MSU/SPA Statutory Fringe Benefit Breakdown and Guidance

Fringe Benefits

Fringe Benefits Components for MSU Sponsored Projects Follows:

Social Security	6.2% of the First $102,000 earned (effective January 1, 2008)
Medicare	1.45% (no limit)
State Retirement	11.85% of the first $230,000 (effective July 1, 2008)
State Health Insurance	10.83%($361 per month / $3,333.33 per month-based on $40,000/yr)
Term Life Insurance	0.29%($.12 times 80 units = $9.60 divided by $3,333.33)(Covers twice annual salary up to $100,000)
Unemployment Insurance	0.38% of the first $7,000 earned
Workers Compensation	.35% (no limit)
Terminal Leave Rate	.85% of salary per month (no limit)

NOTE: On 9-month faculty, only Social Security, Medicare, State Retirement, and Workers Compensation are taken out for summer appointment.

On graduate students and undergraduate students working full-time in the summer -- Social Security, Medicare and Workers Compensation charges are contributed and should be considered.

Use caution when calculating benefits for less than full time employees as such an arrangement will cause the ratio to increase dramatically.

All employees (non-student) working 50% time or greater for 4.5 months or more are benefits eligible.

A fringe rate of 32.2% is used for budgeting purposes only. The 32.2% rate is not a fixed rate because actual fringe will be charged to individual cost centers/projects, which may result in a minor over budget for highly compensated individuals. Conversely, this would result in an under budget for lower paid individuals (< $40,000/yr). As certain elements of the fringe rate structure are static (e.g. health insurance) or threshold-dependent (e.g. social security), an inverse relationship develops between the actual fringe ratio and the compensation level. As compensation increases, the fringe ratio decreases.

The 32.2% rate is encouraged even for cost centers/projects with relatively high average salaries (>$40,000/yr) because the static and threshold-dependent factors of the rate can change mid-project-year resulting in a potential cash flow problem. The fiscal differences between budgeting using the 32.2% fringe rate and a calculated rate is immaterial when considering high average salary cost centers/projects but may be significant when considering low average salary cost centers/projects.

To calculate fringe benefits for graduate students -- Multiply salary by .35% and add tuition.

Last modified:
1/8/08
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