Frequently Asked Questions (FAQ’s) Related to New Benefits Program — Last Updated: 8/27/2010
- Why is managing fringe benefit policies and underlying costs critical to the University’s future vitality?
- What is FRIC? How are members selected and what is their role in the University’s system of shared governance?
- What is the General Benefit Credit?
- What are the Shared Savings Credits?
- What about employees who are double spouse employees (Faculty, Professional & Scientific, or Merit Supervisory Exempt Staff where both spouse/partners work at the University)?
- Can I as an individual add additional monies beyond the General Benefits and/or Shared Savings Credits into the spending accounts? What are the advantages?
- What controls how individuals use the funds allocated to the spending account funds?
- Why will the LTD benefit level change to 60%?
- Can I continue to pay for my long term disability insurance on an after tax basis?
- When does the new plan take effect?
Questions and Answers
Why is managing fringe benefit policies and underlying costs critical to the University's future vitality?
Fringe benefits and energy are the fastest growing major elements in the UI’s overall budget. Both must be managed or there will be serious consequences in the capacity to recruit new faculty and staff as well as to provide competitive salary increases. To place this into perspective, the fastest growing portion of fringe benefits was UI contributions to faculty and staff health care flex spending accounts, which grew by 350% since 2000. Benefits are a greater and greater portion of overall faculty and staff compensation. In FY2009, just the year to year growth of fringe benefit rates required a special General Education fund expense increase of $4.2 million. This equates to having an average of 35 additional tenure/tenure track faculty, or 51 additional professional staff, or a 1.35% salary increase for all faculty and staff. The same economic issues also govern UIHC, the student housing system and all other University units.
What is FRIC? How are members selected and what is their role in the University’s system of shared governance?
FRIC is the Funded Retirement Insurance Committee, one of the charter committees of the University, composed of faculty and staff representatives selected by the Staff Council and Faculty Senate. As a charter committee it is part of the University’s shared governance structure. The charge of this committee is to suggest and review faculty and staff retirement programs and insurance programs. This is a challenging role.
What is the General Benefit Credit included in the new program?
The General Benefit Credit is an amount provided to all staff and faculty to use at their discretion toward the purchase of benefits not otherwise provided by the University. For example, the credit can be applied to the 20% employee premium cost of family health or dental insurance, the purchase of additional life or accidental death and dismemberment insurance, or toward a dependent care or health care spending account.
What are the Shared Savings Credits under the new program?
Individuals who have health insurance, but are not enrolled in a University or a State of Iowa health insurance plan will receive an additional $200 per month in Shared Savings Credits as an incentive to remain with their current insurance provider. Individuals who elect not to enroll in the University’s or a State of Iowa dental insurance plan will be provided an additional $25 per month in Shared Savings Credits.
Finally, individuals who elect to receive only $50,000 in life insurance (when this is less than two times their salary) will receive an additional $40 per month in Shared Savings Credits. The life insurance Shared Savings Credit will be in effect for the first year, but will be subject to further review for continuation into subsequent benefit years.
What about employees who are double spouse employees (spouse/partners that both work at the University)?
The double spouse program for Faculty, Professional & Scientific, or Merit Supervisory Exempt Staff will only be available where both employees are Faculty, Professional & Scientific, or Merit Supervisory Exempt Staff.
Double spouse/partner employees where both employees are Faculty, Professional & Scientific, or Merit Supervisory Exempt Staff will receive the benefit of one free employee/spouse or family health insurance plan and their choice of a free dental insurance plan.
For double spouse couples where both employees are Faculty, Professional & Scientific, or Merit Supervisory Exempt Staff who are participating in the current double spouse program, the current contract holder will remain the contract holder unless they notify the Benefits office they want to change.
For couples who are not covering dependents, there is no financial difference between two single coverage plans or a double spouse employee-spouse coverage contract.
For families with dependent/s it is beneficial to participate in the double spouse program. You must fill out a request for double spouse credit form and return it to the Benefits Office in order to receive this credit.
Can I as an individual add additional monies beyond the General Benefits and/or Shared Savings Credits into the spending accounts? What are the advantages?
Yes. Individuals who have used all of their credits (and those without credits) are encouraged to contribute to a flexible spending account if they believe they will have eligible expenses. When used correctly, spending accounts can offer considerable tax savings – subject to program maximums and forfeiture if not used. Please check the flexible spending account area of the benefits office web site for more information: Http://www.uiowa.edu/hr/benefits/spendacct/index.html
What controls how individuals use the funds allocated to the spending account funds?
The use of funds allocated to a spending account is controlled by Federal regulations and to a limited extent, by the employer.
Why will the LTD benefit level change to 60%?
In order to provide coverage that is effective upon employment without a
waiting period, the benefit level will change to 60%. This is also the most
common coverage level in the Big 10 and the local market.
Can I continue to pay for my long term disability insurance on an after tax basis?
No. The University will pay the premium directly. There is no option for the employee to pay any of the premium cost. Under IRS rules, an employer paid LTD benefit makes the funds paid to a disabled employee taxable.
When does the new plan take effect?
The new plan goes into effect January 1, 2011.