Iowa State University

Payroll Office

Pooled Fringe Benefits


Basics about the Fringe Benefits Pool

FY 2017 and FY2018 Approved Rates

Accounting Issues

Sponsored Programs

Sick Leave Payouts / Forms
Retirement
Long-Term Disability

If you have other questions, please email them to fringepool@iastate.edu

What is a Fringe Benefits Pool?

A fringe benefits pool is an allocation concept that clusters fringe benefits paid by the university for its employees. Employee groups are determined based on the fringe benefits offered to the employees within a particular group. A percentage is determined for each group by taking the fringe benefits costs paid by the university and dividing that amount by the total salaries and wages of that group. The impact of employee benefits choices are kept within the pool rather than the employing departments. This simplifies accounting, budgeting, and grant processing. A department can easily calculate the total cost of a new employee at the time of hire rather than after new employees make benefit choices.

What Benefits are Included in the Pool?

Rates include: Employer costs of medical and dental insurance, retirement (IPERS/TIAA/Federal), group basic life and long-term disability insurance, worker’s compensation, employee assistance program, FICA, Medicare, unemployment insurance, long-term disability waiver, sick leave payouts (disability and retirement), and employee tuition assistance.

Why is Iowa State going to a Pooled Fringe Rate?

  • Spreads fringe costs over total salary base and funding streams
  • Simplifies accounting, budget administration, and grant process
  • Total cost impact can be calculated at point of salary/hiring decisions
  • Relieves departmental burden for long-term sick leave payouts

What does this mean for ISU departments?

Departments will see on their payroll vouchers that the employer share of an employee’s fringe benefits (i.e. medical insurance, retirement, etc.) will be charged using the federally approved rates instead of actual benefits charges in previous years.

What does this mean for ISU employees?

There will be no changes for individual ISU employees. Individual employee share of selected benefits can change due to changes in employee choices during open enrollment or as a result of a qualifying event. Employees’ pay detail will still show all of the same information as before.

When will the new rates be implemented?

Starting with the July 29, 2016, payroll, new fringe benefits rates, as approved by the U. S. Department of Health and Human Services, Division of Cost Allocation Services, will be applied.

What are the current rates?

2017 Fringe Benefit Rate Agreement


FY 17 and FY 18 Fringe Benefits Components (Approved)
Employee Classification* Fringe Rate[1] Health/Dental Insurance Retirement Life/Disability Insurance Social Security/Medicare Other [2]
Faculty (A/B) 27.50% 9.70% 9.60% 0.70% 6.80% 0.70%
Professional & Scientific (P) 34.50% 15.90% 9.60% 0.80% 7.30% 0.90%
Miscellaneous (MN) 34.50% 15.90% 9.60% 0.80% 7.30% 0.90%
Contract (K) 34.50% 15.90% 9.60% 0.80% 7.30% 0.90%
Merit (E/H) 45.80% 27.20% 9.50% 0.70% 7.50% 0.90%
Graduate Assistants (C) 9.80% 9.30% 0.00% 0.00% 0.00% 0.50%
Postdoctoral (D) 32.90% 22.30% 3.50% 0.00% 6.60% 0.50%
Senior Staff / Leadership 11.40% 2.10% 5.00% 0.80% 2.80% 0.70%
Student Hourly (XH) .60% 0.00% 0.00% 0.00% 0.10% 0.50%
Non-Student (XH) 17.10% 0.00% 9.45% 0.00% 7.15% 0.50%
Miscellaneous (M) 17.10% 0.00% 9.45% 0.00% 7.15% 0.50%
*ISU employees with an annual base salary of $265,000 and above are considered Senior Staff/Leadership for fringe benefits rate purposes.
[1]Percentage applied on salaries and wages.
[2] Other includes Unemployment Insurance, Disability Waiver, Sick Leave Payout, Sick Leave, Long-Term Disability, Employee Tuition Assistance, Flex Spend Contractor, Worker's Comp, Employee Assistance Program.

    Accounting Issues

Will the fringe benefits rate be applied when the pay is earned or when paid?

Payroll fringe benefits charges will always be calculated using the fringe benefit rate in effect on the date the payment is made, not when the pay was earned.

How do I correct payroll that used the old benefit method?

Payments made in FY2016 and Correction Vouchered in FY2017 will use the FY 2016 actual fringe benefit.

How do I correct payroll that used the new benefits method?

