CERTIFYING OFFICER LETTERS 2004

CERTIFYING OFFICER LETTERS FROM OTHER YEARS

December 2004

Chapter 113 Salary Limits

Under Chapter 113, P.L. 1997, the amount of compensation (salary) used to determine member contributions and benefits, for the State-administered pension systems listed below, may not exceed the compensation limitation of section 401(a)(17) of the federal Internal Revenue Code. This compensation (salary) limitation is adjusted annually, based upon cost of living increases. The compensation limitation for 2005 will be $210,000.

In other words, under the provisions of the Internal Revenue Code, Section 401(a)(17), for the "qualified" defined benefit plans listed below [401(a)(2)], the current federal ceiling on pensionable salary ($205,000 in 2004) applies to the base salaries of members of these pension plans. Salary earned by a member in excess of this amount is not pensionable; that is, it may not be used in determining member contributions and benefits.

Change To Member Contribution Pension Rates - Teachers' Pension And Annuity Fund

Effective the first payday on or after January 1, 2005, the Teachers' Pension and Annuity Fund (TPAF) member contribution rate will return to the normal rate of 5%.

Retroactive increases paid on or after January 1, 2005 should be deducted at 5% including any portion of the retroactive salary that covered a period prior to January 1, 2005.

Change To Member Contribution Pension Rates - Public Employees' Retirement System

Chapter 415, P.L. 1999 reduced the pension rate for members of the Public Employees' Retirement System from 4.5% to 3%.  Effective the first payday on or after July 1, 2004, the Public Employees' Retirement System (State Employees) member contribution rate returned to the normal rate of 5%.

The previous reduction in the member rate for the PERS was authorized by statute and was based on the existence of surplus pension assets in the retirement system. However, also per statute when there are no longer surplus pension assets, the member rate for PERS will return to the normal rate of 5%

Retroactive increases paid on or after July 1, 2004, should be deducted at 5%, including any portion of the retroactive salary that covered a period prior to July 1, 2004.

Your 4^th quarter 2004 Report of Contributions file, applicable to the Teachers' Pension and Annuity Fund, Public Employees' Retirement System, and Police and Firemen's Retirement System, is due on or before January 10, 2005.  Your final December 2004 contribution remittance, which represents the pension and contributory insurance deductions due for the balance of the quarter, should be made through the Transmittal Electronic Payments System (TEPS).  The portion of the remittance for total pension deductions should reflect the sum of normal pension contributions, back deductions, loan payments, and arrears/purchase deductions.  Your TEPS remittance is also due by January 10, 2005.

With the Report of Contributions file, you must complete and return the Transmittal Summary form for the 4^th quarter 2004.  This document is used to assist your office and this Division in reconciling your transmittal remittances to the quarterly Report.  The Control and Certification form must also accompany your quarterly tape Report.  This is essential as it attests to the accuracy and validity of the submitted documentation.

If your quarterly Report and total contributions are not received in a timely manner, we cannot update the pension accounts of your employees.  This may adversely affect any claim for benefits, including loan applications, filed by your employees.  Also, any delay affects our scheduling in posting contributions to all members' accounts as well as the mailing of Reports of Contributions for the following quarter.  A tape Report of Contributions will be considered received when it is submitted in an acceptable format, passes all data processing edits, and can be used to update members' accounts.  Interest will be assessed, as prescribed by statute and administrative code, when monthly transmittal remittances and the quarterly Report of Contributions are not received within fifteen days of the due dates.

SACT Tax-Sheltered Annuity - Remittance Of 403(b) Contributions

Chapter 247, P.L. 1999 requires 403(b) salary reductions on behalf of an employee to be transmitted and credited within five business days from the pay date.

Members of the Public Employees' Retirement System, Teachers' Pension and Annuity Fund and Police and Firemen's Retirement System in the Supplemental Annuity (SACT) Tax Sheltered Annuity Program are required to have 403(b) salary reductions remitted to the Division of Pensions and Benefits within the timeframes prescribed by law.  Contributions for these members will be made through the Transmittal Electronic Payments System (TEPS).

Please note that the full quarterly SUPPLEMENTAL ANNUITY contribution must be submitted prior to the processing of your report of contributions. If the full contribution is not submitted, it may be necessary to refund any supplemental annuity contributions sent in for the quarter. This could adversely affect your employees' retirement savings.

Reporting Actual Salaries For Part-Time Employees (Rule Change N.J.A.C. 17:2-4.7)

The Public Employees' Retirement System's Board of Trustees adopted a rule change for N.J.A.C. 17:2-4.7, that became effective on January 1, 2000.  The amendment requires reporting districts to use the actual creditable salary earned by employees, and not estimated salary, for part-time hourly, on-call and per diem employees.

The enrollment criteria for part-time hourly, on-call, and per diem employees remains unchanged.  However, once membership is established, an employee must only meet the $1,500 minimum salary regulation to continue membership; the number of hours worked in a month or a year is no longer applicable.  This provides greater equity in granting service credit.  A member is entitled to a month of service as long as the actual creditable salary being reported exceeds the monthly minimum for enrollment. 

In other words, when a 10-month member has a monthly reportable salary exceeding $150 (one tenth of $1,500), the member should be reported for that month.  Similarly, $125 (one twelfth of $1,500) is the minimum monthly reportable salary for a 12-month member.  If the member does not make $1,500 in the current calendar year, and is not expected to make $1,500 in the following year, that employee is no longer eligible for the retirement system.

TEPS - Transmittal Shortage Payments

The Division sends transmittal shortage statements when the sum of the transmittal remittances does not equal the due figure on the quarterly Report of Contributions.  Transmittal shortage statement payments can only be paid through TEPS.  Checks received for payment of transmittal shortages will be returned.  If you have questions related to TEPS, contact the TEPS Helpline at
(888) 835-3345 or FAX your inquiries to the Audit/Billing Section at (609) 633-1708.

Changing Banking Information For TEPS

Notice of Changes for TEPS should be submitted to the Division of Pensions and Benefits on or after the date that the new checking account becomes effective.  Every Notice of Change is verified to ensure that the Division has the correct banking information.  This normally takes 12 to 15 days.

Statements Of Overages/Shortages

Overage and shortage statements, which affect a member's Annuity Savings Fund, identify whether or not the pension contributions are subject to the 414(h) provision.  These statements should be reviewed to determine when adjustments are required to your payroll records in calculating year-to-date mandatory pension contributions under 414(h).  Please note that all member shortages are to be paid by separate check.  Do not remit through TEPS.

Should you have any questions or need assistance in completing the Report, please telephone Peter Groffie at (609) 984-4807.

Enclosures:
Transmittal Summary for 4^th Quarter 2004
Control and Certification Form

December 2004

This memorandum has pertinent information concerning the completion of your Report of Contributions (ROC).  Please read this memorandum before you make any changes to the ROC.

Chapter 113 Salary Limits

Under Chapter 113, P.L. 1997, the amount of compensation (salary) used to determine member contributions and benefits, for the State-administered pension systems listed below, may not exceed the compensation limitation of section 401(a)(17) of the federal Internal Revenue Code. This compensation (salary) limitation is adjusted annually, based upon cost of living increases. The compensation limitation for 2005 will be $210,000.

In other words, under the provisions of the Internal Revenue Code, Section 401(a)(17), for the "qualified" defined benefit plans listed below [401(a)(2)], the current federal ceiling on pensionable salary ($205,000 in 2004) applies to the base salaries of members of these pension plans. Salary earned by a member in excess of this amount is not pensionable; that is, it may not be used in determining member contributions and benefits.

Change To Member Contribution Pension Rates - Public Employees' Retirement System - Local Government Employers

Effective January 1, 2005, the Public Employees' Retirement System (PERS) member contribution rate for local government employees will return to the normal rate of 5%. As a result employee pension contributions for retroactive salary increases paid on or after January 1, 2005, should be calculated at the rate of 5%, including any portion of the retroactive salary that covered a period prior to January 1, 2005.

Member Rates Remain Unchanged For 4^th Quarter 2004 - Chapter 415, P.L. 1999 reduced the pension rate for members of the Public Employees' Retirement System (PERS) from 4.5% to 3%.  The pension rate for calendar year 2004 will remain at 3% for PERS local government employees.

Change To Member Contribution Pension Rates - Teachers' Pension And Annuity Fund - Local Government Employers

Effective January 1, 2004, the Teachers' Pension and Annuity Fund (TPAF) member contribution rate for local government employees returned to the normal rate of 5%. As a result employee pension contributions for retroactive salary increases paid on or after January 1, 2004, should be calculated at the rate of 5%, including any portion of the retroactive salary that covered a period prior to January 1, 2004.

TEPS

Please note that the only payments that should be submitted through TEPS are for monthly transmittal and appropriation payments. Employee shortages are not to be submitted through TEPS.

Effective July 30, 2004, you were able to access TEPS through the Internet instead of calling in your payments.  In addition to making payments on-line, you can cancel payments on-line providing that you make the cancellation before the 5:30 pm cut off time.  On-line inquiries in which you can view and print a history of your payments are also available. Log on to www.payments-govonesolutions.com/njpen

Once you have logged on to TEPS, enter your location number and current password, the same password you are using with the telephone application.  You will find a user friendly program that will guide you through the payment, inquiry or payment cancellation processes.  The Division will still receive your payments the next business day, as long as you enter your payment on-line before the 5:30 pm cut off time.

The fax number and address that you use to submit the Employer Authorization Forms to the Division of Pensions and Benefits has been changed.  The Employer Authorization Form must be faxed to (720) 332-0039 or mailed to State of New Jersey, Department of Treasury, Division of Pensions and Benefits, P.O. Box 9581, Trenton, NJ 08650-9581.

Deadline For Filing

All ROCs must be postmarked by January 10, 2005, to be considered timely filed.

It must be noted that these deadlines are established to provide for the timely updating of member accounts each quarter. 

In order to accomplish this goal for the over 300,000 members of the retirement plans, we rely on you, our participating employers, to report pension information to us by the 10th calendar day of the month following the end of the calendar quarter.  In return, your employees' accounts are updated with the most recent pension information, which in turn may be used to process benefit claims by those same employees or their beneficiaries.

In recent years more and more employers have been delivering their ROCs to us later and later.  However, we have extended the courtesy of holding open the reporting period to accommodate this late receipt of information so as to not adversely impact the employees.  We must now notify you that this courtesy may no longer be extended because it conflicts with our goal to provide timely benefit processing to other retirement plan members whose employers submit their ROCs by the prescribed due date.  We will continue to accept your ROCs beyond the 10th of each calendar quarter but we will not guarantee that your employees' pension accounts will be updated or benefits processed within the time period they would expect. That may result in your employees not receiving service credit as earned, loans when submitted or retirement benefits immediately following termination of employment.

When you receive your quarterly ROC, you should review it immediately.  If you think you will have a problem in meeting the filing deadline, or if there is anything you do not understand, contact the Audit/Billing Section at (609) 292-3630.  Normally, reporting inquiries can be resolved with a telephone call.  If other arrangements need to be made to assist you in the completion of your ROC, the sooner you communicate that fact to the Division the better for everyone involved.

TOP 5 REPORTING AND PAYMENT ERRORS

• Number 5 - Changing Banking Information for TEPS
  
  Banking changes for TEPS should be submitted to the Division of Pensions and Benefits through the Employer Authorization Form on or after the date that the new checking account becomes effective.  Please note that the fax number and address previously used has changed.  The Employer Authorization form must be faxed to (720) 332-0039 or mailed to State of New Jersey, Department of Treasury, Division of Pensions and Benefits, P.O. Box 9581, Trenton, NJ 08650-9581.
  
  
• Number 4 - Explain all changes
  
  Please make all necessary corrections to the ROC before you return it to the Division of Pensions and Benefits.  Verify that all changes are explained, the ROC is added correctly, and the totals agree with the sum of the transmittal remittances.
  
  
• Number 3 - Reporting partial months of service
  
  
• Number 2 - Incorrect page and grand totals
  
  
• And, the number 1, most common reporting error is - Changes to employee contribution amounts for penny differences resulting from rounding

Should you have any questions or need assistance in completing the ROC, please telephone us at (609) 292-3630.

Enclosures: 
Quarterly Report of Contributions
Transmittal Summary for 4th Quarter 2004
Return Envelope

December 2004

The enclosed Report of Salary Change lists those members projected on your fourth quarter 2004 Report of Contributions. The list shows the membership number, member's name, payment plan (10/12 month), and provides space to insert the base salary to be projected on the quarterly Report of Contributions for the first calendar quarter of 2005.

Do not add any members (i.e., new enrollments, transfers, employees returning from leave of absence) or reflect any name changes to this report.

You should insert only the member's quarterly base salary, rounded to the nearest dollar for January, February, and March of 2005; this amount will be projected on the quarterly Report of Contributions for the first quarter of 2005.  For example, if a member is paid over 12 months and has an annual salary of $25,642, you should show a salary of $6,411 to be projected for the first quarter 2005.

Project only three full months of contractual base salary even if an employee will be on leave of absence or terminating employment.  It has been our experience that employers reporting one or two months of salary on the Report of Salary Change have the correct base salary and contributions on the next quarterly Report of Contributions, but the months of service column is not changed to reflect the correct service credit.  (A projection for the 3^rd quarter to a 10 month member is the only situation when the salary projection would not be for 3 full months of base salary.)

There is sometimes a delay in a municipality adopting its new budget, and although salary changes are effective January 1st, the retroactive increase is not paid until the second quarter.  Under these circumstances, it is suggested that you forward the Report of Salary Change for the second quarter to this Division before May 15th with the new quarterly base salary for the second quarter plus the retroactive increase covering the first quarter.  This should be one combined figure.  In this case, you must denote on the first page of the projection sheet that this is a second quarter salary projection.

In addition, you should request a Report of Salary Change for the third quarter to insert the quarterly base salaries for the third quarter Report of Contributions.  If you follow this procedure, it will avoid numerous changes on your Report of Contributions, because the Division will project salaries and deductions for each quarter.

The Division will furnish a Report of Salary Change for any quarter upon request.  To avoid delays in submitting your Report of Contributions, it is recommended that you use the Report of Salary Change, rather than column 1 of the Report, whenever you have numerous salary projections.  To process a Report of Salary Change, it must be returned to the Division of Pensions and Benefits by the 15th of the second month of a calendar quarter for the salaries to be projected for that quarter.

To project the salaries on your first quarter 2005 Report of Contributions, the changes must be received no later than
February 15^th.

In Summary

• Project only 3 months of base salary (plus retroactive salary adjustments, if applicable)
• Do not add members
• Do not make name changes
• Make no entry if the member's salary did not change from last quarter's reported salary
• Return the report of salary change by February 15^th

Effective January 1, 2005, the member contribution rate will return to the normal rate of 5% for local government employees enrolled in the PERS.

The previous reduction in the member rate for the PERS was authorized by statute and was based on the existence of surplus pension assets in the retirement system. However, also per statute, when there are no longer surplus pension assets, the member rate for PERS w ill return to the normal rate of 5%.  Since excess assets no longer exist in the PERS for local government members, please be sure to deduct the 5% rate for base salary reported on or after January 1, 2005.

Retroactive increases in base salary paid on or after January 1, 2005, must have corresponding pension contributions deducted at the 5% rate; including any portion of the retroac tive salary that covered a period prior to January 1, 2005.

November 29, 2004

Recent changes in the state licensing regulations allowed districts to use retired teachers and administrators to serve as mentors for new teachers. We have recently received information from the Division of Pensions and Benefits that such employment could violate the earnings threshold established in statute for the Teachers' Pensions and Annuity Fund (TPAF). This violation could jeopardize either their earnings or benefits and result in a requirement to make restitution to the state for any pension payments made during the employment period.

The following are the statutory citations that govern the TPAF enrollment:

N.J.S.A. 18A:66-4 - Membership

No person in employment, office or position, for which the annual salary or remuneration is fixed at less that $500 shall be eligible to become a member of the retirement systems. This means anyone making $500 or more must become a member.

N.J.S.A. 17:3-2.1 - Enrollment Eligibility

(a) Any person appointed by the State, local board of education, or charter school to a position listed in the definition of "teacher" found in N.J.S.A. 18A:66-2(p) or as a regular full-time or part-time employee in position that meets the following conditions shall be required to become a member of the Fund effective as of the date of their employment:

1. The position requires a valid certificate issued by the State Board of Education and the person employed holds this valid certificate;
2. The position is covered by Social Security; and
3. The salary for the position is $500 or more within a year.
   

The stipend for mentoring is $550 for traditional route provisional teacher mentors and $1000 for alternate route provisional teacher mentors. The Division of Pensions and Benefits has advised the Department of Education that all retired mentor teachers making more that $499 would fall under the definition in the statute.

If you have further questions on the mentoring pension issues, please contact Dr. Jay Doolan, Director, Office of Academic and Professional Standards at 609-984-5322. For all other questions involving the use of retired teachers and administrators in schools, please contact:

Mindy Smith-Sopko
Legislative/Legal Affairs Unit
Division of Pensions and Benefits
Department of the Treasury
P.O. Box 295
Trenton, NJ 08625-0295

October 2004

The State Health Benefits Commission has authorized the extension of the Employee Dental Plans to State Health Benefits Program (SHBP) participating employers effective January 1, 2005.  Local government and education employers that offer SHBP medical plan coverage to their employees may now offer the same dental plans to their employees that are currently offered to active State employees.  Participating SHBP employers may adopt the Employee Dental Plans for their active employees and their dependents by filing the attached resolution with the Division of Pensions and Benefits, State Health Benefits Bureau. 

Employers with less than 250 employees must file a completed resolution to participate in the Employee Dental Plans at least 75 days prior to the effective date of coverage.  Employers with 250 or more employees must file at least 90 days prior to the desired effective date of coverage.  Employers electing to participate must remain in the Employee Dental Plans for at least 12 consecutive months.  

If you elect to participate in the Employee Dental Plans, your employees will have a choice between two types of dental plans:

• the Dental Expense Plan; or
  
  
• a Dental Plan Organization (DPO).

Dental Expense Plan

The Dental Expense Plan is a traditional indemnity, fee-for-service plan administered by Aetna Dental that reimburses covered services provided by any dental provider licensed to practice at a percentage of reasonable and customary fees.  There is a $50 per person annual deductible, maximum of $150 per family, which must be met before reimbursements are made. The deductible is waived for diagnostic, preventive, and orthodontic services.  The plan covers preventive, basic restorative, and major restorative services at different levels and orthodontic services are eligible only up to a limited amount. The Dental Expense Plan has a passive network of dentists who have agreed to accept a discounted fee for services.  If an employee uses a network provider, the fee for the service will generally be lower than that charged by an out-of-network dentist so the employee's costs will be lower.  The plan is described in greater detail in the enclosed Fact Sheet #37, SHBP Employee Dental Plans Adobe PDF (41K).

Dental Plan Organizations (DPOs)

DPOs contract with a network of providers for dental services and employees enrolling in these plans must use providers participating with the DPO to receive coverage.  As long as the employee uses a DPO dentist, diagnostic and preventive services are covered in full.  Most other eligible expenses require a copayment.  Orthodontic treatment is covered for both children and adults.  For more information on DPOs, refer to the enclosed Fact Sheet #37, SHBP Employee Dental Plans Adobe PDF (41K).

The State Health Benefits Commission currently contracts with 10 DPOs as follows:

Employee Dental Plans Member Handbook

The SHBP publishes a handbook detailing the dental plan benefits.  A newly revised SHBP Employee Dental Plans Member Handbook - that includes benefits to local government and education employees - will be available to enrolled members in January 2005.  Prior to publication, employers and employees may consult the current State Group Dental Program Member Handbook which describes benefits that are identical to the 2005 plan year benefits with the following exceptions:

• Procedures for oral evaluations and cleanings for the SHBP Dental Plans will change. Diagnostic oral evaluations can be performed up to two times per calendar year; X-rays can be made for two series of up to four films per calendar year; preventative dental cleanings can be performed two times in a calendar year; and two fluoride treatments can be performed per calendar year for eligible dependent children under 19 years of age.
  
  
• Effective for the 2005 plan year, Unity Dental Plan Organization will no longer be offered under the SHBP Employee Dental Plans.

The member handbook is available for viewing online from a link at the SHBP home page: www.state.nj.us/treasury/pensions/shbp.htm

Employer Participation in the Employee Dental Plans

The rules established by the State Health Benefits Commission for participation in the Employee Dental Plans are generally the same as for the SHBP medical plans with the following exceptions.

• An employee who terminates dental coverage does not have a right of conversion to non-group coverage.
  
