Certifying Officer Letters 2005

December, 2005

Notice To Delinquent Report Of Contribution Filers

In the past I have written explaining the importance of all employers providing to the Division of Pensions and Benefits their quarterly Report of Contributions (ROC) in a timely fashion. As stated in the past, delays in receiving these reports affect the timeliness of the Division providing services to ALL pension plan members, not just your employees and retirees. Unfortunately, we continue to experience delays associated to employer late reporting. I must again ask for your help in avoiding these delays at all costs and remind you that the Division will utilize everything at its disposal in order to solicit timely reporting by the employers we work with to provide benefit services to the State's public employees.

Reporting And Payment Information

Your 4th quarter 2005 tape ROC applicable to the Teachers' Pension and Annuity Fund, Public Employees' Retirement System, and Police and Firemen's Retirement System is due by January 10, 2006. Your December 2005 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 January 10, 2006.

With the tape ROC, you must complete and return the Transmittal Summary form for the 4th quarter 2005. This document is used to assist your office and this Division in reconciling your transmittal remittances to the quarterly ROC. The Control and Certification form must also accompany your quarterly tape ROC. This is essential as it attests to the accuracy and validity of the submitted documentation.

If your quarterly ROC 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 ROC for the following quarter. A tape ROC 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 ROC 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 ROC. 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.

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 ROC. 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.

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, 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 federal ceiling for 2005 is $210,000.

In other words, under the provisions of the Internal Revenue Code, Section 401(a)(17), for "qualified" defined benefit plans {IRC § 401(a)(2)}, the current federal ceiling on pensionable salary 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.

Should you have any questions or need assistance in completing the Report, please refer to http://www.state.nj.us/treasury/pensions/epbam/finance/roc.htm

December, 2005

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.

Reports of Salary Change (NEW)

The Division of Pensions and Benefits is no longer sending our reports of salary change as has been our past practice. Now that the majority of employers are reporting through the web, (I ROC), we are asking that you use the report of contributions to submit these salary changes for the next quarter. Should you need a paper report of salary change please call (609) 292-3630.

Notice To Delinquent Report Of Contribution Filers

In the past I have written explaining the importance of all employers providing to the Division of Pensions and Benefits their quarterly ROC in a timely fashion.  As stated in the past, delays in receiving these reports affect the timeliness of the Division providing services to ALL pension plan members, not just your employees and retirees. Unfortunately, we continue to experience delays associated to employer late reporting.  I must again ask for your help in avoiding these delays at all costs and remind you that the Division will utilize everything at its disposal in order to solicit timely reporting by the employers we work with to provide benefit services to the State’s public employees.

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 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 ROCs to us well after the established due date.  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 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.

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.

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, 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 federal ceiling for 2005 is $210,000.

In other words, under the provisions of the Internal Revenue Code, Section 401(a)(17), for "qualified" defined benefit plans {IRC § 401(a)(2)}, the current federal ceiling on pensionable salary 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.

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

November 2005

In-network NJ PLUS benefits are currently available to State Health Benefits Program (SHBP) NJ PLUS members through the Blue Cross and Blue Shield of Delaware provider network. Blue Cross and Blue Shield of Delaware has made a decision to discontinue their network offerings in Delaware. Although SHBP members may continue enrollment in NJ PLUS, the in-network benefit will no longer be available in Delaware.

Beginning January 2006, the following options will be available to SHBP members in Delaware:

• Traditional Plan*
• Aetna HMO
• Amerihealth HMO
• Cigna Healthcare HMO
• NJ PLUS (out-of-network only)

*Certain State employees are prohibited from enrolling in the Traditional Plan as determined by Union Contract.

For a more detailed description of the SHBP plan options, please access the Division of Pensions and Benefits Internet site at www.state.nj.us/treasury/pensions/shbp.htm On that site your employees can visit the Unified Provider Directory which provides information about all participating physicians and will provide you with information on the HMOs in which their current physician may participate. The Division's Internet site also contains a comparison chart illustrating the differences among all available SHBP health plans.

