Separation Incentive Benefits
ERIP 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, no later than one month following their date of separation from Indiana University.
- Employees with the following rank or status will be paid an amount equal to 10 months of the employee's base salary in effect on June 30, 2011:
- Tenured faculty
- Clinical faculty
- Any other Academic employee and all Staff employees will be paid an amount equal to 6 months of the employee's base salary or wages in effect on June 30, 2011.
For salaried employees (e.g. Academic and Professional Exempt Staff), this amount would be 6 times the 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 does not include overtime, supplemental pay, summer pay, call-back pay, shift differentials, or any other non-base salary or wages.
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 compensation for purposes of calculating the University's contribution to the IU Retirement Plan or to the Indiana Public Employees Retirement Fund (PERF), per IRS and PERF regulations.
(Separating employees who are not already maximizing their 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/tda.html.)
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.
ERIP participants who are enrolled as the employee in an IU-sponsored medical plan on June 30, 2011, will be provided a health reimbursement account (HRA). The University will credit an amount to an HRA on behalf of the ERIP participant each year based on the employee’s medical plan membership level on June 30, 2011. This amount shall be equal to:
- Employee Only $6,000
- Employee with Child $11,000
- Employee with Spouse $13,500
- Family $14,500
Notwithstanding the above, the University will instead credit an amount to an HRA on behalf of an ERIP participant who is Medicare age (65) or older equal to $5,000 each such year.
The University will make these contributions for a total of 5 years. However, contributions will end earlier if the participant becomes eligible for medical coverage through another employer or spouse/domestic partner employed by IU, or dies.
The University will credit the applicable lump sum amount to the ERIP participant’s HRA during the month following the ERIP participant’s separation date, and then annually thereafter on the anniversary of such date, based on the participant’s Medicare age at that time.
The ERIP participant can use the HRA account to reimburse medical expenses within the meaning 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 Retiree premiums)
- Deductibles and copayments not covered by another medical plan
- Dental and vision care expenses not cover by another plan
- Prescription drugs
- Preventive care
- Medicare Part B and D premiums
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 medical expenses; provided, however, that unused contributions will be forfeited at the end of the five-year period beginning with the participant’s separation date or, if earlier, the date that the participant becomes eligible for medical care coverage through another employer, a spouse/domestic partner 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 are 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, as described above. If there is no spouse at the time of the participant’s death, the HRA account can be used by an IRS qualified dependent. (Changing the name on the HRA account to a spouse or dependent is not automatic, and the surviving spouse or dependent will need to contact University Human Resources 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 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 participants may elect COBRA continuation coverage in any IU-sponsored medical plan for up to 18 months or Medicare eligibility, by paying the COBRA premium.
- After COBRA coverage expires, ERIP participants may elect to participate in the PPO $900 Deductible plan until Medicare age (65), by paying the full premium.
- Participants with IU Retiree Status may enroll in the Blue Retiree Medicare Supplement plan at age 65, and continue in the plan as long as it is offered by Indiana University, by paying the plan’s full premium.
- Participants enrolled in the HDHP & Health Savings Account plan at time of separation may want to consider switching enrollment to another medical plan to take full advantage of the above HRA account (contact University Human Resources for additional information).
- All ERIP participants may elect COBRA continuation coverage in the IU Dental plan for up to 18 months by paying the COBRA premium.