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Benefit Cost Code - Adding

Overview

Add a Benefit Costs Code

The Benefit Costs screen can be launched from the Benefit Codes Table.

For the online version of this screen, the fields that display are conditional based on what is selected on the current record.

For the Enterprise Client version of this screen, the Cost Bands button is not available. Instead, Cost Band records need to be defined through the online product.

Benefit Cost Record

Benefit costs are unique by Benefit code, effective dates (effective and termination dates), coverage code, and benefit profile.

1. Active?  A selected Active checkbox puts the code into service. To remove a cost record from service, it should have a termination date based on payroll periods. In some cases, a terminated benefit cost also has its Active checkbox cleared to take the cost record out of service.
2. Code.  Select the benefit code for this benefit cost.
3. Description.  Enter a text Description to identify the benefit cost. Often, the plan year is entered as part of the description.
4. Coverage.  Select the Coverage Code to associate coverage with costs. Coverages may be filtered based on the benefit type for the benefit code itself. If necessary when editing, re-select the benefit code with a mouse-click, then select the coverage code.

Look to the upper right section of the screen, under the cost options and under the Monthly COBRA field.

5. Benefit Profile (optional).  If this benefit cost only applies to a specific benefit profile, select that benefit profile. Otherwise, leave the benefit profile selection blank. As part of a benefit setup, the benefit code itself should also be selected in the benefit profile's New Hire Profile Setup (available through the Enterprise Client program).

What Type of Annual Costs?  Banded? Increments for Benefit Amounts?

6. Option for Cost Type.  Choose the option for the type of cost calculation.

Cost Type Options

Look midway down the screen, and see if benefit costs are banded or custom.

7. Benefit Costs are Banded or Custom? (optional). If this benefit is cost-banded, select the this checkbox and select the Band/Custom Cd on a subsequent step. Benefit cost band codes need to be defined through the web product.
8. Calculate Coverage Increments? (optional).  Some cost-banded or custom-programmed costs are defined with one coverage code that has a range of benefit amounts for coverages. In that case, select the checkbox for "Calculate Coverage Increments." These types of plans often offer coverage every 1000, 5000, or 10000 dollars between the minimum and maximum benefit amounts. Enter the amount for these increments in the Increments field.

On the online screen, the "Calculate Coverage Increments" checkbox needs to be selected for the corresponding Increments field to display.

Return to the upper part of the screen.

Effective Dates

10. Effective.  Enter the begin date for the benefit costing. When entering this date, consider the pay period effective dates.  
11. Termination (optional).  If this coverage and costing have an expiration date, enter a termination date. Consider the pay period effective dates.  

Deductible, Out of Pocket, and Monthly COBRA

12. Deductible and Out of Pocket (optional).  If appropriate for the benefit, enter the deductible amount in Deductible Amt, and enter the Out of Pocket maximum for the benefit, if any.
13. Monthly COBRA.  Enter the amount of the monthly COBRA premium to continue this benefit. Leave this amount blank where the benefit is not COBRA-eligible or where the COBRA cost is calculated by a formula and is manually entered on the Employee COBRA Detail.

Annual Benefit Amounts

A benefit amount is not a cost. The benefit amount can be considered how much an insurance might pay under particular situations. For instance a 50,000 in life insurance coverage would be expected to have a benefit amount of 50000 in the system.

Methods to Define an Annual Benefit Amount (Step 14)

14. Define the value of the annual benefit amount (optional).

1. Benefit Amount (optional).  Optionally, enter the annual benefit amount. For instance, if this benefit coverage pays a standard amount per occurrence, enter that amount here. For instance, if a company offered $15,000 of group life insurance coverage, 15000 would be entered in the Benefit Amount field for that benefit coverage. Also refer to the section of the screen labeled, "Benefit Amount and Salary Calc."

OR

2. Benefit Amount by Salary Calculation (optional).  Optionally, define the calculation for the value of the benefit amountbased on the rules in the "Benefit Amount and Salary Calc" section.

1. To calculate benefit amounts based on salary multiplied by an amount multiplier and a cost rule amount, select the Benefit = Mult x Salary indicator.
2. Enter the Amount Multiple.

Benefit Amount= Amount Multiplier x Employee Salary x Cost Rule Amount

2. Select the Salary Calc Code.  When 2, Salary As Of Costing User Date, is the selected salary calculation code, also complete the User Date field.
3. In the Rounding Rule field, select the rounding convention to apply to the Benefit Amount.

OR

3. Benefit Amount from Applicable Cost Band (optional). Optionally, for plans defined with exact benefit amounts for a coverage (instead of using the features to calculate increments), select "Band Max Ben Amt As EE Ben Amt" along with "Costs are Banded or Custom" and a cost band and define the required benefit amount and benefit limit amount as the maximum benefit amount per range of years on the Benefit Cost Band code(s).

Minimums and Maximums

14. Define the minimum and maximum limits for the annual benefit amount values (optional).  

1. Min Ben Amt.  If a minimum amount of benefit amount applies, enter the minimum benefit amount. In some cases, this minimum may be necessary.
2. Max Ben Amt.  If the plan rules or regulatory guidelines require an annual limit on the benefit amount, enter the maximum benefit amount. This is common for life insurances.  

Costs in Percentages or Dollars?

