Employee Benefits Rate

LAST UPDATED: July 7, 2014

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 prior to July 1, 2014, 201-207, 210, 301-307, and 501-503; on and after July 1, 2014, 5003-5005, 5051-5053, 5093, 5101, 5151-5155, 5181-5184, 5301-5304, 7024-7027, and 7151. Student salary account codes exempt from the benefits rate charge: prior to July 1, 2014, 208 and 209; on and after July 1, 2014, 5201-5206 and 5251-5252.

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 2015 Employee Benefit Rates
Major Components (Expense/Salary) Rate
Medical Expenses 10.9
Employer Retirement Contribution 9.4
FICA Taxes 6.4
Other 1.5
Total Administrative Department Rate (Base) 28.2
Faculty Sabbaticals 6.0
Total Academic Department Rate 34.2

Projected Rates

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.

Projected Future Benefit Rates (as of April 2014)
Fiscal Year Administrative Rate Academic Rate
2016 29.6 36.8
2017 30.3 37.6
2018 30.6 37.1

Historical Benefit Billing Rates

The billing rates reflect the negotiated rates with the Department of Health and Human Services.

Historical Main Campus Employee Benefit Billing Rates
Fiscal Year Administrative Rate Academic Rate
2015 28.2 34.2
2014 27.9 33.7
2013 27.5 34.2
2012 28.9 35.5
2011 28.2 34.5
2010 27.7 34.3
2009 27.6 34.0
2008 26.2 32.5
2007 26.1 33.0
2006 27.4 33.2
2005 26.7 32.0
2004 26.9 33.1
2003 25.8 32.3
2002 25.6 31.2
2001 25.6 31.7
2000 26.8 33.9

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.


 

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