- Introduction
- Headlines
- Important Changes
- How Do I?
A Flexible Benefits Plan is a benefit program designed to help employees reduce taxes. Authorized under Section 125 of the Internal Revenue Code, this program allows you to pay certain specific expenses from your pre-tax rather than your after-tax income.
All state employees are eligible to participate in the State of Tennessee's Flexible Benefits Plan. Any premiums you pay for state group medical or dental insurance will automatically be paid with tax free earnings through the Flexible Benefits Plan.
Use of the plan to pay other eligible expenses other than medical and dental insurance premiums is not automatic. In order to pay medical expenses or dependent care expenses through the Flexible Benefits Plan, you must file an Election Form each year. For these plans, elections filed for previous years do not continue automatically. Elections should be made online through Edison Employee Self-Service before the annual enrollment deadline. Transportation and Parking Accounts will continue at the current level until a change is made by the participant.
NOTICE:
Before submitting your reimbursement requests, please review the following helpful tips for reimbursement requests.
- Annual Enrollment/Transfer Period: October 1 - November 1, 2011.
- Enroll on-line using Edison Employee Self-Service.
- Participation in the Medical and Dependent Daycare Flexible Benefits programs requires Enrollment each year. Transportation and Parking Accounts will continue at the current level until a change is made by the participant.
- Beginning January 1, 2012, the mileage reimbursement rate for medical purposes is 23 cents per mile. The 2011 rate was 19 cents per mile.
*Important changes due to the Patient Protection and Affordable Care Act (PPACA) for Flexible Benefits*
Effective January 1, 2011 over-the-counter drugs are no longer reimbursable under
the health flexible spending account (FSA), unless the drugs are prescribed by a physician.
Effective January 1, 2013 FSA contributions will be limited to $2,500. Future limits will be tied to increases in the Consumer Price Index (CPI).
- How does it work?
- How can the Flexible Benefits Plan help me?
- How can I enroll?
- What if I was hired after the annual
enrollment? - Can I change my enrollment?
- How does this plan affect my other benefits?
- Other tips about Flexible Spending Accounts
How does it work?
Each pay period, all eligible tax-free deductions are taken out of your paycheck before federal and social security taxes are calculated. After all tax-free deductions have been made, federal income taxes and social security taxes are calculated on the reduced amount, and the amounts paid to you through the reimbursement accounts will not be subject to federal income taxes or social security taxes.
Any other taxable payroll deduction amounts are then taken out of your paycheck. The amount remaining in your paycheck is your take-home pay for this period. Since you have paid less in taxes, you will have more money to spend on other things.
How can the Flexible Benefits Plan help me?
Flexible Benefits puts more money in your pocket. Unlike other salary reduction plans, such as deferred compensation, the Flexible Benefits Plan frees income and social security taxes on these amounts forever rather than just delaying the tax liability.
How can I enroll?
Worksheets for Dependent Care and Medical expenses section are included in Appendix A. The worksheets will help you to:
1. Estimate your annual medical and daycare expenses separately.
2. Use the information from your worksheet to fill out the enrollment form.
Election Forms are available from your payroll/personnel officer or in the Forms section of this website. If you enroll in a reimbursement account, Edison will generate a confirmation statement to you when your Election Form has been processed.
The Flexible Benefits staff is available for questions Monday through Friday, 8 a.m. to 4:30 p.m. CT, at (877) 681-0155. Questions may also be directed to Flexible.Benefits@tn.gov.
What if I was hired after the annual enrollment?
If you start to work after the enrollment period, you will have 30 days from your employment date to sign up for Medical and Dependent Care Flexible Benefits Accounts. Return the completed Election Form to Benefits Administration. Your period of coverage will begin on the first day of the month your first deduction occurs.
back to top
Can I change my enrollment?
Since the funds involved in the Flexible Benefits Plan are tax free, there are significant IRS requirements that the program and participants must meet:
Should you need to change your deductions because of a family status change, you must complete a Family Status Change Form and submit it to the Flexible Benefits office within 60 days of the qualifying event.
Forms may be obtained from your personnel officer, the Forms section of this website, or from the Flexible Benefits office. Documentation of the change will be required. Any change you request must be consistent with the type of family status change you experience.
If the Family Status Change Form is submitted within the 60 day time limit and approved, it will be effective for the remainder of the calendar year. Changes cannot be retroactive (contributions already made to the plan cannot be refunded) except in the event of a death or in the event that medical insurance premiums were deducted from your salary while you were receiving temporary disability benefits through workers’ compensation (lost time pay).
In order for a change to begin in the paycheck you receive at the end of a month, the Flexible Benefits office must receive your completed form by the 15th of that month and the change must then be approved. If you miss the monthly cutoff date, your change can still begin the next month as long as it complies with the 60 day requirement and is approved.
If you do not submit the change form within 60 days, you will not be allowed to change your elections, which may result in a forfeiture of your insurance premiums or reimbursement account contributions for the remainder of the year. Everyone will have an opportunity to make new elections for the new plan year.
How does this plan affect my other benefits?
Each pay period, all eligible tax-free deductions are taken out of your paycheck before federal and social security taxes are calculated. After all tax-free deductions have been made, federal income taxes and social security taxes are calculated on the reduced amount, and the amounts paid to you through the reimbursement accounts will not be subject to federal income taxes or social security taxes.
Any other taxable payroll deduction amounts are then taken out of your paycheck. The amount remaining in your paycheck is your take-home pay for this period. Since you have paid less in taxes, you will have more money to spend on other things.
How can the Flexible Benefits Plan help me?
