General Information

Pre-Tax Premiums

PRE-TAX PREMIUMS HELP YOU STRETCH YOUR DOLLARS
The Flexible Benefits Program allows you to save on taxes while you pay for your benefits. Pre-tax premiums reduce your taxable pay…and your taxes. That's because premiums for most of your insurance options, health benefit options, and spending account contributions are taken out of your paycheck before federal and state income taxes and Social Security (FICA) taxes are withheld.

This means your taxable pay is lower…and so are your taxes. It also means you have more in your paycheck - or more to spend on benefits than you would if you paid the same premiums with after-tax dollars.

The example below shows the impact of the pre-tax advantage for an employee earning $25,000 a year with annual pre-tax premiums of $1,800.

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Your Benefit Salary - which includes your base salary and salary supplements that are regular, nontemporary, and not more than the amount on which retirement contributions are calculated - is reflected on your Option Statement and remains constant for the entire Plan year. Benefit Salary is the pay used to calculate your pay-based coverage - employee life, AD&D, and disability.
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with after-tax premiums

with pre-tax premiums

Annual pay Annual pre-tax premiums Taxable pay Income and FICA taxes Annual after-tax premiums Take-home pay

$25,000 0 $25,000 - 3,513 -1,800 $19,687

$25,000 1,800 $23,200 - 2,997 0 $20,203

With pre-tax premiums, this employee saves $516 in taxes, and has $516 more to spend on other benefits… or to take home.

Pre-tax premiums are available only for the state-wide benefits offered through the Flexible Benefits Program; they are not available for other agency-sponsored benefits. This example is based on a married employee filing a joint return and claiming four exemptions.

Age Today

Reduction in Social Security Benefits at Age 65

25 35 45 55

2.6% 2.3% 1.7% 0.8%

Based on pay of $25,000 and $2,500 in pre-tax premiums until age 65.

A FEW WORDS ABOUT PRE-TAX PREMIUMS
Using pre-tax premiums will not affect other employee benefits that are based on pay, such as any State of Georgia retirement system, life insurance, disability, and pension benefits. Those benefits will be based on your full pay before pre-tax premiums are taken out. It is worth noting that:

• You won't pay Social Security taxes (FICA) on your pre-tax premiums…potentially reducing your future Social Security benefits, although any reduction will be minimal in comparison with your total Social Security benefits;
• Pre-tax premiums are not available for short-term disability, spouse life and child life, legal, or longterm care insurance or specified illness.

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