Fehb Premium Conversion Guide for Employees

As a federal employee, you have the option to convert your FEHB premium to a taxable benefit, known as a premium conversion. This means you'll pay federal income taxes on the premium amount, but it can be a great way to save for retirement.

The premium conversion amount is based on your FEHB premium, which is the monthly cost of your health insurance. For example, if your premium is $200 per month, that's the amount you'll convert to a taxable benefit.

By converting your premium, you'll get to keep the money in your pocket and use it for other expenses or savings goals. It's a personal choice, but it can be a smart financial move for many federal employees.

For more insights, see: Fehb Medicare Part B

FEHB is a type of health insurance that's available to federal employees and retirees.

It stands for Federal Employees Health Benefits, and it's a program that allows participants to choose from a variety of health insurance plans.

These plans are offered by private insurance companies and are designed to meet the needs of federal employees and their families.

FEHB plans typically cover a wide range of medical services, including doctor visits, hospital stays, and prescription medications.

The program is administered by the Office of Personnel Management (OPM), which is responsible for overseeing the FEHB program and ensuring that it runs smoothly.

FEHB plans are available to federal employees, retirees, and their families, and they can be enrolled in through the Benefits Administration Service (BAS).

Broaden your view: Fehb Plans with Medicare Reimbursement

All employees in the Executive Branch of the Federal Government who are participating in the FEHB Program and whose pay is issued by an agency of the Executive Branch are automatically covered by the premium conversion plan.

Certain reemployed annuitants may be considered employees for purposes of premium conversion.

Employees of organizations that have established a premium conversion plan prior to October 2000 may not participate in the plan described here because they are already covered by their employing agency's plan.

Discover more: Fehb Plan Brochure

Individuals enrolled in FEHB who are not employees of the Executive Branch or are not employees of the Federal government will be covered by the premium conversion plan if their employer signs an adoption agreement that is accepted by OPM.

Individuals enrolled in FEHB who are appointed by an agency in the Executive Branch, but whose pay is not issued by that agency, will be covered by the premium conversion plan if the entity that makes their FEHB contribution signs an adoption agreement that is accepted by OPM.

Individuals may waive premium conversion by filing a waiver form with their employer in accordance with this part.

The effective date of an FEHB enrollment, change in enrollment, or cancellation of enrollment is the same as the effective date provided in § 890.301 of this chapter.

You can start the premium conversion process by enrolling in the FEHB plan through your employing agency.

The premium conversion process begins on the 1st day of the first pay period after your agency receives your enrollment, as long as you're newly employed or newly eligible for FEHB in a covered Executive Branch agency.

You'll need to file a waiver form by the date set by your employing office, but not later than the day before the effective date of coverage.

The waiver form is available from your employing office.

The premium conversion plan allows you to reduce your taxable income by the amount of your contribution to your FEHB insurance premium.

Section 125 of the Internal Revenue Code enables you to reduce your salary through an employer allotment and use that portion to purchase your FEHB insurance.

As a result, your taxable income is reduced, and you'll save on Federal income tax, Social Security and Medicare tax, and in most States and localities, State and local income taxes.

If you disagree with an initial decision affecting your participation in the premium conversion plan, you may use the reconsideration procedure set out at § 890.104 of this chapter to request your agency to reconsider.

A different take: Premium Income Etfs

The start-up costs of implementing the premium conversion program are estimated to be $3 million in 2001, with $2.5 million coming from Agency implementation costs and the remaining $.5 million from educational outreach programs.

The start-up costs are incurred in the first year of the program as individual Federal Government Agencies update their payroll systems to accommodate premium conversion and educate the Federal employee population.

The tax benefit to Federal employees caused by premium conversion is estimated to be about $670 million in Fiscal Year 2001, with $550 million in Federal income taxes, $85 million in Social Security taxes, and $35 million in Medicare taxes.

The decrease in Federal employer payments to the Medicare and Social Security Trust Funds is estimated to be $85 million and $35 million dollars respectively in Fiscal Year 2001.

Assuming health insurance premiums continue to increase at recent rates, the change in tax benefits and Federal employer payments from premium conversion is expected to grow at roughly a proportional rate in each subsequent year.

Intriguing read: Iphone 5

The Open Season is a period of time each year when you can enroll or change your enrollment in the FEHB program.

Changes made during the Open Season become effective with the first pay period that begins in the following year.

You can make changes to your enrollment during the Open Season if you experience certain life events, such as the birth or adoption of a child.

These life events include the issuance of a court order requiring you to provide coverage for a child, or the loss of coverage under another Federally-sponsored health benefits program.

You can also make changes if you experience a change in employment status that could affect the cost of insurance, such as a change from a temporary appointment to a permanent appointment.

Additionally, you can make changes if your spouse or dependent loses coverage under another health plan, or if they become eligible for coverage under a new plan.

If you become eligible for premium assistance under Medicaid or a State Children's Health Insurance Program, you can make changes to your enrollment within 60 days of being determined eligible.

On a similar theme: Rpx Regal Premium Experience

You can waive participation in premium conversion during the annual FEHB open season, which typically takes place from mid-November to mid-December. The effective date of the waiver will be the first day of the first pay period that begins in the following calendar year.

To waive premium conversion, you must submit your election no later than the close of business on the last day of the open season, which is usually December 14th.

If you're newly hired or rehired, you can also waive premium conversion at the same time as you sign up for FEHB. This is a one-time opportunity, and you won't be able to change your mind later.

You can also waive premium conversion after a qualifying life event, such as a divorce or the loss of a spouse. In this case, you have 60 days to file a waiver with your employer.

If you've waived premium conversion in the past, you can cancel the waiver and participate in premium conversion if you experience a qualifying life event, such as the birth of a child or a change in marital status.

The Federal Employees Health Benefits (FEHB) program is a vital benefit for federal employees, offering access to a range of health insurance plans.

The FEHB program is administered by the Office of Personnel Management (OPM) and is mandatory for federal employees, with premiums deducted from their paychecks.

Federal employees have a choice of health insurance plans, with over 250 options available through the FEHB program.

The FEHB program is designed to provide comprehensive health insurance coverage to federal employees and their families.

Premium conversion is an option available to federal employees who are eligible for the FEHB program, allowing them to convert their premium payments into additional pay.

Explore further: Fehb Health Plans

If you're a federal worker, you might be wondering if you should opt out of premium conversion. For most federal workers, premium conversion is a smart move, but there are some exceptions.

Only individuals who don't have to pay any federal income tax should consider opting out. This is because they won't benefit from the tax savings associated with premium conversion.

The tax savings can be substantial, but it depends on a few factors. These include the number of years until retirement and whether or not your salary is greater than the applicable Social Security wage base.

Here's a simple formula to calculate the tax benefit:

For FERS employees, any future reduction in Social Security benefits due to premium conversion would be compensated by the tax savings.