Lump Sum Payment Calculator (xls)

If your position has been eliminated for reasons other than cause, and if your department has offered you the lump sum payment as an option to the longer notice period, consider these factors:

• Your vacation accrual available for payout will be smaller than it would be if you leave employment at the end of the longer notice period, since the accruals end sooner. This payout will be taxed at your earnings rate at whatever date it is paid.
• Lump sum payments would be taxed at a flat rate unrelated to your income level. This could result in a tax liability when filing annual taxes.
• If you want to continue health insurance, you will receive twelve months of coverage with a University of Iowa single contribution. You will be responsible for any costs above this consideration. COBRA coverage will be available after this period of time.
• The 45-day notice period provides a shorter window during which you would have priority consideration to vacant positions than does the longer notice period, meaning successful placement is less likely.
• If you elect the Lump Sum Payment Option, you will continue to be eligible to apply for University of Iowa P&S non-organized positions and receive priority status for positions at the same or lower pay level for which you qualify, for one year following the end of your 45-calendar day shortened furlough notice period, and your employment will end 45 calendar days from the date of this letter.
• If you return to university employment within one year of termination, you will retain your original employment date for purposes of parking priority and record of service with the university, as well as your original benefit date affecting retirement, disability, and dental insurance. In addition, the university will restore your prior sick leave balance.
• If the staff member accepts the lump sum payment option, and they are enrolled in university health insurance at the time of their separation, the employee may elect COBRA and the University continues its normal contribution toward the cost of single health insurance for twelve months following termination. [SDM1] An additional 6 months of COBRA coverage is available after the initial 12 months of coverage, but the employee becomes responsible for the full cost.  Coverage automatically continues for the additional 6 months and premiums will be charged to the employee unless the employee requests that coverage be discontinued by contacting the University Benefits office.

Staff age 55 or older, may elect to take the lump sum and retire from the university. This allows them the ability to continue their university health and/or dental insurance coverage for themselves and their eligible dependents at their own expense.   (This option is not available if the staff member initially elects COBRA).

• If you are 55 or older there is a possibility for reinstatement your sick leave if you received a one-time payout and if it is paid back in the same tax year as the payout.  Vacation will not be reinstated if the laid-off employee returns to employment, nor can it be purchased back. For the sick leave reinstatement option, you will need to contact and work directly with UI Workforce Operations.  
•  The length of the probationary period or specified term duration will follow standard processes.