SOW for FSA 2010.docx

OTS FLEXIBLE SPENDING ACCOUNT PLAN

I. Background

The Office of Thrift Supervision (OTS), a bureau of the Department of Treasury, (OTS) is responsible for regulating the thrift industry and receives no direct appropriation from Congress. Its income is primarily derived from assessments collected from savings and loans and interest earned on the portfolio of U.S. Treasury securities. As a non-appropriated agency, OTS is statutorily exempt from a number of pay benefits programs generally applicable to Federal agencies and their employees. More specifically, OTS has independent authority to offer their own bureau sponsored benefit programs to its employees which are in addition to benefits available in the Federal Government. The OTS sponsored benefit programs include group life insurance, business travel accident insurance, 401(k), long term disability and flexible spending accounts (FSA).

II. Scope of Work

OTS is seeking an experienced and qualified vendor(s) to administer its flexible spending account (FSA) program for its employees. OTS has been offering its own FSA program since 1991. The plan includes a Health Care and a Dependent Care reimbursement account. Since OTS offers its own FSA plan, OTS employees are not permitted to participate in the federally sponsored FSA program (FSAFEDS).

OTS requires, but is not limited to, the following features for their administrative services for FSA:

· On-line enrollment

· Web-based, on-line account inquiry

· Debit Card

· Dedicated Plan Administrator

· Communication materials

III. Plan Design

The Contractor shall provide a FSA Plan design that contains all benefits included in the current OTS FSA Plan design as described in the summary plan description (Attachment A) as well as any enhancements. Therefore, it is imperative that offerors carefully read the summary plan description (Attachment A).

OTS requires, but is not limited to, the following features for their plan design for FSA:

· Type of Accounts- Health Care Account (HCA) & Dependent Care Account (DCA)

· Plan Minimums for each account- $100 &Plan Maximums for each account-$5,000

· Plan Year- January 1 thru December 31

· 90 day grace period to file claims after plan year end or separation from agency

· Pre-tax Employee and Employer Contributions A. HCA- Health care claims are administered in accordance with Section 125 of the IRS Code. Reimbursements should be generated via submission of a paper claim by fax, scan or mail or paying a provider directly via a Health Care debit card. Reimbursement to employees should be generated by direct deposit or check.

B. DCA-Dependent care claims are administered in accordance with Sections 125 and 129 of the IRS Code. Reimbursements should be generated via submission of a paper claim by fax, scan or mail or direct payment to a provider. Reimbursement to employees should be generated by direct deposit or check.

IV. Requirements for Performance

The offeror shall ensure that the plan design, implementation, communications and reports are in compliance with all applicable laws and regulations. At a minimum, the offeror will provide qualified personnel and resources to accomplish the following requirements:

· Enrollment- Annual open season enrollment should coincide with the Federal Governments Health Benefits Open Season which is held normally during the months of November and December. Elections should be effectuated via an online enrollment tool managed by the offeror, as well as providing access to designated agency representatives. Enrollments conducted outside of open season can be effectuated online or manually.

· Employer Funding- OTS provides but is not obligated to, $1,000 to eligible employees to allocate towards their HCA, DCA or the lump sump option, Life Cycle Account (LCA). The offeror shall accept HCA and DCA employer contributions on a pre-tax basis. Each plan year, the offeror will accept a projected fund amount provided by the agency based on open enrollment participation. Payment will be remitted to the offeror on a monthly basis which is 1/12 of the agency projected fund amount. Forfeited contributions from the employer and employee will be returned to the employer after calendar year end reconciliation in the form of an electronic wire.

· Employee Account Contributions- The offeror shall accept HCA and DCA employee contributions on a pre-tax basis. Employee HCA and DCA contributions are payroll deducted on a biweekly basis (26 pay periods in a tax year). The offeror shall accept, at the beginning of each plan year, funds representing the total employer contribution election for plan participants. Forfeited contributions from the employer and employee will be returned to the employer after calendar year end reconciliation in the form of an electronic wire.

· Transmission of Data-The offeror shall receive and upload employee eligibility data files to its system bi-weekly for participant eligibility. The data file will contain the employees’ personal information (i.e., name, social security number, date of birth, home address, hire date, business email address and separation date, if applicable). Employee elections and separations are captured on the file then transmitted to the offeror electronically on a bi-weekly basis. The offeror shall work with OTS to convert the enrollment file into an acceptable format for OTS’s third party payroll provider, the National Finance Center (NFC). In addition, the offeror shall accept a payroll file produced by NFC that contains employee payroll deductions and post that information to the employee’s applicable FSA accounts in which they participate.

V. Plan Requirements

The offeror shall provide the following services:

· Design and develop plan documents, booklets and administration manuals as needed for regulatory compliance and employer management administration within 60 days of contract award.

· Prepare and supply employee booklets and claim forms within 60 days of contract award.

