- Why do I need to "pre-tax" my premiums?
- Can I stop pre-taxing my premiums at any time?
- What types of premiums can be pre-taxed?
- Which premiums should not be pre-taxed and why?
- Which premiums are not allowed by the IRS to be pre-taxed?
Q: Why do I need to pre-tax my premiums?
A: By having your employer pre-tax your premium, you will save on Federal, State and FICA taxes on those premium dollars.
Q: Can I stop pre-taxing my premiums at any time?
A: "No. You cannot change your election at any time, however you can change your election at the beginning of a plan year or if have an eligible change of status. A change in status would be one of the following events:
- Birth or Adoption of a child
- Divorce, Legal Separation or annulment
- Death of Spouse and/or dependent
- Termination of employment by employee
- Termination or commencement of employment by your spouse or your dependent
- You or your spouse take an unpaid leave of absence
- You, your spouse or dependent are switching from part-time to full-time (or vice-versa)
- A significant change in your family's health coverage attributable to your spouse's employment
- Dependent ceases to satisfy the requirements for unmarried dependents due to the attainment of age, student status or any similar circumstances as provided under the accident or health plan under which the employee receives coverage
- A change in the place of residence or worksite of the employee, spouse or dependent
Q: What types of premiums can be pre-taxed?
A: "The following premiums can be pre-taxed (as allowed by the plan):
- Health Insurance
- Dental Insurance
- Vision Insurance
- Supplemental Benefit Premiums (if there is no cash value)
- Group Term Life Insurance (for the employee up to a $50,000 policy)
Q: Which premiums should not be pre-taxed and why?
A: "The following premiums should not be pre-taxed because if the premiums are pre-taxed, any benefit paid to the employee will be subject to income tax withholding:
- Long-term Disability
- Short-term Disability
- Some Cancer Insurances
Q: Which premiums are not allowed by the IRS to be pre-taxed?
A: Dependent Life Insurance and Long Term Care Insurance premiums are not allowed to be pre-taxed at this time.