Insurance carriers use annual salary to calculate premiums for income based benefits such as LTD, STD and life insurance. For hourly employees, we will automatically calculate the annual base salary by Hours per Week x Hourly Rate x 52 weeks. For salaried employees, this is the value input as the Annual Base Salary.
Annual Base vs Annual Benefit Salary
For either type of employee, if this value is not the value which should be used by the insurance carrier to calculate the income based benefits, the Annual Benefit Salary field may be used to to insert a value used to calculate these benefits. Annual Benefit Salary will override the base salary so that all income based benefits will calculate according to this amount instead. Note that ACA calculations will continue to use the Annual Base Salary and not the Annual Benefit Salary. Using the Annual Benefit Salary effective date allows the benefit salary to be changed to have it apply to applicable plans instead of all. The most common use is updating annual benefit salary effective 1/1 and having it apply to open enrollment elections that are being elected in December.
Employee Pay Basis
Employees can be classified as either Hourly or Salary employees. This classification is called Pay Basis (formerly Compensation Type) and is used to specify which fields need data. You can manually add/update an employee's salary by going to the employee's profile: Profile > Compensation > Annual Base Salary > Edit
An employee paid Hourly, must have an Hourly Rate and an Hours per Week. The system will use the company default Benefit hours multiplier (under Benefits > Enrollment Settings) for all employees, which is defaulted to 40 hours but can be changed as needed. If for example, all hourly employees in the company work 28 hours, you can change the company's Benefit hours multiplier to 28. You can override the company default for specific employees by entering a different number in the employee's Hours Per Week field under their profile (or when initially adding/importing the employee).
When calculating Annual Base Salary (hourly rate/hours per week/52) for an hourly employee, the system will pull in either the company default Benefit hours multiplier, or the employee's specific Hours Per Week if one had been set previously. Hourly employees who don't work the same # of hours per week, should use the average hours over 52 weeks as their Hours Per Week. The Annual Base Salary will be calculated by Hourly Rate x Hours Per Week x 52 weeks. If this employee is eligible for income based benefits, and this calculated value is NOT the value used for benefits, add the actual amount in the Annual Benefits Salary field.
An employee who is not paid Hourly is paid on a Salary basis, and must have an Annual Base Salary. This value may be $0 for a commissioned employee. If this employee is eligible for income-based benefits, and this value is NOT the value used for benefits, add the actual amount in the Annual Benefits Salary field.
NOTE: When adding compensation, a Salary Effective Date is mandatory.
Employee Pay Basis is not an importable field, but is instead assigned when importing either Annual Base Salary OR Hourly Rate/Hours Per Week. For employees that have only an Annual Base Salary value, they will be imported as Pay Basis = Salary. For employees that have Hourly Rate/Hours Per Week, they will be imported as Pay Basis = Hourly. For employees imported with both an Annual Base Salary and Hourly Rate/Hours Per Week, they will be imported as Pay Basis = Hourly as long as the Annual Base Salary matches the hourly calculation (Hourly Rate x Hours Per Week x 52 weeks). We will validate these values upon import and if the values don't match, the employee record will be skipped and a failed message indicating mismatched values will display.
The Employee Salary Updates import template can be used to easily import compensation changes. When asked "What are you importing?", Employee Census should be selected.
It is best practice not to include an Annual Base Salary for Hourly employees. Likewise, it is also best practice not to import hourly values for Salary employees.
Updating Annual Base Salary and Annual Benefit Salary will trigger a rate recalculation, and will update enrolled income-based benefits based on the effective dates. When importing compensation data of any type (Hourly Date, Annual Base Salary, or Annual Benefit Salary) the corresponding effective date must be included on the file or the record will be skipped.
- Hourly Rate: requires Salary effective date
- Annual Base Salary: requires Salary effective date
- Annual Benefit Salary: requires Annual Benefit Salary effective date
Events will be stored on the employee event history (Manage Employee > Events) detailing when import changed either of these fields.
Compensation must be deleted manually. There is no way to bulk delete compensation data for a company. To delete compensation, just click Edit for the salary and press the trash icon and click outside of the salary window.
NOTE! Do not click save after removing salary information. This will result in the salary being added back onto the employee's profile. You only need to save salary information if data is being added.
NOTE! If Annual Benefits Salary was imported, it will be used to calculate salary based benefits. If this was not intended, or at any time if the benefits should once again be calculated off of the Annual Base Salary, importing an Annual Benefit Salary effective date WITHOUT a value in the Annual Benefit Salary field will prompt the system to use the Annual Base Salary in calculations as of the effective date of the (blank) Annual Benefit Salary record.
Importing blanks does not remove data that already exists for Annual Base Salary or Hourly Rate. It's too easy to inadvertently include a column with no data, that is not intended to unset existing data for employees.
Simplify by making the salary changes effective on the First of the following month.
Note: If you add a future salary into the system, you will not see the updated benefit or rates until that date, however, they will be visible by selecting 'edit' on the compensation page which will surface the full salary history table.