COMPLIANCE FRAMEWORK & FAQ'S

You will see new line items on your paycheck:

1. Pre-Tax Deduction – Reduces your taxable income.
2. Benefit Credit – Your participation incentive is applied to every paycheck after receiving your preventative health education, creating a healthier you and a healthier paycheck.
3. PHP Admin Fee – Service charges applied for the administration cost of the program.
4. Universal Life Insurance Premium – Funds your cash-value life insurance policy that builds long-term financial security.

Your tax savings fund the program. The Pre-Tax Deduction reduces your taxable income, lowering the amount of taxes withheld.

• Example: If you were originally paying $500 in taxes, after the plan, you might pay $350, creating a $150 savings.
• This savings covers the cost of the plan, so your net paycheck remains the same.

No, this program functions similarly to a medical expense tax write-off, except it's applied directly in your paycheck. In fact, by reducing your taxable gross income, you may owe less in taxes and could potentially lower your tax bracket.

If you have other write-offs or medical expenses, speak with your tax professional for more details.

This program is a medical tax write-off, reducing your taxable income.

• If you typically overpay taxes to receive a refund, your refund may be slightly lower.
• If you claim dependents or other deductions, your refund could remain unchanged or even increase

To see how this program impacts your paycheck:

1. Compare before and after pay stubs. Ensure Gross and Net Earnings match.
2. Identify the Pre-Tax Deduction. This lowers taxable wages.
3. Review the tax savings. If you were paying $500 in taxes before and now pay $350, you've saved $150.
4. Check the Benefit Credit (Post-Tax). This offsets the Pre-Tax Deduction.
5. Confirm that Net Pay remains the same. Your paycheck stays the same, with savings funding the plan.

You can estimate your tax savings by adding the PHP Admin Fee and your Universal Life (UL) Premium together. That total represents the tax savings generated per paycheck through the program.

To estimate your annual tax savings, multiply that number by your pay schedule:

• Weekly: × 52
• Bi-Weekly: × 26
• Semi-Monthly: × 24
• Monthly: × 12

Participation in the program requires that you generate federal tax liability through payroll in order for the tax savings to fund the benefits.

If your payroll withholding changes significantly or your federal withholding becomes $0, it may impact eligibility because tax savings would no longer be generated.

If this occurs, our team will review your eligibility and contact you with available options.

Only minimally. CPA-Attorney Peter Karl estimates the average impact to Social Security is about $10 per paycheck. However:

• The life insurance policy builds tax-free cash value, which you can access in the future.
• Social Security benefits are taxed upon withdrawal, while your life insurance cash value grows tax-free.
• Social Security is based on your 35 highest-paid years, so the effect of this program on your future benefits is minor; similar to what a 401k or your health insurance premiums would do.

Life insurance coverage amounts vary because policies are based on several underwriting factors. While we can provide general examples, individual policies are determined based on:

• The premium generated through tax savings
• Age
• Sex / mortality risk factors

For example, if $100 per month in premium is generated through tax savings:

• A 20-year-old female might receive approximately $75,000–$100,000 in coverage.
• A 56-year-old male might receive approximately $25,000–$35,000 in coverage.

Your Universal Life premium is created through the tax savings generated in payroll.

The PHP administrative fee is a flat rate. After the admin fee is applied, any remaining tax savings are used to purchase as much life insurance as possible, based on the underwriting factors of age and sex.

Because the available premium and underwriting factors differ for each person, policy values will vary from employee to employee.

Yes. Your Universal Life policy is initially funded based on the premium generated through tax savings.

However, you may choose to increase your coverage amount by contributing an additional out-of-pocket premium if you would like a higher death benefit.

A Benefits Specialist can review available options with you if you are interested in increasing your coverage.

Life insurance carriers typically activate online portals within 45–60 days after the policy has been issued.

Once the portal is active, you will be able to:

• View your policy details
• Designate or update beneficiaries
• Review policy values
• Access carrier documents

Employees have an initial 30-day enrollment window to review the program and make a decision. If you choose to opt out within this period:

• Your participation will be cancelled
• There will be no changes to your paycheck, as payroll changes are not implemented until after this review window
• No additional documentation is required

To opt out during the first 30 days, complete the Opt-Out SRA Form.

After the initial 30-day enrollment period, the program becomes part of the employer's benefit plan administration. At this point, opting out requires a Qualifying Life Event (QLE).

Examples of a QLE may include:

• Marriage or divorce
• Birth or adoption of a child
• Gain or loss of other coverage
• Change in employment status (hours reduced, job ended, new position)
• Change in residence or address
• Change in dependent eligibility

To opt out after 30 days:

1. Complete the QLE Opt-Out Form
2. Upload supporting documentation for your Qualifying Life Event

If you do not have documentation, you must have your HR department complete and sign the QLE Verification Form and upload the signed form to the QLE Opt-Out Form.

If you opt out after the enrollment window:

• Payroll deductions and tax savings will stop
• Your Universal Life Insurance policy remains yours (portable)

You will have the option to:

• Continue the policy by paying premiums directly to the insurance carrier (previously funded through tax-advantaged savings)
• Allow the policy to lapse according to the policy terms (you have 120 days to set up premium payments)

Yes. During the annual anniversary period, employees may opt out without needing a Qualifying Life Event (QLE). No QLE or documentation is required during this time.

Complete the Opt-Out SRA Form to opt out during the anniversary period.

You may opt back in at any time by completing the Opt-In SRA Form. Once submitted and approved, the program will be added back into your payroll structure based on eligibility.