July 26, 2018

Merit increases affect more than base pay, provide opportunity to review, adjust benefits

With merit increases effective in the month of July, now may be a good time for employees to consider making adjustments to benefits such as voluntary retirement savings or health savings accounts. 

Simply increasing retirement contributions by as little as 1 percent can make a big difference to an employee’s retirement savings and save on current tax withholding. Pay increases also result in increased retirement contributions from the University.

To make changes to voluntary retirement contributions, employees can log in to Fidelity, call 800-343-0860 or visit the local Fidelity office located in Purdue Memorial Union.

Additional benefit and insurance programs affected by merit increase

Merit increases affect other benefits and insurance programs, through both the value of coverage and benefit premium deductions.

As an example, an employee’s higher earning years are factored into their Social Security benefit. Higher earnings also increase the value of both basic and additional life insurance amounts and benefit payment amounts while on leave under the long-term and short-term disability programs. 

Certain employee benefit premium deductions may also be affected at the time of a pay increase. For example, if an employee enrolled in a Purdue health plan crosses above the $44,000 annual salary tier following the merit increase, an increase in premium will take effect at the time of the pay increase.

Long-term disability, short-term disability and life insurance are all benefit programs that are based on salary-driven rates.  Therefore, the value of the benefits increase when pay raises occur, along with slight increases to the premiums deducted.  With the basic term life insurance amount the University provides employees, imputed income amounts may also increase.  Employees have the option to limit their basic coverage to $50,000 to avoid imputed income expense, which can be adjusted through Benefitfocus on the OneCampus portal.  

Employees paid on a biweekly pay cycle saw a partial effect in their July 18 pay and will see the full effects of their increases in their Aug. 1 pay.

Employees paid on a monthly pay cycle will see their merit increases and any effects to premiums in the July 31 pay. 

Questions about benefit-related items can be directed to Human Resources – Benefits at 765-494-2222,  hr@purdue.edu or HRHelp (secure email). 


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