06-P-009 Addition of Payroll Deduction Codes for Health Savings Account
|DATE:||October 14, 2005|
|SUBJECT:||Addition of Payroll Deduction Codes for Health Savings Account|
|EFFECTIVE DATE:||Pay Period Beginning December 18, 2005; Ending December 31, 2005; Paid January 13, 2006|
|CONTACT:||Nancy Ruoff||(785) 296-5369||Nancy.Ruoff@da.state.ks.us|
|SUMMARY:||Addition of New Payroll Deduction Code for the Health Savings Account Program|
For Plan Year 2006, a Qualified High Deductible Health Plan (QHDHP) is available to employees as a benefit option under the State of Kansas health insurance program. The QHDHP is offered through Coventry Healthcare. Employees electing the QHDHP option are also required to contribute to a Health Savings Account (HSA). An HSA is a special account owned by an individual where contributions to the account are to pay for current and future medical expenses. HSA's were created in Medicare legislation signed into law by President Bush on December 8, 2003. United Missouri Bank (UMB) is the custodian for the State of Kansas HSA program.
To accommodate the new HSA employee contribution, new plan types and deduction codes will be added in SHARP effective for the payroll period beginning December 18 and ending December 31, 2005, paid January 13, 2006. These new plan types/deduction codes are:
|6Y||HSASGL||HSA-Single Coverage/High Ded||HSA-Single|
The HSA deduction will always be taken on a pretax basis. The Health Savings Account deduction will occur semi-monthly on the first two paychecks of the month. Payroll deductions for the Health Savings Account program will be remitted to UMB on payday and should be posted to the individual employee accounts on payday.
If an employee enrolls in the new Coventry QHDHP, they will be required to enroll in a Health Savings Account with payroll deductions on a pretax basis for Plan Year 2006. The open enrollment process on the web will require the employee who enrolls in the Coventry QHDHP to also enroll in the HSA. These employees will not be eligible to enroll in the KanElect Health Care Flexible Spending Account for 2006.
For 24 pay cycle employees, the minimum semi-monthly payroll deduction will be $25.00. The maximum semi-monthly payroll deduction will be $62.50 if enrolling in single coverage and $125.00 if enrolling in any level of dependent coverage. For 16 pay cycle employees, the minimum semi-monthly payroll deduction will be $37.50. The maximum semi-monthly payroll deduction will be $93.75 if enrolling in single coverage and $187.50 if enrolling in any level of dependent coverage.
Upon completion of Open Enrollment, an enrollment file will be sent to Coventry by the Division of Health Policy and Finance. Coventry will then provide the enrollment information to UMB bank. UMB will send the employee the HSA account enrollment form and obtain the required signature. Upon receipt by UMB Bank of the required enrollment form, an HSA account will be opened and a debit card sent to the employee.
The following new Fund/Index combination has been established for the Department of Administration clearing fund for Health Savings Account:
In addition, index code 9702 has been added to the STARS system for each of the Regent's Payroll Funds (98XX) to record the receipt of the deduction by the individual Regent's institutions. Attached is an updated copy of the "Index Codes for Agency and DOA Clearing Funds". This document has been updated for the changes noted above and replaces the document issued with Informational Circular 04-P-014 dated November 4, 2003.
The Division of Accounts and Reports, Payroll Services Section will remit the monies to UMB for all agencies. The KPAYHSA2 report will be available in the agency MVS directories to provide employee detail for each remittance period.
The Division of Accounts and Reports, Payroll Systems Team will make changes to the SHARP payroll system to implement the Health Savings Account Deduction. Regent's institutions are responsible for ensuring that the Health Savings Account deduction is available in their individuals systems. In addition, Regent's institutions should be prepared to test their benefits interface and payroll files for the new deduction prior to November 15, 2005.
Attachment: Index Codes for Agency and DOA Clearing Funds (.pdf)