jump to main menu jump to subject menu jump to content jump to footer
go image

Division Director

Christina Smith

Assistant Director

Rick Sweet


Accounting and Auditing
200 East Gaines Street
Tallahassee, FL 32399-0318

(850) 413-5510
design placeholder only
March 24, 1992

COMPTROLLER'S MEMORANDUM NO. 17 (1991-92)

SUBJECT: IMPLEMENTATION OF SUPPLEMENTAL INSURANCE - PRETAX BENEFITS PROGRAM


The Department of Administration, Division of State Employees' Insurance (DSEI) is implementing the inclusion of supplemental insurance products into the Pretax Benefits Program, effective with the Biweekly warrants to be dated April 3, 1992, and with a payroll submission date of March 30, 1992.

This first phase of implementation will be the "grandfathering", pursuant to Section 110.123, Florida Statutes, of seven existing group plans into the Pretax Benefits Program. Plans with 5,500 or more State employees enrolled were eligible for "grandfathering." Considerable information was provided in DSEI Memorandum No. 92-06, dated February 28, 1992. The purpose of this memorandum is to provide the details of the implementation as it directly affects payroll processing.

Our payroll system will obtain the salary reduction information for the "grandfathered" products from DSEI. This information will no longer be required or accepted from the agency input of payroll data. The supplemental insurance salary reductions will occur 24 times each year for biweekly employees, not 26 times. This is consistent with the practice now followed for State Health and Life Insurance and the reimbursement accounts.

Miscellaneous deduction codes are used in the payroll system for salary reductions as well as salary deductions. There are currently four categories of supplemental insurance products and each is assigned a new miscellaneous deduction code as shown below:

NEW
CODE
PRODUCT CATEGORY
0101 Supplemental Health Insurance
0102 Cancer/Intensive Care Insurance
0103 Dental Insurance
0105 Accident Disability Insurance

DSEI plans to provide a vision insurance program in the future and therefore, code 0104 is assigned to this product category. However, there is no vision product being "grandfathered."

Of the seven companies currently providing group insurance in these categories which are being "grandfathered", five offered products which were assigned unique miscellaneous deduction codes in our payroll system. Those companies, the products, and the old and new codes are:

COMPANY PRODUCT OLD
CODE
NEW
CODE
American Family Life Assurance Cancer Ins.02020102
State Dental Plans (Denticare)Dental Ins.02540103
Dental Health (Cigna)Dental Ins. 02560103
Anthem Life Insurance30/20 and PPP02580101
American Dental PlanDental Ins. 02650103

We have been advised that State Dental Plans (Denticare) and American Dental Plan both are implementing rate changes at the same time the supplemental insurance products are being implemented into the Pretax Benefits Program.

Two of the companies offered more than one product under a single miscellaneous deduction code. Colonial Life and Accident Insurance Company (Colonial Life) uses deduction code 0207 and the Gabor Company, Inc., uses deduction code 0215. These two codes are being handled differently from the other five codes and differently from each other.

The Colonial Life products and the new codes being assigned are:

PRODUCTOLD
CODE
NEW
CODE
Accident/Disability Insurance(the product being "grandfathered")02070105
Life Insurance(not "grandfathered")02070340
Cancer/Intensive Care Insurance(not "grandfathered")02070341
Hospital Income Insurance(not "grandfathered")02070342

The Gabor Company, Inc. markets a number of different products under code 0215. Only the Hospital Income Insurance is being "grandfathered" and will be assigned to new code 0101. Gabor Company, Inc. has provided data to each agency which uses deduction code 0215 to show the change to the deduction amount and each applicable agency is independently processing the necessary adjustments. Deduction Code 0215 is the only one of the seven existing codes which will continue to be valid for payroll processing. The Gabor Company, Inc. products marketed under code 0215 will be assigned separate codes at some future time.

