Employee Security, Inc. ESI Flexible Benefits

The Pre-Tax Advantage Plan

Any premium you pay for individual and/or dependent family medical coverage under our group health care and group dental care plans can be paid under The Flexible Benefit Plan with pre-tax dollars. This means that the net cost for this coverage will be less to you since you will not be paying taxes on these premiums. For example, if you set aside $1,000 before taxes and you pay federal and state taxes in the 33% tax bracket, you immediately reduce your income tax by $333. Thus, you have the full $1,000, not $667, to pay for health care and dental care insurance premiums. That full amount will be placed in your Pre-Tax Advantage Plan Account to pay your premiums. By participating, you actually reduce your health and dental care insurance premiums.

Here is an example of how this affects your spendable income:

 WITHOUT THE PLAN WITH THE PLAN
Annual Adjusted Gross Salary $50,000 $50,000
Group Medical PremiumAfter Tax 4,200
Sub-Total 50,000 45,800
Income and Payroll Taxes 16,250 14,885
Net Income 33,750 30,915
Group Medical Premium 4,200(Paid Pre-Tax)
Spendable Annual Income 29,550 30,915
Increase in Take-Home Pay   $1,365