Defined Contribution is an advanced feature that allows an employer to give a "bucket" of money to an employee to pay for coverage in medical model or HSA plans. As the employee elects coverage, they see a running total of the amount of Defined Contribution Dollars they have available to use. The employee can make their enrollment decisions based on their individual preferences.
- Designed to support a 12 month period (full plan year)
- All plan start dates must be the same
- The defined contribution effective date must match the plan start date (ex: DC effective date is 1/1/17, all plans to be included must have a 1/1/17 start date)
Go to the company's Benefits tab > Defined Contribution (left navigation). To add a new defined contribution, click Add a defined contribution year+.
Enter the Effective Date of the Defined Contribution year (this must match the start date of the plans you wish to include in the Defined Contributions setup).
Once the Effective and End Dates are entered, the available plans to include in the DC will appear on the right. Any plan selected will allow the employee to use defined contribution funds to pay for their cost of coverage. Select the desired plans, check the box next to Active? and then Save.
Employer defined contribution amounts can be the same for all employees, or may vary based on specific class structures and/or employee demographics. Select how contributions are grouped and then click Add+.
If the employer applies a flat contribution amount regardless of coverage level, input the monthly amount in the Contribution field. If the employer applies different contribution amounts based on an employee's selected coverage level, check the box next to Contribution Is Based On Coverage Level and input the monthly contribution amounts per coverage level tier.
If the employer offers a different contribution amount if the employee declines medical, input this monthly amount in the Contribution if Medical is declined field. Save when finished.
- Only a flat contribution amount is supported if medical declined - this does not support different contributions based on coverage level.
- If the Contribution if Medical is declined field is left blank, employees will not receive a contribution amount if they decline medical
- Contribution should be entered as monthly amounts, not per pay amounts.
To add additional communication regarding defined contributions, click Edit. Input the desired text and save. Employees will see a separate Defined Contribution page in enrollment that contains the details typed here.
This report provides monthly defined contribution details. It calculates employee eligible defined contribution amounts based on their election or declination of the medical plan and any allocated defined contribution dollars. It is recommended to use this report to audit whether employees have any remaining eligible defined contribution dollars that need to be allocated.
Individual Plan Contribution Amounts
If the employer is only contributing the funds allocated in the defined contribution setup, the individual plan contributions should reflect Company Contribution = 0%.
- Currently supported plans: Medical, Dental, Vision, TriCare, Prescription, Supplemental Medical, Accident, Cancer, Telemedicine, Wellness, Identify Protection, Legal, Laboratory Services, Hospital Indemnity, HSA
- Defined Contributions apply to the entire benefit (e.g. Medical, Dental) and cannot be applied to specific plans selected within the same benefit category
- Defined Contribution will look at a payroll group's calendar, but does not account for skipped deductions on each plan level (via Customize Deduction Dates tab)
- The Contribution if Medical is declined field supports a flat contribution amount only - it does not support different contributions based on coverage level
- During OE, if passive enrollment is selected, the system applies the same contribution amounts employees had on the current plans to the new plans, even if the defined contribution amounts have increased for the new plan year. Allocation of the new funding amounts must be applied by manually saving the enrollments through the enrollment flow.
How do I setup the individual plan contributions when using defined contribution?
If the company is only contributing the amounts outlined under the defined contribution setup, then the plan's contributions should be setup to reflect Company Contribution % is 0%.