  
• Duplicate coverage within the Employee Dental Plans is not permitted; an individual may be covered as an employee or as a dependent but not as both an employee and a dependent.  Dependent children may only be covered by one parent.
  
  
• An employee must participate in their chosen dental plan for a minimum of 12 consecutive months.
  
  
• There is no premium delay of 30 or 60 days of the employer premium charges for the Employee Dental Plans.

Employee Dental Plans Cost

The Employee Dental Plans are being offered to local employers at the same rates the State pays.  If over the next few years there appears to be a significant difference in the utilization of the State group verses the local employer group, separate rates will be developed.  A rate chart for calendar year 2005 is attached.

If a participating local employer does not pay 100 percent of the cost of coverage in the Employee Dental Plans, the employee's share of the cost may be determined by a formula different from that used to determine their cost for medical coverage, provided that the employee's share of the cost for dental coverage is not more than 50 percent.    For employee contribution purposes only, the DPO rates are calculated in aggregate, that is, the employee contribution for DPO coverage is the same regardless of the DPO selected.  The State Health Benefits Commission determines DPO premium rates based upon the value of services provided.  Plans of higher value receive higher premiums.  The use of a DPO composite rate prevents adverse selection by employees against the better performing (and more expensive) plans.  The 50 percent maximum employee contribution and the DPO composite rate are provided in the attached rate chart.

Retiree Dental Expense Plan

The State Health Benefits Commission will also offer a Retiree Dental Expense Plan to State and Local SHBP retirees effective January 1, 2005.  All retirees eligible for enrollment in the SHBP will be offered an opportunity to enroll in this new dental coverage.  Generally, retirees will be enrolled on a retiree-pay-all basis, although participating employers may elect to pay all or a portion of the cost of post-retirement dental coverage for eligible retirees.  Information about this plan is available in Fact Sheet #73, Retiree Dental Expense Plan, Adobe PDF (32K) which is available on our Web site at: www.state.nj.us/treasury/pensions

For More Information

General information about the SHBP Dental Plans can be found on the SHBP Web site at: www.state.nj.us/treasury/pensions/shbp.htm   If you have specific questions about the plans, employers can call the Employer Hotline at (609) 292-5353 (select option 1 when prompted for the Dental Plan mailbox), or e-mail the Division of Pensions and Benefits at: pensions.nj@treas.state.nj.us

Enclosures

September 2004

We are very pleased to announce that we have enhanced the Transmittal Electronic Payment System (TEPS) so you may remit your State Health Benefits (SHBP) payments electronically. The Active Employer and Retired Employer Group payments, if applicable, can be processed by using the Internet or placing a toll free telephone call.

All employers' remittances must be made through the TEPS program beginning December 27, 2004. After this date, paper checks will not be accepted. TEPS is a safe and efficient system that allows you to authorize payments from your bank account to the Division of Pension and Benefits.

• Convenient and Easy-To-Use: You can make your SHBP payments using the Internet or the telephone seven days a week. Each payment method will prompt you for the required information.
  
  
• Free of Charge: No more need to issue checks or incur mailing costs, ultimately reducing your time and cost on this monthly task. There is no charge by the State of New Jersey, Division of pensions and Benefits for using TEPS. Your bank may charge you an incidental fee to process these transactions.
  
  
• Increased Control: A payment is made only when you authorize it through one of the payment methods. You will have maximum use of your funds with the added benefit of ensuring on-time payments. You also have the capability to inquire, cancel or research a payment.
  
  
• Increased Reliability: Once you have completed the payment through one of the payment methods, you will receive a reference number as your proof of payment. The Division will receive your payment the next business day, as long as you enter your payment before the 5:30 p.m. cut off time.

To implement this system for SHBP, employer must complete the attached Employer Authorization Form for each employer identification number. Be sure to follow the instructions and attach an original voided blank bank check and return the completed document in the enclosed envelope. The Employer Authorization Form is also available on the Division's Web site. If you have Acrobat Reader version 4.0 or higher, the form can be completed on line an printed. All forms must be signed by the Certifying Officer and dated. You must submit your form with a voided check to P.O. Box 9581, Trenton, NJ 08650-9581 or you may fax the form and voided check to (720) 332-0039. Please allow fourteen to twenty-one days for the enrollment process. When this is complete, you will receive a Welcome Packet that contains a welcome letter, a temporary password, and easy instructions on how to use the TEPS System. For the Internet payment method, the TEPS Web site has a user friendly program that will guide you through the payment, inquiry, or payment cancellation processes.

If you have any questions about the enrollment process, please contact Customer Service at the TEPS Helpline at (888)-835-3345 between 9:00 a.m. and 7:00 p.m. We appreciate your cooperation in complying with the new procedure. Thank you for your participation.

September 14, 2004

The State Health Benefits Program (SHBP) Open Enrollment Period for local government employees will begin on October 1, 2004 and end on November 1, 2004.  All changes to coverage made during this open enrollment will be effective on January 1, 2005.

Completed employer-certified health benefit and/or dental applications should be forwarded to the Health Benefits Bureau as soon as they are received from employees. The last day that certified applications may arrive at the Health Benefits Bureau to be effective for the start of the new plan year is November 8, 2004.

In keeping with its current policy, the SHBP will not provide health fairs during this year's open enrollment period. 

RATES FOR 2005

The State Health Benefits Commission has approved new health and prescription drug plan rates for the 2005 plan year. These rates are based upon the recommendation of the Commission's actuarial consultant, Milliman USA.  Since the SHBP self-funds most of its plans, the claims experience used in projecting 2005 costs are based upon the actual claims experience of the group. 

Health benefit costs for many employer-sponsored plans continued to experience double digit increases in 2004, although there are signs of moderation.  For the SHBP, we are pleased to report that favorable claims experience for 2003 and 2004 has helped to produce medical plan rate increases for the 2005 plan year that are somewhat lower than emerging trends. For the Employee Prescription Drug Plan, although emerging trends continue in the double digits, increases were suppressed by a large number of highly utilized drugs coming off patent, going generic or over-the-counter, resulting in a rate increase for the Plan of only 8.4%.  Many industry experts predict that health care costs will begin to moderate over the next few years due to some restraint in hospital costs and stabilization of drug costs, but caution that double digit rate increases remain a possibility for many employer-sponsored health plans. 

Effective January 1, 2005, SHBP plan rates for the Local Government Active Group will see the following aggregate percentage of increase:

MEDICAL AND PRESCRIPTION DRUG PLAN CHANGES

• Prescription Mail Service Option Under NJ PLUS and the Traditional Plan - Effective January 1, 2005, a mail order service is available in the Employee Prescription Drug Reimbursement Plan offered to local active, full-time employees and their dependents (and COBRA participants) enrolled in NJ PLUS or the Traditional Plan who do not have a separate prescription drug plan through their employer. The Employee Prescription Drug Reimbursement Plan is administered by Horizon Blue Cross Blue Shield of New Jersey through AdvancePCS, a Caremark Company. The mail order service will allow members to obtain maintenance prescriptions by mail from AdvanceRx.com, the mail service pharmacy owned and operated by AdvancePCS.

DENTAL PLAN INFORMATION

• Employee Dental Plans Expansion - The State Health Benefits Commission has authorized the extension of dental coverage to SHBP participating local employers effective January 1, 2005.  Participating SHBP local employers may adopt the SHBP Employee Dental Plans for their active employees and eligible dependents by filing the appropriate resolution to participate with the State Health Benefits Bureau. The Employee Dental Plans include the Dental Expense Plan and several Dental Plan Organizations. An employer must agree to participate in the Employee Dental Plans for 12 consecutive months and an employee who enrolls in a dental plan must participate in their chosen plan for a minimum of 12 consecutive months.  A separate mailing is being prepared that will describe the dental plan offering in detail.  Employers and employees can also see Fact Sheet #37, SHBP Employee Dental Plans, Adobe PDF (41K) for a description of the plans and a chart outlining the benefits.
  
  
• New Retiree Dental Expense Plan - A new Retiree Dental Expense Plan, administered for the SHBP by Aetna Dental, will become effective January 1, 2005.  The Plan is available to all retirees eligible to enroll under the medical plans in the SHBP Retired Group.  Generally, retirees who enroll in the Retiree Dental Expense Plan are responsible for paying the full cost of their coverage.  Beginning January 1, 2005, when an employee becomes eligible for medical plan coverage under the SHBP Retired Group, their SHBP offering letter will include information on enrolling under the Retiree Dental Expense Plan.  This will be a one-time offering at time of retirement or when first eligible for SHBP Retired Group enrollment.  All retirees who are currently receiving (or are eligible to receive) benefits under the SHBP Retired Group (including those that waived SHBP benefits because they have coverage under a public employer group plan from a spouse or their own employment) will be offered an opportunity to enroll in the Retiree Dental Expense Plan during a special open enrollment period.  This special open enrollment period will be held from October 1, 2004 through March 31, 2005.  Communications will be mailed directly to these retirees.

A description of the plan and a chart outlining the benefits of the new Retiree Dental Expense Plan is available in Fact Sheet #73, Retiree Dental Expense Plan, Adobe PDF (32K) which can be found on our Web site at: www.state.nj.us/treasury/pensions

RETIREE PRESCRIPTION DRUG PLAN INFORMATION

In accordance with the provisions of the pilot Retiree Prescription Drug Plan under NJ PLUS and the Traditional Plan, effective January 1, 2005, retail pharmacy copayments for a 30-day supply will increase to $7 for generic drugs; $14 for preferred brand name drugs; and $29 for all other brand name prescription drugs. The mail order copayments for a 90-day supply will increase to $7 for generic drugs, $21 for preferred brand name drugs, and $36 for all other brand name prescription drugs.  The out-of-pocket maximum will increase to $552.

OPEN ENROLLMENT INFORMATIONAL MATERIALS

MILESTONES - Enclosed is a milestone chart that lists the critical dates of the open enrollment period and outlines the efforts being made to educate employees. Please use this chart as a checklist to guide your activities during open enrollment.

RATE CHARTS - Enclosed you will find approved rates for SHBP health and prescription drug plans. We have included rate charts for employers with and without prescription drug coverage. The listed rates are effective January 1, 2005 through December 31, 2005.

HEALTH CAPSULE - The Health Capsule newsletter announces the SHBP Open Enrollment Period to employees and presents important information and changes that may affect their benefit selection.  A sample is enclosed for your review. The newsletters are scheduled for delivery to Local employers in mid-September.  Please distribute them to your employees prior to the start of the open enrollment period. 

HEALTH PLAN CONTACTS - Also included in this mailing is a listing of marketing contacts for the various health and dental plans. Use these contacts to obtain provider directories or other plan specific literature. (These telephone numbers are not for member services. Please do not give these telephone numbers to your employees.)

NEW HEALTH PLAN APPLICATIONS - Enclosed you will find a copy of the most current application for SHBP health plans (including prescription drug coverage).  The application is also available for download from the SHBP home page.  For this open enrollment period, the Health Benefits Bureau will continue to accept employer-certified changes to SHBP plans on either this newly revised application or the former Local Employer Group application. 

Note: A separate application is used for enrollment in the SHBP Employee Dental Plans, and will be forwarded to those employers who adopt the plan.

HEALTH PLAN COMPARISON CHARTS - The SHBP Plan Comparison Chart for Local Government/Educational Active Employees and All Retirees is currently being printed and copies will be shipped to employers for the start of the open enrollment period.

SUMMARY PROGRAM DESCRIPTION (SPD) BOOKLET - The SHBP Summary Program Description has been revised for the 2005 plan year.  The booklet is currently being printed and copies will be shipped to employers for the start of the SHBP Open Enrollment Period.  The SPD is also available for viewing over the Internet at: www.state.nj.us/treasury/pensions/shbp.htm

PLAN HANDBOOKS - The SHBP's member handbooks for the Traditional Plan, NJ PLUS, the Employee Prescription Drug Plan, and the SHBP Dental Plans are being revised for the 2005 plan year.  New editions will be available in January 2005 for plan enrollees.

ONLINE INFORMATION

The SHBP's plan comparisons, member handbooks, newsletters, and rate information are available over the Internet at the State Health Benefits Program home page: www.state.nj.us/treasury/pensions/shbp.htm

Web-based presentations on the SHBP Open Enrollment Period will also be available for both employers and employees during the open enrollment period.  Once open enrollment begins you will find the link on the SHBP home page.

Participating provider information for all SHBP medical plans is available in the Unified Provider Directory (UPD).  The UPD is an online service that provides a comprehensive listing of health care providers and facilities that deliver their services through one or more of the SHBP's health care plans.  Updated monthly, you can access the UPD through the SHBP home page at: www.state.nj.us/treasury/pensions/shbp.htm

ADDITIONAL INFORMATION

If you have any questions about the SHBP Open Enrollment Period or the information in this letter, please contact our Office of Client Services at (609) 292-5353, and select option #2 on the phone. When prompted, leave a message and a representative will return your call. 

Thank you for your assistance in making the SHBP Open Enrollment Period a success for your employees.

Enclosure:

September 14, 2004

The State Health Benefits Program (SHBP) Open Enrollment Period for local Board of Education employees will begin on October 1, 2004 and end on November 1, 2004.  All changes to coverage made during this open enrollment will be effective on January 1, 2005.

Completed employer-certified health benefit and/or dental applications should be forwarded to the Health Benefits Bureau as soon as they are received from employees. The last day that certified applications may arrive at the Health Benefits Bureau to be effective for the start of the new plan year is November 8, 2004.

In keeping with its current policy, the SHBP will not provide health fairs during this year's open enrollment period. 

RATES FOR 2005

The State Health Benefits Commission has approved new health and prescription drug plan rates for the 2005 plan year. These rates are based upon the recommendation of the Commission's actuarial consultant, Milliman USA.  Since the SHBP self-funds most of its plans, the claims experience used in projecting 2005 costs are based upon the actual claims experience of the group. 

Health benefit costs for many employer-sponsored plans continued to experience double digit increases in 2004, although there are signs of moderation.  For the SHBP, we are pleased to report that favorable claims experience for 2003 and 2004 has helped to produce medical plan rate increases for the 2005 plan year that are somewhat lower than emerging trends. For the Employee Prescription Drug Plan, although emerging trends continue in the double digits, increases were suppressed by a large number of highly utilized drugs coming off patent, going generic or over-the-counter, resulting in a rate increase for the Plan of only 8.4%.  Many industry experts predict that health care costs will begin to moderate over the next few years due to some restraint in hospital costs and stabilization of drug costs, but caution that double digit rate increases remain a possibility for many employer-sponsored health plans. 

Effective January 1, 2005, SHBP plan rates for the Local Education Active Group will see the following aggregate percentage of increase:

MEDICAL AND PRESCRIPTION DRUG PLAN CHANGES

• Prescription Mail Service Option Under NJ PLUS and the Traditional Plan - Effective January 1, 2005, a mail order service is available in the Employee Prescription Drug Reimbursement Plan offered to local active, full-time employees and their dependents (and COBRA participants) enrolled in NJ PLUS or the Traditional Plan who do not have a separate prescription drug plan through their employer. The Employee Prescription Drug Reimbursement Plan is administered by Horizon Blue Cross Blue Shield of New Jersey through AdvancePCS, a Caremark Company. The mail order service will allow members to obtain maintenance prescriptions by mail from AdvanceRx.com, the mail service pharmacy owned and operated by AdvancePCS.

DENTAL PLAN INFORMATION

• Employee Dental Plans Expansion - The State Health Benefits Commission has authorized the extension of dental coverage to SHBP participating local employers effective January 1, 2005.  Participating SHBP local employers may adopt the SHBP Employee Dental Plans for their active employees and eligible dependents by filing the appropriate resolution to participate with the State Health Benefits Bureau. The Employee Dental Plans include the Dental Expense Plan and several Dental Plan Organizations. An employer must agree to participate in the Employee Dental Plans for 12 consecutive months and an employee who enrolls in a dental plan must participate in their chosen plan for a minimum of 12 consecutive months.  A separate mailing is being prepared that will describe the dental plan offering in detail.  Employers and employees can also see Fact Sheet #37, SHBP Employee Dental Plans, for a description of the plans and a chart outlining the benefits.
  
  
• New Retiree Dental Expense Plan - A new Retiree Dental Expense Plan, administered for the SHBP by Aetna Dental, will become effective January 1, 2005.  The Plan is available to all retirees eligible to enroll under the medical plans in the SHBP Retired Group.  Generally, retirees who enroll in the Retiree Dental Expense Plan are responsible for paying the full cost of their coverage.  Beginning January 1, 2005, when an employee becomes eligible for medical plan coverage under the SHBP Retired Group, their SHBP offering letter will include information on enrolling under the Retiree Dental Expense Plan.  This will be a one-time offering at time of retirement or when first eligible for SHBP Retired Group enrollment.  All retirees who are currently receiving (or are eligible to receive) benefits under the SHBP Retired Group (including those that waived SHBP benefits because they have coverage under a public employer group plan from a spouse or their own employment) will be offered an opportunity to enroll in the Retiree Dental Expense Plan during a special open enrollment period.  This special open enrollment period will be held from October 1, 2004 through March 31, 2005.  Communications will be mailed directly to these retirees.

A description of the plan and a chart outlining the benefits of the new Retiree Dental Expense Plan is available in Fact Sheet #73, Retiree Dental Expense Plan, Adobe PDF (32K) which can be found on our Web site at: www.state.nj.us/treasury/pensions

RETIREE PRESCRIPTION DRUG PLAN INFORMATION

In accordance with the provisions of the pilot Retiree Prescription Drug Plan under NJ PLUS and the Traditional Plan, effective January 1, 2005, retail pharmacy copayments for a 30-day supply will increase to $7 for generic drugs; $14 for preferred brand name drugs; and $29 for all other brand name prescription drugs. The mail order copayments for a 90-day supply will increase to $7 for generic drugs, $21 for preferred brand name drugs, and $36 for all other brand name prescription drugs.  The out-of-pocket maximum will increase to $552.

OPEN ENROLLMENT INFORMATIONAL MATERIALS

MILESTONES - Enclosed is a milestone chart that lists the critical dates of the open enrollment period and outlines the efforts being made to educate employees. Please use this chart as a checklist to guide your activities during open enrollment.

RATE CHARTS - Enclosed you will find approved rates for SHBP health and prescription drug plans. We have included rate charts for employers with and without prescription drug coverage. The listed rates are effective January 1, 2005 through December 31, 2005.

HEALTH CAPSULE - The Health Capsule newsletter announces the SHBP Open Enrollment Period to employees and presents important information and changes that may affect their benefit selection.  A sample is enclosed for your review. The newsletters are scheduled for delivery to Local employers in mid-September.  Please distribute them to your employees prior to the start of the open enrollment period. 

HEALTH PLAN CONTACTS - Also included in this mailing is a listing of marketing contacts for the various health and dental plans. Use these contacts to obtain provider directories or other plan specific literature. (These telephone numbers are not for member services. Please do not give these telephone numbers to your employees.)

NEW HEALTH PLAN APPLICATIONS - Enclosed you will find a copy of the most current application for SHBP health plans (including prescription drug coverage).  The application is also available for download from the SHBP home page.  For this open enrollment period, the Health Benefits Bureau will continue to accept employer-certified changes to SHBP plans on either this newly revised application or the former Local Employer Group application. 

Note: A separate application is used for enrollment in the SHBP Employee Dental Plans, and will be forwarded to those employers who adopt the plan.

HEALTH PLAN COMPARISON CHARTS - The SHBP Plan Comparison Chart for Local Government/Educational Active Employees and All Retirees is currently being printed and copies will be shipped to employers for the start of the open enrollment period.

SUMMARY PROGRAM DESCRIPTION (SPD) BOOKLET - The SHBP Summary Program Description has been revised for the 2005 plan year.  The booklet is currently being printed and copies will be shipped to employers for the start of the SHBP Open Enrollment Period.  The SPD is also available for viewing over the Internet at: www.state.nj.us/treasury/pensions/shbp.htm

PLAN HANDBOOKS - The SHBP's member handbooks for the Traditional Plan, NJ PLUS, the Employee Prescription Drug Plan, and the SHBP Dental Plans are being revised for the 2005 plan year.  New editions will be available in January 2005 for plan enrollees.

ONLINE INFORMATION

The SHBP's plan comparisons, member handbooks, newsletters, and rate information are available over the Internet at the State Health Benefits Program home page: www.state.nj.us/treasury/pensions/shbp.htm 

Web-based presentations on the SHBP Open Enrollment Period will also be available for both employers and employees during the open enrollment period.  Once open enrollment begins you will find the link on the SHBP home page.

