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Deduction Prepay Process (Part II: Disburse Money for Insurance During Leave) in HRS

Overview

The Deduction Prepay process is used for employees who are planning a leave and need insurance premiums to be paid while they are gone. In some cases, the employee is in an Academic (C-Basis) position and will be taking a Short Work Break from that position during the summer. In other cases, the employee may be taking a Leave of Absence or Short Work Break for other reasons, such as medical, professional or seasonal. Prior to the leave, money needs to be collected in advance for payment of future premiums. While the employee is on leave, the prepaid money will be disbursed to cover insurance deductions during the leave.

This document will describe the procedures for the second part of the process: Disbursing Money. The disbursement process is the same regardless of whether the employee is on a Short Work Break (related to Summer Prepay) or other LOA.

Process Considerations:

  • Employee must be actively enrolled into insurances
  • Employee's Deduction Prepay Balance must be sufficient to cover the insurance premiums
  • The Benefits Primary Job for each employee must be on a Short Work Break or Leave of Absence.
You may click on the links below to navigate directly to a section:

Paysheet Creation

The first step in the Prepay disbursement process is to create a paysheet for employees who would not normally be paid during the specified pay period.  This is achieved by an automated process that is run on the first official day of payroll processing.  Please note that the official day of payroll processing is called "1st Batch Prelim Calc" on Payroll calendar. To ensure that this step is successful for all of your employees, please validate all of the following prior to the first official day of payroll processing for the applicable pay period:
  • The 'HR Status' of the Benefits Primary Job for each employee must be active.  Please run the EJED query when notified by the UWSS HR Team and modify the EJED Report, where needed, prior to the deadline.  This will prevent the employee being terminated in error and not have prepays paid out correctly. 
  • If an employee was terminated in error and re-hired, verify if the benefits need to be reinstated using an ADM event. (See:  Adding Events to the BAS Activity Table in HRS ; Enrolling, Changing, or Canceling Coverage Using On Demand Event Maintenance in HRS )
  • The Benefits Primary Job cannot be a Summer Service or Summer Session Job.  If the employee will be working in a Summer Service or Summer Session job, then it must be entered on a different Empl Rcd other than the Benefits Primary Job.

Prepay Disbursement

The automated process that disburses (refunds) money from an employee's Prepay balance is run on Monday night of a typical payroll processing week.  The goal is to disburse exactly the amount of money needed to cover the amount of the employee's insurance deductions.  The end result is a $0 net paycheck that includes all of the employee's normal insurance deductions (e.g., Health and Life, but not FSA, HSA, or TSA). 

You can use Review Paycheck to view the Prepay disbursements once they have been added to the paycheck.  Below is an example of a $0 paycheck that shows Prepay disbursing to pay for several different insurance deductions:

Review Paycheck

There are several requirements for successfully disbursing money from the employee's Prepay balance.  Below is a list of requirements and action that you can take to maximize the chance for success:

1.  'HR Status' of the job marked as Benefits Primary must be active.

Action needed:

  • Establish an effective level of collaboration between the Human Resources and Benefits functions for your campus so that there is good communication about employees who have a Prepay balance and should not be terminated without notifying the Benefits Administration.
  • If an employee is terminated in error and re-hired, then determine if the benefits were terminated, too.  If so, then you (or your centralized Benefits Office) will need to reinstate the benefits using an ADM event. (See:  Adding Events to the BAS Activity Table in HRS ; Enrolling, Changing, or Canceling Coverage Using On Demand Event Maintenance in HRS )
  • If the employee was appropriately terminated and has a Prepay balance, UW Shared Services will be identifying these on a monthly basis and creating tickets to have a full reconciliation done.  The institutions do not need to submit a ticket. 

2.  The employee's Benefit Primary Job must be eligible for benefits.

Action needed:

  • Watch for employees whose Benefit Program changes to L01, L02, L03 or L04.  If the change is not appropriate, then fix the problem that caused the BN Program to change or contact UW Shared Services for assistance.  If the change is appropriate, UW Shared Services will identify these changes on a monthly basis and create a WiscIT to have a full reconciliation done.  The institutions do not need to submit a ticket. 

