INDIANAPOLIS – “The results from our push to encourage state employees to pay health insurance premiums with pre-tax dollars are in. An additional 2,233 state employees now participate in the state’s Taxsaver program, saving them money and saving the state $209,701.38 annually,” announced State Auditor Connie Nass. “In my office alone, 21 of 24 employees (87.5%) who were eligible but not participating in Taxsaver changed their withholding and have now increased their take-home pay while saving the state valuable taxpayer dollars.”

At the urging of Auditor Nass, the annual process of health insurance coverage selection, known as “open-enrollment,” was reopened by the Department of Personnel in June. State employees who had not signed up to take advantage of the State’s Taxsaver program, commonly referred to as a Cafeteria Plan, were given a second opportunity to enroll.

“Only slightly more than 40% of state employees who could have enrolled in Taxsaver last month chose to do so. That means there is an opportunity for additional savings this fall when open-enrollment comes around again. There are still about 3,000 state employees who can save themselves and the state money at the same time,” continued Nass.

Taxsaver benefits commenced for the affected employees in their July 16 and July 23 payroll. Non-participation in Taxsaver was reducing the take-home pay of the state employees who did not enroll, and increasing the amount of payments the state has to make to the IRS.

The pre-tax nature of a Taxsaver deduction means the employee does not have to pay social security, Medicare, federal, state or county taxes on the health insurance premium. This increases the employee’s net pay. At the same time, the State, as employer, does not pay social security or Medicare taxes on that money, saving taxpayer dollars.

“The savings realized by the state thanks to the 2,233 employees who entered Taxsaver breaks down to $169,954.06 in social security payments, and $39,747.32 in Medicare payments,” added Nass.

There are nearly 35,000 employees with health care insurance deductions on the Auditor’s payroll system. Prior to the reopening of the process, approximately 5,400 (15%) of those employees did 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 was set to grow to over $450,000. Now that increase will be about $210,000 lower each year.