Defining Death Coverage Reductions

Arithmetic Rule

An arithmetic method involves counting the covered periods from the election history and applying a specific factor (a percentage or fraction) for each period. For example, you could reduce a benefit by .05 percent for each year of coverage or by .05 percent per year for the first five years of coverage and .04 percent per year thereafter.

Select an option in the Periods Counting Option field. There are parameters for setting the reduction rate on the Define Schedule page. Here, you only specify units for measuring the covered period of time.

Select from monthly or yearly periods.

Table Lookup

If you use a table lookup, you create a custom table for your reduction factor. Reference your custom table in the Table Lookup Name field. The table lookup returns a single factor based on the criteria you specify.

Subtract Result From Cumulative Reduction (Starts at 1.0)

Select this if the table returns the reduction amount—for example, .02 for a 2 percent reduction. This option starts with a factor of 1.0 and reduces it by the factor provided by the table lookup. So if the table lookup returns a .02 reduction, the system converts that to a reduction factor of .98.

Multiply Cumulative Reduction By Result

Select this if the table returns the reduction factor—for example, .98 for a 2 percent reduction.

Decimals

Select the number of decimal places for the final reduction factor. The system rounds the final result to the specified number of decimal places.

Apply the Reduction To andEffective Date Rounding

Select from the these options:

• Empl Coverage Election History (employee coverage election history): The death coverage function breaks the history into covered and non-covered segments, based on coverage changes.

• Some Fixed Period: Use a specific length of time as the basis for the factor—for example, the period from age 50 to the event date.

  In this case, the death coverage function doesn't break an employee's history into segments but instead treats the period as a single segment. Therefore, if the employee's coverage history shows that the employee is covered at any point during the defined period, the benefit is reduced as if coverage were in effect for the entire period.

  If you select this option, the Determine Fixed Period Length group box appears so that you can define the period.

Effective Date Rounding

If you apply the reduction to Empl Coverage Election History, you can round the coverage change dates by entering a rounding option here. For example, you might always round to the first of the preceding month so that you always deal in full months.

Stays Within Segment Dates.

If you apply the reduction to Some Fixed Period, you can select this check box to modify the fixed period by constraining it to the segments dates.

For example, if you define the fixed period as the time starting when the employee reaches age 50 and ending at the event date, the function looks at the coverage history and adjusts the period to begin whenever coverage begins within the period. In this case, if coverage were active when the employee reached age 50, the period would begin immediately, but if the coverage commenced at age 52, the period would not start until that point.

Method

Select Count Periods Between Ages or Count Periods Between Dates to determine whether to express the fixed period in terms of either ages or dates. Alternatively, you can select User Code.

Start Age and Stop Age

If your method is Count Periods Between Ages, enter the start and stop ages here. You can enter constants or aliases.

Start Date and Stop Date

If your method is Count Periods Between Dates enter the start and stop dates here. You can enter constants or aliases.

Not Applicable

Select this if you don't want to impose limits.

Minimum, Maximum, and Number of Periods

Otherwise, indicate whether the limit is a minimum or maximum, and enter the limit in the Number of Periods field.

Between Definitions

Select this to preserve credit when the definition changes, either because of a group change or a plan rule change.

Between Coverage History Rows

Select this to preserve credit when an employee drops and then reelects coverage.

As the system counts coverage periods, it keeps separate accumulators based on each of these options. When you don't preserve coverage, the relevant accumulator is set to zero when there is a definition or coverage history break. In the end, the larger accumulator is used.

Length of Coverage Based or Age Based

Select Length of Coverage Based or Age. Then complete either the Length of Coverage Based or Age Based group box.

Percentages or Fractions

Select one of these options to choose whether to express the reductions as fractions, such as a 1/600 reduction per period, or as percentages, such as .16% per period.

Fraction per Period and Denominator

If the reduction uses a fraction, enter the fraction numerator in the Fraction per Period field, and enter the fraction denominator in the Denominator field.

Percent per Period

If the reduction uses percentages, enter a percentage.

Over Periods

If your reduction is based on the length of coverage, indicate how many periods use each factor. The first row in the sequence applies to the first group of periods, the second to subsequent periods, and so on.

Between Age and And Age

Specify the age range to which each factor applies.