University of Oregon

Benefit Deductions

 

Concept of Negative Deductions

The following examples show the calculations for thevarious types of benefit coverage deductions shown on your earnings statement. When attempting to calculate the cost of your benefits, remember that PSA (Benefit Contribution) is a "negative deduction" or positive addition to net pay that off-sets the amount deducted from your paycheck for medical, dental, vision, administrative fee, and basic life insurance costs. Currently for full-time employees, the net amount of the cost to the employee for benefits is 5% as shown in the first example below.

Additional Benefit Information (HR website)

 

Full-Time Benefit Coverage

Deduction Code Description Employee
Family
Employee
Only
PSA Employer Contribution -1532.92 -1144.31
PMB Medical 1402.57 1046.80
PDT Dental 111.91 83.49
PVP Vision 17.44 13.02
CL1 PEBB Basic Life $5,000 1.00 1.00
P5P Post-Tax Deduction of 5% $76.65 $57.22

 

 

Employee and Family:

  • Cost of Benefits:1,402.57 + 111.91 +147.44 +1.00= + $1532.62
  • Percentage Charged to Employee:$1532.92 X .05 =$76.65

Employee Only:

  • Cost of Benefits:1,046.80 + 83.49 +13.02 +1.00= + $1144.31
  • Percentage Charged to Employee:$1144.31 X .05 =$57.22

Optional Benefits

The optional benefits listed above are not covered by the PEBB medical/dental plan and are an "out-of-pocket" cost to an employee. This means that these deductions are not part of the above calculation. The table blow is a partial listing of the many optional benefits available.

Deduction Code Description
CL2 PEBB Life up to $45K Pre tax
CL3 PEBB Life $60K-355K Post tax
L02 PEBB Spouse/Ptr Life Post tax
L03 PEBB Dependent Life Insurance
LAE PEBB AD&D Ins, Employee
LAF PEBB AD&D Ins, Empl/Family
LCE Long Term Care, Employee
LCS Long Term Care, Spouse/Ptnr
LTD PEBB Long Term Disability
LST PEBB Short Term Disability
PXM PEBB Medical Flex Spending
PXS Flex Spending/Dependent Care

Medical Opt Out (Cashback)

Deduction Code Description Amount
PSA Contribution -387.00
POO Medical Plan Opt Out 154.00
PDP Dental 77.14
CL1 PEBB Basic Life 1.00
CBK Cash Back Amount to Employee in Paycheck $ 154.86

In this example, the employee has another group medical coverage and has elected to "opt out" of PEBB medical coverage in order to receive "cash back" payments each month.

For those who "opt out" of medical insurance, the contribution amount is approximately 60% of $387.00. The medical plan opt out deduction reduces By $154.00 the actual contribution to $233.00. The cost of PEBB dental and basic life insurance is then deducted from this amount, resulting in a month cashback amount of $154.86.. ($233.00 - $77.14 - 1.00 = $154.86)

Medical / Dental Opt Out (Cashback)

Deduction Code Description Amount
PSA Contribution -387.00
POB PEBB Mde & Dental Opt Out 193.50
CL1 PEBB Basic Life 1.00
CBK Cash Back Amount to Employee in Paycheck $ 192.50

In this example, the employee has other group medical coverage from another employe, and has elected to "opt out" of PEBB medical and dental coverage in order to receive "cash back" payments each month.

For those who "opt out" of medical insurance, tje contribution amount is rediced by 50% to $193.50. The cost of PEBB Basic Life is then subtracted from this amount, resulting in a monthly cashback amount of $192.50.

Domestic Partner Benefit Taxation

The Payroll Office adds the "imputed value" cost of the benefit coverage for a domestic partner or domestic partner's children to the employee's monthly taxable wages, and then calculates and withholds the taxes. The "imputed value" is considered a taxable fringe benefit by the Internal Revenue Service (IRS). The amount added to gross earnings is listed in the "earnings section" of your earnings statement with the code of FDP (Fringe Domestic Partner).

The example below shows the increased amount of Federal, State, Social Security, and Medicare taxes withheld when a domestic partner is covered by the employee's insurance plan. In this case, the imputed value of $664.08 consists of $618.82 full-time medical plan, $39.33 full-time dental plan, and $5.93 for vision plan.

Paycheck-Gross to Net Entries Employee Only Employee/Domestic Partner Coverage
Salary $ 3,515.39 $ 3,515.39*
FDP (Imputed Value)   +664.08
Taxable Gross Salary 3,515.39 4,179.47
Federal Tax 435.10 601.12
State Tax 244.33 283.72
Social Security 147.65 175.54
Medicare 50.97 60.60
SAIF 2.43 2.43
Other Deductions 131.65 131.65
Net Pay $ 2,503.26 $ 2,260.33*

Note: The amount withheld for Federal and State Taxes is based on requested W-4 withholding amounts. In the example above, federal and state tax withholding is based on Single with One allowance on the W-4.

* Remember with FDP, the imputed value of $664.03 is added to the taxable gross for tax withholding purposes. Use the salary amount of $2,260.33 to subtract the federal, state, social security, Medicare, SAIF and other deductions to arrive at the net pay of $2,193.48. (The $664.08 is a place holder for tax calculation, and is not part of the net pay calculation.)

Domestic Partner Taxation Issues:

  • Box 1 (Wages, tips, other compensation) of the W-2 Wage and Tax Statement at year end will now include the total of your regular wages plus the imputed value of your domestic partner benefit.
  • The amount of imputed value for the domestic partner benefit will be listed separately in another section of the W-2. (This past year it was in Box 14.)
  • Your tax bracket could be increased by the addition of this benefit to your taxable gross earnings. It all depends on your particular tax situation.
  • You may want to consider consulting with a tax consultant on how this selection will impact both your state and federal tax returns.
  • A domestic partner who meets specific IRS tax requirements may be considered a tax dependent for health purposes.

Helpful Links:

 

  • You may visit the Human Resources website for more information on the domestic partner coverage at http://hr.uoregon.edu/benefits/domestic.html.
  • Use our Net Pay Calculator to find out the actual amounts in federal, state, Medicare and social security deductions on your earnings statement when you add domestic partner benefits. If you need assistance when first using the calculator, you may contact Payroll staff at 346-3151.

9-Month / Academic-Year Employees

Each year in May, the Payroll Office processes triple benefit deductions for benefit eligible academic year employees who are not resigning or retiring in May or June. The triple deduction process adds two extra premiums to the normal deductions in the month of May, to cover benefits for August and September. The normal deductions in June cover July benefits. The normal deduction in May covers June benefits.

The triple deduction process ensures that there is continuous coverage in the summer for this group of employees. In May, the additional out-of-pocket benefits expenses paid by employees are also tripled. Disability insurance, fixed amount of tax deferred investments, dependant day care, and medical flexible spending accounts are NOT tripled in May. These deductions are only taken in the months when employees receive pay.

Employees will also see the "TAY" deduction code, "Academic Year Triple Contribution" on the employer side of the monthly earnings statements. These contributions are collected to pay for the additional two months of benefit coverage for the summer.

In May, employees will see a triple negative amount of PSS "subsidy" and a double negative contribution on the employee side of their earnings statements.

Additional Information (HR website)


Last update: May 4th, 2016 @ 11:28:13 PDT

Business Affairs
Eugene, OR 97403

P: Billing 541-346-3170F: 541-346-5820P: Payroll 541-346-3151

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