Purpose Statement
This document outlines the steps for configuring benefit plans that will prorate premiums for mid-year enrollments
Configuring Benefit Plans
- From the Admin tab, go to Company Settings>Profiles/Policies>Benefits>Plans
- Click on Add New Plan to create a new benefit plan.
- A pop-up screen will appear for you to fill in the plan type, number of earning/deduction codes, the coverage type, and the number of coverage levels
Note: The Coverage Type must be a Coverage Amount option for proration functionality to appear.
- Once inside the benefit plan set up screen, fill out the plan as you normally would.
- In the Deduction/Earning window, check the box next to Prorate Employee and Prorate Employer
- Once the plan is set up, click Save in the top right corner to save the plan.
Proration Logic
- Prorate Employee and Prorate Employer functionality allows the application to calculate an amount that is closer to the desired prorated deduction amounts when an employee enrolls mid-year.
Note: The system calculates an estimated prorated amount based on the month the employee enrolls, regardless of the actual day in the month the employee enrolled. For example, enrolling on 4/1 or 4/20 will result in the same Remaining Months Multiplier.
- The calculation used by the system gets the Average Monthly Multiplier based on the employee’s Pay Period Profile.
Example: Biweekly employees have an Average Monthly Multiplier of 2.1666 pay periods per month (26 weeks/12 months = 2.1666)
- A new employee hired on ANY day in April will have 9 months left (April through December), because the system ALWAYS includes the current month of enrollment.
- The system calculates by taking the average number of pay periods per month times the remaining months in the year. This returns the Remaining Month Multiplier.
- The system then takes the requested amount of coverage by the Remaining Month Multiplier to get the employee premium.
- The Premium Field on the benefit plan can be set up to reflect something similar to CoverageAmount/12
- Because of this logic, the system calculated employee premium can be slightly off from the expected amount.