HR Fast Facts: What Is the Difference Between Deduction Adjustments and Reimbursements for Benefits?

When an over-deduction for benefits occurs, it can be resolved using either a deduction adjustment or a one-time reimbursement, depending on the situation.

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Remote Worker Reimbursement

When an over-deduction for benefits occurs for an employee, a payroll carrier may resolve it through either a medical deduction adjustment or a one-time reimbursement, depending on the situation. An example of each type of resolution is seen below.

Cases that can be resolved by a deduction plan

When someone is over-deducted for benefits and has more than a $0 deduction moving forward, you can balance out their year-to-date deductions by calculating an adjustment plan. Here is an example of how this would look on the Zenefits platform:

  • Bob pays $50 for medical benefits on every paycheck. On 6/1, he attempts to add a dependent to his medical insurance, increasing his deduction to $75. However, on 7/16 the benefits carrier rejects the addition of that dependent, resulting in a $50 over-deduction. This over-deduction would appear on the Zenefits’ Adjustments dashboard, and the deductions would be adjusted to $0 for one pay period to balance everything out.
  • In this scenario, Bob’s 2 $75 deductions were made on 6/15 and 6/30. As a result, Zenefits would adjust his deductions to $0 on 7/15, and then restore them to $50 on 7/31. Bob’s deductions are now balanced.

Cases which require reimbursement

In instances where someone is over-deducted for benefits and has a $0 deduction amount moving forward, Zenefits would not be able to balance out their year-to-date deductions with an adjustment plan. They would instead receive a one-time reimbursement.

  • For example, Sally attempts to enroll in medical insurance with an effective date of 6/1 and a per-paycheck deduction of $75, which is approved by the benefits carrier. However, on 7/1, she decides to remain on her spouse’s insurance instead, and requests a cancellation as of 6/1. Since Sally had 2 paycheck deductions of $75 made, this over-deduction would appear on the Zenefits’ Reimbursements dashboard, as a reminder to reimburse.
  • In this scenario, Sally received 2 deductions of $75 on 6/15  and 6/30. Since she has requested a cancellation, Zenefits would issue a one-time reimbursement of $150 on the next paycheck date of 7/15  for the 2 deductions.
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