May 10, 1971 M29-l, Part II

Change1

CONTENTS\
CHAPTER 32. EMPLOYER PAYROLL ACCOUNTS\
PARAGRAPH PAGE\
32.01 General 32-1\
32.02 Clerical Processing 32-2\
32.03 Adjustments 32-3

32-i

May 10,1971 M29-1, Part 1\
Change 1

CHAPTER 32. EMPLOYER PAYROLL ACOUNTS

32.01 GENERAL

a\. Commercial employers, certain U.S. Government agencies and the
Philippine services may deduct an amount from an employee\'s or
member\'s pay for insurance premium payments and/or loan/lien
repayments, when authorized by the employee. The combined deductions of
a participating organization or company are usually paid in a single
remittance by the commercial employers and U.S. Government agencies. The
Philippine services\' payments are made to the agent cashier, VA
Regional Office, Manila, and reported to the Philadelphia VA center on
VA Form 14-1551, Transmittal Schedule of Insurance Collections.

b\. The establishment of a new organization to the employer payroll
deduction system is accomplished by the Insurance Division, Philadelphia
VA center. An employer office number is assigned by the Collections and
Cashier Section, Finance and Data Processing Division, which maintains a
record of each number assigned and the related employer. Ml accounts for
insureds under the payroll deduction plan are maintained at the
Philadelphia VA center.

c\. Upon the establishment of a payroll deduction, the initial
remittance should be sufficient to pay premiums l month in advance. If
not, the insured should be advised of this fact, and that it is to his
best interest to have \~ account paid in advance. He should be requested
to tender a direct remittance of one monthly premium. Letters will not
be released to employers requesting adjustment of premiums 1 month in
advance. Employer payroll accounts may be paid more than on a
I-month-in-advance basis.

d\. A master file of each employer payroll deduction account is
maintained in the Reconciliation and Deposit Unit, Finance and Data
Processing Division. This file consists of a VA Form 29-367a,
Collections and Payroll Deduction Card, for each insured, and is used as
input to computer run 132A. The input is processed by the computer in
the same manner as not paid-as-billed direct payments.

e\. VA Form 29-800, Notice of Action Taken on Payroll Deduction for
Government Life Insurance, is used bye employers to report
establishments, discontinuances, or changes. If a change is involved,
two VA Forms 29-800 should be received: one for the discontinuance of
the present amount, and one for the establishment of the new amount. A
folder is established for each employer payroll deduction account in
which VA Form \~4-800a, \~ Monthly Summary of Payroll Deductions for
Government Life Insurance, and a current list of the master file, are
maintained. If there is no change from the previous month in the amount
of the remittance or the insureds to whom credit is given, the list in
file is noted with the0current PDN (processing day number) and the
postmark date. The PDN is also stamped on the VA Form i4.80

f\. Discrepancies which may affect an insured\'s account must be
resolved before the master file for each employer is introduced into the
computer. The employer may be contacted to resolve discrepancies by
letter or telephone, depending upon the urgency of the situation and
location of the employer.

g\. The master file for each employer is listed annually in alphabetical
order after the July payment is processed. These lists are mailed to the
employers for verification, with an appropriate cover letter.

h\. The Collections Section is responsible for notifying the Insurance
Officer of unusual delays in receipt of deductions from employers, based
on the normal pattern of receipt dates, so that appropriate action can
be taken to determine the reason for delay.

**i.** Employers who do not submit payroll deductions as requested by
the VA, or those who desire to submit payments on other-than-a-monthly
basis (even as a minimum), will not be included in the payroll deduction
plan. These items will be processed as regular Open Mail by the
Collections Section.

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M29-1, Part ll May 10,1971

Change I

32.02 CLERICAL PROCESSING

a\. VA Forms 29-800 and/or VA Forms 29-5886\$, Record Print Out (RPO),
received from the Reconciliation and Deposit Unit, will be processed as
follows:

\(l\) Establishments. VA Form 29-8530, Life Miscellaneous, transaction
type 040, will be prepared to establish the deduction segment. If the
amount is to pay insurance and/or total disability income provision
premiums, VA Form 29-8523, Premium/TDIP, transaction type 083 and/or
087, will be prepared to change the how paid code(s) to the payroll
deduction code (8). If the amount is to repay a loan or lien, VA Form
29-8525, Dividend-Loan-Lien, transaction type 025 or 026, will be
prepared to insert the monthly repayment amount in the loan or lien
segment.

