Paying for benefits

Find out your options for paying for your PEBB benefits.

How to pay for coverage

If you are an eligible state agency or higher-education institution employee enrolling in a PEBB medical plan, you may pay your medical premium with pretax dollars. This means your employer may deduct your medical premium from your paycheck before calculating federal withholding, Social Security, and Medicare taxes. This is allowed under the state’s salary reduction plan (WAC 182-12-116). Exception: If you enroll a state-registered domestic partner and they do not qualify as an Internal Revenue Code Section 125 dependent, then the premiums with be a posttax deduction from your paycheck.

If you are not a state agency or higher-education institution employee, ask your employer’s personnel, payroll, or benefits office if they offer a pretax deduction option.

Why should I pay my monthly medical premiums with pretax dollars?

You take home more money because taxes are calculated after the premium and applicable premium surcharges are deducted. This reduces your taxable income, which lowers your taxes and saves you money.

Do I need to complete a form to have my medical premiums withheld pretax?

If you are a new employee of a state agency or higher-education institution who enrolls in PEBB medical your personnel, payroll, or benefits office automatically has the premiums deducted before calculating taxes.

If you are not a state agency or higher-education institution employee, ask your employer's personnel, payroll, or benefits office.

How do I pay the premium surcharges?

If your premium and any applicable premium surcharges are automatically deducted from your paychecks, the deductions will be taken before taxes unless you request otherwise. Exception: If you enroll a state-registered domestic partner and they do not qualify as an Internal Revenue Code Section 125 dependent, then the $50 monthly spouse or state-registered domestic partner coverage premium surcharge (if it applies to you) will be a posttax deduction from your paychecks.

How to opt out of pretax payments

If you do not want to pay your medical premiums with pretax earnings, you must complete and submit a Premium Payment Plan Election/Change form to waive (opt out of) participation in the premium payment plan no later than 31 days after you become eligible for PEBB benefits (generally the first day of employment; check with your personnel, payroll, or benefits office).

Can I change my mind about having my medical premiums withheld pretax?

You may change your participation (such as opt out of, or revoke your election and elect to opt in) during the PEBB Program's annual open enrollment or when a special open enrollment event occurs as described in WAC 182-08-199.

Choosing not to have a pretax deduction

If you have your medical premiums deducted pretax, it may also affect the following benefits:

  • Social Security—If your base salary is under the annual maximum, participation in the premium payment plan saves you money now by reducing your Social Security taxes. However, your lifetime Social Security benefit would be calculated using the lower salary.
  • Unemployment compensation—Participation in the premium payment plan also reduces your base salary used to calculate unemployment compensation.

If necessary, your employer may also remove you from the premium payment plan, with notice, to prevent excess tax deferral.