• Tax Savings on Insurance Premiums (TIP)
• Dependent Care Reimbursement Account (DepCare)
• Health Care Reimbursement Account (HCRA)
• Parking and Transportation Program
• Retirement Savings Program (Defined Contribution, 403(b) and 457(b) Plans)

All of these benefits allow you to deduct a cost or contribution from your monthly salary before your federal, state, and, in some cases, FICA (Social Security and Medicare) taxes are figured. As a result, your taxable income is reduced, and you pay less in taxes.

All of these benefits allow you to deduct a cost or contribution from your monthly salary before your federal, state, and, in some cases, FICA (Social Security and Medicare) taxes are figured. As a result, your taxable income is reduced, and you pay less in taxes.

If you can’t imagine that participation in these plans can make a difference, consider this hypothetical UC employee, who we will call Bill.

He earns $50,000 per year. He is enrolled in the Kaiser medical plan, covering his wife and two children at a cost of $69.49 per month. His 3-year-old is in day care at a cost of $175 per week, so he enrolls in DepCare with an annual deduction of $5,000, the maximum allowed. To help cover his family’s out-of-pocket costs for medical care and his daughter’s braces, he enrolls in HCRA with $200 deducted monthly. He also takes public transportation to work and purchases a $60 fare card through the pretax parking and transportation program at his location. His mandatory Defined Contribution Plan contribution is $83, and he also saves $50 per month in the 403 (b) Plan.

Without participating in these benefits, Bill’s monthly taxable income would be $4167. By participating in the various tax-savings programs, Bill’s taxable income is reduced to $3288, which means he pays about $200 less in taxes each month.

An employee earning $40,000 per year enrolled in the same plans pays less for medical insurance and still has about a $200 monthly tax savings. And an employee in the third pay band earning $85,000 enrolled in a similar situation saves more than $300 per month in taxes, even though he or she pays higher medical premiums.

Of course, your tax savings may be different depending upon your tax bracket, the plans you enroll in, and whether you are coordinated with Social Security.