CENTRAL SUSQUEHANNA INTERMEDIATE UNIT Application: Personnel. Step By Step Instructions for: How to Set Up the Fringe Benefits Directory

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CENTRAL SUSQUEHANNA INTERMEDIATE UNIT Application: Personnel

Step By Step Instructions for:

How to Set Up the Fringe Benefits Directory

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Table of Contents

INTRODUCTION ...3

INSURANCE INFORMATION ...4

Projected Insurance Rates ...4

Employer Insurance Information ...4

PAYROLL INFORMATION...5

Projected Payroll Benefits ...5

Employer Payroll Information...5

SET UP PROCESS ...6

Step-by-Step:...6

CALCULATE LIFE INSURANCE PERCENT...7

Coverage Based on Salary ...7

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INTRODUCTION

This Step-by-Step Guide will review how to set up the Fringe Benefits directory to provide benefit information with the transfer of salary information to the Budget Prep module in Fund Accounting.

In this Step-by-Step instruction you will learn:

 What information is used to create insurance amounts for budgeting

 Where projected amounts are entered

 How employee payroll benefits are calculated

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INSURANCE INFORMATION Projected Insurance Rates

Projected insurance rates are calculated when a Fringe Code is created. The current monthly rate

information is selected from the INSURANCE PARAMETERS DIRECTORY to calculate an annual amount.

The calculation multiplies the monthly amount by 12. With the annual amount calculated based on the current rate, projections for the coming year are easy to update. For example, If rates are to increase by 5% based on the current costs, multiply the annual amount that was calculated by 1.05%. Updating the Annual Amount will allow you to budget with a 5% increase.

Employer Insurance Information

Insurance information stored in the INS > EMPLOYEE INSURANCE INFORMATION screen is used to identify employees’ Plan and Type of coverage for the budgeting process.

The annual amount found in the FRINGE BENEFITS DIRECTORY is used to determine the cost of insurances for employees who are:

Included in the selected contract

 Have active Insurance Plan/Type record(s)

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PAYROLL INFORMATION Projected Payroll Benefits

In addition to providing insurance benefits, the employer shares in the cost of paying Social Security, Medicare, Retirement, Unemployment Compensation, and Workers Compensation coverage.

These amounts are entered by defaulted when a FRINGE BENEFITS record is added to the directory. The default rates are based on the current Rates record in the EMPLOYER PARAMETERS in the Payroll application.

Update these rates with any changes that are expected, such as changes for retirement rates.

Employer Payroll Information

All mandatory taxes for the employer are calculated using the values in the rate fields within the Employer Rates section of the Mandatory Deductions tab. The rates and maximums are applied to each

employee.

Retirement is calculated only for employees who are identified with a Retire Rate on their EMPLOYEE

MASTER/Miscellaneous tab. Retirement is not calculated for an employee without this identification.

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Step-by-Step:

1. Select the SALARY > FRINGE BENEFITS DIRECTORY menu item.

2. Click the Add button to add a new record.

3. Enter a 1-digit code and a Description to identify the new record.

4. Click the Save button to save the record.

5. Make changes to the mandatory (payroll) benefit rates and save the changes.

6. Click on the Fringe Benefits tab.

7. If the grid is empty, refresh the screen using the arrow buttons at the bottom of the screen.

8. Generate the directory listing to review the annual amounts that were created to determine if any changes are needed.

9. Update the Annual Amt/Pct field with any needed changes.

10. Save the changes.

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CALCULATE LIFE INSURANCE PERCENT Coverage Based on Salary

To determine the percent needed for the Annual Amt/Pct field, when insurance cost is based on the employee’s salary, first manually calculate one or two employees.

Here is how to calculate the percent:

Our first employee has a salary of $63,589.00. Life insurance is provided based on 1 x the annual salary rounded to thousands. The insurance rate is .15 per thousand dollars of coverage.

Determine the Coverage: This employee’s coverage is $64,000.00.

Determine the Monthly Cost: Multiply the amount of coverage by the rate per thousand to determine the monthly cost. 64 X .15 = $9.60

Determine the Annual Cost: Multiply the monthly cost by 12. $9.60 X 12 = $115.20 Determine the Percent of Salary: Divide the annual cost by the employee’s annual salary.

In this first example the percent would be .0018116 but you can only go out 4 decimal places so you will need to round.

Calculate the percent for a second employee so you can determine how you want to round the percent to be used for all employees on this insurance type.

Our second employee's salary is $78,243.00 and the same rate of .15 per thousand should be used.

Coverage: Rounding to the nearest thousand would be a coverage amount of $78,000, but if rounding up it would be $79,000.

Monthly Cost: 78 X.15 = $11.70 Annual Cost: $11.70 X 12 = $140.40

Percent of Salary: $140.40/$78,243.00 =.0017944

With this information you can decide if you want to round up or down based on your calculations and enter that percent. Most often rounding up is preferred.

If the .0018 percent is used for this plan and type our second employee’s life insurance cost will be

$140.84. This is a difference of $.44 extra in your budget.

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References

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