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UW Staff Benefits

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.

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UW Staff Benefits

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  1. UW Staff Benefits University of Wisconsin-Extension Payroll and Benefits Office

  2. 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

  3. 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

  4. 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

  5. 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

  6. 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

  7. State Health Insurance Accumulated Sick Leave Program • Supplemental Sick Leave Credit Maximums 15 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 hours For each full year up to 24, you receive 52 hours For each full year over 24, you receive 104 hours

  8. 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

  9. 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

  10. 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

  11. 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

  12. 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

  13. 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!!!

  14. 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

  15. 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

  16. 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

  17. 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

  18. 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.

  19. 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

  20. 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

  21. State Health InsuranceMedicare 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

  22. 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

  23. 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

  24. 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 restricted Minimum $171- Maximum $348

  25. 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

  26. 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

  27. 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 .952x .952 $840.14 + $190.40 Life Annuity Option $1030.54

  28. 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

  29. 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

  30. 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

  31. Wisconsin Retirement System Retirement Benefit Compare: Formula Benefit Calculation = $1030.54 Money Purchase Calculation = $1298.00 Always get the larger of the two calculated amounts

  32. 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

  33. 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

  34. 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.

  35. 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

  36. 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

  37. 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

  38. 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

  39. 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

  40. 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

  41. 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

  42. 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 payroll@uwex.edu

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