What You Should Know
The employee benefits rate is a set percentage applied to non-student salaries. It includes the costs Princeton incurs on behalf of its employees and their dependents for:
- retirement plan benefits
- the University’s share of FICA taxes
- medical insurance
- life insurance
- long-term disability insurance
- workers' compensation
- unemployment insurance
- occupational medicine services provided through University Health Services
- staff educational assistance
- subsidized employee cafeterias
- childcare subsidies
- mass transit subsidies
The rate charged in academic departments also includes faculty sabbatical leaves and short-term disability.
Three Different Rates
We have three employee benefits rates: one for academic departments and programs; one for administrative departments; and one for the Princeton Plasma Physics Laboratory. All three rates are approved by the federal government; see the main campus rate agreement.
Rate Calculation & Application
The rate is the ratio of total plan costs divided by the total salaries and wages paid to non-student employees. It is applied to every non-student salary dollar charged to the PeopleSoft financial system: account codes 201-207, 210, 301-307 and 501-503. Student salaries are recorded on account codes 208 and 209 and do not incur the benefits charge.
The two main campus billing rates are set in advance of the fiscal year based on projected costs. Any over- or under-recovery is carried forward and built into future rates. The separate PPPL benefits rate is adjusted throughout the year to recover the actual fiscal year costs. The tables below apply only to the main campus rates.
|FY 2014 Employee Benefit Rates|
|Major Components (Expense/Salary)||Rate|
|Employer Retirement Contribution||9.5|
|Employee Health Services||0.4|
|Total Administrative Department Rate (Base)||27.9|
|Total Academic Department Rate||33.7|
These projected rates are provided for internal University planning purposes only. They have not been approved by the federal government. On the ORPA website you’ll find approved benefit rates for use in preparing budgets for federally sponsored awards.
Historical Benefit Billing Rates
The billing rates reflect the negotiated rates with the Department of Health and Human Services.
Casual Hourly Employees & the Benefits Rate
Even though casual hourly employees don’t participate in all Princeton benefit programs, significant benefit costs are associated with their employment. The largest of these costs is the University’s share of FICA tax. Hourly employees also are covered by our workers’ compensation policy and have access to subsidized cafeterias. In some cases, state law requires that we extend temporary disability coverage to these employees. These costs generate approximately eight points of the total benefits rate.
While it would be possible to calculate a separate rate for casual employees, doing so would drive up the rate for all other classes of employee. The impact of casual hourly employees on actual benefit costs essentially is equivalent to costs for full-time regular employees who leave the University before vesting in our retirement plan, giving birth, dying, or otherwise generating benefits costs beyond the FICA tax.
In addition, the average benefits rate is a budgeting convenience if a department wishes to convert a casual employee position to regular status; the associated benefits already are part of the department’s budget.