Use this article to understand how missed benefit deductions will be corrected for Gusto-managed benefits.
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If your benefits are managed by Gusto (including the broker integration) and a deduction is missed, we’ll apply corrections to upcoming payroll(s) to catch up on the missed amounts. These deductions cannot be manually skipped.
If your benefits are managed by your company or another broker outside of Gusto, deduction corrections are not automatic. You'll need to edit a deduction to add and remove corrections as needed.
When benefit deduction corrections may apply
For Gusto-managed benefits, here are some examples of missed deductions we'll automatically apply benefit deduction corrections for:
- A company’s benefits (a new policy or a renewal) were not approved by the carrier until after coverage already started.
- An employee's entire payroll was skipped.
- A qualifying life events (QLE) resulted in a benefit being back-dated.
- Example: A baby is born, and the new dependent's benefits coverage is effective from the date of birth, but the enrollment was processed several weeks later.
- Unintentional processing errors and/or incorrect rates were used.
- A newly hired employee enrolled in benefits after the start date of the coverage.
- An employee did not have enough pay to cover all taxes and deductions.
The way corrections apply depends on the type of benefit deduction that was missed—learn more about each benefit type below.
If you have questions or do not want these deduction corrections to occur, contact us through the Help section of your account.
Missed health benefit deductions If an employee’s health benefits deductions were missed, we’ll apply a correction amount to upcoming payrolls until the total missed amount is collected. This correction amount will include the missed deduction(s) plus an additional amount to ensure timely recovery, typically resulting in a deduction larger than the normal amount. On the paystub, this is listed in a line item under the benefit called "Correction." For example, if one normal $100 deduction was missed, the next two payrolls might have an additional $50 deducted on each, totaling $100 in additional deductions over two payrolls, in addition to the regular $100 deduction for those periods. This means the employee would see $150 deducted on each of the next two payrolls. Once the full amount is captured, only the regular deduction amount will be applied moving forward.
Ex: If we missed 1 deduction that's normally $100 per paycheck, the next two payrolls will have $150 deducted. Once the full amount is captured, only the regular deduction amount will be applied moving forward.
Missed 2% shareholder benefit deductions 2% shareholder employer-sponsored health insurance premiums are treated as taxable income (imputed income) and are subject to federal and state income taxes. This amount is typically added to their gross wages on their paycheck. While these amounts are generally not pre-tax, a 2% shareholder may be able to deduct these premiums on their personal tax return if they meet certain IRS criteria. Missed deductions for 2% shareholder benefits will be processed to ensure the correct taxable income is reported.
Missed HSA or commuter benefit deductions If an HSA or commuter benefit deduction is missed, Gusto will attempt to collect the full monthly election across the remaining payroll(s) within that same month. If the total monthly election cannot be fully caught up within the current month due to insufficient remaining payrolls or earnings, the outstanding balance will carry over and continue to be collected on future payrolls until the full elected amount for the period is captured.
Over deductions If benefit deductions were over-collected (e.g., due to a QLE being submitted or processed late, resulting in a change in coverage or cost), Gusto will process a benefit reversal. You will receive an email detailing this correction and any necessary actions on your part.
