Employer not deducting correct benefit amount?

Question

I noticed during open enrollment that my employer did not deduct the right amount for our medical and dental benefit, am I liable for the additional amount or do they have to cover the difference since it is their error? Also, is it advisable that I tell someone and if I am not liable for the difference is there anything I can reference in my defense? Thanks in advance.

Additional info, my coverage is correct but the amount of the benefit deduction increases as salary goes up and my deduction hasn't increased since I start working their after several raises, so I could be looking at $1000 owed. Thats why I am a little concerned as to whether or not I should address it, I don't want to have to come up with that money.

Answer 1

I work in payroll for a large company. If the wrong amount is not being deducted, it is your liability, not the company's. The theory is that you knew what you signed up for and it is your responsibility to check your payslips to make sure they are accurate. I see errors on checks all the time---in the company's favor and in the employee's favor. Either way, we have to correct it so that everything is paid correctly.

I saw one instance where an employee had signed up for additional coverage which should have cost nearly $100 per week. It hadn't come out for months and when the benefits department figured it out, they took his entire paycheck for several weeks to get him caught up. Benefits are the only deduction we can't override in payroll so we couldn't stop them from taking all of his money. It was a nightmare for everyone involved. We ended up cutting him a check from the payroll account and letting him pay us back over time.

Before the difference in what is being deducted and what should be deducted gets any bigger, I would contact your HR department to find out what the correct amount should be.

Answer 2

Maybe you have a grandfathered benefit, or they only change the deduction periodically, or have decided not to change it.

You have to affirm your intention to take the medical and dental coverage each year. That is the time for the employer to update you on the fees.

It is their error. If they presented you with higher fees at open enrollment, you could have declined it. So I don't believe they can force you to pay higher fees for years where you have already signed off on the lower fees.

Your employer is paying the full premium for you and taking the deduction in partial payment. So the premiums are being paid in full and you don't have to worry about not being covered.

You can reference your signed document agreeing to the enrollment in the plan. If you do not have a copy, you could ask your HR department for a copy. You do not have to explain why you want a copy of this.

Answer 3

If you have an incorrect payroll deduction by your employer for medical and dental coverage, contact the Payroll Department and have them correct to the deduction which is correct. In an audit you may have to make up the difference because the coverage you are buying requires a premium.

Answer 4

The employer is required to keep the W-4s and must furnish them to the IRS if they request it. Since you didn't fill out a new W-4 for 2010, your employer was supposed to withhold using the same information as the most recent W-4 they have for you. The amount you have withheld for income taxes does not make a difference to the employer. The employer is simply required to pay the taxes that they withhold to the IRS. If you complain to the IRS, they may penalize the employer for not withholding according to your W-4, but it won't affect your taxes. You are still required to pay the taxes you owe. In 2010, there was a tax credit called "Making Work Pay". Payroll tax rates were decreased to give employees the credit in their paychecks. Maybe your employer withheld at the correct amount but it doesn't seem so to you because you aren't taking the credit into consideration? Just a thought.

Answer 5

Go to payroll and ask them to verify the medical/dental plan you signed up for. If the amount is incorrect--then you don't have the coverage you think you do. (Eg, different plan or covers only you and it was supposed to be a family plan.)

If there is an error and they can correct it, then yes, you do owe the money.

Answer 6

Go get it checked and corrected if needed. Common sense.