We are facing the following compliance issue in SAP Payroll – USA.
As per the government rules if any Pre-tax Medical plan is changed retroactively, it should be charged as Post tax instead of Pre-Tax for the past period.
For example in the month of May if I change my Pre-tax Medical plan effective from April 1st , the amount deducted for the month of April should be post tax and not pre-tax.
This situation happens frequently, for any adjustment reason (other than Initial, Birth or Death) within the 30 day enrollment period, if the employee changes a plan on the last few days, the plan becomes effective from the start date of the adjustment period, but a payroll might have been already run for the part of that period. Hence during the retroactive period the amount charged to the employee should be Post tax instead of Pre-Tax.
This legislation is in effect since several years, please let me know how this can be configured in SAP -US Payroll. Is there any BADI available to achieve this result or should this be done via Payroll Schema? Does any company treat the retro amount as post tax and regular amount as Pre-tax for the same Benefit Plan?