Pooled Fringe Benefits
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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?
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.
2017 Fringe Benefit Rate Agreement
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 ProgramsAwards 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.
Updated September 9, 2016