An Overview for Benefits setup in SAP
Benefits are an important part of the total compensation of an employee. Apart from the Mandatory Benefits (mandated by law) that an Employer has to necessarily offer, there are several Voluntary Benefits an Employer might choose to offer that best meets the needs of the organization and its employees. There are various kinds of benefits e.g. Health, Insurance, Savings, Flexible Spending, etc. In SAP, there are separate info types relevant for these benefits and their processing.
The Benefits Administration component provides the functions needed to handle the organization’s benefits
administration processes. It enables us to perform the following key activities:
- Enroll employees in benefits plans and terminate enrollments
- Monitor eligibility
- View information about current benefit enrollments
- Print enrollment and confirmation forms
- Transfer data electronically to plan providers
Basic Benefits Elements
This is a process of enrolling employees of an organization for Benefit Plans depending on their eligibility. The
Enrollment function enables us to enroll employees and, where possible, make changes to employee benefit elections as required for the following tasks:
- Enrollment of employees during an open enrollment period in plans for the coming Season.
- Enrollment of new hires in plans that are automatically offered.
- Enrollment of new hires in default plans as an interim measure, until they have made their benefits choices.
- Adjustment of plan enrollments as a result of employee life or job changes.
An open offer is the most unrestricted type of offer. It is generated by the system when you start enrollment for a date that lies within an open enrollment period. Only those plans are available in an open offer for which the employee fulfills certain eligibility criteria, as defined in Customizing.
A period of time during which an organization allows its employees to enroll in new benefits plans or change existing benefits elections.
The benefits offer set up for open enrollment is valid only during the open enrollment period. Plans available for selection during the open enrollment start on a future date, typically at the beginning of the coming year.
A plan in which employees can be enrolled before they communicate their benefits elections to the benefits office.
Default plans are typically used for giving short-term coverage to new hires and therefore often allow little flexibility to the employee regarding the plan terms.
A plan in which employees are enrolled without the requirement that they consent to the enrollment or make any elections within the plan An employee is enrolled in all relevant automatic plans at all times.
Automatic plans are often provided at no extra cost to the employee and often allow little flexibility to the employee regarding the plan terms.
A personal or organizational change experienced by an employee, as a result of which the employee is allowed to change his/her current benefit elections.
In the SAP System, the adjustment reason is a user-defined parameter to which certain adjustment permissions are assigned for different types of benefit plan. The following are examples of adjustment reasons:
- New dependent
- Job change
Benefit areas allow you to have separate administration of different benefit plan pools. This division is primarily for administrational purposes and would not normally be used for eligibility. This is a primary subdivision of plan set up within the benefits component.
Benefit areas are set up and function completely independently of each other.
The Benefit Area will be defaulted under General Benefits Information Infotype – 171 based on the Feature BAREA.
Benefit Category is the broadest classification of benefits. Categories are maintained by SAP. The following plan categories are provided by SAP:
- Health Plans
- Insurance Plans
- Savings Plans
- Stock Purchase Plans
- Flexible Spending Accounts
- Credit Plans
- Miscellaneous Plans
These categories are predefined because the system handles each differently. In order to reflect your own requirements regarding the categorization of plans, you define plan types within these categories.
Benefit Category is the highest level in the Benefit Plan structure. Benefit Categories are again divided into Plan types. Every Category may consist of one or more Benefit Plan types.
Benefit Plan Types:
Benefit Plan types are the logical grouping of different benefit plans. Each Plan type is identified by a unique identifier, which is a maximum of four characters.
- MEDI – Comes under Health Plan Category (MEDI => Medical)
- DCAR – Comes under Flexible spending Accts (DCAR => Dependent Care Spending)
- LIFE – Comes under Insurance Plans Category (LIFE => Life Insurance)
- SAVE – Comes under Savings Plans Category (SAVE => Savings)
- STPC – Comes under Stock Option Category (STPC => Stock Purchase)
- CAR – Comes under Miscellaneous Plans Category (CAR => Company Car)
- CRED – Comes under Credit Plans Category (CRED => Flex Credit)
Plan types are a control mechanism for enrollment, since the system does not allow an employee to enroll in more than one benefit plan per plan type. This allows you, for example, to offer a choice of regular health
care from different providers under one plan type, without the risk of accidentally enrolling an employee in more than one of these benefit plans.
Within each plan category (for example, Insurance Plans) you should define one plan type for each sort of benefit plan that the employee is likely to elect (for example, Life Insurance, Spousal Life, Supplemental Life).
Thus an employee can elect a plan from the Life Insurance as well as from the Spousal Life plan type.
