Tax Free Deductions
Employees with paycheck deductions for health insurance will receive a tax break on the premiums they pay for health insurance.
Deductions for health insurance are taken before your biweekly income is taxed. This reduces your taxable income for the year
Internal Revenue Service regulations make it possible for the County to provide you with a Before Tax in which your health insurance deduction is taken from your pay prior to the calculation of your taxes.
Instead of being taxed on your entire income, you’ll only be taxed on the pay remaining after your premium deductions have been taken. This means you pay less in income taxes and have more take home pay. Your personal tax advisor may help you clarify the impact on your personal tax planning.
LIMITATIONS
Per IRS regulations, Employees who receive the tax-free benefits of before tax, may only terminate a dependent enrollment for reasons such as a divorce, or change in spouse's employment which results in a change in health insurance coverage. Dependents may not be dropped because of financial reasons. Listed below are some common changes in family status for which dependents may be dropped from the health plan.
- Divorce
- Death of a spouse or child
- Significant change in the insurance coverage of the employee or spouse or dependents attributable to the spouse's employment
- Changing employment status, for example from full time to part time
- Dependent children becoming overage or marrying
