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7.4.3 Fringe Benefit Rate


Fringe benefits are non-taxable contributions of an employer and include:

  • Retirement Contribution
  • Health Insurance
  • Dental Insurance
  • Life Insurance
  • Medicare
  • Social Security

The actual cost of fringe benefits varies for each employee based on the options chosen or the type of employment. The state of Illinois does not fund fringe benefits for persons employed under a grant or a contract. Therefore, the grant or contract must provide the fringe benefits.

To ensure there are sufficient funds in the grant or contract for this, the University has calculated an average fringe benefit rate, which is applied as a percentage of salaries and wages. This estimated amount is in the budget, but only the actual amount of fringe benefits will be assessed against the grant or contract.

Guidelines for Fringe Benefit Rate

Annually the Comptroller's Office calculates the fringe benefit rate for future years. This requires intricate calculations.

  • Once the fringe benefit rate is determined, it is submitted to Research & Sponsored Programs for dissemination among the various colleges through their College Research Coordinators.
  • These rates are estimates of the fringe benefit costs to occur. These rates are based on average costs of all available fringe options. Several factors could cause these rates to vary, so it would be beneficial for the Principal Investigator to contact the Grants Accounting area prior to the completion of a grant or contract proposal budget.
  • The retirement contribution will vary from year to year. It is a rate set by the State Universities Retirement System of Illinois (SURS) and begins July 1st. It applies to all earnings paid to employees who are under the SURS system.
  • Medicare is a fixed rate set by the Social Security Administration (SSA). It is based on earnings paid to all employees hired after March 31, 1986 and undergraduate and graduate students not currently enrolled full time.
  • Social security is a fixed rate set by the Social Security Administration (SSA). It is based on earnings to all employees not covered by SURS. Usually this applies to temporary Civil Service staff, undergraduate and graduate students who are not currently enrolled full time.
  • Health, dental, and life insurance rates vary based on plans selected, monthly salary, and dependent coverage. Illinois State University has established an average cost based on a percentage of the salary to provide a consistent rate for insurance benefits. As an example, assume a monthly base salary of $1,000 with an insurance cost of $570 per month. This would result in a 57% insurance cost. If the same coverage applied to an individual earning $4,000 monthly, then the insurance cost would be 14.25%.

Initiating body: Division of Finance and Planning

Contact: Comptroller's Office (309-438-5674)

Revised on: 06/2002

2022-04-21T08:48:00.291-07:00 2022