Salary corrections for salary charges July 29 and beyond will use the fringe benefits rate resulting in more simplified accounting corrections. Payments made in FY 2017 and Correction Vouchered in FY 2018 will use the FY 2017 fringe benefits rate.

Are there "summer rates?"

No. There will no longer be any "summer rates."

Will the fringe benefits rate be applied to additional compensation?

Yes. All additional compensation must be processed through payroll where the fringe benefits rate will be applied.

    Sponsored Programs

Awards effective on or after July 1, 2016, should use the new fringe benefits rates effective for FY 2017 and FY 2018. After FY 2018, fringe benefits rates are anticipated to change annually.

Fringe benefits are a direct cost to a sponsored project. Prior to July 1, 2016, estimated rates were provided but actual fringe benefits were billed to the sponsored project at the time the costs were incurred based on the salary, selected benefit packages, and other variables selected by the individual employee.

Beginning July 1, 2016, the fringe benefits pool rates determined for each employee group will be billed to the sponsored project at the time the salary costs are incurred. The impact of an employee’s benefits choice will no longer impact what is charged to the sponsored project.

If the sponsor will not pay fringe benefits costs, the PI must provide an account number for the fringe benefits as part of the GoldSheet submission.

    Sick Leave Payout

    How is Sick Leave Payout processed upon retirement?

Per university policy, faculty and staff who retire at age 55 or older and have unused sick leave hours are eligible to receive a one-time cash payment not to exceed $2,000. Employees claiming sick leave payout must apply for payout of accumulated, unused sick leave using the Application for Payment of Accumulated, Unused Sick Leave form. The ISU Payroll Office will handle the payment of the sick leave payout from the fringe benefits pool on the 15th of the month following the month of retirement.

    How is Long-Term Disability processed for full-time employees?

Effective July 1, 2016, departments with employees applying for full-time, long-term disability will be able to request sick leave payments from the fringe benefits pool when the sick leave accrual balance is beyond the 90-work day waiting period.
  1. Employees working part-time are not eligible for payments from the pool.
  2. When an employee changes from part-time employment to full-time long-term disability application, the department will be able to request payment by the fringe benefits pool.
  3. Departments are responsible for transferring the amount of vacation payout at the end of the 90-work day long-term disability waiting period to the fringe benefits pool. The fringe benefits pool will be responsible for paying the total vacation payout when sick leave runs out.
  4. The Request for Long-Term Sick Leave Payments from the Fringe Benefits Pool form must be completed to ensure all of the following criteria have been met prior to payment by the fringe benefits pool.
    1. When a department anticipates an employee may qualify for the University’s medically-related long-term disability leave program on a full-time basis, the department should encourage the employee to work with University Human Resources/Benefits as soon as possible to complete the required paperwork to initiate a long-term disability application with Principal Financial Group (ISU vendor).
    2. To request payment of sick leave from the fringe benefits pool, the department must complete the top portion of the “Request for Long-Term Sick Leave Payments from the Fringe Benefits Pool” form and send to University Human Resources/Benefits.
    3. University Human Resources/Benefits will verify
      1. The completion and filing of the disability application to Principal Financial Group.
      2. The named employee is not working part-time.
      3. The employee has satisfied the 90-work days waiting period (720 hours full-time leave) of sick leave usage.
      4. The end date of the 90-work days waiting period as determined by Principal Financial Group.
      5. The employee’s sick leave accrual balance exceeds the 720 hours.
    4. Payroll Office will
      1. Verify the amount of vacation accrual balance at the end date of the 90-work days as determined by UHR/Benefits and confirmed by Principal Financial Group.
      2. Calculate when the sick leave will run out. If the employee is at maximum allowable vacation, use the monthly vacation accrual prior to using sick leave.
      3. Calculate the vacation payout balance with associated benefits at end of 90-work days.
      4. Notify the department of the vacation payout amount and transfer the funds from the departmental account indicated on the form.
    5. Division of Finance will
      1. Work with the department to process the EPA to transfer
        1. The employee to the fringe benefits pool (home department will be changed to the Division of Finance).
        2. Vacation payout dollars to the fringe benefits pool.
      2. Be responsible for leave reporting.
      3. At the end of the sick leave payments, process the final EPA and payout vacation as appropriate.
        1. For P&S, Supervisory/Confidential, and Non-Supervisory Merit, this will result in full separation of employment from Iowa State University.
        2. For Faculty, the timing and completion of the steps for separation will be processed with the assistance of the Office of the Senior Vice President and Provost.
      4. Retain all related documentation.



    Updated September 9, 2016