Fringe Benefits for Sponsored Projects

General Description

In an effort to allocate the cost of fringe benefits more realistically, a new system referred to as Specific Identification (SI), went into effect on July 1, 2004. Under this system, costs are specifically identified into four categories and accounts will be charged only to the extent that an employee receives, or in the case of health care is eligible to receive, those benefits. The categories are:

1. MSU retirement (10% of base salary or per labor contract) if the employee is eligible AND participates.  If they don't participate, they won't be charged.
2. FICA at 7.65% is made up of: 6.2% Social Security tax (charged up to a capped amount that is adjusted annually) + 1.45% Medicare tax.
3. Other/miscellaneous category (1.4%) for small items like life insurance, workers compensation, unemployment compensation, long term disability, vacation payouts, etc.
4. Health, dental & prescriptions using a flat dollar amount if employee is eligible for health benefits.  Since federal HIPAA regulations prevent employment discrimination based on health care costs, we are prevented from charging different amounts depending on if one is signed up for single, family or waived coverage.

All of the costs identified above will be distributed to the employee's base salary.  All other payroll types, summer school, overtime, medical service plan monthly and quarterly will only be charged FICA as appropriate.

While SI fringe rates are more accurate, they are also difficult to budget. In an effort to help you budget, the following tools are available:

• A web-based multi-year budget module within the Kuali Research Administration System.
• An excel spreadsheet with SI formulas that can be copied and pasted into your budget spreadsheets
• A chart of SI fringe costs for graduate assistants

Fringe Benefit Rates by Employee Type

Faculty and Staff fringes should be calculated using the Specific Identification (SI) method.  Under SI, fringe costs are based on average actual costs and individual participation in retirement.

Summer Salary for Academic Year (AY) Faculty - starting with Summer 2025 should be budgeted at 17.65% of salaries.  In the fall of 2024, the University agreed to provide retirement benefits on AY faculty summer salary. The summer fringe benefit rate is now made up of FICA (7.65%) + retirement (10%).  

Part-time employees (<50% appt. or < 9 months) should be budgeted at 7.65% of salaries.  Please exercise caution when hiring a current MSU employee into a temporary position. MSU employee contracts differ on what qualifies as part-time and may involve bridging of past time worked that will make the current position/person benefit eligible, which then triggers full SI fringe charges. Also, part-time employees have been known to fill the remainder of their time with other MSU employment opportunities which again might make the employee benefit eligible and therefore full fringe. Questions should be addressed to Human Resources, but when in doubt, budget full SI fringe.

Student labor should be budgeted at 0% of salaries paid during the academic year and 7.65% during the summer semester depending on the number of credits they are enrolled in.  If a student falls below a minimum number of credits set by the IRS, i.e., undergrads enrolled for less than 6 credits; master's level students enrolled for less than 5; and doctoral level students enrolled for less than 3 credits, then the account will be charged FICA and Medicare at 7.65%.

Graduate Assistant fringes also adopted the SI method in September 2004. Rather than assessing a loading rate against stipends, a flat dollar amount will be charged for these benefits based upon the cost of health care and the average number of credits waived.  The flat amount for health care will continue to be applied to the ledgers using the fringe object class code and be subject to the Facilities & Administration (F&A or overhead) charge.  However, the tuition portion will be reflected on the ledgers under a separate object class code and, in most cases, will not be subject to F&A.   

Under this system the summer grad fringe amount will only include the tuition, i.e. no health care because the preponderance of graduate assistants appointed for this period have previously earned summer health care coverage through an academic year appointment (just like AY faculty with summer school appointments). MSU-HRD also offers Summer-only stipend-only no-tuition Research Graduate Assistantships for qualifying individuals (contact MSU-HRD for further details at 517-353-4434).

Research Associates will be charged a reduced SI rate due to the lower utilization of health, dental, and prescription benefits mostly because of this group's aggregate younger age. As of January 1, 2023 research associates are eligible for the University’s 10% retirement match immediately upon employment. 

Senior Research Associates are eligible for the same benefits as fixed term faculty and will be assessed the normal costs of fringe benefits.

Lecturer, assistant instructors, instructor resident, instructor intern, resident and intern will be exempted from the retiree portion of health dental, and prescriptions during the first three FTE years of MSU employment.
 

Specific Identification Faculty & Staff Fringe Table for the 2024-2025 Fiscal Year

Graduate Assistant Fringe Benefits for the 2024-2025 Fiscal Year

The Tuition and Health benefits will be charged on a bi-weekly basis. Tuition and Fees will be charged to object code 6230 and Health will be charged to object code 6516. The above amounts will be applied to all grants regardless of percent employment (1/4, 1/2, or 3/4). Awards using MSU's negotiated F&A rates will not be charged F&A on the tuition portion.

* Assumes increases of 10% per year for health and 3% per year for graduate tuition.

FICA Note – Graduate Assistants enrolled for less than 5 credits for Master's level or 3 credits for Doctoral level will be assessed 7.65% FICA/Medicare in addition to the above charges.

ACA Note – Graduate Assistants who have a 3/4 time appointment and are enrolled in the Consumer Driven Health Plan (CDHP) insurance, which is offered due to ACA requirements (in addition to the student health insurance), will need an additional $520.46/month budgeted. This cost should be included in the "other" category of your budget.