UW Staff Benefits University of Wisconsin- Extension Payroll and Benefits Office.
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Transcript of UW Staff Benefits University of Wisconsin- Extension Payroll and Benefits Office.
UW Staff Benefits
University of Wisconsin-Extension
Payroll and Benefits Office
State Health Insurance Accumulated Sick Leave Program
Studies show that employees consider heath insurance the Number 1 benefit of importance
Retirement benefits come in a distant second
State Health Insurance Accumulated Sick Leave Program
Wisconsin’s State Group Health Insurance plan is excellent
Sick leave credits may be used to pay for future health insurance premiums at retirement-unique to Wisconsin• Employees who terminate with 20 years of service do not
lose sick leave credits
Health insurance is the number one expense for most retirees
State Health Insurance Accumulated Sick Leave Program
To be eligible for post-retirement sick leave credits you must participate in the State of Wisconsin Group Health Insurance plan as a subscriber or a dependent of a state/UW employee and:
• Retire and receive a lump sum benefit or
• Begin a WRS annuity immediately after termination or
• Terminate employment with 20 years of WRS creditable State Service but defer application for retirement benefit
State Health Insurance Accumulated Sick Leave Program
The sick leave you accumulate over your working career will help pay your health insurance premiums after you retire
Three components:• Highest hourly rate
• Hours of unused sick leave
• Supplemental sick leave credits linked to your years of continuous state service
State Health Insurance Accumulated Sick Leave Program
What are Supplemental Sick Leave Credits?• Credits are computed at retirement
• To qualify, you must have 15 years of adjusted continuous UW and/or other state service
• For each full year of service up to 24 years you receive 52 hours of supplemental credits
• For each full year of service over 24 years you receive 104 additional hours
• Total supplemental hours cannot exceed your accumulated sick leave balance
State Health Insurance Accumulated Sick Leave Program
Supplemental Sick Leave Credit Maximums15 years = 780 hours 21 years = 1092 hours
16 years = 832 hours 22 years = 1144 hours
17 years = 884 hours 23 years = 1196 hours
18 years = 936 hours 24 years = 1248 hours
19 years = 988 hours 25 years = 1352 hours
20 years = 1040 hoursFor each full year up to 24, you receive 52 hours
For each full year over 24, you receive 104 hours
State Health Insurance Accumulated Sick Leave Program
Sick Leave Credits (classified)
Example 1
Hours Earned Bi-Weekly 5
Pay Periods per Year 26
Hours Earned Per Year 130
Years of Employment x 10
Total Sick Leave Hours 1,300
State Health Insurance Accumulated Sick Leave Program
Financial Value
Total Sick Leave Hours 1,300
Hourly Rate of Pay X $ 16.50
Value $ 21,450.00
State Health Insurance Accumulated Sick Leave Program
Sick Leave Credits (classified)
Example 2
Hours Earned Bi-Weekly 5
Pay Periods Per Year 26
Hours Earned Per Year 130
Years of Employment x 20
Total Sick Leave Hours 2,600
State Health Insurance Accumulated Sick Leave Program
Financial Value
Total Sick Leave Hours 2,600
Supplemental Hours
52 hrs x 20 years 1,040
Total Hours 3,640
Hourly Rate of Pay x $ 16.50
Value $60,060.00
State Health Insurance Accumulated Sick Leave Program
Example 3 30 years of service Sick Leave Balance 2,850 hrs Match 52 hrs/yr. for yrs 1-24 1,248 Match 104 hrs/yr. >24 years 624
Total Hours 4,722
Hourly Rate of Pay $ 26/hr
Value $122,772
State Health Insurance Accumulated Sick Leave Program
Sick Leave’s Real Value
$122,772/2850 hours = $43.09 per hour
IT’S A TAX FREE BENEFIT TOO!!!
State Health Insurance Accumulated Sick Leave Program
How long will it last?
