RDA Systems Inc

What This Does

• The VRS (Virginia Retirement System) sets rates for Optional Life Insurance Program (OLIP) based on employee age and spouse age.
• VRS Optional Life (OLIP) is currently administered by Minnesota Life (and premiums withheld through payroll are paid to Minnesota Life, not VRS).
• OpenRDA computes OLIP deductions based on the VRS Common Date, or based on the employee's Application Date for this insurance as entered in the employee's deduction master (in the case of the Application Date, new employees hired after the current Common Date).
• The VRS Common Date should be changed each year after the last payroll for the Common Date is completed, and before a payroll under the new Common Date is computed.
• The employee's Life Insurance Salary amount should be changed each year after the last payroll for the Common Date is completed, and before a payroll under the new Common Date is computed. OpenRDA has a standard report for doing this in mass (accessed via Maintenance; normal range for that report is on the Gross Identification used for the VRS jobs).
• System computations use the Annual VRS OLIP Cost table (found under Setup → Define Tables), which has annualized rates per age bracket (monthly rates provided by VRS, multiplied by 12) for employee and spouse options.
• When VRS changes rates, RDA updates the Payroll resource that produces the table (in a regular program release), and users are notified to select a resource called Create Standard Tax Tables (from Version Control, Make Payroll); this causes the program to update with the rate changes, and causes Title 2 of the table to change to reflect the current year's rates. Customers may also manually change the rates in the table if desired.
• OLIP for dependents does not use the tax table, but is instead based on a flat rate maintained in the Deduction Descriptions.
• VRS OLIP is normally withheld for all payrolls. However, a VRS Factor is used by organizations who only withhold over the contract period (e.g., 10 month employee paid over 12 payrolls; deduction only withheld for 10 of the payrolls); this causes the pay period amount to automatically compute at a higher amount.
• Although not recommended, a non-standard setup can be used where VRS OLIP deductions are hand-calculated and maintained in the employees' Deduction Masters (Additional/Adjustment Amount field). Non-standard setups do not use the table, the Common Date, or the Life Insurance Salary amounts in the Job Masters.

Employee Optional Life

• Employees who are covered under the VRS Group Life Insurance Program may purchase additional coverage for themselves through the Optional Group Life Insurance Program.
• The employee can choose from Option 1 (for an insurance policy in the amount of 1X  salary), Option 2 (2X salary), Option 3 (3X salary), Option 4 (4X salary), Option 5 (5X salary), Option 6 (6X salary), Option 7 (7X salary) and Option 8 (8X salary)
• Premiums are paid through payroll deduction.
• The following fields factor into the deduction computation for employee optional life coverage:

Employee Optional Life Deduction Formula

• Calculate the employee's age as of the VRS Common Date, not today's date. Round the employee Life Insurance Salary up to the next thousand (if multiple jobs, add all life insurance salaries for each job and then round to the next thousand), and multiply that by the elected option/level (e.g., 1, 2, 3, 4, 5, 6, 7, or 8 times salary). Divide by 1,000. Multiply by the rate that was in effect for the employee's age bracket as of the VRS Common Date. Divide by the employee's number of pays (if withholding for contract months only instead of number of pays, divide by contract months).
• Example: The employee's Date of Birth is 11/30/52; the Common Date is 9/1/12; the employee is 59 for purposes of VRS OLIP (even though actually 60 based on today's date). Life Insurance Salary is $21,098, which rounds up to $22,000. Employee has Option 2; $22,000 multiplied by 2 equals $44,000. That is divided by 1,000 (since rates are per $1,000 of insurance) equaling 44. Then multiplied by the rate in effect for the employee's age bracket. That is then divided by the number of pay periods, providing the deduction per pay period. When the VRS Common Date is changed to 9/1/13, the employee will be 60 for VRS purposes, and the pay period amount will increase.
• Special Situation – New Hires: Insurance companies may base new hires' ages (and thus, their premiums) on the date they applied for insurance coverage. For OpenRDA to compute OLIP deductions based on actual age, for employees hired after the current VRS Common Date, populate the Application Date (i.e., the date they applied for VRS OLIP) in the employee's OLIP Deduction Master(s). This will make the age calculate using the Application Date rather than the VRS Common Date. The Compute Payroll program will automatically begin using the VRS Common Date once the Application Date is less than the VRS Common Date.

Spouse Optional Life

• Employees electing optional group life insurance coverage may also cover their spouse (and dependent children).
• An employee can cover a spouse for up to half the maximum amount of coverage elected for the employee; choices are Option 1 (for an insurance policy in the amount of 1/2X the employee's salary), Option 2 (1X salary), Option 3 (1 1/2 X salary), Option 4 (2X salary), Option 5 (2 1/2 X salary), Option 6 (3X salary), Option 7 (3 1/2 X salary) and Option 8 (4X salary)
• Premiums are paid through payroll deduction.
• The following fields factor into the deduction computation for spouse optional life coverage:

Spousal Optional Life Deduction Formula

• Calculate the spouse's age as of the VRS Common Date, not today's date. Round the employee's Life Insurance Salary up to the next thousand (if multiple jobs, add all life insurance salaries for each job and then round to the next thousand), and divide by 2 (because the spouse's premium is calculated on 1/2 the employee's Life Insurance Salary). Then multiply that by the spouse option/level (e.g., 1, 2, 3, 4, 5, 6, 7, or 8 times half the employee's salary). Divide by 1,000. Multiply by the rate that was in effect for the spouse's age bracket as of the VRS Common Date. Divide by the employee's number of pays.
• Example: The spouse's Date of Birth is 10/1/52 as of the Common Date of 9/1/12; so is 59 for purposes of VRS OLIP, even though actually 60 based on today's date. The employee's Life Insurance Salary is $21,098, which rounds up to $22,000. That divided by 2 is $11,000. The spouse has Option 2; so $11,000 is multiplied by 2, which equals $22,000. That is divided by 1,000, which equals 22. That is multiplied by the rate in effect for the age bracket to arrive at the annual premium. That is then divided by the number of pay periods, providing the deduction per pay period. When the VRS Common Date is changed to 9/1/13, then the spouse will be 60 for VRS purposes, and the pay period amount will increase.

Dependent Optional Life Deduction Formula

• The dependent optional life is calculated based on the Compute Type Flat Amount set on the Deduction Description; multiplied by 12 (to annualize the premium); then divided by the number of time the deduction is withheld (the compute program uses the VRS factor to indicate when VRS is withheld over contract period instead of pay frequency)
• Example: The amount set up on the Deduction Description for Dependent 4 is $2.40; annualized to $28.80; the employee's VRS job has pay frequency of 12 but the deduction is only withheld for the contract period; the annualized amount ($28.80) is divided by the contract months to arrive at the pay period amount of $2.88. If the deduction was withheld for each pay frequency (instead of contract period), the monthly deduction amount would be $2.40.