## Setting Up Flexible Benefits

This chapter provides an overview of flexible benefits setup and discusses how to:

- Set up deduction, benefit, accrual (DBA) information for flexible benefits.

- Set up a benefit group for flex benefits.

- Set up a lump sum credit.

- Set up an employee flex deduction.

- Set up flex benefit plans.

### Understanding Flexible Benefits Setup

Before you can use the flexible benefits features, you need to define the information that the system uses for processing. You set up this information to meet the particular needs of the organization.

The setup of flexible benefits varies depending on the method that you use to administer the flex plan. Typically, you set up a lump sum credit that can be used for all benefit plans, or you set up multiple lump sum credits so that each credit is used for a specified category of benefits, such as medical or dental.

### Common Fields Used in Flexible Benefits

Allow Enrollment at Plan Level | Select to specify whether an employee can enroll in the plan when plan options are available. Values include: 0: The employee cannot enroll. 1: The employee can enroll.
Category Type | Enter a code that identifies categories for DBAs that use special flex calculation plans, such as lump sum employer flex credits and employee flex deductions when remaining flex credits are negative.
ER Flex Credits (employer flex credits) | Select the DBA in the Payroll Transactions Constants table (F069116) that the system uses to calculate the points amount that the employer contributes to an employee who is enrolled in a flexible spending environment. DBAs that are used for points in a benefit plan or option must meet two requirements: The DBA must have blanks in the specification for gross effect and net effect (see data items PAYG and PAYN) so that the use of non-dollar points does not add or subtract dollars from employee pay. The DBA must have an M in the specification for journal entry (see data item NMTH) so that the use of non-dollar points does not affect the General Ledger system.
Flex Plan | Enter a code that identifies the plan as a flex plan.
Mandatory | Specify whether the plan is required for all employees. Values are: Y: Yes, the plan is required. N: No, the plan is optional.

### Setting Up DBA Information for Flexible Benefits

This section provides an overview of DBA information for flexible benefits.

#### Understanding DBA Information for Flexible Benefits

You might want to set up the DBAs that you can use in flexible benefits before you complete the other setup steps. You complete DBA setup information in the PDBA (pay type, deduction, benefit, accrual) Setup program (P059116). This table illustrates the DBA setup that is typically required for flex benefits:

DBA | Description
Employee flex deduction | The employee flex deduction is the total cost to the employee for all the selected flexible benefit plans. When an employee elects a flexible benefit plan, the amount in the employee flex deduction is updated with the cost of the selected plan. When you set up the employee flex deduction DBA, be sure to include: Deduction DBA type. Flat-dollar-amount method of calculation. Blank value in the Amount/Rate 1 field.
Employer flex credits | Use the employer flex credits DBA to provide employees with a lump sum amount to purchase flexible benefits. Flexible benefit costs that exceed the lump sum credit typically results in an employee payroll deduction using the employee flex deduction DBA. When you set up the employer flex credit DBA, be sure to include: Benefit or accrual DBA type. Flat-dollar-amount method of calculation. Amount/Rate 1 field that is equal to the amount of employer-provided credits. Calculation during pre-payroll.
Employee flex cost | The employee flex cost DBA is the amount that an employee must spend to select a particular benefit plan. You must set up an employee flex cost DBA for each flex benefit plan for which there is an associated employee cost. When you set up the employee flex cost DBA, be sure to include: Benefit DBA type. Flat-dollar-amount method of calculation. Amount/Rate 1 field that is equal to the cost to the employee for the benefit. Calculation during pre-payroll.
Employer-paid benefit | The employer-paid benefit DBA is the cost (or portion of the cost) that is incurred by the company to provide a particular benefit plan. Some companies provide employer-paid benefits in addition to or instead of employer flex credits. This DBA can be used for flex or non-flex plans. The setup is the same for both. The employer-paid benefit does not appear on any interactive enrollment forms. It is simply the company cost that is recorded in the general ledger, and it does not affect the enrollment process. The employer-paid benefit DBA is set up as a benefit type or accrual DBA type.

See Also

Setting Up Deductions, Benefits, and Accruals

### Setting Up a Benefit Group for Flex Benefits

This section provides an overview of benefit groups for flex benefits and discusses how to link categories to benefit groups for flex benefits.

