When creating a benefit, there are some key questions and situations that you should consider during creation that can impact how it functions, benefit deductions, and more. For our example, we will be creating voluntary benefits. Voluntary life benefits are typically divided into three separate benefits: employee, spouse, and children. An employee would typically see at least one benefit option that applies to them, but additional benefits can be set up for employees to elect different coverage amounts for each dependent, which is why these benefits are set up individually.
As we will only cover fields/options relevant to creating or fields that should not be completed for voluntary life benefits, you can learn more about each step and tab from our dedicated resources here.
We offer a video training for this topic on Arcoro Learning.
- Expand Settings and click Benefit Management from the menu.
- Click the name of the new benefit package.
- Click the Configure Benefit Structure tab.
- Click Add Benefit from the Actions drop-down menu.
Creating Benefit
Benefit Type
The first thing that we will do is select the type of benefit. For our example, we will be selecting an employee life benefit. You will notice Employee Life, Employee Supplemental Life, and Employee Supplemental Life Alternate. You may also see AD&D benefits listed separately; generally, the Basic Life and AD&D are employer-provided, while the supplemental options are for voluntary coverage.
- Employee Life - Usually the employer-paid basic life benefit.
- Employee Supplemental Life - Voluntary life coverage that the employee elects and pays for themselves.
- Employee Supplemental Life Alternate - Used if the employee has a second supplemental life option
When setting up a voluntary life benefit, you will want to use the employee supplemental life option to create the benefit. The employee supplemental AD&D (Accident and Dismemberment) benefit is commonly bundled with the employee supplemental life benefit.
To bundle them, select the "Employee Supplemental Life" option and click Save and Continue >>.
Benefit Properties
Benefit Fields and Dropdown Menus
In the "Benefit Properties" tab, we will be completing or considering the following fields:
- Name & Name (Spanish) - Rename the benefit to "Employee Supplemental and AD&D" and enter the spanish translation. You will need to provide the translation.
- Benefit Type - Make sure it is correct and matches the benefit we are creating.
- Benefit Code - This code will be ignored for our example, but it may apply, depending on your organization. Some previous integrations will use it to drive syncing with payroll, such as Millennium or Evolution sync, while new integrations do not use the field. Occasionally, the code can also be used for auditing deductions between systems, matching codes to Excel reports, which is not usually done in the benefit configuration.
- Earning Deduction Code - This code will be ignored for our example, but it may apply, depending on your organization. Some previous integrations will use it to drive deductions with payroll, such as Millennium or Evolution sync, while new integrations do not use the field. Deduction audits may use these codes, but they do not factor into the demonstration.
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Pay Periods - This field should be set to "0" as we will use the pay schedules to drive the number of deductions in the year. Entering a number into the field, such as 52 for a typical weekly pay schedule, will have the system ignore your pay schedules and rely on the number entered instead, which is not recommended.
- For example, if you build a pay schedule with 52 pay periods per year, you will occasionally have a pay schedule with 53 pay periods for the year. As organizations do not want 53 deductions in a year, and instead opt for 52 deductions a year, they would instead want to use the pay date exclusion.
- Pay Date Exclusions - Allows you to exclude a pay date from deductions. Select the pay schedule and the pay schedule year. A list of pay dates for the selected year should populate the menu, where you can select the pay date to be excluded from deductions, typically the last pay date of the year, so the system will take deductions for every pay period for the year, except for the selected date.
- Eligibility Rule - Determines who is eligible to receive the benefit. For our example, we will be selecting an eligibility rule for employees with a "Full-time" employment status.
- Start & End Date - The benefit start and end dates will have two options. the benefit package start and end dates by default (Start date of Jan 1 and end date of Dec 31). If your benefit should use tyhe benefit package date, this option should always be used, or the option to use the specified start and end dates to override the benefit package dates for a specific benefit, such as off cycle benefits, where the benefit starts outside of the benefit package dates, such as FSA which always starts Jan 1 and ends Dec 31, even if your benefit package doesn't.