· Develop and implement financial systems, as appropriate for transfer of funds, reimbursement to employees and plan accounting within 60 days of contract award.

· Reimburse funds to eligible employees.

· Determine eligibility for benefits.

· Prepare appropriate financial and administrative reports for the plans, including any non-discrimination tests required.

· Administer the plans for OTS.

· Provide cost estimates on proposed benefit changes

· Provide administrative, technical and physical safeguards to protect any OTS information maintained in the contractors’ custody.

· Prepare presentation materials, as requested, for managements review.

· Provide ongoing assistance, as requested to employees and the OTS Contracting Officers Technical Representative.

· Ensure that the plan and plan documents maintain compliance with all applicable laws and regulations, as they are changed, by recommending modifications, as necessary.

· Advise and assist OTS in accomplishing an accurate and timely annual open season enrollment period.

· A Web-based system that allows employer access to view participant enrollment information

· Electronic notifications for enrollment confirmation, account balances, debit card and claim activity.

· Online access to enter enrollment elections online, view account information, update information and view the IIAS approved merchants list

· Educational materials that contain eligible HCA and DCA expenses, benefits of pre-tax savings through HCA and/or DCA and claim filing instructions

· A toll-free telephone number for contacting customer service and claims submission

· Customer service representatives available weekdays from 8:00 a.m. until 8:00 p.m. ET

· Day-to-day account manager with at least five years of experience in the FSA area and familiarity with federal and OTS benefits

VI. Rates

The offeror should assume the following in developing their costs and rates:

· All rates must be guaranteed for one year from the inception of the contract term.

· Administrative fees, if any should be consistent with average industry cost.

· Administrative Cost should be computed per employee.

VII. Administrative/Technical Questionnaire

1. Does your company currently provide Flexible Spending Account (FSA) services for Federal employees? If yes, what plan(s) do you currently administer? (Include number of employees covered and current estimated annual costs.)

2. Does your organization currently administer section 125 plan for private employers? If yes, please provide number of employee accounts and type of accounts.

3. Indicate the number of FSA plans your company has in force as of January 1, 2011.

4. Please include your most current annual report of your organization.

5. OTS has approximately 1012 employees nationwide; describe how your organization would organize the delivery of services to these employees.

6. Describe how your organization would determine employee eligibility and reimbursement eligibility.

7. What is the typical turnaround for reimbursements?

8. If a claim is denied, how do you notify the claimant?

9. What appeals process is in place for a participant whose claim is denied?

10. Describe your reimbursement process in detail. Include location of office, timelines, funds transfers and personnel responsibilities that would be involved.

11. Please list three (3) references for current clients who have similarly sized populations for programs comparable to those you are proposing to OTS (include contact name, telephone number and brief description of the organization).

Attachment A- Summary Plan Description

GENERAL PLAN INFORMATION

Plan Name: The Office of Thrift Supervision Flexible Benefits Plan

Type of Plan: A Cafeteria Plan under Code Section 125

Plan Year: A 12 month period ending on the last pay period in a calendar year

Plan Sponsor: The Office of Thrift Supervision (OTS)

Administrator: The Office of Thrift Supervision

Business Telephone #: (202) 906-6000

Employer ID # for Plan Sponsor: 52-1643945

Service of legal process may be made to the Administrator or the legal agents at the business address listed above

Effective Date of Plan: December 30, 1990

Effective Date of the Amended January 1, 2007 and Restated Plan:

Latest Revision Date of this February 2007 Summary:

2. IMPORTANT DEFINITIONS

As you read about your benefits, you may find terms, which have specific meaning. This section lists important terms and their meanings under the Plan. Any term not included in this section, but used in this Summary shall have the same meaning as specified in the Plan.

“AD&D Benefit” means the coverage under the accidental death and dismemberment insurance plan sponsored or provided by OTS and included in the Group Term Life Insurance Benefit.

“Dental Benefit” means coverage under the dental plan or plans sponsored or provided by OTS.

“Dependent” means, for purposes of the Medical Benefit, the Dental Benefit, the Vision Benefit and/or the Health Care FSA Benefit, any individual who is your tax dependent, but not applying the requirements that:

(1) an individual who is the dependent of another taxpayer is treated as having no dependents,

(2) a married individual who files a joint return cannot be a dependent and

(3) gross income of a “qualifying relative” must be less than the exemption amount and with the following exception, (regarding a child of divorced parents, etc., where one or both parents have custody of the child for more than half of the calendar year and where the parents together provide more than half of the child's support for the calendar year) is treated as a dependent of both parents).

For purposes of this section a "qualifying relative” is defined as an individual who (1) has a relationship with the taxpayer as set forth in federal law, such as child, brother or sister, or father or mother, (2) receives over one-half of his or her support from the taxpayer and (3) has income that does not exceed the exemption amount for the tax year.

