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Texas Payroll/Personnel Resource

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Voluntary Deductions
Insurance Plans

State agencies and institutions of higher education may be able to offer their employees insurance from cafeteria and/or group benefit plans. The plan administrator determines employee eligibility and enrollment opportunities. Agencies or institutions should contact the appropriate administrator for more information on employee eligibility, deadlines, exclusions, etc., that apply to their employees.

Cafeteria Plans

Cafeteria Plans — also called reimbursement accounts, flexible benefit plans, or flexible spending accounts (FSAs) — are authorized by Internal Revenue Code Section 125. Cafeteria plans provide a tax-advantaged way to pay certain out-of-pocket health care expenses and work-related dependent care expenses. Cafeteria plans allow employees to pay expenses using pre-tax dollars. Employees do not pay federal income, Social Security or Medicare taxes on this allocated money.

Employees covered by the Texas Employees Group Benefit Program or employees of the University of Texas or Texas A&M systems may use group insurance plans other than cafeteria plans.

The Employees Retirement System administers a cafeteria plan (TexFlex) that most state employees may participate in. Two benefits currently are included in the plan: health care reimbursement and dependent care reimbursement. Participation in either benefit is optional.

The governing boards of the University of Texas System (UT System) and the Texas A&M University System also administer cafeteria plans for their employees. UT FLEX is the program administered by the UT System. FlexConnect is the program administered by the Texas A&M System.

The benefits included in the cafeteria plans adopted by the respective governing boards may differ. See TexFlex, UT FLEX and FlexConnect for participation and election details.

Other Considerations

An employee who chooses to participate in one of these plans must pay for his or her participation costs by completing a salary reduction agreement that creates a payroll deduction. This deduction is in addition to the plan deduction and begins at the same time as the plan deduction. The amount deducted each pay period is binding until the next annual enrollment period unless a qualifying life event occurs.

Group Insurance Plans for State Agencies

The board of trustees of the Employees Retirement System of Texas (ERS) is required to establish and administer the Texas Employees Group Benefit Program for active and retired state employees. For the purpose of this deduction, “employee” means an individual eligible to participate in the group benefits program under Texas Insurance Code, Section 1551.101.

The state contributes to the cost of the group insurance program for each employee. This contribution may not be enough to cover the entire cost of participation for some employees, particularly if an employee includes his or her spouse and children in the program.

When the state’s contribution is insufficient to cover an employee’s entire cost, the employee must pay the balance through payroll deduction. In connection with its administration of the group insurance program, the board of trustees of ERS administers a premium conversion plan that is mandatory for each employee who participates in the group insurance program. The plan provides for employees to pay insurance premium expenses with pre-tax dollars.

To learn more about this payroll deduction, see Chapter 9, “Deductions,” in the USPS Process Guide or the SPRS Deduction Code Table.

Group Insurance Plans for Institutions of Higher Education

The University of Texas System and the Texas A&M University System are required to implement the Texas State College and University Employees Uniform Insurance Benefits Program for the benefit of their employees. For the purpose of this deduction, “employee” means an individual eligible to participate in the group benefits program under Texas Insurance Code, Section 1601.101.

Each system must contribute to the cost of the group insurance program for each employee. This contribution may be insufficient to cover the entire cost of the program for some employees. When a system’s contribution is insufficient to cover an employee’s entire cost, the employee must pay the balance through payroll deduction.

The benefits offered by the Texas A&M University System include:

  • Health
  • Dental
  • Vision care
  • Long-term disability
  • Optional accidental death and dismemberment
  • Long-term care
  • Life insurance

The benefits offered by the University of Texas System include:

  • Medical
  • Dental
  • Vision
  • Accidental death and dismemberment
  • Short and long-term disability
  • Group term life
  • Long-term care

Sources

Texas State Employees Uniform Group Insurance Benefits Act; Texas Insurance Code, Article 3.50-2, Sections 3(a)(11), 5(a), 13B, 13Ba, 14(a), (d)-(f), (h), 15, 16B(b); 34 Texas Administrative Code Section 81.7(a)(4), (f)(1), 85.5(a), 85.7(c)(1)–(2); Texas State College and University Employees Uniform Insurance Benefits Act, Texas Insurance Code, Article 3.50-3, Sections 3(a)(7), 4(a)(e), 12(a)-(b), 14B(b), 17(a).