Employee benefits rates

last updated 05/19/08

At the request of the University's cognizant agency, the Department of Health and Human Services, Northwestern calculated and negotiated two additional employee benefits rates for FY 2004: a Graduate School student rate, applicable to full-time Graduate School students receiving pay for service as teaching assistants, research assistants, or graduate assistants; and a statutory rate, applicable to salary and wages that qualify only for those benefits mandated by statute (Social Security, Medicare, workers' compensation insurance, and unemployment insurance). The benefits eligibility of these two populations was determined to be sufficiently different from the general employee population to warrant separate benefits rates.

Another change for FY 2004 was that student hourly wages, formerly assessed a full benefits charge, will be exempted from any benefits charge. Also exempted from a benefits charge are any graduate students not enrolled in the Graduate School who are working as teaching assistants, research assistants, or providing some other form of service, since the University does not subsidize part of the hospitalization insurance premium for them.

To facilitate the budgeting of grant and contract proposals to external agencies, the Office of Business and Finance has provided a five-year rate projection. Rates for fiscal years 06-10 are estimates - they are contingent upon a yearly Federal negotiation process.

How to calculate Employee Benefits across multiple fiscal years:

• Determine start date of project (e.g., July 1, 2004).
• Identify the number of months in the budget period that will be assessed at each FY benefits rate (e.g. 2 months at the FY 04 rate and 10 months at the FY 05 rate).
• Divide the salary total for the budget period by the number of months in the budget period (e.g. $45,000 / 12 = $3,750).
• Multiply the monthly salary total by the number of months at the first benefits rate and the monthly salary total by the number of months at the second benefits rate. (e.g. [$3,750 x 2 x 23.40%] + [$3,750 x 10 x 23.00%] = $1,755.00 + $8,625.00 = $10,380 total budget-year benefits costs.)
• Repeat for remaining budget periods.

For ease of calculation, you may wish to use the blended rate "quick chart". The resulting dollar figure should be entered on your budget pages. Do not, however, list the blended rates on your budget page as though they are Northwestern's actual benefits rates. Instead, use the budget justification statement shown below.

Budget justification statement for proposal budgets:

Add the following statement to all federal proposal budget justifications:

Employee benefits have been calculated based on the following DHHS approved rates:

• 9/1/07 – 8/31/08 .... 22.40%
• 9/1/08 – 8/31/09 .... 21.90%
• 9/1/09 – 8/31/10 .... 23.50% (estimated)
• 9/1/10 – 8/31/11 .... 24.30% (estimated)
• 9/1/11 – 8/31/12 .... 24.90% (estimated)
• 9/1/12– 8/31/13 & thereafter.... 25.50% (estimated)

Add the following statement to all non-federal proposal budget justifications:

Employee benefits have been calculated based on the following DHHS approved rates:

• 9/1/07 – 8/31/08 .... 24.00%
• 9/1/08 – 8/31/09 .... 24.10%
• 9/1/09 – 8/31/10 .... 25.30% (estimated)
• 9/1/10 – 8/31/11 .... 26.20% (estimated)
• 9/1/11 – 8/31/12 .... 26.90% (estimated)
• 9/1/12– 8/31/13 & thereafter.... 27.60% (estimated)

Object Codes

Effective 9/1/03, object code 0080 will no longer be used for benefit charges. Several new object codes have been established to accomodate the new rate structure as follows:

Appropriate objects of expense will be opened automatically for all active sponsored accounts for FY04 charges.