Checkboxes
- This is a COBRA-elibility Benefit - While rare, life benefits can be COBRA-eligible depending on State regulations. For our example, we will not enable it.
- Require beneficiaries for this benefit - As this is a life benefit, we typically collect beneficiaries as we serve as the system of record for those elections.
- Do no display Covered Dependents section for this benefit - As this benefit is for the employee's voluntary life benefit, it will not be enabled. Dependent life coverage, such as for a spouse or child, will be a separate benefit.
- When terminating this benefit for an employee the Benefit Termination Date should default to the Employee Termination Date - Organizations will typically set the benefit to terminate on the employee's last day worked, with some exceptions. For our example, we will keep it enabled.
- Use Spouse's age in age banded calculations (where applicable) - This option does not apply here as the benefit is for the employee only and will only matter when setting up the spouse's voluntary life.
Click Save & Continue >> when finished.
Benefit Dependencies
In the "Benefit Dependencies" tab, we should consider whether the benefit relies on the employee enrolling in another benefit first. This is generally not done as employee voluntary life is standalone and does not depend on other enrollments. Some organizations, however, may want the employee to be enrolled in medical coverage before they can enroll in voluntary life.
Click Save and Continue >> and go to the next tab.
Benefit Compensation Calculation
While we will not be setting up benefit compensation calculation for this example, it is important to consider if it applies to your organization.
For example, some organizations limit voluntary life elections to a multiple of the employee's salary. If an employee were making $50,000 per year and the voluntary life would be x5 of the employee's compensation, they could elect up to $250,000, even if the plan allows for more. In these situations, we can set up the benefit to calculate the limit based on the employee's compensation using their salary or hourly rate.
Waiting Period Rules
For the voluntary life benefit, we will be assuming that the standard waiting period rules for your organization will apply, and we will not need to create unique waiting period rules at the benefit level.
Click Return to Configure Benefits.
Cearting Employee Benefit Plans
Click Add Plan or the default plan to create a new benefit plan or modify the existing default plan.
Properties
- Name - Enter a name for the benefit plan. The plan name should match the benefit name. For our example, we will enter "Employee Supplemental Life and AD&D".
- Policy/Group # - Enter your policy number.
- Carrier - Select the carrier for the benefit.
- Eligibility Rule - We will specify "All Employees Eligible" as employees who are eligible for the benefit should be eligible for the benefit plan.
- Coverage/Rate Template - The system will default to the correct coverage/rate template, typically "Age Banded" as the premium amount is based on the employee's age with a cost per $1000 of coverage. You should see a slash symbol in the rate table provided by your carrier partner, which means per $1000 of benefit coverage.
- Configure the Tax Rules for this Benefit - "Employee Supplmental Life and AD&D" is typically a post-tax benefit where the deduction comes out after taxes. Other benefits such as Medical, Dental, and Vision, are typically pre-tax benefits.
- Enter any Age Restrictions for Dependents - As this benefit is for the employee, options relating to dependents and domestic partners do not apply.
Click Save and go to the next tab.
Coverage Levels
- By default, the system creates two coverage levels: Employee Only and Waive. For voluntary life benefits, we do not "Waive" in the plan, so we will delete it by selecting it with the checkbox to the far right and clicking Delete Selected Records from the Actions drop-down menu.
- We will be left with the "Employee Only" option as the default coverage level. We need to remove the default coverage level, so we will click the name of the coverage level.
- Uncheck "This coverage level will be the default selected coverage level assigned to an employee when creating a benefit record (unless otherwise specified via a Rollover Mapping)."
- While we are here, we will also check that the dependent rules are correct, as this benefit does not allow dependent enrollment. It should show "0" dependents allowed and no other dependent options should be enabled.
- Click Save when finished.
- Now we will determine how many coverage levels should be built for the benefit. You can typically consult your carrier guide from your partner. Voluntary life coverage is usually built in $10,000 increments. For our example, we will have a maximum coverage amount of $500,000 with a minimum coverage amount of $10,000, resulting in 50 different coverage levels. We can duplicate the "Employee Only" coverage level by selecting it with the checkbox to the far right and clicking Duplicate Selected Records from the Actions drop-down menu. Repeat as needed while deleting any excess coverage levels. Any copies of a coverage level will have "- Copy" added to the name.