If any of your employee need to make a change, please have them complete a NJ State Health Benefits Program Application. The SHBP open enrollment period is being extended for NJ PLUS members who use Delaware Primary Care Physicians. The completed applications must be returned to the SHBP by December 1, 2005. If a plan change is not reported by December 1, 2005, the NJ PLUS coverage will continue with out-of-network benefits only and a new NJ PLUS identification card will be issued.

Coverage changes will be effective January 1, 2006 for all state monthly and local employers. For State employees paid through the State's Centralized Payroll Unit, the effective date will be January 7, 2006.

If you have questions concerning this announcement, please contact Horizon Blue Cross Blue Shield at 1-800-414-SHPB(7427) or the Division of Pensions and Benefits at 609-292-7524.

September, 2005

Should you have any questions or need assistance in completing the Report, please refer to http://www.state.nj.us/treasury/pensions/epbam/finance/roc.htm

September, 2005

September 6, 2005

RATES FOR 2006

The State Health Benefits Commission has approved new health, dental, and prescription drug plan rates for the 2006 plan year. These rates are based upon the recommendation of the Commission's actuarial consultant, Aon Consulting. Since the SHBP self-funds most of its plans, the claims experience used in projecting 2006 costs are based upon the actual claims experience of the group. As of January 2006, all SHBP plans will be self-funded.

Effective January 7, 2006, SHBP plan rates for the State Active Group, will see the following 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 eligible and 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:

• Employees in State law enforcement bargaining units (most Fraternal Order of Police units and all State Police units - including non-aligned officers) are no longer eligible to participate in the SHBP Traditional Plan effective July 1, 2005 (July 9, 2005 for State employees paid through the State's Centralized Payroll Unit). In addition, the closure of the Traditional Plan also applies to Fraternal Order of Police retirees and State Police retirees (including non-aligned officers) who retire after July 1, 2005, regardless of their years of service credit.
  
  
• Employers should also remember that new State employees hired on or after July 1, 2003 and eligible for enrollment in the SHBP, are not eligible for coverage under the SHBP Traditional Plan. Ineligible employees include State employees as determined by union contract and all non-aligned State employees as provided under Chapter 119, P.L. 2003.

  Employees who are not eligible for the Traditional Plan can choose from among the six other plans offered by the SHBP such as NJ PLUS or one of the five HMOs: Aetna, AmeriHealth, CIGNA HealthCare, Health Net, and Oxford.

• Employees who are newly married, or enrolling in the SHBP for the first time during the Open Enrollment, and are enrolling their spouse as a dependent are required to provide a copy of the marriage certificate at the time of enrollment. Similarly, if an employee is enrolling an eligible domestic partner as a dependent, a copy of the NJ Certificate of Domestic Partnership is required at the time of enrollment. To ensure that the documentation submitted is properly matched to the employee's record, the Health Benefits Bureau is requesting that employers provide the employee's Social Security number on the copy of the marriage/partnership documentation.

DENTAL PLAN INFORMATION

• Employee Dental Plans Update - Oral Evaluations and cleanings were changed for administrative ease of processing claims for all dental plans. These changes were 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, 2005, they cannot make a dental plan change during this open enrollment period.
  
  
• Retiree Dental Expense Plan - The Retiree Dental Expense Plan, administered for the SHBP by Aetna Dental, is now available to all retirees when they 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. A description of the plan and a chart outlining the benefits of the Retiree Dental Expense Plan is available in Fact Sheet #73, Retiree Dental Expense Plan, 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 Retiree Prescription Drug Plan under NJ PLUS and the Traditional Plan, effective January 1, 2006, retail pharmacy copayments for a 30-day supply will increase to $8 for generic drugs; $16 for preferred brand name drugs; and $33 for all other brand name prescription drugs. The mail order copayments for a 90-day supply will increase to $8 for generic drugs, $25 for preferred brand name drugs, and $41 for all other brand name prescription drugs. At the time of this writing, the out-of-pocket maximum for the 2006 plan year was yet to be determined by the State Health Benefits Commission. Please visit: www.state.nj.us/treasury/pensions/shbp.htm for an update when it becomes available.

