In this article we will walk you through the steps to define and enhance dependent contributions.
Dependent contribution amounts should be apart of the conversation as you are building out your models. The best place to start when a group is trying to decide what to amount to offer for dependents is to look at what they're currently offering through their group policy. You can always adjust the dependent contribution amount based on each clients budget until you find a contribution strategy that works them.
How to Edit the Dependent Contribution Limits
You will begin this process in the model you are wanting to edit. You can set different contribution amounts for each class of employees. To edit one class, you will click the three dots to the right of the class you're wanting to edit and select the 'Edit' option.
You will then be able to add or edit the dependent contribution amounts. When it comes to setting these limits you can choose between either a 'Custom contribution' or 'Traditional Group'. With the Custom contribution option you are able to select a dollar amount per child and a Max dependent contribution dollar amount. The Traditional Group option allows you to include percentages for each category. Once you have added the contribution amounts, click the blue 'Save' button at the bottom of the page.
Custom Contributions
The custom contribution option allows your clients to offer specific amounts for an employees dependents and cap the total dollar amount offered (if desired).
For example, if an employee was being offered $500 for themselves, 100% for the spouse, $200 per child, and $2500 Max dependent contribution it would be as followed.
Employee Only - $500
Employee + Spouse -$1,000
Employee + Child - $700
Employe + Spouse + Child + Child + Child -$1800
Because there is a $2500 max, if an employee had 7 children, the total family contribution offered would be $2500. If an employer wanted to have no limit to the amount offered to an employee + family, you would put 0 in the 'Max dependent contribution' box.
Traditional Group Contribution
The Traditional Group option allows you to add percentages for the dependent contribution amounts rather than a dollar amount. Since ICHRA contributions for employees are often different depending on their ages, this option allows for an employee dependent contribution to adjust as they age.
For example, lets say an employer offers 100% for spouse, 50% per child, and 400% as the family contribution limit. If you have an employee with a spouse and two kids, who is age 39 and about to turn 40 and move into a new age class, it would be as followed.
39 year old employee being offered $500 for themselves:
Employee ($500) + Spouse ($500) + Child ($250) + Child ($250) = Total contribution of $1500
Once the employee turns 40, their employer contribution strategy now says they'd be offered $550 for themselves:
Employe ($550) + Spouse ($550) + Child ($275) + Child ($275) = Total contribution of $1650
The percentage you put in the 'Family contribution' box is the maximum contribution that would be offered to an entire family. If you set it at 400% that means the contribution limit would be 5X the amount offered to the employee (employee is offered $500 + 400% = $2500).
How to View the Reimbursement Schedule
If at any point you're wanting to see how the dependent contribution you've defined would affect each age class of employees, you can always view the model's Reimbursement Schedule. You can find the reimbursement schedule when you're in the model by clicking the three dots to the right of the blue 'Add New Class' button. You will select the 'Reimbursement Schedule' from that expanded menu.
You can then view the real dollar amounts that would be offered to employees who had added dependents. Viewing the reimbursement schedule is a great way to make sure the amounts you're adding and providing the results you're looking for.