\(2\) Discontinuances. VA Form 29-8530, transaction type 090, will be
prepared to delete the deduction segment. VA Form 29-8525, transaction
type 025 or 026, will be prepared to delete the repayment amount in the
loan or lien segment.

\(3\) Changes. The account will be reviewed to determine what change is
required.

\(4\) Transfers between employer offices. An RPO will be received from
the Collections Section with the new office noted thereon. VA Form
29-8530, transaction type 050, will be prepared to change the office
number in the master record.

\(5\) It will be determined if any other adjustments or changes are
required. If so, the insured will be advised and a diary inserted for
followup action. VA Forms 29-800 will be stamped Ready for File, signed,
dated and sent for filing in the insurance folder.

b\. Procedures for clerically processing employer payroll deduction
accounts are essentially the same as those for direct pay accounts, with
the following two exceptions:

\(l\) The system will not automatically release lapse notices or
letters. If a lapse callup is reached, an RPO reason code RPO 980, will
be generated. The master record will be automatically frozen.

\(2\) VA Form 29-5885, Information About Your Insurance, is not released
when the overage or shortage field in the master record is affected. An
RPO reason code RPO 980 is generated when a premium payment is applied
that is not equal to the total premium in the master record.

c\. Upon receipt of an RPO reason code RPO 980 and the account is not
frozen, the required adjustment action will be determined and the
insured advised accordingly. If the amount of the deduction is less than
the monthly premium, the insured will be advised of the shortage and the
month in which the deduction should be adjusted. The month should be
based on allowing the insured sufficient time (approximately 60 days) to
contact the employer and make the change. The amount necessary to pay
premiums on a month-in-advance basis will be completed, taking into
consideration overages or shortages which will exist through the month
in which the insured was notified to make the change. The insured will
be requested to pay this amount by direct remittance or if dividend
credits exist, authority will be requested to deduct the amount needed
from the dividend credit balance. Care must be exercised in this type
case to determine if the account is in danger of lapse and whether
reinstatement requirements will have to be met; i.e., shortage has
reached the point where another deduction with a shortage will exceed
the shortage limitations. If so, the insured will be advised as to the
potential lapse date and requested to submit a direct remittance prior
to that date to prevent lapse.

d\. Upon receipt of an RPO reason code RPO 980 and the account is frozen
because of the lapse callup, the status of the account will be
determined as to whether reinstatement requirements must be met. In many
instances, deductions on this type case are received postmarked within
IS days after the end of the grace period and are subsequently applied
to continue the insurance in force, but are not entered into the system
timely enough to prevent the lapse callup. Verification should be made
with the Reconciliation and Deposit Unit as to whether deductions are
available which can be applied to prevent lapse prior to release of a
lapse notice to the insured. The insured will be advised of the
reinstatement or adjustment action, as appropriate.

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May 10,1971 M29-I, Part II\
Change 1

e\. If deductions are not being deposited properly; i.e., deposited as
premium but should be applied to loan, the Collections Section will be
notified by VA Form 3230 so that flu control file of VA Forms 29-367a
can be corrected.

32.03 ADJUSTMENTS

Administrative acceptance of late remittances as timely may be made by
the Insurance Officer [where]{.underline}, in his \~f

judgment, the circumstances warrant such acceptance. These situations
are:

a\. the entire payroll deduction submission is delayed. Deposit may be
made as of the last day of the calendar month in which due, or

b\. Out-of-balance conditions which necessitate return to the employer
for correction. Deposit will be made as of the original postmark date,
or

c\. On individual cases -[when]{.underline} through error on the part of
the reporting office a deduction is not reported and a statement to that
effect is received from the employer. Deposit will be made as of the
last day of the calendar month in which due.

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\* u. s. GOVERNMENT PRINTING OFFICE : 1971 O **- 436-399 (119)**