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:
|0101||Supplemental Health Insurance|
|0102||Cancer/Intensive Care 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:
|American Family Life Assurance||Cancer Ins.||0202||0102|
|State Dental Plans (Denticare)||Dental Ins.||0254||0103|
|Dental Health (Cigna)||Dental Ins.||0256||0103|
|Anthem Life Insurance||30/20 and PPP||0258||0101|
|American Dental Plan||Dental Ins.||0265||0103|
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:
|Accident/Disability Insurance||(the product being "grandfathered")||0207||0105|
|Life Insurance||(not "grandfathered")||0207||0340|
|Cancer/Intensive Care Insurance||(not "grandfathered")||0207||0341|
|Hospital Income Insurance||(not "grandfathered")||0207||0342|
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
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
** 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
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
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
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.
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,
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.