Configure Benefits Structure - Plan - Step 4 - Premium/Benefit Amt Rules

The 'Premium/Benefit Amt Rules' tab is generally used when configuring plans for LTD, STD, basic life, or supplemental life where compensation is used to derive premium and coverage amounts.

• If the plan being created is not using age-banded rates or coverage that is derived from the compensation of the employee, you will be able to skip this step altogether.
• When building plans that do, you will want to select the date for which the plan looks at the employees' ages.
• By default, the DOB will be calculated from the package DOB in the first tab of the package build.

Available fields may differ depending on your benefit configuration.

Please note that for 'Age Banded Medical', the options on this tab are not applicable.

• Select an appropriate option for the Date to be used when calculating an Employee or Spouse's Age for any age-banded premiums and age reductions - The DOB (Date of Birth) Effective Date field is used to calculate an Employee's or Spouse's age on the date specified. Entering a different DOB effective date at this level will override the package effective date. This option is not available for age-banded, medical, or non-spouse dependents.
• Dependent Rate Calculation Rules
  • Use the first __ Dependents between the ages of __ and __ [Youngest to Oldest/Oldest to Youngest] Then use the next __ Dependents between the ages of __ and __ [Youngest to Oldest/Oldest to Youngest]
    
• Rate Calculation Rules
  • Employee Costs should be recalculated on the Birth Date Anniversary - This would be selected when the plan uses age-banded rates, and employees who move age bands throughout the plan year should have their premium and possibly employee cost increased because of that new age band. If the cost should not be changed for the entire plan year after the election DOB is recorded, then this box would still remain unselected. Selection of this box will not automatically recalculate employees' benefits within the system. The box will alert the administrator that an employee needs to have their costs recalculated for this benefit, where the administrator would still need to save the election through the employee's Benefits > Benefits page or through the use of the plan utility.
  • Spouse costs should be recalculated on the Birth Date Anniversary
  • Dependent costs should be recalculated on the Birth Date Anniversary
  • Employee costs should be recalculated on Compensation Change - This would be selected when the plan is using compensation to create coverage for the employee. If the cost should not be changed for the entire plan year after election coverage and salary is recorded, then this box would still remain unselected. Selection of this box will not automatically recalculate employees' benefits within the system. The box will alert the administrator that an employee needs to have their costs recalculated for this benefit, where the administrator would still need to save the election through the employees' Benefits > Benefits page or through the use of the plan utility.
  • Premiums should be based on 100% of Covered Earnings (Benefit Compensation) rather than on the Coverage Level Benefit Amount - Common for long-term disability benefit plans. Administrators who select this box are looking to charge the premium to the employee based on the entire 100% of earnings instead of just the 60% of compensation coverage that is derived from.
    • For example, if an employee makes $2,000 per month, and coverage for their LTD plan is 66% of their monthly income. With this box checked, the system would give the employee a coverage amount of $1,320.00, but still charge the premium of the LTD to the 2000 that the employee makes. When the box is unselected, the premium would be charged to just the 1320.
  • Annual Compensation Flat Cap - The compensation flat cap field can be used to cap the compensation used in determining the benefit amount. This field only applies when the benefit is using compensation to determine cost and/or benefit amount. If rounding rules are applied to the benefit compensation, then this cap will be applied after the rounding rules have been applied.
• Benefit Amount Rules
  • Annual Minimum - Used to enforce a minimum benefit amount when coverage is elected for the selected Plan.
  • Annual Flat Cap - Used to cap the benefit amount at a flat amount when coverage is elected for the selected Plan.
  • Annual Compensation Multiple Cap - Used to cap the benefit amount at a multiple of compensation when coverage is elected for the selected Plan.
  • Benefit Amount Rounding - Used to specify how the Benefit Amount should be rounded in calculating premiums and benefit amounts.
  • Apply Rounding Rules after calculating Coverage Amounts for Age Reductions - If enabled, the Coverage of the affected election record will be rounded after the Amount is reduced through an Age Reduction. By default, this box is not checked, indicating that the Coverage Amount should be rounded prior to applying an Age Reduction and the rounding rule should not apply to the Age Reduced Coverage Amount.
  • Apply Annual Flat Cap before calculating Coverage Amounts for Age Reductions - If enabled, the Coverage of the affected election record will be capped before the Amount is reduced through an Age Reduction. By default, this box is not checked, indicating that the Coverage Amount should be capped after applying an Age Reduction.
• Grandfather rules - There must be a previous package in the system to apply grandfathered rules. Without a previous package to find benefits, plans, and premiums, the system would have nothing to base the earliest premiums on file or the most recent ones. If previous packages are present with premiums, then the employee needs to have benefit plan selected in that previous year for the rules to apply.
  • Employee Premiums should be Grandfathered using the earliest premium on file for employee
  • Employee Premiums should be Grandfathered using the most recent premium on file for employee in the previous Benefit Package
  • Covered Dependents should be Grandfathered and will not be subject to age or relationship restrictions
• Commissions or Administrative Fees - Commission rates and administrative fees can be applied for plans that are elected by the employee at the bottom of this page. Please test by making elections for a test employee and viewing a benefit statement for them.
  • Commission Rate - The percentage rate that will be paid in commission for this plan against the Total Premium. For example, if a 10% commission is being paid, then "0.10" should be entered in this field.
  • Administrative Fee - The flat per-participant fee that will be paid for this plan. For example, if a $1 fee per participant is being paid, then "1" should be entered in this field.