IU Employee Receiving Indiana University and Practice Plan Compensation

Example: Initial Determination of Annualized Salary Limitation Amount

When employees receive practice plan compensation, both the Indiana University (IU)base salary and theIUHP practice plan components must be included in the determination of institutional base salary. Therefore, the NIH Salary Limitation must be applied to the combined compensation.

At Indiana University,IBS institutional base salary is defined as the annual compensation paid for an individual's appointment, whether that individual's time is spent on research, instruction, administration, clinical,or other activities. IBS Institutional base salary excludes extra compensation received that is outside a regular appointment(i.e. supplemental pay, academic overload payments, etc.).

Salary Cap Amount Applicable to an Award:

Once the annualized salary cap amount is determined, the amount applicable to the award effort is determined.The annualized salary cap amount applicable to an award is prorated by the percentage of effort applied to that award.

Example - Total Compensation (IU + IUHPpractice plan):

  1. Total Compensation (institutional base salaryIBS): $250,000
  1. Annual Salary Limitation:$187,000

-Effective 1/8/17 through 9/30/17

  1. Effort on Project:20%
  1. Salary Applicable to the Project:$50,000

-Total Compensationx Effort on Project (Line A x Line C)

  1. Allowable Payroll on Project:$37,400

-Annual Salary Limitation x Effort on Project (Line B x Line C)

  1. Unallowable*:$12,600

-Salary Applicable to the Project – Allowable Payroll on Project (Line D – Line E)

*The unallowable portion of salary (line F above) is recorded in anINST Ccost Sshare Ssubaccount labeled “INST1”.

The aboveillustration is based on the IBS institutional base salary as the sum of IU and IUHP practice plan compensation. The following illustration splits out each funding source with the respective allocation of salary directly charged to the award and the unallowable portion of salary (recorded in a n INST cost share subaccount labeled “INST1”).

Example – Proration of IU and IUHP practice plan Components of Institutional Base Salary:

IUHPPractice PlanIU

A. Total Compensation (IBS):$200,000$50,000

B. Annual Salary Limitation:$187,000 $187,000

-Effective 1/8/17 through 9/30/17

C. Effort on the Project:20% 20%

- Effort Percentage for IU and IUHP practice plan must equal

D. Salary Applicable to the Project:$40,000$10,000

-Total Compensationx Effort on the Project (Line A x Line C)

E. Allowable Payroll on Project:$29,920$7,480

-Total Allowable $37,400 Prorated between IU and IUHPpractice plan

F. Unallowable Portion Recorded as INST Cost Share*$ 10,080$ 2,520

- Salary Applicable to the Project -Allowable Payroll on Project(Line D – Line E)

*The IU unallowable portion of salary is recorded in a n INST Ccost Sshare Ssubaccount labeled “INST1”.