Separation Incentive Benefits
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:
- Academic and Staff employees who are potential recipients of 18/20 Retirement Plan or IU Replacement Plan benefits will receive an amount equal to two times annual base salary (10-month appointments will receive two times their 10-month base salary)
- All other Staff employees will receive an amount equal to 6-months base salary/wages
- All other Academic employees will receive an amount equal to annual base salary, with 10-month appointments receiving 10-months base salary
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.
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 with Child||$14,600|
|Employee with Spouse||$17,900|
- 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.
- University contributions to the ERIP-2013 participant’s HRA will begin during the month following separation, and then annually thereafter.
- 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.
- 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
- 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)
Deductibles and copayments not covered by another medical plan
Dental and vision care expenses not cover by another plan
For a complete list of qualified medical expenses that qualify for reimbursement refer to IRS Publication 502, “Medical and Dental Expenses.”
- 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.
- 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.
- 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.
- HRA accounts will be administered by Nyhart Inc. (Nyhart also administers IU’s TSB accounts under IRC Section 125 provisions.)
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:
- All ERIP-2013 Participants may elect COBRA continuation coverage in any IU-sponsored medical plan for up to 18 months or Medicare eligibility, by paying the then-current COBRA premium.
- After COBRA coverage expires, ERIP-2013 Participants may elect to participate in the PPO $900 Deductible plan until Medicare age (65), by paying the then-full premium.
- Participants with IU Retiree Status may enroll in the Blue Retiree Medicare Complement plan at age 65, and continue in the plan as long as it is offered by Indiana University, by paying the plan’s then-full premium.
- Participants enrolled in the HDHP & Health Savings Account plan at time of separation have some additional tax considerations. See the Questions & Answers section, F. Medical & Dental Options, question #2 for more specifics. ERIP-2013 Participants may contact University Human Resources for additional information.
- All ERIP-2013 Participants may elect COBRA continuation coverage in the IU Dental plan for up to 18 months by paying the then-current COBRA premium.