New Federal Guidance MCW negotiates its fringe benefit rates with the Department of Health and Human Services (DHHS) annually. Based on direction from DHHS, for FY2018 MCW must transition to a fringe benefit rate calculation that does not use the retirement limit for assessed salaries. DHHS requires that the negotiated fringe benefit rates be based on a method that is equitable and consistent in allocating fringe benefit costs and does not overcharge federal grants and contracts. Allowable fringe benefit methods include: Assess actual fringe benefit costs for each employee. Calculate and assess a pooled fringe benefit rate: Single, organization-wide fringe benefit rate, or Multiple rates for selected groups of employees.

FY2018 Proposed Methodology To limit the impact on non-federal funds, MCW has elected to use two fringe benefit methodologies. Separate rates were negotiated and will be applied to total salaries on funds that impact direct and indirect costs of federal grants. The negotiated fringe benefit rates will be: Faculty and Staff Physicians - 14.7% Staff - 29.5%

Further Explanation Benefit rates for each employee group are derived as follows: Total benefit costs divided by total salary (Fiscal Year Basis) Faculty and Staff Physician Rate = 14.7% Staff = 29.5% The above rates are applied to salaries allocated to the Funds displayed in the below table: Salaries allocated to all other Funds will be assessed at 22.5% up to the IRS Retirement limit of $270,000. Salary in excess of $270,000 will be assessed at the Medicare rate of 1.45%.