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FLEXIBLE BENEFIT SERVICES |
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What do you mean......
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MORE
TAKE HOME PAY?
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Your employer is providing you with an exciting new employee benefit program that allows you to pay for your group medical coverage with “before-tax” dollars. This program is called a Premium Reduction Option Plan. With this option your employer deducts your insurance premium from your salary before taxes are figured. This results in lower taxes and more spendable income for you. |
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Look
at the following example!
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Mary makes
$1,500 a month and has a group medical deductible of $173.00 per month.
Before joining the plan, her group medical costs were deducted after taxes.
After she chooses to join in Premium Reduction Option, her taxable salary
is reduced, her taxes go down, and she gets . . . MORE
TAKE HOME PAY!!!
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| Mary “WITHOUT” | Mary “WITH” | |
| Premium Reduction Option | Premium Reduction Option | |
| Gross Salary Before Tax Medical Costs |
$1,500.00
0.00 |
1,500.00 |
| Taxable Salary* |
$1,500.00
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$1,327.00
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| Taxes (Federal, State, FICA) |
(375.00)
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(332.00)
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| After tax Medical Costs |
(173.00)
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(0.00)
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| Take Home Pay |
$952.00
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$995.00
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*Example assumes a 25% tax bracket.
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