the MGIS companies

IRS Notice 2005-42 enables employers to offer up to a 2½ month grace period for flexible benefit plans at the end of the plan year. Employers should be aware of the following issues:

• The grace period is simply an extension of time that allows participants to spend down any unused monies they have in their Flexible Spending Accounts (FSAs) or Dependent Care Assistance (DCA) Plans.
• Implementing the extended grace period is not required. However, if an employer elects to offer the new grace period, the employer must amend the Plan Document/SPD before the end of the plan year.
• If an employer offers an extended grace period, the employer must notify all participants of the change prior to the end of the plan year.
• The employer determines the length of the grace period, but the grace period cannot be longer than 2½ months past the end of the plan year.
• The employer can limit the grace period to specific benefits. Generally employers offer the grace period only for FSA and/or PRA plans. Applying the grace period to a DCA plan is not recommended because employers must then track and report all expenses incurred after the end of the plan year.
• The employer can establish a run-out period following the grace period during which participants can submit receipts for eligible expenses incurred during the previous plan year or the grace period.
• Funds for a specific flexible benefit plan type may only be used to reimburse expenses for the same flexible benefit plan type during the grace period (i.e. FSA funds can only be used to reimburse FSA expenses).
• Participants cannot change their flexible benefit elections mid-year, even if an extended grace period is added mid-year.
• Eligible expenses incurred during the grace period in excess of the unused funds from the preceding plan year will be reimbursed from the current plan year's account.
• At the end of the grace period, any unused funds will be forfeited to the employer.
• An employee terminated prior to the first day of the new plan year will not qualify for the extended grace period.

IRS Notice 2005-42 enables employers to offer up to a 2 1/2-month grace period for flexible benefits plans at the end of the plan year. Participants should be aware of the following issues:

• The grace period is simply an extension of time that allows participants to spend down any unused monies they have in their Flexible Spending Accounts (FSAs) or Dependent Care Assistance (DCA) Plans.
• During the grace period, participants may incur qualified medical, dental, vision or dependent care expenses and be reimbursed from the previous year's unused FSA or DCA funds.
• The employer determines the length of the grace period for the company’s flexible benefit plan(s).
• Participants cannot change their FSA or DCA elections mid-year, even if a grace period extension is added mid-year.
• FSA funds may not be used to reimburse DCA expenses during the grace period.
• Eligible expenses incurred during the grace period in excess of the unused funds from the preceding plan year will be reimbursed from the current plan year's account.
• At the end of the grace period, any unused amounts in the FSA and/or DCA will be forfeited to the plan sponsor.
• An employee who has been terminated before the first day of the new plan year will not qualify for the grace period.

Employers have flexibility in determining the exact rules governing the flexible spending plans they offer, so participants should ask their employers the following questions:

MGIS is pleased to announce that it has been selected again as one of the Best Places to Work in Insurance. For the second consecutive year, Business Insurance has recognized MGIS for its high-quality workplace and dedicated employees.

According to Glenna Lasater, Assistant Vice President Human Resources at MGIS, the award does not come easy. "The evaluation process involves both a confidential employee satisfaction survey and a questionnaire that focuses on benefit programs, policies, practices and other general information," she comments. "The positive results speak highly of our employee-focused culture and workplace satisfaction."

The Best Places to Work competition is open to all publicly or privately held P&C insurers, group life/health insurers, retail agents and brokers, wholesale brokers/managing general agents, reinsurance brokers, group health advisers, and claims managers with at least 25 employees working in the United States and serving the commercial insurance market. The award program is a joint effort between Business Insurance and the Best Companies Group, an independent workplace excellence research firm. Winners will be recognized at a November 1 awards luncheon in New York.

"As one of only 50 companies recognized in this year's program, MGIS is again honored to be listed among the nation's most elite insurance organizations," notes Jeff Brunken, President and Managing Partner, The MGIS Companies, Inc. "Give our employees credit. A strong work ethic and rock-solid reputation for providing superior customer service to our physician clients have served us well for more than 40 years."

Being recognized in both 2011 and 2010 as one of the Best Places to Work in Insurance follows MGIS' prestigious 2009 Utah Work/Life Award, where it was named one of Utah's Best Places to Work.

Thank you very much for the opportunity to work with you. We appreciate your patronage and the chance to serve your customers with you.

We would like to take this opportunity to notify you of a change that has recently occurred here at MGIS. Our CDH sales executive, Marsha Maresca, is no longer with MGIS. We wish Marsha the very best in the next chapter of her career and appreciate all her contributions to our company while at MGIS.

We would like to introduce you to your new contact here at MGIS, Noelle Lundberg. Noelle has been with MGIS for 10 years and is excited about the chance to work with you. We are confident you will find Noelle to be a terrific and knowledgeable resource for you and your customers. Her experience and expertise in our CDH portfolio of products and services will be a great asset to you.

Noelle will be reaching out to you soon to introduce herself. In the interim, please feel free to contact Noelle on any current opportunities. She can be reached at noelle.lundberg@mgis.com or 800-969-6447, extension 131.

Thank you very much for your overwhelming responses over the past several weeks. As you know, we reached out to you to announce some changes and introduce your new sales contact, Noelle Lundberg. It has been terrific to connect/reconnect with you and discuss how we can help you serve your customers.

