Benny™ is a special-purpose branded MasterCard® with a magnetic strip and signature panel on the back. Here is what the branded Benny™ looks like:

The standard Benny™ Card contains:

• Participant’s name
• Card number – uniquely tied to participant’s eligibility
• Expiration date
• Toll-free customer service phone number and web site
• MasterCard®
• Benny™ name and logo

To assure compliance with IRS regulations requiring that 100% of FSA/HRA card transactions be substantiated, Evolution Benefits (EB) offers the maximum electronic substantiation choices to drive the minimum amount of paper. EB screens transactions first by merchant category code (MCC), enabling us to disallow use of the card in locations that do not relate to the benefits (gas stations, for example). In addition, the following charts represent substantiation options available for each type of transaction.

Evolution Benefits’ Substantiation Solutions

• Patented real-time data matching at point-of-sale – EB has in place direct data links with the premiere pharmacy benefit managers (PBMs) including Argus, Caremark Rx, Catalyst Rx, Express Scripts, Innoviant, Medco Health, MedImpact, and PharmaCare. Real-time substantiation occurs during the card swipe authorization in the pharmacy prior to the transaction’s being approved. The Benny™ transaction is matched to the claims data at the point of sale. If they match, the card swipe transaction is approved and considered 100% substantiated, requiring no further action. If the transaction cannot be matched, it is declined. This patented process requires no special handling at the point of service and works completely in the background. Method endorsed by IRS Revenue Ruling 2003-43.
• Retrospective data matching – Paid card transactions are compared to adjudicated claims from PBMs as well as pharmacy, health plan, vision, and dental carriers. If they match, the card swipe transaction is considered 100% substantiated and requires no further action. Method endorsed by IRS Notice 2006-69.
• Employee-level copayment matching – The administrator collects employee copayment information from the employer and provides it to EB. (The IRS prohibits employee self-certification of copayments.) EB matches this copayment information retrospectively against the card transactions for both pharmacy and non-pharmacy expenses. No receipt submission is required. Method endorsed by IRS Revenue Ruling 2003-43. EB’s system automatically calculates multiple and combination copayments (up to 5) consistent with IRS Notice 2006-69.
• Recurring expense logic – Once a transaction has been substantiated the first time, transactions for the same amount in the same setting do not require another review. EB substantiates these transactions electronically. Method endorsed by IRS Revenue Ruling 2003-43.
• Merchant partnerships Using Inventory Information Approval Systems – EB has partnered with several merchants (Walgreens, Wal-Mart, Sam’s Club, drugstore.com, 1-800 CONTACTS, and Vision Direct) to offer IRS-compliant systems for electronic substantiation of FSA-eligible items (prescription, over-the-counter, and vision). The merchants’ systems automatically recognize and separate FSA-eligible from non-eligible purchases. Eligible purchases can be placed on Benny™, and the consumer is asked for an alternative payment method for ineligible items. Method endorsed by IRS Notice 2006-69.

Substantiation Summary
EB offers the maximum in electronic substantiation choices to drive to the minimum amount of paper for all involved. However, an employer group’s actual substantiation results are dependent on the methods used by EB on behalf of the employer.

• Overall, EB's book of business using PBM data enjoys a 79-89% electronic substantiation level, meaning that cardholder follow-up is needed in only 11-21% of transactions.
• Aggressive use of data can result in up to 94% auto adjudication, as evidenced by several of their Fortune-ranked clients.

Manual Claims Process
Although the use of Benny™ will automatically adjudicate the majority of transactions, in cases where the card isn’t used, the cardholder can pay by other means and apply for reimbursement using TPA’s normal manual claims process.

EB works with TPA so that all card transactions and related balances are synchronized using file interfaces. On a daily basis, the single database holding the participant’s information is updated to reflect both the card swipe transactions and any transactions that TPA has manually processed and is pending for payment.

Reporting
EB has access to card transaction and account usage activity in real time and uses it to monitor the daily efficiency of Card processing. They provide standard daily reports to your administrator through a secure URL and also run reports on request.

Enrollment and Cardholder Communications
When cardholders understand the special rules for prepaid benefits card usage, their card experience is a positive one. EB offers comprehensive enrollment and cardholder communications materials to our administrator partners at no added cost. In fact, EB has invested in an online document-sharing application, so EB's TPAs can have EB's most up-to-date documents available to them on demand. Most pieces are available in text, as well as formatted versions, so a TPA can “cut and paste” card content into materials for your company, or they may use EB's print-ready materials. EB can also work with TPA to brand standard materials with your logo for a nominal fee, or EB can develop and produce customized materials (minimum quantities apply).

Enrollment Materials
EB’s pre-enrollment and enrollment communications educate employees about:

1. FSAs, HRAs, and how they work
2. How you can get tax benefits by participating in and contributing to an FSA or HRA
3. How to properly use accounts
4. How Benny™ makes it easier to access and manage FSA funds

Employees are also encouraged to visit the non-password area of the MyBenny.com web site (specifically the Education Center and FSA Calculator).

Cards and Cardholder Communications
Standard cardholder materials are available at no additional cost. EB is also pleased to provide a quote for customized materials after discussing project specifications (subject to minimum quantities).

All of the materials that are used in conjunction with the Benny™ Prepaid Benefits Card have been reviewed by a combination of product experts, in-house and outside counsel, as well as by MasterCard International. In addition, EB have provided their materials, particularly their cardholder agreement language, to the IRS and Treasury for review.