3.  The employee must be enrolled in at least one Benefit Plan with the same tax class (i.e., After-Tax, Before-Tax or Taxable) as the existing Prepay balance.  The examples below further explain this requirement.  Please contact UW Shared Services to submit a WiscIT if you need to move Prepay money from one tax "bucket" to another, or to refund money for a plan that was voluntarily canceled.

Example A- Employee with State Group Life:
An employee currently has a Prepay balance in the After-Tax, Before-Tax and Taxable "buckets".  They are enrolled in all of the State Group Life plans and must pay additional tax (i.e., imputed income) on some of them.  They are enrolled in SGL-Basic (Before-Tax and Taxable), SGL-Supplemental (Before-Tax and Taxable), SGL-Additional (After-Tax and Taxable), and SGL-Spouse/DP & Dep (After-Tax).  Assuming that all other requirements are met, the Prepay money will disburse from the After-Tax bucket to pay for SGL-Additional and SGL-Spouse/DP & Dep; from the Before-Tax bucket to pay for SGL-Basic and SGL-Supplemental; and from the Taxable bucket to pay for the imputed income on SGL-Basic, SGL-Supplemental and SGL-Additional.

Example B – Employee with AD&D and Individual & Family:
An employee currently has a Prepay balance in the After-Tax and Before-Tax "buckets" and is beginning a Short Work Break.  They are enrolled in AD&D (After-Tax), Individual & Family Employee (After-Tax) and Health (Before-Tax).  Effective in June, they voluntarily cancelled the AD&D coverage.  Assuming that all other requirements are met, the Prepay money will still disburse from both buckets to cover the remaining deductions for Individual & Family Employee (After-Tax) and Health (Before-Tax).  Without manual intervention, the Prepay After-Tax bucket will still have a balance when the employee returns to work in September since it was not needed for AD&D.  Prepay money will gradually disburse to pay for the Individual & Family Employee deduction each pay period until the Prepay balance is $0.

Example C – Employee with only Before-Tax funds, moved to an After-Tax program:
An employee currently has Prepay money only in the Before-Tax "bucket" and is beginning a LOA in May.  Effective June, they voluntarily changed to an After-Tax Benefit Program.  As a result, the tax class for the Health insurance is now After-Tax. If the employee has no funds available in the After-tax “bucket”, Prepays will not disburse. If funds need to be moved to an After-Tax “bucket” from a Before-Tax “bucket’, please submit a ticket to UW Shared Services with this request.

Note: When moving funds to accommodate this situation, the transfer would need to occur prior to the payroll confirmation. In addition, there will be tax implications that ultimately reduce the total amount of Prepay money available during the LOA.

4.  There must be sufficient prepay money to cover each individual benefit deduction in full.  Deductions that cannot be taken will go into Arrears. (See:  Reviewing Benefits Arrears Balances in HRS)

Example A- Employee is short funds:
Prepay deductions were taken on the payrolls in March and April, and were planned to be taken in May to cover an employee's Short Work Break. The employee was terminated in error in May and benefits were not reinstated until after the payroll confirmation. Once the first Prepay deduction for May is missed, the system will automatically begin disbursing the deductions, leaving a deficit in the remaining available funds.

Although there is sufficient Prepay money to cover all of the June deductions, after June, there is no money remaining for July or August deductions.  To cover the required funding for the insurances the employee needs to be enrolled in Benefits Billing (See:  Entering Benefits Billing Enrollments in HRS ). 

Example B- Employee is changing coverage from Single to Family:
An employee currently has Prepay deduction taken for March through May under single coverage and is now on their Short Work Break.  In June the employee got married and is changing to family coverage effective in June. The funds collected for their insurance were based on Single coverage and now they are projected to fall short of funds.

Since 3 months of premiums were collected, it is likely monies will be disbursed for full June coverage. The system will only make full deduction prepay payments, and therefore funds for July and/or August will likely fall short.  If no action is taken, the deductions will not be disbursed for July or August and the employee will go into Arrears.

Keywords:
May Multiples Prepay Deduction Prepay Leave of Absence LOA Short Work Break SWB set aside money setting aside money summer Summer Prepay disbursement refunds BN, Benefits BN, Benefits 
Doc ID:
40844
Owned by:
Christina S. in UW–Shared Services
Created:
2014-06-06
Updated:
2024-12-13
Sites:
UW–Shared Services