#### Understanding Benefit Groups for Flex Benefits

If you are using flexible benefits, you must set up a benefit group for flex benefits. You cannot use an existing benefit group for flex benefits.

You enable flex benefits at the benefit group level by assigning a benefit group rule in the Categories by Benefit Group program (P08350). The benefit group rule enables you to specify whether a benefit group offers flex plans and, if so, whether you require the employee to use all of the available credits on flex plans. When the benefit group rule indicates that flex plans are offered, the value generated by the employer flex credit DBAs appears on interactive enrollment forms and is used to calculate an employee's available flex credits.

When an employee uses more flex credits than are available, the system automatically generates a pretax flex deduction for the amount of the negative remaining balance. An employee can have positive remaining credits, if the benefit group rule allows it. The benefits administrator can manually allocate these remaining credits to other plans. The system does not automatically reallocate positive remaining credits.

Within each benefit group that offers flex plans, you must set up a single category with a single plan for employee flex deductions. The system uses this category and plan to track any amounts that an employee spends on benefits in excess of what the employer allows. This amount is deducted from the employee's pay. If you are offering employees an initial lump sum of flex credits, you must set up a single category with a single plan to hold the lump sum credits. You can also identify the credits for each category or plan, such as 100 credits to spend on medical, 50 credits to spend on dental, and so forth.

See Also

Setting Up Benefit Group Information

Setting Up an Employee Flex Deduction

Setting Up a Lump Sum Credit

#### Form Used to Set Up a Benefit Group for Flex Benefits

Form Name | FormID | Navigation | Usage
Categories By Benefit Group | W08350B | Benefits Administration Setup (G08BB4), Categories by Benefit Group On the Work With Benefit Groups form, complete the Benefit Group field with the name of a benefit group that has been set up for flex benefits, and click Find. Select the benefit group and click Select. | Link categories to benefit groups for flex benefits.

#### Linking Categories to Benefit Groups for Flex Benefits

Access the Categories By Benefit Group form.

To link categories to benefit groups for flex benefits:

1. Complete the Group Category and Seq. Num. (sequence number) fields on a blank record in the detail area.

2. Enter 1 for employer lump sum credits in the Category Type field.

3. Click OK.

### Setting Up a Lump Sum Credit

This section provides an overview of lump sum credits, lists prerequisites, and discusses how to:

- Set up a lump sum credit category.

- Set up a lump sum credit plan.

#### Understanding Lump Sum Credits

You can provide employer credits in a lump sum amount that has been determined based on factors such as length of service, or a lump sum amount that is the same for all employees. You can also award credits at the plan level for selection of less-costly benefit plans.

When you provide a lump sum of employer credits, you must set up a lump sum credit category and plan within each benefit group that offers a lump sum credit. The lump sum credit plan is the mechanism for awarding the lump sum credit. The lump sum credit is awarded through either a benefit or accrual DBA.

The lump sum credit category and plan do not appear on self service forms because employees cannot change their enrollment in this plan.

The lump sum credit plan must be set up as a mandatory plan so that all employees are automatically enrolled in the plan.

See Also

Setting Up Benefit Plans

Setting Up Flex Benefit Plans

#### Prerequisites

Before you complete the tasks in this section, you must:

- Set up a code and description for the lump sum credit category.

  See Setting Up Benefit Categories.

- Set up a lump sum credit benefit or accrual DBA that has no effect on gross or net pay and that has a positive amount.

  See Setting Up DBA Information.

#### Forms Used to Set Up a Lump Sum Credit

Form Name | FormID | Navigation | Usage
Categories By Benefit Group | W08350B | Benefits Administration Setup (G08BB4), Categories by Benefit Group On the Work With Benefit Groups form, complete the Benefit Group field with the name of a benefit group that has been set up for flex benefits, and click Find. Select the benefit group and click Select. | Set up a lump sum credit category.
Plan Master | W08320A | Benefits Administration Setup (G08BB4), Plan Master On the Work With Plan Master form, click Add. | Set up a lump sum credit plan.

#### Setting Up a Lump Sum Credit Category

Access the Categories By Benefit Group form.

