July 2013 FORCES Presentation
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Domestic Partner Benefits
Exchange of Leave
OAB & Retro Payroll Issues
Other Issues of Interest
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The topics to be covered today were
encountered by Pinellas County Government
during and after implementation of Oracle
HR, Payroll and OAB
Consult your implementation consultant (if
one is engaged) and legal counsel where
appropriate
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Pinellas elected to offer partner benefits for
medical only, but process would be similar
for dental
Premium for the employee can still be pretax under federal regulations, depending on
how you set things up
Post-tax deduction of employee portion of
premium for the partner is permitted under
regulations
Things get a little dicey from there!
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Some family members are eligible for pretax deductions (employees and children of
employees)
Some family members are not eligible for
pre-tax deductions (partner and children of
partner)
Employer can choose to treat all of the tier
premium as post-tax (simple method)
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When children are involved things can get
complicated
◦ If you treat all dependent coverage deductions as
post tax then it is simple.
◦ Otherwise the employer must break coverage tier
premium into amount to cover employee (pre-tax)
and amount to cover partner (post tax)
◦ Pre-tax treatment for child dependents of the
employee is acceptable, however for ease of
administration Pinellas made all dependents post
tax if any were children of the partner
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Pinellas used the domestic partner as a
person type when employees enter their
contacts in employee self service
In OAB annual enrollment employees see
choices of domestic partner coverage when
making their coverage elections
Tax treatment rules track the election of
domestic partner coverage
Pinellas requires a signed affidavit for
domestic partners to be covered
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Pinellas permits employees to exchange
accrued leave for cash and/or deferred
compensation. Maximums apply to exchange
elections
Employers should consider tax consequences
of such a program and consult legal counsel
◦ Elections must be made in the calendar year prior
to year when the leave is exchanged
◦ Leave exchanged must be leave accrued in the year
of the exchange, meaning existing banks of leave
previously accrued may not be exchanged
◦ Elections are irrevocable!
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Since leave can not be exchanged until
accrued it is necessary that payout schedules
keep that in mind
Partial exchanges can be permitted as leave is
accrued
Options are fixed and must be established in
advance
Employer accrual rates should be used to
determine payout options and amounts
Employees elect the amount of leave and the
payout frequency in OAB annual enrollment
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Employees elect the amount of leave and the
payout frequency in OAB annual enrollment
Our programming team set up a separate
leave exchange bucket which collects the
leave which is committed to the exchange
Until the employee reaches the annual
election amount, all newly earned leave goes
into this bucket
After reaching the election amount new leave
spills into the “normal” annual leave bucket
One Exchange
Date
•November 22, 2013
Two
Exchange
Dates
(50% Each)
Four
Exchange
Dates
25% Each
•June 7, 2013
•November 22, 2013
•March 15, 2013
•June 7, 2013
•August 30, 2013
•November 22, 2013
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Careful planning is necessary to implement
such a program
Employee communication is critical to avoid
misunderstanding and mistakes
Challenges encountered include
◦ Understanding the irrevocability of elections
◦ Understanding why leave which is committed to the
exchange can not be used for other purposes
◦ Developing a spreadsheet that considered all the
accrual rates in place for our employees,
exempt/classified, years service, etc.
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Pinellas took benefit deductions in advance
and provided coverage through end of the
month in which eligibility ended
Pinellas continued pay in advance when going
live with Oracle
Triggering of life events in OAB created
significant retroactive adjustment issues for
Payroll staff
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At recommendation of our implementation
consultant Pinellas made two decisions
First, we used 26 deductions rather than 24
semi-monthly deductions
Second, we converted our deductions from
pay-in-advance to pay-as-go
This last decision resulted in a premium
holiday for employees, but also meant that
the health fund missed one month of revenue
from employee deductions
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To further minimize retro adjustments
Pinellas changed benefit plan eligibility to
term coverage at the end of the pay period in
which eligibility ended
The COBRA administrator starts coverage (if
elected) mid-month so there is no gap
Employers should discuss this with their
COBRA administrator in advance of
implementing this type of change
These changes have significantly reduced the
number of retroactive adjustments
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Managing employee elective deferred
compensation deductions
Total Compensation & Benefit Statements
Other items other than traditional benefits
that employers run through OAB