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									                                  Army NAF Employee
                                   Benefits Program
                                                                      Presentation for

                              U.S. Army CFSC Headquarters
                                Managers and Supervisors


Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                  Army NAF Employee Benefits

                                                              Presentation Outline
                        •          Who We Are & What We’re all About
                        •          Our Benefit Plans
                                   – Retirement Plan
                                   – 401(k) Savings Plan
                                   – Long Term Care Plan
                                   – Life Insurance Plan
                                   – Health Benefit Plan
                        •          Automation
                        •          Benefits On-Line
                        •          Future Initiatives

Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                              NAF Employee Benefits Office
                                                                                   Who We Are.
                                                                                           Ronald Courtney
                                                                                         Chief, NAF Employee Benefits
                                                                                                 681-7260
                                                               Tyra Dayanan
                                                                 Secretary
                                                                 681-7262                    Patricia Simpson
                                                                                            Operations Manager
                                                                                                 681-7261



                                                               Patricia Nadeau                                   Carol Wigen                              Susan Mondello
    Joanne Baker                                                                                                                                       401(k)/LTC Prog Mngr
Sr. Systems Administrator                                    Retirement Supervisor                            Medical/Life Ins Supv
                                                                   681-7264                                        681-7266                                  681-7341
       681-7340

                     Eric Penningroth                                              Mary Davis                                    Rita Martin
                                                                                                                                                            Rena Kim
                    Systems Administrator                                        Benefits Examiner                             Benefits Specialist
                            681-7273                                                                                                                     Benefits Specialist
                                                                                    681-7270                                      681-7271
                                                                                                                                                            681-7275

                      Rochelle Jones                                              Mary Parrish                                 Mary Ann Skinner
                    Systems Technician                                           Benefits Examiner                             Benefits Specialist       Alice Edwards
                         681-7276                                                   681-7272                                      681-7339              Customer Svc Spec
                                                                                                                                                            681-7267
                         Nalo Ervin                                               Debora Harris                                Christine Laney
                            Clerk                                                Benefits Examiner                             Benefits Specialist       Deborah Everson
                          681-5277                                                  681-7274                                      681-7268              Systems Accountant
                                                                                                                                                             681-7263
                                                                                  Minnie Patton
                                                                                 Benefits Examiner
                                                                                    681-7277




                                                                                                                                                     As of Nov 2004

Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil                   # of #                                                               Date-Time-Group
                                              NAF Employee Benefits Office
                                                                                 What We Do.


     • Manage Benefit Plans
       – Retirement Plan
       – 401(k) Employee Savings Plan
       – Health Benefit Plans
       – Group Life Insurance Plan
       – Long Term Care Insurance Plan
     • Manage Automated Benefit Data Systems
     • Provide Customer Service, Support &
       Assistance

Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil       # of #    Date-Time-Group
                                  Army NAF Employee Benefits
                                                                                 Our Goal
    • Develop and Implement Improved Employee Benefit
      Programs that
                – Enhance the Well-Being of the NAF Workforce
                – Provide more Options for Employees
                – Keep Benefit Costs Under Control for both Employees and
                  Employers
                – Keep Pace with and Compare Favorably to Industry Trends
                  & Initiatives
    • Army NAF Employees have the best benefits
      program of any service or government system and
      compare favorably to the top 20% of Fortune 500
      Companies.
    • We intend to stay ahead of the other services.

Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil     # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                                                        Our Basic Principles

    • We are in the Business of Providing
      Benefits Programs for our Customers.
                – We must take care of our customers and
                  the people who take care of them

    • We Must Carefully Manage and Protect
      Program Funds
                – We must focus constant attention on
                  internal controls & fund valuations

Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                                                            Five Biggest Myths

           1. NAF Retirement Plan isn’t Worth It
           2. If you don’t stay until retirement, you lose
              your money
           3. FERS is better than the NAF Retirement Plan
           4. TSP is better than NAF 401(k) Plan
           5. FEHBP is better and cheaper than DODHBP


          We are going to put those myths to rest!

Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                                                  Eligibility to Participate

          • All regular Army NAF employees working in one
            of the 50 United States, the District of Columbia
            or Puerto Rico. If working overseas, you must be
            a U.S. citizen or the spouse or child of a U.S.
            citizen.
          • Regularly scheduled NAF employees, full time
            and part time (20 hours or more weekly).
          • APF employees eligible for Portability of Benefits
            through P.L. 101-508 or 104-106 or 107-107
            remain eligible for Retirement & 401(k) Plan
            participation.
          • FLEX & Limited Tenure may not
            Participate.
Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                              US Army NAF
                                                Employee
                                             Retirement Plan


Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                             How the Retirement Plan Works

        •       Qualified Defined Benefit Plan under IRC
        •       Internal Revenue Code Sets Rules
        •       Contributions Taxed – Earnings are Tax-Deferred
        •       Funded by Employee Contributions (2%) and
                Employer Contributions (6.5%)
        •       Funds Are Held in Trust and Invested
        •       Annual Actuarial Valuation Determines Liability and
                Funding Requirement
        •       Current Market Value of Trust = $620M
        •       Annuities Administered by John Hancock


Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                                         Retirement Plan Highlights

• Participation is mandatory for first six months of employment.
• Vesting occurs after five years of participation
• Types of retirement
   – Normal Retirement (Unreduced)
   – Deferred Retirement
   – Early Retirement (Reduced)
   – Disability Retirement
   – DSR and VERA
• Non-vested employees may receive a refund upon separation with
  3% interest
• Refunds may be redeposited within two years upon rehire to
  reestablish full service credit
• Participants may purchase up to five years of military service
• Survivor benefits are provided (active & retired)

Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                                         Retirement Plan Highlights

      • Retirement Computation Factors
                  –      Hi-3 years average annual salary (36 consecutive months)
                  –      Years and months of participation in the plan
                  –      Accumulated sick leave balance
                  –      Age
                  –      Military Service (up to 5 years)
                  –      APF time does not count
                  –      NAF time with other service NAFI’s may be applied
      • Post Retirement Features
                  – Annual COLA based on CPI
                  – No Social Security Off-Set



Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                                        Current Issues & Initiatives
          • Contribution Audits in Progress
          • UFM Implementation
          • Portability of Benefits
             – Problems Continue to Plague Portability Implementation
                • Erroneous or no information provided to employees on
                  their portability options
                • Errors in processing and coding
                • DFAS errors on contributions & failure to start
                  contributions timely
             – Our Portability Project Office is making progress
                • Auditing old cases
                • Ensuring new portees are processed correctly
                • Providing training to APF and NAF HRO staff
                • Developing Information Guide for employees
Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                    U.S. Army NAF
                                  401(k) Savings Plan



Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                    How the 401(k) Savings Plan Works

     • Qualified Defined Contribution Plan under IRC
     • Internal Revenue Code Sets Rules (Sec 401(k))
     • Contributions & Earnings are Tax-Deferred
     • Withdrawals are Taxed
     • Voluntary enrollment open to all regular Army NAF employees
     • Funded by Employee Contributions & Employer Match
     • Employer provides 3% match if employee defers 4% or more.
     • May defer between 1% & 100% subject to mandatory
       withholding amounts.
     • IRS maximum deferral is $14,000 in year 2005
     • Over 50 participants may contribute an additional $4000 in 2005
     • Funds are Invested by Fidelity Investments, who also
       Administers the Plan



Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                    How the 401(k) Savings Plan Works

  • Contributions go directly to Fidelity Investments, Inc.
  • Funds are invested in various funds nine) selected by participant.
  • Fidelity sends participants a quarterly statement of their account.
     – Employee contributions
     – Employer contributions
     – Earnings
  • Vesting occurs after three years of service (not participation) –
    Point at which employer contributions become yours.
  • Employees manage account thru Fidelity web site or over the
    phone. Can make changes anytime.
  • Deferral amounts must be changed through HRO



Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                         401(k) Savings Plan Distributions
                            • Hardship withdrawals under safe harbor rules
                               – Certain Medical Expenses
                               – Purchase of principal residence
                               – College Tuition
                               – Eviction or foreclosure from home
                            • Termination of Employment (30 day wait req)
                            • Death
                            • Retirement (over age 59 ½)
                            • QDRO (Qualified Domestic Relations Order)



Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                      401(k) Savings Plan Loan Program

        • Borrow up to the lesser of
           – 1/2 vested value
           – $50,000
        • Take up to 5 years to repay (15 years, if the loan is for
          the purchase of a primary residence)
        • Repay through payroll deduction
        • Interest rate is Prime + 1% **
        • Modest loan origination fee subtracted from
          employee account
        • Request loan privately over the phone
        • Multiple loans available (2 General & 1 Residential)

                                                                                          **(7%, Effective 15 May 2005)

Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #                                   Date-Time-Group
                                  Army NAF Employee Benefits
                                401(k) Plan Issues & Initiatives
    • Employees can manage all account transactions through Fidelity
      Enhanced Service Online
    • Nearly all service requests with Fidelity are done on PSW
    • Employee investment in 401(k) increasing approximately 15% each
      year. Currently over $210M.
    • Joint Benefits/Fidelity Retirement Seminars and Investment
      Strategy sessions presented at various installations upon request.
    • Fidelity First Person initiative – to directly engage each employee
       – Sweep roles for employees with no deferral
       – New hires will automatically get a welcome letter
       – Postcards
           • Employees with less than minimum to receive employer
             match will receive a notice
           • Employees who have not allocated their investments will get
             a reminder
       – Employees will get an annual checkup

Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                                401(k) Plan Issues & Initiatives

  • New Fidelity web tools
     – Retirement Income Planner
     – Portfolio Planner
  • New service for over 55 employees – Retirement
    Income Advantage
     – Online Retirement Planning
     – Email contact with Fidelity Advisor
     – Telephonic financial planning assistance
  • New Diminimus Payout Rules issued by IRS
     – Account Balances < $1,000 must be involuntarily
       paid to terminated employees.


Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                            Army NAF Employee
                         Group Long Term Care Plan




Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                            How the Long Term Care Plan Works


      • NAF Employee Long Term Care Plan a joint service contract
        with CNA
      • Fully insured product – No liability to Benefit Funds
      • Plan Features
         – Available to Active Regular Employees & Retirees & their
           spouses, parents, grandparents and in-laws
         – Favorable Group Rates
         – Guaranteed Issue during open enrollment
         – Optional Coverages
             • Daily benefit of $100, $140 or $180
             • Three or five year maximum benefit
             • Covers institutional or community based care
         – Premiums by Payroll Deduction
         – No Employer Contribution – Employee Pays All
Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                                LTC Plan Issues and Initiatives

      • Enrollment is currently only 4% of eligible
        workforce.
      • New Open Enrollment period will occur this year in
        conjunction with Open Season
      • Current participants will be offered a chance to
        upgrade their coverage at that time.




Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                              Army NAF Employee
                              Health Benefit Plans




Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                                        How Health Benefit Plans Work

      • How the DODHBP Works
                  –      Plan Designed by DOD Service Components
                  –      Army has 7,000 of the 38,000 Participants (18%)
                  –      Aetna Contracted to Administer Plan (TPA)
                  –      Premiums Accrue to Individual Service Funds
                  –      Claims & Direct Expenses Paid from Service Funds
                  –      Annual Reconciliation between Service Funds
                  –      Claims Reserve Requirements Determine Premiums
                  –      Very Limited Override/Exception Authority
                  –      Internal Control is Crucial to Solvency
      • How the HMOs Work
                  – Fully Insured Products
                  – Available in Some Areas
                  – HMO’s are declining in popularity except for Hawaii.
Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                                                      DOD Health Benefit Plan

  •        Employees are placed in PPO or Indemnity, based on their location.
  •        Plan is generally comparable to Blue Cross Blue Shield, but with better
           benefits and lower rates.
  •        Benefits include:
            – Unlimited lifetime benefit
            – Low Co-Pays & Deductibles & Annual out-of-pocket limits
            – Routine Preventive Care
            – Physician Services & Specialist Services
            – Hospital In and Out Patient Care
            – Mental Health Care
            – Substance Abuse Treatment
            – Durable Equipment
            – Health Care Alternatives
            – Pharmacy & Mail Order Drugs
            – Optical & Hearing
            – Optional dental

Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                                            DOD HBP Issues & Initiatives
    •        Aetna continues to expand networks into previously indemnity areas
              – Dugway Proving Grounds
              – White Sands Missile Range
              – Puerto Rico in 2006
              – Fort Polk continues to be a challenge
    •        Implementation of HIPAA Privacy Legislation
              – Individual Participant Notices sent
              – All HRO staff trained on procedures
              – Administrative procedures established
    •        Aetna Navigator Interactive Web Site
                        24/7 Access to your account (must register first).
                        Review eligibility/enrollment
                        View claim status of medical and dental claims
                        View EOBs for settled claims
                        View a summary of the plan benefits
                        Access Aetna Pharmacy Formulary Guide
                        Request Member ID cards
            Disease Management Program
            Health Care Costs continue to climb - $38M in 2004


Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                                         DOD Health Benefit Plan Costs

                                       Bi-Weekly Rates 2005
                              Paid with Pre-Tax Dollars under Sec 125

                                                                            TOTAL              Employee      Employer
                                                                                              Share (30%)   Share (70%)
         Single w/o Dental                                                 $160.94              $48.28        $112.66
         Family w/o Dental                                                 $374.44              $112.33       $262.11
         Single w/Dental                                                   $171.89              $51.56        $120.33
         Family w/Dental                                                   $400.33              $120.10       $280.23


           Post Retirement Medical Benefit Provides continued subsidized
             participation for life if eligible. Funded by 2.6% Payroll Tax.

Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil       # of #                               Date-Time-Group
                                  Army NAF Employee Benefits
                                        DOD HBP Satisfaction Surveys

                                   Category                                       2004    2003   2002
                            Medical Plan                                            91%   85%    77%
                            Dental Plan                                             91%   85%    78%
                            Member Services                                         89%   82%    72%
                            Claims Handling                                         89%   87%    75%
                            Physicians                                              91%   92%    92%

            Satisfaction with DODHBP continues to increase
            What they don’t like:
                        Health Insurance costs too much – want lower premiums
                        Co-Pays are too high - want everything covered at 100%
                        Prescription drugs cost too much
Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #                 Date-Time-Group
                                  Army NAF Employee Benefits
                                                      DOD HBP 2006 Changes


    •        Dental Only Plan
    •        Increased eyewear benefit
    •        Increase in Premiums projected at 8-10%
    •        Medicare Part D Implementation




Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                             Army NAF Group Life
                                                Insurance Plan




Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                                     How Group Life Insurance Plan Works



      • “Self Insured” based on underwriters’ projection of exposure,
        which determines Premiums and Claims Reserve
      • Plan is Administered by Unicare
      • Employee/Employer Split Cost of Basic (Currently 14 cents per
        $1000 of coverage)
      • Employee Pays Group Rates for:
         • Optional Life
         • Additional Increments of Dependent Life
      • AD&D, First Increment of Dependent Coverage and Retiree
        Coverage is included in Basic at no Cost to Employee




Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                                       Group Life Insurance Plan Highlights


          • Basic Life Insurance
             – Elect one or two times basic annual salary
             – Maximum Basic $250,000
             – Cost is 14 cents per $1,000 of coverage for
               employee and the same for the employer
          • Optional Life Insurance
             – Employee Pays Full Premium
             – Premium is Age-Based
             – Maximum up to two times basic life insurance
               election, in multiples of $10k, NTE $500,000
             – Amounts over $100K require EOI.


Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                                       Group Life Insurance Plan Highlights


    • Dependent Life Insurance
       – $5000 spouse; $2,500 each dependent child
       – No cost to employee
       – Optional dependent life insurance available up to 5x
          amount. Employee pays all above 1x; $1.25 ea.
    • Accidental Death/Dismemberment
       – Double life insurance paid for accidental death
       – Dismemberment (full both hands, feet, one hand and one
          foot, both eyes, etc.); half for one hand, one foot, sight of
          one eye.
       – No cost to employee
    • Living Benefit for Terminally Ill
    • Post Retirement Life Benefit at no cost


Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                       Group Life Insurance Plan Issues & Initiatives