For proposes of the Dependent Care FSA Benefit, a Dependent means any “qualifying individual.” A qualifying individual is any child not yet age 13 who resides with you or your spouse or other individuals who are physically and/or mentally incapable of self-care.

“Dependent Care FSA Benefit” means a dependent care flexible spending account benefit described in Section 6 of this summary.

“Group Term Life Insurance Benefit” means coverage under the group term life insurance plan or plans sponsored or provided by OTS.

“Health Care FSA Benefit” means the health care flexible spending account benefit described in Section 5 of this summary.

“HIPAA” means the Health Insurance Portability and Accountability Act of 1996.

“Insurer” means any insurance company that underwrites a benefit under the Plan.

“Medical Benefit” means coverage under the medical plan or plans sponsored or provided by OTS.

“OTS” means the Office of Thrift Supervision.

“Plan Year” means a 12-month period ending on the last payroll period of a calendar year.

“Premium Conversion Benefit” means the benefit described in Section 4 of this summary.

“Protected Health Information” (“PHI”) means individually identifiable health information that is maintained or transmitted by a covered entity, subject to specified exclusions as provided in federal regulations.

“Reemployed Annuitant” means an individual who is retired from the Federal Government, is reemployed as an employee and continues to receive an annuity.

“Spouse” means an individual who is legally married to a Participant as determined under the applicable state law (and who is treated as a spouse under federal tax law).

“Vision Benefit” means coverage under the vision plan or plans sponsored or provided by OTS.

3. ELIGIBILITY AND PARTICIPATION REQUIREMENTS

Who may participate in the Plan?

If you are a permanent or temporary common law employee of OTS or a Reemployed Annuitant, you are eligible to participate in the Plan as of the first pay period after your date of hire. If you were not at work on the day coverage would have begun; your coverage will become effective on the day you return to work.

If you were a participant in the Plan before it was amended and restated, you will continue to participate in the Plan.

How do you begin participation in the Plan once you are eligible?

Once you become eligible to participate in the Plan, you must make an initial election to begin participation during a prescribed election period. If you fail to make an initial election or to satisfy the other requirements above, you will be deemed to have elected not to participate in the Plan for the remainder of the Plan Year.

However, even if you have not elected to participate in the Plan in the year in which you become eligible, you may nevertheless become a participant in the Plan automatically. If you are eligible to participate in the Plan and are covered by OTS’s insured or self-funded benefits under this Plan, you will automatically become a participant in the Plan to the extent of the Plan’s premiums for such insurance unless you specifically elect, during the election period, not to participate in the Plan for that year.

How do you participate in the Plan in subsequent Plan Years?

Regardless of whether you elected to participate in the Plan in the prior year, you will have an opportunity before the end of the prior year to elect to participate in the Plan in the upcoming Plan Year. OTS will notify you of this annual enrollment period, and if you wish to participate in the upcoming Plan Year, you must make an election to do so during this period.

If you are eligible to participate in the Plan and are covered by OTS’s insured or self-funded benefits under the Premium Conversion Benefit, you will automatically become a participant in the Plan in the upcoming year to the extent of the Plan’s premiums for such insurance unless you have specifically elected, during the annual enrollment period, not to participate in the Plan for that year.

What types of contributions are made to the Plan?

There are two types of contributions made to the Plan, salary reduction contributions and employer contributions.

You may make contributions to the Plan to pay your portion of premiums for the benefits provided under the Plan. In addition, you may make contributions to the Plan to:

· reimburse yourself for medical, dental or vision expenses you and your dependents have incurred during the Plan Year; and

· reimburse yourself for expenses you have incurred for dependent care expenses.

Any contributions that you make to the Plan will not be subject to income tax, Social Security or Medicare payroll taxes.

OTS will also make contributions to the Health Care FSA Benefit and/or the Dependent Care FSA Benefit on your behalf each Plan Year in an amount it will determine on a yearly basis. At annual enrollment each Plan Year, you may use employer contributions allocated to you to reimburse yourself for additional amounts in the Health Care FSA Benefit and/or Dependent Care FSA Benefit.

Are your Dependent’s expenses reimbursed?

Yes. Their expenses can be reimbursed under the Medical Benefit, the Dental Benefit, the Vision Benefit, the Dependent Care FSA Benefit and the Health Care FSA Benefit. To be reimbursed for a Dependent’s expenses, you must complete and return a new Enrollment Form. Their expenses will be reimbursed on the date they first qualify as a Dependent, and you have enrolled them to participate.

If you incur a change in family status during the year, as defined below, you may be able to change your Enrollment Form. Generally speaking, changes in family status include, but are not limited to, marriage, divorce, birth or adoption of a child, or death of a Dependent.

If your Dependent is confined at home, in a hospital, or elsewhere because of injury or illness on the date his or her coverage would become effective, the coverage will be postponed until he or she is no longer confined. This limitation on coverage does not apply to newborn dependents.

