FAQs About Changes to Employee Deductions

Zenefits automatically defaults to 2x the normal deduction amount when determining per-paycheck adjustments. Deductions adjustments will never exceed 2x the normal deduction amount unless requested by an administrator.

If the default catch-up amount causes financial hardship to under-deducted employee, administrators can contact Support to request a reduction as:

  • a flat amount, e.g., the normal deduction + $50, or
  • as a multiple of the normal amount, e.g., 1 .5x.

For employees in synced payroll or Zenefits Payroll, a new hire's deductions for a particular benefit will normally appear in the first paycheck after the effective date for that benefit. However, if an employee enrolls after their effective date and misses the first payroll run, then a pending deduction adjustment will generate. Learn more about how Zenefits determines deduction adjustments.

For companies who use File Sync or Payroll Reports, the timeframe is the same: new deductions will appear in the Deductions report for the period that contains the first paycheck. The pending deduction adjustment tool is not available for File Sync or Payroll Reports. More information about reviewing employee deductions

In general, changes to deductions due to enrollment changes (e.g., for a qualifying life event) will be applied on the first of the month after the date of the change. However, the actual timeline can vary by carrier so it's best to check with your broker if you have any questions.

In general, when an employer makes changes to their health insurance contributions, the date when employees' deductions will update to reflect the change depends on when the company pays its premiums.

  • For premiums paid in advance, new deductions will begin the next pay period in the month of actual coverage. For example, deductions that appear in paychecks paid in March reflect March coverage.
  • For premiums paid in arrears (for the previous month's coverage), new deductions will start in the same month the change is made. 
There may be situations where catch-up deductions do not correspond to the month of coverage in which they appear.

Deductions for employees going through Open Enrollment will start at different times, depending on the particular circumstances:

  • For new plan enrollments, deductions will appear on the first paycheck after the effective date.
  • For changes to enrollments made during the window, changes to deductions will be applied retroactively, back to the effective date.
  • For groups switching carriers, Zenefits will wait for the final confirmation of the group's approval from the new carrier. Once the group is approved, catch-up deductions will begin.

In some months of the year, there are 5 pay dates for employees paid weekly. Zenefits does not push normal deductions for these employees in the 5th paycheck, so there's usually no cause for alarm in this case. Learn more.

In most case, a new hire's deductions haven't yet begun because their effective date(s) for benefits are in the future. Zenefits begins deductions in the paycheck that follows the effective date.

Other reasons for delayed deductions include:

  • the employee completed enrollment, but there's a delay in approval for retroactive coverage to the effective date.
  • the company just added new coverage with a retroactive effective date.
  • the company is switching carriers or adding a new line of coverage, and there is a delay in approval by the insurance carrier(s)
  • the new hire's first pay date is the 1st of the month. Payroll is always run in advance of check date, so even if the employee's benefits' effective date is the 1st as well, deductions won't show up in the first paycheck.

If for some reason deductions don’t make it into payroll on time, Zenefits will automatically calculate catch-up deductions.

Deduction amounts for each paycheck may change as a result of many factors, such as:

  • employee contribution changes for benefits like 401(k) and commuter
  • adding or removing dependents
  • rate changes
  • deduction adjustments or reimbursements

In addition, Zenefits rounds deductions to the nearest cent. A slight variance from pay period to pay period to account for rounding is common.

Deduction adjustments are temporary increases (or decreases) in per-paycheck deductions to resolve differences between how much an employee has paid to date for their benefits and how much these benefits actually cost.

Differences can be caused by multiple reasons, such as:

  • Changes to benefits that increase monthly premiums
  • Addition or removal of a dependent from an employee's plan
  • Retroactive or future effective dates for insurance
  • Changes to contributions for Flex Benefits accounts.

Assume the following example.

  • An employee is hired on August 31 and enrolls in a plan with an effective date of September 1.
  • The carrier approves the plan at the end of September.
  • The new plan's monthly premiums are $360.

Deductions can't start until coverage is approved, even if the approval date is later than the effective date. The employee then had coverage for a month without paying premiums. Adjustments (sometimes, double deductions) are required because the employee now owes $360 for the previous month's coverage in addition to the current month's premiums.