To set up a lump sum credit category:

1. Select a benefit group rule.

   The benefit group rule determines whether the benefit group contains flex plans, and whether the system tracks flex credits that remain after an employee has enrolled in benefit plans.

2. Complete the Group Category and Seq. Num. fields on a blank row in the detail area:

3. Enter 1 for employer lump sum credits in the Category Type field.

4. Click OK.

#### Setting Up a Lump Sum Credit Plan

Access the Plan Master form.

To set up a lump sum credit plan:

1. Complete the Plan ID field.

2. In the unlabeled field following the Plan ID field, enter the name of the plan.

3. Enter the address book number of the company in the Provider/Trustee field.

4. Select these options:

   - Mandatory

   - Flex Plan

5. Select the Calc./Eligibility (calculation/eligibility) tab.

6. Enter the lump sum credit benefit or accrual DBA in the ER Flex Credits field.

7. Complete these required fields:

   - Init Elig Table (initial eligibility table)

   - Cont Elig Table (continuing eligibility table)

8. Click OK.

After you set up the lump sum credit category and plan, you must link the plan to the category.

### Setting Up an Employee Flex Deduction

This section provides an overview of employee flex deductions, lists prerequisites, and discusses how to:

- Set up a flex deduction category.

- Set up a flex deduction plan.

#### Understanding Employee Flex Deductions

Each benefit group that offers flex plans must contain an employee flex deduction category and plan. The system uses the employee flex deduction to deduct a negative flex balance from an employee's pay.

You do not set up the employee flex deduction plan as a flex plan because it does not have a predetermined flex cost or credit. Instead, you set it up as a regular plan and assign it a pretax deduction DBA that requires you to enter a flat amount. The system calculates the flat amount by subtracting the flex costs of the plans that an employee selects from the employee's available credits. If the resulting amount is negative, that amount is deducted from the employee's pay on a pretax basis.

The employee flex deduction category and plan do not appear on self service forms because employees cannot change their enrollment in this plan. Also, you cannot change the amount of the employee flex deduction in the Enrollment With Eligibility program (P08334) because the system automatically updates the plan DBA with the employee's negative flex balance.

See Also

Setting Up Benefit Plans

#### Prerequisites

Before you complete the tasks in this section, you must:

- Set up a code and description for the flex deduction category.

  See Setting Up Benefit Categories.

- Set up a flex deduction DBA with a method of calculation of $ (USD).

  See Setting Up DBA Information.

#### Forms Used to Set Up an Employee Flex Deduction

Form Name | FormID | Navigation | Usage
Categories By Benefit Group | W08350B | Benefits Administration Setup (G08BB4), Categories by Benefit Group On the Work With Benefit Groups form, complete the Benefit Group field with the name of a benefit group that has been set up for flex benefits, and click Find. Select the benefit group and click Select. | Set up a flex deduction category
Plan Master | W08320A | Benefits Administration Setup (G08BB4), Plan Master On the Work With Plan Master form, click Add. | Set up a flex deduction plan.

#### Setting Up a Flex Deduction Category

Access the Categories By Benefit Group form.

To set up a flex deduction category:

1. Complete the Group Category and Seq. Num. fields on a blank row in the detail area.

2. Enter 2 for employee flex deduction in the Category Type field.

3. Click OK.

#### Setting Up a Flex Deduction Plan

Access the Plan Master form.

To set up a flex deduction plan:

1. On the Plan Master form, complete the Plan ID field.

2. In the unlabeled field following the Plan ID field, enter the title, or name, of the plan.

3. Enter the address book number of the company in the Provider/Trustee field.

4. Complete the Status Code field.

5. If all employees are required to enroll in this plan, click the Mandatory option.

6. Select the Enter Amount/Rate option.

7. Select the Calc./Eligibility tab.

8. Enter the flex deduction DBA in the EE Payroll Deduction field.

9. Complete theInit Elig Table (initial eligibility table) and the Cont Elig Table (continuing eligibility table) fields.

