UW Staff Benefits
University of WisconsinExtension
Payroll and Benefits Office
State Health Insurance
Accumulated Sick Leave Program

Studies show that employees consider
heath insurance the Number 1 benefit of
importance

Retirement benefits come in a distant
second
State Health Insurance
Accumulated Sick Leave Program
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Wisconsin’s State Group Health Insurance
plan is excellent
Sick leave credits may be used to pay for
future health insurance premiums at
retirement-unique to Wisconsin
•

Employees who terminate with 20 years of service do not
lose sick leave credits
Health insurance is the number one expense
for most retirees
State Health Insurance
Accumulated Sick Leave Program

To be eligible for post-retirement sick leave credits
you must participate in the State of Wisconsin Group
Health Insurance plan as a subscriber or a
dependent of a state/UW employee and:
• Retire and receive a lump sum benefit or
• Begin a WRS annuity immediately after
termination or
• Terminate employment with 20 years of WRS
creditable State Service but defer application for
retirement benefit
State Health Insurance
Accumulated Sick Leave Program


The sick leave you accumulate over your
working career will help pay your health
insurance premiums after you retire
Three components:
• Highest hourly rate
• Hours of unused sick leave
• Supplemental sick leave credits linked to your
years of continuous state service
State Health Insurance
Accumulated Sick Leave Program

What are Supplemental Sick Leave Credits?
• Credits are computed at retirement
• To qualify, you must have 15 years of adjusted
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•
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continuous UW and/or other state service
For each full year of service up to 24 years you
receive 52 hours of supplemental credits
For each full year of service over 24 years you
receive 104 additional hours
Total supplemental hours cannot exceed your
accumulated sick leave balance
State Health Insurance
Accumulated Sick Leave Program

Supplemental Sick Leave Credit Maximums
15 years = 780 hours
16 years = 832 hours
17 years = 884 hours
18 years = 936 hours
19 years = 988 hours
20 years = 1040 hours
21 years = 1092 hours
22 years = 1144 hours
23 years = 1196 hours
24 years = 1248 hours
25 years = 1352 hours
For each full year up to 24, you receive 52 hours
For each full year over 24, you receive 104 hours
State Health Insurance
Accumulated Sick Leave Program
Sick Leave Credits (classified)
Example 1
Hours Earned Bi-Weekly
5
Pay Periods per Year
26
Hours Earned Per Year
130
Years of Employment
x 10
Total Sick Leave Hours
1,300
State Health Insurance
Accumulated Sick Leave Program
Financial Value
Total Sick Leave Hours
Hourly Rate of Pay
1,300
X $ 16.50
Value
$ 21,450.00
State Health Insurance
Accumulated Sick Leave Program
Sick Leave Credits (classified)
Example 2
Hours Earned Bi-Weekly
5
Pay Periods Per Year
26
Hours Earned Per Year
130
Years of Employment
x 20
Total Sick Leave Hours
2,600
State Health Insurance
Accumulated Sick Leave Program
Financial Value
Total Sick Leave Hours
2,600
Supplemental Hours
52 hrs x 20 years
1,040
Total Hours
3,640
Hourly Rate of Pay
x $ 16.50
Value
$60,060.00
State Health Insurance
Accumulated Sick Leave Program
Example 3
 30 years of service
 Sick Leave Balance
2,850 hrs
 Match 52 hrs/yr. for yrs 1-24 1,248
 Match 104 hrs/yr. >24 years
624
Total Hours
4,722
Hourly Rate of Pay
$ 26/hr
Value
$122,772
State Health Insurance
Accumulated Sick Leave Program
Sick Leave’s Real Value
$122,772/2850 hours = $43.09 per hour
IT’S A TAX FREE BENEFIT TOO!!!
State Health Insurance
Accumulated Sick Leave Program
How long will it last?
Sick Leave Value
Family Premium
Coverage in Months
Coverage in Years
$ 122,772
$ 1,700/month
72 months
6 years
State Health Insurance
Accumulated Sick Leave Program
How long will it last?
 The answer depends on the type of
coverage you have (family or single,
Medicare eligible or not), the plan you
select and inflation
 Your insured dependents can continue
to use your credits after your death
State Health Insurance
Accumulated Sick Leave Program
You are eligible continue the state health
insurance plan for as long as you live
Premiums:

