Processing Eligibility and Proration

This chapter provides overviews of eligibility and proration calculation and proration factor calculations and discusses how to:

• Determine eligibility and calculate proration.

• View and adjust plan member eligibility.

Understanding Eligibility and Proration Calculation

Here are the basic steps you use to calculate eligibility and proration:

1. Set up plan membership.

2. Set up proration-related control tables (for prorated plans).

3. Run the Determine Eligibility/Proration Application Engine process (VC_ELIG_PRO).

   • The process generates a list of workers who are eligible under the plan and calculates the eligibility status.

   • For prorated plans, it calculates a proration factor that the system applies when it calculates the award allocation.

4. View and adjust plan member eligibility.

Understanding Proration Factor Calculations

This section discusses:

• General proration factor calculation.

• Daily, weekly, or monthly frequency calculation method.

• Workday schedule calculation method.

• Proration percentage calculation method.

• Proration calculation method for plan members who fall off a tree.

General Proration Factor Calculation

The proration factor is a number that expresses the portion of the payout period for which an individual was an eligible plan member. The highest proration factor is 1, which means that the individual was eligible for the entire payout period.

The Determine Eligibility proration process calculates eligibility and the proration factor. The Calculate Awards process uses the proration factor in awards calculation. Before you calculate awards, ensure that you have calculated proration for the entire plan payout period.

Terms and Elements

These terms are important for understanding proration calculation.

Basic Proration Factor Calculation Process

To calculate the proration factor:

1. Select Calculate Proration on the Plan Business Rules page.

2. Set up proration-related control tables.

   • Set up workday rules on the Workday Schedule page (for the workday schedule calculation method)

   • Set up proration percentage rules on the Percentage Proration Rules page (for the proration percentage calculation method).

   • Set up proration periods on the Prorate Periods page (for all prorated plans).

3. Define the begin and end dates of the eligibility evaluation period on the Determine Eligibility run control page.

4. Run the process to calculate eligibility based on whether the worker is eligible as of the end date of each of the proration periods evaluated.

   Each time you run the process, it calculates the cumulative eligibility proration factor for each member from the begin date of the plan payout period through the eligibility evaluation end date.

   The system displays the proration factor on the Eligible Employees by Plan or Eligible Employees by Group pages and on the Award Details section of the Allocate Awards page.

Daily, Weekly, or Monthly Frequency Calculation Method

The system calculates the proration factor for each evaluation period and accumulates the factor for the entire payout period.

Setting Up Prorate Periods

You set up the prorate periods on the Prorate Periods page. Select Calendar Days, Weekly, or Monthly as the proration frequency (length of the proration period).

Note. If you select Calendar Days, do not select a prorate % ID when the field appears. If you select Weekly, or Monthly, define which day of the week or month is the as of date for eligibility calculation.

The system defines the end dates of proration periods for the payout period based on the daily, weekly, or monthly frequency parameters.

Setting Up Prorate Periods

You set up the prorate periods on the Prorate Periods page.

Select Calendar Days, Weekly, or Monthly as the proration frequency (length of the proration period).

Note. If you select Calendar Days, do not select a prorate % ID when the field appears. If you select Weekly, or Monthly, define which day of the week or month is the as of date for eligibility calculation.

The system defines the end dates of proration periods for the payout period based on the daily, weekly, or monthly frequency parameters.

Example of Monthly Calculation

This table describes the three proration periods in the example of monthly frequency with the end of the month as the period end date:

The process evaluates eligibility for each of the three proration periods of the evaluation period. Workers who are eligible on the proration period end dates are eligible for the month.

The process credits qualifying members with a proration factor of 1/3 for each proration period for which they were eligible.

A member who was eligible in all three proration periods would receive a proration factor of one (3/3).

Workday Schedule Calculation Method

The system calculates a proration factor for each day in the period and accumulates the worker's proration factors for eligible days. The calculation is:

Goal Weight × Performance Level of the Attainment Value

Setting Up Workday Schedule Calculation

To set up workday schedule calculation:

1. Set up workday rules on the Workday Schedule page.

   • Create schedules assigning a factor to each day of the week (Sunday through Saturday).

   • Each day in the period has a proration factor equal to that day's factor over the total of the factors for the period.

