An important part of the Human Resource and Payroll Process in Dynamics 365 for Finance and Operations or Dynamics AX, is to establish your employee benefits. In doing so you can manage employee eligibility, employee enrollment, employee deductions and even your company’s contribution towards benefits.
In this post we’re going to explore the functionality of creating benefit elements. Once you have created the elements, move to Part 2 of this blog series: Benefit Creation. To get started, navigate to your Payroll Module > Setup > Benefits > Benefit Elements
The first step to establishing your benefits is to setup your Benefit Elements. By opening this form, you’ll see a list of different benefit types. Think of these are the categories for your benefits. You can have multiple benefits under one benefit type. If you have multiple benefits under a type, you’ll want to indicate “multiple enrollments per type” as being allowed.
After your types are established you can move onto plan creation. Each plan should be tied to a benefit type. You will also need to select if/how this benefit impacts payroll. Things like equipment or transportation may not have an effect, but other benefits may be just an employee deduction, an employer contribution or a combination.
On the Tax Rule Fast Tab you will establish if the benefit applies to any pretax rule and if not or your option isn’t available, then select custom and define the tax exemptions manually.
On the Payroll Details Fast Tab you’re establishing how you want this benefit deduction to work. If you allow Recover arrears, you’re indicating that if an employee’s payment doesn’t cover the deduction amount, that you will collect the remaining amount in the next check. In conjunction with that is the deduction method. If you select partial, then you’re allowing to collect a partial deduction amount and collect the rest in arrears. If you select In Full, then you’re taking the entire amount from the paycheck or collecting the full amount from the next check. You must select at least one Payment Type. The selection indicates the type of payment run in which you’ll be taking this deduction. Benefits such as medical you wouldn’t want to take out of additional payments, but 401K you may.
Deduction priority is extremely important. You’re going to assign each benefit with a priority – this places the deduction in order, from lowest to highest in which money should be taken from the employee. Before assigning these numbers you will want to check with your state laws as it’s common that tax levis, child/spousal support and other garnishments may be required to come first.
Lastly, you can establish a period and maximum amount within the period to which a deduction or contribution can be made. This is commonly used with retirement plans.
On the Reporting Fast Tab, you need to indicate if the benefit needs to be reported on a W-2 (the deduction and/or contribution) and which box that amount should appear under.
Lastly, on the Accounting Fast Tab, you can select different legal entities that you want to see or setup the accounting information for. This allows you to post the benefit differently by legal entity. Then select your vendor that payments for the benefit are paid to. Then depending on your benefit, you can select the main account that the deduction, contribution or both will post to.
Lastly, select the Options of the left of the Element Form to perform the last piece of setup. These options will be the coverage levels that can be selected for each benefit. Most medical benefits give you the option to enroll yourself, yourself and spouse or yourself and family. You will need to set up each one of those as an option. Make sure to create an option for an employee to waive a benefit too!
Once you have created the option, then on the right side of the form, indicate if the option allows dependents and/or beneficiaries.
Now that you have created your benefit elements, you can move on to setup your individual benefits which will use components of the three elements. For details on this process, please see Part 2 of this blog series: Benefit Creation.
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