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Administrator Guide
Last Updated: 2023-06-23
Example: Calculate the Fair Market Value of Dependent Health Care Coverage (USA)

Example: Calculate the Fair Market Value of Dependent Health Care Coverage (USA)

This example illustrates 1 way to configure an earning to calculate the fair market value of dependent health care coverage.
The company contributes to dependent health care coverage, and Francis needs to create an earning to calculate the fair market value of that benefit.
Have a pay components group named
Benefits During Leave
 for non-active workers.
Define a dependent health care coverage plan.
Security:
Set Up: Payroll (Calculations - Payroll Specific)
 domain in the Core Payroll functional area.
  1. Access the
    Create Earning
     task.
  2. Enter these settings:
    Option Description
    Name
    Dependent Health Care Fair Market Value
    Code
    DEP_HC_FMV
  3. Enter these settings on the
    Effective Dated
     tab:
    Option Description
    Run Category
    Regular
    Worker Eligibility
    Row 1:
    • Benefits: Fair Market Value Exists (and < > 0)
    • Processing Primary Job
    Row 2:
    • Payroll Input Exists for Pay Component
    • Processing Primary Job
    Calculation
    Benefits: Fair Market Value
    Calculation Proration
    Prorate Using Days Worked
  4. Enter these settings on the
    Non-Effective Dated
     tab:
    Option Description
    Groups
    Benefits During Leave
    Non Cash Taxable Benefits
    State Withholding Taxable (Withhold Taxes [USA]
    Benefit Plans
    Select applicable benefit plans.
The
Benefits Fair Market Value
 calculation retrieves the total fair market value of over-age dependent coverage from Workday Benefits. If a worker has more than 1 over-age dependent with coverage, the calculation retrieves the sum of the dependent coverage. Workday processes this earning for eligible workers and deducts taxes on the imputed income.
Use the
Maintain Tax Authority Exceptions Pay Component Groups
 task to define tax authorities to include or exclude for this earning.