2. Set up the prorate periods on the Prorate Periods page.

   • Select By Workday as the proration frequency. This is a daily frequency, so the system creates a prorate period end date for each day in the payout period.

   • Select a Workday Rule to assign factors to each day in the payout period. This Workday Rule is assigned to all members of the plan for the duration of the payout period.

Goal Weight × Performance Level of the Attainment Value

Example

Workday Schedule Definition:

Based on this schedule, the total factor was 23.5 in January 2000.

The proration factor attributed to a member for any eligible day in January 2000 is that day's factor on the workday schedule over 23.5. In this example, the proration factor for a Saturday is 0.5/23.5; the proration factor for a Tuesday is 1/23.5.

The worker's proration factor for the entire payout period is the accumulated sum of the daily proration factors for eligible days in the period. The maximum, for a worker who is eligible on every day in the period, is 23.5/23.5, or 1.

Proration Percentage Calculation Method

The proration factor is determined by looking up the percentage associated with the number of days that the worker is eligible in the period.

The calculation formula is the percentage assigned to the range into which the worker's number of eligible days falls for the period.

Setting Up Proration Percentage Calculation

To set up proration percentage calculation:

1. Set up proration percentage rules on the Percentage Proration Rules page.

2. For each prorate % ID, create separate proration rate schedules for workers who are active and those terminated at the end of the payout period.

3. For each proration rate schedule, define ranges of eligible days and associate a percentage with each range.

4. Set up prorate periods on the Prorate Periods page.

   • Select Calendar Days as the proration frequency. This is a daily frequency, so the system creates a prorate period end date for each day in the payout period.

   • Select a prorate % ID to associate proration rates schedules with the plan for the payout period.

Example

Proration Rates schedule:

Sample of proration factors:

Proration Calculation Method for Plan Members Who Fall Off a Tree

Sometimes a worker is a member of a group that was on the VC Tree for part of a payout period, but by the end of the period, the worker or group is no longer on the tree due to reorganization or other factors.

The Determine Eligibility proration process does not calculate the proration factor for such workers who fall off the tree. For prorated plans, the Consistency Report, available from the Variable Compensation report menu, provides a list of the names and employee IDs of workers who have fallen off a tree, along with the group ID to which they belonged. The VC administrator or the workers' managers can use this information to manually add the workers back into the tree in a special group for this purpose.

To recalculate eligibility for workers who fall off a tree:

1. Create a group with all of the workers who fell off the tree.

2. Manually attach this group to the tree.

3. Run the eligibility process to correctly calculate the proration factor for members in the group.

See Also

Reporting on Tree Membership

Determining Eligibility and Calculating Proration

The Determine Eligibility/Proration Application Engine process (VC_ELIG_PRO) tracks the eligibility history of each plan member from the payout period start date to the payout period end date. Run the Determine Eligibility proration process at any time during the life of the plan. If any awards have been manually altered or have been submitted for payout or distribution for a payout period, you cannot rerun eligibility for that payout period.

Note. The Determine Eligibility proration process calls the VC_ELIG_PRO SQL query that retrieves only the most current effective-dated row in Job data for the employee, even if the employee has more than one job action within the time period specified in the group definition in Group Build.

Note. If you rerun the Determine Eligibility proration process after you have run the Determine Allocations or Calculate Awards process, you must run those processes again. The system issues a warning that you will lose all award calculations if you rerun the eligibility process.

Page Used to Calculate Eligibility and Proration

Running the Determine Eligibility Proration Process

Access the Determine Eligibility page (Compensation, Variable Compensation, Identify Eligible Recipients, Determine Eligibility, Determine Eligibility).

Run this process to calculate and update eligibility for all plans except those having Ad Hoc Awards as the plan member rule. For Ad Hoc Award plans, manually enter and change member eligibility on the Eligible Employees by Plan page.

Determining the Period of Calculation

Depending on whether the plan ID you select is a prorated plan, only certain fields are available for entry.

• For plans without proration, Eval As of Date is available.

• For prorated plans, Eval Begin Date and Eval End Date are available.

Field Definitions

Viewing and Adjusting Plan Member Eligibility

This section provides overviews of how to view and adjust plan member eligibility and eligibility status and discusses how to:

• View and adjust member eligibility.

• View or correct historical plan member eligibility data.