To learn more about how Zenefits calculates catch-ups for under-deducted employees, see this page. For more information on reimbursing over-deducted employees, see this page.

When Zenefits detects that an employee was under-deducted for their benefits, payroll administrators can make their own adjustments in payroll, or use the adjustment plans that Zenefits automatically calculates to temporarily increase their deductions until the difference is repaid.

Each adjustment plan has 3-4 stages:

  1. To begin, the employee's per-paycheck deductions increase 2x the correct amount. (Why?)
  2. These 2x deductions continue for one or more paychecks until the remaining unpaid amount is less than 2 x the correct amount.
  3. Deductions for the next (and final paycheck) include the remaining unpaid amount (if any).
  4. Deductions return to normal in the next pay period.

In some months, there is a third paycheck for bi-weekly employees and a fifth paycheck for weekly employees. If these employees have catch-up deductions, up to 2x the normal deduction amount will be taken from the third or fifth paychecks. Any deduction amounts in these paychecks are 100% catch-up deductions.

Examples

An employee with a normal semi-monthly deduction of $100 ($200 monthly) was under-deducted $120 for the previous month, and will have $320 in deductions over the next two paychecks to catch up.

Deductions Remaining Unpaid
$120
1st paycheck $200 ($100 x 2) $20
2nd paycheck $120 ($100 + $20) $0
Total: $320

An employee with a normal weekly deduction amount of $80 ($320 monthly) was under-deducted by $180 for the previous month, and will have $500 in deductions over the next four paychecks to catch up.

Deductions Remaining Unpaid
$180
1st paycheck $160 ($80 x 2) $100
2nd paycheck $160 ($80 x 2) $20
3rd paycheck $120 ($80 + $20) $0
4th paycheck $80
Total: $500

An employee with a normal bi-weekly deduction amount (by Zenefit's Method 1 for bi-weekly deductions) of $100 ($200 monthly) was under-deducted by $400 for the previous month. If current month has three paychecks, this employee will have $600 in deductions in the next three paychecks.

Deductions Remaining Unpaid
$400
1st paycheck $200 ($100 x 2) $300
2nd paycheck $200 ($100 x 2) $200
3rd paycheck $200 $0
Total: $600

An alternative to manually reimbursing over-deducted employees in payroll is to have Zenefits calculate and apply an adjustment schedule for "reverse" adjustments, which reduce the employee's deductions for one or more paychecks until the amount they would have been deducted (without the reduction) is equal to the amount they overpaid.

Zenefits can only schedule and push reverse adjustments for employees with future deductions that are greater than $0. Employees with no future deductions, such as those who've retroactively cancelled their benefits, must be reimbursed manually in payroll.

Examples

An employee with a normal semi-monthly deduction of $100 ($200 monthly) was over-deducted $120 for the previous month. Their deductions will be reduced over two paychecks before returning to normal.

Deductions Remaining Overpayment
$120
1st paycheck $0 ($100 - 100) $20
2nd paycheck $80 ($100 - 20) $0
Total: $80

An employee with a normal weekly deduction amount of $80 ($320 monthly) was over-deducted by $180 for the previous month. Their deductions will be reduced over four paychecks before returning to normal.

Deductions Remaining Overpayment
$180
1st paycheck $0 ($80 - 80) $100
2nd paycheck $0 ($80 - 80) $20
3rd paycheck $60 ($80 - 20) $0
4th paycheck $80
Total: $120

An employee with a normal bi-weekly deduction amount of $100 ($200 monthly) was over-deducted by $350 for the previous month. Their deductions will be reduced over four paychecks which normally have deductions.

Deductions Remaining Overpayment
$350
1st paycheck $0 ($100 - 100) $250
2nd paycheck $0 ($100 - 100) $150
3rd paycheck $0 ($100 - 100) $50
4th paycheck $50 ($100 - 50) $0
Total: $50

Zenefits automatically calculates adjustment plans for employees who were under- or over-deducted for their benefits. Click Deduction Adjustments on the Deductions page to use the Deduction Adjustments tool and manage over- and under-deducted employees by approving or declining Zenefits' suggested plans.

