Configuring and Using Deductible Allowances

Deductible Allowances

Deductible Allowances are benefits that allow periodic deductions from an employee’s compensation once they are enrolled. Deductible allowances are not the same as the Allowances benefit type. While allowances are typically added to the employee's salary, deductible allowances are deducted from their salary.

For example, to encourage employees to prioritize physical fitness, an organization may provide an allowance for membership in a health club for employees that work remotely and can't access the company fitness center. Since the employee can choose their own health club, the fee is deducted from their pay, but the company can also contribute a portion to offset their costs. You can indicate how much of the allowance is paid by the employee and how much by the employer. This can be a fixed amount or a percentage.

Set Up a Deductible Allowance Benefit

In this exercise, you will create a deductible allowance that employees can use for a gym membership. The cost will be shared by the employee and the employer, with each contributing US$50 per month.

Task 1: Create a Schedule and Schedule Period for a Deductible Gym Allowance Benefit

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Steps

Create a new benefit schedule using the data in the following table:

Field	Value
Schedule ID	2025GYM
Schedule Name	2025 Gym Allowance Period
Schedule Period	Choose + and enter the following data: Period ID: 2025GYM Period Name: 2025 Gym Allowance Period Enrollment Opens: 01/01/2025 Enrollment Closes: 12/01/2025 Enrollment Effective From:01/01/2025 Enrollment Effective Until: 12/31/2025

Use the Action Search and navigate to Benefits Admin Overview.
Select Create New→Benefit Schedules.
Enter the given Schedule ID and Schedule Name.
In the Schedule Period field, select +.
Enter the details given in the table for the Schedule Period .
Choose Save and close the Benefits Schedule Period screen.
Choose Save.

Task 2: Create a Pay Component for the Gym Allowance

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Steps

Create a pay component with the following details:

Field	Value
Effective as of	01/01/2025
Pay Component ID	GymAllowance
Name	Gym Allowance
Status	Active
Pay Component Type	Amount
Is Earning	No
Currency	USD
Frequency	Monthly (pay frequency of employee)
Recurring	Yes
Can Override	Yes

Navigate to Employee Files→Manage Organization, Pay, and Job Structures.
Choose Create New: Pay Component.
Enter the data from the table.

Task 3: Create a Deductible Gym Allowance Benefit

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Steps

Create a new benefit using the data in the following table:

Field	Value
Benefit ID	GYMALLOWANCE
Benefit Type	Allowance
Benefit Name	Gym Allowance
Benefit Short Description	Gym Allowance
Effective From	01/01/2025
Status	Active
Currency	U.S. Dollar
Integration Mode	Benefit Objects
Legal Entity	Ace USA
Frequency	Monthly
Benefit Schedule	2025 Gym Allowance Schedule
Enrollment Required	Yes
Day Remaining to Enroll	Show
Employee Contribution Type	Amount
Employer Contribution Type	Amount
Enrollment Type	Manual
Enrollment Edit Allowed	No
Employee Contribution Pay Component	Gym Allowance
Employee Contribution	50
Employer Contribution Pay Component	Gym Deductible Allowance
Employer Contribution	50

Use the Action Search and navigate to Benefits Admin Overview.
Choose Create New: Benefit.
Enter the data from the table.
Select Save.

Confirm if the benefit deductible allowance is showing up in the People Profile→Benefits tab under the Allowance tab.
1. From the User menu, select Proxy As.
2. Enter the user name Carla Grant.
3. Select View My Profile.
4. Select the Benefits tab.
5. Under My Active Enrollments, select Go To Benefits.
6. Verify the Gym Allowance appears under Open Enrollments.

Summary

Deductible Allowances are benefits taken from an employee’s pay after enrollment. They can encourage positive behaviors, like a gym membership to prioritize fitness.
When setting up, it's possible to define employee's and employer's contribution amounts. This contribution can be a fixed sum or a percentage of the allowance.