One of the most frequent questions we have received is what products and services are currently available from MGIS. The conversations have been wonderful and we are thrilled to have the opportunity to share this information. To provide a brief overview of what we currently offer, please note the following highlights:

• Innovative CDH solutions for FSAs, DCAs, HRAs, HSAs, Commuters, and COBRA
• Extraordinary turnaround: 98% of claims are processed within one day
• Aggressive pricing
• Top-of-line service

Please let us know what additional information we can share with you about these services and any other challenging issue you are managing for your customers.

Thank you very much for the opportunity to work with you. We appreciate your patronage and the chance to serve your customers with you.

As you know, we recently announced a change in our personnel and introduced you to your new sales executive, Noelle Lundberg. We would like to express our appreciation for the overwhelmingly positive response we have received. It has been terrific to connect and reconnect with so many of you over these past two weeks. Many thanks to those we have been able to speak with, and we look forward to continuing our efforts to reach out going forward.

Once again, Noelle's contact information is:
Noelle Lundberg
800-969-6447, extension 131
noelle.lundberg@mgis.com
1849 West North Temple
Salt Lake City, UT 84116

Thank you again for your support and the opportunity to work with you. Please let us know how we may assist you.

One of the value-added benefits you receive as an MGIS customer is access to HR Essentials, a human resources database at your fingertips.

HR Essentials has upgraded to a powerful new online HR library system that provides a comprehensive view of human resource and benefit information, forms and posters called HR360. To access HR360, please log on to www.hr360.com. Once you log on, please take a moment to view the introductory video on the home page, or simply click "Member Login" in the upper right corner to begin. Your existing login username and password are exactly the same.

As you will see, the content is new and greatly expanded, featuring step-by step guidance in such key areas as COBRA, FMLA and Termination as well as hundreds of downloadable forms. HR360 also features online interactive HR tools such as a job description builder and salary benchmarking tool.

Please note the new website. We're confident that you will be pleased with the changes.

If you have questions, please contact your MGIS account manager.

The IRS has recently clarified the use of a debit card for the purchase of prescribed OTC medicines and drugs. The health debit card can be used to purchase prescribed OTC medicines and drugs if five specific criteria have been met. The excerpt below is from the IRS notice and outlines the five criteria:

"After January 15, 2011, health FSA and HRA debit cards may continue to be used to purchase over-the-counter medicines or drugs at drug stores and pharmacies, at non-health care merchants that have pharmacies, and at mail order and web-based vendors that sell prescription drugs, if:

(1) prior to purchase, (i) the prescription (as defined in Notice 2010-59) for the over-the-counter medicine or drug is presented (in any format) to the pharmacist; (ii) the over-the-counter medicine or drug is dispensed by the pharmacist in accordance with applicable law and regulations pertaining to the practice of pharmacy; and (iii) an Rx number is assigned;

(2) the pharmacy or other vendor retains a record of the Rx number, the name of the purchaser (or the name of the person for whom the prescription applies), and the date and amount of the purchase in a manner that meets IRS recordkeeping requirements1;

(3) all of these records are available to the employer or its agent upon request;

(4) the debit card system will not accept a charge for an over-the-counter medicine or drug unless an Rx number has been assigned; and

(5) the requirements of the guidance referred to in paragraph I.02 of this notice are satisfied. If these requirements are met, the debit card transaction will be considered fully substantiated at the time and point-of-sale."

We are currently aware of Walgreens being in compliance with all five of the criteria mentioned above. We will continue to update you as more pharmacy merchants become compliant with these requirements.

If you have additional questions, please do not hesitate to contact your account manager directly.

For every referral you send us who starts using MGIS for FSA or HRA administration, we'll send you a $50 American Express gift card. Talk about easy money.

How does this program work? Simply complete the contact information on the attached form. Click here to access the form. Once you complete the form, we'll reach out to your contact(s) and discuss with them the advantages of using MGIS for FSA/HRA administration.

Please fax the completed form to MGIS at 801-990-2401 or call me at 1-800-969-6447, ext. 150 with your referrals. Better yet, you can respond to this email with your referrals, and we'll do the rest.

If you have any questions about this program, please contact your CDH Account Manager at 1-801-990-2400. We look forward to continuing to serve you ... and sending you a $50 gift card.

Last month we informed you that Congress was considering legislation that would keep the transit benefit at $230, but nothing had been finalized at that time. Our advice was to have your participants make their elections based on this amount ($230), and if necessary, adjustments could be handled later, depending on the decision made by Congress.

Fortunately, Congress has acted quickly. The pre-tax transit benefit cap will remain at $230 per month through the end of 2011. Presently, there is no additional action required on your part.

If have additional questions, please contact your account manager directly.

Due to all of the recent changes with health reform, we have received many questions regarding the updating of group's plan documents. The current document makes generic references to dependents and items covered/allowed by the IRS. Many groups are satisfied with this version, while some prefer a more specific reference.

If you haven't updated your plan document in some time, or are wanting to see more specific language, MGIS recommends having your document updated to include the specific wording now available for dependents, OTC, etc.

A new plan document would normally cost $350, but we will be providing this service for the cost of our plan amendment fee of $100. If you are interested in having your document updated, please contact your account executive directly and she will be happy to assist you with making this change.