If you are enrolled in the medical, dental or supplemental insurance plans and don’t want to make any changes – don’t do anything. Your coverage will remain in effect through April 30, 2010. Be sure to note the new premium rates and other changes.
Section 125
Employees enrolled in medical, dental and supplemental insurance products can have deductions taken on a pretax basis, so your money goes further.
Pay lower taxes
Paying your contributions on a pretax basis will reflect a lower “taxable earnings” figure on your W2 – and that means you pay taxes on a lower amount. That usually means you see an increase in your take-home pay!
The one exception is for those enrolled in the voluntary disability benefit. Deductions for that are post-tax, so any disability benefit you receive from it is not taxable.
Here’s an example of how you profit from paying for benefits with pretax dollars. This example is based on a married couple with three withholding allowances in 2009.