The other six existing codes, 0202, 0207, 0254, 0256, 0258, and 0265, will not be accepted for payroll processing starting March 30, 1992. All of the information for old codes 0202, 0254, 0256, 0258 and 0265, as well as that for the Accident/Disability portion of old code 0207 and the Hospital Income portion of code 0215 will be provided on the Pretax Benefits Authorization File furnished to the Bureau of State Payrolls by DSEI. The amounts of these salary reductions (they are no longer miscellaneous deductions) will appear on employees' earnings statements under the new codes shown above.

The new codes used for this supplemental insurance in payroll processing will not identify the specific company from which the employee is purchasing insurance or the specific product being purchased; they show only the product group. Detailed information concerning companies and specific products may be obtained by agencies and employees from DSEI.

CHANGE ORDER PROCEDURES

We are working with COPES to automate as much of this change as possible. All deductions using codes 0202, 0207, 0254, 0256, 0258, and 0265 will be deleted from change order records on March 25, 1992, following the processing of the supplemental payroll on March 24. This will remove the codes from both COPES and the payroll system's Change Order Master File maintained by the Bureau of State Payrolls.

Information for the new miscellaneous deduction codes and amounts for the Colonial Life products not being "grandfathered" is being furnished to COPES and will be included in those records immediately following the deletion of the old codes. This information will automatically update our payroll system's Change Order Master File.

This is being automated for only those records where the information provided by Colonial Life agrees with the present deduction amount for code 0207. A discrepancy report which lists any records involving differences between the payroll data and the Colonial Life data has been furnished to the employing agency for reconciliation and research of the differences. All employees shown on the discrepancy report must have their COPES records adjusted by the agency personnel or payroll office following the reconciliation and the determination of the correct deduction amount(s). All of the discrepancies must be resolved and changes made for inclusion in the biweekly payroll to be processed on March 30, 1992, for warrants dated April 3, 1992. The memorandum used to distribute the discrepancy report contains the name and telephone number of the Colonial Life representative to contact for assistance in resolving the discrepancies.

The same procedures will be followed for monthly agencies. The old deduction codes will be deleted on March 25. The new data for Colonial Life products not being "grandfathered" will be loaded into COPES the same week, but will not appear in the Bureau of State Payrolls' records until after the April monthly payroll is processed on April 22, 1992.


MAGNETIC TAPE AGENCIES

Each agency which operates in its own personnel/payroll system is responsible for deleting deduction codes 0202, 0207, 0254, 0256, 0258, and 0265 prior to submission of the biweekly payroll on March 30, or the monthly payroll on April 22. Deductions submitted using these codes will be dropped from payroll processing and will result in excessively large error reports.

We have been communicating individually with some magnetic tape agencies to address specific problems and procedures applicable to their conversion.

PAYROLL CALCULATION CHANGES

The products being added to the Pretax Benefits Program will be treated in a manner similar to the existing reimbursement accounts for Medical Expenses and Dependent Day Care. The premiums for these insurance products are no longer miscellaneous deductions; they are now salary reductions.

This means that the amounts are no longer subject to withholding for income tax, social security or Medicare. It also means that the amounts must be deducted to the extent that salary is available. The supplemental insurance products have been placed into the hierarchy of salary deductions and reductions between State Life Insurance and PTB Medical Reimbursement Accounts.

** Enclosed are copies of pages which have been developed for the Payroll Preparation Manual, Volume IV, Section 5. They show the hierarchy of priority given to employee taxes, retirement contributions, State Health and Life Insurance, supplemental insurance, reimbursement accounts, and salary reductions for annuities and deferred compensation and all other deductions. These new pages will be distributed as part of the next Payroll Manual Update.

The salary reductions for supplemental insurance products will be taken from any regular salary payments being processed within a single payroll. This will be done in the order in which the payment records are processed. If there is not a sufficient balance available in one payment record to take all the reductions, or all of one reduction, as much of the balance as is available will be taken. Any balance for one reduction or more reductions will be taken from any other regular salary payments processed in the same payroll for the employee.


