7) An employee has a family status change that results in a change in premiums. How should this be handled?
Insurance premiums are always based on a monthly period. A full month’s premium will have to be deducted for the month in which the change occurs, regardless of the date of the change. The critical point is for the employee to define when the change is to take effect.
The options for when the change may be effective are basically (1) effective the date of the family status change or (2) effective the first of the month following when the change form is returned to the appropriate benefits office, given the form is returned within 31 days of the family status change. For example, if an employee has a family status change on May 20, he may choose to have the new benefits and premiums take effect on May 20 (new premium for the entire month of May), June 1 (with form submitted by May 31) or July 1 (with form submitted by June 20th, the 31st day after the family status change). The premium due date will have to be set to the first of the month. CAUTION: For biweekly employees, the full employer amount is always deducted from the first biweekly payroll. The employee portion is split between two payrolls. If the first biweekly payroll has already processed for a month, the due date should be set to the 1st and a cancellation should be done on the employer payment amount, if one exists.
This page was last updated on 06/11/2010 17:10:48