Section 125 Premium Conversion Plan

This plan allows employees to pay for eligible benefits using either before-tax or after-tax dollars. Those who choose to participate will have their benefit premiums deducted from their salary before taxes are calculated. Participating in this plan will generally lower an employee’s taxable income for a given year. Eligible benefits include Medical, Dental, Life, and Accidental Death & Dismemberment Insurance.

If no changes are made to the eligible benefits listed below during open enrollment, the previous plan year’s elections will continue automatically. For new employees, if no election is made, the deductions will automatically be taken after tax and the employee will be subject to all plan requirements and restrictions. For detailed information, refer to the Section 125 Premium Conversion Plan document.

Section 125 Resources

EBSD Phone: 909.387.5787 EBSD Email: ebsd@hr.sbcounty.gov

Eligibility and Election

Employees must meet the eligibility requirements specified in their Memorandum of Understanding (MOU), Exempt Compensation Plan, contract or salary ordinance. In order to be eligible for the pre-tax option, a dependent must be claimed on your Federal tax return and meet the eligibility requirements of a qualifying child or relative as described in the Internal Revenue Code (IRC). You must notify the County of your choice to deduct eligible insurance premiums from your paycheck either before or after taxes.


Failure to Elect

Election of before-tax and after-tax payroll deductions shall be made on the designated forms within sixty (60) days of the initial eligibility period. Failure to timely submit appropriate paperwork will result in after-tax deductions for all eligible premiums for the remainder of the plan year or denial of the request.


Elections are Irrevocable

Plan elections are irrevocable for the remainder of the plan year unless you experience an Internal Revenue Service (IRS) Change in Status Event. No election change will be retroactive except as required under the Health Insurance Portability and Accountability Act (HIPAA) or other applicable laws or policies. This means that once you elect to participate, you cannot change the elections that you have made for your eligible benefits until you have a qualifying event, or until the next annual Open Enrollment period, whichever is sooner.


Qualifying Event

Examples of qualifying events include marriage, divorce, commencement or termination of a state-registered domestic partnership, addition of a new dependent through birth, adoption, or court placement, a change in employment status for you or your spouse/registered domestic partner, or moving into our out of an HMO service area.

When you experience a qualifying event, you have 60 days from the date of the event to make a change to your benefit elections. To make a change, complete the Premium Deduction Election Form and submit along with all necessary supporting documentation to your department's Payroll Specialist or to the Employee Benefits and Services Division (EBSD) at: 157 W. 5th Street, First Floor, San Bernardino, CA 92415, Interoffice Mail Code 0440. The change must be consistent with and as a result of the qualifying event.

When you submit a change request, you must provide documentation that supports and verifies the change. For example, if you are submitting a change due to a recent marriage, you must provide a copy of your marriage certificate. When you are submitting a change due to the birth of a child, you must provide a copy of the birth certificate.


Pre-Tax Option and Premiums

This option is especially attractive as it results in greater take-home pay. It does, however, limit your mid-year changes (involving premium increases or decreases) to the change-in-status events as specified in IRC Section 125 and the County’s Section 125 Premium Conversion Plan. Eligibility for the pre-tax option does not affect your dependent’s eligibility for County-sponsored insurance.

Premiums for the following plans may be deducted from your paycheck before taxes are calculated:

  • Medical
  • Dental
  • Accidental death & dismemberment (AD&D)
  • Life insurance premiums

NOTE: Premiums for life insurance coverage in excess of $50,000 (including employer-paid life insurance) are ineligible for pre-tax deduction per Internal Revenue Service regulations.

Election of Pre-Tax Benefits
  • Open Enrollment: To have your medical and dental premiums deducted from your pay before federal and state taxes are withdrawn, you must use eBenefits to select the appropriate before-tax plan.
  • Mid-Year Change: To have your medical and dental premiums deducted from your pay before federal and state taxes are withdrawn, you must submit a completed Premium Deduction Election Form.

After-Tax Option and Premiums

This option results in less take home pay. Changes during the plan year are still limited to those allowed by the County’s contracts, agreements or plan documents governing the benefits.

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