Employer Bulletin

State Agencies
Vol. 16, State C
August 26, 1999

Pay Adjustments for Health and Income Continuation Insurance Plan Amendments

Knowing When to Include or Exclude Add-on Pay from Employe Pay Rate when Certifying Sick Leave

For the past several years, the question of whether to include or exclude add-on pay from the employe pay rate has been an ongoing issue. Please note that the amount of sick leave you certify to the Department of Employe Trust Funds (ETF) on the Accumulated Leave Certification form (ET-4306) will vary depending on the employe's classification.

Represented and Non-represented Employes

Do not include add-on pay for any represented or non-represented employe. The rationale behind this decision includes the following provisions:

• Sick leave is converted at the basic pay rate (Wis. Stats. § 40.05(4)(b))

• The basic pay rate excludes any overtime, on-call, and extracurricular or supplementary compensation (Wis. Admin. Code Chapter ETF 10.01 (1m)).

Therefore, because add-on pay is considered supplementary compensation, it must be excluded from the employe pay rate when certifying the amount of sick leave to ETF.

State Employes Classified as Teachers, Teacher Supervisor, Education Director

An educational credit add-on is considered part of an employe's basic pay rate (Wis. Stats. § 40.05(4)(b)). This applies to any state employe classified as a teacher, teacher supervisor or education director, who receives payment of supplemental compensation to complete an educational course that has been approved by their employer. Information about this provision was published by the Department of Employment Relations in Bulletin CC/PP-143 dated July 22, 1998.

Income Continuation Insurance Plan Amended

The Group Insurance Board amended the State Income Continuation Insurance (ICI) Plan at its June 29, 1999 meeting. The amendments bring Plan language into agreement with statutory language, clarify long-standing practices, eliminate inconsistency and confusion about reporting earnings and premiums, and clarify the definition of short term disability. All changes went into effect on June 29, 1999.

Sick Leave

The statutes reference sick leave in terms of days rather than hours. The amendment to the Plan clarifies that, except for special category 3, a day of sick leave is equal to 8 hours for purposes of determining the correct premium category.

ICI benefits cannot be paid for days for which an employe is entitled to receive sick leave. However, the statutes do not require an employe to use more than 130 days of sick leave before ICI benefits can begin. Anything in excess of 130 days can be used or saved at the discretion of the employe. The amendment clarifies that the number of sick days will be determined based on the claimant's FTE appointment percentage if the claimant is in a part-time appointment. For example, a half-time employe with 600 hours of sick leave has 150 days of sick leave for purposes of this provision (600 hours ÷ 4 hours/day = 150 days). A full-time employe with 600 hours of sick leave has 75 days of sick leave (600 hours ÷ 8 hours/day = 75 days).

Project and Limited Term Employes

In order to create a consistent method of determining benefit amounts and premiums for LTE and project employes, the ICI plan language that relates to seasonal and academic year employes was expanded to include project and limited term employes.

The ICI plan states that an employe who is a project or limited term employe, or employed on a seasonal or academic year appointment of less than 12 calendar months, must pay a premium on the basis of WRS-reported state earnings from the prior calendar year, rounded to the next higher thousand and divided by twelve.

If such an employe is newly hired, or if there has been a break in service of more than three consecutive months, you must estimate the project, limited term, seasonal, or academic earnings to be received during the next 12 months. Then, you round these earnings to the next higher thousand and divide by 12 to determine the monthly basis for earnings and premiums. Divide the monthly earnings by 2.175 in order to calculate biweekly earnings.

Definition of Short Term Disability Revised

Claimants need only be disabled from their own specific occupation in order to meet the definition of disability for short-term Income Continuation Insurance (ICI) benefits.

Previously, the ICI plan required that in order to qualify for short-term ICI benefits, a claimant had be disabled not only from their own occupation, but also from any "like occupation." When an employe became disabled from his or her own job, the employe expected the ICI plan to pay benefits until that employe was capable of returning to work.

In rare instances claims were denied because, while the employe was clearly disabled from his or her job, the employe was capable of working in a "like occupation." For example, a claim was denied if the particular place of employment posed a health hazard, but the employe was capable of performing a like occupation in a different location. Since this situation rarely occurred, and because it may create an unreasonable justification for denying an otherwise valid claim, the Board removed this language from the definition of short term disability.

Supplemental Add-on Pay for Purposes of Determining Premiums/Benefits

Supplemental (permanent) add-on pay has been included in the definition of earnings for the purpose of determining premiums and benefits for ICI. Earnings include permanent add-on pay awarded to an employe who holds certain educational degrees, certifications, licenses or credentials, but does not include temporary additional pay such as night differential, weekend differential, or income from any other sources. Permanent add-on pay for University of Wisconsin Hospital nurses who only work weekend hours is included in earnings for ICI purposes.

This amendment clarifies a long-standing practice of basing premiums and benefits on earnings that include permanent supplemental add-on pay for attainment of specific credentials or accreditation.

ICI Updates Made to ETF Internet Site

Check out the State ICI Plan on the Department's Internet site. Questions can be directed to the Employer Communication Center at (608) 264-7900.