About Salary-Based Benefits

In this article:

What is a salary-based benefit?
Many employers offer benefits that look at the employee's salary to determine the coverage amounts and costs. Here are some common examples:
  • A basic life product with an issued amount based on X times the employee’s salary
  • A disability product in which an employee will receive a certain percentage of their salary in the event they become unable to work

If you're not sure which benefits that your company offers are based on salary, reach out to your Advisor.

Which salary will be used as a basis for calculating costs and coverage amounts for benefits?

You can control which salary should be used when calculating available coverage options for salary-based benefits under Settings > Preferences. This is especially important if you make a change to an employee's salary. You’ll always need to go into Maxwell to update the employee’s annual salary field and add a new salary effective date. 


Here are your options:

  • Use what the employee’s salary was on the day that the plan year started. This is a good option if you don’t want salary-based benefits to update as you make changes to employee salaries throughout the year. Let’s say you have a plan year from 1/1/19 - 12/31/19 and you change an employee's salary, effective 3/1/19. This employee’s salary-based benefits won’t update to reflect the new salary until 1/1/20 when the plan is renewed.
  • Use the employee’s most recent salary. This is the option you’ll want to go with if you always want enrollments to be in sync with the employee’s salary. If you select this option, you can then select exactly when you want those benefits to be updated:
    • Immediately as of the date the new salary is effective.
      • Example: If the new salary is effective on 11/1, enrollments will update effective 11/1. If the new salary is effective on 11/2, enrollments will update effective 11/2.
    • First of the month following the date the new salary is effective.
      • Example: If the new salary is effective on 11/1, enrollments will update effective 12/1. If the new salary is effective on 11/2, enrollments will update effective 12/1.
    • First of the month coinciding with or following the date the new salary is entered
      • Example: If the new salary is effective on 11/1, enrollments will update effective 11/1. If the new salary is effective on 11/2, enrollments will update effective 12/1.

Here's an example of how this will work:

  • Update an individual employee’s salary from their employee profile or multiple employees' salaries via Bulk Upload following the same process you would to update any employee information.
  • If updating on the employee's profile, you'll see a message letting you know which benefits are salary-based and will be updated as a result, if the employee is enrolled in them. Once you save the change, you can see the updates reflected on the employee's benefits.


Please note that if you update an employee's salary as part of a life event or correction, and your settings dictate that the salary-based benefits will be updated as a result of that salary change, you will not see the employee's salary-based benefits listed as "changed" in the "Review Updates" section. Do not be alarmed; the benefits have updated automatically, and you will see them reflected on the employee's "benefits" tab.

Viewing the salary basis in reporting

All Pending Elections, Coverage, and Cost reports reflect costs and calculations based on the salary that is effective when the benefits represented on the report are effective. See the “Salary Basis” field on the report, which will tell you the annual salary that was used as the basis for these costs and calculations.

Frequently asked questions
  1. Q: I want to update an employee's salary and enrollments, but they're not effective for some time in the future. Can I still enter them now?
    A: Yes! You can enter them now with an associated salary effective date that's in the future.
  2. Q: I have a BambooHR integration. Will the salary effective date field pass down from my BambooHR system into Maxwell?
    A: The salary effective date field will not pass down automatically from BambooHR into Maxwell at this time. That field will need to be entered manually in Maxwell, even if it is already populated in BambooHR.
  3. Q: What if a salary increase causes employee coverage to increase above the guaranteed issue amount? Will that be a problem if my portal is set to automatically update salary-based enrollments?
    A: For benefits that require evidence of insurability (EOI) to be approved for coverage over the guaranteed issue (GI) amount, a salary increase will not automatically increase coverage over the GI amount. Coverage will only automatically increase up to the GI amount, if applicable. Any amount of coverage over the GI amount will be reflected as "pending" and will require carrier approval before it can be processed as approved coverage.

  4. Q: I updated the salary, but I did not see a change to the employee's salary-based enrollments. What's going on?
    A: An updated enrollment will only be created if the salary change results in a change in the coverage amount or cost. For example, if an employee's coverage amount is already above the maximum coverage amount as allowed by the plan, they will not see a new enrollment when a salary is changed since nothing has actually changed with the enrollment.

  5. Q: I want to handle my salary updates manually. Can I do that?
    A: With the ability to determine when a salary is effective, coupled with the settings where you can determine when the salary-based enrollments are updated, you shouldn't need to make any manual updates to salary-based enrollments. If the reason is that you didn’t have the setting set correctly before you made the salary change, you can change the setting now, delete the salary you added, and re-add the salary. You’ll see that the enrollments will then update as you would expect, based on the settings.
  6. I need to upload salaries that were effective in the past, and I'd like employee enrollments in salary-based benefits to also be effective (at the same time) in the past. What should I do?
    A: Ensure your Preferences are set to: "Use the employee's most recent salary Immediately as of the salary effective date." Once you have that setting set, you can bulk upload the past salaries with their past effective dates (or update them individually on the employee's profile).
  7. I want to change the effective date of an existing salary. How do I do that?
    A: If you’d like to update the salary effective date, you can do that by adding the same annual salary with a new effective date (either individually or in bulk) and deleting the existing salary that you want to correct.
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