Federal employees can use pre-tax dollars to pay health insurance premiums to the Federal Employees Health Benefits Program under the "Premium Conversion" program. Premium conversion uses Federal tax rules to let employees deduct their share of health insurance premiums from their taxable income, thereby reducing their taxes. This plan is similar to the
private sector, which has allowed their employees to deduct health insurance
premiums from their taxable incomes for many years.
Premium conversion for federal employees enrolled in the FEHBP went into effect in October 2000.
A brief description of the program and its tax implications.
Answers to many questions about the Premium Conversion program.
This Plan provides Employees a choice between cash and pre-tax coverage under a Medical Plan, Health Care Flexible Spending Arrangement (HCFSA) and Dependent Care Flexible Spending Arrangement (DCFSA). It qualifies as a "cafeteria plan" under Section 125 of the Internal Revenue Code of 1986, as amended.
Premium Conversion Regulations
- Part 550,
Pretax Allotments for Health Insurance Premiums
[PDF]
[Text]
- Parts 890 & 892, Health Insurance Premium Conversion
[PDF]
[Text]
