ARCHIVED CD 2008-019
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Note This document has been modified. The changes are identified by a vertical line "|". Revision (|)
October 28, 2008 (Revised April 24, 2009)
SUBJECT: Two New Recovery Codes for Public Service Health Care Plan (PSHCP) Deficiencies to be Used for an Authorized Leave Without Pay (LWOP) Period
1.1. The purpose of this directive is to advise client departments of the creation of two new recovery codes for deficiencies under the Public Service Health Care (PSHCP) that occur when an employee chooses to remain in the plan and to pay the required contributions at the end of the authorized leave without pay (LWOP) period.
In this directive, any reference to LWOP presumes that the leave has been duly authorized by the employer.
2.1. This directive cancels and supersedes Compensation Directive 2006-022 dated September 27, 2006.
3.1. The Treasury Board Secretariat and the National Joint Council directive regarding the changes to the PSHCP which came into effect on April 1, 2006, is available at the following Internet site: Public Service Health Care Plan Directive - April 1, 2006
3.2. Further to the announcement of these changes, Public Works and Government Services Canada (PWGSC) had issued Compensation Directive 2006-022 to implement interim procedures that compensation advisors (CA) were to follow to process and remit PSHCP contributions of employees on (LWOP).
3.3 PSHCP contributions while on (LWOP)
3.3.1. Prior to April 1, 2006, in order to continue the PSHCP coverage during a period of LWOP , an employee was required to remit the contributions in advance of the LWOP. As a result of the changes, effective April 1, 2006, the employee has new payment options.
The temporary method to handle the deficiencies for PSHCP contributions when an employee had chosen to pay the deficiencies monthly on his return to duty from a LWOP period needed to be changed. Therefore, as of November 18, 2008 , the CA must stop using deduction code 794 (personal and miscellaneous) for the recovery of PSHCP deficiencies and use the appropriate new codes created for this purpose.
4.1. As of April 1, 2006, the PSHCP coverage continues while the employee is on LWOP unless the employee gives a written notice indicating that he wants to opt out of the plan while on LWOP.
4.2 Payment of PSHCP contributions while on LWOP
If the employee gives a written notice stating that he opts out of the plan during the period of LWOP , the coverage will be terminated at the end of the month following the month in which the notice is received by the designated officer. The coverage will be reinstated at the end of the period of LWOP effective the first of the month following the return to work date. A member who is on LWOP and who does not opt out of the PSHCP for the period of LWOP will be required to either:
- pay the required contributions in advance in monthly or quarterly installments; or
- pay the contributions owing on ceasing to be on whether due to a return to work or to ceasing to be employed.
An employee who has not chosen to pay the required contributions in advance will be deemed to have opted to pay the contributions retroactively on ceasing to be on LWOP.
5.1. This initiative only replaces the use of deduction code 794 to recover PSHCP deficiencies with two new PSHCP deficiency codes. The CA will still be responsible to calculate and recover the PSHCP deficiency amount owing.
However, the CA will no longer be required to calculate the provincial sales tax on the PSHCP deficiency amount when applicable, as this will be done automatically by the system, unless the employee pays by cheque or money order. In the latter case, the CA will enter the PSHCP deficiency amount owing and the applicable provincial sales tax in the area indicated on the PWGSC-TPSGC 2278 form, attach the payment to the form and send everything to the Financial and Payroll Accounting Division (FPAD).
The FPAD will still be required to process the employer's share of the PSHCP contributions where applicable.
In all cases, the CA will continue to forward the PWGSC-TPSGC 2278 form to FPAD.
5.2 New deduction codes - LWOP PSHCP deficiency.
- 5D7 PSHCP deficiency
- 5D8 PSHCP deficiency outside Canada
These are monthly deductions to be recovered from Pay cycle 1.
These deductions are refundable and reversible (for cancelled cheques).
5.3. A 10-digit alphanumeric reference number is required and the first character is always a zero (0); the second and third characters are numeric and identify the province of residence; and the last seven characters are a unique number assigned by the department to identify the employee.
