFEDS participants. If implemented, participants would have the ability to accept payment for their claims made to a debit card account in lieu of their bank account if they designate by choosing to Opt-In. The Contractor shall comply with the Government-approved implementation process and administration procedures, which will be incorporated to the PWS by modification of the contract if the Government decides to implement the Debit Card reimbursement feature.

• 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 (allowing eligible expenses for one benefit year to be incurred in the subsequent benefit year) and carryover of up to $500 (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 twenty-five dollars ($25) have become ‘stale’ 180 days after issue. The Contractor will send a letter to participants notifying them of an uncashed check. Within a specified time period, the participant must contact the Contractor to request that their check be re-issued and must be notified that $12 will be withheld from the check amount to pay for each re-issuance. The Contractor shall perform this service once per calendar year (for a maximum of 5 years), 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.

vii. 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.

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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 penalties regarding claims turnaround and Call Center responsiveness for a mutually agreed upon number of days following the requested interruption of timely claims payment.

viii. 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 associated with the Contractor obtaining a line of credit.

ix. Investment Income and Bank Fee Reconciliation Procedures

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

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• Monthly The Contractor shall:

Obtain the invoice for all FSAFEDS bank accounts Review the bank statements for accuracy Transfer interest to OPM 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 o Contractor is responsible for bank fees not covered by the interest o Contractor shall not assess OPM a separate management fee related to investing idle funds o Contractor is responsible for income tax liability. The bank accounts that support the FSAFEDS program will be in the Contractor’s tax ID.

o 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.

4. 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.

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While more carriers may be added in 2020 and beyond, the carriers participating in Paperless Reimbursement as of October 2019 are:

OPM Sponsored FEHB Health Carriers: OPM Sponsored FEDVIP Dental and Vision

Carriers:

• Aetna

• APWU Health Plan

• BCBS Service Benefit Plan

• Compass Rose Health Plan

• Foreign Service Benefit Plan

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

• Humana

• Kaiser Permanente

• Mail Handlers Benefit Plan

• M.D. Individual Practice Association, Inc.

• NALC

• Rural Carrier Benefit Plan

• SAMBA

• United Health Care

• Aetna Dental

• Aetna Vision

• Delta Dental

• Dominion Dental

• Emblem Health Dental

• GEHA, Inc. Dental

• FEP BlueDental

• FEP BlueVision

• Humana Dental

• Metlife 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 of 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 plans 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.

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5. 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 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.

• BC’s 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 BC’s on the following holidays (based on Eastern time):

• 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)

• 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)

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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, two-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, customer service contact information, allow for simultaneous storage of multiple email addresses and phone numbers for each participant account, and a tax savings calculator.

• The Contractor shall host the 508 compliant FSAFEDS website on behalf of

OPM.

• The Contractor shall make such changes, updates, redesigns, troubleshooting adjustments and repairs or other services needed to maintain the FSAFEDS website.

• The Contractor shall keep the website content current on any changes to the program.

• The Contractor shall ensure website is accessible and operational 24 hours a day, seven days a week, except for maintenance downtime of less than 1%.

The Government reserves the right to review and approve information on the FSAFEDS website for FSA education, customer service, and enrollment, prior to publication.

The Contractor will perform system maintenance as is reasonably necessary to meet current service requirements, including but not limited to 508 compliance and website compatibility with mobile devices and all major web browsers. These maintenance activities will include maintaining a separate secure database for OPM’s information.

d. Phone App

The Contractor shall create android and iphone app(s) which allow participants to access their FSAFEDS account.

• The Contractor shall make such changes, updates, redesigns, troubleshooting adjustments and repairs or other services needed to maintain the FSAFEDS apps.

• The Contractor shall keep the app content current on any changes to the participant accounts.

• The Contractor shall ensure the website and apps are accessible and operational 24 hours a day, seven days a week, except for maintenance downtime of less than 1%.

6. Claims Administration

The Contractor shall:

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• Develop enrollment, claims forms and explanation of benefits reimbursed forms for review and approval by OPM.

• Administer appropriate program provisions.

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

• 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.

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

• 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.

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

• 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.

• 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).

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

VI. FINANCIAL

A. Separate Accounts The Contractor must maintain separate accounts for FSAFEDS and FSA monies. All FSAFEDS related monies must be held separately from that of the Contractor’s other finances.

B. Claims, Forfeitures and Investment Income

Actual claims, forfeitures and investment income shall each be separately accounted for.

1. Claims – 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.

2. Forfeitures - No later than ninety (90) days following the end of the annual benefit period (including a grace period, if applicable), the Contractor shall transfer to OPM any funds unclaimed by participants plus funds from any outstanding checks along with any applicable interest for addition in the Risk Reserve Account. Although the money goes directly to the OPM Chief Financial Officer (CFO), a report must be sent to the program office detailing the amount of the forfeitures prior to sending to CFO. Notification must also be sent to the program office, once the transfer has been completed with the exact date and amount of the transferred funds.

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3. Investment Income – The Contractor may invest a portion of the funds in the FSAFEDS claims reimbursement account. The Contractor shall maintain all bank accounts and sweep available funds into identified investments.

• Contractor will not assess OPM a separate management fee related to investing idle funds; and

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

• Contractor is responsible for paying bank fees in excess of the interest earned from the management of FSAFEDS accounts

• Interest earned over the bank fees belongs to the FSAFEDS program.

C. Credits

The Contractor must credit to the FSAFEDS account the actual total net income for assets in the separately identifiable FSA account.

D. Bank Accounts, Banking Fees and Interest Earned

All bank accounts related to FSAFEDS must be FDIC insured, and located in financial institutions that are U.S. owned.

The Contractor may incur monthly banking fees on the claims reimbursement account. Interest earned on this account may be used to offset these banking fees. In some months, interest earned is expected to exceed banking fees. In other months, banking fees may exceed interest earned. If banking fees exceed interest earned in a particular month, the Contractor must pay these excess fees out of its own funds.