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Benefits deduction corrections

If your benefits are managed by Gusto and a deduction was missed, we’ll apply corrections to upcoming payroll(s) to make sure the missed amounts are caught up.

These situations are quite common, here are a few examples: 

  • A company’s benefits (a new policy or a renewal) aren’t approved by the carrier until after coverage has already started. 

  • An employee is skipped on payroll. 

  • Qualifying life events that result in a benefit being back-dated (example: a baby is born but benefits aren’t added until several weeks later).

  • Unintentional processing errors and/or incorrect rates being used.

  • A newly hired employee enrolls in benefits after the date coverage started.

If an employee’s health benefits deductions were missed, we’ll apply 1.5x the normal deduction amount to upcoming payrolls until the missed amount is captured. For example, if we missed 1 deduction that is normally $100 per paycheck, the next two payrolls will have $150 deducted. Once the full amount is captured, only the regular deduction amount will be applied moving forward. 

2% shareholder deductions will be taken from the shareholder’s first paycheck after benefits begin as imputed pay. Because the IRS does not permit shareholders to take part in employer-sponsored (pre-tax) health benefits, the full amount will be added to the following paycheck because imputed pay is subject to federal and state income taxes.

If you have an HSA or a DCA, all missed deductions will be applied to the first upcoming payroll after the benefit starts so that all the funds are available in the accounts for immediate use. If you have an FSA, missed deductions will be adjusted and equally apply to the rest of your deductions throughout the plan year.

Payroll, benefits, HR and more.