These deductions are considered to be multiple deductions.
5.4 Payment options - PSHCP contributions for the period of LWOP
5.4.1 Remittance of monthly or quarterly cheques in advance (pay-as-you-go) - no change to current procedure
The CA must continue forwarding copy 1 of the PWGSC-TPSGC 2278 form and the cheque(s) or money order(s) to the FPAD. The CA should remind the employee that contributions are due one month in advance of the effective date. Failure to make the required payments will not result in termination of coverage, but the employee will be required to pay the deficiencies upon return to work or on termination of employment if he does not return to work. It should be noted that in the event an employee fails to make the required payments, the CA must continue to forward copy 1 of the PWGSC-TPSGC 2278 form to ensure that all eligible claims for the employee will continue to be paid while on LWOP. The form should be annotated to indicate that the employee did not forward the required payments.
5.4.2 PWGSC-TPSGC 2278
The PWGSC-TPSGC 2278 form, the Personnel-Pay Input Manual (PPIM) and the Insurance Administration Manual (IAM) will be modified to reflect the new changes.
The PWGSC-TPSGC 2278 form must be completed and attached to the member's PSHCP contributions remittance (personal cheque or money order), when the CA forwards the remittance of contributions to the FPAD.
The PWGSC-TPSGC 2278 form should be sent to FPAD at the start of the LWOP and throughout the period of LWOP when the duration of the LWOP is not known. All full months of LWOP and the final month if the employee is struck off strength (SOS) have to be accounted for on the PWGSC-TPSGC 2278 form. The FPAD needs the form to send in the monthly contribution remittance to continue coverage. If the FPAD does not receive the PWGSC - TPSGC 2278 form, they will not remit the monthly contributions.
5.4.3 Retroactive payment of contributions upon ceasing to be on LWOP -- retaken on strength (RE-TOS) or struck off strength (SOS)
At the beginning of the LWOP , the CA must forward copy 1 of PWGSC - TPSGC 2278 form to the FPAD and annotate on the form that the employee will pay the contributions retroactively upon ceasing to be on LWOP. This procedure will ensure that all eligible claims for this employee will continue to be paid during the period of LWOP.
If an employee chooses to pay his contributions upon ceasing to be on LWOP, it is important that the employee is advised, in writing, that the outstanding PSHCP contributions based on the type and the duration of the LWOP could be considerable.
5.4.4 When LWOP ceases and the employee is RE-TOS.
The CA will be required to calculate the PSHCP deficiencies taking into account the annual adjustment to the employee and employer contribution rates. However, the CA will no longer be required to calculate the provincial sales tax for employees living in Ontario and in Quebec, as this will be done automatically by the system. For details on the contribution rates, refer to the (IAM) Section 2-5-3.
NOTE: When an employee is RE-TOS in a month for which at least one day of entitlement is earned e.g. RE-TOS on July 31, 2008, that month is not to be included in the calculation of the PSHCP deficiencies. The contribution for the month will be deducted by the pay office (PO) using the PSHCP deduction arrears code 872.
5.4.5. Method of payment for contribution deficiencies
The employee can pay his PSHCP contribution deficiencies and the applicable provincial sale tax by having them deducted at source or by paying them in a lump sum amount by personal cheque or money order. They can be deducted from salary over a period of time not greater than the length of the period of LWOP or in a lump sum payment. The Deduction Commence (DEC) screen using deduction code 5D7 (PSHCP deficiency outside Canada) must be used to collect the PSHCP deficiencies.
| If an employee requests an arrears recovery, the input should be done with a Rate Base "6" with the "effective from" date being the first of month that the deduction should commence and the "effective to" date being the last day of the month that the deduction is to stop. These are monthly deductions to be recovered from Pay cycle 1.
