KanElect flexible spending accounts program (FSA) is offered by the State of Kansas to benefits eligible employees and is an Internal Revenue Code Section 125 plan. It allows the employee to pay for Group Health Insurance, unreimbursed health care expenses, and dependent day care expenses with pretax dollars. An employee can save 25-40% in taxes on that portion of their salary that is used for these qualifying expenses.
The KanElect program offers three benefit plans:
Pretax Premium Option - allows the employee to pay for the cost of Health Plan coverage with pretax or after-tax dollars (enrollment is completed through online benefits open enrollment at the Employee Self Service Center website).
Health Care Flexible Spending Account - allows the employee to use pretax money to pay for certain expenses allowed by the IRS but not reimbursed by medical, dental, prescription drug or vision insurance.
Dependent Care Flexible Spending Account - allows the employee to use pretax money to pay for day care expenses. Special note: this account is not for health care.
Payment on a pretax basis means that the employee enters into an agreement with the State of Kansas to reduce their salary by the cost of Health Plan coverage or by the amounts elected for either of the flexible spending accounts. Since the employee’s salary has been reduced, the employee does not pay federal or state income taxes or social security taxes on these amounts. As a result, the employee’s take home pay will increase by the amount they don’t pay in taxes for the pretax benefits selected.
Since these plans are authorized by the Internal Revenue Code, medical expenses of any family member who is a dependent for tax purposes qualify for the tax savings under the FSA even if they are not covered under one of the health/dental plans offered by the State. (There are age restrictions and custody restrictions for the Dependent Care FSA.)
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