The Pre-Tax Plan allows employees to have their medical, dental and/or vision premiums (excluding domestic partner portions of the premium) deducted from their salaries before income taxes are calculated. By using the pre-tax method for premium payments, employees can reduce their taxable income, and through tax savings, lessen the impact of insurance cost on their spendable income.
The Pre-Tax Premium Plan is available to all NMSU employees enrolled in the NMSU Medical, Dental and Vision plans.
- Cafeteria plan document– revised July 2015
New eligible employee must complete the Benefit Enrollment Form within their first 31 days of employment. Benefits for new hires are effective the first pay period after 30 days of employment.
Once enrollment in the Pre-Tax Premium Plan is completed, the Plan remains in effect during the employee’s entire employment at NMSU:
- unless cancelled during the open enrollment period, or;
- unless a participant makes a mid-year election change in response to a change in status and only if the election change is “on account of and corresponds with a change in status that affects eligibility for coverage under an employer’s plan.”
- The employee does not pay federal income tax (and in most cases state income taxes), or Social Security and Medicare taxes on the pre-tax contribution amount.
- Some states may base unemployment compensation and worker’s compensation taxes on the employee’s pay after pre-tax contributions.
- An employee’s Social Security benefit may be reduced due to the reduction of the employee’s compensation that is considered for calculating a Social Security benefit.
- Elections may only be revoked during a plan year due to a change in status or other changes permitted under the Treasury Regulations.
Employees may want to consult with a tax advisor prior to making changes to the pre-tax or post-tax election.
Once pre-tax is opted, it will automatically apply to medical, dental, and vision premiums.