Who's eligible: Employees with Full, Mid-Level and Core benefits
Who’s covered: You
Who pays: There are no costs. The plan is an employee benefit that permits you to pay your share of group health plan premiums with pretax dollars.
How the plan works
- If you enroll in a medical plan that requires you to pay a premium, you’ll be automatically enrolled in TIP. Your premium is deducted from your paycheck each month before taxes are calculated. This reduces your taxable income and increases your take-home pay.
- Premiums for the following family members who are on your UC medical plan are also paid pretax via TIP: Your spouse, children and stepchildren. You may also pay via TIP for other eligible children if they are your tax dependents (grandchildren, step-grandchildren, disabled children age 26 and older and legal wards).
- If you’re in a registered domestic partnership, the premiums for your domestic partner and/or your partner’s children or grandchildren must generally be paid on an after-tax basis for federal tax purposes—unless these family members are your dependents as defined under the Internal Revenue Code.
- However, medical premiums for your registered domestic partner and his or her children (including overage disabled children) may be paid pretax for California tax purposes. Premiums for your registered domestic partner’s grandchildren also may be paid pretax on your California taxes, if the grandchildren are your California tax dependents. You’ll need to submit the UPAY 850 form indicating that your domestic partnership is registered with the state.
- If you haven’t registered your domestic partnership, you will pay medical premiums on an after-tax basis for both federal and state tax purposes for your partner and his or her children/grandchildren, unless they are your tax dependents.
- Because TIP reduces your taxable earnings, it may also reduce the earnings on which your Social Security and unemployment benefits are based. If you have questions, check with a tax adviser about your situation. TIP deductions don’t affect the wages used to calculate your UC Retirement Plan (UCRP) benefits or the annual contribution limits for your 403(b) and 457(b) Plan
- Your TIP amount will adjust or stop automatically if you change or cancel your medical plan during your first 31 days of employment or during Open Enrollment. Also, certain changes in your coverage, employment or family status trigger a new 31-day period during which you’re allowed to make certain changes to your medical plan. (See the Enrollment section of A Complete Guide to UC Health Benefits for details on permitted changes.) Once you’ve made the changes, your TIP amount will be adjusted accordingly. If any excess tax has been withheld, you can get it back when you file your tax returns.
- If you would prefer not to pay for your coverage on a pre-tax basis, you may cancel during your first 31 days of eligibility, during Open Enrollment in November, or within the first 31 days after you have an eligible change in employment or family status. The cancellation takes effect as soon as you complete the transaction, subject to payroll deadlines. Your take-home pay won’t be adjusted retroactively.
- If you go on a leave without pay or lose eligibility for benefits due to a reduction in your appointment rate, your participation in TIP automatically ends.