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How is proration calculated?
Proration is calculated based on a few different factors. We take into account:
Important dates like when you were hired or experienced a QLE and when your policy period started
The total flexible dollars, insurance premiums, or spending account allocations for the entire policy period
Whether money is prorated monthly, quarterly, or daily
We’ve included examples of different calculations to help you understand how proration works.
Note: Not sure how proration is calculated for your specific benefits plan? Reach out to our Customer Care team through Chat or email us at help@league.com.
Example one: Monthly proration
Imagine you started at a new company on April 1st, and the company's policy period started on January 1st. Your employer gives everyone $1000 in a Lifestyle Spending Account (LSA) for the year. Because the policy period already started, the amount of money you receive is prorated.
The total LSA contribution for the year ($1000) is divided equally based on the number of months in the policy period (12 months). Because you were hired in April, this amount is then multiplied by the number of months left in the policy period (9 months).
The calculation would look like this: $1000 / 12 x 9 = $750
Example two: Quarterly proration
Let's say your policy period started on January 1st. You have a baby on April 1st and add them to your benefits plan (what's known as a QLE). Each year, your employer gives anyone who has a dependent an extra $500 in flexible dollars (money to help cover the cost of your benefits). Because the policy period already started, the amount of extra flexible dollars you receive is prorated.
The total flexible dollars available for dependents for the year ($500) is divided equally based on the number of quarters in the policy period (four quarters). Because you had a baby in the second quarter, this amount is then multiplied by the number of quarters remaining in the policy period (three quarters).
The calculation would look like this: $500 / 4 x 3 = $375
Keep in mind: This is an example scenario - not all policies give extra flexible dollars when dependents are added to a benefits plan.
Example three: Daily proration
Imagine you started at a new company on September 1st, and the company's policy period started on January 1st. Your employer gives everyone $1200 in a Lifestyle Spending Account (LSA) for the year. Because the policy period already started, the amount of money you receive is prorated.
The total LSA contribution for the year ($1200) is divided equally based on the number of days in the policy period (365 days). Because you were hired in September, this amount is then multiplied by the number of days left in the policy period (121 days).
The calculation would look like this: $1200 / 365 x 121 = $398