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Benefits deduction corrections

If your benefits are managed by Gusto, changes to your benefits in the middle of the plan year may lead to a deduction correction applied to a payroll. If this happens, it'll be specified on the corresponding paystub.  

A correction like this happens when someone enrolls in a benefit with a past effective date. In this situation, payrolls that have already been processed will not have the benefit deduction applied because the enrollment had not been completed at the time the payroll was run.

Example: Misty had a baby on February 1. Having a baby is a qualifying life event, which gives Misty a special enrollment window to add her baby with an effective date of February 1 (date of birth). However, she didn’t initiate the change until February 15. Because it takes about a week for health insurance carriers to confirm the change, her baby wasn’t included as a dependent in her Gusto account until February 24. Any paychecks that were paid during this time would not have had deductions for Misty’s baby because the dependent wasn’t processed on her health insurance policy yet. To catch up on these missing deductions, a deduction correction will apply to the next paycheck.

Some examples of when this may happen include:

  • Qualifying life events that result in a benefit being back-dated.
  • Unintentional processing errors and/or incorrect rates being used.
  • A newly hired employee enrolls in benefits after the date on which their insurance is actually effective.

Note: Deduction corrections will not exceed 50% of a regular deduction on one payroll. If you have any questions about your deduction correction, please contact our team at