To collect the PSHCP deficiencies from salary in a lump sum payment, use the Rate Base "0" with past "effective from" and "effective to" dates that correspond to the months of LWOP for which deficiencies are being recovered. The lump sum payment can also be made by personal cheque or money order. For detailed reporting requirements, please refer to the PPIM Section 4-4-16-1 (PAC 16C) or PPIM Section 14-5-1 DEC.
- An employee is on LWOP for personal needs reason from August 7, 2006, to February 2, 2007, followed by a relocation of spouse leave from February 5, 2007, to August 3, 2008. The employee opts to pay his PSHCP contributions at the end of the LWOP period and is RE-TOS on August 6, 2008.
- The employee resides in Ontario and the monthly contribution rate for Family Level III is $10.34. The employee is required to pay the employees' share only for the first three months and both the employee and employer shares for the remainder of the LWOP period. For details on coverage while on LWOP, please refer to the IAM Section 2-13-3. See example of calculation below:
Months where contributions need to be recovered for the LWOP period Employee share - Family Level III Plus: Employer share Multiplied by number of months included in the period Total From September 2006 to November 2006 $10.34 n/a 3 months$31.02 From December 2006 to March 2007 $10.34 $81.79 4 months$368.52 From April 1, 2007 to March 2008 $10.34 $86.57 12 months$1,162.92 From April 1, 2008 to July 2008 $10.34 $94.73 4 months $420.28 Total PSHCP deficiencies to be recovered over 23 months $1,982.74
- Use the deduction code 5D7 on the DEC screen to commence the monthly contribution to be recovered which should correspond to the total deficiencies to be recovered divided by the number of months the employee was on LWOP ($1,982.74 divided by 23 months = $86.21). The "from date" must be the first of the month where the deduction is to commence and the "to date" must be the last day of the month when the deduction should stop.
F60 F61 F62 F63 F64 F65 F66 F71 DEC (PAC16)C 5D7 01 09 08 1 31 07 10 26 86.21 0071234567 *Insert a 10-digit reference
number as per DEDENT 703 (PPIM 9-5-4)
- The system will automatically calculate the provincial sales tax portion and generate a code 936 transaction as the employee resides in Ontario. If the employee resides in Quebec, the system would automatically calculate the provincial sales tax portion and generate a code 676 transaction.
5.4.6 When LWOP ceases due to termination of employment (SOS)
When LWOP ceases due to termination of employment (SOS), the CA will be required to calculate the deficiencies taking into account the employee/employer contribution rate change adjustment each year. For information on contribution rates, refer to the IAM Section 2-5-3.
The employee can pay the deficiencies and the applicable tax in a lump sum amount by having them collected from supplementary termination payments such as severance pay (on the TEC screen) or from unpaid vacation pay (on the ENT screen) or by personal cheque or money order.
To collect from the TEC screen, the termination deduction (TED) screen (with pay period SS) and the appropriate deduction code (5D7 or 5D8) is to be used.
To collect from the ENT screen deduction code 029, the TED screen (pay period is left blank) and the appropriate deduction code (5D7 or 5D8) is to be used.
Both the supplementary termination payment and the collection of the deficiencies must be processed for the same update. For detailed reporting requirements, please refer to the PPIM Section 4-4-77 or PPIM Section 14-5-6 TED.
If there are still some outstanding PSHCP deficiencies to be paid, a personal cheque for the complete balance must be requested from the employee.
|TED (PAC77)||5D7||13 07 75 1||07 08 08 2||
|SS||0071234567 *Insert a 10-digit reference number as per DEDENT 703 (PPIM 9-5-4)|
|TEC (PAC71)||54||13 07 75 1||07 08 08 2||
5.5. Quebec taxable benefits for employees residing in Quebec - The employer's share of the PSHCP contributions continues to be a taxable benefit. There will be no change to the current process in place for taxable benefits.
6.1. Any inquiries on the information contained in this document should be addressed to your PWGSC Compensation Services Office.
Accounting, Banking and Compensation
Reference(s): CJA 9242-3-13, DED 5D7 and 5D8
- Date modified: