Employee Payroll Deduction

Employers are assessed a Payroll Contribution and may choose to deduct a portion directly from employee’s wages. This is the Employee Payroll Deduction. 

After an exemption, the maximum amount an employer can deduct is 2% of the Employee’s Gross Pay.

  • The exemption is $15,000 – (Gross Pay x 0.25)
  • The exemption phases out for pay above $60,000.

The Employee Payroll Deduction does not apply to employees 65 years or older.

The Payroll Contribution would be assessed quarterly, and employers are responsible for its collection.

Remember, the employer may choose to pay some or all of the Payroll Contribution as a benefit of employment.

Calculation Examples

Jane grosses $90,000/yr and does not qualify for an exemption. If her employer chose to deduct the maximum amount her deduction would be:

  • Jane’s Payroll Deduction
    • 90,000 x 2% = $1800/yr or $150/mo

Trey makes $50,000 GP which qualifies for an exemption. If his employer chose to deduct the maximum amount his deduction would be:

  • Trey’s Payroll Contribution
    • $50,000 x .25 = $12,500
    • $15,000 – 12,500 = $2,500
    • $50,000 – 2,500 x 2% = $950/yr or $79/mo

See Page 30 – Section 203 of the full bill text for details. In the bill, the Employee’s Payroll Contribution is referred to as the Personal Health Assessment.