Can you change your election for benefits, employer contributions, and/or salary reduction contributions during the Plan Year?

You can change your elections for benefits, employer contributions and/or salary reduction contributions during the Open Enrollment Period, but that will apply only for the upcoming Plan Year.

You may change your election for Premium Conversion Benefits, Health Care FSA Benefits and Dependent Care FSA Benefits during the Plan Year if a “Change in Election Event” occurs. The following “Change in Election Events” is allowed under the Plan:

a. Leaves of Absences - (Applies to Premium Conversion Benefits, Health Care FSA Benefits and Dependent Care FSA Benefits). You may change an election under the Plan upon FMLA and non-FMLA leave as described below.

b. Change in Status - (Applies to Premium Conversion Benefits, to Health Care FSA Benefits as limited below and to Dependent Care FSA Benefits as limited below.) If one or more of the following Changes in Status occur, you may revoke your old election and make a new election, provided that both the revocation and new election are on account of and correspond with the Change in Status. Those occurrences that qualify as a Change in Status include the events described below, as well as any other events that the Administrator, in its sole discretion and on a uniform and consistent basis, determines are permitted under subsequent IRS regulations:

· A change in your legal marital status (such as marriage, death of a Spouse, divorce, legal separation or annulment).

· A change in the number of your Dependents (such as the birth of a child, adoption or placement for adoption of a Dependent, or death of a Dependent). For purposed of this subsection “Dependent” means your tax dependent under the federal tax code;

· any of the following events that change the employment status of you, your Spouse, or your other Dependents and that affects benefit eligibility under a cafeteria plan (including this plan) or other employee benefit plan of you, your Spouse, or your other Dependents. Such events include any of the following changes in employment status: termination or commencement of employment, a strike or lockout, a commencement of or return from an unpaid leave of absence, a change in worksite, switching from salaried to hourly-paid, union to non-union, or full-time to part-time (or vice versa); incurring a reduction or increase in hours of employment; or any other similar change which makes the individual become (or cease to be) eligible for a particular employee benefit;

· an event that causes your Dependent to satisfy or cease to satisfy an eligibility requirement for a particular benefit (such as attaining a specified age, student status, or similar circumstance); and

· A change in your, your Spouse’s or your other Dependent’s place of residence.

c. Change in Status - Other Requirements (Applies to Premium Conversion Benefits, to Health Care FSA Benefits as limited below and to Dependent Care FSA Benefits as limited below.) If you wish to change your election based on a Change in Status, you must establish that the revocation is on account of and corresponds with the Change in Status. The Administrator, in its sole discretion and on a uniform and consistent basis, shall determine whether a requested change is on account of and corresponds with a Change in Status. As a general rule, a desired election change will be found to be consistent with a Change in Status event if the event affects coverage eligibility (for Dependent Care FSA Benefits, the event may also affect eligibility of dependent care expenses for the dependent care tax exclusion). Election changes may not be made to reduce Health Care FSA coverage during a Plan Year; however, election changes may be made to cancel Health Care FSA coverage completely due to the occurrence of any of the following events: death of your Spouse, divorce, legal separation, or annulment; death of your Dependent; change in employment status such that you become ineligible for Health Care FSA coverage; or your Dependent ceasing to satisfy eligibility requirements for Health Care FSA Benefit coverage on account of attaining a certain age, etc. But if you cancel coverage, it cannot result in your contributions for the year being less than the amount for which you have already been reimbursed.

· Loss of Spouse or Dependent Eligibility. For Premium Conversion Benefits and Health Care FSA Benefits, a special rule governs which types of election changes are consistent with the Change in Status. For a Change in Status involving your divorce, annulment or legal separation from your Spouse, the death of your Spouse or your other Dependent, or your Dependent’s ceasing to satisfy the eligibility requirements for coverage, you may elect only to cancel the accident or health benefits for the affected Spouse or other Dependent. A change in election for any individual other than your Spouse involved in the divorce, annulment, or legal separation, your deceased Spouse or Dependent, or you’re other Dependent that ceased to satisfy the eligibility requirements would fail to correspond with that Change in Status.

· Gain of Coverage Eligibility under another Employer’s Plan. For a Change in Status in which you, your Spouse, or your other Dependent gains eligibility for coverage under another employer’s cafeteria plan (or qualified benefit plan) as a result of a change in your marital status or a change in your, your Spouse’s, or your Dependent’s employment status, your election to cease or decrease coverage for that individual under the Plan would correspond with that Change in Status only if coverage for that individual becomes effective or is increased under the other employer’s plan.