Participating provider information for all SHBP medical plans is available in the Unified Provider Directory (UPD).  The UPD is an online service that provides a comprehensive listing of health care providers and facilities that deliver their services through one or more of the SHBP's health care plans.  Updated monthly, you can access the UPD through the SHBP home page at: www.state.nj.us/treasury/pensions/shbp.htm

ADDITIONAL INFORMATION

If you have any questions about the SHBP Open Enrollment Period or the information in this letter, please contact our Office of Client Services at (609) 292-5353, and select option #2 on the phone. When prompted, leave a message and a representative will return your call. 

Thank you for your assistance in making the SHBP Open Enrollment Period a success for your employees.

Enclosure:

September 10, 2004

The State Health Benefits Program (SHBP) Open Enrollment period for all State employees will begin on October 1, 2004 and end on November 1, 2004.  All changes to coverage made during this open enrollment will be effective on December 25, 2004 for State biweekly employees paid through the State Centralized Payroll Unit.

Completed employer-certified health benefit and/or dental applications should be forwarded to the Health Benefits Bureau as soon as they are received from employees. The last day that certified applications may arrive at the Health Benefits Bureau to be effective for the start of the new plan year is November 8, 2004.

In keeping with its current policy, the SHBP will not provide health fairs during this year's open enrollment period. 

RATES FOR 2005

The State Health Benefits Commission has approved new health, dental, and prescription drug plan rates for the 2005 plan year. These rates are based upon the recommendation of the Commission's actuarial consultant, Milliman USA.  Since the SHBP self-funds most of its plans, the claims experience used in projecting 2005 costs are based upon the actual claims experience of the group. 

As a result of contract negotiations and the fiscal year 2005 Budget Appropriations Act, SHBP medical plan deductibles and copayments and prescription drug copayments will be changing for a large majority of State employees.  Rates differ depending on whether an employee is affected by these plan changes.

Effective December 25, 2004, SHBP plan rates for the State Active Group, (those with plan changes and those without) will see the following aggregate percentage of increase:

PREMIUM SHARING

The premium share arrangements remain unchanged.  For those employees subject to premium sharing:

• There is no premium cost to any employee who enrolls in NJ PLUS. 
  
  
• Employees will pay 5% of the premium cost if enrolled in an HMO.
  
  
• Employees will pay 25% of the premium cost if enrolled in the Traditional Plan.

These percentages apply regardless of salary level or date of hire. 

MEDICAL AND PRESCRIPTION DRUG PLAN CHANGES

The plan changes that will affect the majority of employees are as follows:

• For the Traditional Plan, the annual deductible will be increasing from $100 per person to $250 per person effective January 1, 2005
  as follows:

¹The total combined deductible for dependents adds up to $250 per year.

• For NJ PLUS and all HMOs (Aetna, AmeriHealth, CIGNA, Health Net, and Oxford), the copayment for primary doctor visits and visits to a specialist will increase from $5 to $10 as of December 25, 2004 for State employees paid through the State's Centralized Payroll Unit.
  
  
• The copayments for the Employee Prescription Drug Plan will also be increasing as of December 25, 2004.  For each 30-day supply received at a retail pharmacy, the copayments will increase from $1 to $3 for generic drugs and from $5 to $10 for brand name prescription drugs. Mail order copayments for up to a 90-day supply will increase from $1 to $5 for generic drugs and $5 to $15 for brand name prescription drugs.

These changes will go into effect for employees covered by collective bargaining agreements, where the agreements provide for or adopt such changes, and all non-aligned employees. Employees in collective bargaining units who have not agreed to or adopted these changes will not be affected until such time as the majority representative agrees to them, or they are made part of a final and binding interest arbitration award. As of this printing, employees of the Executive Branch of the State covered under State labor agreements with the State Police Troopers, Sergeants, and Lieutenants bargaining units and five non-State Police law enforcement bargaining units will not be affected by the changes.

DENTAL PLAN INFORMATION

• Unity Dental Plan Organization - The State Health Benefits Commission did not renew the State's contract with Unity DPO, therefore, Unity Dental will no longer be offered under the Employee Dental Plans.  Employees enrolled in this dental plan must transfer to another dental plan offered during this open enrollment period.  Failure to choose another dental plan will result in the employee no longer having dental coverage after December 24, 2004.  Current enrollees in the Unity Dental Plan will be receiving communication that will provide more information on their dental plan choices and the impact on services currently in progress.   The following services will be continued to conclusion through a Unity Dental Plan professional if an employee or dependent was already in treatment on December 24, 2004: services for a crown or restoration for which a tooth was prepared; an appliance or modification of an appliance for which an impression was taken; root canal therapy for which the pulp chamber was opened; orthodontic treatment that began prior to the termination date of December 24, 2004.  Services shall be provided at no additional cost to the employee, except for any copayment or portion of copayment that has not yet been paid.

If you have employees enrolled in Unity Dental plan you will receive a listing from the SHBP to assist you in identifying employees who must submit a new dental enrollment application to make a plan change. 

• Employee Dental Plans Update - Oral Evaluations and cleanings have been changed for administrative ease of processing claims for all dental plans.  These changes are effective January 1, 2005, and should result in fewer claim denials. 
  
  
• Diagnostic - Oral evaluations can be performed up to two times per calendar year.  X-Rays can be made for two series of up to four films per calendar year;
  
  
• Preventive - Dental cleanings can be performed two times in a calendar year; and
  
  
• Fluoride - Two treatments can be performed per calendar year for eligible dependent children under 19 years of age.

Formerly, these benefits were available on a one-time basis every six months.

• Dental Plan Note - Employees must maintain enrollment in a dental plan choice for a minimum of 12 months before they are permitted to change plans. Therefore, if an employee was not enrolled in a dental plan as of January 1, 2004, they cannot make a dental plan change during this open enrollment period (exception made for Unity Dental Plan).
  
  
• New Retiree Dental Expense Plan - A new Retiree Dental Expense Plan, administered for the SHBP by Aetna Dental, will become effective January 1, 2005.  The Plan is available to all State retirees eligible to enroll under the medical plans in the SHBP Retired Group.  Any retiree who enrolls in the Retiree Dental Expense Plan is responsible for paying the full cost of their coverage.  Beginning January 1, 2005, when a State employee becomes eligible for medical plan coverage under the SHBP Retired Group, their SHBP offering letter will include information on enrolling under the Retiree Dental Expense Plan.  This will be a one-time offering at time of retirement or when first eligible for SHBP Retired Group enrollment.  For all those state employees that are currently retired and are receiving (or are eligible to receive) benefits under the SHBP Retired Group (including those that waived SHBP benefits because they have coverage under a public employer group plan from a spouse or their own employment) will be offered an opportunity to enroll in the Retiree Dental Expense Plan during a special open enrollment period.  This special open enrollment period will be held from October 1, 2004 through March 31, 2005.  Communications will be mailed directly to these State retirees.

A description of the plan and a chart outlining the benefits of the new Retiree Dental Expense Plan is available in Fact Sheet #73, Retiree Dental Expense Plan, Adobe PDF (32K) which can be found on our Web site at: www.state.nj.us/treasury/pensions

RETIREE PRESCRIPTION DRUG PLAN INFORMATION

In accordance with the provisions of the pilot Retiree Prescription Drug Plan under NJ PLUS and the Traditional Plan, effective January 1, 2005, retail pharmacy copayments for a 30-day supply will increase to $7 for generic drugs; $14 for preferred brand name drugs; and $29 for all other brand name prescription drugs. The mail order copayments for a 90-day supply will increase to $7 for generic drugs, $21 for preferred brand name drugs, and $36 for all other brand name prescription drugs.  The out-of-pocket maximum will increase to $552.

OPEN ENROLLMENT INFORMATIONAL MATERIALS

MILESTONES - Enclosed is a milestone chart that lists the critical dates of the open enrollment period and outlines the efforts being made to educate employees. Please use this chart as a checklist to guide your activities during open enrollment.

RATE CHARTS - Enclosed you will find rate charts for your use, as well as a sample open enrollment announcement flier that provides a list of medical and dental plans and the premium sharing costs for your employees. This flier is designed to assist your employees in making informed decisions concerning their health care coverage during this open enrollment period. 

State employees paid through the State's Centralized Payroll Unit are being provided with the open enrollment announcement flier with their September 24 paychecks.

HEALTH CAPSULE - The Health Capsule newsletter announces the SHBP Open Enrollment Period to employees and presents important information and changes that may affect their benefit selection.  A sample is enclosed for your review.

On September 24, the Health Capsule newsletter and open enrollment flier will be distributed with paychecks to all employees paid through the State's Centralized Payroll Unit. 

HEALTH PLAN CONTACTS - Also included in this mailing is a listing of marketing contacts for the various health and dental plans. Use these contacts to obtain provider directories or other plan specific literature. (These telephone numbers are not for member services. Please do not give these telephone numbers to your employees.)

NEW HEALTH AND DENTAL PLAN APPLICATIONS - For administrative purposes resulting from the expansion of the SHBP Dental Plans to local government and educational employers, the Health Benefits Bureau has returned to the use of separate applications for health plans (including prescription drug coverage) and the Employee Dental Plans.  The revised applications are enclosed and are also available for download from the SHBP home page.  For this open enrollment period, the Health Benefits Bureau will continue to accept employer-certified changes to SHBP plans on either the new separate health/prescription drug and dental applications or the former combined applications.

HEALTH PLAN COMPARISON CHARTS - Due to the difference in SHBP benefits for State Active employees, Local/Educational Active employees and all retirees, the SHBP has developed two different Comparison Charts - One for State Active employees and one for Local/Educational Active employees and all retirees (State or Local/Educational).   The comparison chart for State Active employees is currently being printed and copies will be shipped to employers for the start of the open enrollment period.

SUMMARY PROGRAM DESCRIPTION (SPD) BOOKLET - The SHBP Summary Program Description has been revised for the 2005 plan year.  The booklet is currently being printed and copies will be shipped to employers for the start of the SHBP Open Enrollment Period.  The SPD is also available for viewing over the Internet at: www.state.nj.us/treasury/pensions/shbp.htm

PLAN HANDBOOKS - The SHBP's member handbooks for the Traditional Plan, NJ PLUS, the Employee Prescription Drug Plan, and the SHBP Dental Plans are being revised for the 2005 plan year.  New editions will be available in January 2005 for plan enrollees.

ONLINE INFORMATION

The SHBP's plan comparisons, member handbooks, newsletters, and rate information are available over the Internet at the State Health Benefits Program home page: www.state.nj.us/treasury/pensions/shbp.htm

Web-based presentations on the SHBP Open Enrollment Period will also be available for both employers and employees during the open enrollment period.  Once open enrollment begins you will find the link on the SHBP home page.

Participating provider information for all SHBP medical plans is available in the Unified Provider Directory (UPD).  The UPD is an online service that provides a comprehensive listing of health care providers and facilities that deliver their services through one or more of the SHBP's health care plans.  Updated monthly, you can access the UPD through the SHBP home page at: www.state.nj.us/treasury/pensions/shbp.htm

TAX$AVE

The State Employees' Tax Savings Program (Tax$ave) Open Enrollment Period runs concurrent with the SHBP Open Enrollment Period (October 1 - November 1, 2004). Tax$ave is a benefit program available to full-time State employees who are eligible for the SHBP. Tax$ave can save your employees tax money by paying health and dental benefit premiums and eligible unreimbursed medical and/or dependent care expenses from before-tax dollars. See the Tax$ave Open Enrollment materials for more information. 

Internal Revenue Service (IRS) rules require that for an employee covered by the Premium Option Plan, payroll deductions for health and dental plan benefits remain the same for the entire plan year.  Therefore, no coverage level changes can be made which result in a change in the amount of an employee's health and/or dental plan deduction unless a Qualifying Event has occurred.

Tax$ave and Domestic Partners - SHBP members need to be aware of the possible federal tax implications of adding a domestic partner to SHBP benefits. Since the federal tax code does not view domestic partners in the same manner as spouses, an employer may have to treat the domestic partner SHBP benefit as taxable to the employee and withhold federal income, Social Security, and Medicare taxes on its value. Similarly, since the domestic partner's coverage is a federally taxable benefit, an employee who participates in the Tax$ave Premium Option Plan cannot make pre-tax payments for the cost of a domestic partner's coverage. Pre-tax dollars may still be used to pay for the employee's portion of the cost of his or her own and dependent children's coverage. If an employee wants to claim a federal tax dependency exemption for a domestic partner, he or she should contact the Internal Revenue Service or see IRS Tax Topic 354 - Dependents for more details.

ADDITIONAL INFORMATION

If you have any questions about the SHBP Open Enrollment Period or the information in this letter, please contact our Office of Client Services at (609) 292-5353, and select option #2 on the phone. When prompted, leave a message and a representative will return your call. 

Thank you for your assistance in making the SHBP Open Enrollment Period a success for your employees.

Enclosure:

September 10, 2004

The State Health Benefits Program (SHBP) Open Enrollment period for all State employees will begin on October 1, 2004 and end on November 1, 2004.  All changes to coverage made during this open enrollment will be effective on January 1, 2005 for employees of State universities, State colleges, and State authorities.

Completed employer-certified health benefit and/or dental applications should be forwarded to the Health Benefits Bureau as soon as they are received from employees. The last day that certified applications may arrive at the Health Benefits Bureau to be effective for the start of the new plan year is November 8, 2004.

In keeping with its current policy, the SHBP will not provide health fairs during this year's open enrollment period. 

RATES FOR 2005

The State Health Benefits Commission has approved new health, dental, and prescription drug plan rates for the 2005 plan year. These rates are based upon the recommendation of the Commission's actuarial consultant, Milliman USA.  Since the SHBP self-funds most of its plans, the claims experience used in projecting 2005 costs are based upon the actual claims experience of the group. 

As a result of contract negotiations and the fiscal year 2005 Budget Appropriations Act, SHBP medical plan deductibles and copayments and prescription drug copayments will be changing for a large majority of State employees.  Rates differ depending on whether an employee is affected by these plan changes.

Effective January 1, 2005, SHBP plan rates for the State Monthly Active Group, (those with plan changes and those without) will see the following aggregate percentage of increase:

PREMIUM SHARING

The premium share arrangements remain unchanged.  For those employees subject to premium sharing:

• There is no premium cost to any employee who enrolls in NJ PLUS. 
  
  
• Employees will pay 5% of the premium cost if enrolled in an HMO.
  
  
• Employees will pay 25% of the premium cost if enrolled in the Traditional Plan.

These percentages apply regardless of salary level or date of hire. 

MEDICAL AND PRESCRIPTION DRUG PLAN CHANGES

The plan changes that will affect the majority of employees are as follows:

• For the Traditional Plan, the annual deductible will be increasing from $100 per person to $250 per person effective January 1, 2005 as follows:

¹The total combined deductible for dependents adds up to $250 per year.

• For NJ PLUS and all HMOs (Aetna, AmeriHealth, CIGNA, Health Net, and Oxford), the copayment for primary doctor visits and visits to a specialist will increase from $5 to $10 as of January 1, 2005 for employees of State universities, State colleges, and State authorities.
  
  
• The copayments for the Employee Prescription Drug Plan will also be increasing as of January 1, 2005.  For each 30-day supply received at a retail pharmacy, the copayments will increase from $1 to $3 for generic drugs and from $5 to $10 for brand name prescription drugs. Mail order copayments for up to a 90-day supply will increase from $1 to $5 for generic drugs and $5 to $15 for brand name prescription drugs.

These changes will go into effect for employees covered by collective bargaining agreements, where the agreements provide for or adopt such changes, and all non-aligned employees. Employees in collective bargaining units who have not agreed to or adopted these changes will not be affected until such time as the majority representative agrees to them, or they are made part of a final and binding interest arbitration award. As of this printing, employees of the Executive Branch of the State covered under State labor agreements with the State Police Troopers, Sergeants, and Lieutenants bargaining units and five non-State Police law enforcement bargaining units will not be affected by the changes.

DENTAL PLAN INFORMATION

• Unity Dental Plan Organization - The State Health Benefits Commission did not renew the State's contract with Unity DPO, therefore, Unity Dental will no longer be offered under the Employee Dental Plans.  Employees enrolled in this dental plan must transfer to another dental plan offered during this open enrollment period.  Failure to choose another dental plan will result in the employee no longer having dental coverage after December 31, 2004.  Current enrollees in the Unity Dental Plan will be receiving communication that will provide more information on their dental plan choices and the impact on services currently in progress.   The following services will be continued to conclusion through a Unity Dental Plan professional if an employee or dependent was already in treatment on December 31, 2004: services for a crown or restoration for which a tooth was prepared; an appliance or modification of an appliance for which an impression was taken; root canal therapy for which the pulp chamber was opened; orthodontic treatment that began prior to the termination date of December 31, 2004.  Services shall be provided at no additional cost to the employee, except for any copayment or portion of copayment that has not yet been paid.

If you have employees enrolled in Unity Dental plan you will receive a listing from the SHBP to assist you in identifying employees who must submit a new dental enrollment application to make a plan change. 

• Employee Dental Plans Update - Oral Evaluations and cleanings have been changed for administrative ease of processing claims for all dental plans.  These changes are effective January 1, 2005, and should result in fewer claim denials. 
  
  
• Diagnostic - Oral evaluations can be performed up to two times per calendar year.  X-Rays can be made for two series of up to four films per calendar year;
  
  
• Preventive - Dental cleanings can be performed two times in a calendar year; and
  
  
• Fluoride - Two treatments can be performed per calendar year for eligible dependent children under 19 years of age.

Formerly, these benefits were available on a one-time basis every six months.

• Dental Plan Note - Employees must maintain enrollment in a dental plan choice for a minimum of 12 months before they are permitted to change plans. Therefore, if an employee was not enrolled in a dental plan as of January 1, 2004, they cannot make a dental plan change during this open enrollment period (exception made for Unity Dental Plan).
  
  
• New Retiree Dental Expense Plan - A new Retiree Dental Expense Plan, administered for the SHBP by Aetna Dental, will become effective January 1, 2005.  The Plan is available to all retirees eligible to enroll under the medical plans in the SHBP Retired Group.  Any retiree who enrolls in the Retiree Dental Expense Plan is responsible for paying the full cost of their coverage.  Beginning January 1, 2005, when an employee becomes eligible for medical plan coverage under the SHBP Retired Group, their SHBP offering letter will include information on enrolling under the Retiree Dental Expense Plan.  This will be a one-time offering at time of retirement or when first eligible for SHBP Retired Group enrollment.  All retirees who are receiving (or are eligible to receive) benefits under the SHBP Retired Group (including those that waived SHBP benefits because they have coverage under a public employer group plan from a spouse or their own employment) will be offered an opportunity to enroll in the Retiree Dental Expense Plan during a special open enrollment period.  This special open enrollment period will be held from October 1, 2004 through March 31, 2005.  Communications will be mailed directly to these retirees.

A description of the plan and a chart outlining the benefits of the new Retiree Dental Expense Plan is available in Fact Sheet #73, Retiree Dental Expense Plan, Adobe PDF (32K) which can be found on our Web site at: www.state.nj.us/treasury/pensions

RETIREE PRESCRIPTION DRUG PLAN INFORMATION

In accordance with the provisions of the pilot Retiree Prescription Drug Plan under NJ PLUS and the Traditional Plan, effective January 1, 2005, retail pharmacy copayments for a 30-day supply will increase to $7 for generic drugs; $14 for preferred brand name drugs; and $29 for all other brand name prescription drugs. The mail order copayments for a 90-day supply will increase to $7 for generic drugs, $21 for preferred brand name drugs, and $36 for all other brand name prescription drugs.  The out-of-pocket maximum will increase to $552.

OPEN ENROLLMENT INFORMATIONAL MATERIALS

MILESTONES - Enclosed is a milestone chart that lists the critical dates of the open enrollment period and outlines the efforts being made to educate employees. Please use this chart as a checklist to guide your activities during open enrollment.

RATE CHARTS - Enclosed you will find rate charts for your use, as well as sample open enrollment announcement fliers that provide a list of medical and dental plans and the premium sharing costs for State employees. These fliers are master copies that can be reproduced for distribution to your employees. The fliers are provided for three different payroll schedules (Monthly, 24 Pay Periods, and 26 Pay Periods). Choose the flier that corresponds to your payroll schedule.

These rate fliers are designed to assist your employees in making informed decisions concerning their health and dental care. Please distribute them to your employees prior to the start of the Open Enrollment.

HEALTH CAPSULE - The Health Capsule newsletter announces the SHBP Open Enrollment Period to employees and presents important information and changes that may affect their benefit selection.  A sample is enclosed for your review. The newsletters are scheduled for delivery to monthly employers in mid-September.  Please distribute them to your employees prior to the start of the open enrollment. 

