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.
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.