6 Understanding JD Edwards EnterpriseOne Benefits Administration

This chapter contains the following topics:

6.1 J.D. Edwards EnterpriseOne Benefits Administration

You use the Benefits Administration feature of Human Resources to implement and support benefit packages for the employees in an organization. The Benefits Administration feature enables you to enroll employees in the benefit plans that the organization offers. You can end enrollment whenever employment ends or the organization changes benefit plans. You can also add new benefit plans, change the cost of current plans, and remove old plans from the system.

After a company has determined which standard, government-mandated, and supplemental benefits it will incorporate into its benefit package, benefit professionals must administer the plans. Recordkeeping for the plans can be time consuming, and it generally involves interaction with health insurance companies, unemployment insurance offices, and pension plan administrators. Many companies hire a third-party administrator (TPA) to assist in administering the plans, maintaining plan compliance, and submitting regulatory reports to the appropriate administrators.

In addition to maintaining the benefit plans, benefit administrators must enroll employees in these plans. Many factors,such as eligibility requirements and enrollment periods, affect how employee enrollment is administered. Most benefit plans have eligibility criteria—such as age, length of service, and employment status—that employees must meet before they are permitted to participate. For example, a pension plan might stipulate that for an employee to participate in the plan, the employee must be at least 21 years old, work a minimum of 20 hours per week, and have been employed by the company for at least one year. Sometimes the company decides these eligibility requirements and sometimes the company works with the plan administrator to decide the requirements.

Some benefit plans contain open enrollment or re-enrollment periods. Open enrollment refers to a time during which employees can change their benefit coverage or begin enrollment in a plan in which they were not previously enrolled. If an employee makes such changes outside the open enrollment period, waiting periods might be required before the changes take effect, or employees might be prohibited entirely from making changes outside the open enrollment period. Re-enrollment occurs when a plan is based on a specific time period, typically one year. Employees must re-enroll in that plan annually. During the re-enrollment period, employees can sign up for different coverage than they had previously.

Frequently, annual re-enrollment periods are associated with cafeteria plans or flexible spending account plans. Cafeteria plans—often referred to as flexible benefit plans—are an effective way of allowing employees to choose benefits that are useful to them. Employees select from a group of benefit options and pay for only those options that they select. This method of selecting benefits represents a cost savings to both employee and employer because both pay only for benefits that the employee uses. Generally, employers grant employees a specified number of flexible credits that they used to pay for the benefits that they select. Each benefit option has a flexible cost, and that cost is deducted from the total number of flexible credits granted to the employee.

When an employee does not have enough flexible credits to pay for the benefits that the employee selects, the excess amount can be deducted from the employee's payment through payroll deduction.

When an employee has more than enough flexible credits to pay for the benefits that the employee selects, some employers allow the employee to use the excess credits in one of these ways:

  • Receive the excess amount in the form of a taxable addition to the employee's pay.

  • Use the excess amount for other life needs, such as tuition expenses, weight-loss programs, smoking cessation programs, or financial planning expenses.

Some employers do not permit employees to use excess flexible credits.

6.2 System Integration for J.D. Edwards EnterpriseOne Benefits Administration

To simplify processes and facilitate communication within organizations, the Benefits Administration feature fully integrates with the other features in the JD Edwards EnterpriseOne Human Capital Management product suite and with other JD Edwards EnterpriseOne products, such as the JD Edwards EnterpriseOne General Accounting system. This integration eliminates redundant data entry and allows the company to maintain current and accurate information.

To prevent unauthorized access to confidential information, you can set up system security that enables users to access only the information that they need for their jobs.

This table illustrates how the Benefits Administration feature integrates with other features in the JD Edwards EnterpriseOne Human Capital Management product suite:

Feature Benefits Administration Human Resources Payroll
Quick Hire Not applicable (NA) X NA
Pay Types, Deductions, Benefits, and Accrual Setup X NA X
Time Entry NA NA X
Automatic Accounting Instructions NA NA X
Job Information X X X
Employee Information X X X
Employee Self Service X X X
Employee History and Turnover Tracking NA X NA

6.3 J.D. Edwards EnterpriseOne Benefits Administration Terms and Concepts

This table describes the terms and concepts related to benefit program administration:

Term or Concept Description
Allocation The distribution of funds to various investment options. For example, you might allocate half of the money that you are investing to one fund and the other half to another fund.
Beneficiary The individual who receives the benefit from an insurance or investment plan in the event of the plan holder's death. For example, you might designate the spouse as the beneficiary of the life insurance plan.
Benefit group A group of employees that is offered the same set of benefit plans. For example, you might create separate benefit groups for salaried employees, hourly employees, and executives.
Benefit category A broad description of related benefit plans. For example, a benefit category might be medical, dental, or retirement.
Benefit plan A detailed program that provides a benefit for an employee. For example, a benefit plan can be traditional medical, medical health maintenance organization, vision, dental, and so forth.
Dependent An individual, such as a spouse or a child, whom an employee supports financially. Dependents are often entitled to share in an employee's benefit plans, such as medical insurance.
Deductions, benefits, and accruals (DBAs) A deduction is a monetary amount taken out of an employee's pay. For example, a deduction can contribute toward a benefit, such as life insurance or medical coverage.

A benefit is a payment or service that an employee receives for working for the employer. In this case, benefit refers specifically to the employer contribution.

An accrual is typically sick time, vacation time, or holiday time that can be accumulated by the employee and used at a later date.
Flexible benefit plan Also called a flex plan, a program that enables employees to select the benefits that meet their individual needs. Employers provide employees with flex credits with which to purchase the benefit plans that they want. Employers can provide flex credits in a lump sum that is based on factors such as length of service or in a lump sum that is the same for all employees. Flex credits can also be awarded upon selection of specified benefit plans.
Plan option A choice within a benefit plan that further defines the plan. For example, a medical plan might offer options for employee, employee plus one, and employee plus family.