HEALTH PLAN CONTACTS - Also included in this mailing is a listing of marketing contacts for the various health and dental plans. Use these contacts to obtain provider directories or other plan specific literature. (These telephone numbers are not for member services. Please do not give these telephone numbers to your employees.)

NEW HEALTH AND DENTAL PLAN APPLICATIONS - For administrative purposes resulting from the expansion of the SHBP Dental Plans to local government and educational employers, the Health Benefits Bureau has returned to the use of separate applications for health plans (including prescription drug coverage) and the Employee Dental Plans.  The revised applications are enclosed and are also available for download from the SHBP home page.  For this open enrollment period, the Health Benefits Bureau will continue to accept employer-certified changes to SHBP plans on either the new separate health/prescription drug and dental applications or the former combined applications.

HEALTH PLAN COMPARISON CHARTS - Due to the difference in SHBP benefits for State Active employees, Local/Educational Active employees and all retirees, the SHBP has developed two different Comparison Charts - One for State Active employees and one for Local/Educational Active employees and all retirees (State or Local/Educational).   The comparison chart for State Active employees is currently being printed and copies will be shipped to employers for the start of the open enrollment period.

SUMMARY PROGRAM DESCRIPTION (SPD) BOOKLET - The SHBP Summary Program Description has been revised for the 2005 plan year.  The booklet is currently being printed and copies will be shipped to employers for the start of the SHBP Open Enrollment Period.  The SPD is also available for viewing over the Internet at: www.state.nj.us/treasury/pensions/shbp.htm

PLAN HANDBOOKS - The SHBP's member handbooks for the Traditional Plan, NJ PLUS, the Employee Prescription Drug Plan, and the SHBP Dental Plans are being revised for the 2005 plan year.  New editions will be available in January 2005 for plan enrollees.

ONLINE INFORMATION

The SHBP's plan comparisons, member handbooks, newsletters, and rate information are available over the Internet at the State Health Benefits Program home page: www.state.nj.us/treasury/pensions/shbp.htm

Web-based presentations on the SHBP Open Enrollment Period will also be available for both employers and employees during the open enrollment period.  Once open enrollment begins you will find the link on the SHBP home page.

Participating provider information for all SHBP medical plans is available in the Unified Provider Directory (UPD).  The UPD is an online service that provides a comprehensive listing of health care providers and facilities that deliver their services through one or more of the SHBP's health care plans.  Updated monthly, you can access the UPD through the SHBP home page at: www.state.nj.us/treasury/pensions/shbp.htm

TAX$AVE

The State Employees' Tax Savings Program (Tax$ave) Open Enrollment Period runs concurrent with the SHBP Open Enrollment Period (October 1 - November 1, 2004). Tax$ave is a benefit program available to full-time State employees who are eligible for the SHBP. Tax$ave can save your employees tax money by paying health and dental benefit premiums and eligible unreimbursed medical and/or dependent care expenses from before-tax dollars. See the Tax$ave Open Enrollment materials for more information. 

Internal Revenue Service (IRS) rules require that for an employee covered by the Premium Option Plan, payroll deductions for health and dental plan benefits remain the same for the entire plan year.  Therefore, no coverage level changes can be made which result in a change in the amount of an employee's health and/or dental plan deduction unless a Qualifying Event has occurred.

Tax$ave and Domestic Partners - SHBP members need to be aware of the possible federal tax implications of adding a domestic partner to SHBP benefits. Since the federal tax code does not view domestic partners in the same manner as spouses, an employer may have to treat the domestic partner SHBP benefit as taxable to the employee and withhold federal income, Social Security, and Medicare taxes on its value. Similarly, since the domestic partner's coverage is a federally taxable benefit, an employee who participates in the Tax$ave Premium Option Plan cannot make pre-tax payments for the cost of a domestic partner's coverage. Pre-tax dollars may still be used to pay for the employee's portion of the cost of his or her own and dependent children's coverage. If an employee wants to claim a federal tax dependency exemption for a domestic partner, he or she should contact the Internal Revenue Service or see IRS Tax Topic 354 - Dependents for more details.

ADDITIONAL INFORMATION

If you have any questions about the SHBP Open Enrollment Period or the information in this letter, please contact our Office of Client Services at (609) 292-5353, and select option #2 on the phone. When prompted, leave a message and a representative will return your call. 

Thank you for your assistance in making the SHBP Open Enrollment Period a success for your employees.

Enclosure:

September 22, 2004

The State Health Benefits Program (SHBP) Open Enrollment Period for all eligible part-time employees of the State and part-time faculty at institutions of higher education will be held from October 1, 2004 through November 1, 2004.  These eligible part-time employees may elect to enroll for benefits under NJ PLUS and the Employee Prescription Drug Plan if they did not do so when first eligible.  They may also add any eligible dependents they have not previously enrolled.  Enrollments or changes to coverage level made during this open enrollment will be effective on January 1, 2005 for part-time employees. 

Completed employer-certified Part-time Employee Group applications should be forwarded to the Health Benefits Bureau as soon as they are received from employees.  Please mark these applications with the words, "Open Enrollment", on the top of the application to assist with processing. The last day that certified applications may arrive at the Health Benefits Bureau to be effective for the start of the new plan year is November 8, 2004.

New Copayments for State Part-time Employees as of January 1, 2005

• For NJ PLUS the copayment for primary doctor visits and visits to a specialist will increase from $5 to $10.
  
  
• The copayments for the Employee Prescription Drug Plan will also be increasing.  For each 30 day supply received at a retail pharmacy, the copayments will increase from $1 to $3 for generic drugs and from $5 to $10 for brand name prescription drugs.  Mail order copayments for up to 90-day supply will increase from $1 to $5 for generic drugs and $5 to $15 for brand name prescription drugs.

NOTE:  There is no increase in copayments for Local part-time employees.

RATE CHARTS - Enclosed you will find Part-time Active and Part-time COBRA Group Rates for NJ PLUS and the Employee Prescription Drug Plan. 

PLAN HANDBOOKS - The SHBP's member handbooks for the NJ PLUS and the Employee Prescription Drug Plan are being revised for the 2005 plan year.  New editions will be available in January 2005 for plan enrollees.

ONLINE INFORMATION

The SHBP's member handbooks, newsletters, and rate information are available over the Internet at the State Health Benefits Program home page: www.state.nj.us/treasury/pensions/shbp.htm

Participating provider information for NJ PLUS is available in the Unified Provider Directory (UPD).  The UPD is an online service that provides a comprehensive listing of health care providers and facilities that deliver their services through one or more of the SHBP's health care plans.  Updated monthly, you can access the UPD through the SHBP home page at: www.state.nj.us/treasury/pensions/shbp.htm

ADDITIONAL INFORMATION

If you have any questions about the SHBP Open Enrollment Period or the information in this letter, please contact our Office of Client Services at (609) 292-5353, and select option #2 on the phone. When prompted, leave a message and a representative will return your call. 

Thank you for your assistance in making the SHBP Open Enrollment Period a success for your employees.

Enclosure:

2004 SHBP Part-time Active and COBRA Rates

August 12, 2004

The annual open enrollment for the calendar year 2005 New Jersey State Employees Tax Savings Program (Tax$ave 2005) will be conducted from October 1 through November 1, 2004. Full-time employees of the State who are eligible for participation in the New Jersey State Health Benefits Program (SHBP) may participate in Tax$ave.

About Tax$ave

Tax$ave consists of three components:

1. The Premium Option Plan (POP);
   
   
2. The Unreimbursed Medical Spending Account (UMSA); and
   
   
3. The Dependent Care Spending Account (DCSA).

Tax$ave offers eligible employees the opportunity to increase their available income by reducing their federal tax liability. Each year eligible employees should review their personal financial circumstances and decide if they wish to participate or not. Open Enrollment offers employees the opportunity to conduct this review and then act on their decision.

Note: Tax savings on commuter mass transit and parking expenses are available at any time as a separate benefit to State employees under the Commuter Tax$ave Program and are not tied to this open enrollment period. See Fact Sheet #67, Commuter Tax$ave Program, Adobe PDF (28K) for details.

Premium Option Plan

Enrollment in the Premium Option Plan is automatic. This saves your employees tax money by paying health and dental premiums from pre-tax dollars and reducing their tax liability. If an employee does not wish to take advantage of the Premium Option Plan in 2005 (and therefore pay more in federal, Social Security, and Medicare taxes) he or she should file a Declination of Premium Option Plan (POP) form.

Flexible Spending Accounts

The Unreimbursed Medical Spending Account (UMSA); and the Dependent Care Spending Account (DCSA) are also referred to as Flexible Spending Accounts (FSA's).

• New! - Over-the-counter drugs are now eligible for reimbursement in the Unreimbursed Medical Spending Accounts. The Internal Revenue Service ruled that over-the-counter products/medications deemed for "medical care" will be considered reimbursable. "Medical care" includes amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease. Amounts paid for medicines and drugs are expenditures for medical care, but expenditures that are merely beneficial to the general health of an individual, such as vitamins and other supplements, are not eligible. For more information about expenses that are eligible under Unreimbursed Medical Spending Accounts and Dependent Care Spending Accounts, please visit the Horizon Healthcare Web site through the link from the Division of Pensions and Benefits' Tax$ave page at: www.state.nj.us/treasury/pensions/taxsave.htm
  
  
• Tax$ave Unreimbursed Medical Spending Accounts feature the Benny^TM Card, a special MasterCard^® that draws on the value of the employee's annual UMSA election amount, making the UMSA easier to use. Each time an employee uses Benny to pay for a qualified health care expense at a health care provider or business that accepts MasterCard, the amount of the qualified purchase is transferred from the UMSA automatically - eliminating the need to lay out cash at the time of purchase and file for a reimbursement.
  
  
• New! - FSA Assist is a new service that can help employees estimate how much they should allocate for the Unreimbursed Medical Spending Account.  Employees simply select their plan and FSA Assist incorporates deductibles, coinsurance, and copayment amounts, along with other plan elements, into a customized estimate.  Access to FSA Assist is available over the Internet.  See the Tax$ave 2005 newsletter for more information on how to access this service.

Unlike the POP or the plans of the SHBP, prior participation in a Tax$ave FSA in 2004 does not carry over automatically into 2005. Employees must enroll again to participate in an FSA for calendar year 2005.

Employees have three ways of enrolling in the Tax$ave FSA accounts: mail, telephone, and Internet. The Tax$ave publications will provide the following instructions to employees:

• Mail: FSA Election Applications must be mailed directly to Horizon Healthcare by the employee. All election forms must be postmarked no later than November 1, 2004, to be accepted. Those postmarked after November 1, 2004 will be returned without action. Benefits offices should not be involved in processing or mailing FSA Election Applications.
  
  
• Telephone: Employees may either enroll (or reenroll) in the UMSA or DCSA plans for 2005 over the phone by calling Horizon Healthcare's automated voice response unit at 1-800-224-4426. This is a great opportunity to quickly and easily go through the process of a new or repeat enrollment. Horizon will inform current participating employees of this opportunity through a direct mailing in September. The deadline for enrollment by telephone is midnight, November 1, 2004.
  
  
• Internet: Again this year employees have the ability to enroll (or reenroll) over the Internet. Go to the Horizon Healthcare Web page through a link from the Division of Pensions and Benefits' Tax$ave page at: www.state.nj.us/treasury/pensions/taxsave.htm and follow the simple directions. The deadline for enrollment over the Internet is midnight, November 1, 2004.

Tax$ave and Domestic Partners

Beginning July 10, 2004, under the New Jersey Domestic Partnership Act, State employees were able to add a same-sex domestic partner to their health and dental insurance coverage. However, before any premiums that the employee pays for the domestic partner coverage can be made on a pre-tax basis under the Tax$ave Premium Option Plan, the domestic partner must be able to qualify as a "tax dependent" of the employee for federal tax filing purposes under IRC Section 152. Similarly, the domestic partner must qualify as the employee's federal tax dependent before an out-of-pocket medical expense incurred by the domestic partner can be reimbursed under the Unreimbursed Medical Spending Account.

If the domestic partner is not a "qualified tax dependent" of the employee, any premium deductions made for the domestic partner's coverage must be made on an after-tax basis and funds in the Unreimbursed Medical Spending Account cannot be used to cover the domestic partner's medical expenses.  See IRS Tax Topic 354 - Dependents for additional information on dependent status for federal tax purposes.  Additional information regarding the Domestic Partnership Act can be found in Fact Sheet #71, Benefits Under the Domestic Partnership Act, Adobe PDF (39K) which is available on the Division of Pensions and Benefits Web site: www.state.nj.us/treasury/pensions

Employee Seminars

Upon request, Horizon Healthcare will provide Tax$ave educational seminars, at your workplace, for interested employees. The seminars are about 60 minutes in duration (including questions and answers). These have proven to be very successful educational tools and we strongly encourage you to make one available to your employees. Please see the enclosed request form to schedule a Horizon Healthcare representative.

Tax$ave Support Materials

The remainder of this letter provides information on the Tax$ave Open Enrollment publications and support available to assist you in explaining this important benefit program to your employees. Please do your best to make a concerted effort to inform your employees of the open enrollment and to educate them on the valuable benefits that Tax$ave offers them. We believe that more employees will participate in Tax$ave if they are made aware and understand the value of the tax savings offered by the program.

Enclosed is the Tax$ave Open Enrollment Milestones chart that lists the critical dates of the Tax$ave 2005 Annual Open Enrollment and outlines the efforts being made to educate employees. Please use this chart as a checklist to guide your activities during the open enrollment.

Anouncement of the open enrollment to employees paid through Centralized Payroll will be made in a August 27 paycheck message and again in a September 10 paycheck message that will be accompanied by three payroll inserts. These inserts are:

• The Tax$ave 2005 Open Enrollment News that announces the open enrollment, outlines the components of the program with emphasis on its tax saving advantages, and identifies the November 1, 2004 deadline for submission of all election materials;
  
  
• An FSA pamphlet that describes the Unreimbursed Medical Spending Account (UMSA) and the Dependent Care Spending Account (DCSA); and
  
  
• The Premium Option Plan 2005 pamphlet that explains the advantages and disadvantages of participation.

The September 24 paychecks will carry another Tax$ave 2005 Open Enrollment announcement message and "reminder messages" will be provided to employees through paycheck messages on October 8 and October 22 (a final November 5 paycheck message will address the Commuter Tax$ave Program). The text of these check message announcements and preview copies of the Tax$ave publications are enclosed with this letter.

The other open enrollment materials you will need are the FSA Election Kits and the Declination of Premium Option Plan (POP) forms for Plan Year 2005 form.

• FSA Election Kits for 2005 will be sent directly to benefits administrators by Horizon Healthcare, along with a request form for additional kits. Please provide the FSA Election Kits to those employees who request them.
  
  
• This letter includes a minimal supply of the declination forms. These can be copied for use by those few employees who do not wish to participate in the POP and, therefore, pay more in tax. (Note: do not distribute POP Declination forms to employees unless they ask for one.) If an employee chooses not to save tax dollars under the Tax$ave Premium Option Plan and wants to pay more federal income, Social Security, and Medicare taxes on the salary used to pay their medical and dental premiums in 2005, they must complete a POP form declining the federal tax break they could receive. Employees should request these forms from you. We will be instructing employees to return the Declination of Premium Option Plan (POP) forms to benefits administrators by November 1, 2004.  Benefits administrators must then forward declination forms to Centralized Payroll by November 12, 2004.

We appreciate your cooperation. Your involvement in the Tax$ave Open Enrollment is key to your employees receiving the valuable benefits offered by this program. If you have any questions about Tax$ave 2005 or the open enrollment, call the Horizon Healthcare Insurance Agency, Inc. at 1-800-224-4426, or visit the Division of Pensions and Benefits' Tax$ave Internet site at: www.state.nj.us/treasury/pensions/taxsave.htm

August 12, 2004

The annual open enrollment for the calendar year 2005 New Jersey State Employees Tax Savings Program (Tax$ave 2005) will be conducted from October 1 thorough November 1, 2004. Full-time employees of the State, State authorities, State Universities, and State colleges who are eligible for participation in the New Jersey State Health Benefits Program (SHBP) may participate in Tax$Ave.

About Tax$ave

Tax$ave consists of three components:

1. The Premium Option Plan (POP);
   
   
2. The Unreimbursed Medical Spending Account (UMSA); and
   
   
3. The Dependent Care Spending Account (DCSA).

Tax$ave offers eligible employees the opportunity to increase their available income by reducing their federal tax liability. Each year eligible employees should review their personal financial circumstances and decide if they wish to participate or not. Open Enrollment offers employees the opportunity to conduct this review and then act on their decision.

Note: Tax savings on commuter mass transit and parking expenses are available at any time as a separate benefit to State employees under the Commuter Tax$ave Program and are not tied to this open enrollment period. See Fact Sheet #67, Commuter Tax$ave Program, Adobe PDF (39K) for details.

Premium Option Plan

Enrollment in the Premium Option Plan is automatic. This saves your employees tax money by paying health and dental premiums from pre-tax dollars and reducing their tax liability. If an employee does not wish to take advantage of the Premium Option Plan in 2005 (and therefore pay more in federal, Social Security, and Medicare taxes) he or she should file a Declination of Premium Option Plan (POP) form.

Flexible Spending Accounts

The unreimbursed Medical Spending Account (UMSA); and the Dependent Care Spending Account (DCSA) are also referred to as Flexible Spending Accounts (FSA's).

• NEW! - Over-the-counter drugs are now eligible for reimbursement in the unreimbursed Medical Spending Accounts The Internal Revenue Service ruled that over-the-counter products/medications deemed for medical care will be considered reimbursable. Medical care includes amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease. Amounts paid for medicines and drugs are expenditures for medical care, but expenditures that are merely beneficial to the general health of an individual, such as vitamins and other supplements, are not eligible. For more information about expenses that are eligible under unreimbursed Medical Spending Accounts and Dependent Care Spending Accounts, please visit the Horizon Healthcare Web site thorough the link from the Division of Pensions and Benefits' Tax$ave page at: www.state.nj.us/treasury/pensions/taxsave.htm
  
  
• Tax$ave unreimbursed Medical Spending Accounts feature the Benny TM Card, a special MasterCard p® p that draws on the value of the employee's annual UMSA election amount, making the UMSA easier to use Each time an employee uses Benny to pay for a qualified health care expense at a health care provider or business that accepts MasterCard, the amount of the qualified purchase is transferred from the UMSA automatically - eliminating the need to lay out cash at the time of purchase and file for a reimbursement
  
  
• New! - FSA Assist is a new service that can help employees estimate how much they should allocate for the unreimbursed Medical Spending Account Employees simply select their plan and FSA Assist incorporates deductibles, coinsurance, and copayment amounts, along with other plan elements, into a customized estimate.  Access to FSA Assist is available over the Internet.  See the Tax$ave 2005 newsletter for more information on how to access this service.

Unlike the POP or the plans of the SHBP, prior participation in a Tax$ave FSA in 2004 does not carry over automatically into 2005. Employees must enroll again to participate in an FSA for calendar year 2005.

Employees have three ways of enrolling in the Tax$ave FSA accounts this year: mail, telephone, and Internet. The Tax$ave publications will provide the following instructions to employees:

• Mail: FSA Election Applications must be mailed directly to Horizon Healthcare by the employee. All election forms must be postmarked no later than November 1, 2004, to be accepted. Those postmarked after November 1, 2004 will be returned without action. Benefits offices should not be involved in processing or mailing FSA Election Applications.
  
  
• Telephone: Employees may either enroll (or reenroll) in the UMSA or DCSA plans for 2005 over the phone by calling Horizon Healthcare's automated voice response unit at 1-800-224-4426. This is a great opportunity to quickly and easily go thorough the process of a new or repeat enrollment. Horizon will inform current participating employees of this opportunity thorough a direct mailing in September. The deadline for enrollment by telephone is midnight, November 1, 2004.
  
  
• Internet: Again this year employees have the ability to enroll (or reenroll) over the Internet. Go to the Horizon Healthcare Web page thorough a link from the Division of Pensions and Benefits' Tax$ave page at: www.state.nj.us/treasury/pensions/taxsave.htm and follow the simple directions. The deadline for enrollment over the Internet is midnight, November 1, 2004.

Tax$ave and Domestic Partners

Beginning July 10, 2004, under the New Jersey Domestic Partnership Act, State employees were able to add a same-sex domestic partner to their health and dental insurance coverage. However, before any premiums that the employee pays for the domestic partner coverage can be made on a pretax basis under the Tax$ave Premium Option Plan, the domestic partner must be able to qualify as a "tax dependent" of the employee for federal tax filing purposes under IRC Section 152. Similarly, the domestic partner must qualify as the employee's federal tax dependent before an out-of-pocket medical expense incurred by the domestic partner can be reimbursed under the unreimbursed Medical Spending Account.

