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Benefit setup tasks [AX 2012]

Updated: March 7, 2014

Applies To: Microsoft Dynamics AX 2012 R3, Microsoft Dynamics AX 2012 R2

This topic describes how to set up current and future benefits that workers and their dependents and beneficiaries can receive, and also how to maintain payroll information for benefits. Examples of benefits include medical insurance, retirement investments, workers’ compensation plans, and parking benefits.

Garnishments and tax levies are also set up as benefits, although the steps required to set them up are different. For more information, see Garnishment and tax levy setup tasks.

After you set up benefit elements by using the Benefit elements form, you must create the benefits so they can be assigned to workers. When you create a benefit, you link an option to a benefit plan, designate a benefit period, and assign eligibility rules to the benefit.

This topic describes functionality that is available only if Payroll for Microsoft Dynamics AX 2012 is installed.

NoteNote

This topic has been updated to include information about features that were added or changed for cumulative update 6 and cumulative update 7 for Microsoft Dynamics AX 2012 R2. This information applies to CU6, CU7, and later cumulative updates. This information also applies to AX 2012 R3.

Click these links to find more information about the concepts that are discussed in this topic.

Setting up and maintaining Payroll

A benefit is a combination of three benefit elements: a benefit type, plan, and option:

  • Type – A collection of plans for a specific benefit, such as medical or parking.

  • Plan – A specific benefit that is contracted from a provider.

  • Option – The coverage level, such as employee only or employee and spouse.

Set up benefit types

  1. Click Human resources > Setup > Benefits > Benefit elements.

  2. In the Types area, click New to create a benefit type.

  3. Type the name of the benefit type and a description.

  4. Select one of the following concurrent enrollment options:

    • Multiple enrollments per type – You can enroll a worker in multiple plans that have the same benefit type, even if the enrollment is effective for the same period. For example, a worker can be enrolled in two term life insurance plans.

    • One enrollment per type – You cannot enroll a worker in more than one plan that has the same benefit type for the same period. For example, if the worker already has health insurance for a specified time period, you cannot enroll the worker in another health insurance plan that covers the same period.

  5. Select a payroll category to use for benefits that have the new benefit type. The payroll category determines which settings are available for a selected plan in the Plans area of this form. Settings that do not apply to the payroll category are not available.

Repeat these steps to set up additional benefit types. When you have finished, you can close the form, or see “Set up benefit plans” later in this topic to continue.

Set up benefit plans

  1. Click Payroll > Setup > Benefits > Benefit elements.

  2. In the Plans area, click New to create a benefit plan.

  3. Type the name of the benefit plan and a description, and select the benefit type.

    Different options are available, depending on the payroll category that is associated with the benefit type you select. If no additional options are available for this benefit plan, you can create another benefit plan, or see “Set up benefit options” later in this topic to continue.

  4. Select one of the following payroll impact options:

    • None – No amounts are contributed by the employer or deducted from the worker’s pay. When this is selected, no FastTabs are available on this page.

      NoteNote

      When the payroll category for the benefit type is None, the payroll impact is also None.

    • Deduction only – An amount is deducted from the worker’s pay for this benefit, but no employer contribution is made.

      When you select this option, controls that are related to payroll deductions are available on the other FastTabs, and controls that are related to employer contributions are not available.

    • Contribution only – An employer contribution is made for this benefit, but no amount is deducted from the worker’s pay.

      When you select this option, controls that are related to employer contributions are available on the other FastTabs, and controls that are related to payroll deductions are not available.

    • Deduction and contribution – An employer contribution is made for this benefit, and an additional amount is deducted from the worker’s pay.

      When you select this option, controls that are related both to employer contributions and to payroll deductions are available on the other FastTabs.

  5. On the Tax rule FastTab, select the pretax basis for the plan. The pretax basis determines the pattern of before-tax and after-tax treatment for payroll deductions and employer contributions.

    In the rare case that no preset options are appropriate for your plan, select Custom, and then select a Custom pretax method to specify the taxes that should not be deducted from the paychecks of employees who enroll in the plan. For more information, see Benefit elements (form).

    Caution noteCaution

    Use Custom only when no preset patterns are appropriate. If you must use Custom, work with your legal advisors to make sure that you select the correct settings for the benefit plan.

  6. If the payroll category is Retirement, enter the following information on the Retirement plans FastTab.

    1. Select the retirement type.

    2. Select the value that the maximum contribution for this benefit plan is based on:

      • None – There is no contribution limit.

      • Employee limit – The employer contribution stops when the employee’s payroll deduction limit is reached. For the payment in which the deduction limit is reached, the employer contribution is proportionally limited. For example, if only half of the expected employee deduction can be made before the limit is reached, only half of the employer contribution is made.