· Dependent Care FSA Benefits. With respect to the Dependent Care FSA Benefits, you may change or terminate your election with respect to a Change in Status event only if (a) such change or termination is made on account of and conforms with a Change in Status that affects eligibility for coverage under an employer’s Plan; or (b) your election change is on account of and conforms with a Change in Status that affects the eligibility of dependent care expenses for the available tax exclusion.

d. Medicare or Medicaid - (Applies to Premium Conversion Benefits, to Health Care FSA Benefits as limited below, but not to Dependent Care FSA Benefits.) If you, you’re Spouse, or other Dependent becomes entitled to Medicare or Medicaid, you may cancel that person’s accident or health coverage under the Health Benefit (here, major medical coverage) and/or your Health Care FSA coverage may be canceled completely but not reduced. Similarly, if you, you’re Spouse, or other Dependent who has been entitled to Medicare or Medicaid loses eligibility for such coverage, you may, subject to the terms of the underlying plan, elect to begin or increase that person’s accident or health coverage, and/or begin or increase Health Care FSA Benefit coverage.

e. Change in Coverage - (Applies to Premium Conversion Benefits and Dependent Care FSA Benefits, but not to the Health Care FSA Benefits.) You may also change your election for the Plan if one of the following events occurs:

· Significant Curtailment of Coverage. If the Administrator notifies you that your coverage under the Plan is significantly curtailed without a loss of coverage (for example, when there is an increase in the deductible), then you may revoke your election and elect coverage under another Plan option that provides similar coverage. If the Administrator notifies you that your coverage under the Plan is significantly curtailed with a loss of coverage, then you may either revoke your election and elect coverage under another Plan option that provides similar coverage, elect similar coverage under the plan of your Spouse’s employer, or drop coverage but only if there is no option available under the plan that provides similar coverage.

· Addition or Significant Improvement of Plan Option. If the Plan adds a new option or significantly improves an existing option, the Administrator may permit Participants who are enrolled in an option other than the new or improved option to elect the new or improved option. Also, the Administrator may permit eligible Employees to elect the new or improved option on a prospective basis, subject to limitations imposed by the Medical Benefit under the Plan.

· Loss of Other Group Health Coverage. You may change your election to add group health coverage for you, your Spouse or other Dependent, if any of you loses coverage under any group health coverage sponsored by a governmental or educational institution (for example, a state children’s health insurance program or certain Indian tribal programs).

· Change in Election under another Employer Plan. You may make an election change that is on account of and corresponds with a change made under another employer plan (including a plan of OTS or a plan of your Spouse’s or other Dependent’s employer), so long as (a) the other cafeteria plan or qualified benefits plan permits its participants to make an election change permitted under the IRS regulations; or (b) this Plan permits you to make an election for a period of coverage (for example, the Plan Year) that is different from the period of coverage under the other cafeteria plan or qualified benefits plan.

· Dependent Care FSA Coverage Changes. You may make a prospective election change that is on account of and corresponds with a change by your dependent care service provider. For example: (a) if you terminate one dependent care service provider and hire a new dependent care service provider, you may change coverage to reflect the cost of the new service provider; and (b) if you terminate a dependent care service provider because a relative becomes available to take care of the child at no charge, you may cancel coverage.

Additionally, the Administrator may modify your election(s) downward during the Plan Year if you are a key employee or highly compensated individual (as defined by the Code), if necessary to prevent the Plan from becoming discriminatory within the meaning of the federal income tax law.

What happens if your employment ends during the Plan Year or you lose eligibility for other reasons?

If your employment with OTS is terminated during the Plan Year, your active participation in the Plan will cease, and you will not be able to make any more contributions to the Plan. If you are rehired within the same Plan Year and are eligible for the Plan, you may make new elections, provided that you are rehired more than 30 days after you terminated employment. If you are rehired within the time frames indicated in the previous sentence or less during the same Plan Year, your prior elections will be reinstated.

If you terminate employment during the Plan Year, you may submit claims for reimbursement for a period after termination not exceeding 90 days.

How will participating in the Plan affect your Social Security and other benefits?

Plan participation will reduce the amount of your taxable compensation. Accordingly, there could be a decrease in your Social Security benefits and/or other benefits (e.g., 401(k), disability and life insurance), which are based on taxable compensation. However, the tax savings that you realize through Plan participation will often be more than offset any reduction in other benefits.

How do leaves of absence (such as under the Family and Medical Leave Act) affect your benefits?

You may continue Medical Benefits, Dental Benefits, Vision Benefits and Health Care FSA Benefits while you are on unpaid FMLA leave on the same terms as an active employee. Payment for your share will be made either on a pretax or after-tax basis before you go on leave, during your leave or after you return, as you and the Administrator may agree.

You also have the option of not paying your portion of the premium or contributions and discontinuing coverage while on leave. If your Medical Benefit, Dental Benefit, Vision Benefit or Health Care FSA Benefit coverage ceases while on FMLA leave (e.g., for non-payment of required contributions), you will be entitled to re-enter such benefits, as applicable, upon return from such leave on the same basis as you were participating in the Plan before the leave, or otherwise required by the FMLA.

