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Tax Savings and Other Employee Benefits

Section 125: Tax Savings Programs

The State of New Jersey provides employees participating in the State Health Benefits Program a benefit plan under the provisions of Section 125 of the Internal Revenue Code.  Section 125 includes the option of participating in any or all of the following plans.

1. Premium Conversion:

The Premium Conversion Plan allows employees to pay any State Health Benefits Program medical and/or dental premiums they have with before-tax dollars.

  • Premiums are deducted from each paycheck before Federal income and FICA (Social Security & Medicare) taxes are taken out — thereby saving the employee money.
  • Enrollment into the Premium Conversion plan will be automatic unless an employee signs the Declination of Premium Conversion Participation Form and returns it to the Benefits Section of the Department of Human Resources.

2. Unreimbursed Medical Spending Account: 

The Unreimbursed Medical Spending Account allows employees to set aside before-tax dollars to pay for medical and dental expenses NOT paid by insurance.

  • The employee elects to set aside money from his/her pay for the entire calendar year for this plan.
  • The payroll deductions are taken from each paycheck before Federal income and FICA (Social Security & Medicare) taxes are taken out — thereby saving employee money.
  • Employees can use the account for health care services such as co-payments and deductibles for medical, prescription and dental bills, and services not covered by insurance.
  • Minimum election is $100 per year.
  • Maximum election is $2,000 per year.

Please note that effective January 1, 2011, Over-The-Counter medications are no longer eligible for reimbursement without a prescription from the attending provider.  For additional information on this important change, please access  the links below:

3. Dependent Care Spending Account: 

The Dependent Care Spending Account allows employees to set aside before-tax dollars to pay for eligible dependent care expenses.

  • The employee elects to set aside money from his/her pay for the entire calendar year for this plan.
  • The payroll deductions are taken from each paycheck before Federal income and FICA (Social Security and Medicare) taxes are taken out — thereby saving the employee money.
  • Qualifying expenses are those dependent care expenses necessary to enable the employee and spouse (if married) to work.
  • Eligible dependents include the employee’s children below age 13, spouse (if a full-time student or physically or mentally incapable of self-care), or any other person, regardless of age, who is considered the employee’s dependent for tax purposes and who is incapable of self-care.
  • Minimum election is $250 per year.
    • Maximum election is $5,000 per year for a married person who files their federal income tax jointly; $2,500 maximum if married, filing separately.

Pension Loan Information

Other Employee Benefits

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