      • Fixed – The employer contribution limit is a fixed amount per calendar year. The amount is set in the contribution limit field on the benefit plan.

      • Combination – Both the employee limit method and the fixed method are evaluated, and whichever limit method reaches the limit first limits the employer contribution.

      The actual amount of the contribution limit is entered on the Payroll details FastTab.

  7. On the Payroll details FastTab, set up the following information.

    1. To prevent pay statement lines that include the benefit plan from being changed, select the Lock pay statement check box. When this check box is selected, lines that include the benefit plan can be added to or deleted from the pay statement, but lines that are on the pay statement cannot be changed.

    2. Select the Recover arrear check box to recover arrearages that are created for benefits that are based on this benefit plan.

    3. Select the method to use to determine the deduction amount if the employee’s pay is insufficient to cover the whole amount of the deduction for the selected benefit plan:

      • All or nothing – If the whole amount of the deduction cannot be made, nothing is deducted. The whole amount is placed in arrears.

      • Partial – Deduct as much of the deduction amount as possible. Any remaining amount is placed in arrears.

    4. Select at least one of the following payment run types:

      • Primary

      • Additional

      • Gross up

      Deductions and contributions for the selected benefit plan are included in payroll calculations for payroll runs that result in the payment run types that you select in this step. For more information about payment run types, see Earning codes (form).

    5. Assign a number to designate the default order that deductions for a benefit are made in, relative to other deductions.

      Amounts are deducted from pay statements starting with the benefit that has the lowest deduction priority number. When multiple benefits have the same number, the deductions for those benefits are made in alphabetical order.

      Caution noteCaution

      Certain benefits are considered mandatory deductions in some states. Those benefit plans should have the highest deduction priority and, therefore, the lowest deduction priority number.

      In many states, deductions for garnishments and tax levies must be made before deductions for any other benefits are made. For more information, see Garnishment and tax levy setup tasks.

      Your legal advisors should help you determine the deduction priorities for the benefit plans that you offer.

      By default, the value in this field is entered in the Maintain benefits form when a worker is enrolled in a benefit. You can change the value for a worker at the time of enrollment or at any other time.

      If you change the default value, existing benefit assignments do not change. Those values must be changed individually.

    6. In the Default deduction limits and Default contribution limits field groups, enter the limit amount and the limit period.

      The limit amount is the maximum amount that can be deducted or contributed for the selected benefit during the specified limit period. If there is no maximum amount, leave these fields blank.

      NoteNote

      When the payroll category assigned to the benefit type is Retirement, the limit period is automatically set to Year.

      When payroll is calculated, the limit amount is calculated across the limit period. For example, if the limit amount for deductions is 1200.00 and the limit period is Year, when the cumulative amount that has been deducted for the benefit reaches 1200.00, no more is deducted for that benefit for the rest of the year.

  8. On the Accounting FastTab, select the legal entity to set the accounting information for, and then complete the following tasks:

    1. Select the project category to use for the employer contribution. This usually is Payroll, although your organization might use a different category.

    2. Select the vendor that payments for this plan are paid to.

    3. Enter the default financial dimensions.

    4. Select the main accounts to use for posting deductions and contributions.

    If the benefit plan is offered by more than one legal entity in your organization, repeat this step for each legal entity.

  9. On the Reporting FastTab, if the benefit must be reported on Form W-2, select the number of the box on Form W-2 where the amount of the payroll deductions or employer contributions for the selected benefit are reported, and enter the label to use for the boxes.

Repeat these steps to set up additional benefit plans. When you have finished, you can close the form, or see “Set up benefit options” later in this topic to continue.

Set up benefit options

  1. Click Payroll > Setup > Benefits > Benefit elements.

  2. In the Options area, click New to create a benefit option.

  3. Type the name of the option and a description.

  4. To allow for dependents to be covered under the benefit, select the Allow dependent coverage check box.

  5. To allow the benefit to be designated to beneficiaries, select the Allow beneficiary designations check box.

Repeat these steps to set up additional benefit options. When you have finished, close the form.

To create the benefits that you can enroll workers in, see “Create a new benefit” later in this topic.

NoteNote

To create retirement benefits, you must first set up the contribution calculation rate tables. If you have not set up the rate tables yet, see “Set up contribution calculation rates for retirement benefits” and then “Create a new benefit” in this topic.

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For retirement benefits, the method that is used to determine the employer contribution and the employer contribution rates are determined by the rate table that is defined in the Contribution calculation rates form and assigned to the benefit in the Benefits form.

Before you start this task, we recommend that you create a table of your retirement plans. For each plan, include the contribution method, the employee deductions, and the employer contributions for the plan.