The term "regular salary payments" refers to those payments with a pay cycle of 1 or 2. This denotes the payment of the employee's usual salary on a biweekly (pay cycle 1) or monthly (pay cycle 2) basis. It includes any payment with either of these pay cycles, whether processed on the biweekly, monthly, or supplemental payroll. The addition of the supplemental insurance component to the Pretax Benefits Program increases the importance for agencies to correctly identify supplemental payments by using pay cycle 3 (biweekly supplemental payment) or 4 (monthly supplemental payment), regardless of the type of payroll on which the payment is processed.

All salary reductions for supplemental insurance collected during payroll processing will be transferred automatically to a DSEI fund. Agencies will not have any warrants or registers to submit to DSEI. Similarly, all amounts reduced will be restored automatically to agency accounts if a warrant is canceled. Agencies will not collect directly from the companies providing the supplemental insurance. However, agencies must continue to collect from the companies any refunds due for deductions made prior to April 3, 1992.

PAYROLL REPORT CHANGES

There will be three new reports produced as a result of the implementation of this change in the Pretax Benefits Program. There will be a Supplemental Insurance and Reimbursement Account Error Report, a Supplemental Insurance and Reimbursement Account Reduction Register and a Supplemental Insurance and Reimbursement Account Pay Cycle Change Audit Report.

SUPPLEMENTAL INSURANCE AND REIMBURSEMENT ACCOUNT ERROR REPORT

This report will provide information when there was a salary payment and the supplemental insurance or reimbursement account reductions were not taken, in whole or in part. It will be designated as PSARPTER and will be produced in payroll sequence. Two copies will be sent to agencies. The error message will appear for the final organization code processed (highest organization number). It will show the organization codes, all supplemental insurance and reimbursement account reductions requested, amounts not taken, and total number of payments processed in the payroll for the employee.

Supplemental insurance salary reductions may affect one or several employee warrants in a single payroll. Because of this, the error messages cannot be produced as the individual payment requisition records are processed. A reduction which cannot be made in one payment may be made in a subsequent payment in the same payroll. Therefore, the error report showing salary reductions which could not be made will be produced following all processing for the payroll and will reflect all payments processed during that payroll.

SUPPLEMENTAL INSURANCE AND REIMBURSEMENT ACCOUNT REDUCTION REGISTER

This report will be very similar in format to the present State Health, Life and Disability Insurance Register. It will be designated as report number BP3502. It will be in payroll sequence by warrant and will show all salary reductions for the new supplemental insurance products and for the existing reimbursement accounts. An employee with reductions in more than one warrant will appear on the register more than one time.

The initial distribution will match that currently on file for the State Health, Life and Disability Insurance Register. Agencies may receive zero, one or two paper copies and have microfiche available. Agencies desiring a different distribution for this report should submit their request in writing to Jack Peterson in the Bureau of State Payrolls, Room 1201, the Capitol, Tallahassee, FL 32399-0350.

The supplemental insurance product reductions will not appear on the Miscellaneous Deduction Registers currently printed by agency, deduction code and account and furnished to agencies which utilize change order documents for payroll processing. The reimbursement account salary reductions are also being removed from these registers.

SUPPLEMENTAL INSURANCE AND REIMBURSEMENT ACCOUNT PAY CYCLE CHANGE AUDIT REPORT

This report will provide information when the pay cycle data in the payroll and on the State Insurance and Pretax Benefits Authorization File do not coincide. The report will be in payroll sequence and will show the employee and organization identifying information from the payroll and the pay cycles from each file. The report will be designated BP3503; two copies will be sent to each agency and one copy to DSEI.

The report is intended to assist in addressing the problems which will arise when employees change both agency and pay cycle. The supplemental insurance and reimbursement account salary reductions are based on the employee's pay cycle. If the pay cycle reported by DSEI does not match that reported by the agency, the salary reductions will not be made.

Following payroll processing, the payroll file will be compared to the DSEI Authorization File. Those employees appearing on the payroll in one pay cycle and on the DSEI Authorization File in the other pay cycle will be reported to the agency. This should assist the agency in working with the DSEI staff to assure that salary reductions are appropriate for the employee's pay cycle and to make appropriate corrections.