If the domestic partner is not a "qualified tax dependent" of the employee, any premium deductions made for the domestic partner's coverage must be made on an after-tax basis and funds in the unreimbursed Medical Spending Account cannot be used to cover the domestic partner's medical expenses.  See IRS Tax Topic 354 - Dependents for additional information on dependent status for federal tax purposes.  Additional information regarding the Domestic Partnership Act can be found in Fact Sheet #71, Benefits under the Domestic Partnership Act, Adobe PDF (41K) which is available on the Division of Pensions and Benefits Web site: www.state.nj.us/treasury/pensions

Employee Seminars

Upon request, Horizon Healthcare will provide Tax$ave educational seminars, at your workplace, for interested employees. The seminars are about 60 minutes in duration (including questions and answers). These have proven to be very successful educational tools and we strongly encourage you to make one available to your employees. Please see the enclosed request form to schedule a Horizon Healthcare representative.

Tax$ave Support Materials

The remainder of this letter provides information on the Tax$ave Open Enrollment publications and support available to assist you in explaining this important benefit program to your employees. Please do your best to make a concerted effort to inform your employees of the open enrollment and to educate them on the valuable benefits that Tax$ave offers them. We believe that more employees will participate in Tax$ave if they are made aware and understand the value of the tax savings offered by the program.

Enclosed is the Tax$ave Open Enrollment Milestones chart that lists the critical dates of the Tax$ave 2005 Annual Open Enrollment and outlines the efforts being made to educate employees. Please use this chart as a checklist to guide your activities during the open enrollment.

The Division will also provide State Monthly employers, State Universities, and State Colleges with sufficient copies of the Tax$ave 2005 Open Enrollment News and the Premium Option Plan 2005 pamphlet for all eligible employees. Horizon Healthcare will provide sufficient copies of the FSA pamphlet for distribution to all of your eligible employees.

• The Tax$ave 2005 Open Enrollment News announces the open enrollment, outlines the components of the program with emphasis on its tax saving advantages, and identifies the November 1, 2004 deadline for submission of all election materials.
  
  
• The Premium Option Plan 2005 pamphlet explains the advantages and disadvantages of participation.
  
  
• The FSA pamphlet describes the unreimbursed Medical Spending Account (MSA) and the Dependent Care Spending Account (DCSA).

These publications will be shipped to employers early in September and you should distribute them to your employees before the Open Enrollment start date on October 1, 2004.  Preview copies of these publications are enclosed with this letter.

We also encourage you to provide your employees with reminders of the Tax$ave Open Enrollment to ensure they don't allow this opportunity to slip by without action.

The other open enrollment materials you will need are the FSA Election Kits and the Declination of Premium Option Plan (POP) forms for Plan Year 2005 form.

• FSA Election Kits for 2005 will be sent directly to benefits administrators by Horizon Healthcare, along with a request form for additional kits. Please provide the FSA Election Kits to those employees who request them.
  
  
• This letter includes a minimal supply of the declination forms. These can be copied for use by those few employees who do not wish to participate in the POP and, therefore, pay more in tax. (Note: do not distribute POP Declination forms to employees unless they ask for one.) If an employee chooses not to save tax dollars under the Tax$ave Premium Option Plan and wants to pay more federal income, Social Security, and Medicare taxes on the salary used to pay their medical and dental premiums in 2005, they must complete a POP form declining the federal tax break they could receive. Employees should request these forms from you. We will be instructing employees to return the Declination of Premium Option Plan (POP) forms to benefits administrators by November 1, 2004. Benefits administrators must then forward declination forms to payroll.

We appreciate your cooperation. Your involvement in the Tax$ave Open Enrollment is key to your employees receiving the valuable benefits offered by this program. If you have any questions about Tax$ave 2005 or the open enrollment, call the Horizon Healthcare Insurance Agency, Inc. at 1-800-224-4426, or visit the Division of Pensions and Benefits' Tax$ave Internet site at: www.state.nj.us/treasury/pensions/taxsave.htm

August 12, 2004

The State Health Benefits Program (SHBP) Open Enrollment period for all employees will begin on October 1, 2004 and end on November 1, 2004.  All changes to coverage made during this open enrollment will be effective on December 25, 2004, for State Biweekly employees paid through State Centralized Payroll and January 1, 2005 for all other employees.

Enclosed is a milestone chart that lists the critical dates of the Open Enrollment. Please use this chart as a checklist to guide your activities during the Open Enrollment.

Samples of this year's SHBP open enrollment materials including rate charts, Health Capsule newsletters, and contact information for the available plans will be forwarded to employers under a second mailing early in September. (Distribution of the SHBP open enrollment materials to employees paid through Centralized Payroll is scheduled for the September 24 payroll - other employers will receive materials through mailings in September.) Updated versions of the SHBP's plan comparisons, newsletters, and rate information will also be available over the Internet at the State Health Benefits Program home page: www.state.nj.us/treasury/pensions/shbp.htm when the Open Enrollment begins in October.

Completed employer certified health benefit applications should be forwarded to the Health Benefits Bureau as soon as they are received from employees. (The last day that certified applications must arrive at the Health Benefits Bureau to be effective for the start of the new plan year is November 8, 2004.)

As is previous years, we look forward to and thank you for your continued assistance in making the Open Enrollment a success for your employees.

MEMORANDUM

August 2004

Enclosed please find your PFRS employer pension liability invoice for 2005.  The invoice reflects the impact of Chapter 108, P.L. 2003 that calls for the return of pension contributions on a phase-in basis.  For 2004 20% was billed and now in year two of the phase-in, your bill reflects a phase-in amount of 40%.  The phase-in will continue through 2006, 2007 and 2008 with 60%, 80% and 100% of the actuarially calculated amounts being due for those years respectively.

The enclosed invoice reflects a Chapter 108, P.L. 2003 phase-in-amount credit that indicates the amount your location's pension contribution has been reduced for this year.  However, please note that if your location participated in the Early Retirement Incentive Program 1, the invoice does include this amount, which is reflected as ERI 1 liability. 

The amount due is payable by the statutory payment date of April 1, 2005.  If timely payment is not received, interest, according to statute, must be levied at the rate of 10% per annum.

This information is being provided to you earlier than normal to assist you with your budgeting process.  Additionally, please note that a new payment process will be utilized for the 2005 bill.  You will be required to make your payment electronically through the same system used to make your monthly transmittal payments for employee pension contributions.  However, this system will not be available until October.  Therefore, information will be provided to you separately regarding when and how to use the new system.

If there are any questions regarding this invoice, please call (609) 984-4521, Prompt 1.

Thank you.

MEMORANDUM

August 2004

As a result of the existence of excess pension assets, your location has not been required to make normal and accrued liability pension contributions to the Public Employees Retirement System since 1997.  Based on the July 1, 2003 actuarial valuation, which determines contribution requirements for 2005, there are no longer excess pension assets available to reduce contribution requirements.  Consequently, employer pension contributions will again be due in 2005.

However, in order to assist local employers with meeting their current budgetary obligations as well those in coming years, Chapter 108, P.L. 2003 was passed in 2003.  This Law calls for the return of employer pension contributions on a phase-in basis with 20% of the actuarially calculated amount for 2005 being due and payable.  This approach will continue with 40% of the actuarially calculated amount being due in 2006, 60% being due in 2007, 80% being due in 2008, until 100% of the actuarially calculated amount is due in 2009.

The enclosed invoice reflects a Chapter 108, P.L. 2003 phase-in-amount credit that indicates the amount your location's pension contribution has been reduced for this year.  However, please note that if your location participated in any of the Early Retirement Incentive Programs, the invoice does include this amount which is reflected as ERI 1, ERI 2 or ERI 3 liability.

The amount due is payable by the statutory payment date of April 1, 2005.  If timely payment is not received, interest, according to statute, must be levied at the rate of 10% per annum.

This information is being provided to you earlier than normal to assist you with your budgeting process.  Additionally, please note that a new payment process will be utilized for the 2005 bill.  You will be required to make your payment electronically through the same system used to make your monthly transmittal payments for employee pension contributions.  However, this system will not be available until October.  Therefore, information will be provided to you separately regarding when and how to use the new system.

If there are any questions regarding this invoice, please call (609) 984-4521, Prompt 1.

Thank you.

MEMORANDUM

August 2004

Enclosed is an Invoice to cover your employer accrued liability to the Teachers' Pension and Annuity Fund for the Early Retirement Incentive
1 & 2 Programs (ERI 1 & 2).

This invoice is payable by the statutory payment date of April 1, 2005.  If timely payment is not received, interest, according to statute, must be levied at the rate of 10% per annum.

This information is being provided to you earlier than normal to assist you with your budgeting process.  Additionally, please note that a new payment process will be utilized for the 2005 bill.  You will be required to make your payment electronically through the same system used to make your monthly transmittal payments for employee pension contributions.  However, this system will not be available until October.  Therefore, information will be provided to you separately regarding when and how to use the new system.

If there are any questions regarding this invoice, please call (609) 984-4521, Prompt 1.

Thank you.

July 2004

We are excited to announce that the Transmittal Electronic Payment System (TEPS) is enhanced to accept your monthly transmittal payments and payments for transmittal shortages through the INTERNET.  Starting July 30, 2004,  you may choose to access TEPS through the Internet instead of calling in your payments.  In addition to making payments on-line, you can cancel payments on-line providing that you make the cancellation before the 5:30 pm cut off time.  On-line inquiries in which you can view and print a history of your payments are also available.

To start using TEPS through the Internet, log on to www.payments-govonesolutions.com/njpen.  Once you have logged on to TEPS, enter your location number and current password, the same password you are using with the telephone application.  You will find a user friendly program that will guide you through the payment, inquiry or payment cancellation processes.  The Division will still receive your payments the next business day, as long as you enter your payment on-line before the 5:30 pm cut off time.

In the upcoming year, we will be making more enhancements to TEPS.  You will be able to use TEPS to pay for your Annual Employer Appropriation bill, Delayed Enrollment bills and Interest on Delinquent Reports and Monthly Transmittals bills.

For employers who participate in the NJ State Health Benefits Program (SHBP), we will be expanding TEPS to allow payment of premiums for active employees and retirees, if applicable.  We will mail TEPS Enrollment Authorization Forms at a later date for this purpose.  Once the employer is successfully enrolled and confirmed, you will have the ability to use the TEPS Internet Payment system for your SHBP payments.

We encourage you to use TEPS on the Internet.  It will save you time, cut operating costs and ensure the accuracy of your payments by giving you the ability to view the payments as you enter them on-line.

If you have any questions about the Internet payment option, please contact Customer Service at the TEPS Helpline at 1-888-835-3345 between 9:00 a.m. and 7:00 p.m.

July 13, 2004

The Division of Pensions and Benefits has made several recent changes to its Web site to help members find downloadable forms. 

Retirement Applications for all of the State-administered defined benefit retirement systems are now available for download from our main Web site. The applications are in Adobe PDF format and include:

• "Regular" versions of the applications that can be printed out and filled in by hand;
  
  
• In most cases, "Fill-in online and Print" versions that can be completed* on your PC; and
  
  
• Both "Regular" and "Fill-in" versions* of the Certification of Service and Final Salary forms.

The retirement applications and certifications also include active links that take members to the corresponding instruction pages if help is needed when completing the forms.

A link to the retirement application index page is now on the Division's home page (at: www.state.nj.us/treasury/pensions under "Quick Links") and on our "Forms and Publications" page that can be reached from a link in the "Resources" section of our home page. Links are also provided to the on the index page to appropriate fact sheets for members who are just seeking retirement information.

*Note that "Fill-in" applications and certifications can be filled in online but cannot yet be submitted online - both types of application require printing, a signature, and mailing to the Division. We are working on developing forms that can be submitted electronically, but we are several months away from attaining that capability.

Additional links to the forms most commonly requested by our members are also now located on our "Forms and Publications" page. Please inform your employees about these online resources.

Employers should also note that links to the forms employers need for the administration of all retirement systems, Deferred Compensation, SACT, and the State Health Benefits Program remain available in the "Forms Index" of the Employer Pension and Benefits Administration Manual (EPBAM) at: www.state.nj.us/treasury/pensions/epbam/index.htm

We thank you for using our Web site and these online services.

July 2004

The Division of Pensions and Benefits has revised the following forms:

• the ENROLLMENT APPLICATION Adobe PDF (12K) for the Public Employees' Retirement System (PERS) and Teachers' Pension and Annuity Fund (TPAF) members; and
  
  
• the DESIGNATION OF BENEFICIARY form for all members. (Note: Effective February 1, 2013, paper Designation of Beneficiary forms are no longer accepted by the Division. Verify or update your beneficiary information using MBOS.)

A brief description of the changes is provided below.

ENROLLMENT APPLICATION for PERS and TPAF members Adobe PDF (12K)

The PERS and TPAF enrollment applications have been combined into a unified Enrollment Application.  The new pension Enrollment Application should be used when enrolling an employee into either the PERS or TPAF.  Please note the following:

The employee completes the section entitled Applicant Information on the front and the Designation of Beneficiary data on the reverse side.

The employer (Human Resources Representative or Certifying Officer) completes all other requested information.

The Enrollment Applicationmust be submitted on a timely basis; otherwise, late employer liability may be assessed.  If the employee is unable to designate a beneficiary at the time of enrollment, the application should be submitted and the employee's estate will be designated as the beneficiary until the Division receives a Designation of Beneficiary form naming a specific beneficiary.

DESIGNATION OF BENEFICIARY for all members of State-administered pension funds

The process to change the beneficiary designated to receive pension and life insurance benefits upon a member's death has been made easier.  The Designation of Beneficiary form, used by all members to designate or change their beneficiary, no longer requires notarization and includes additional instructions and tips for completing the form, and answers too frequently asked questions.

For additional information on completing the Designation of Beneficiary form and details on how to specify special provisions when nominating a beneficiary, such as a trust or a minor, electing unequal distributions or definite dollar amounts, see Fact Sheet #68, Designating a Beneficiary Adobe PDF (27K). This Fact Sheet can be viewed on our Web site at: www.state.nj.us/treasury/pensions/epbam/support/factindex.htm

Attached you will find copies of these new publications.  You can photocopy the attachments or print additional copies from the online Employer Pensions and Benefits Administrative Manual at www.state.nj.us/treasury/pensions/epbam/index.htm  You can also bulk order copies through the Employer Forms Hotline at (609) 777-4357.  Please recycle any remaining copies of the previous PERS and TPAF Enrollment Applications or Designation of Beneficiary forms.

If you have any questions regarding these new publications, e-mail us at pensions.nj@treas.state.nj.us or contact the Office of Client Services at (609) 292-7524.

Attachments

Enrollment Application Adobe PDF (12K)
Designation of Beneficiary
Fact Sheet #68 Adobe PDF (27K)

June 14, 2004

The State Health Benefits Program (SHBP) has revised the health benefit enrollment application for local active employees to allow for the addition of same-sex domestic partners to SHBP coverage.  This new application (form number HA-0709-0704) replaces the previous active employee application (HA-0068).  You may begin using this new application immediately.  However, domestic partners cannot be added to coverage until the later of August 1, 2004 or your governing body choosing by resolution to extend domestic partner health benefits to its employees.

Please also note these other changes to the application and/or its processing:

• Do not complete this form just to change your Primary Care Physician (PCP). If a member only wants to make a change to their PCP, the member should contact the medical plan directly.  Toll-free telephone numbers for SHBP plans are found in the SHBP Summary Program Description and on the SHBP Plan Comparison Chart.
  
  
• Do not complete this form just to change your address. If a member only wants to make a change to their address, the member should contact the Division of Pensions and Benefits - Office of Client Services at (609) 292-7524 and request a change of their SHBP address information.
  
  
• A Primary Care Physician ID Number must be given for the member's PCP and the PCPs of all dependents enrolling in NJ PLUS or an HMO plan.  The SHBP can no longer accept a physician's name as identification for enrollment.  If a PCP ID Number is not listed, the member will get a "must select PCP letter" from the plan and in-network services may not be covered.  PCP ID Numbers can be obtained by contacting the health plan directly, the doctor's office, or through the Unified Provider Directory found on the SHBP home page at: www.state.nj.us/treasury/pensions/shbp.htm
  
  
• Certifying Officers should note the responsibilities that have been added to the instructions for the "Employer Certification".  By verifying and certifying the requested information, employers can help prevent delays in the enrollment of their employees.
  
  
• Members who wish to enroll a domestic partner must submit a photocopy of their Certificate of Domestic Partnership along with this application. The employer's governing body must also have chosen by resolution to extend domestic partner health benefits to its employees.
  
  
• As of July 1, 2004 we are requesting a photocopy of a marriage certificate for new enrollees who are including a spouse as a dependent or for current enrollees who are adding a new dependent spouse.

A copy of the new application is enclosed and can be reproduced for use by your employees.  The application is also available for printing from the forms index of the online Employer Pension and Benefits Administration Manual (EPBAM) at:
www.state.nj.us/treasury/pensions /epbam/support/formsindex.htm

Enclosure

June 14, 2004

The State Health Benefits Program (SHBP) has revised the health benefit enrollment application for State active employees. This new application (form number HA-0711-0704) combines medical, prescription drug, and dental plan enrollment into a single form, replacing the previous medical/prescription application (HA-0068) and the separate dental application (HD-0081)*. You may begin using this new application immediately.  However, please note that the domestic partner provisions are not effective until July 10, 2004.

*This application is also revised from the sample initially sent with the letters of May 2004 describing benefits under the Domestic Partnership Act.

Please also note these other changes to the application and/or its processing:

• Do not complete this form just to change a Primary Care Physician (PCP) or dentist. If a member only wants to make a change to their PCP or dentist, the member should contact the medical or dental plan directly.  Toll-free telephone numbers for SHBP plans are found in the SHBP Summary Program Description and on the SHBP Plan Comparison Chart.
  
  
• Do not complete this form just to change your address. If a member only wants to make a change to their address, the member should contact the Division of Pensions and Benefits - Office of Client Services at (609) 292-7524 and request a change of their SHBP address information.
  
  
• A Primary Care Physician ID Number must be given for the member's PCP and the PCPs of all dependents enrolling in NJ PLUS or an HMO plan.  The SHBP can no longer accept a physician's name as identification for enrollment.  If a PCP ID Number is not listed, the member will get a "must select PCP letter" from the plan and in-network services may not be covered.  PCP ID Numbers can be obtained by contacting the health plan directly, the doctor's office, or through the Unified Provider Directory found on the SHBP home page at: www.state.nj.us/treasury/pensions/shbp.htm
  
  
• Certifying Officers should note the responsibilities that have been added to the instructions for the "Employer Certification".  By verifying and certifying the requested information, employers can help prevent delays in the enrollment of their employees.
  
  
• Members who wish to enroll a domestic partner - after July 10, 2004 - must submit a photocopy of their Certificate of Domestic Partnership along with this application.
  
  
• As of July 1, 2004 we are requesting a photocopy of a marriage certificate for new enrollees who are including a spouse as a dependent or for current enrollees who are adding a new dependent spouse.

A copy of the new application is enclosed and can be reproduced for use by your employees.  The application is also available for printing from the forms index of the online Employer Pension and Benefits Administration Manual (EPBAM) at:
www.state.nj.us/treasury/pensions /epbam/support/formsindex.htm

Enclosure

May 10, 2004

TO: Certifying Officer State and Autonomous State College/University
FROM: John D. Megariotis, Deputy Director, Finance
SUBJECT: PERS State Rate Increase July 2004

Clarification - Change To Effective Date Of Member Pension Rates -
Public Employees' Retirement System

Chapter 415, P.L. 1999 reduced the pension rate for members of the Public Employees' Retirement System from 4.5% to 3%.  Effective PAY PERIOD #15, the period from 6/26/04 - 7/9/04, the Public Employees' Retirement System (State Employees) member contributions rate will return to the normal rate of 5%.

The previous reduction in the member rate for the PERS was authorized by statute and was based on the existence of surplus pension assets in the retirement system.  However, also per statute when there are no longer surplus pension assets, the member rate for PERS will return to the normal rate of 5%.

Retroactive increases paid on or after July 16, 2004 pay date should be deducted at 5%, including any portion of the retroactive salary that covered a period prior to July 10, 2004.

Prior direction from this office indicated that the change in rate was to take effect with the first payday of July 2004.