10. Click OK.

Status Code | Enter a user-defined code (UDC) 08/ST that defines the current state of the benefit plan. For example, you can enter A to define the plan as active.
Enter Amount/Rate | Enter a code that indicates whether you can enter an amount or rate when you enroll an employee in a benefit plan. Typically, you enter Y when the employee determines the amount of a deduction or a benefit. Examples include 401(k) percentages, dependent care, and health care reimbursements.
EE Payroll Deduction (employee payroll deduction) | Specify the DBA in the F069116 table that the system uses to calculate the dollar amount that the employee contributes by enrolling in the plan. In most cases, this DBA is defined to deduct pay from the enrolled employee's check.

### Setting Up Flex Benefit Plans

This section provides an overview of flex benefit plans, lists a prerequisite, and discusses how to set up a flex benefit plan.

#### Understanding Flex Benefit Plans

You set up flex benefit plans in the same way that you set up other benefit plans, except that you select an option in the Plan Master program (P08320) to specify that the plan is a flex plan. When you select this option, assign the plan either an employee flex cost DBA or an employer flex credits DBA.

Flex plans are normally set up to use the employee flex cost and employer flex credit DBAs. However, the system enables you to enter an employee payroll deduction DBA for flex plans as well. You can also set up a plan to require entry of an amount or rate. When a plan requires an amount or rate entry, the system displays a column for amount or rate entries on self service forms. How the system applies the amount or rate depends on which DBAs are assigned to the plan.

Note. For each flex benefit plan that you set up, you must link the plan to the appropriate category within the flexible benefit group.

These rules apply to amount and rate entries for:

- Flex plans with the employee flex cost DBA only, the system applies amount or rate entries to that DBA.

- Flex plans with both the employee flex cost DBA and the employee payroll deduction DBA, the system applies amount or rate entries to the employee payroll deduction DBA.

- Non-flex plans, the system applies amount or rate entries only to the employee payroll deduction DBA.

  Important! On self service forms, amount or rate entries can never apply to the employer flex credit DBA.

See Also

Setting Up Benefit Plans

Linking Plans to Benefit Categories

#### Prerequisite

Before you complete the tasks in this section, you must set up DBAs to represent the employee flex cost that is required to participate in the plans or the employer flex credits that are awarded for enrollment in the plans.

See Setting Up DBA Information.

#### Form Used to Set Up Flex Benefit Plans

Form Name | FormID | Navigation | Usage
Plan Master | W08320A | Benefits Administration Setup (G08BB4), Plan Master On the Work With Plan Master form, click Add. | Set up a flex benefit plan.

#### Setting Up a Flex Benefit Plan

Access the Plan Master form.

To set up a flex benefit plan:

1. On the Work With Plan Master form, click Add.

2. On the Plan Master form, complete the Plan ID field.

3. In the unlabeled field following the Plan ID field, enter the name of the plan.

4. Select the General Info tab and complete the Provider/Trustee field.

5. Complete these optional fields:

   - Policy/Reference Number

   - Plan Type

   - Status Code

6. Select the Flex Plan option.

7. Select the Calc./Eligibility tab and complete any of these fields:

   - ER Paid Benefit (employer paid benefit)

   - EE Flex Cost

   - ER Flex Credits

8. Complete the Init Elig Table (initial eligibility table) and the Cont Elig Table (continuing eligibility table) fields.

9. Complete any other optional fields, and then click OK:

   Policy/Reference Number | Enter the certificate or policy number of the benefit plan.
   Status Code | Enter a code from UDC 08/ST that defines the current state of the benefit plan. For example, you might use A to define the plan as active.
   Flex Plan | Enter a code that identifies the plan as a flex plan.
   ER Paid Benefit (employer paid benefit) | Specify the DBA in the F069116 that the system uses to calculate the dollar amount that the employer contributes to the employee enrolled in the plan. In most cases, this DBA is defined as a benefit to add pay to the enrolled employee's check.
   EE Flex Cost (employee flex cost) | Specify the DBA in the F069116 that the system uses to calculate the points amount that the employee contributes by enrolling in the plan in a flexible spending environment. DBAs that are used for points in a benefit plan or option must meet two requirements: The DBA must have blanks in the specification for gross effect and net effect (see data items PAYG and PAYN) so that the use of non-dollar points does not add or subtract dollars from employee pay. The DBA must have an M in the specification for journal entry (see data item NMTH) so that the use of non-dollar points does not affect the General Ledger system.