Do you want to learn what does per pay period mean in insurance? In insurance, per pay period means that the insurance premium will be deducted from one’s paycheck every time it is received. Having your premium deducted from your paycheck is a convenient way to make sure that you never miss your payments.
By breaking the payments down per pay period, the deductions won’t affect be that much of a burden on your budget. You’ll still be able to remain flexible and the premiums won’t be that taxing. The amount for the insurance premium will be deducted from the salary you receive per pay period.
The keyword here is “per pay period.” The frequency of these deductions will depend on how often you get paid or receive your paycheck. In addition, deductions from your paycheck won’t just help you with your insurance but with other payments as well. We will discuss all of these later on.
Elaboration on pay periods and payroll deductions will be discussed in this article. If you are interested in learning more about these things, you won’t regret reading this article until the end.
What Is Pay Period?
Employees of a company or business receive pay in one way or another. The set amount of time before a paycheck is received on the pay period. This determines when your employer will give you your salary and how the total amount of money you receive in a year is divided into smaller amounts.
It is an essential part of the payroll system being followed in a business. A business owner should understand what pay periods are and have a good payroll system. This will make sure that all the employees are being paid right and ensure the proper operation of your business.
Employees that receive salary will have fixed amounts of pay received every pay period. At the same time, employees paid per hour will most likely have varying amounts of pay received per pay period.
Regardless of whether your employees are paid for the total amount of hours they work or have fixed wages, you should follow a consistent process or system of payment. If you want to know what does per pay period mean in insurance, continue reading this article.
Examples of pay periods
Now that you have an idea of what pay periods are, it is time for us to look at some examples. The amount of money and time invested by an employer in payroll processing will increase proportionally with how employees receive their payments. Because a pay period is how frequently employees receive paychecks, the most common examples of these payments are weekly, bi-weekly, semi-monthly, and monthly.
#1. Weekly
If a weekly pay period is followed, they will give 52 paychecks to an employee in a year. They will give the paycheck at the end of each week. These are more common for employees that have inconsistent work hours than it is for salaried employees.
The “paid per hour” employees will receive an amount of pay according to their timesheet for that given week. For salaried employees, they will receive a fixed amount of pay each week. That is unless they worked overtime. In this case, they will give the extra amount of work hours proper compensation.
#2. Bi-weekly
For a bi-weekly pay period, a total of 26 to 27 paychecks will be received by an employee in a year. In this pay period type, paychecks are given once every two weeks, hence the term “bi-weekly.” A bi-weekly pay period is applicable to both salaried and hourly employees. It only gets complicated in months where there are three pay periods. Still, it is less costly in payroll processing compared to a weekly pay period.
#3. Semi-monthly
In a semi-monthly pay period, employees are paid twice a month. Since there are 12 months, this results in a total of 24 paychecks in a year. You can add extra working hours or days to the total amount.
This pay period is suggested for salaried employees. Especially for those who work with a fixed schedule. Pay is usually given during the first day of the month and the 15th.
#4. Monthly
A monthly pay period allows employees to receive one paycheck every month, totaling 12 paychecks a year. This is usually recommended for salaried employees as it makes the payroll process simpler. However, it is not suggested that employees be paid for their work hours because the payroll process can get complicated with all the calculations needed. Another downside is that the employees get paid less frequently, making their income harder to budget.
Payroll deductions
Regardless of what pay period is followed, payroll deductions will always be there. This is a way for employees to pay for their taxes, premiums, and other benefits requiring installments. We will be focusing, however, on insurance premiums and how they are deducted per pay period.
A lot of companies offer benefits such as health insurance. The payment for these benefits will be deducted from the paycheck that the employees will be receiving. Depending on the type of pay period, the premium payments for the insurance may be split differently.
For example, if a weekly pay period is followed, you may take the deductions from the first and third paycheck of the month. Everything will vary depending on your employer and the agreement that you will have.
Final Words
At the end of this article, I hope you have learned what does per pay period mean in insurance. Thank you for reading up to this point of the article. Your time and effort are very much appreciated. Well, if you want to know why does insurance often provide “peace of mind”, read more!