The MSC Premium Conversion Program allows City employees who have payroll deductions for health insurance premiums and optional riders to increase their take-home pay.Read More
The Medical Spending Premium Conversion Program enables eligible employees to pay for their health plan premium deductions on a pre-tax basis, thereby reducing their gross income for tax purposes.
Currently, health plan deductions for basic and/or optional benefits are deducted from your salary. For tax purposes, payments made on a before-tax basis effectively reduce the salary on which your taxes are computed by the amount of the health plan deduction.
Therefore, Federal and Social Security taxes that must be withheld are reduced. The net effect will be that you receive more money in your paycheck.
Find out if you are eligible to participate in the MSC Premium Conversion Program.Read More
Employees eligible to participate in the Medical Spending Premium Conversion (MSC) Program are those covered by:
Employees of cultural institutions, libraries and DOE charter schools may be offered a Premium Conversion Program through their individual institutions. Please contact your Benefits Manager for additional information.
Enrollment in the Premium Conversion Program is automatic.
Health insurance benefit premium payments will be deducted automatically from your paycheck on a pre-tax basis. If you currently do not have a payroll deduction for health insurance, this program does not affect your tax status.
While automatically enrolled on a pre-tax basis, you are able to choose post-tax premium payments if you wish.Read More
In order to do this, you must obtain, complete and submit a Medical Spending Conversion (MSC) Premium Conversion Enrollment/Change Form available at your Agency's Human Resources Department, or by contacting the MSC Administrative Office directly at (212) 306-7760.
After You Have Completed the Form
The completed form should be returned to your Agency's Human Resources Depatment for completion of the benefit section and to sign the MSC Enrollment/Change Form and send it to the MSC Administrative Office for processing.
Changing from pre-tax to post-tax or vice-versa can be done during the annual Health Benefits Fall Transfer Period. However, employees must choose to pay on a pre-tax or post-tax basis for an entire Plan Year.
In certain circumstances, such as a change in family status or employment, employees can change their tax status in the program.Read More
Enrollment in the Premium Conversion Program remains in effect during the Plan Year and your status cannot change unless an approved Qualifying Event occurs mid-year.
Similarly, employees who waived enrollment in the Premium Conversion Program may enroll mid-year only if they incur a Qualifying Event listed below:
Note: Participants will not be allowed to make changes inconsistent with the Qualifying Event.
Find out how the Premium Conversion Program affects your salary, taxes & benefits.Read More
Effect on Gross Salary
There is a reduction in the taxes withheld from your gross salary.
The reduction in gross salary will be shown on your Form W-2, under IRC 125, at the end of the year. Please note, you must add back the amount listed as IRC 125 on your Form W-2 to your state/city gross wages.
The unadjusted gross salary will only appear on your last paycheck of the year as a year-to-date figure. Some agencies may show individual gross salaries differently depending on the software and payroll systems in use.
Savings will vary and be based on, among other things, your health plan option, whether you have individual or family coverage, the number of withholding allowances that you claim for tax purposes and the amount of your income. There will be savings on federal as well as Social Security taxes (FICA).
Effect on Other Benefits
Social Security Tax (FICA): You will save on Social Security taxes due to the Premium Conversion Program. However, based on current Social Security law, Social Security benefits at age 65 will be slightly less as a result of the Premium Conversion Program. The effect would be minimal and would be offset by the amount saved in taxes today.
Pension: The Premium Conversion Program will have no effect on your pension contributions or benefits.
Deferred Compensation: Participation in the Premium Conversion Program will have no effect on your participation in a 457, 401(k), Roth 401(k) or 403(b) plan.