• View and adjust eligibility for plans with groups.

• Maintain eligibility for Employee Variable Compensation record plans.

Understanding How to View and Adjust Plan Member Eligibility

When you run the Determine Eligibility proration process, the system enters eligible plan members and their eligibility status on the Eligible Employees by Plan page or the Eligible Employees by Group page. After calculating eligibility, use these pages to view the most recent list of eligible plan members. Also use these pages to adjust eligibility at any time during the life of the VC plan.

Note. Rerun the Determine Eligibility proration process if you adjust eligibility on the Eligible Employees by Plan pages.

This table illustrates which page the system populates, depending on the plan member rule:

These pages show current automatic eligibility status along with current and future manual eligibility status. The system tracks each change of eligibility status and keeps a full record of historical eligibility data for each worker, which you can view on the Member History page. Access the Member History page from a member's data row on the Eligible Employees by Plan page or Eligible Employees by Group page.

Using the Eligible Employees by Plan Page for Ad Hoc Awards

For Ad Hoc Awards, add a new row in the grid for each new plan member who gets an award for the plan ID and payout period ID.

Using the Eligible Employees by Plan Page for Employee VC Record Without Groups

When the plan member rule is Employee Variable Compensation Record (without groups), use the Eligible Employees by Plan page to view plan member eligibility or to change a member's eligibility status to a manual status, but you cannot manually add members. Add members on the Individual's Payout page.

See Also

Setting Up Plan Members for Ad Hoc Awards

Understanding Eligibility Status

The Determine Eligibility proration process calculates the eligibility status for each plan member except members of Ad Hoc Award plans. Always establish eligibility status manually for Ad Hoc Award plans.

Automatic Status Compared to Manual Status

Eligibility falls into the categories of automatic status and manual status. The Determine Eligibility proration process calculates automatic status based on a member's eligibility for a plan or group as established on the Individual's Payout page or in group definition criteria. Override the automatic status by entering a manual status for the plan member on the Eligible Employees by Plan page or Eligible Employees by Group page. The system does not override a manual status with an automatic status.

Throughout the life of a VC plan, a plan member's eligibility status can change for a number of reasons. To track changes, the system displays the member's eligibility status along with a date as of which that eligibility status is effective.

Source of the Eligibility As Of Date

This table summarizes the source of the eligibility as of date, which depends upon the individual conditions of the plan and member:

Definitions of the Five Eligibility Status Codes

The five eligibility status codes are Auto Elig (automatic eligible), Auto Inelig (automatic ineligible), Elig Pro (eligible prorated), Man Elig (manual eligible), and Man Inelig (manual ineligible).

• Auto Elig (Automatic Eligible)

  The Determine Eligibility proration process generates the Auto Elig status; you cannot manually enter this status. The calculation of Auto Elig status depends on the rules of the plan as shown here:

  Plan Member Rule	Non-prorated Plan	Prorated Plan
  Ad Hoc Awards	Automatic status is not possible.	Automatic status is not possible.
  Employee VC Record (without groups)	On the eligibility evaluation as of date, the member is active in the Employee VC table and the employee status on the Job record is not excluded under the plan rules.	During the entire eligibility evaluation period, the member is active in the Employee VC table and the employee status on the Job record is not excluded under the plan rules.
  Employee VC Record with Groups Or Define Tree/Group	The member meets all of the Group Build group definition criteria on the eligibility evaluation as of date.	The member meets all of the Group Build group definition criteria during the entire eligibility evaluation period.

• Auto Inelig (Automatic Ineligible)

  The Determine Eligibility proration process generates the Auto Inelig status; you cannot manually enter this status. The system doesn't calculate an award allocation for plan members whose eligibility status is Auto Inelig. The calculation of the status depends on the rules of the plan as shown here:

  Plan Member Rule	Non-prorated Plan	Prorated Plan
  Ad Hoc Awards	Automatic status is not possible.	Automatic status is not possible.
  Employee VC Record (without groups)	On the eligibility evaluation as of date, the member is not active in the Employee VC table or the employee status on the Job record is excluded under the plan rules.	The member is not active in the Employee VC table during the entire eligibility evaluation period or the Employee Status on the Job record is excluded under the plan rules.
  Employee VC Record with Groups Or Define Tree/Group	The member does not meet all of the Group Build group definition criteria on the eligibility evaluation as of date.	The member does not meet all of the Group Build group definition criteria during the entire eligibility evaluation period.