You are entitled to have coverage for such benefits automatically reinstated so long as coverage for Employees on non-FMLA leave is automatically reinstated upon return from leave. In addition, if your coverage ceased under the Health Care FSA Benefit, you will be entitled to elect whether to be reinstated in this benefit at the same coverage level as in effect before the FMLA leave (with increased contributions for the remaining period of coverage) or at a coverage level that is reduced pro-rata for the period of FMLA leave during which you did not pay contributions. If you elect the pro-rata coverage, the amount withheld from your compensation on a payroll-by-payroll basis for the purpose of paying for reinstated Health Care FSA Benefits will equal the amount withheld before FMLA leave.

If you are commencing or returning from FMLA leave, your election for non-health benefits (such as Dependent Care FSA Benefits) will be treated in the same way as under OTS’s policy for providing such benefits for participants on a non-FMLA leave. If that policy permits participants to discontinue contributions while on leave, participants will upon returning from leave be required to repay the premiums or contributions not paid by the Participant during leave. Payment will be withheld from your compensation either on a pre-tax or after-tax basis, as may be agreed upon by the Administrator and the Participant or as the Administrator otherwise deems appropriate.

Non-FMLA Leaves of Absence. If you go on an unpaid leave of absence that does not affect eligibility, then you will continue to participate and the premium or contribution due for you will be paid by pre-payment before going on leave, after-tax contributions while on leave or with catch-up contributions after the leave ends, as may be determined by the Administrator.

What benefits are provided under the Plan?

The Plan provides the following benefits:

a. Premium Payment Component (“Premium Conversion Benefit”). It permits you to pay for your share of the premiums (that is, contributions for the cost of coverage) for the Medical Benefit, the Dental Benefit, the Vision Benefit, and the Group Term Life Insurance Benefit (including the AD&D Benefit).

b. Health Care Flexible Spending Account (“Health Care FSA Benefit”). It permits you to pay for your eligible medical care expenses that are not otherwise reimbursable by any Medical Benefit, Dental Benefit or Vision Benefit with pre-tax dollars.

c. Dependent Care Flexible Spending Account (“Dependent Care FSA Benefit”). It permits you to pay for your eligible dependent care expenses with pre-tax dollars.

4. PREMIUM CONVERSION BENEFITS

What are “Premium Conversion Benefits”?

If you elect Premium Conversion Benefits, you will be able to pay for your share of premiums for those benefits indicated in Section 3 above with pre-tax dollars by completing an Enrollment Form with OTS. This means that the share of the premiums you pay will be paid with pre-tax funds, which saves you Social Security, Medicare and income taxes on the amount of your salary reduction.

5. HEALTH CARE FSA BENEFITS

What are “Health Care FSA Benefits”?

If you elect Health Care FSA Benefits, you provide a source of pre-tax funds to reimburse yourself for your eligible medical care, dental care and or vision care expenses by completing an Enrollment Form with OTS. Under that agreement, you agree to a salary reduction to fund eligible expenses instead of receiving a corresponding amount of your regular pay. In return, you may be reimbursed from the Plan for certain eligible expenses using dollars that are not subject to state or federal income, Social Security or Medicare taxes.

Health Care FSA Benefits are intended to pay benefits solely for eligible expenses not previously reimbursed or reimbursable elsewhere. Accordingly, the Health Care FSA Benefit shall be considered to be a group health plan for coordination of benefits purposes.

What amounts of reimbursement may you elect to receive for Health Care FSA Benefits during any Plan Year?

You may choose any amount of eligible expenses reimbursement that you desire under the Health Care FSA Benefit. This amount is subject to the minimum reimbursement amount of $100 and the maximum reimbursement amount of $5,000 (for 2007) per Plan Year. OTS may change this amount in the future. You will be reimbursed weekly if your request for reimbursement equals or exceeds the minimum indicated above. You will be required to make the annual Health Care FSA “contribution” equal to the coverage level you have chosen. These limits may be changed from year to year and during the Plan Year only if certain events specified above take place. You will be notified during enrollment.

How are your Health Care FSA Benefits paid?

When you complete the Enrollment Form, you specify the amount of Health Care FSA Benefits that you wish to pay for with your salary reduction contribution. From then on, you must make this contribution for such coverage by having an equal portion of the annual contribution deducted from each paycheck unless otherwise agreed with, or as deemed appropriate by the Administrator.

What expenses can be reimbursed under the Health Care FSA Benefit?

Only “eligible medical care expenses” can be reimbursed under the Health Care FSA Benefit. “Eligible medical care expenses” mean expenses incurred by you and/or your Dependents for “medical care” as defined in Code Sections 105 and 213. Generally, this means an item for which you could have claimed a medical care expense deduction on an itemized federal income tax return (without regard to any threshold limitation or time of payment) for which you have not otherwise been reimbursed or could be reimbursed from insurance or from some other source.