Sick Leave Value $ 122,772
Family Premium $ 1,700/month
Coverage in Months 72 months
Coverage in Years 6 years
State Health Insurance Accumulated Sick Leave Program
How long will it last? The answer depends on the type of
coverage you have (family or single, Medicare eligible or not), the plan you select and inflation
Your insured dependents can continue to use your credits after your death
State Health Insurance Accumulated Sick Leave Program
You are eligible continue the state health insurance plan for as long as you live
Premiums: From your accumulated sick leave account until it is
exhausted Deducted from your retirement annuity Pay directly to the insurance carrier who will bill you
for the premiums
State Health Insurance Accumulated Sick Leave Program
If your spouse is a state or university employee:• You may elect to transfer your family health
insurance coverage to your spouse
• Your sick leave credits will be placed in an inactive account until your spouse retires and depletes his/her sick leave credits
• Your sick leave credits will then be used
State Health Insurance Accumulated Sick Leave Program
If your spouse is NOT a state or university employee• If your spouse’s health insurance plan has
comparable coverage, you are eligible to escrow (delay using) your sick leave credits indefinitely
• To escrow, submit a Sick Leave Escrow Application to the Department of Employee Trust Funds at the time of retirement.
State Health Insurance Accumulated Sick Leave Program
You may defer the use of your sick leave credits indefinitely by applying to “escrow” the credits. You may escrow sick leave at any time if you have comparable health insurance coverage elsewhere, e.g. from another job or through a spouse
To “unescrow” sick leave credits, you must apply during the annual fall Dual Choice period unless your comparable coverage is involuntarily lost
State Health Insurance Medicare in retirement
When you are retired and turn 65, you become eligible for Medicare Part B• IF you have the State Group Health insurance,
you must sign up for Medicare Part B Health coverage remains the same as before
Medicare coverage became effective• State Group Health insurance is designed to
supplement, not duplicate the Medicare coverage
Medicare Part D
State Health Insurance Medicare in retirement
Failure to enroll in Medicare Part B will result in termination of State Group Health insurance coverage
Medicare Part B premium is $96.40/month• But the cost of State Group Health is reduced as well
Non Medicare Rate Medicare Rate
Single Family Single Family 2 Family 1
$555.80 $1385.80 $397.40 $792.30 $950.70
Types of Retirement Income
Wisconsin Retirement System (WRS) Annuity Tax Sheltered Annuity/Wisconsin Deferred
Compensation Individual Retirement Account (IRA) Social Security Retirement plan from other employers Post-retirement employment-30 day break in
service if WRS employer
Wisconsin Retirement System
Eligibility for Retirement At least age 55 Termination of all WRS covered employment Must not be on a leave of absence or temporary
layoff Must submit a completed retirement application to
the Department of Employee Trust Funds
Wisconsin Retirement System
WRS Retirement Benefit Calculation• Two methods
• Formula Calculation
• Money Purchase Calculation
WRS automatically pays the higher of the two amounts
Lump sum availability is restrictedMinimum $171- Maximum $348
Wisconsin Retirement System
Formula Calculation:• Calculated by multiplying four factors:
• “Final Average” monthly earnings
• Years of creditable service
• Age at retirement
• “Formula Multiplier” which is set by statute
• 1.765% pre-2000 years of service
• 1.6% post-1999 years of service
Wisconsin Retirement System
WRS Terms to Understand:• Final Average Earnings(FAE): average of 3 highest
years earnings
• Formula Factor: established by statute• .016 for years after 1999
• .01765 for years prior to 2000
• Years of creditable service: amount of WRS service based on number of hours worked in a year
• Age Reduction Factor: factor based on age and years of service
• Option Conversion Factor: a figure used to calculate annuity options after basic benefit is determined
Wisconsin Retirement System
Sample Formula Benefit Calculation for Employee age 56 and 25 years of service
(20 pre-2000 and 5 post-1999)Final Average Earnings $ 2500 $ 2500
Formula Multiplier x 1.765% x 1.6%
Creditable Service x 20 x 5
Age Reduction Factor x .952 x .952
