Why does an employee have deduction adjustments?
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.
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