Here is a list of expenses that qualify for reimbursement under the Health Care FSA Benefit. Generally, eligible expenses include deductibles, copayments and other health care expenses for you, your Spouse and your other Dependents not paid by the medical Benefit, the Dental Benefit or the Vision Benefit. Under most of the categories, you will also find examples of expenses that do not qualify for reimbursement because they are not considered legitimate deductions for federal income tax purposes. For the complete listing of eligible health care expenses, refer to IRS Publication 502.

Deductibles and Copayments

· Eligible expenses:

· Deductibles and copayments for health coverage or HMO

· Deductibles and copayments for dental coverage

· Deductibles and copayments for vision and hearing care coverage

· Deductibles and copayments for prescription drug coverage

· Amounts over usual and customary

· Ineligible expenses:

· Premiums for your or your spouse's health coverage

· Membership in a health maintenance organization or preferred provider organization

· Premiums for dental, vision, hearing or prescription drug coverage

· Premiums for Medicare Part B

· Premiums for medical plans not sponsored by your employer

· Premiums for automobile insurance, including segments that provide medical coverage for injuries caused by an auto accident

· Premiums for life insurance policies that provide repayment for loss of earnings or for general health purposes

· Premiums for long-term care insurance

· Contributions to state disability funds Prescription Drugs

· Eligible expenses:

· Vitamins and mineral supplements prescribed for treatment of an illness

· Prescription drugs that treat a medical condition

· Insulin

· Smoking cessation prescriptions

· Ineligible expenses:

· Vitamins taken for general health purposes

· Over-the-counter items such as amounts for paid toiletries (e.g., toothpaste), cosmetics (e.g., face creams), and other sundry items, vitamins, herbal remedies and supplements taken to promote general health and well being

· Prescription drugs for cosmetic purposes, weight loss or lifestyle enhancements Over-the-Counter Items

· Eligible expenses:

Antiseptics

Asthma Medications

Cold, Flu, and Allergy Medications

Diabetes

Ear/Eye Care

Health Aids

Pain Relief

Personal Test Kits

Skin Care

Stomach Care

· Ineligible expenses:

· Dual use – requires doctor letter:

Medical Equipment and Supplies

· Eligible expenses:

· Wheelchairs, crutches (purchased or rented) and other durable medical equipment

· Autoette (cost of operating/maintaining)

· Oxygen and oxygen equipment used to relieve breathing problems that result from a medical condition

· Syringes, needles and other medical supplies

· Prosthetic and orthopedic devices

· Excess cost of orthopedic shoes over cost of ordinary shoes

· Wigs where necessary to the mental health of a person who loses hair because of disease

· Ineligible Expenses:

· Wigs when not considered medically necessary for mental health

· Mechanical exercise device not specifically prescribed by a physician

Dental and Orthodontic Care

· Eligible expenses:

· Fees for dentist, dental hygienist, orthodontist or periodontist

· Dental check-ups, X-rays, extractions and fillings

· Artificial teeth and dentures

· Braces and orthodontic devices (only those incurred within the active plan year)

· Cost of fluoridation of home water supply recommended by a dentist

· Ineligible expenses:

Uninsured Medical Fees and Services

· Eligible expenses:

· Fees for any licensed physician, including a dermatologist, anesthesiologist and gynecologist

· Hospital services, including fee for a private room

· Fees for a registered nurse or licensed practical nurse for medical care

· Laboratory and Xray diagnostic services

· Confinement in a nursing home for the treatment of an illness or injury

· Hospice care

· Fees for licensed chiropractors and osteopaths

· Christian Science practitioner's fees

· Surgery and transplants, including experimental procedures

· Vaccinations and immunizations

· Cost of a nurse's room and board where nurse's services qualify

· Social Security tax paid on a nurse's wages where nurse's services qualify

· Founder's fee paid in a monthly or lump sum to a retirement home to cover the portion specifically for medical care

· Ineligible expenses:

· Fees for domestic help, companion, babysitter, chauffeur, etc., who primarily render non-medical services, such as house-cleaning

· Nursemaids or practical nurses who provide general care for healthy infants

· Custodial care in an institution

· Fees for which the child care credit is taken on your income tax return Hearing Care

· Eligible expenses:

· Fees for a hearing examination

· Hearing aids

· Batteries for operation of hearing aids

· Hearing aid repair Physical Examinations

· Eligible expenses:

· Routine and preventive physicals

· School and work physicals Vision Care

· Eligible expenses:

· Fees for an optometrist or ophthalmologist

· Eyeglasses, including lenses and frames

· Contact lenses

· Laser vision correction

· Ineligible expenses:

Therapy and Treatments

· Eligible expenses:

· Xrays, radium and chemotherapy treatment

· Hypnosis for the treatment of an illness

· Fees for a halfway house that helps individuals adjust from life in the hospital to community living

