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enrico3
February 25, 2022
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How do you set up health insurance deductions when your employees are on a bi-weekly schedule meaning there are 2 months in the year with 3 paychecks?

  • February 25, 2022
  • 1 reply
  • 0 views
This means you cant do a flat amount per paycheck because there would be an overpayment for the employee and employer.
Best answer by Rainflurry

Sorry… That doesn’t answer my question. I don’t have a problem setting up my payroll. The payroll is set up on a biweekly pay schedule already. What is in question, is how to account for health insurance deductions when I only need 24 health insurance deductions per year but yet I have 26 pay periods to account for. The last person who replied, I believe was saying something about taking the annual total of the premium and dividing it by 26 pay periods. However, that would not work if the employee doesn’t finish the full year. If I take a yearly premium total and divide it by 26, the only way the math would equate correctly would be if that employee completes 26 pay cycles. Am I missing something? 


@enrico3 

 

Dividing the annual premium by the 26 pay periods is the proper way to do it.  If the premium is $4,080/yr ($340 X 12), each pay period will have a pre-tax deduction of $156.92 ($4,080/26).  If the employee quits halfway through the year (June 30), you will have deducted $156.92 X 13 pay periods for a total of $2,039.96, or half of $4,080.  That's right on.  You can do the math for any other point in the year and it will work.    

1 reply

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Ethel_A12
February 25, 2022

Hello there, @enrico3. Let me share the steps to add health insurance on a bi-weekly payroll.

 

You can go to the employee's profile then manually enter the correct contribution in the Amount per pay period section.

 

Follow the steps below:

 

  1. From the left menu, choose Workers, then choose Employees to see the list of workers.
  2. Double-click the employee's name to see the complete details under the My payroll page.
  3. Selecting these options will take you to the Employee details window.
  4. From there, click the Pencil icon beside the "Pay" to view more information.
  5. Navigate to the Does employee have any deductions section and hit the Add a new deduction link to set up the payroll item.
  6. In the "What deductions or contributions do the employee have" section, hit the drop-down for Deduction/contribution and choose New deduction/contribution.
  7. Then pick the appropriate payroll item by clicking the drop-downs for Deduction/contribution type and Type.
  8. Input the name of the agency in the Provider field box.
  9. Navigate to the Employee deduction section and click the drop-down for the Amount per pay period to select the $ Amount ($92.30), or you can also choose the % of gross pay.
  10. For the Company-paid contribution, follow the same process found in Step 9.
  11. Click OK to save the changes.

 

Because the premium is for a bi-weekly payment, the computation should be (200x12)/26. You can click this link to learn more about the number of payouts every year and then go straight to the Pay schedule section to see all the information.

 

Check out this article for more information to record the contribution limitations and which W-2 box health insurance: Set up Health Savings Account (HSA) plans.

 

Leave a comment below if you have additional questions about health insurance set up in QuickBooks Online. I will be here to assist further.

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enrico3Author
February 25, 2022

Thank you for your reply. I'm not sure what the $200x12 is but I'm assuming you're saying the premium amount the employee is going to pay times 12 months and then divided by 26 pay periods, correct? So for my employee, his premium is $340 per month x 12 months / 26 pay periods. However, doesn't this mean that unless the employee stays with the company for the full year, he/she could be under paying?  Dividing by the annual total would only work if they stay for a year.  So how does that work? 

 

Additionally, the same would go for the employer pay out, I assume. So if we are going to contribute $150 per month toward that premium then we would take ($150x12)/26? Again, how does that work if the employee is terminated in the middle of the year? 

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AileneA
February 26, 2022

Hello, enrico3.

 

If you wish to pay your employees every other week or Bi-weekly and you schedule payday for every other Friday, you have 26 payouts per year.  

 

To understand how the pay schedules works and helps you manage your payroll. Please check out this article: Set up and manage payroll schedules. 

 

Just in case the employee will be terminated in the middle of the year, we have other options on paying schedules you can assign your employees. I suggest reaching out to our customer support team, they can help you with what best pay schedule to set up for your employee. Customer Support Team. 

 

Drop me a comment below for any other questions. I'll be happy to help you some more. Wishing you and your business success. Take care!

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