CUNY Bulletin No. CU-757

City University of New York (CUNY) Health Benefits Buy-Out Waiver Program for Payment Cycle of 07/01/2022 – 12/31/2022
Date Issued
December 30, 2022


The purpose of this bulletin is to provide agency instructions for processing the CUNY Health Benefits Buy-Out Waiver Program.

Affected Employees

Eligible CUNY employees who elect to participate in the Health Benefits Buy-Out Waiver Program are affected.


The Health Benefits Buy-Out Waiver Program is authorized under IRC Section 125 and administered under the Medical Spending Conversion (MSC) Program.  Employees receive an annual incentive payment in exchange for waiving their City health benefits when other non-City group coverage is available.  The employee must complete the Health Benefits Application and the MSC Enrollment/Change Form.  An employee will receive $1,000 for waiving family coverage or $500 for waiving individual coverage on a semi-annual basis.  The maximum payment amount is $1,000 and the payment must be prorated for any period less than 6 months.

Effective Dates

Effective as of Institution Pay Period 19L/20C, paychecks dated 01/12/2023.

OSC Actions

A listing of employees who elect to participate in the Health Benefits Buy-Out Waiver Program is sent to CUNY Central Office by the Deputy Director of the NYC Management Benefits Fund, Tax-Favored Benefits, and Citywide Programs.  To pay the Health Benefits Buy-Out Payment to employees appearing on this list, University Payroll must submit the following information on the Time Entry Interface (NPAY502) or the Time Entry page using Earnings Code HBB:

Earnings Begin Date: Pay Period 19L/20C End date or the last date the employee was in pay status
Earnings End Date: Same as Earnings Begin Date
Earn Code: HBB-HB Buyout
Amount: The amount designated on the listing

Errors and warning messages are communicated to the agency via Control-D report NPAY502 (Warning/Rejected Time Entry: Univ Management & Programs) and must be manually updated in PayServ as necessary.

Miscellaneous Payment Information

The Health Benefits Buy Out earnings are not pensionable.

Tax Information

The CUNY Health Benefits Buy-Out Payment is supplemental taxable income, will be included in the employee’s taxable gross, and is subject to all employment and income taxes.

Federal, State, and New York City income tax withholding will be calculated using the Aggregate method.  Yonkers income tax withholding will be calculated using the Flat Rate method (1.95975% for Yonkers residents and 0.50% for Yonkers non-residents).


Questions regarding this bulletin may be directed to the Payroll Earnings Mailbox.