INDIANAPOLIS - At the urging of Auditor of State
Connie Nass, the annual process of health insurance coverage selection,
known as "open-enrollment", is being reopened by the
Department of Personnel for State employees who did not sign up
to take advantage of the State's Taxsaver program, commonly referred
to as a Cafeteria Plan.
Under the State's plan to allow pre-tax withholding of health
insurance premiums, state employees are to be enrolled in Taxsaver
unless they opt out during open-enrollment. Historically, the
form employees used to sign up for health insurance kept them
out of Taxsaver unless they opted in. The form is being changed
to be consistent with the State's plan. Under participation
in Taxsaver has the result of reducing the take-home pay of
the state employees who do not enroll, and increasing the amount
of social security payments the state has to make to the IRS
because those employees' social security taxable wages are higher.
"With the Auditor's Office and State Personnel working
together, employees who have not chosen the Taxsaver option
in the past are going to be given a second opportunity to take
advantage of pre-tax withholding," commented Auditor Nass.
There are nearly 35,000 employees on the Auditor's system with
health care insurance deductions. Of those employees, approximately
5,400 (15%) do not participate in the Taxsaver plan for health
insurance. * In 2002, the state paid over $200,000 in social
security taxes because eligible employees did not select the
Taxsaver plan. In 2003, largely due to increases in premium
amounts, that number may grow to over $450,000.
The pre-tax nature of a Taxsaver deduction means the employee
does not have to pay social security, federal, state or county
taxes on the premium. This will increase the employee's net
pay. At the same time, the State, as employer, does not pay
social security taxes on that money, saving taxpayer dollars.
Auditor Nass observed, "If most of the eligible employees
choose to take advantage of the Taxsaver plan, the State could
save as much as $350,000 or more every year, and at the same
time State employees in the Taxsaver plan would increase their
take-home pay."
The program to enable State employees to take advantage of
pre-tax health insurance withholding begins now. It will end
June 23 for employees on the pay-cycle paid June 4, 2003, and
June 30 for employees on the pay-cycle paid June 11, 2003. The
Taxsaver benefit would commence in the employees' July 16 and
July 23 payroll, respectively.
* As of the end of the most recent open-enrollment period,
34,789 state employees had health insurance deductions, and
5,391 of them were not Taxsaver participants.