The Granularity level in the Benefit Plans Structure is identified by Benefit Plans. Many Benefit plans may be grouped together under a particular plan type. The benefit Plans are also identified by a unique identifier, which is of a maximum of four characters. Ex: MEDI, DENT, VISI for Health Plans Category (MEDI Plan Type).
Benefit plans within the health plan category cover the basic health needs of an employee. A typical health plan might provide the employee with medical, dental or vision coverage.
Insurance plans provide monetary amounts of coverage payable to the employee or designated beneficiaries.
A spending account provides an employee with the opportunity to establish account balances to meet anticipated spending needs during the course of the employee’s benefit plan year. These needs are most often associated with
health, dependent care or legal benefits.
Benefit Program Groupings:
The first program grouping is a method of grouping employees for purposes of macro eligibility. The second program grouping is a second, identical method of grouping employees into other macro eligibility groups.
The cross reference of these two groupings places every employee into a benefit program.
First program groupings are a means of identifying a group of employees who share a common set of benefits and eligibility criteria.
An organization offers one set of benefit plans for hourly-paid employees and a different set for salaried employees. Hourly-paid employees may enroll in medical, dental and life insurance plans after a four-month waiting
period. Salaried employees may enroll in medical, dental, life and vision plans after a one-month waiting period.
Benefit second program grouping:
The second program grouping is a method of grouping employees for purposes of macro eligibility. The first parameter grouping is a second, identical method of grouping employees into other macro eligibility groupings.
Second program grouping is a means of subdividing your first program groupings depending upon their employment status.
An organization offers one set of benefit plans for full-time employees and a different set for part-time employees. Full-time employees may enroll in medical, dental and life insurance plans after a four-month waiting period. Part-time employees may enroll in medical, dental, life and vision plans after a one-month waiting period.
General Benefits Information (Infotype 0171):
This Infotype stores the benefit area, first program grouping, and second program grouping assignments of the employee. This record is essential for benefits plan enrollment.
What is Benefit Area?
Benefits area allows having separate administration of different benefits plan pool. BAREA feature can be used to maintain values for benefit area.
We can create different Benefits by considering following factors:
- Geographical location/ Different benefits
What is First Program Grouping?
A first program grouping means identifying a group of employees with common characteristics in order to determine on a high level the benefits available for that group. Feature BENGR is used to maintain values for first program grouping.
What is Second Program Grouping?
A second program grouping means identifying a group of employees with common characteristics in order to determine on the next lower level the benefits available for that group. Feature BSTAT is used to maintain values for second program grouping. An employee must have a General Benefits Information record before
enrolling in a benefit plan. During enrollment, the system refers to the first and second program grouping of employees in order to determine which benefit plans the employee is permitted to participate in.
A General Benefits Information record must also exist before creating an Adjustment Reasons (Infotype 0378)
record for an employee.
Here consider an XYZ organization, having employee benefits eligibility primarily based on the work location, working hours and Full-time or Part-time working for a minimum of 30 hours.
- California [Full time/Part time/Weekly/Hourly] US Employees
- Non-California [Full time/Part time/Weekly/Hourly] US Employees
Benefits Ineligible employees are a set of Employees for whom Benefits are not available.
We can separate the group of employees on the basis of Employee group and Employee Subgroup at the Personnel Administration level.
The Employee group allows dividing the Employees into groups and defining their relationship to the enterprise. For ex. we can divide the employees between the Active employees, Retire Employee etc.
The employee subgroups are subdivision of the Employee group. For ex. For the Active employee group, we can divide the employees into active employees, trainees, monthly employee/semi monthly employee/weekly employee etc.
Steps to maintain IT0171:
Go to maintain IT0171, for an US based XYZ organization; we have prepared 1st program grouping and 2nd program grouping on the basis of Employees.
Here, we have to maintain combination of first program grouping & second program grouping under Benefit Area US.
|1st Program Grouping||Text|
|REGG||Non California Employee|
|2nd Program Grouping||Text|
System will maintain combination as REGG as 1st Program grouping & REGG as a 2nd program group under Benefit area US and so on.
System automatically maintains this combination depending on
- Employee Group & Subgroup
- Personal Area & Personal Subarea of an
IT0167: Health Plan Infotype:
This Infotype stores details of the health plans in which the employee is enrolled. For each health plan in which the employee participates, a separate record exists.
This Infotype gets updated / created by the system at enrollment. The dependents chosen by the employee are marked here.
After enrollment of an Employee in Benefit plan, IT0167 –Health plan gets updated. Please find attached screen below.
