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Separation Incentive Benefits

Income Replacement Payment

ERIP-2013 Participants will be paid the following amount in a single lump-sum, less all deductions for local, state and federal taxes legally required to be withheld, in the month following separation from the University: 

Income Replacement Payments are calculated based on the employee’s base salary/wages on September 1, 2013, for December 31, 2013, separations or on February 1, 2014, for May 31, 2014, separations. 

For salaried employees (e.g. Academic and Professional Exempt Staff), this amount will be calculated based on monthly base salary.  For non-exempt employees (e.g. Professional Overtime Eligible Staff and Support and Service Staff), this amount will be 26 times weekly base wages.

Base salary/wages do not include overtime, supplemental pay, summer pay, call-back pay, shift differentials, administrative supplements, professorships, or any other non-base salary or wages.  

In accordance with regulations from the IRS and the Indiana Public Employees Retirement Fund (PERF), no portion of this lump-sum payment is eligible for salary deferral under the IU TDA Plan or the IU Retirement Savings Plan, nor is it considered to be “compensation” for purposes of calculating the University's contribution to the IU Retirement Plan or to PERF. 

For employees who are members in PERF, an amount not to exceed $2,000 will be included in the average annual compensation used for PERF benefit calculations, based on provisions of that retirement plan.

Employees who are not already maximizing their tax-deferred contributions to the IU TDA Plan and/or the IU Retirement Savings Plan may be able to allocate tax-deferred contributions to these plans from base compensation received during the months prior to separation. More information about the IU TDA Plan and the IU Retirement Savings Plan is located at hr.iu.edu/benefits/supp_retire/index.htm.

Health Reimbursement Account

ERIP-2013 Participants who are enrolled as the employee (not as a dependent) in an IU-sponsored medical plan on September 1, 2013, for December 31, 2013, separations or on February 1, 2014, for May 31, 2014, separations will be provided a health reimbursement account (HRA).  On an annual basis, for a period of five years, except as provided in paragraphs below, the University will credit an amount to an HRA on behalf of the ERIP-2013 Participant, based on the employee’s medical plan membership level on the above dates (September 1, 2013, or February 1, 2014). This amount shall be equal to:

Employee Only   $7,400
Employee with Child  $14,600
Employee with Spouse $17,900
Family $20,300

 

  1. At the beginning of the annual benefit period after the ERIP-2013 Participant turns age 65 (eligibility for Medicare), the University will instead credit an amount to an HRA on behalf of an ERIP-2013 participant equal to $7,400 each year.  If the ERIP-2013 participant is eligible for Medicare at the time of the associated ‘as of’ dates (September 1 for December 31 separations  and February 1, 2014 for May 31st, 2014 separations), then the first contribution to the HRA will equal $7,400.
  2. University contributions to the ERIP-2013 participant’s HRA will begin during the month following separation, and then annually thereafter. 
  3. University’s HRA contribution amounts will not change during the five year benefit period even if the ERIP-2013 Participant has a family status change, (e.g. a marriage) during that period.
  4. University contributions to the HRA will cease before the end of the five year period if the ERIP-2013 Participant:
    • enrolls in medical coverage through another employer (as the employee),
    • enrolls in an IU medical plan through a spouse/domestic partner that is employed by Indiana University, or
    • dies.
  5. The ERIP-2013 Participant may use the HRA account to reimburse medical expenses within the guidelines of Section 213(d) of the Internal Revenue Code on behalf of the participant, his or her spouse, and his or her eligible dependents.  Examples of medical expenses that qualify for HRA reimbursement:

    After-tax medical insurance premiums (COBRA and IU Blue Retiree premiums)

    Medicare Part B and Part D premiums

    Medicare Advantage Plan premiums (Part C)

    *NEW* Medicare Supplement Plan (Medigap) premiums

    Deductibles and copayments not covered by another medical plan

    Dental and vision care expenses not cover by another plan

    Eyeglasses

    Prescription drugs

    Preventive care

    For a complete list of qualified medical expenses that qualify for reimbursement refer to IRS Publication 502, “Medical and Dental Expenses.”

  1. The Internal Revenue Service (IRS) does not allow the use of HRA funds for expenses associated with a domestic partner unless the partner qualifies as a dependent under IRS regulations.
  2. Any amount remaining in the HRA account at the end of a year will carry forward and can be used in subsequent years to pay for eligible health expenses; provided, however, that unused contributions will be forfeited at the end of the associated five year period (December 31, 2018, or May 31, 2019) or, if earlier, the date that the participant enrolls in medical coverage through another employer (as the employee), enrolls in an IU medical plan through a spouse/domestic partner that is employed at Indiana University, or the date the Participant dies.
  3. The IRS does not allow HRA accounts to be transferred to any other individual, except in the event of the Participant’s death. If the Participant dies after separating from the University, but before the date that funds would otherwise be forfeited, the HRA account can be used by the Participant’s spouse to reimburse medical expenses within the meaning of Section 213(d) of the Internal Revenue Code. If there is no spouse at the time of the participant’s death, the HRA account can be used by an IRS qualified dependent. Important Note: After the death of an ERIP-2013 Participant, a change of name on the HRA account to a spouse or dependent is not automatic. The surviving spouse or dependent will need to contact University Human Resources within 60 days following the Participant’s death to initiate the process. If there is no spouse or dependent at the time of the Participant’s death, any balance in the HRA account will be forfeited.
  4. HRA accounts will be administered by Nyhart Inc. (Nyhart also administers IU’s TSB accounts under IRC Section 125 provisions.)

Medical and Dental Plan Continuation

ERIP-2013 Participants who are enrolled as the employee in an IU-sponsored medical or dental plan on the date of separation may elect to continue in plan coverage for themselves and any covered spouse and dependents:

 


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