1. July 2013 FORCES Presentation

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

3.  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.  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.  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.  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.  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.  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.  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.  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. One Exchange Date November 22, 2013 Two Exchange Dates (50% Each) June 7, 2013 November 22, 2013 Four Exchange Dates 25% Each March 15, 2013 June 7, 2013 August 30, 2013 November 22, 2013

12.  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.  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.  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.  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.  Managing employee elective deferred compensation deductions  Total Compensation & Benefit Statements  Other items other than traditional benefits that employers run through OAB