IT0168: Insurance Plan Infotype:
This Infotype stores details of the insurance plans in which the employee is enrolled. For each insurance plan in which the employee participates, a separate record exists.
This Infotype Stores the cost and coverage rule variants for the plan created by the system at enrollment.
After enrollment of an Employee in Benefit plan, IT0168 –Insurance plan gets updated.
Please find attached screen below.
IT0169: Savings Plan Infotype:
After enrollment of an Employee in Benefit plan, IT0169 –Savings plan gets updated. The contribution made on regular payroll runs.
Please find below the screenshot for IT0169:
Sometime, as per the business scenario, Employee enrolls in the Savings Plan directly on company site. He maintains the percentage and further this percentage gets uploaded into the system by creating Inbound Interface between Vendor and the organization.
IT0170: FSA Plan Infotype:
This Infotype stores details of the Flexible spending accounts (FSAs) in which the employee is enrolled. For each FSA in which the employee participates, a separate record exists. Infotype is created by the system at enrollment.
Flexible spending accounts (FSAs) enable employees to set aside pre-tax income to cover anticipated medical or dependent care expenses. Contributions to FSAs are automatically deducted from the employee’s paycheck in accordance with a deduction agreement. When an employee incurs an expense, he/she registers a claim and submits the accompanying receipt, which, if approved, is reimbursed in the employee’s next paycheck.
The Infotype is used for payroll and for evaluations of employee benefits data. After enrollment of an Employee in Benefit plan, IT0170 –FSA plan gets updated.
Please find attached screens below.
IT0378 Adjustment Reasons Infotype:
This Infotype stores adjustment reasons that determine the changes an employee can make to his/her benefits plan like change in Family member by marriage, divorce etc.
For ex. Employees marital status was ‘Single’ while joining but after it becomes ‘Married’ then Benefit Administrator maintains IT0021 in HR master data.
A personal or organizational change experienced by an employee, as a result of which the employee can change
current benefit elections.
In the SAP System, the adjustment reason is a user-defined parameter to which certain adjustment permissions are assigned for different types of benefit plan.
After maintaining IT0021, Benefits Administrator maintains IT0378 in HR master data with respective Adjustment reason.
For example, for married employee, Benefit Administrator uses ‘Marriage’ as an Adjustment Reason in IT0378.
Consider the following as some examples of Adjustment Reasons for XYZ Organization:
|NEWB||Benefits Elig Change|
|SPAD||Spouse Loses Emp/Cvg|
|SPDR||Spouse Gains Emp/Cvg|
We use above Adjustment reasons to
- Enroll an Employee in Benefit plan.
- To change the Enrollment of an Employee with respect to Adjustment reason (for Example Marriage, Birth / Adoption).
Permissibility of Adjustment Reasons and Benefits Plan:
We can assign Permissibility of the Benefits plan for the various Adjustment Reasons to Create/Change / Delete the plans. Benefit administrator has rights to Create, Change & Delete the plans.
Please find below the permissibility that can be configured for an organization XYZ
After selecting Adjustment reasons, it triggers HRBEN0001 program to maintain Benefits details for an employee.
Once the Adjustment reason is available in the Enrollment screen, select the same and make the necessary changes.
Here, Benefit Administrator Enrolls/Changes the Employee Benefit Plan as per Employees
details filled in Enrollment form.
Dependents for Enrollment:
To Enroll Dependents in the Benefit plan, it is mandatory to maintain Subtype in IT0021 for an Employee.
Subtypes under IT0021 that were available for XYZ organization are:
|14||Child of Domestic Partner|
To enter the student status, mark tick on student indicator in IT0021 [Subtype: Child].
Enrollment in Benefits: [HRBEN0001]:
Benefit Administrator will enroll the Employee/Dependents in the Benefit
plan through “HRBEN0001” program. To enroll the dependent in the Benefit plan, IT0021-Family
Members/Dependents need to be maintained.
How to enroll the Employee in Benefit plan:
Steps for Enrollment for Benefits Plan are:
- Run the ‘HRBEN0001’ program.
- Enter the Employee number.
- Select the appropriate Adjustment reason.
- To enroll in the Benefit plan, click on the Benefit
5. Select the Dependent coverage option.
6. Select the Dependent as per the Employee Request and click on ‘Accept’.
7. After Enrollment in the Benefit plan, you will see the Tick under Activity (shown in blue color). Now click on the Enroll.
8. Confirm the enrollment by click on ‘Enroll’ button.
9. After the enrollment you will get the pop up saying ‘Enrollment completed successfully. Click on continue button for Benefit plan enrollment for next employee.