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Administrator Guide
Last Updated: 2023-06-23
Example: Create a Deduction for Employee Pre-Tax Contribution to Health Care Benefits (USA)

Example: Create a Deduction for Employee Pre-Tax Contribution to Health Care Benefits (USA)

This example illustrates 1 way to create a deduction for employee pretax contributions to health care benefits.
A portion of Paul's contributions to his health care plan is nontaxable. You want to create a deduction for Paul's pretax contributions to health care benefits.
  • You have a pay components group named
    Benefits During Leave
     for non-active workers.
  • Security:
    Set Up: Payroll (Calculations - Payroll Specific)
     domain in the Core Payroll functional area.
  1. Access the
    Create Deduction
     task.
  2. Enter these settings:
    Option Description
    Name
    Health Care - EE (Pre-Tax)
    Code
    HC-PRE-TAX-EE
  3. Enter these settings on the
    Effective Dated
     tab:
    Option Description
    Effective Date
    Current date
    Run Category Eligibility
    Regular
    Worker Eligibility
    Benefits: Employee Cost (Pre-tax)
    Pay Component: Not Previously Paid in Period
    Processing Primary Job
    Calculation
    Benefits: Employee Costs (Pre-tax)
    Recalculate During Retro
    Select the check box.
  4. Enter these settings on the
    Non-Effective Dated
    tab:
    Option Description
    Groups
    Benefits During Leave
    Federal Taxable Reduction [USA]
    FICA Taxable Reduction [USA]
    Pre Tax Deductions
    Section 125 Cafeteria Plan [USA]
    State Withholding Taxable Reduction [USA]
    Benefit Plans
    Select the health care benefit plan.
Create a deduction to calculate the employee's contribution to a health plan post taxation.