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From your accumulated sick leave account until it is
exhausted
Deducted from your retirement annuity
Pay directly to the insurance carrier who will bill you
for the premiums
State Health Insurance
Accumulated Sick Leave Program

If your spouse is a state or university
employee:
• You may elect to transfer your family health
•
•
insurance coverage to your spouse
Your sick leave credits will be placed in an
inactive account until your spouse retires and
depletes his/her sick leave credits
Your sick leave credits will then be used
State Health Insurance
Accumulated Sick Leave Program

If your spouse is NOT a state or
university employee
• If your spouse’s health insurance plan has
•
comparable coverage, you are eligible to
escrow (delay using) your sick leave credits
indefinitely
To escrow, submit a Sick Leave Escrow
Application to the Department of Employee
Trust Funds at the time of retirement.
State Health Insurance
Accumulated Sick Leave Program


You may defer the use of your sick leave
credits indefinitely by applying to “escrow”
the credits. You may escrow sick leave at
any time if you have comparable health
insurance coverage elsewhere, e.g. from
another job or through a spouse
To “unescrow” sick leave credits, you must
apply during the annual fall Dual Choice
period unless your comparable coverage is
involuntarily lost
State Health Insurance
Medicare in retirement

When you are retired and turn 65, you
become eligible for Medicare Part B
• IF you have the State Group Health insurance,
you must sign up for Medicare Part B

Health coverage remains the same as before
Medicare coverage became effective
•
State Group Health insurance is designed to
supplement, not duplicate the Medicare coverage

Medicare Part D
State Health Insurance
Medicare in retirement


Failure to enroll in Medicare Part B will result
in termination of State Group Health
insurance coverage
Medicare Part B premium is $96.40/month
•
But the cost of State Group Health is reduced as well
Non Medicare Rate
Medicare Rate
Single
Family
Single
Family 2
Family 1
$555.80
$1385.80
$397.40
$792.30
$950.70
Types of Retirement Income
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Wisconsin Retirement System (WRS)
Annuity
Tax Sheltered Annuity/Wisconsin Deferred
Compensation
Individual Retirement Account (IRA)
Social Security
Retirement plan from other employers
Post-retirement employment-30 day break in
service if WRS employer
Wisconsin Retirement System
Eligibility for Retirement
 At least age 55
 Termination of all WRS covered employment
 Must not be on a leave of absence or temporary
layoff
 Must submit a completed retirement application to
the Department of Employee Trust Funds
Wisconsin Retirement System

WRS Retirement Benefit Calculation
• Two methods
• Formula Calculation
• Money Purchase Calculation
WRS automatically pays the higher of
the two amounts
Lump sum availability is restricted
Minimum $171- Maximum $348
Wisconsin Retirement System

Formula Calculation:
• Calculated by multiplying four factors:
• “Final Average” monthly earnings
• Years of creditable service
• Age at retirement
• “Formula Multiplier” which is set by statute
• 1.765% pre-2000 years of service
• 1.6% post-1999 years of service
Wisconsin Retirement System

WRS Terms to Understand:
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•
•
•
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Final Average Earnings(FAE): average of 3
highest years earnings
Formula Factor: established by statute
• .016 for years after 1999
• .01765 for years prior to 2000
Years of creditable service: amount of WRS
service based on number of hours worked in a year
Age Reduction Factor: factor based on age and
years of service
Option Conversion Factor: a figure used to
calculate annuity options after basic benefit is
determined
Wisconsin Retirement System
Sample Formula Benefit Calculation for
Employee age 56 and 25 years of service
(20 pre-2000 and 5 post-1999)
Final Average Earnings
Formula Multiplier
Creditable Service
Age Reduction Factor
Life Annuity Option
$ 2500
x 1.765%
x 20
x .952
$840.14 +
$1030.54
$ 2500
x 1.6%
x
5
x .952
$190.40
Wisconsin Retirement System

