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Update Enrollments in Salary-Based Benefits Due to a Salary Change

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Ashley Faber
If an employee’s salary changes, you’ll always need to go into Maxwell to update the employee’s annual salary field. From there, the employee's enrollment in any salary-based benefits may need to be updated to reflect the employee's new salary. Whether that happens right away or at a future date is up to you. You also have the option to indicate whether or not you'd like the employee's enrollments to be updated automatically by the Maxwell system.
 
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.

What are my options for updating enrollments in salary-based benefits?

The "salary changes" preference under Settings > Preferences allows you to set up how you'd like the Maxwell system to handle enrollments in salary-based benefits once a salary is changed. You'll choose whether you'd like to have enrollments automatically updated to reflect the new coverage and costs.

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Option #1: Have enrollments update automatically

You'll want to select "Yes..." if you always want your employee's enrollments to be in sync with the latest salary. From there, you can decide when you want that change to be effective.
  • Immediately as of the date the new salary is entered
    • Example: If the new salary is entered on 11/1, enrollments will update effective 11/1. If the new salary is entered on 11/2, enrollments will update effective 11/2.
  • First of the month following the date the new salary is entered
    • Example: If the new salary is entered on 11/1, enrollments will update effective 12/1. If the new salary is entered 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 entered on 11/1, enrollments will update effective 11/1. If the new salary is entered on 11/2, enrollments will update effective 12/1.

Please pay special attention that the effective date is based off of "the date the new salary is entered" into the Maxwell system vs. the date the change/event occurred or any other date. For this reason, you should be mindful of the actual day you are entering the salary change into the system.

Here's an example of how this will work:

  1. 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. (We recommend using the "Change of Compensation" change reason if updating individually.)
  2. Once the salaries are updated, head to the "Enrolled Products" tab. See that all of the salary-based benefits have been updated with new effective dates, coverage amounts, and (if applicable) costs that are based on the new salary.

Option #2: Choose to update enrollments manually

If you do want to update salary-based enrollments based on the latest salary, but would prefer to do so manually, you should select "No, I will update coverage manually" in the Employer Preferences.
 
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You can also leave the preference unselected, as the default system preferences allow you to make manual updates whenever you'd like.
 
Here's an example of how you should update salary-based enrollments manually:
 
  1. 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. (We recommend using the "Change of Compensation" change reason if updating individually.)
  2. Once the salaries are updated, head to the employee’s "Eligible Products" tab. For each salary-based benefit:
    • Click Edit/Process. (Note: at this point you may be asked to provide a change reason if you're not already in one. We recommend choosing "Change of Compensation").
    • Change the "Shopping Status" to “Confirmed."
    • Change the "Intent" to "Enroll."
    • Change the "Effective Date" to the date that you want the new salary to be used to determine coverage amounts and costs for the benefit.
    • Click Process Elections.

      Salary2.gif

  3. You’re done! See the employee’s new effective date, coverage amount, and (if applicable) cost for the salary-based benefit under their "Enrolled Products" tab.

Option #3: Do not update enrollments until plan renewal
 
You always have the option to leave current enrollments in salary-based benefits alone and wait until plan renewal for those changes to take effect in the new plan year. In that case, you don't need to touch the "Salary Changes" setting in the Employer Preferences.
 
Please be aware that if the enrollment needs to be updated and processed for any other reason (due to a qualifying life event or otherwise) before the next open enrollment, the coverage amounts and costs (if applicable) will be updated based on the salary that is in Maxwell. We are working on functionality that will allow you to "freeze" a salary effective at a certain date as the salary to use when calculating enrollment information for salary-based benefits.
 
Frequently asked questions
 
  1. Q: What other improvements to employee compensation management is Maxwell working on?
    A: In early 2019, we plan to release the ability to set an effective date for the salary change. This will allow you to load in salary updates whenever is convenient for you, as well as run an open enrollment showing eligible coverage amounts and costs based on their future salaries when the plans are effective. We’re also working on a better way to display an employee’s salary history. Stay tuned!

  2. Q: 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 in the past. Which option should I take?
    A: You should take option #2 and update the salary-based enrollments manually, entering the past effective date on each benefit. Please don't hesitate to contact the Maxwell Customer Support Team if you need any help.

  3. 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: Right now we do not support a "salary effective date" so that you can enter salaries but make sure they don't take effect until a certain date. We are working on that functionality now and plan to complete it in early 2019. However, you can always update the salary and either automatically or manually have the salary-based enrollments update at a future effective date. Please be aware that the automatic setting allows for "first of the month following" as the future date. If you'd like to use a different future date, please update the enrollments manually.

  4. 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 in the corresponding EOI eligible product as "confirmed" and will require carrier approval before it can be processed as approved coverage.

  5. 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.

 
 
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