Example

Your organization offers two retirement plans. For Plan 1, your organization matches the worker’s own contributions to their plan at 50 percent up to the first 3 percent, and at 100 percent up to 6 percent. For Plan 2, your organization contributes 1 percent of the worker’s pay to the 401(k) plan when the worker’s own contributions are between 1 percent and 3 percent of their pay; 2 percent when the worker’s own contributions are between 3 percent and 6 percent; and 3 percent of the worker’s pay when the worker’s contributions are 6 percent or more. In this example, your two tables would look like this.

Plan

Worker deduction rate

Employer contribution rate

Contribution method

Plan 1

0.0000

0.5000

Percent of employee

0.0300

1.000

Percent of employee

0.0600

0

Fixed percent

Plan 2

0.0100

0.0100

Fixed percent

0.0300

0.0200

Fixed percent

0.0600

0.0300

Fixed percent

For Plans 1 and 2, the actual amount that the employer contributes depends on the tier type that you select in the Contribution calculation rates form. The following list describes each tier type and includes an example of how the tier types affect the employer contribution amount for Plans 1 and 2.

  • Single line – Use this tier type to use only one line from the rate table to calculate the employer contribution amount.

    For Plan 1, if the worker’s contribution rate is 10 percent of their 1000.00 earnings, the employer contribution is 0.00. For Plan 2, the employer contribution is 30.00 for an employee who earns 1000.00 and whose contribution rate is 10 percent.

  • Cascading tier – Use this tier type to use multiple lines from the rate table to calculate the employer contribution amount. Only lines that have a deduction rate of less than or equal to the actual worker’s deduction rate are used to calculate the employer deduction amount.

    For Plan 1, if the worker’s deduction rate is 10 percent of their 1000.00 earnings, the employer contribution is 45.00. For Plan 2, the employer contribution is 60.00.

The following table lists the formula for calculating the employer contribution amount for Plans 1 and 2 for each tier type.

Plan

Tier type

Employee earnings

Employee deduction amount

Employer contribution amount

Formula used to calculate employer contribution amount

Plan 1

Single line

1000.00

100.00

0.00

Cascading tier

1000.00

100.00

45.00

(1000 * 0) + ((1000 * (.06 - .03)) * 0.5) + ((1000 * (.03 - .00)) * 1) = 45

Plan 2

Single line

1000.00

100.00

30.00

Cascading tier

1000.00

100.00

60.00

(1000 * .03) + (1000 * .02) + (1000 * .01) = 60

Use the data in your own table to set up the contribution calculation rate tables that you need.

Set up a rate table for a retirement benefit plan

  1. Click Payroll > Setup > Benefits > Contribution calculation rates.

  2. Click New.

  3. Enter a name and description that identifies the contribution calculation rate table.

  4. Select the tier type for the rate table.

    Caution noteCaution

    The tier type that you select can considerably affect the employer contribution amount of the retirement benefit plan. See the examples in “Set up contribution calculation rates for retirement benefits” earlier in this topic to understand how tier types affect employer contribution amounts.

  5. Click Maintain versions.

  6. In the Maintain rate structure versions form, there are two Add buttons. The form-level button lets you add new versions of the rate table. The grid-level button lets you add rows to the rate table. Click the grid-level Add button.

  7. Enter the first worker deduction, employer contribution and contribution method for this rate table.

  8. Click the grid-level Add button again to add another row. When you have added all the rows that you need for this rate table, close the form.

Repeat this task to create additional contribution calculation rate tables. After you create a rate table, you can assign it to retirement benefits by using the Benefits form. For more information, see “Create a new benefit” later in this topic.

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After you have set up benefit elements by using the Benefit elements form, you must create the benefits so they can be assigned to workers. When you create a benefit, you link an option to a benefit plan, designate a benefit period, and assign eligibility rules to the benefit.

  1. Click Payroll > Setup > Benefits > Benefits.

  2. In the New group, click Benefit and enter the following information:

    • Plan – The name of the benefit.

    • Option – An option to add to the benefit.

    • Effective – The first date when the benefit is available to a worker.

    • Expiration – The last date when the benefit is available to a worker.

  3. Click Create benefit.

  4. Click Edit and expand the Eligibility rules FastTab to select the method to use to determine eligibility for this benefit.

    • All workers are eligible – The benefit is included in eligibility processing, but eligibility rules are not enforced for the benefit. All workers are always eligible.

      When you select this method, any worker who is included in an eligibility event can enroll in the benefit after the event is processed, but not at any other time. This lets you restrict enrollment in the benefit to appropriate enrollment periods, without otherwise limiting eligibility for the benefit.

    • Rule based– User-defined eligibility rules are enforced for the benefit. Select the rule type to use from the Rule type list.

      This method is used for most benefits.

    • Bypass eligibility process– The benefit is not included in eligibility processing. Any worker can be enrolled in the benefit at any time. You do not have to process an eligibility event before you enroll a worker in the benefit.

      This method is usually used for garnishments and tax levies.

