Paying for benefits
Learn how benefits are paid for and whether you can pay your medical premium with pretax dollars.
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What does my employer pay?
Your employer pays:
- A portion of the medical premium.
- The premiums for:
- Dental and vision coverage for you and your dependents.
- Basic life insurance.
- Basic accidental death and dismemberment (AD&D) insurance.
- Employer-paid long-term disability (LTD) insurance.
What do I pay?
- Monthly premiums (required)
You pay a monthly medical premium for yourself and any enrolled dependents on your account. Your premiums pay for an entire calendar month of coverage.
Your medical and life insurance premiums cannot be prorated for any reason, including when a member dies before the end of the month.
- Premium surcharges (based on your situation)
In addition to your monthly medical premium, you may be charged a $25 tobacco use premium surcharge if you or a dependent uses tobacco. You may be charged a $50 spouse or state-registered domestic partner coverage premium surcharge to enroll a spouse or partner who has other coverage available.
- Out-of-pocket costs (required)
You are responsible for paying any out-of-pocket costs for deductibles, coinsurance, or copayments for services under the medical, dental, and vision plans you choose. Compare common benefits and costs for services for each medical, dental, and vision plan.
- Supplemental and employee-paid insurance (based on your situation)
You can buy supplemental life and supplemental AD&D insurance for yourself and your dependents.
You will be automatically enrolled in employee-paid LTD insurance. You can reduce to a lower cost coverage level. You can also decline the coverage. If you later decide to enroll in or increase coverage, you will have to provide evidence of insurability and be approved by the insurer.
How do I pay?
You pay for coverage with pretax dollars from your paycheck under the state's premium payment plan. That means unless you request otherwise, premiums and applicable premium surcharges are automatically deducted from your paycheck before taxes are taken out. (See related laws and rules.)
To comply with a federal or state mandate, your employer may also remove you from the premium payment plan, with notice, to prevent excess tax deferral.
Can I opt out of pretax payments?
Yes. Submit a SEBB 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 SEBB benefits. You cannot do this in SEBB My Account. If you waive, your premiums will still be deducted from your paycheck after taxes.
Your eligibility date is generally the first day of employment. Check with your payroll or benefits office.
- Why should I pay with pretax dollars?
Paying your premiums pretax allows you to keep more money in your paycheck because the premium, applicable premium surcharges, and/or contributions are deducted before taxes are calculated. This reduces your taxable income, which lowers your taxes.
- Do I need to submit a form to pay pretax?
No. If you are a new employee enrolled in SEBB medical and your employer offers this benefit, your payroll or benefits office will automatically deduct the premiums before calculating taxes.
- Are premiums for all my dependents withheld pretax?
Only if they qualify as a dependent for tax purposes. (See related laws and rules.)
If your dependents do not qualify as your tax dependent, their monthly medical premiums and premium surcharges will appear as posttax deductions from your paycheck. However, you will be able to make premium payments for your own insurance coverage with pretax deductions.
If you enroll a nonqualified tax dependent (such as a state-registered domestic partner, their child, or an extended dependent), who does not qualify as a dependent for tax purposes, submit a Declaration of Tax Status.
- Would it benefit me not to have a pretax deduction?
Maybe. If you have your medical premiums deducted pretax, it may also affect the following benefits:
- Social Security. If your base salary is less than the annual federal taxable maximum, paying your premiums pretax reduces your Social Security taxes now. However, as a result, your lifetime Social Security earnings would also be calculated using the lower salary.
- Unemployment compensation. Paying your premiums pretax also reduces your base salary used to calculate unemployment compensation. To learn more about IRC Section 125 and its impact on other benefits, talk to a qualified financial planner, tax specialist, or visit your local Social Security office.
- Can I change my mind about pretax withholding?
Yes. You may change your participation (enroll or opt out) during annual open enrollment or when a special open enrollment occurs. (See related laws and rules for details).
Related laws and rules
- The premium payment plan is part of the Salary Reduction Plan under Internal Revenue Code Section 125.
- WAC 182-31-060: Who is eligible to participate in the salary reduction plan?
- WAC 182-30-100: When may a school employee enroll, or revoke an election and make a new election under the premium payment plan, medical flexible spending arrangement (FSA), or dependent care assistance program (DCAP)?
- WAC 182-31-040: How do school employees establish eligibility for the employer contribution toward school employees benefits board (SEBB) benefits and when do SEBB benefits begin?
- Nonqualified dependents may qualify as a dependent for tax purposes under IRC Section 152, as modified by IRC Section 105(b).