May 13, 2004

Chapter 246, P.L. 2003 the Domestic Partnership Act, is effective on July 10, 2004.  This law establishes the rights and responsibilities of domestic partners in the State of New Jersey and also extends certain health and pension benefits to same-sex domestic partners of State employees.  Chapter 246 allows local government and education entities participating in the State Health Benefits Program (SHBP) to extend these same benefits to same-sex domestic partners of their employees by resolution of their governing body.  This letter describes the:

• SHBP benefits that will be extended to same-sex domestic partners of State employees and the employees of local government and education entities that adopt SHBP domestic partnership benefits by resolution; and
  
  
• Procedures for local entities participating in the SHBP to adopt SHBP domestic partner benefits.

We have sent all local public employers information about extending pension benefits to domestic partners in a separate letter.

The SHBP Domestic Partner Benefit

Chapter 246 states that same-sex domestic partners of State employees will be provided the same SHBP benefits as are provided to spouses.  It does this by changing the definition of dependents of State employees in the statutes governing the SHBP to include a same-sex domestic partner.

Local government and education employers have the option to keep the current definition of "dependent" or adopt the definition that will be used by the State for its employees.  (Note: The provisions in Chapter 246 that address opposite-sex domestic partners over age 62 do not apply to the health benefits or pension provisions in the law.  See sections 2e and 58a of the Domestic Partnership Act.)  Also note that the benefits described in this section will not apply to your employees and retirees if your governing body does not specifically act to adopt the SHBP provisions of the Domestic Partnership Act.

To implement this law, the Member & Spouse level of coverage will also be used for an employee and domestic partner.  The premium rate for Member & Spouse and Member & Domestic Partner coverage will be the same.  If the employee also has children enrolled for coverage, then the Family level coverage will include the domestic partner at the same cost as if a spouse were covered.

Since the stated intent of Chapter 246 is to provide benefits to domestic partners in the same manner as for spouses, an employee will be able to add a domestic partner's children to SHBP coverage under the same conditions that an employee can now add stepchildren to coverage. 

Taxability of the Domestic Partner Benefit

Domestic partners are not viewed in the same manner as spouses by the Internal Revenue Code and are not automatically considered as dependents for tax purposes. Therefore, the employer health benefits provided to the domestic partner is normally subject to federal taxes (income, Social Security, and Medicare taxes) as imputed income.  However, the domestic partner benefit is not taxable under New Jersey law.

If your governing body extends benefits to the domestic partners of your employees and retirees, it should anticipate having to make employer FICA and Medicare contributions on the imputed income.  The FICA contributions will not be reimbursed since the State reimbursement is limited to contributions on salary from which TPAF contributions were taken.  You will also have these same federal tax reporting and payment requirements for your retirees who are receiving full or partial State-paid health benefits.

Estimating the Imputed Income for Employees and Retirees

If an employee or retiree adds a domestic partner to coverage and that benefit is deemed to be taxable (which will be the case unless the employee or retiree certifies that it is not taxable), the value of the benefit for reporting imputed income will be the cost of single coverage for the plan or plans in which the employee's domestic partner is enrolled less any amount that the employee pays for the domestic partner portion of the coverage.  If the employee pays the full amount for the domestic partner coverage, there will be no imputed income. If the employee or retiree pays nothing towards the cost of the domestic partner benefit, the imputed income will be the cost of single coverage in the plan or plans in which the domestic partner is enrolled.

Tax Treatment of Employee Premium Payments

If the domestic partner benefit is taxable to the employee, any premiums that the employee pays for that benefit cannot be made on a pre-tax basis. Therefore, if you require employees to pay all or a share of the cost for dependent coverage, and if the employee participates in a Section 125 Cafeteria Plan and normally uses pre-tax dollars to pay the employee share for dependent coverage, the payment that the employee makes to cover the domestic partner coverage cannot be made through the Section 125 Plan and has to be made on an after-tax basis.

The Decision to Adopt SHBP Domestic Partner Coverage

Chapter 246 allows local government and education employers participating in the SHBP to adopt the same definition of dependent as the State, that is, one that includes a same-sex domestic partner.  There is no requirement for an employer to do so, nor any time period in which a decision, one way or the other, must be made.  This decision is also independent of any decision to extend domestic partner pension benefits to your employees.  If an employer does adopt a SHBP Chapter 246 Resolution, the option to add domestic partners to coverage will be available to all its employees and all of its retirees enrolled in the SHBP.  The local employer also has the option to require the employee to pay all or a portion of the cost of coverage for a domestic partner.  SHBP uniformity rules, however, require that domestic partner coverage be handled in the same manner as spousal coverage is handled.

To extend SHBP coverage to domestic partners of your employees, your governing body must adopt by resolution the provisions of Chapter 246.   Attached is the Resolution that your governing body must approve if it decides to provide the SHBP domestic partner benefit.  Please complete it and submit it to the Health Benefits Bureau of the Division of Pensions and Benefits.  The effective date for the addition of coverage of domestic partners will be the 1^st of the month following 60 days after the receipt of the resolution.

If at some time in the future, an employer decides to reverse its decision to provide domestic partnership health benefits to its employees and retirees, that decision will be applied prospectively effective the 1st of the month following 60 days after the Division receives the governing body resolution rescinding the previous decision.  Domestic partners losing coverage under these circumstances will not be eligible for COBRA coverage since the employer's cancellation of the domestic partner benefit does not qualify as a COBRA event.

Summary

• A local employer who participates in the SHBP has the option of allowing its employees and retirees to cover a same-sex domestic partner as an eligible dependent.
  
  
• The governing body must adopt a Chapter 246 Resolution to provide this benefit for its employees and retirees.  The effective date of the SHBP coverage will be the 1^st of the month following 60 days after the resolution is received by the SHBP.
  
  
• The governing body may adopt a Chapter 246 Resolution for SHBP coverage independent of any action it may take on pension benefits and at any time in the future.
  
  
• The employer may require the employee to pay all or a portion of the cost of the SHBP domestic partner coverage in the same manner as they require employees to pay for spouse coverage.
  
  
• The employer will be responsible for managing the federal tax consequences of its Chapter 246 Resolution for its employees and retirees, that is, reporting imputed taxable income on a Form W-2 for this benefit and reporting and making required employee and employer contributions to the federal government.

Information Resources

An extensive set of questions and answers about the domestic partner benefit is available on the Division's Web site (www.state.nj.us/treasury/pensions).  We will be providing general information about this domestic partner benefit to all retirees currently enrolled in the SHBP, but since their eligibility for coverage will be based on the actions of your governing body, they may contact you directly for information.  We are also developing a new Fact Sheet #71, Domestic Partnership Benefits Adobe PDF (32K) that we will make available through our Web site as soon as possible. If you have any questions about this letter, write the Division at the address above or e-mail us (at pensions.nj@treas.state.nj.us).

enclosure

SHBP Chapter 246 Resolution

May 5, 2004

TO: Benefits Administrators, SHBP State Monthly Employer Group

FROM: Florence J. Sheppard, Deputy Director, Benefits Operations

SUBJECT: Domestic Partnership Act: Health Benefits Implications

Chapter 246, P.L. 2003 the Domestic Partnership Act, is effective on July 10, 2004.  This law establishes the rights and responsibilities of domestic partners in the State of New Jersey and also extends certain health and pension benefits to same-sex domestic partners of employees with coverage in the State Employer Group of the State Health Benefits Program (SHBP).  The State Employer Group includes the State colleges and universities, the Palisades Interstate Parkway Commission, the New Jersey Building Authority, the State Library, and the Commerce and Economic Growth Commission in addition to State employees paid through Centralized Payroll.  Chapter 246 also allows local government and education entities participating in the SHBP to extend these same benefits to same-sex domestic partners of their employees by resolution of their governing body.  This letter describes

• SHBP benefits that will be extended to same-sex domestic partners of State employees and the
  
  
• Responsibilities of State Monthly employers in administering this benefit.  

We will send information about extending pension benefits to domestic partners in a separate letter.

The SHBP Domestic Partner Benefit

Chapter 246 provides that same-sex domestic partners be provided the same SHBP benefits as are provided to spouses. It does this by changing the definition of dependents of State employees in the statutes governing the SHBP to include a same-sex domestic partner.  (Note: The provisions in Chapter 246 that address opposite-sex domestic partners over age 62 do not apply to the health benefits or pension provisions in the law. See sections 2e and 58a of the Domestic Partnership Act.)  

To add a domestic partner to SHBP coverage, the employee must produce a Certificate of Domestic Partnership issued by any New Jersey local registrar or a similar official document issued legally from a political jurisdiction in another State.  Residents of another State may obtain a New Jersey Certificate of Domestic Partnership from any New Jersey local registrar as long as one of the partners is a member of a New Jersey administered pension system.  A Certificate of Pension Membership is attached.  This form can be used by out-of-State residents to provide the documentation needed to obtain a New Jersey Certificate of Domestic Partnership.  A list of local registrars is on the Web site (http://www.state.nj.us/health/vital/regbycnty.shtml) of the New Jersey Department of Health and Senior Services.

To implement this law, the Member & Spouse level of coverage will also be used for an employee and domestic partner.  The premium rate for Member & Spouse and Member & Domestic Partner coverage will be the same.  If the employee also has children enrolled for coverage, then the Family level coverage will include the domestic partner at the same cost as if a spouse were covered.

Since the stated intent of Chapter 246 is to provide benefits to domestic partners in the same manner as for spouses, an employee will be able to add a domestic partner's children to SHBP coverage under the same conditions that an employee can now add stepchildren to coverage.  The children of the domestic partner must be unmarried and under age 23, live with the employee, and receive substantial financial support from the employee.  The employee will be required to file an Affidavit of Dependency with the request to add the domestic partner's children to coverage.

Enrollment of Domestic Partners

State employees who wish to add domestic partners may do so beginning July 10, 2004 with the earliest possible coverage effective date of August 1, 2004.  The SHBP will require a Certificate of Domestic Partnership to add a domestic partner to coverage.  The employee must submit a copy of the certificate with the health benefits enrollment application within 60 days of the Certificate of Domestic Partnership date.  If an application is submitted without the Certificate of Domestic Partnership, we will return it without action.  Certificates of Domestic Partnership will be available from every State local registrar.

There is no special open enrollment period for Domestic Partners.  When the employee obtains a Certificate of Domestic Partnership, the employee has 60 days from the date of the Certificate in which to add the new dependent to SHBP coverage.  If submitted within the 60-day timeframe, the effective date of coverage will be retroactive to the date of the Certificate, but no earlier than August 1, 2004.  If this is not done, then the employee must wait for the next regular open enrollment period to add the dependent.

Taxability of the Domestic Partner Benefit

The federal Internal Revenue Code does not view domestic partners in the same manner as spouses.  The IRS does not automatically consider domestic partners as dependents for tax purposes.  Therefore, the employer health benefits provided to a domestic partner is normally subject to federal taxes (income, Social Security, and Medicare taxes) as imputed income.  However, the domestic partner benefit is not taxable under New Jersey law.  How you should calculate the value of the domestic partner benefit is described in the next section of this letter.

If the domestic partner meets the IRS definition of a dependent for tax purposes, then the employer does not have to treat the domestic partner coverage as a taxable benefit.  (See the attached IRS Tax Topic 354-Dependents for information on IRS dependency criteria.)   The IRS has stated in private letter rulings that an employer can rely on an employee's written certification that the dependent meets the IRS tests for dependency.  An Employee Tax Certification - Domestic Partner Benefit that will be used for State employees paid through Centralized Payroll is attached for your consideration.  Since an individual's situation can change, you should obtain a new certification each tax year. 

Calculating the Imputed Income for Active Employees

If an employee adds a domestic partner to coverage and that benefit is deemed to be taxable (which will be the case unless the employee certifies that it is not taxable), the value of the benefit for reporting imputed income will be the cost of Single coverage for the plan or plans in which the employee's domestic partner is enrolled less any amount that the employee pays for the domestic partner portion of the coverage.  If the employee is premium sharing, the amount that the employee pays for the domestic partner portion of the coverage is the difference between the employee share for Single coverage and for Member & Spouse or Domestic Partner coverage or the difference between the employee share for Parent & Child(ren) coverage and for Family coverage, whichever is appropriate.  If the employee does not premium share, then the imputed income is the full cost of Single coverage.

Example:  An employee with Single coverage in NJ PLUS, the Employee Prescription Drug Plan, and the Dental Expense Plan adds a domestic partner to the coverage of all three plans. The domestic partner benefit is a federally taxable benefit.  The monthly imputed income for the NJ PLUS and the Employee Prescription Drug Plan, for which there is no employee premium charge, is the full cost of Single coverage, or $286.23 and $102.81, respectively. The monthly imputed income for the Dental Expense Plan, for which the employee does premium share, is $29.29.  This is the full cost of Single coverage, $40.16, minus the amount that the employee has paid for the domestic partner coverage, $10.87 (the difference between the employee share for Single coverage, $20.08, and for Member & Spouse or Domestic Partner coverage, $30.95). The total monthly imputed income attributable to domestic partner coverage for this employee is $418.33, the sum of the imputed incomes for all three plans.

We have enclosed a chart which shows the imputed income to an employee who adds a domestic partner to coverage for every medical and dental plan.  The employer must take the necessary income tax, Social Security tax, and Medicare tax deductions for the imputed income from the employee's regular pay and make the required employer contributions to the federal government for the Social Security, Medicare, and Unemployment taxes.

Tax Treatment of Employee Premium Payments

If the domestic partner benefit is taxable to the employee, any premiums that the employee pays for that benefit cannot be made on a pre-tax basis.  Therefore, if the employee participates in the Tax$ave Premium Option Plan and normally uses pre-tax dollars to pay the employee share for coverage, the difference between Single and Member & Spouse or Domestic Partner coverage has to be made on an after-tax basis.

Example:  An employee premium shares for the Traditional Plan and the Dental Expense Plan with Single coverage. The monthly employee share is $114.43 and $20.08, respectively and it is made on a pre-tax basis.  The employee adds a domestic partner to both plans and the benefit is taxable. The new premium share amounts are $244.92 and $30.95, respectively.  For the new coverage, $114.43 and $20.08 can still be paid using pre-tax dollars, but $130.49 and $10.87, the difference between the employee's premium share for Single and Member & Spouse or Domestic Partner coverage, must be paid using after-tax dollars.

Calculating the Imputed Income for Retirees

The federal government does not distinguish between active employees and retirees with respect to the taxability of employer provided benefits. Therefore, the taxability issues just discussed for employees apply also to any of your retirees receiving the domestic partner benefit.  The Division of Pensions and Benefits will take the required steps to properly report any imputed taxable income to State retirees because of domestic partner coverage.  

Information Resources

We are enclosing copies of revised SHBP applications reflecting domestic partner eligibility for coverage and for your information and use.  These forms are available on the Division's Web site (www.state.nj.us/treasury/pensions) as are an extensive set of questions and answers about the domestic partner benefit.  Note that the separate medical/Rx and dental plan applications have been combined into one form.  We will provide information about this domestic partner benefit to all retirees currently enrolled in the SHBP.  We are developing a new Fact Sheet #71, SHBP Domestic Partnership Benefits Adobe PDF (32K) that we will make available through our Web site as soon as possible.  We are also preparing a summary of domestic partner pension and health benefits that will be available for distribution to your employees in mid-June.

If you have any questions about this letter, write the Division at the address above or e-mail us (at pensions.nj@treas.state.nj.us).

enclosures

Certificate of Pension Membership
IRS Tax Topic 354 - Dependents
Employee Tax Certification - Domestic Partner Benefit Form
Domestic Partner Monthly Imputed Income
Revised SHBP Application

May 5, 2004

TO: Benefits Administrators, SHBP State Biweekly Employer Group

FROM: Florence J. Sheppard, Deputy Director, Benefits Operations

SUBJECT: Domestic Partnership Act: Health Benefits Implications

Chapter 246, P.L. 2003 the Domestic Partnership Act, is effective on July 10, 2004.  This law establishes the rights and responsibilities of domestic partners in the State of New Jersey and also extends certain health and pension benefits to same-sex domestic partners of employees with coverage in the State Employer Group of the State Health Benefits Program (SHBP).  Chapter 246 also allows local government and education entities participating in the SHBP to extend these same benefits to same-sex domestic partners of their employees by resolution of their governing body. 

This letter describes the SHBP benefits that will be extended to same-sex domestic partners of State employees.  We will send information about extending pension benefits to domestic partners in a separate letter.

The SHBP Domestic Partner Benefit

Chapter 246 provides that same-sex domestic partners be provided the same SHBP benefits as are provided to spouses.  It does this by changing the definition of dependents of State employees in the statutes governing the SHBP to include a same-sex domestic partner.  (Note: The provisions in Chapter 246 that address opposite-sex domestic partners over age 62 do not apply to the health benefits or pension provisions in the law.  See sections 2e and 58a of the Domestic Partnership Act.)  

To add a domestic partner to SHBP coverage, the employee must produce a Certificate of Domestic Partnership, issued by any New Jersey local registrar, or a similar official document issued legally from a political jurisdiction in another State.  Residents of another State may obtain a New Jersey Certificate of Domestic Partnership from any New Jersey local registrar as long as one of the partners is a member of a New Jersey administered pension system.  A Certificate of Pension Membership is attached.  This form can be used by out-of-State residents for the documentation needed to obtain a New Jersey Certificate of Domestic Partnership.   A list of local registrars is on the New Jersey Department of Health and Senior Services Web site (http://www.state.nj.us/health/vital/regbycnty.shtml).

To implement this law, the Member & Spouse level of coverage will also be used for an employee and domestic partner.  The premium rate for Member & Spouse and Member & Domestic Partner coverage will be the same.  If the employee also has children enrolled for coverage, then the Family level coverage will include the domestic partner at the same cost as if a spouse were covered.

Since the stated intent of Chapter 246 is to provide benefits to domestic partners in the same manner as for spouses, an employee will be able to add a domestic partner's children to SHBP coverage under the same conditions that an employee can now add stepchildren to coverage.  The children of the domestic partner must be unmarried and under age 23, live with the employee and receive substantial financial support from the employee.  The employee will be required to file an Affidavit of Dependency with the request to add the domestic partner's children to coverage.

Initial Enrollment of Domestic Partners

State employees who wish to add domestic partners may do so beginning July 10, 2004 with the earliest possible coverage effective date of August 7, 2004.  The SHBP will require a Certificate of Domestic Partnership to add a domestic partner to coverage so the employee must submit a copy of the certificate with the health benefits enrollment application within 60 days of the Certificate of Domestic Partnership date.  If an application is submitted without the Certificate of Domestic Partnership, we will return it without action.  Certificates of Domestic Partnership will be available from every State local registrar.

There is no special open enrollment period for Domestic Partners.  When the employee obtains a Certificate of Domestic Partnership, the employee has 60 days from the date of the Certificate in which to add the new dependent to SHBP coverage.  If submitted within the 60-day timeframe, the effective date of coverage will be retroactive to the date of the Certificate, but no earlier than August 7, 2004.  If this is not done, then the employee must wait for the next regular open enrollment period to add the dependent.

Taxability of the Domestic Partner Benefit

The federal Internal Revenue Code does not view domestic partners in the same manner as spouses and they are not automatically considered as dependents for tax purposes.  Therefore, the employer health benefits provided to a domestic partner is normally subject to federal taxes (income, Social Security, and Medicare taxes) as imputed income.  However, the domestic partner benefit is not taxable under New Jersey law.  How Centralized Payroll will calculate the imputed value of the domestic partner benefit is described in the next section of this letter.

If the domestic partner meets the IRS definition of a dependent for tax purposes, then the employer does not have to treat the domestic partner coverage as a taxable benefit.  (See the attached IRS Tax Topic 354 - Dependents for information on IRS dependency criteria.)   The IRS has stated in private letter rulings that an employer can rely on an employee's written certification that the dependent meets the IRS tests for dependency.  An Employee Tax Certification - Domestic Partner Benefit that will be used for State employees paid through Centralized Payroll is attached for use of your employees.  Since an individual's situation can change, an employee who files a certification stating that the domestic partner meets the IRS definition of dependent will be required to file a new certification every calendar year to continue that same tax treatment of the benefit. 

Calculating the Imputed Income for Active Employees

If an employee adds a domestic partner to coverage and that benefit is deemed to be taxable (which will be the case unless the employee certifies that it is not taxable), the value of the benefit for reporting imputed income will be the cost of Single coverage for the plan or plans in which the employee's domestic partner is enrolled less any amount that the employee pays for the domestic partner portion of the coverage.  If the employee is premium sharing, the amount that the employee pays for the domestic partner portion of the coverage is the difference between the employee's share for Single coverage and Member & Spouse or Domestic Partner coverage or the difference between the employee's share for Parent & Child(ren) coverage and Family coverage, whichever is appropriate.  If the employee does not premium share, then the imputed income is the full cost of Single coverage.

