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Tax$ave:  Premium Option Plan (POP)


Employees who are eligible to participate in the State Health Benefits Program (SHBP) can save tax dollars by participating in the Premium Option Plan (POP).  The plan allows members to pay any of their SHBP medical and/or dental premiums with before-tax dollars. 

Under the POP, the member's premiums for medical and/or dental coverage are deducted from the member's paycheck before federal income and FICA (Social Security and Medicare) taxes are calculated. As a result, money is saved on taxes withheld, which yields a higher "take home" amount in each check. (Members who decline POP enrollment have their medical and/or dental premiums deducted after federal income and FICA taxes are calculated, so these taxes are calculated on a higher income.)

The amount each person saves depends on a variety of factors, such as the amount of the premiums and the income tax filing status claimed by the member.

Enrollment is automatic. 

If an employee is making a premium contribution for dental and/or medical coverage, enrollment is automatic.  If a person chooses to decline enrollment into the POP, each year a Declination of POP form must be signed and returned to the benefits administrator.  The plan runs on a calendar year basis.

The POP will increase take-home pay; it does not change medical and/or dental premiums paid.

Required Form

The only form required is a Declination of POP form, if an employee wishes to decline participation.  If the employee wishes to decline in future years, a new "Declination" form must be completed and submitted prior to each calendar year.  If a declination form is not received before the start of a calendar year, the employee will automatically be enrolled for that year.

New employees who start work in 2006 and who wish to decline participation in the POP should complete the appropriate form:

Declination of POP for Employees Paid through Centralized Payroll.

Declination of POP for Employees of the State Colleges and Universities.

Employers should count on receiving copies of the 2007 form prior to 2007 Open Enrollment in October 2006.

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Last Updated: March 22, 2006