- Medical Benefits
- Reimbursement Procedures
- Contribution Limits
- Eligible Expenses
- Limited Purpose FAQ
LIMITED PURPOSE PLAN
The Limited Purpose Medical Reimbursement Account is one of the tax saving options available to state employees through the Flexible Benefits Plan. The Limited Purpose Medical Reimbursement Account is generally beneficial to anyone who has predictable out-of-pocket vision or dental expenses and has also enrolled in HealthSavings CDHP account. Please visit stateoftn.payflexdirect.com for more details regarding the HealthSavings CDHP Plan.
Enrollment into one or all of the tax free reimbursement accounts is done each year during the Annual Enrollment/Transfer Period through Edison Employee Self-Service.
The effective coverage date for the FSA program is the first day of the month following one full calendar month of employment. For example, if hire date is 8/2, coverage begins 10/1. Expenses incurred prior to the coverage begin date are not eligible for reimbursement. Your personnel officer can assist you with this process. Enrollment of new employees after the Annual Enrollment/Transfer Period is over requires enrollment in Edison. Employees are not able to enroll or make changes to enrollment in Edison after the Annual Enrollment/Transfer Period.
Please note, Limited Purpose Flexible Benefits accounts are not health savings accounts. Limited Purpose Flex accounts are subject to the "use it or lose it" rule and unused funds are forfeited from year to year. All expenses must be incurred by March 15 and filed for reimbursement by March 31 for the prior calendar year to avoid forfeitures of funds.
Estimate your out-of-pocket vision or dental expenses for the upcoming plan year. Using these calculations, decide how much to place in your account. Be certain the amount is realistic.
Please be sure not to include Medical expenses in your calculation (prescriptions for medicine, surgery not related to dental or vision care, etc.)
Be sure to save the Explanation of Benefits you receive from your insurance provider and/or the receipts for out-of-pocket medical expenses you incur. Submit Reimbursement Request Forms to the Flexible Benefits Office along with either your Explanation of Benefits or your itemized statement detailing your incurred expenses. You will then receive payment for the amount of your approved claimed expense (as long as the claims do not exceed the amount you will contribute for the year). Amounts paid to you through the reimbursement account will not be subject to income tax or social security tax.
There is currently no annual minimum contribution. The maximum amount you may contribute to the Limited Purpose Reimbursement Account is $2,550.00 per year. Future limits will be tied to increases in the Consumer Price Index (CPI).
As a general rule, any categories of expenses that could be deducted on an IRS Form 1040 for vision or dental expenses, except insurance premiums, can be paid for with pre-tax dollars through the Limited Purpose Expense Reimbursement Account.
The Limited Purpose Expense Reimbursement Account allows you to use tax-free money to pay for many vision or dental expenses incurred by you and your family. While you may have vision or dental expenses, the attractiveness of the reimbursement account depends upon the amount of such expenses you and your dependents pay out-of-pocket each year. This also depends on how much you intend to contribute to your HSA (HealthSavings CDHP) Account. You may use the account to pay your co-payments and deductible amounts on dental and vision care not covered by insurance, and many other expenses. Some of which are listed below:
- Contact lenses
- Dental Cleanings
- Dental procedures (crowns, fillings, bridges, etc.)
- Orthodontic Care (Braces and fittings)
- Prescription Sun Glasses
- Contact Lens Cleaners and Eye Glass wipes
Please contact the Flexible Benefits office at 1 (877) 681-0155 or email us at firstname.lastname@example.org for questions regarding eligible expenses not listed in the list above.
Q: Can I have both an HSA account and an FSA account?
A: If you have an HSA you cannot not have a medical FSA account, but you can open a “limited purpose medical FSA” to use for dental and vision expenses. Dependent care, parking and transportation flexible spending accounts are still allowed. Consider a limited purpose FSA if you contribute the annual maximum to your HSA. 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.
Q: What are the differences between a Flexible Spending Account (FSA) and a HSA?
A: A healthcare flexible spending account (FSA) allows employees to be reimbursed for medical expenses. An FSA is usually funded through voluntary salary contributions. No employment or federal income taxes are deducted from your contribution. The most important difference between the FSA and the HSA is that any remaining balance in the HSA rolls over for at the end of the year for you to keep. Any balance left in your FSA account at the end of the year is lost. Also, you must submit documentation for your expenses when you want reimbursement from your FSA. To access money in your HSA, simply use the debit card provided by PayFlex. However, the IRS requires that you maintain appropriate documentation to demonstrate that the items being reimbursed under the HSA are qualified medical expenses.
If you elect to add your OWN funds to your HSA through monthly payroll deduction, you can use only the amount that is actually in your account, not the amount that you “pledge” for the year as you do with the FSA.
Q: Can I open an HSA account if I still have money in my FSA account?
A: You cannot open an HSA if there are funds remaining in your 2015 FSA in 2016 as follows. If your FSA plan has a grace period:
- Your FSA balance must be zero on December 31, 2015, in order to be eligible for the HSA on January 1, 2016.
- If your FSA has a balance on December 31, 2015, you will not be eligible to set up your HSA until April 1, 2016.
NOTE: Any funds posted in the HSA cannot be used for claims incurred prior to the date the HSA opened.
Q: If I enroll in the HealthSavings CDHP and my spouse has a medical FSA, can I still contribute to an HSA?
A: No, you are not eligible for an HSA if you have access to medical FSA funds, unless it is a limited purpose medical FSA for dental and vision expenses only. Dependent care, parking and transportation flexible spending accounts are still allowed. The same rules apply to HRAs.
Please contact PayFlex Customer Service at 1(855) 288-7345 or visit their website at stateoftn.payflexdirect.com for more information regarding the State of TN HealthSavings CDHP Plan.