Example:  An employee with Single coverage in the NJ PLUS, the Employee Prescription Drug Plan, and the Dental Expense Plan adds a domestic partner to the coverage of all three plans.  The domestic partner benefit is a federally taxable benefit. The biweekly imputed income for the NJ PLUS and the Employee Prescription Drug Plan, for which there is no employee premium charge, is the full cost of Single coverage, or $131.75 and $47.32, respectively. The biweekly imputed income for the Dental Expense Plan, for which the employee does premium share, is $13.48.  This is the full cost of Single coverage, $18.48, minus the amount that the employee has paid for the domestic partner coverage, $5.00 (the difference between the employee share for Single coverage, $9.24, and for Member & Spouse or Domestic Partner coverage, $14.24). The total biweekly imputed income attributable to domestic partner coverage for this employee is $192.55, the sum of the imputed incomes for all three plans.

We have enclosed a chart which shows the imputed income to an employee who adds a domestic partner to coverage for every medical and dental plan.  Centralized Payroll will take the necessary income tax, Social Security tax, and Medicare tax deductions from the employee's regular pay and the State will make the required employer contributions to the federal government for the Social Security, Medicare, and Unemployment taxes.

Tax Treatment of Employee Premium Payments

If the domestic partner benefit is taxable to the employee, any premiums that the employee pays for that benefit cannot be made on a pre-tax basis under an Internal Revenue Code Section 125 plan.  Therefore, if the employee participates in the Tax$ave Premium Option Plan and normally uses pre-tax dollars to pay the employee share for coverage, the difference between Single and Member & Spouse or Domestic Partner coverage has to be made on an after-tax basis.

Example:  An employee premium shares for the Traditional Plan and the Dental Expense Plan with Single coverage.  The biweekly employee share is $52.67 and $9.24, respectively, and it is made on a pre-tax basis.  The employee adds a domestic partner to both plans and the benefit is taxable. The new premium share amounts are $112.73 and $14.24, respectively.  For the new coverage, $52.67 and $9.24 can still be paid using pre-tax dollars, but $60.06 and $5.00, the difference between the employee premium share costs for Single and Member & Spouse or Domestic Partner coverage for each plan, must be paid using after-tax dollars.

Calculating the Imputed Income for Retirees

The federal government does not distinguish between active employees and retirees with respect to the taxability of employer provided benefits. Therefore, the taxability issues just discussed for employees apply also to any State retirees receiving the domestic partner benefit.  The Division of Pensions and Benefits will take the required steps to properly report any imputed taxable income to State retirees because of domestic partner coverage.  

Information Resources

We are enclosing copies of revised SHBP applications reflecting domestic partner eligibility for coverage for your information and use.  These forms are available on the Division's Web site (www.state.nj.us/treasury/pensions) as well as an extensive set of questions and answers about the domestic partner benefit.  Note that the separate medical/Rx and dental plan applications have been combined into one form.  We will provide information about this domestic partner benefit to all retirees currently enrolled in the SHBP.  We are developing a new Fact Sheet #71, Domestic Partnership Benefits Adobe PDF (32K) that we will make available through our Web site as soon as possible.  We are also preparing a summary of domestic partner pension and health benefits that will be available for distribution to your employees with their July 2^nd pay checks.

If you have any questions about this letter, write the Division at the address above or e-mail us (at pensions.nj@treas.state.nj.us).

enclosures

Certificate of Pension Membership
IRS Tax Topic 354 - Dependents
Employee Tax Certification - Domestic Partner Benefit Form
Domestic Partner Biweekly Imputed Income
Revised SHBP Application

May 10, 2004

TO: Local Certifying Officers, Public Employees' Retirement System, Teachers' Pension and Annuity Fund, Police and Firemen's Retirement System

FROM: Janice C. Curtin, Assistant Director, Pension Operations

SUBJECT: Domestic Partnership Act: Pension Implications

Chapter 246, P.L. 2003, the Domestic Partnership Act, is effective on July 10, 2004.  This law establishes the rights and responsibilities of domestic partners in the State of New Jersey.  Chapter 246 extends certain health and pension benefits to same-sex, domestic partners of employees of the State.  The law also gives a local governmental entity the option to extend these same benefits to domestic partners of its employees and retirees by resolution of the governing body.   (Note: The provisions in Chapter 246 that address bopposite-sexb domestic partners over age 62 do not apply to the health benefits or pension provisions in the law.  See sections 2e and 58a of the Domestic Partnership Act.) 

This letter describes the

• Pension benefits that may be extended to same-sex domestic partners and
  
  
• Procedures for a local governmental entity to adopt these benefits for its employees and current and future retirees.  

The extension of health benefits to domestic partners of employees and retirees of local government will not be discussed in this letter.  That topic will be covered in a separate letter for employers who participate in the State Health Benefits Program for their active employees.[1]

Chapter 246 potentially affects local public employees who are members of the Public Employees' Retirement System (PERS), the Teachers' Pension and Annuity Fund (TPAF), and the Police and Firemen's Retirement System (PFRS).  The Consolidated Police and Firemen's Pension Fund and the Prison Officers Pension Fund are not affected by this law.

PERS and TPAF Implications.  The law adds a domestic partner to the existing definitions of spouse, widow, and widower for these systems.  The only PERS and TPAF benefit affected by Chapter 246 is the survivor's benefit in the event of the accidental death of the member while in the performance of duty.  Other retirement benefits are not affected since a retiring member may already name anyone as the beneficiary of the pension benefit, within the constraints imposed by the Internal Revenue Code described below.  There are very few accidental deaths in the PERS and TPAF and there is almost always a beneficiary eligible to receive the accidental death benefits when a qualifying death occurs.  Therefore, there will be little or no additional employer costs resulting from extending these benefits to domestic partners of members of the PERS and TPAF. 

The PERS and TPAF benefits extended to a domestic partner are essentially identical to those provided a spouse with two exceptions caused by federal tax code.  The Internal Revenue Service does restrict who a member can name as a beneficiary under Options 2, A, and B.  Under Options 2 and A, a member cannot name a non-spouse beneficiary who is more than 10 years younger than the member; under Option B, the beneficiary cannot be more than 19 years younger.  Additionally, a survivor's benefits from an Accidental Disability retirement or accidental line-of-duty death going to a domestic partner would be subject to federal tax. This is not the case when a survivor's benefit is paid to a spouse.

PFRS Implications.  Chapter 246 adds domestic partner to the current definitions of spouse, widow, and widower. The law potentially affects all PFRS survivor benefits, both active and retired, since the pension beneficiary is established by law, not member choice.  There currently are frequent occurrences of member deaths where there is no eligible beneficiary, so extending these survivor benefits to domestic partners may result in some additional employer pension costs since it will increase the likelihood of a survivor's benefit being paid.   It will be several years before those costs can be determined.  It is difficult to accurately estimate the potential impact on employer costs without knowing how many employees and retirees have or may have domestic partners.  Very rough estimates from the experience of other employers who provide domestic partner benefits are indicate that adding the domestic partner benefit may result in an increase in employer pension contribution requirements of between ½ to 1% of salary.

Non-Portability of the Domestic Partner Benefit.  Domestic partner benefits are associated with specific employers that opt to extend them to their employees and retirees.  If an employee transfers to another employer, the domestic partner benefit does not transfer with them.  If the new employer has opted to provide domestic partner benefits, then that pension benefit will continue.  If the new employer has not extended the pension benefit to domestic partners, then the eligibility for that benefit will end.

The Decision to Extend Domestic Partner Benefits.  Employers should keep the following in mind as they decide whether to extend pension benefits to domestic partners of its employees and retirees. The decision

• Is optional and can be made separately from any decision regarding the extension of other benefits to domestic partners, e.g., health benefits;
  
  
• Can be made at any time, now or in the future;
  
  
• Will be prospective and not cover anyone who died or transferred employment prior to the governing body's adoption;
  
  
• Cannot be restricted to select employee groups, but must include members of all pension systems in which your employees participate;
  
  
• Will automatically extend domestic partner benefits to all of your present and future retirees;
  
  
• May entail some future pension costs, but they cannot be determined at this time;
  
  
• Can be rescinded at some future date, but the pension benefit will be guaranteed to any employee or retiree with more than five years of service at the time of the action to rescind the benefit for as long as they are associated with your organization.

The governing body of your organization must approve by resolution or ordinance the extension of pension benefits to same-sex domestic partners of its employees and retirees under the provisions of Chapter 246.  The resolution or ordinance must include all the language of the attached Resolution, on which the action of the governing body is to be reported to the Division of Pensions and Benefits.  Please complete it and submit it to the Division of Pensions and Benefits at the address shown.

Certificates of Domestic Partnership.  If your governing body opts to extend domestic partner pension benefits to its employees and retirees, pension members will have to submit a Certificate of Domestic Partnership, or a similar official document issued legally from a political jurisdiction in another State, to the Division of Pensions and Benefits when they designate a domestic partner as a beneficiary.  The member can obtain the Certificate of Domestic Partnership from any New Jersey local registrar.  Residents of another State may obtain a New Jersey Certificate of Domestic Partnership from any New Jersey local registrar as long as one of the partners is a member of a New Jersey administered pension system.  A Certificate of Pension Membership is attached.  This form can be used by out-of-State residents for the documentation needed to obtain a New Jersey Certificate of Domestic Partnership.   A list of local registrars is on the New Jersey Department of Health and Senior Services Web site (http://www.state.nj.us/health/vital/regbycnty.shtml).

Other Information.  We have prepared an extensive Question and Answer document about the pension and health benefits provisions of the Domestic Partnership Act and posted it on our Web site (www.state.nj.us/treasury/pensions).  If you have any questions about the subject of this letter, please contact us by e-mail (pensions.nj@treas.state.nj.us) or by letter at the address on the letterhead.

enclosures

Employer Domestic Partner Resolution
Certificate of Pension Membership

[1] Chapter 246 gives statutory authority to provide health benefits to domestic partners only to local employers participating in the SHBP.  Therefore, local group retirees enrolled in the SHBP, for whom the State pays all or a portion of the cost of their coverage  and who retired from employers that do not participate in the SHBP for their active employees, will not be eligible for the domestic partner health benefit.  This includes retirees of education employers and PFRS members enrolled in the SHBP under the provisions of Chapter 330, P.L. 1997 unless their former employer participates in the SHBP for their active employees and opts to extend benefits to domestic partners.

May 5, 2004

TO: State Certifying Officers, Public Employees' Retirement System, Teachers' Pension and Annuity Fund, Police and Firemen's Retirement System, State Police Retirement System, Judicial Retirement System

FROM: Florence J. Sheppard, Deputy Director, Benefits Operations

SUBJECT: The Domestic Partnership Act: Pension Implications

Chapter 246, P.L. 2003, the Domestic Partnership Act, is effective on July 10, 2004.  This law establishes the rights and responsibilities of domestic partners in the State of New Jersey.  Chapter 246 also extends certain health and pension benefits to same-sex, domestic partners of employees of the State.  (Note: The provisions in Chapter 246 that address opposite-sex domestic partners over age 62 do not apply to the health benefits or pension provisions in the law.  See sections 2e and 58a of the Domestic Partnership Act.)  This letter describes the pension benefits that will be extended to domestic partners of State employees enrolled in a pension system.  Extending health benefits to domestic partners will be covered in a separate letter. 

Chapter 246 affects State employees who are members of the Public Employees' Retirement System (PERS), the Teachers' Pension and Annuity Fund (TPAF), the Police and Firemen's Retirement System (PFRS), the State Police Retirement System, and the Judicial Retirement System.    

Domestic Partner Benefits in the PERS and TPAF. The Domestic Partnership Act basically adds a domestic partner to the existing definitions of spouse, widow and widower in the statutes governing the PERS and the TPAF.  Therefore, the only PERS and TPAF benefit affected by Chapter 246 is the survivors benefit in the event of the accidental death of the member while in the performance of duty.  Other retirement benefits are not affected since a retiree may already name anyone as the beneficiary of the pension benefit within the constraints imposed by the Internal Revenue Code.  The IRS does restrict who a member can name as a beneficiary under Options 2, A and B.  Under Options 2 and A, a member cannot name a non-spouse beneficiary who is more than 10 years younger than the member; under Option B, the beneficiary cannot be more than 19 years younger. Since the IRS is a federal agency, it is not governed by the provisions of Chapter 246.

Domestic Partner Benefits in the PFRS and the SPRS.   Chapter 246 also adds domestic partner to the current definitions of spouse, widow, and widower in the statutes governing the PFRS and the SPRS.  Therefore, the law potentially affects all PFRS and SPRS survivor benefits, both active and retired, since the pension beneficiary is established by law, not member choice.  A domestic partner will now qualify for a survivor's benefit in the same manner as a spouse. Additionally, if an individual is receiving a PFRS or SPRS survivors benefit (with the exception of a survivor of an accidental death in the line of duty), the survivor will lose that pension benefit if they remarry or establish a same-sex domestic partnership.

Domestic Partner Benefits in the JRS.   The Domestic Partnership Act basically adds a domestic partner to the existing definitions of spouse, widow and widower in the statutes governing the JRS. Therefore, the law potentially affects all JRS survivor benefits, both active and retired, since the pension beneficiary is established by law, not member choice.  A domestic partner will now qualify for a survivors benefit in the same manner as a spouse.  Additionally, if an individual is receiving a JRS survivor's benefit, the survivor will lose that benefit if he/she remarries or establishes a same-sex domestic partnership.  If a judge wishes to select a joint and survivor retirement option, the IRS restrictions mentioned above under the PERS and TPAF would apply.

Other Pension Funds.  Chapter 246 did not extend any domestic partner pension benefits to members of the Alternate Benefit Program, the Consolidated Police and Firemen's Pension Fund or the Prison Officers' Pension Fund.

The Division will prepare a notification for State employees of the impact of the Domestic Partner Act on their pension and health benefits for distribution in July.  If you have questions about the pension ramifications of this law, e-mail us (pensions.nj@treas.state.nj.us) or write us at the address on the first page.

March 2004

TO: Certifying Officer: Teachers' Pension and Annuity Fund, Public Employees' Retirement System, Police and Firemen's Retirement System

FROM: John D. Megarioti, Deputy Director, Finance

SUBJECT: Report of Contributions, First Quarter 2004 (January 1^st to March 31^st)

This memorandum has pertinent information concerning the completion of your Report of Contributions.  Please read this memorandum before you make any changes to the Report.

Effective January 1, 2004 the Teachers' Pension and Annuity Fund (TPAF) member contribution rate returned to the normal rate of 5%.

The previous reduction in the member rate for the TPAF was authorized by statute and was based on the existence of surplus pension assets in the retirement system.  However, also per statute, when there are no longer surplus pension assets, the member rate for TPAF will return to the normal rate of 5%.

Employee pension contributions for retroactive salary increases paid on or after January 1, 2004 should be calculated at the rate of 5%, including any portion of the retroactive salary that covered a period prior to January 1, 2004.

Chapter 415, P.L. 1999 reduced the pension rate for members of the Public Employees' Retirement System from 4.5% to 3%.  The pension rate for calendar year 2004 will remain at 3% for PERS Local employees.

Employee pension contributions for retroactive salary increases paid on or after January 1, 2000 should be calculated at the rate of 3%, including any portion of the retroactive salary that covered a period prior to January 1, 2000. Because the change is a temporary reduction, the minimum repayment for pension loans and the minimum deduction for the purchase of service credit will not change.  The minimum deduction for the single payment value will continue to be computed on 5% of base salary.

It must be noted that these deadlines are established to provide for the timely updating of member accounts each quarter.  In order to accomplish this goal for the over 300,000 members of the retirement plans, we rely on you, our participating employers, to report pension information to us by the 10^th calendar day of the month following the end of the calendar quarter.  In return, your employees' accounts are updated with the most recent pension information, which in turn may be used to process benefit claims by those same employees or their beneficiaries.

In recent years more and more employers have been delivering their reports to us later and later.  However, we have extended the courtesy of holding open the reporting period to accommodate this late receipt of information so as to not adversely impact the employees.  We must now notify you that this courtesy may no longer be extended because it conflicts with our goal to provide timely benefit processing to other retirement plan members whose employers submit their reports by the prescribed due date.  We will continue to accept your reports beyond the 10^th of each calendar quarter but we will not guarantee that your employees' pension accounts will be updated or benefits processed within the time period they would expect.  That may result in your employees not receiving service credit as earned, loans when submitted or retirement benefits immediately following termination of employment.

Employers must submit monthly transmittal remittances through the Transmittal Electronic Payments System (TEPS). Token payments are not acceptable.  Approximately one-third of the total quarterly amount due for pension contributions, contributory life insurance premiums and SACT is expected to be remitted through TEPS each month.  Your March 2004 transmittal remittance, which represents the deductions due for the balance of the quarter, should be made through TEPS.  The portion of the remittance for total pension deductions should reflect the sum of normal pension contributions, back deductions, loan payments, and arrears/purchase deductions.  The TEPS remittance is also due by April 10, 2004.

With the Report of Contributions, you must complete and return the Transmittal Summary form for the 1^st quarter 2004.  This document is used to assist your office and this Division in reconciling your transmittal remittances to the quarterly Report.

If your quarterly Report and total contributions are not received in a timely manner, we cannot update the pension accounts of your employees.  This may adversely affect any claim for benefits, including loan applications, filed by your employees.  Also, any delay affects our scheduling in posting contributions to all members' accounts as well as the mailing of Reports of Contributions for the following quarter.  Interest will be assessed, as prescribed by statute and administrative code, when monthly transmittal remittances and the quarterly Report of Contributions are not received within fifteen days of the due dates.

When you receive your quarterly Report, you should review it immediately.  If you think you will have a problem in meeting the filing deadline, or if there is anything you do not understand, contact the Audit/Billing Section at (609) 292-3630.  Normally reporting inquiries can be resolved with a telephone

call.  Please make all necessary corrections to the Report before you return it to the Division of Pensions and Benefits.  Verify that all changes are explained, the Report is added correctly, and the totals agree with the sum of the transmittal remittances.

Please show on the quarterly Report the telephone number of the individual to be contacted if our auditors have questions concerning any items.

SIGNATURE

Your quarterly Report of Contributions must be signed.  Any Report not bearing a signature will be considered delinquent until an affidavit is submitted by the Certifying Authority attesting to its contents.  Initials will not be accepted.

Chapter 247, P.L. 1999 requires 403(b) salary reductions on behalf of an employee to be transmitted and credited within five business days from the pay date.  Employees of local boards of education may participate in the SACT 403(b) program or a 403(b) plan administered by their employer.  This law impacts both arrangements.

Members of the Public Employees' Retirement System, Teachers' Pension and Annuity Fund and Police and Firemen's Retirement System in the Supplemental Annuity (SACT) Tax Sheltered Annuity Program are required to have 403(b) salary reductions remitted to the Division of Pensions and Benefits within the timeframes prescribed by law.  Contributions for these members must be made through the Transmittal Electronic Payments System (TEPS).

Please note that the full quarterly SUPPLEMENTAL ANNUITY contribution must be submitted prior to the processing of your report of contributions.  If the full contribution is not submitted, it may be necessary to refund any supplemental annuity contributions remitted for the quarter. This could adversely affect your employees' retirement savings.

The Public Employees' Retirement System's Board of Trustees at its November 17, 1999 meeting adopted a rule change for N.J.A.C. 17:2-4.7 that became effective on January 1, 2000.  The amendment requires reporting districts to use the actual creditable salary earned by employees, not estimated salary, for part-time hourly, on-call and per diem employees. 

The enrollment criteria for part-time hourly, on-call, and per diem employees remains unchanged.  However, once membership is established, an employee must only meet the $1,500 minimum salary regulation to continue membership; the number of hours worked in a month or a year is no longer applicable.  This provides greater equity in granting service credit.  A member is entitled to a month of service as long as the actual creditable salary being reported exceeds the monthly minimum for enrollment.  In other words, when a 10-month member has a monthly reportable salary exceeding $150 (one tenth of $1,500), the member should be reported for that month.  Similarly, $125 (one twelfth of $1,500) is the minimum monthly reportable salary for a 12-month member.  If the member does not make $1,500 in the current calendar year, and is not expected to make $1,500 in the following year, that employee is no longer eligible for the retirement system.

The Division sends transmittal shortage statements when the sum of the transmittal remittances does not equal the amount due on the quarterly Report of Contributions.  Transmittal shortage statement payments must be paid through TEPS.  Checks received for payment of transmittal shortages will be returned.  If you have questions related to TEPS, contact the TEPS Helpline at (888) 835-3345 or FAX your inquiries to the Audit/Billing Section at (609) 633-1708.