Adjustments for Under-deducted Employees

Under-deducted employees were not deducted enough to cover the cost of their benefits.

For these employees, click:

image to approve the adjustment, and have the employee to pay back the difference. Zenefits will automatically increase their deductions (as catch-ups) over a specified number of pay periods, then return them to normal deductions. Read an explanation of how Zenefits calculates catch-ups.
image

to decline the adjustment. By this method, you can either manually make adjustments in payroll, or "forgive" the amount entirely by paying the difference on behalf of the employee. Zenefits will make no changes to the employee's deductions.

Adjustments for Over-deducted Employees

Over-deducted employees paid more than the cost of their benefits, and should receive the difference as a reimbursement.

For these employees, click:

image to approve an automatic adjustment. Zenefits will automatically decrease their deductions over a specified number of pay periods, then return them to normal deductions. Read an explanation of these adjustment plans.
image

to decline the automatic adjustment. You'll need to manually reimburse the employee through payroll. Zenefits recommends this method because it is the fastest way to reimburse the employee up-front.

Making Decisions

Your decisions to approve or decline an adjustment only take effect once you click Apply Decisions. Prior to that, you can undo each decision, or Reset All to undo all pending decisions.

  • Once you click Apply Decisions, Zenefits will push these changes to synced payroll, Payroll Reports, or Zenefits Payroll for the next check date.
  • Zenefits will not make changes to the employee's current (normal) deductions until you make a decision on any pending adjustments.

Example Adjustment Scenario

Let's walk through an example:

  • An employee's normal per-paycheck deduction for Medical is $100. However, Zenefits determines that this employee was under-deducted by $150.
  • On the Deduction Adjustments page, there will be an entry for this employee in the Under-Deductions tab:

    Employee A's medical deduction was under-deducted by $150.

    Adjust deduction from $100 to $200 for 1 pay period, then $150 for 1 pay period?

If the adjustment is:

  • approved, Zenefits will push $200 to payroll (or the Deductions report) for Medical in the employee's next paycheck, and $150 in the following paycheck, and back to $100 in the paycheck after that.
  • declined, Zenefits will continue to push $100 for this employee, and add an Adjustment item to the employee's historical deductions.

Deduction Adjustment Block Period

We are not able to sync deduction information to payroll during the block period. If a company is in this block period, any pending deduction adjustments an admin may have seen with their Deduction Adjustment tool will be removed until the block period has ended. There is no need to panic. This is how the product is supposed to work.

What is the block period?
  • The block period is 2 days before the check date and the the actual check date.
For example, if the next check date for a company is the 15th, the pending adjustments will disappear from 13th-15th and reappear on the 16th.





Zenefits is unable to sync deduction information to payroll during the block period. If a company is in this block period, any pending deduction adjustments an admin may have seen in their Deductions App will be removed until the block period has ended. There is no need to panic. This is how the product is supposed to work.

What is the block period?

The block period is 2 days before the check date and the actual check date.

For example, if the next check date for a company is the  15th, the pending adjustments will disappear from  13th-15th  and reappear on the  16th.

**If outside the block period, pending Deduction Adjustments will appear as normal**

If you are an employee and do not see the correct deductions for insurance, please bring this up to the attention of your HR administrator for additional clarification. 

If you are an HR administrator looking for additional clarification, please bring this to the attention of your broker contact.

If you enrolled in a Commuter, FSA, HSA, or HRA  plan, and believe your deductions are incorrect, please make note of the date you made the change.

  • Changes you make before the 25th of the month will go into effect on the 1st of the following month.
  • Changes you make after the 25th of the month will go into effect on the 1st of the month after the next.

If you still believe your deductions are incorrect, please speak with your HR representative to reach out to Support.

If you're an employee and do not see the correct deduction for 401(k), please bring this up to the attention of your HR representative. Remember that the IRS sets annual limits for how much can be contributed to these accounts. 

If your HR representative identifies an issue, please have them reach out to Support for further assistance.

Still need our help? Our support team is waiting to help you. Contact us