Oracle Advanced Benefits

1. Oracle Advanced Benefits July 2013 FORCES Presentation

2. Agenda • Domestic Partner Benefits • Exchange of Leave • OAB & Retro Payroll Issues • Other Issues of Interest

3. Oracle Advanced Benefits • The topics to be covered today were encountered by Pinellas County Government during and after implementation of Oracle HR, Payroll and OAB • Consult your implementation consultant (if one is engaged) and legal counsel where appropriate

4. Domestic Partner Benefits • Pinellas elected to offer partner benefits for medical only, but process would be similar for dental • Premium for the employee can still be pre-tax under federal regulations, depending on how you set things up • Post-tax deduction of employee portion of premium for the partner is permitted under regulations • Things get a little dicey from there!

5. Domestic Partner Benefits • Some family members are eligible for pre-tax deductions (employees and children of employees) • Some family members are not eligible for pre-tax deductions (partner and children of partner) • Employer can choose to treat all of the tier premium as post-tax (simple method)

6. Domestic Partner Benefits • When children are involved things can get complicated • If you treat all dependent coverage deductions as post tax then it is simple. • Otherwise the employer must break coverage tier premium into amount to cover employee (pre-tax) and amount to cover partner (post tax) • Pre-tax treatment for child dependents of the employee is acceptable, however for ease of administration Pinellas made all dependents post tax if any were children of the partner

7. Domestic Partner Benefits • Pinellas used the domestic partner as a person type when employees enter their contacts in employee self service • In OAB annual enrollment employees see choices of domestic partner coverage when making their coverage elections • Tax treatment rules track the election of domestic partner coverage • Pinellas requires a signed affidavit for domestic partners to be covered

8. Exchange of Leave • Pinellas permits employees to exchange accrued leave for cash and/or deferred compensation. Maximums apply to exchange elections • Employers should consider tax consequences of such a program and consult legal counsel • Elections must be made in the calendar year prior to year when the leave is exchanged • Leave exchanged must be leave accrued in the year of the exchange, meaning existing banks of leave previously accrued may not be exchanged • Elections are irrevocable!

9. Exchange of Leave • Since leave can not be exchanged until accrued it is necessary that payout schedules keep that in mind • Partial exchanges can be permitted as leave is accrued • Options are fixed and must be established in advance • Employer accrual rates should be used to determine payout options and amounts • Employees elect the amount of leave and the payout frequency in OAB annual enrollment

10. Exchange of Leave • Employees elect the amount of leave and the payout frequency in OAB annual enrollment • Our programming team set up a separate leave exchange bucket which collects the leave which is committed to the exchange • Until the employee reaches the annual election amount, all newly earned leave goes into this bucket • After reaching the election amount new leave spills into the “normal” annual leave bucket

11. Pinellas Exchange of Leave

12. Exchange of Leave • Careful planning is necessary to implement such a program • Employee communication is critical to avoid misunderstanding and mistakes • Challenges encountered include • Understanding the irrevocability of elections • Understanding why leave which is committed to the exchange can not be used for other purposes • Developing a spreadsheet that considered all the accrual rates in place for our employees, exempt/classified, years service, etc.

13. OAB and Retro Payroll Issues • Pinellas took benefit deductions in advance and provided coverage through end of the month in which eligibility ended • Pinellas continued pay in advance when going live with Oracle • Triggering of life events in OAB created significant retroactive adjustment issues for Payroll staff

14. OAB and Retro Payroll Issues • At recommendation of our implementation consultant Pinellas made two decisions • First, we used 26 deductions rather than 24 semi-monthly deductions • Second, we converted our deductions from pay-in-advance to pay-as-go • This last decision resulted in a premium holiday for employees, but also meant that the health fund missed one month of revenue from employee deductions

15. OAB and Retro Payroll Issues • To further minimize retro adjustments Pinellas changed benefit plan eligibility to term coverage at the end of the pay period in which eligibility ended • The COBRA administrator starts coverage (if elected) mid-month so there is no gap • Employers should discuss this with their COBRA administrator in advance of implementing this type of change • These changes have significantly reduced the number of retroactive adjustments

16. Other Issues for Discussion • Managing employee elective deferred compensation deductions • Total Compensation & Benefit Statements • Other items other than traditional benefits that employers run through OAB