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Human Resources

Premium Conversion (pretax) Plan photo of scissors cutting taxes

Enrollment & Change Period
October 1-November 1, 2012

Program Basics

State of Iowa employees who work at least 1040 hours/year, have the option to pay their share of health, dental and supplemental term life insurance premiums with pretax* dollars. Employees are automatically enrolled in this plan and may elect out of the plan. Participating in the Premium Conversion Plan helps you...
  • Decrease taxes
  • Increase net take-home pay
photo of social security card
*
 The term pretax, for purposes of the Premium Conversion Plan, means "before federal, state and FICA taxes". Your pretax premium amount will reduce the amount of wages reported to social security. The effect on your social security benefit will be proportional to the amount of total pretax premiums you pay.

 

Example: a $504 tax savings in one year
Without
Premium Conversion
With
Premium Conversion
Savings with
Premium Conversion
Gross Income
$36,000
$36,000
Expenses run through Premium Conversion
0
-$1,800
Taxable Income
$36,000
$34,200
Federal Tax*
-5,400
-5,130
270
State Income Tax*
-1,926
-1,830
96
FICA
-2,754
-2,616
138
Income After Taxes
$25,920
$24,624
Expenses after taxes
-1,800
0
Your Spendable Income
$24,120
$24,624
$504
This employee reduced taxes by $504 by utilizing the Premium Conversion benefit!

* Based on estimated federal tax of 15% , state tax of 6%, and FICA of 7.65%

 

 

 

 


This website describes the benefits in effect on January 1, 2012. This site does not meet the requirements of a summary plan description and is not intended to serve as one.  If there are discrepancies between this information and any of the plan documents or State of Iowa policies, the plan documents or State of Iowa policies will govern in all cases.  The benefits described on this website are subject to change.  Nothing herein shall be construed as a guarantee of future benefits.