Notice of Changes for TEPS should be submitted to the Division of Pensions and Benefits on or after the date that the new checking account becomes effective.  Every Notice of Change is verified to ensure that the Division has the correct banking information.  This normally takes 12 to 15 days. 

It is important to review the salary shown in column 6 and verify that it correctly reflects the member's base salary for the quarter.  If the salary shown is not correct, draw a line through it and write the correct salary above it.  Pension Contributions, Contributory Insurance, SACT, and Tax-Sheltered Annuity deductions must be changed to reflect amounts due on the new salary.

If your employees received a salary increase that is retroactive to a prior quarter, change column 6 to reflect the COMBINED TOTAL of:

           (a) the new base salary for the quarter, plus,

           (b) the additional base salary for the retroactive period.

The new quarterly base salary should be written in column 1 of the Report.  This salary will be projected in column 6 of your next quarterly Report.  This will eliminate the need to make numerous changes on your 2nd quarter Report of Contributions.  Also, in the "Remarks Column" of the current Report you should indicate that the members had a salary increase and the effective date.

If a member receives a retroactive salary adjustment after retirement, do not write the member's name on the Report of Contributions.  Complete a new Certification of Service and Final Salary and indicate that it is a retroactive adjustment after retirement by writing on the top of the Certification "Revised Due to Retro."  Deduct the pension contributions and contributory life insurance, if applicable, from the retroactive check and remit that amount on behalf of the member to the Audit/Billing Section of this Division.

Overages and shortages that affect a member's Annuity Savings Fund identify whether or not the pension contributions are subject to the 414(h) provision.  These statements should be reviewed to determine when adjustments are required to your payroll records in calculating year-to-date mandatory pension contributions under 414(h).  All overage and shortage statements that cover a period prior to January 1, 1987 are not subject to the 414(h) provision.  Please note that all member shortages are to be paid by separate check.  Do not remit through TEPS.

Should you have any questions or need assistance in completing the Report, please telephone us at (609) 292-3630.

Enclosures:

Quarterly Report of Contributions
Transmittal Summary for 1^st Quarter 2004
Return Envelope

March, 2004

TO: Certifying Officer, Autonomous State College/University

FROM: John D. Megariotis, Deputy Director, Finance

SUBJECT: Report of Contributions, 1^st Quarter 2004

Effective January 1, 2004 the Teachers' Pension and Annuity Fund (TPAF) member contribution rate returned to the normal rate of 5%.

Retroactive increases paid on or after December 13, 2003 should be deducted at 5% including any portion of the retroactive salary that covered a period prior to December 13, 2003.

CHANGE TO MEMBER PENSION RATES - PUBLIC EMPLOYEES' RETIREMENT SYSTEM

Chapter 415, P.L. 1999 reduced the pension rate for members of the Public Employees' Retirement System from 4.5% to 3%.  Effective the first payday on or after July 1, 2004 the Public Employees' Retirement System  (State Employees) member contributions rate will return to the normal rate of 5%.

The previous reduction in the member rate for the PERS was authorized by statute and was based on the existence of surplus pension assets in the retirement system. However, also per statute when there are no longer surplus pension assets, the member rate for PERS will return to the normal rate of 5%

Retroactive increases paid on or after July 1, 2004 should be deducted at 5%, including any portion of the retroactive salary that covered a period prior to July 1, 2004.

Your 1^st quarter 2004 tape Report of Contributions applicable to the Teachers' Pension and Annuity Fund, Public Employees' Retirement System, and Police and Firemen's Retirement System is due April 10, 2004.  Your March 2004 transmittal remittance, which represents the deductions due for the balance of the quarter, should be made through the Transmittal Electronic Payments System (TEPS).  The portion of the remittance for total pension deductions should reflect the sum of normal pension contributions, back deductions, loan payments, and arrears/purchase deductions.  Your TEPS remittance is also due by April 10, 2004.

With the tape Report of Contributions, you must complete and return the Transmittal Summary form for the 1^st quarter 2004.  This document is used to assist your office and this Division in reconciling your transmittal remittances to the quarterly Report.  The Control and Certification form must also accompany your quarterly tape Report.  This is essential as it attests to the accuracy and validity of the submitted documentation.

If your quarterly Report and total contributions are not received in a timely manner, we cannot update the pension accounts of your employees.  This may adversely affect any claim for benefits, including loan applications, filed by your employees.  Also, any delay affects our scheduling in posting contributions to all members' accounts as well as the mailing of Reports of Contributions for the following quarter.  A tape Report of Contributions will be considered received when it is submitted in an acceptable format, passes all data processing edits, and can be used to update members' accounts.  Interest will be assessed, as prescribed by statute and administrative code, when monthly transmittal remittances and the quarterly Report of Contributions are not received within fifteen days of the due dates.

Retroactive increases paid on or after January 1, 2000 should be deducted at 3%, including any portion of the retroactive salary that covered a period prior to January 1, 2000.  Because the change is a temporary reduction, the minimum repayment for pension loans and the minimum deduction for the purchase of service credit will not change.  The minimum deduction for the single payment value will continue to be computed on 5% of base salary.

SACT TAX-SHELTERED ANNUITY - REMITTANCE OF 403(b) CONTRIBUTIONS

Chapter 247, P.L. 1999 requires 403(b) salary reductions on behalf of an employee to be transmitted and credited within five business days from the pay date.

Members of the Public Employees' Retirement System, Teachers' Pension and Annuity Fund and Police and Firemen's Retirement System in the Supplemental Annuity (SACT) Tax Sheltered Annuity Program are required to have 403(b) salary reductions remitted to the Division of Pensions and Benefits within the timeframes prescribed by law.  Contributions for these members will be made through the Transmittal Electronic Payments System (TEPS).

Please note that the full quarterly SUPPLEMENTAL ANNUITY contribution must be submitted prior to the processing of your report of contributions. If the full contribution is not submitted, it may be necessary to refund any supplemental annuity contributions sent in for the quarter. This could adversely affect your employees' retirement savings.

REPORTING ACTUAL SALARIES FOR PART-TIME EMPLOYEES (Rule Change N.J.A.C. 17:2-4.7)

The Public Employees' Retirement System's Board of Trustees adopted a rule change for N.J.A.C. 17:2-4.7, that became effective on January 1, 2000.  The amendment requires reporting districts to use the actual creditable salary earned by employees, and not estimated salary, for part-time hourly, on-call and per diem employees.

The enrollment criteria for part-time hourly, on-call, and per diem employees remains unchanged.  However, once membership is established, an employee must only meet the $1,500 minimum salary regulation to continue membership; the number of hours worked in a month or a year is no longer applicable.  This provides greater equity in granting service credit.  A member is entitled to a month of service as long as the actual creditable salary being reported exceeds the monthly minimum for enrollment. 

In other words, when a 10-month member has a monthly reportable salary exceeding $150 (one tenth of $1,500), the member should be reported for that month.  Similarly, $125 (one twelfth of $1,500) is the minimum monthly reportable salary for a 12-month member.  If the member does not make $1,500 in the current calendar year, and is not expected to make $1,500 in the following year, that employee is no longer eligible for the retirement system.

TEPS - TRANSMITTAL SHORTAGE PAYMENTS

The Division sends transmittal shortage statements when the sum of the transmittal remittances does not equal the due figure on the quarterly Report of Contributions.  Transmittal shortage statement payments can only be paid through TEPS.  Checks received for payment of transmittal shortages will be returned.  If you have questions related to TEPS, contact the TEPS Helpline at (888) 835-3345 or FAX your inquiries to the Audit/Billing Section at (609) 633-1708.

CHANGING BANKING INFORMATION FOR TEPS

Notice of Changes for TEPS should be submitted to the Division of Pensions and Benefits on or after the date that the new checking account becomes effective.  Every Notice of Change is verified to ensure that the Division has the correct banking information.  This normally takes 12 to 15 days.

STATEMENTS OF OVERAGES/SHORTAGES

Overage and shortage statements, which affect a member's Annuity Savings Fund, identify whether or not the pension contributions are subject to the 414(h) provision.  These statements should be reviewed to determine when adjustments are required to your payroll records in calculating year-to-date mandatory pension contributions under 414(h).  Please note that all member shortages are to be paid by separate check.  Do not remit through TEPS.

Should you have any questions or need assistance in completing the Report, please telephone Peter Groffie at (609) 984-4807.

Enclosures

Transmittal Summary for 1^st Quarter 2004
Control and Certification Form

March 5, 2004

TO: County Vocational-Technical School Benefits Administrators

FROM: Janice C. Curtin, Assistant Director, Pension Operations

SUBJECT: Postsecondary Vocational-Technical School Instructors

On January 20, 2004, the State Board of Education approved new Administrative code for certification of instructors. The Vocational-technical Part-time certificate has been eliminated as a result of the adoption of N.J.A.C. 6A:19-2.3, Administrative, instructional and educational services personnel. This revision allows non-certificated individuals to be employed in postsecondary vocational-technical schools.

This is a revision of the current N.J.A.C. 6:51-1.5 that requires administrative, instructional and educational services personnel to meet certification requirements. The section has been updated from current N.J.A.C. 6:51-1.5 to include a provision that county vocational schools may employ individuals that do not possess educational licenses to provide postsecondary vocational-technical course instruction, as long as the individuals possess the appropriate education or industry-endorsed credentials requisite to meeting educational objectives of the course.

This rule change by the State Board of Education has several effects on the Division of Pensions and Benefits regarding pension policy:

1. Part-time instructors at postsecondary vocational-technical schools who are currently members of the Teachers Pension and Annuity Fund (TPAF) will be "grandfathered" in their positions with postsecondary vocational-technical schools as long as they remain with their current employers. If they change employers, they will be enrolled in the Public Employees' Retirement System (PERS) if they are employed as part-time instructors at postsecondary vocational-technical schools.
   
   
2. New part-time instructors with postsecondary vocational-technical schools will be enrolled in the PERS.
   
   
3. Part-time instructors at postsecondary vocational-technical schools who retire under the TPAF will not be eligible for enrollment in the PERS if they accept other part-time instructor positions at postsecondary vocational-technical schools after their dates of retirement. A retiree can, however, accept the employment.

The New Jersey Department of Education (NJDOE) has informed the Division of Pensions and Benefits that it will not be issuing new certificates to individuals employed in part-time instructor positions at postsecondary vocational technical schools. The NJDOE has also informed the Division that current certificates expire within 5 years from the date of issuance and will not be renewed.

February 4, 2004

TO: Certifying Officers, Alternate Benefits Program

FROM: John Megariotis, Deputy Director, Finance

SUBJECT: New Contracts Awarded for the Alternate Benefit Program and the Additional Contributions Tax-Sheltered Program

The State has awarded a five-year contract to five companies to serve as investment carriers in the Alternate Benefit Program (ABP) and the Additional Contributions Tax-Sheltered (ACTS) Program beginning April 1, 2004.  These companies, joined by TIAA-CREF, which is designated in statute as an investment provider for ABP and ACTS, gives us the following investment providers for these programs:

• AIG-VALIC
  
  
• CitiStreet
  
  
• Equitable
  
  
• The Hartford
  
  
• ING
  
  
• TIAA-CREF

Two of the current providers, Lincoln Financial and Met Life, will no longer be offering service to new members nor be eligible to receive continuing contributions after March 31, 2004. 

Between now and April 1, 2004, your human resource departments will be contacted by representatives from each of the approved investment carriers to arrange for worksite visits.  We expect that you will continue your gracious support of these retirement programs and do everything within your powers to accommodate these visits.  The Division will not interfere with your administration of these meetings at your worksite other than reminding you that each carrier must be given equal access to your worksites and staff.  As always, the carriers are responsible to make prior arrangements with each human resource office before appearing on campus.

The following questions and answers address the key issues regarding the transition to the new contract. If you have questions not addressed by this letter, please contact our Defined Contribution Plans Unit at (609) 777-0887 where one of our staff will assist you or log your inquiry and reply to you. We will also be providing this information on our Web site with updates added as soon as it becomes available. Please look for this information at: www.state.nj.us/treasury/pensions/abp_transition.htm

Questions and Answers

Q: What will happen to investments currently with Lincoln Financial or MetLife?

A: We hope to allow members to keep their current assets with these carriers. However, the provider whose contract is terminated as a result of the expiration of the previous contract must agree to:

1) Servicing the existing accounts of program members pursuant to the terms and conditions under the expiring contract, and

2) Continuing reporting requirements to the Division pursuant to the terms and conditions under the expiring contract for as long as assets are held by the provider in program member accounts.

If Lincoln Financial and MetLife agree to these conditions, program members with accounts maintained by these providers may leave accumulated account balances with that provider until such time as these providers are unable to fulfill their requirements under the contract.  However, a new election is required from these members to direct all future investments to one or more of the six providers approved under the new contract taking effect on April 1, 2004.  If a member fails to make such an election, contributions after March 31, 2004, must be directed by the employer to the default carrier to be placed into the default investment vehicle.

We  hope Lincoln Financial and MetLife will agree to these conditions.  However, in the event either does not agree to these conditions, program members with accounts maintained by that provider will be given until September 27, 2004, to transfer these assets to an approved provider under the new contract.  Members failing to make such a transfer will have their assets transferred to the program's default carrier. 

Q: What is the timeline for initiating the use of the providers under the new contract?

A: Under the provisions of the new contract, there is a 60-day mobilization and implementation period that each provider has agreed to and has provided a detailed timetable for this period.  It is expected that each provider will be fully operational by April 1, 2004; the starting date for the new agreement.

Q: Which provider will be Default Provider?

A: We anticipate meeting with the approved providers within the next two weeks.  At that time a default provider will be chosen for each of the calendar years under the contract.  Therefore, you will receive notification shortly identifying the default provider for the remainder of calendar year 2004.  CitiStreet will continue to be the default provider through March 31, 2004.

Q: What investment option will be utilized when a member fails to make an election (i.e., forced enrollments)?

A: If a member chooses a provider but fails to make an investment election, the administrator has instructed each provider to credit contributions to the most conservative investment option available.  Under the new contract, those options will be:

Q: How long must funds stay with the default provider before a member may transfer them to another approved provider?

A: Contributions will continue to be sent to the default carrier until the employee designates a provider by completing the appropriate application(s).  The employer will redirect the contributions to the provider(s) of choice upon notification of the election and a reasonable period for administrative implementation.  The employee, even if he or she is under a delayed vesting status (NJAC 17:7-3.23), may choose to transfer funds from the default provider to another provider.

Q: What investment options will be available from the new carriers?

A: The new carriers will have options comparable to those offered by the other carriers that have been participating in the program.  We will provide you a list of these options, along with new options being offered by carriers under the previous contract, no later than February 15, 2004.  Initially the information will be distributed by accessing the information on the Internet.  Later, a print version will be available.

January 13, 2004

TO: State Benefits Administrators

FROM: John D. Megariotis, Deputy Director, Finance

The State is implementing a transportation benefit in April 2004 that is authorized by Chapter 162, P.L. 2001.  The benefit is being offered under the provisions of Section 132(f) of the Internal Revenue Code.  It will allow employees to use pre-tax dollars to pay for mass transportation (train, bus, ferry, and vanpool) used to commute to and from work and to pay for parking at work or at Park-and Ride locations.  The program is entitled the New Jersey State Employees Commuter Tax Savings Program with a short title of the Commuter Tax$ave Program.

This letter provides a brief description of the Commuter Tax$ave Program and how it will be administered.  It also delineates the responsibilities of departmental and agency benefits/payroll administrators in its administration.  The letter essentially reiterates the information already provided to the benefits/payroll personnel who attended the meetings on this subject on January 6^th and 7^th.

The Section 132(f) Benefit:  Eligible employees may execute salary reduction agreements to have up to:

• $100 per month ($1,200 per year) deducted from salary to pay for mass transit commutation costs (mass transit includes train, bus, ferry, and vanpool expenses) and/or
  
  
• $195 per month ($2,340 per year) to pay for parking at work or at park and ride sites.

The money deducted is not subject to federal income taxes, Social Security taxes, or Medicare taxes.  There is a minimum deduction of $15 for either mass transit or parking deductions.  There are no provisions for higher deductions on an after-tax basis.  Deductions may only be made for use with the employee's personal commutation costs for going to and from work.  Deductions may not be made to pay for commutation costs of dependents.

The Section 132(f) benefit is a monthly benefit.  Eligible employees may enroll in the program or end participation at any time during the year and may change deductions as often as they like during the year.  Once an employee has enrolled, the employee remains enrolled for all subsequent months at the same level of participation until they change their deduction amounts or elect to end participation.

Eligibility: Employees eligible for State-paid health benefits coverage are eligible to participate in the Commuter Tax$ave Program.

Administration: TransitCenter, Inc., a public nonprofit corporation, will administer the Commuter Tax$ave Program under contract with the State of New Jersey. 

TransitCenter will

• Develop marketing information for employees,
  
  
• Enroll employees for the available benefits through the Internet or by Interactive Voice Response (IVR) telephone programs,
  
  
• Provide the benefits directly to enrolled employees, and
  
  
• Operate a toll-free customer service operation for employee use beginning February 2, 2004.

The Executive Account Manager for the State of New Jersey is Ron Reinhardt (Tel. 201-216-6245, Fax 201-216-6576, e-mail rreinhardt@transitcenter.com). TransitCenter's Customer Service telephone number, the IVR number, and the Web site address, which become operational before the end of the month, will be provided at that time.

The Division of Pensions and Benefits is responsible for oversight of the contract with TransitCenter and the overall administration of the Commuter Tax$ave Program.  The Project Manager for the Division is Timothy McMullen, Chief of Budget and Compliance (Tel. 609-292-4542, Fax 609-393-5037, e-mail timothy.mcmullen@treas.state.nj.us).

The Office of Management and Budget - Centralized Payroll is responsible for transferring eligibility information to TransitCenter, taking payroll deductions from enrolled employees, and transmitting those deductions to TransitCenter.  Kevin McMullen, Supervisor of Payroll Audit, is the Project Officer for OMB. (Tel. 609-984-6363, Fax 609-777-3530, e-mail kevin.mcmullen@treas.state.nj.us).

The Commuter Tax$ave Program was designed to minimize the responsibilities of Departmental/agency benefits administrators (Human Resource, Personnel, or Payroll staff as appropriate to each organization).  However, as the individuals in direct contact with employees about their benefits, some involvement is necessary and desirable.  

Departmental/agency benefits administrators have the following responsibilities:

• Distribute initial marketing materials to all eligible employees with their January 30^th paycheck (view Commuter Tax$ave Announcement Letter and Brochure).  Posters describing the program will also be provided you to display throughout employee work sites.
  
  
• Arrange with TransitCenter for initial orientation meetings with their employees - the initial enrollment period is February 2-15, 2004. 
  
  
• Be able to answer basic questions about the Commuter Tax$ave Program and refer more involved questions to TransitCenter Customer Service.
  
  
• Work with OMB Centralized Payroll to resolve eligibility problems if employees are unable to enroll with TransitCenter.
  
  
• Orient new employees on the Commuter Tax$ave Program when they are hired.

The Benefit Process: The first Commuter Tax$ave Program benefits will be offered in April 2004 with marketing materials distributed to employees with their January 30^th paycheck.  Employee orientation and enrollment will occur between February 2 -15, 2004.  OMB will take the deductions for the April benefit from the first check in March.  Unlike the Tax$ave Program (Section 125) that requires one annual election, the transportation benefit allows an employee to opt in and out or change amounts on a monthly basis.  The schedule for enrollments and changes during this calendar year is shown in the following chart.

Note that the monthly deduction for the Commuter Tax$ave Program
will be taken from only the first paycheck each month.

Delivery of the Benefit: Once OMB sends the deductions to TransitCenter, TransitCenter will deliver the benefits requested by the participating employees directly to the employees at their home address.  Section 132(f) requires that the mass transit benefit be delivered in the form of a ticket or payment mechanism (electronic credit/debit-like card or voucher) that can only be used to procure mass transportation services.  TransitCenter offers several options in this regard and will deliver the benefit requested by the employee during enrollment.  Section 132(f) permits the parking benefit to be delivered either in the same manner as the mass transit benefit or through reimbursement.  Here again, TransitCenter will deliver the benefit to the employee in the manner requested during enrollment.  If reimbursement is selected, this will be done by direct deposit or check upon submission of the parking expenses. Reimbursement will be accomplished weekly.

Commuter Tax$ave Announcement Letter

Commuter Tax$ave Brochure

Last update: June 28, 2010