• Elig Pro (Eligible Prorated)

  The Determine Eligibility proration process generates the Elig Pro status; you cannot manually enter this status. Only prorated plans use this status. Elig Pro status indicates that the member was eligible for the plan on the end date of at least one, but not all, of the proration periods for which eligibility has been calculated within the plan payout period.

• Man Elig (Manual Eligible)

  The member was added to the plan manually. Man Elig is the default status when you insert a new row on the Eligible Employees by Plan or Eligible Employees by Group page.

• Man Inelig (Manual Ineligible)

  The member was manually made ineligible for the plan. The system doesn't calculate an award allocation for plan members whose eligibility status is Man Inelig.

Pages Used to View and Adjust Plan Member Eligibility

Viewing and Adjusting Member Eligibility

Access the Eligible Employees by Plan page (Compensation, Variable Compensation, Identify Eligible Recipients, Eligible Employees by Plan, Eligible Employees by Plan).

Period Begin/End	The dates that you defined for this VC plan and payout period ID in the Payout Periods table.
Eval As of Date (evaluation as of date)	Different values appear depending upon these VC plan conditions:

Populating Plan Members in Chunks

Because the number of plan members can be very large, the system loads members into this page in chunks. If members exist for the current plan ID, payout period, and group, the system loads the first chunk into the page by default. Click the Refresh button to view the members. Determine the number of rows in a chunk in the Max Number of Rows in Scrolls field on the Installation Table.

Enter information into one or more of the filter fields to narrow your search, and then click the Refresh button to populate the page with members who meet the search criteria. Use navigator buttons to move from one chunk to another.

Use these filters and navigator buttons:

Plan Member Details

When you click Search, the system loads the first chunk of members for the current plan ID, payout period, and group into the page. View a different chunk by using the Plan Member Chunking controls. For Ad Hoc Award plans, the grid is empty if you have not previously entered members for the plan ID and payout period ID.

Member information displayed in this grid is the current and future information about each member, as of the evaluation as of date that appears at the top of the page. In other words, the as of date in the grid data row is equal to or later than the evaluation as of date at the top of the page.

Entering or changing the Eligibility status on the Eligible Employees by Plan page or Eligible Employees by Group page is subject to these conditions:

Viewing or Correcting Historical Plan Member Eligibility Data

Access the Member History page (click the Member History Data button to the left of the plan member's data row on the Eligible Employees by Plan page or Eligible Employees by Group page).

The system displays the plan member's identification information from the corresponding data row in the Eligible Employees by Plan page or Eligible Employees by Group page.

Eligibility History

Note. The system does not maintain historical data for Ad Hoc plans.

Viewing and Adjusting Eligibility for Plans with Groups

Access the Eligible Employees by Group page (Compensation, Variable Compensation, Identify Eligible Recipients, Eligible Employees by Group, Eligible Employees by Group).

The fields on this page are identical to the fields on the Eligible Employees by Plan page with this additional field:

See Also

Viewing and Adjusting Plan Member Eligibility

Maintaining Eligibility for Employee Variable Compensation Record Plans

For plans that specify Employee Variable Compensation Record (without groups) as the plan member rule, update plan member information using the Individual's Payout page or the Eligible Employees by Plan page.

See Setting Up Members with Employee Variable Compensation Records.

Individual's Payout Page

Use the Individual's Payout page to add or delete plan membership or to change target payout information at any time in the life of the plan.

To add or delete membership on the Individual's Payout page:

1. Insert a new effective-dated row.

   The system asks whether you want to copy forward all existing plan rows from the previous effective date. Copy the rows forward if the worker is still active in the plans.

2. To make a worker ineligible for a plan, insert a new effective-dated row and keep the plan detail but delete the value in the Eligibility Date field (null value).

   Deleting the entire detail row for that plan does not make the worker ineligible.

3. To make a worker eligible for a plan, insert a new plan row and enter data as necessary.

Eligible Employees by Plan Page

Use the Eligible Employees by Plan page to change a member's eligibility status.

See Also

Viewing and Adjusting Plan Member Eligibility