Please Note: For 'Age Banded Medical' the options on this tab are not applicable.
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' age.
- By default, the DOB will be calculated from the package DOB in the first tab of the package build.
- Employees costs should be recalculated on birth date anniversary: This would be selected when the plan is using age banded rates and employees that move age bands throughout the plan year should indeed have their premium and possibly employee cost increased because of that new age band. If cost should not be changed for entire plan year after 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 on the employee's Benefits > Benefits page or through the use of the plan utility.
- Employees costs should be recalculated on compensation change: This would be selected when the plan is using compensation to create coverage for the employee. If cost should not be changed for 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 on the employees Benefits>Benefits page or through the use of the plan utility.
- Premiums should be based on 100% of covered earnings rather than 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 earning instead of just the 60% of compensation coverage is derived from. An employee may 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.
- Benefit Amount Rules: Administrators are able to place in coverage minimums and caps along with compensation caps. Below that the administrator has the ability to set a compensation multiple cap for say a plan that is up to 5 times annual earnings.
- Rounding can be done before or after age reductions if rounding of coverage is selected. Compensation rounding is done at the benefit level under Step 4. When an annual flat cap is used, administrators may choose between coverage calculation before or after age reductions as well.
- Grandfather rules: There needs to be a previous package in the system to make grandfathered rules applicable. Without a previous package to find benefits, plans and premiums the system would have nothing to base earliest premiums on file or the most recent ones. If previous packages are present with premiums, then employee needs to have benefit plan selected in that previous year for rules to apply.
- Commission rates and administrator fees can be applied for pplans that are elected by the employee at the bottom of this page. Please test by making elections for test employee and viewing a benefit statement for them.
The next article is Step 2.5 - EOI Rules