The use of pay cycle will assist in preventing salary reductions from being applied to both a biweekly and a monthly payment when an employee does change cycle. Prompt action by the agencies will be required to assure that the pay cycle is appropriately recorded for the action being taken. These changes must be coordinated by the agency with DSEI, Bureau of Enrollment and Accounting, not the Bureau of State Payrolls.

TERMINAL ACCESS TO SUPPLEMENTAL INSURANCE INFORMATION

Agency personnel and payroll offices will have access to information for the supplemental insurance products by two means, through the State Insurance Inquiry Menu available in COPES and through the payroll system's Employee Inquiry function. DSEI will provide instructions for access to its data.

The Employee Inquiry (EI) function provides agencies with access to recent payroll deductions, reductions, and the most current State Health and Life Insurance and Pretax Benefits Authorization File from DSEI, including the supplemental insurance. The screens available within the EI function include the LP, CE, CG and PT.

The LP screen allows access to the Last Payment data, i.e., the most recent two biweekly, monthly, CJIP and Class C Meals payrolls, most recent three supplemental payrolls, and the last two weekly cancellation and adjustment runs. The CE and CG screens allow access to the Current calendar year Earnings and Gross to net summaries.

There is also a PT screen to display the data submitted to the Bureau of State Payrolls by DSEI on the State Health and Life Insurance and Pretax Benefits Authorization File. The file is the most recent furnished by DSEI and a heading on the screen shows the payroll for which the data was supplied. A new file is furnished for each biweekly and monthly payroll, so the period of time a particular file is available varies depending on the payroll schedule.

The PT screen shows the employee=s social security number, name, State Health and State Life Insurance enrollment selections, the current reimbursement account reductions and the supplemental insurance product selection and salary reduction amount. After the payroll is processed, and until the next file is loaded, the screen also shows any balance of the salary reductions which were not taken during payroll processing.

EMPLOYEE RECORD ADJUSTMENTS

Adjustments for the supplemental insurance products will be processed exactly like those for Pretax State Health and Life Insurance and the reimbursement accounts. The Salary Refund Form, DBF-BP-29, is being revised to include the codes for the supplemental insurance products. There are substantial supplies of the existing form in many agencies and they may continue to be used. The applicable reduction codes for the supplemental insurance products should be written on the forms when these products are involved in a salary refund.

Any other type of adjustment to an employee's record for these amounts, such as a refund of Pretax premiums, must be submitted to DSEI, which will request the appropriate action after its review of the request.

OTHER INFORMATION

There will be an earnings statement message announcing the implementation of the inclusion of the supplemental insurance products into the Pretax Benefits Program. The space for the message is very limited and a full explanation cannot be provided. Agency communications to employees may prove beneficial and reduce the number of inquiries.

Questions concerning the amount of salary reduction for any of the insurance products being "grandfathered" are to be directed to the Division of State Employees' Insurance, Bureau of Enrollment and Accounting at (904) 487-4621, Suncom 277-4621.

Bureau of State Payrolls staff will assist agency personnel and payroll offices in any way possible. Questions should be directed to Jack Peterson or Richard Harmon at (904) 488-9395, SUNCOM 278-9395. However, please be reminded that Bureau staff does not have access to any information that is not available in the EI function of the Payroll On-Line Inquiry screens. It is requested that you not refer your employees directly to the Bureau with their questions. If any agency personnel do not now have access to these screens, they should contact their agency Access Control Custodian. Other Access Control questions should be directed to Patti Calhoun or Cindy Langley in the Bureau of State Payrolls at (904) 488-9395.

THIS MEMORANDUM INCLUDED ATTACHMENTS WHICH CANNOT BE TRANSMITTED.
** FOR COPIES OF THESE PAGES, PLEASE CONTACT THE BUREAU OF STATE PAYROLLS AT 488-7722, SUNCOM 278-7722.