Pretaxing cuts insurance costs; state pays $482

Pretaxing cuts insurance costs; state pays $482

Yes, insurance rate increases are coming, but you can reduce your total out-of-pocket costs by making sure your premiums are deducted in a pretax manner and by shopping the insurance programs wisely.

The bottom line is, don’t put off reviewing the insurance plan changes that will affect both your coverage and premiums beginning Jan. 1. You can make comparisons with the help of booklets provided by the Public Employees Benefit Board, or by visiting its website at The deadline to make your decision is Nov. 30. If you don’t make a choice, you will remain under your current insurance provider by default.

Currently, the state pays 92 percent of each employee insurance premiums. Next year, on average, the state will pay about 86 percent of all employee insurance costs, with employees paying the remaining 14 percent.

Here’s what that means.

In 2003, the state will pay $482.38 per month toward each employee’s monthly insurance costs, distributed as follows:

• Medical insurance — $411.03

• Dental insurance — $63.27

• Life insurance — $5.38

• Long-term disability (LTD) — $2.70

How much the employee pays will be determined by the chosen insurance plan.

Taking insurance fees out on a pretax basis reduces actual out-of-pocket insurance costs by 15 – 39.6 percent, or equivalent to that person’s income tax bracket.

Take, for example, a person in the 28 percent tax bracket whose insurance premiums increased by $100 per month. Those costs could be cut by 28 percent to $72, if deducted on a pretax basis. These and additional savings are due to reductions in Social Security, Medicare, Medical Aid contributions.

To determine if your fees are already being taken on a pretax basis, simply look at your pay stub. Under “reductions and deductions” it will show your medical insurance reductions listed as part of your “total reduction.” If they are not and you want to change that situation, or if you simply want more information, call the Benefits Office at 335-4589, or visit that website at, or attend one of the following open sessions:

• 2 – 4 p.m. Thursday, Nov. 21, McCluskey, Room 173

• 3 – 4 p.m. Thursday, Nov. 14, and 1:30 – 3:30 p.m. Tuesday, Nov. 26, the Holland Library, Room 103.

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