What are the Differences between the Contribution Types?
The table below outlines the major differences between the contribution types. You can also use the table to help decide which types best fit your plan. Contribution Type Examples
| Contribution Type | Attributes | When to Use | Example |
|---|---|---|---|
| Options Amount |
Who is eligible EE, Cobra, Retirees Calculate as Flat amount,% of Salary, Flat%, Custom Calculations Use with Flex plans, define amount |
Coverage defined as coverage options Cost of coverage options is same for all employees in a group |
Health plan with a different rate for each option under the plan. |
| Options Amount Range |
Who is eligible: EE, Cobra, Retirees Calculate as Flat amount,% of Sal., Flat%, Custom Calculations Use with Flex plans, define amount Can use rate tables to vary contributions by Salary, Age, Years of service within each of those 3 types of rate tables, you can also define different rates depending on whether the plan participant is a smoker or not. |
Coverage defined as coverage options Cost of coverage options varies based on salary, age or years of service for employees in a group |
An example is a health plan in which employees who earn up to $50,000 pay a different rate for each option than employees who earn more than $50,000. |
| Flat Contributions |
Who is eligible EE, Cobra, Retirees Calculate as Flat amount,% of Sal., Flat%, Rate Table, Custom Calculations Use with Flex plans, define amount Can use rate tables to vary contributions by Salary, Age, Years of service within each of those 3 types of rate tables, you can also define different rates depending on whether the plan participant is a smoker or not. |
Coverage defined as coverage amount or no coverage Cost for the benefit is not based on the benefit's coverage amount |
A dependent life plan in which all employees pay the same amount. |
| Salary or Coverage Rate Table |
Who is eligible EE, Cobra, Retirees Use with Flex plans, define amount Can use rate tables to vary contributions by Salary, Age, Years of service within each of those 3 types of rate tables, you can also define different rates depending on whether the plan participant is a smoker or not. |
Coverage defined as coverage amount Annual contributions are based on benefit's coverage salary or coverage amount |
An employee life plan in which rates are based on each employee's amount of coverage. |
| Contribution Limits |
Who is eligible EE, Cobra Min and Max limits, Amount each pay period, Annual amount,% of Sal. Use with Flex plans, define amount |
Coverage defined as no coverage Employees specify contributions |
A spending account in which the company limits an employee's contribution. A vacation plan to define the maximum number of hours employees can buy or sell and the cost of those hours. |
| Match Limit Schedule |
Who is eligible EE Limit employee pretax, after-tax and total contribution as a percent of salary Limit the matched contribution by% Use Years of service to vary contributions |
Coverage defined as no coverage Employees specify percent or amount contributions that are matched by the company |
The company matches 50% of an employee's contribution up to 4%. If an employee contributes 3%, the company match is 1.5% (0.50*3). If the employee contributes 6%, the company match is 2% (0.50*4). |
| Match Percent Schedule |
Who is eligible EE The company match is calculated as a percentage of the employee's contribution and can be fixed or cumulative. If the match calculation is fixed, the company match directly corresponds to the percent of the employee's contribution. If the match is cumulative, the company match includes all contribution levels up to the level the employee elected. |
Coverage defined as no coverage Employees specify percent or amount contributions that are matched by the company |
A plan matches
|