Flexible Benefits(state and higher education employees)
State and higher education employees (excludes offline agencies) have access to a Flexible Benefits Plan. This plan is designed to help you decrease your taxable income and increase your take-home pay. Authorized under Sections 125 and 132 of the Internal Revenue Code, the Flexible Benefits Plan allows you to pay certain specific expenses from your pre-tax rather than after-tax income.
There are four different FSA plans available:
- Limited Purpose
- Dependent Care
- Parking and Transportation (state employees only)
Important! In 2017, PayFlex, not the Tennessee Department of Treasury, will manage medical, limited purpose and dependent care FSA programs for state employees. Transportation and parking FSA benefits for state employees will be managed by Benefits Administration.
State employees should file their 2016 FSA claims with Treasury as soon as possible. Claims should be submitted before December 31, 2016.
Employees who participate in Treasury’s current flexible benefits program and who carryover a balance from 2016 into the first quarter of 2017 may not claim the same first quarter 2017 expense with both the State of Tennessee Treasury Department and again with PayFlex. This is a violation of IRS rules.
You may set up a FSA to pay many of your and your family's medical expenses that are not already covered by insurance, such as the insurance plan deductible or copayment amounts, contact lenses or glasses, certain non-cosmetic dental procedures, prescription drugs or their copayment amounts, hearing aids and other qualified expenses. You do not qualify for a medical FSA if you are enrolled in the HealthSavings CDHP. However, you can put money in a limited purpose FSA for dental and vision expenses.
While anyone who wants to can enroll in a limited purpose FSA, those who are enrolled in the HealthSavings CDHP with a health savings account (HSA) may find it particularly attractive since they may not enroll in the medical FSA option. You can use the limited purpose FSA to pay for certain dental and vision costs not covered by insurance.
You may set up a FSA to pay for certain dependent-care costs such as after-school care, baby-sitting fees, adult or child daycare and preschool. You must be working and your spouse must be either working, looking for work, in school full time or incapable of self-care.
Transportation and parking
State employees may set up a FSA to pay for certain work-related commuting and/or parking expenses.
State employees can enroll in a FSA using Employee Self Service (ESS) in Edison. If you enroll in a FSA, Edison will generate a confirmation statement and send it to you when your election is processed provided your email address is in Edison. Higher Education employees will select their FSA options in the PayFlex portal, as has been the case in past years.
Enrollment from previous years does not continue automatically for medical, limited purpose and dependent care FSAs. You must re-enroll each year. If you already participate in the transportation and parking FSA, you do not have to re-enroll for the following year. You can enroll, change amounts or cancel coverage at any time.
HealthSavings CDHP Enrollment
If you are enrolled in a HealthSavings CDHP you cannot use a flexible spending account (FSA) for medical expenses. You can have a limited purpose FSA to use for dental and vision expenses. You should consider contributing the maximum allowed to your HSA before contributing to your limited purpose FSA because HSA dollars are not "use-it-or-lose-it" like an FSA.
The maximum amount you can contribute to a FSA is set by the IRS each year (typically in late October or early November), and the limits are subject to change yearly. Employers have the right to set a lower amount than the IRS maximum. The annual contribution limits for 2017 are:
- Medical FSA – $2,550 (If you and your spouse each have a healthcare FSA, you can each contribute $2,550)
- Limited purpose FSA – $2,550
- Dependent care FSA – $5,000 (per household)
- Transportation and parking FSA – $255 per month for each