Skip to main content
Skip table of contents

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, spending account allocations, or employer Health Savings Account (HSA) contributions 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.


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: Monthly proration

Let's say your policy period started on January 1st. You don't have any dependents, so you enrolled in individual coverage. Your benefits plan comes with an HSA that your employer will contribute $750 to over the course of the policy period.

On March 15th, you have a baby (what’s known as a QLE). You add the baby to your benefits plan and increase your coverage from individual to family, with this new coverage starting on April 1st. This means your employer will contribute more money to your HSA - they contribute $1500 over the course of the policy period for employees with family coverage. 

But since you won't have family coverage for the entire policy period, you won't get the full $1500 contribution. How much will your employer actually contribute to your HSA by the end of the policy period?

First, you need to figure out how much money your employer has already contributed to your HSA. The total individual contribution for the year ($750) is divided by the number of months in the policy period (12 months). Because you only had individual coverage for 3 months (from January to March), this amount is multiplied by 3.

The calculation looks like this: 
$750 / 12 = $62.5
$62.5 x 3 = $187.5

So your employer already contributed $187.5 to your HSA. Now, you need to figure out how much money your employer will contribute for the rest of the policy period. They normally contribute $1500 for employees with family coverage, but since there are only 9 months left in the policy period, this amount is prorated.

The total family contribution for the year ($1500) is divided equally by the number of months in the policy period (12 months). Because your family coverage kicked in on April 1st, this amount is then multiplied by the number of months left in the policy period (9 months).

The calculation looks like this:
$1500 / 12 = $125
$125 x 9 = $1125

So your employer will contribute $1125 over the rest of the policy period. Now just add these 2 numbers together ($187.5 + $1125) to figure out the total amount your employer will contribute to your HSA ($1312.50).


Example three: 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 four: 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

JavaScript errors detected

Please note, these errors can depend on your browser setup.

If this problem persists, please contact our support.