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10 <br /> • SUMMARY OF PREMIUM CONVERSION PLAN <br /> INTRODUCTION <br /> In the past you may have thought of the salary you are paid <br /> for the work you do and the benefit plans available to you as two <br /> separate programs. Actually, your salary and benefits together <br /> form your total compensation program. <br /> Under the more traditional programs of the past, employers <br /> provided both a salary and a benefit program. Part of the cost <br /> of the benefits was paid for by the employer and part by the <br /> employee, using payroll deduction. <br /> With the Premium Conversion Plan, you receive flexibility in <br /> how to pay for your portion of the cost of certain employer <br /> sponsored benefits. You can use before-tax dollars to pay for <br /> your choices. . <br /> ELIGIBILITY <br /> Any individual who is regularly scheduled 40 hours per week, <br /> and who receives compensation qualifies for the Premium <br /> Conversion Plan. A qualified- employee who is employed when the <br /> Plan begins is immediately eligible to participate. Individuals <br /> beginning employment after the effective date of the Plan, and <br /> meeting the qualifications, may begin participation the first day <br /> of the month following the completion of their probationary <br /> period. <br /> CONTRIBUTIONS <br /> With the Premium Conversion Plan, you may choose to receive <br /> your full compensation in cash, as you have prior to this Plan, <br /> or you may elect to have a portion of your pay set aside before <br /> any taxes have been deducted to be applied to the payment of your <br /> share of insurance premiums. The legal term for this process is <br /> salary reduction. The advantage is that it reduces your <br /> federal/state-income taxes and social security taxes (FICA) . <br /> It should be noted that because the amount of your salary <br /> reduction is not subject to FICA taxes, it is also not included <br /> in determining your average wages for Social Security benefit <br /> purposes. For example, if you reduce your salary in one year <br /> from $20, 000 to $18 , 000 through use of this Plan, the salary <br /> included in your Social Security wage history for that year would <br /> be $18, 000 rather than $20;000. The exact effect .this will have <br /> on your Social Security benefits is difficult to estimate, since <br /> your benefits are based on your salary history throughout your <br /> working career, your marital status, and other factors, but your <br /> Social Security benefits may be reduced. <br /> 1 <br />