15. Annual EE CostAnnual ER Cost and .  Define the annual costs in dollars or percentages.

When the values for EE Amount and the ER Amount are considered percentages versus when are these dollars depends on the selected costing option. Review these selections before defining the costs. For dollars, the option is "Calc Benefit Cost in Dollars." For percentages, the option is "Calc Benefit Cost by Rule Code."

1. The benefit has no pre-defined cost for EE or ER (optional).  Deferred compensation plans and plans with an HSA benefit type typically have the Annual EE Cost and Annual ER Cost fields left blank. For other plan types, you may need to clear the checkbox for updating costs on each Employee Benefit Detail when the costs differ from the cost setup.

When no Annual EE Annual Cost and/or no Annual ER Cost is entered, the system tries to read that value as 100.00.

OR

2. Calculate Benefit Costs in Dollars (optional).  For benefits costed by dollars, enter the annual amounts associated with this benefit coverage. Enter the Annual EE Cost (the cost per year to the employee to have this benefit).

Cost bands?  Cost bands also can be applied to plans costed in dollars. When cost bands apply, use the Annual EE Cost field, and enter the Annual ER Cost (the cost per year to the employer to provide the benefit to the employee). Cost bands need to be defined online using a web role such as Payroll & HR Enterprise.  For a plan with cost bands, coverages can be defined as a range, where the checkbox for "Calculate Coverage in Increments" is selected.  

OR

3. Define Costing Percentages (optional).  When "Calc Benefit Cost by Rule Code" is chosen, enter the percentage of Annual EE Cost (the percentage of total cost paid by the employee to receive the benefit). For instance, 50% would be entered as 50.

Next, enter the percentage of Annual ER Cost (the percentage of total cost paid by the employer to provide the benefit to the employee).

Avoid under or over allocating for a benefit calculated as a percent: the Annual EE Cost plus the Annual ER Annual Cost should have a sum equal to 100 when these values are percentages.

16. Minimum and Maximum Annual Costs or Percentages (optional).  Define any minimum and maximum costs to the employee or employer.

Minimum Costs?

1. Min EE Cost.  If a minimum applies, enter the employee's minimum cost or percentage in Min EE Cost. Also, if that cost is predetermined, entering that cost or 0.00 as the minimum often is recommended.
2. Min ER Cost.  If a minimum applies, enter the employer's minimum cost or percentage in Min ER Cost. Also, if that cost is predetermined, entering 0.00 or that cost often is recommended.

Maximum Costs?

3. Max EE Cost.  If a maximum cost applies, enter the employee's maximum cost or percentage in Max EE Cost. Also, if the cost is predetermined, entering that cost as the maximum often is recommended.
4. Max ER Cost.  If a maximum cost applies, enter the employer's maximum cost or percentage in Max ER Cost. Also, if the cost is predetermined, entering that cost as the maximum often is recommended.

Plan Costed by Cost Rules?

17. If the plan is defined by cost rule, complete the following sections.

1. By Cost Rule (optional).  Optionally, define costs by cost rule. Benefit plan costs calculated by Cost Rule Code are calculated as a fraction of the salary (or of the benefit amount) multiplied by the Cost Rule Amount. Confirm that the option for "Calc Benefit Cost by Rule Code" is selected in the upper right portion of the screen.

Benefit Cost = Fraction of Cost Rule x Salary or Benefit Amount x Cost Rule Amount

The Cost Rule Codes chart indicates which codes calculate a fraction of the salary.

1. Cost Rule Cd.  For benefits calculated by cost rules, select the Cost Rule Cd.
2. Cost Rule Amt.  Enter the exact amount to apply to the selected cost rule in the Cost Rule Amount field.

For instance, a cost rule amount of 2 with cost rule 4, $0.01/10 of Weekly Salary, would equal $0.02/10 of weekly salary, which is the weekly salary multiplied by 0.002. In this instance, if the weekly salary was $500.00, then the benefit cost would be $1.00. The benefit cost would then be distributed according to the percentages in the Annual EE Cost and Annual ER Cost fields.

OR

Plan Costed by Cost Bands for Years of Service or Age?

18. Rate Costs by Age or Years of Service (optional). When costs are rated by years, this indicates that cost bands are needed.

Benefit Cost = Cost bands rated by age or years of service

 If the costs are not rated by age or years of service, you can opt to leave "Rated by Age" selected and choose 0, Not Age or Service Rated, in the next field for Age/Svc Calculation.

1. If the benefit costing is rated by either age or years of service, select the option for Rated by Age or Rated by Yrs of Svc.

• Rated by Age.  For costs rated by the individual's age, click on the Rated by Age option.
• Rated by Yrs of Svc.  For costs rated by the employee's number of years of service, click on the Rated by Yrs of Svc option.

2. Age/Svc Calculation.  Select the way that years are defined in the Age/Svc Calculation field. If not rated by age or years of service, select 0, Not Age or Service Rated in the Age/Svc Calculation field on the Benefit Cost Code. (Refer to information about Benefit Age/Svc Calc Rules.)

3. Where cost bands rated by age or years of service apply, verify that the "Costs are Banded or Custom" checkbox is selected, and select the Band/Custom Cd.Use a web role, such as Payroll & HR Enterprise to confirm the cost bands.

19. Save.