Formula Calculation
• Increases in monthly earnings
• Increases in creditable service
• Buying separated (forfeited) service
• Buying qualifying service
• Buying other governmental service
• Active military service
Wisconsin Retirement System

Money Purchase Calculation
• Calculated by multiplying the Employee
contributions plus the matching Employer
contributions by an actuarial factor based on
your age when the annuity begins
Wisconsin Retirement System
Sample Money Purchase Benefit Calculation
Age 56 years and 8 months
Money Purchase Balance
Money Purchase Factor
Life Annuity Option
$220,000
x .00590
$1,298.00
Wisconsin Retirement System
Retirement Benefit
Compare:
Formula Benefit Calculation = $1030.54
Money Purchase Calculation = $1298.00
Always get the larger of the two calculated
amounts
Wisconsin Retirement System

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Female retires at age 56
Lives to age 85 or 29 years
Monthly Benefit
Months Paid (29 x 12)
Total Benefit Paid
•
•
•
$
1,298
348
$451,704*
* Without Dividends
Dividends have averaged 2% per year over past 10
years
Currently 602 retirees are over age 95
Wisconsin Retirement System
•
Variable Fund
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Comprised wholly of stocks
In most situations, if enrolled in Variable Fund, half of all contributions are
invested in Variable Fund and other half to Core Fund
Interest is credited once per year but there is no smoothing mechanism like
the Core Fund. Investment returns are fully recognized each year
Investment gains/losses will have a much larger and more immediate
impact on those who participate in Variable Fund
Wisconsin Retirement System
•
There is an “ongoing” variable excess or deficiency amount recorded
on account of current variable participants. Calculated by comparing
actual account balance to what balance would be if participant had
never participated in the Variable Fund. The variable excess/deficiency
balance changes each year, based on contributions to the account and
the investment returns of the Core and Variable Funds.
•
At retirement the variable excess/deficiency is used to increase or
decrease formula retirement benefit. Variable investment results are
already reflected in money purchase balance.
•
The variable excess/deficiency is shown on the annual ETF Statement
of Benefits.
Wisconsin Retirement System

Variable Fund
• Formula Calculation
• Excess/Deficiency: increases or decreases
calculated amount
• Money Purchase Calculation
• Variable investment results are already
reflected in money purchase balance
Wisconsin Retirement System

Choosing a WRS Annuity Option
• 7 annuity options available
• Accelerated options if under age 62
• All options are payable for your lifetime
• Selected annuity option determines death
benefit
Wisconsin Retirement System
Annuity Options
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Annuitants Life Only
Life Annuity – 60 payments guaranteed
Life Annuity – 180 payments guaranteed
Joint Survivor Annuity – 75% continued to named
joint survivor
Joint Survivor Annuity – 100% continued to named
joint survivor
Joint Survivor Annuity – reduced 25% on death of
annuitant or named joint survivor
Joint Survivor Annuity – 100% continued to named
joint survivor with 180 payments guaranteed
Wisconsin Retirement System
WRS "Accelerated" Payment Option
• Retire prior to age 62
• Higher WRS benefit until age 62
• WRS benefit reduced month after 62nd
•
birthday
Reduction in WRS benefit approximately
equal to age 62 social security benefit
Wisconsin Retirement System

Considerations For Choosing an
Annuity Option
• Your (spouse/dependent) age
• Marital status
• Health considerations
• Other pensions and/or investments
• Estate considerations
• Taxes
Wisconsin Retirement System
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Post Retirement Changes
May change option selected up to 60
days after date of first payment
Annuity Payment Statements
Annual Adjustments-Dividends
• Based on investment earnings
• No cost of living adjustments
• Will vary depending on Core/Variable participation
Wisconsin Retirement System
Taxability of Annuity

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Taxable as ordinary income for federal and
state taxes
May change tax withholding at any time
Receive 1099R form in January for tax
purposes
QUESTIONS????

Please contact the UW Extension Payroll and
Benefits Office if:
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you note a discrepancy
need forms
want to enroll in additional benefit plans
want general information
want retirement information
Telephone (608)262-4857 or (608)262-0531
Email payroll@uwex.edu