$840.14 + $190.40
Life Annuity Option $1030.54
Wisconsin Retirement System
Formula Calculation• Increases in monthly earnings
• Increases in creditable service• Buying separated (forfeited) service
• Buying qualifying service
• Buying other governmental service
• Active military service
Wisconsin Retirement System
Money Purchase Calculation• Calculated by multiplying the Employee
contributions plus the matching Employer contributions by an actuarial factor based on your age when the annuity begins
Wisconsin Retirement System
Sample Money Purchase Benefit Calculation
Age 56 years and 8 months
Money Purchase Balance $220,000
Money Purchase Factor x .00590
Life Annuity Option $1,298.00
Wisconsin Retirement System
Retirement BenefitCompare:
Formula Benefit Calculation = $1030.54
Money Purchase Calculation = $1298.00
Always get the larger of the two calculated amounts
Wisconsin Retirement System
Female retires at age 56 Lives to age 85 or 29 years Monthly Benefit $ 1,298 Months Paid (29 x 12) 348 Total Benefit Paid $451,704*
• * Without Dividends• Dividends have averaged 2% per year over past 10
years• Currently 602 retirees are over age 95
Wisconsin Retirement System
• Variable Fund
• Comprised wholly of stocks
• In most situations, if enrolled in Variable Fund, half of all contributions are invested in Variable Fund and other half to Core Fund
• Interest is credited once per year but there is no smoothing mechanism like the Core Fund. Investment returns are fully recognized each year
• Investment gains/losses will have a much larger and more immediate impact on those who participate in Variable Fund
Wisconsin Retirement System• There is an “ongoing” variable excess or deficiency amount recorded
on account of current variable participants. Calculated by comparing actual account balance to what balance would be if participant had never participated in the Variable Fund. The variable excess/deficiency balance changes each year, based on contributions to the account and the investment returns of the Core and Variable Funds.
• At retirement the variable excess/deficiency is used to increase or decrease formula retirement benefit. Variable investment results are already reflected in money purchase balance.
• The variable excess/deficiency is shown on the annual ETF Statement of Benefits.
Wisconsin Retirement System
Variable Fund• Formula Calculation
• Excess/Deficiency: increases or decreases calculated amount
• Money Purchase Calculation
• Variable investment results are already reflected in money purchase balance
Wisconsin Retirement System
Choosing a WRS Annuity Option
• 7 annuity options available
• Accelerated options if under age 62
• All options are payable for your lifetime
• Selected annuity option determines death
benefit
Wisconsin Retirement System Annuity Options Annuitants Life Only Life Annuity – 60 payments guaranteed Life Annuity – 180 payments guaranteed Joint Survivor Annuity – 75% continued to named joint
survivor Joint Survivor Annuity – 100% continued to named joint
survivor Joint Survivor Annuity – reduced 25% on death of
annuitant or named joint survivor Joint Survivor Annuity – 100% continued to named joint
survivor with 180 payments guaranteed
Wisconsin Retirement System
WRS "Accelerated" Payment Option• Retire prior to age 62
• Higher WRS benefit until age 62
• WRS benefit reduced month after 62nd birthday
• Reduction in WRS benefit approximately equal to age 62 social security benefit
Wisconsin Retirement System
Considerations For Choosing an Annuity Option• Your (spouse/dependent) age
• Marital status
• Health considerations
• Other pensions and/or investments
• Estate considerations
• Taxes
Wisconsin Retirement System
Post Retirement Changes May change option selected up to 60
days after date of first payment Annuity Payment Statements Annual Adjustments-Dividends
• Based on investment earnings
• No cost of living adjustments
• Will vary depending on Core/Variable participation
Wisconsin Retirement System
Taxability of Annuity Taxable as ordinary income for federal and
state taxes May change tax withholding at any time Receive 1099R form in January for tax
purposes
QUESTIONS????
Please contact the UW Extension Payroll and Benefits Office if:• you note a discrepancy
• need forms
• want to enroll in additional benefit plans
• want general information
• want retirement information
Telephone (608)262-4857 or (608)262-0531 Email [email protected]