- After creating the coverage levels, click the name of the first coverage level.
- Rename the benefit to "$10,000" and click Save.
- Click the next coverage level and rename it to "$20,000". This will be repeated with each coverage level while increasing the amount by $10,000 until all coverage levels have been renamed.
After entering the coverage level names, make sure that the coverage level ranks match the display order and enter the appropriate the "Flat Benefit Amount" fields, which helps the system calculate premiums. For our example, we will not enter a compensation multiplier as the benefit is not determined by the employee's salary.
Click Save when finished and go to the next tab.
Premiums
In the "Premiums" tab, select the "$10,000" coverage level and click Filter. Each coverage level will be organized by age band with a starting age, ending age, annual premium, annual employer credit, and benefit amount divisor. The age bands will begin at 15 to 29 years, then subsequent age bands of 5 years until 70 years, with a final age band of 70 to 99. Enter the premium information for "$10,000" (i.e., enter 0.066 with the 0 before the decimal).
When entering the premiums for other voluntary life benefits, such as short-term life, you will notice that the numbers are very small, up to 3 decimal places. This is due to premiums being calculated on a per $1,000 coverage basis. As this is a voluntary employee life benefit, the annual employer credit will be 0.00, and the benefit amount divisor will be per 1000.
To help with setting up all other coverage levels, you can use the option to "apply the Age Bands and Rates of the first Coverage Level to all other Coverage Levels (except Waive)" as appropriate for your organization. You can click "Show All" to confirm that all coverage tiers have been set up as necessary.
If you have entered the monthly premiums, you can use the checkbox for "Multiply premium and credit values entered below by 12 upon Save. Note: Only the selected coverage levels will be annualized, not all coverage levels" and clicking Save to multiply the premiums by 12 into the annual premiums.
Click Save when finished and go to the next tab.
EOI Rules
The EOI (evidence of insurability) rules tab is a process where an employee provides information on the condition of their or their dependents' health to receive insurance coverage. Benefits with EOI have a guaranteed issue amount, where the employee is guaranteed a certain level of coverage without needing EOI. This tab is used for change events and for employees to view and elect amounts over the guaranteed issue amount where EOI is needed.
The configuration of the "EOI Rules" tab is completed through a series of questions. As EOI rules can be complex, they are covered in greater detail here.
Age Reductions
Age reductions are typically set by the carrier when coverage is reduced when the employee reaches a certain age. You can also specify if the benefit should use the employee's or the spouse's age for the age reduction of the benefit.
There is an option to reduce premium costs instead of the benefit amount with "Reduce Premium Costs accordingly when the Benefit Amount is reduced through an Age Reduction."
For our example, the coverage will reduce when the employee reaches 65 years old, where they will only receive 65% of their benefit amount. Those who reach 70 years old will only receive 50% of their benefit amount.
Click Save & Continue >> when finished and click Return to Configure Benefits.
Creating Waive Benefit Plan
After creating the employee benefit plan, we can create the "Waive" benefit plan. Click Add Plan.
Properties
- Name - Enter "Waive" for the benefit plan.
- Carrier - Select the same carrier when creating the employee benefit plan.
- Eligibility Rule - Select "All Employees Eligible" for the benefit plan, as all employees should be able to waive their medical coverage.
- Coverage/Rate Template - Select "Waive".
- All other fields, such as tax rules or age restrictions for dependents, can be ignored.
Click Save when finished.
Coverage Levels
The coverage level display order and coverage level rank fields will default to 1 by default. These should be changed to 0, as the system should recognize that "Waive" is the absolute lowest coverage rank possible for an employee.
Click Save when finished. Make sure that the "Waive" coverage level is the default coverage level.
Premiums
The premiums for the benefit will still need to be completed, as every coverage level must have a premium entered, even if it is 0. Enter 0 in the annual premium and annual employer credit fields.
Click Save when finished.