Employee Matters

This column by Employee Compensation and Benefits addresses campuswide employment issues. Send your questions to: wisweek@news.wisc.edu.

What is voluntary group accident insurance, more commonly known as accidental death and dismemberment (AD&D)?
It is an insurance plan that provides benefits for Accidental Death, Accidental Dismemberment or Loss of Use of Limbs that result from an injury sustained anywhere in the world, 24 hours a day, whether in the course of business or pleasure.

Benefits are meant to supplement, not replace, your other life insurance benefits, as AD&D will not pay benefits for death due to illness. Employee Only or Family Plan coverage is available. An employee may be eligible for up to $250,000 in coverage. Spouse and dependent children coverage amounts are a percentage of the employee’s. Premiums are deducted from your payroll.

How are benefits paid?
Loss must occur within a year of injury.

• Death brings payment of the principal sum, which is maximum amount of coverage purchased.
• Loss of a limb, sight, speech or hearing: From one-fourth to all of the principal sum depending on loss incurred.
• Loss of use of a limb: Half to all of the principal sum depending on the loss incurred

Are there additional benefits?
Yes. One employee-only benefit is payable in the event of total and permanent disability that occurs with 180 days of injury and continues for at least 12 months.

Employee or dependent benefits include:

• Common Disaster, payable if employee and spouse die within 90 days of accident.
• Higher education, payable to surviving children, if at the time an employee dies and child is enrolled as full-time student or is in the 12th grade and enrolls in an accredited college, university or trade school. If there is no dependent child at the time of death, a one-time benefit will be paid to the designated beneficiary.
• Spouse retraining, payable to a spouse for cost incurred within 30 months of the employee’s death for professional or trade training for the purpose of obtaining an independent source of support and maintenance.
• Surviving spouse, a monthly benefit paid to the covered spouse for a period of 12 months following the death of the employee.
• Reserve National Guard Coverage, payable for loss incurred by a person in active duty while attending or en route to or from active duty; while participating in authorized active duty training; or in an officially ordered and authorized parade or exhibition.

What additional coverage can be obtained?

• An air ambulance coverage extension is available to employees such as UW medical staff, pilots, operators, crew or cabinet attendants. The extension covers loss incurred while riding on or operating a university-owned or operated air ambulance.
• Private Pilot Coverage extends coverage to loss incurred while a person is piloting an aircraft.

When and how do I enroll?
You may enroll at any time. There are no deadlines. Your coverage will be effective on the date the enrollment application is received by your benefits coordinator, unless a later date is elected. You can access the AD&D plan brochure and obtain an application at: http://www.uwsa.edu/hr/benefits/ins/addbroch.pdf.

What is the Employee Reimbursement Account (ERA) program?
It is an optional benefit plan that allows eligible employees to contribute a portion of their income to an account that is used to pay eligible medical and dependent care expenses from pre-tax income. Contributions are made through payroll deduction. Federal, Social Security and state taxes are calculated on the income remaining after subtracting the contribution. The result is increased take-home salary due to reduced taxes. The program is an authorized Flex Spending Account under Section 125 of the Internal Revenue Code and Wis. Statute 40.85. Enrollment is necessary to participate.

Who should enroll in the program?
Consider enrolling if you anticipate out-of-pocket medical expenses such as deductibles, co-payments or expenses not covered by the Health, Major Medical (EPIC) or DentalBlue (Dentacare) plans and/or if you or your spouse will incur dependent-care expenses as a result of employment or attending school fulltime.

Can the same savings be achieved by itemizing medical expenses and using the child-care credit when filing income tax returns?
To realize tax savings when filing income tax returns, itemized medical expenses must exceed 7.5 percent of adjusted gross income. Most of us do not qualify. Participating in ERA assures tax savings as eligible expenses are paid with pre-tax income. Middle-to upper-income employees usually find the ERA dependent care benefit provides larger tax savings. However, lower-income employees usually receive larger savings using the child-care tax credit. Important: Reimbursements from contributions to your ERA account cannot be claimed on your tax return.

How do you determine the amount to contribute?
The ERA booklet provides information about minimum and maximum contribution amounts and has worksheets on page 30 to assist in your calculations. You can get a PDF version of the booklet: http://badger/state/wi.us/agencies/etf/rf/erabook2002.pdf

Other references for determining out- of-pocket expenses may include the Dual Choice Booklet, the Major Medical (EPIC) or DentalBlue (Dentacare) brochures, if enrolled in these plans. Contact the plans directly if you require clarification. Finally, refer to pages 15-19 in the ERA booklet to determine if the expense is covered by ERA. It is very important to correctly calculate your contributions, as IRS regulations stipulate that any amount remaining in your account for one plan year (calendar year) may not be returned to you or carried forward to subsequent years.

When and how do I enroll?
Eligible new employees, transferring employees or reclassified employees must enroll within 30 days of employment to participate in the current plan year. Benefit coordinators can provide brochures and enrollment forms. Paper enrollment is required. Annual re-enrollment is required for participation in subsequent plan years. Open enrollment this year is now through Nov. 9.

I have more questions.
Contact a benefits specialist at the EC&BS office via e-mail at employee@bussvc.wisc.edu, or call 263-7556 or 262-5650.

Or try searching the EC&BS Web site: http://www.bussvc.wisc.edu/