  5. Optional: If there are workers who should be allowed to enroll in this benefit, but who do not meet the criteria in the eligibility rules, assign an eligibility override for those workers.

    1. Expand the Eligibility overrides FastTab.

    2. Click Add.

    3. In the Name field, select the worker to add an override for.

    4. In the Override start and Override end fields, enter the first and last dates when the override applies. When you determine eligibility for a benefit by using a Coverage start date that is in the specified date range, the employee is eligible for the benefit, regardless of the benefit eligibility rules.

  6. Expand the Payroll details FastTab and enter the following payroll information for this benefit:

    NoteNote

    This FastTab might include settings only for deductions, only for contributions, or for both deductions and contributions, depending on how the Payroll impact field in the Benefit elements form is set for the benefit plan. If the Payroll impact field is set to None, this FastTab is not available. For more information, see Benefit elements (form).

    The values on this FastTab are used as the default values in the Maintain benefits form for each worker who is enrolled in the selected benefit.

    • Frequency – The payroll calculation frequency that is used to determine the pay periods that the selected benefit is calculated in. Payroll calculation frequencies and pay periods are defined in the Payroll calculation frequencies form.

    • Basis – The option to use with the value in the Amount or rate field to determine the amount to deduct or contribute for the benefit. The amount is calculated only in the pay periods as determined by the payroll calculation frequency. Earnings are included in the calculation only when the earning code for the earnings is listed on the Earning basis FastTab and when the required parameters are set in the Earning codes form.

      For more information about the basis options, see Benefits (form).

    • Amount or rate – The amount or rate to use together with the value in the Basis field to determine the amount to deduct or contribute for the benefit.

      • If the basis for the deduction is Fixed amount, enter the amount to use as the payroll deduction or employer contribution for the selected benefit.

      • If the basis for the deduction is Percent of earnings, Regular portion of all pay, or Regular earnings, enter the percentage of the worker’s included earnings or pay to use as the payroll deduction or employer contribution for the selected benefit.

      • If the basis for the deduction is Productive hours, Earning hours, Regular hours, or Total hours, enter the hourly rate for the payroll deduction or employer contribution.

      For more information, see Benefits (form).

      This field is not available when the payroll category that is assigned to the benefit type in the Benefit elements form is Retirement.

    • Calculation rate – The variable rate structure that is used to calculate employer contributions to a retirement plan.

      This field is available only when the payroll category that is assigned to the benefit type in the Benefit elements form is Retirement.

  7. Expand the Earning basis FastTab and enter the earning codes that can be included when deductions and contributions for this benefit are calculated.

    If the Payroll impact field in the Benefit elements form is set to None, this FastTab is not available. For more information, see Benefit elements (form).

    In addition to the earning codes entered here, the Basis setting on the Payroll details FastTab, in combination with the parameter settings in the Earning codes form, are also used to determine whether a specific earnings line is included in the calculation.

    To enter an earning code, click Add, and then select the earning code from the list. You can also add all earning codes at the same time by clicking Add all earning codes.

Repeat these steps to create more benefits. When you have finished, close the form.

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In Microsoft Dynamics AX, workers’ compensation plans are handled just like other employee benefits.

  1. Follow the steps in “Set up benefit elements” in this topic to set up a benefit type for workers’ compensation plans. Use the following values.

    Fields

    Values to enter

    Concurrent enrollment

    Multiple enrollments per type

    Payroll category

    Workers' compensation

  2. Follow the steps in “Set up benefit elements” in this topic to set up a workers’ compensation benefit plan for each workers’ compensation plan that your organization subscribes to. Use the following values for each plan.

    Fields

    Values to enter

    Type

    The benefit type that you created to use with workers’ compensation plans.

    Payroll impact

    Contribution only

    Pretax basis

    None

    Limit period

    Leave blank.

    Limit amount

    Leave blank.

  3. Follow the steps in “Create a new benefit” in this topic to create one workers’ compensation benefit for each workers’ compensation plan that your organization subscribes to. On the Workers' compensation FastTab, specify the state that each benefit applies to.

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When the amount or rate that is used to calculate payroll deductions and employer contributions for a benefit changes, you have to change it both on the benefit itself and on the benefit records of the workers who are enrolled in that benefit. A yellow message bar on the benefit notifies you when the rates on the worker enrollments do not match the rates on the benefit.

  1. On the Benefits list page, select a benefit. Review the current rate information for the benefit under the grid.

  2. Click Maintain versions.

  3. On the Payroll details FastTab, click Add.

  4. In the Effective field, select the date that the new rate takes effect.

  5. Enter the new values in the Frequency, Basis, and Amount or rate fields, and then close the form.

After you have updated rates on the benefit, see Worker payroll tasks for information about how to update the benefit rates for the workers who are enrolled in the benefit.

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