Pre-Tax Payment of Premium Contributions
Premium payment for non-career employees is automatically
withheld on an after-tax basis. However, the
Postal Service has established the pre-tax payment of
health insurance premium contributions as a tax-saving
benefit feature for its employees. This feature has been
sponsored by the Postal Service since 1994. Payment of
premiums on a pre-tax basis prohibits enrollees from
reducing coverage unless they qualify as described in
the section "Reducing Coverage" below.
Pre-Tax Withholding
There are two possible disadvantages of paying your
premiums with pre-tax money that you should balance
against the tax savings you receive.
First, when you retire, if you begin to collect Social
Security (normally this occurs at age 62 at the earliest),
you may receive a slightly lower Social Security benefit.
Paying your FEHB premiums with pre-tax money
reduces the earnings reported to the Social Security
Administration. (Your Medicare, life insurance, retirement
plan, and Thrift Savings Plan benefits are not affected.)
Second, there are some restrictions on reducing or canceling
your coverage outside FEHB Open Season that
apply if you pay your premium contributions with pretax
money. These are explained in the section "Reducing
Coverage" below.
Most employees prefer paying their premiums with
pre-tax money because they save on taxes. Nevertheless,
if for any reason you do not want this method of
payment, and instead wish to have premiums paid with
after-tax money, you must submit a form that is available
from your local personnel office to waive the pre-tax treatment. For more
information, see the section "How to Waive or Restore
Pre-Tax Payment" on page 10 of this Guide.
Reducing Coverage
When your premium contributions are withheld on a
pre-tax basis, certain Internal Revenue Service (IRS)
guidelines affect your ability to change coverage. You
may elect to reduce your coverage, that is, to cancel
your FEHB enrollment, or to go from Self and Family
to Self Only coverage, only during an FEHB Open Season,
unless you have a qualifying life event. These are
shown in the chart on pages 29 to 32 of this Guide
titled "USPS Employees: Table of Permissible Changes
in FEHB Enrollment and Pre-Tax/After-Tax Premium
Payment." Refer to the column labeled "FEHB Enrollment
Change That May Be Permitted" and the header
"Cancel or Change to Self Only." You also must satisfy
the time limits shown in the column labeled "Time Limits
in Which Change May Be Permitted."
If you are the only person left in your Self and Family
enrollment as a result of a qualifying life event in
marital or family status, you must elect to reduce the
enrollment (elect Self Only coverage or cancel coverage)
by submitting the FEHB PostalEASE Worksheet to
your local personnel office within the time limit shown in the column
labeled "Time Limits in Which Change May Be Permitted"
in the chart on pages 34 to 37 of this Guide. Otherwise,
your Self and Family enrollment will continue
until another event (that is, a qualifying life event or
FEHB Open Season) occurs that allows you to elect to
reduce coverage.
Reducing your FEHB coverage outside of FEHB Open
Season must be in keeping with, or on account of,
your qualifying life event. For example, if you have a
new baby, you usually would not change from Self
and Family to a Self Only enrollment, or cancel coverage.
To reduce your FEHB coverage outside of FEHB Open
Season, submit an FEHB PostalEASE Worksheet to your local personnel office within the time limits shown in the column labeled
"Time Limits in Which Change May be Permitted" in
the table on pages 29 to 32 of this Guide. You must
provide any supporting documentation requested by your local personnel office.
The effective date of a change from Self
and Family to Self Only will be the first day of the pay
period that follows the pay period in which your
Worksheet is received by your personnel office. The effective date
of a cancellation will be the last day of the pay period
in which your Worksheet is received by your personnel office, if
received within the specified time limits.
It is your responsibility to notify and submit necessary
forms to your local personnel office on time when you are the
only person left on your enrollment.
Retirement is NOT a qualifying life event that allows
cancellation prior to the date of your retirement. If you
wish to cancel an enrollment at retirement, your personnel office
will accept your completed SF 2809 and forward it to
OPM for processing after separation from the Postal
Service. (Annuitants' FEHB premium contributions are
not withheld as a pre-tax payment, thus once you are
an annuitant, reduction in coverage is allowed at
any time.)
During periods of non-pay status or insufficient pay,
you may terminate your FEHB enrollment. The effective
date of termination is retroactive to the end of the
last pay period in which a premium contribution was
withheld from pay. Contact your local personnel office for more information
about how termination during periods of non-pay
status or insufficient pay affects FEHB enrollment.
How to Elect of Waiver Pre-Tax Payments
If you pay premiums with after-tax money, you will not
be affected by the IRS guidelines described above that
restrict reductions in coverage. You may reduce your
level of FEHB coverage at any time of year without
having a qualifying life event. You will give up the tax
savings from paying your premium contributions with
pre-tax money.
If you are eligible and you wish to pay your premiums with pre-tax money, you must contact your local personnel
office and ask for Postal Service (PS) Form
8202, Pre-Tax Health Insurance Premium Election/
Waiver Form for Noncareer Employees. During Open Season, complete
the form and return it to your local personnel office by close of
business December 11, 2007. If this is your initial
opportunity to enroll in FEHB, you have 60 days to submit
your election to your local personnel office. You also may make
such an election when you have a qualifying life event
which is shown in the Table on pages 29 through 32 of this
Guide. Refer to the column labeled "Premium Conversion
Election Change That May Be Permitted." You must
also satisfy the time limits shown in the column labeled
"Time Limits in Which Change May Be Permitted."
If you previously submitted an election to participate in
pre-tax payments and you want to begin paying your
premiums with after-tax money again, you may submit
a new PS 8202 to restore after-tax payment of your premium
contributions. You may change the method of
payment from pre-tax to after-tax, or the reverse only
during the annual FEHB Open Season or following a
qualifying life event and within the time limits in the
Table on pages 29 through 32 of this Guide.
Your Right To More Information
This section of the FEHB Guide serves as your summary
plan description of the USPS Plan for the Pre-tax Payment
of Health Insurance Premiums. There is also a
legal plan document containing the full legal plan provisions,
which you may arrange to view by writing to:
PRETAX PAYMENT OF HEALTH INSURANCE PREMIUMS
PLAN ADMINISTRATOR
475 L’ENFANT PLAZA SW ROOM 9670
WASHINGTON DC 20260-4210