PREMIUM CONVERSION FINANCIAL WORKSHEET 

Use the following worksheet to estimate your annual tax savings with premium 

conversion, and to estimate the effect of premium conversion on Social Security 

retirement benefits. 

Part One Taxable salary. 

1. Enter your current annual salary. 

2. Enter your annual FEHB premium payment (biweekly 

premium payment multiplied by 26). - 

3. Subtract #2 from #1. This is your taxable salary with 

premium conversion. 

Part Two Tax savings. 

1. Enter your annual FEHB premium payment (as entered 

in Part One, #2). 

2. Enter the sum of: 

(a) Your Federal income tax bracket (O.0, 0.15, 0.28, 

etc.), and 

(b) Social Security tax (0.062), if applicable to you, 

and 

(c) Medicare tax (0.0145). 

 

 x 

3. Multiply #1 by #2. This is an estimate of the annual 

amount of tax you avoid with premium conversion. = 

Note: Additional savings on State and local income taxes, if any, are not included 

for the purpose of simplifying this estimate. 

Continue with Part Three of this worksheet if you are covered by the Federal 

Employees Retirement System or by Social Security only. Part Three should not be 

used by employees covered by either the Civil Service Retirement System (CSRS) 

or the CSRS-Offset System. Employees covered by CSRS are not subject to Social 

Security tax and people covered by the CSRS Offset plan receive a higher annuity 

from OPM if their Social Security benefit is reduced.
Part Three An estimate of the annual gain in Social Security benefits at 

retirement (in today’s dollars) when you waive participation in 

premium conversion. 

To complete this part, you must access the Social Security 

Administration web site, www.ssa.gov, using the Instructions 

on the next page. If you do not have access to the Internet, 

your Human Resources office can help you. 

1. Use the instructions entitled “Using the SSA Web Site 

Calculator.” Enter your estimated monthly Social Security 

benefit at retirement (Step 5) WITHOUT premium 

conversion. 

2. Use the instruction entitled “Using the SSA Web Site 

Calculator.” Enter your estimated monthly Social Security 

benefit at retirement (Step 7) WITH premium 

conversion. 

 - 

3. Subtract #2 from #1. This is the difference in Social 

Security retirement benefits. 

4. Multiply #3 by 12. X 12 

5. This is the estimated annual Social Security benefit 

increase over a 35-year career.

6. Divide by 35 ====÷ 35 

7. This is the estimated Social Security benefit you earn 

for each year you waive premium conversion. = 

8. Enter the annual amount of tax you save with premium 

conversion from Part Two, #3. 

9. Divide the amount in #8 by the amount in #7. This 

estimates how many years of Social Security retirement 

benefits are needed to make up for the additional taxes 

you paid by not participating in premium conversion. 

Because most people receive Social Security for about 20 

years, you may want to consider waiving premium 

conversion if this number is less than 20. 

 = 

Note: when you reduce your taxable salary by your annual health benefits premium 

in the SSA benefit calculator, the model assumes a different salary over your 

entire career (35 years for Social Security benefit calculation purposes). 
Using the SSA Web Site Calculator to Complete Part Three: 

Step 1 Go to www.ssa.gov/retire on your internet. 

Step 2 The first box in the left-hand column menu is labeled 

“Calculators.” Use your mouse to click on this box. 

Step 3 A new screen will appear with three boxes in the center. Use your 

mouse to click on the first box, “1. Quick.” 

Step 4 Follow the instructions on how to use the calculator. You will need 

to use this calculator twice (Steps 5 & 7). 

Step 5 Enter your age, current salary, and select the “Today’s Dollars” 

option in the menu list for the third item on the calculator. Click 

on the button “Submit Request” and a calculation will appear. 

Enter the figure for your estimated monthly Social Security 

benefit in Part Three, #1. 

Step 6 Use the “Back” button on your browser to return to the 

calculator. 

Step 7 Enter your age, salary with premium conversion (Part One, #3), 

and select the “Today’s Dollars” option in the menu list for the 

third item on the calculator. Click on the button “Submit 

Request” and a calculation will appear. Enter the figure for your 

estimated monthly Social Security benefit in Part Three, #2.