Pre-tax Versus Post-tax Deductions
What is the benefits of having the cost of your portion of the insurance deducted from your paycheck before taxes (pre-tax)? By choosing this option, you reduce your taxable income, therefore reducing the taxes you owe. However, you cannot drop coverage until the next open enrollment period or until you have a qualifying change in status.
What are the benefits of having your deductions after taxes (post-tax)? You can drop your insurance coverage, should you choose to do so. However, if you do drop coverage in one of the insurance plans, you will not be eligible to enter the plan again until the next open enrollment period or until you have a change in status.
Whether you choose pre-tax or post-tax deductions, you sign a salary reduction agreement (or provide authorization via completion of open enrollment via Esther) authorizing the university to withdraw your cost of the coverage from your paycheck.
Long-term disability (LTD) coverage has another consequence. Should you go on an approved LTD leave of absence from Rice and had elected to have the university pay the cost of the benefit, your benefits payable to you will be taxable. If you choose to pay the cost of LTD coverage after taxes, then your benefit will be payable to you tax-free.