    • New Plan Booklets distributed.
    • Elimination of War Exclusion Clause - Coverage
      Continues for Reservists Called to Active Duty
    • Also Protects NAF Employees Who are
      Deployed
    • Eliminated Dual Coverage Restriction on
      Spouses and Dependents
    • Elimination of Waiver of Premium for Disability
      Retirees in favor of normal Post Retirement Life
      Benefit


Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
               Army NAF Employee Benefits
                      Automation




Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                                                                                 Automation

    •        Benefits Workstation
              – Data Base for all Benefit Information
              – Import and Export Data
              – Performs Benefit Transactions
              – Management and Error Report Capability
    •        Benefits Online
              – All Benefit Transactions from Field HRO’s are entered directly into
                the BW System through the Benefits Online web access.
              – HRO’s send no paper transactions, except termination
                documentation
    •        Employee Benefits Online
              – Employee access capability through the web.
              – Read-Only at this point
              – Future self-service transaction capability
    • Benefits Web Site: www.NAFBENEFITS.com


Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil       # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                                                               NAFBENEFITS.COM


• Summary plan description booklets for each program
• Projection spreadsheets for retirement and 401(k)
  plans…”what if” scenarios
• Forms needed for benefits participation
• Links to Aetna, CNA, Fidelity, Financial Engines, CPOL,
  DOD Personnel Policy websites, etc.
• Email benefits office
• HRO Restricted Section
• Special banners for hot issues


Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                                                                     Benefits Web Site




Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                                                   Employee Benefits Online




Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                                                   Employee Benefits Online




                                                   John Doe (XXX-XX-9999)




Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                                                                             Coming Soon



                                                                                           NEW



                    Flexible Spending Accounts




Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #          Date-Time-Group
                                  Army NAF Employee Benefits
                                   What are Flexible Spending Accounts?

    • What are FSAs?
      – A new Benefit Program for NAF employees.
      – Under the Internal Revenue Code, employees may
        elect to set aside funds from their pay on a pre-tax
        basis to be used for dependent care and/or health
        care expenses.
         • Up to $5000 for dependent care (child or adult)
    NEW
         • Up to $3000 for medical expenses not covered by
           employee’s medical plan, such as co-pays and
           non-covered procedures.
      – FSA allotments are excluded from all Federal taxes,
        including FICA and from most state and local taxes
        except NJ and PR (same as with Sec 125).

Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                            How do Flexible Spending Accounts work?

        • The FSA Plan will be administered jointly by the NAF
          Employee Benefits Office, NAF Financial Services, FM, and
          a contracted Third Party Administrator (TPA).
        • At the beginning of the tax year, each employee makes an
          irrevocable election to allot amounts from each paycheck
          into their FSA accounts.
        • Funds are deposited in the Med/Life Fund and reported to
          the TPA. Allotments are segregated by FSA (Medical or
          Dependent Care) for each employee.
        • As employees incur eligible medical or dependent care     NEW
          expenses, they file for reimbursement from the TPA. The
          TPA reimburses the employee from the Med/Life Fund and
          posts the account information, much like a checking
          account.
        • The FSA Plan year coincides with the tax year. Funds set
          aside in the tax year must be used within the tax year.
          Funds not expended are forfeited (use or lose basis).
Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                                  Army NAF Employee Benefits
                                   What are Flexible Spending Accounts?

 • When will it Begin?
             – Army NAF Employee Benefits is taking the lead on this
               program on behalf of all the services and exchanges,
               whose participation will lower program costs.
             – We are currently working on the statement of work, so an
               RFP can be issued by NAF Contracting in a few months.
             – Coordination with NFS has been initiated and allotment
               capability has been added to the payroll system.
             – It is anticipated FSA Program implementation will
                                                                     NEW
               commence during Open Season this year.
             – Employees will be able to participate during CY 2006.



Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group
                        U.S. Army Nonappropriated Fund
                          Employee Benefits Program

                                                  www.NAFbenefits.com

                                                                      Call Toll Free
                                                                     1-877-384-2340

Ron Courtney/ CFSC-HRB (703) 681-7260 (DSN 761) /Ronald.Courtney@cfsc.army.mil   # of #   Date-Time-Group

								
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