· Treatment for alcoholism or drug dependency

· Physical or occupational therapy by a licensed therapist (as a medical treatment)

· Fees for use of swimming pool for exercises prescribed by a physician to alleviate a specific medical condition such as rheumatoid arthritis

· Fees for weight loss or smoking cessation programs prescribed by a physician to alleviate or prevent a specific medical condition

· Speech therapy

· Acupuncture

· Hair transplant if medically necessary and prescribed by a physician

· Electrolysis if medically necessary and prescribed by a physician

· Occupational therapy

· Infertility treatment

· Ineligible expenses:

· Fees for exercise, athletic or health club membership that is not prescribed by a physician

· Fees for aerobics classes or dance lessons even though recommended by a physician for general health purposes

· Fees for weight loss and smoking cessation programs for general health purposes

· Physical treatments unrelated to specific health problem (e.g., massage for well-being)

· Any illegal treatment Psychiatric Care

· Eligible expenses:

· Fees for licensed psychotherapists, psychiatrists and psychologists

· Legal fees directly related to the commitment of a mentally ill person

· Ineligible expenses:

Assistance for the Handicapped

· Eligible expenses:

· Fees for tutoring by a licensed school or therapist for a child with a severe learning disability

· Fees for a blind person's guide

· Fees for a deaf student's note-taker

· Braille books and magazines that exceed the cost of regular editions

· Guide dog for a blind or deaf person, and the cost of training and maintenance

· Household visual alert system, audio display equipment or telephone for a deaf person

· Cost of specifically equipping a vehicle for a handicapped person that exceeds the cost of an ordinary vehicle, and the device for lifting a handicapped person into the vehicle

· Special devices, such as a tape recorder and typewriter, to aid a blind person

· Advance payment to a private institution for lifetime care, treatment of training of a mentally or physically handicapped person Miscellaneous Charges

· Eligible expenses

· Ambulance services

· Amounts paid for transportation primarily for and essential to medical care including car mileage, bus, taxi, train, plane fares, parking fees and tolls

· Lodging expenses (not provided in a hospital or similar institution) not to exceed $50 per night per individual while away from home if the lodging is primarily for and essential to medical care provided by a doctor

· Expenses and services related to donating an organ

· Fees for computer storage of medical records

· Cost of a medically prescribed and necessary diet that exceeds the cost of a normal diet

· Charges for medical care included in a tuition fee if billed separately

· Sales tax associated with an eligible expense

· Ineligible expenses:

· Medical expenses which are claimed on your tax return

· Expenses of divorce when doctor or psychiatrist recommends divorce

· Cost of special foods taken as a substitute for regular diet, when the special diet is not medically necessary or cost is not in excess of a normal diet

· Funeral and burial expenses

· Maternity clothes

· Diaper service

· Cosmetics, toiletries and sundry items

· Pajamas purchased to wear in the hospital

· Installation of power steering in an automobile

· Mobile telephone used for personal phone calls as well as calls to a physician

· Distilled water purchased to avoid drinking fluoridated water supply

· Transportation expenses to and from work even though a physical condition may require a special means of transportation

· Cosmetic surgery

· Teeth whitening, unless caused by a disease or accident

When are eligible medical care expenses incurred?

For eligible medical care expenses to be reimbursed to you, they must have been incurred during the Plan Year. Such expense is incurred when the service that gives rise to the expense is provided, not when the expense was paid. Note that if you have paid for the expense but if the services have not yet been rendered, then the expense has not been incurred for this purpose. You may not be reimbursed for any expenses arising before the Plan became effective, before your Enrollment Form became effective, for any expenses incurred after the close of the Plan Year or after a separation from service.

What must you do for expenses to be reimbursed?

When you incur an expense that is eligible for payment, you must submit a claim to the Administrator on an Expense Reimbursement Form that will be supplied to you. You must include written statements and/or bills from independent third parties stating that the expenses have been incurred, and the amount of such expenses along with the Expense Reimbursement Form. Generally, this requires including an Explanation of Benefits (EOB) Form from the medical insurance carrier (or a bill from a doctor’s office) indicating the amounts that you are obligated to pay.

If you have made contributions for the Health Care FSA Benefit coverage you have elected, then you will be reimbursed for your eligible medical care Expenses within 30 days after the date you submitted the Expense Reimbursement Form (subject to a 15-day extension for matters beyond the Administrator’s control) if your claims exceed $5. Remember, though, that you cannot be reimbursed for any total expenses above the annual reimbursement amount you have elected.

You will have until the end of the 90-day period after the end of the Plan Year in which to submit a claim for reimbursement for eligible medical care expenses incurred during the previous Plan Year.

You will be notified in writing if any claim for benefits is denied.

To have your claims processed as soon as possible, please note that it is not necessary for you to have actually paid the bill for an expense—only for you to have incurred the expense, and that it is not being paid for or reimbursed from any other source.

What if your expenses you incurred…