Flexible Benefits puts more money in your pocket. Unlike other salary reduction plans, such as deferred compensation, the Flexible Benefits Plan frees income and social security taxes on these amounts forever rather than just delaying the tax liability.
How can I enroll?
Worksheets for Dependent Care and Medical expenses section are included in Appendix A. The worksheets will help you to:
1. Estimate your annual medical and daycare expenses separately.
2. Use the information from your worksheet to fill out the enrollment form.
Election Forms are available from your payroll/personnel officer or in the Forms section of this website. If you enroll in a reimbursement account, Edison will generate a confirmation statement to you when your Election Form has been processed.
The Flexible Benefits staff is available for questions Monday through Friday, 8 a.m. to 4:30 p.m. CT, at (877) 681-0155. Questions may also be directed to Flexible.Benefits@tn.gov.
What if I was hired after the annual enrollment?
If you start to work after the enrollment period, you will have 30 days from your employment date to sign up for Medical and Dependent Care Flexible Benefits Accounts. Return the completed Election Form to Benefits Administration. Your period of coverage will begin on the first day of the month your first deduction occurs.
back to top
Can I change my enrollment?
Since the funds involved in the Flexible Benefits Plan are tax free, there are significant IRS requirements that the program and participants must meet:
- You must file your enrollment decisions before the plan year begins. Decisions are irrevocable. Once the plan year starts, your contributions cannot be cancelled or changed until the next plan year, unless you meet specific requirements.
- You may not terminate your contributions or change the amount of your contributions, unless you have a significant change in your family status which corresponds with the change you make. See below for further explanation of family status change.
- If you have not been reimbursed your full account balance as of March 31 of the following calendar year, you will forfeit all remaining monies; this is known as the “use it or lose it” rule.
- Your marriage, divorce or legal separation
- Death of a spouse or dependent
- Birth or adoption of a dependent
- Termination or commencement of participant's or spouse's employment (termination of a participant's employment occurs after the last working day)
- You or your spouse taking an unpaid leave of absence lasting more than 30 calendar days
- You or your spouse having a significant change in health coverage due to your spouse's employment
- You change dependent day care providers
- Ineligibility of a dependent
- Bankruptcy court order
Should you need to change your deductions because of a family status change, you must complete a Family Status Change Form and submit it to the Flexible Benefits office within 60 days of the qualifying event.
Forms may be obtained from your personnel officer, the Forms section of this website, or from the Flexible Benefits office. Documentation of the change will be required. Any change you request must be consistent with the type of family status change you experience.
If the Family Status Change Form is submitted within the 60 day time limit and approved, it will be effective for the remainder of the calendar year. Changes cannot be retroactive (contributions already made to the plan cannot be refunded) except in the event of a death or in the event that medical insurance premiums were deducted from your salary while you were receiving temporary disability benefits through workers’ compensation (lost time pay).
In order for a change to begin in the paycheck you receive at the end of a month, the Flexible Benefits office must receive your completed form by the 15th of that month and the change must then be approved. If you miss the monthly cutoff date, your change can still begin the next month as long as it complies with the 60 day requirement and is approved.
If you do not submit the change form within 60 days, you will not be allowed to change your elections, which may result in a forfeiture of your insurance premiums or reimbursement account contributions for the remainder of the year. Everyone will have an opportunity to make new elections for the new plan year.
How does this plan affect my other benefits?
Social Security - If you pay the maximum amount of social security tax each year, your Flexible Benefits Plan participation will not reduce the amount of your social security benefit.
However, if your salary is below the social security wage base, participation in the Flexible Benefits Plan may result in a slight reduction in your social security benefits.
Usually, the resulting reduction will be negligible and far outweighed by the current increase in your spendable income. The tax savings generated, if saved over a period of years, will outweigh any reduction in social security benefits in the long run.
Deferred Compensation - No Impact
Retirement - No Impact
Insurance, Leave, or Other Benefits - No Impact
back to top
Other tips about Flexible Spending Accounts
All expenses claimed must be incurred during your period of coverage. It is not when you pay an expense, but when you incur it that makes it eligible for reimbursement. An expense is “incurred” when you are actually provided with the service that gives you the expense, not when you are formally charged for, billed for, or when you pay for the service.
You will receive payment for the amount of your approved claimed expense(s) within 10 business days, provided the funds are available in your reimbursement account. The expense must be eligible, the request must be properly filled out and completed, and the claim must be in excess of $25. In the event of a disaster that would disable normal processing, this guarantee will be placed on hold until normal activities resume.
However, if your salary is below the social security wage base, participation in the Flexible Benefits Plan may result in a slight reduction in your social security benefits.
Usually, the resulting reduction will be negligible and far outweighed by the current increase in your spendable income. The tax savings generated, if saved over a period of years, will outweigh any reduction in social security benefits in the long run.
Deferred Compensation - No Impact
Retirement - No Impact
Insurance, Leave, or Other Benefits - No Impact
back to top
Other tips about Flexible Spending Accounts
All expenses claimed must be incurred during your period of coverage. It is not when you pay an expense, but when you incur it that makes it eligible for reimbursement. An expense is “incurred” when you are actually provided with the service that gives you the expense, not when you are formally charged for, billed for, or when you pay for the service.
You will receive payment for the amount of your approved claimed expense(s) within 10 business days, provided the funds are available in your reimbursement account. The expense must be eligible, the request must be properly filled out and completed, and the claim must be in excess of $25. In the event of a disaster that would disable normal processing, this guarantee will be placed on hold until normal activities resume.