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.

On September 23, the open enrollment announcement flier will be distributed with paychecks to all employees paid through the State's Centralized Payroll Unit.

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 23, the Health Capsule newsletter 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.)

HEALTH AND DENTAL PLAN APPLICATIONS - As a result of last year's expansion of the SHBP Dental Plans to local government and educational employers, the Health Benefits Bureau has two separate applications: one application is for enrolling into the health plans (including prescription drug coverage) and the other application is for enrolling into the Employee Dental Plans. The health and dental applications are available for download from the SHBP home page at: www.state.nj.us/treasury/ pensions/shbp.htm

HEALTH PLAN COMPARISON SUMMARY 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 Plan Comparison Summary charts - One for State Active employees and one for Local/Educational Active employees and all retirees (State and 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 2006 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 will also be 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 were revised for the 2005 plan year. Please continue to use these editions of the handbooks for the 2006 plan year.

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$ave) Open Enrollment Period runs concurrent with the SHBP Open Enrollment Period (October 1 - October 31, 2005). Tax$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.

Unreimbursed Medical Claim Period Extended - Any balance remaining in a Tax$ave Unreimbursed Medical Spending Account as of December 31, can now be used for eligible expenses incurred from January 1 through March 15 of the following year. While this does not eliminate the use-it-or-lose-it rule completely, employees now have a longer period to obtain covered services and avoid forfeiting unused funds. See the Tax$ave Open Enrollment announcement letter or the Tax$ave 2006 newsletter for details.

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.

September 6, 2005

The State Health Benefits Program (SHBP) Open Enrollment period for all State employees will begin on October 1, 2005 and end on October 31, 2005. All changes to coverage made during this open enrollment will be effective on January 1, 2006 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 7, 2005.

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

RATES FOR 2006

The State Health Benefits Commission has approved new health, dental, and prescription drug plan rates for the 2006 plan year. These rates are based upon the recommendation of the Commission's actuarial consultant, Aon Consulting. Since the SHBP self-funds most of its plans, the claims experience used in projecting 2006 costs are based upon the actual claims experience of the group. As of January 2006, all SHBP plans will be self-funded.

Effective January 1, 2006, SHBP plan rates for the State Monthly Active Group, will see the following 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 eligible and 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:

• Employees in State law enforcement bargaining units (most Fraternal Order of Police units* and all State Police units - including non-aligned officers) are no longer eligible to participate in the SHBP Traditional Plan effective July 1, 2005. In addition, the closure of the Traditional Plan also applies to Fraternal Order of Police retirees and State Police retirees (including non-aligned officers) who retire after July 1, 2005, regardless of their years of service credit.
  
  *Note: This provision does not apply to Fraternal Order of Police employees/retirees of Rutgers University, the University of Medicine and Dentistry of New Jersey (UMDNJ), or the New Jersey Institute of Technology (NJIT).
  
  
• Employers should also remember that new State employees hired on or after July 1, 2003 and eligible for enrollment in the SHBP, are not eligible for coverage under the SHBP Traditional Plan. Ineligible employees include State employees as determined by union contract and all non-aligned State employees as provided under Chapter 119, P.L. 2003.
  
  Employees who are not eligible for the Traditional Plan can choose from among the six other plans offered by the SHBP such as NJ PLUS or one of the five HMOs: Aetna, AmeriHealth, CIGNA HealthCare, Health Net, and Oxford.
  
  
• Employees who are newly married, or enrolling in the SHBP for the first time during the Open Enrollment, and are enrolling their spouse as a dependent are required to provide a copy of the marriage certificate at the time of enrollment. Similarly, if an employee is enrolling an eligible domestic partner as a dependent, a copy of the NJ Certificate of Domestic Partnership is required at the time of enrollment. To ensure that the documentation submitted is properly matched to the employee's record, the Health Benefits Bureau is requesting that employers provide the employee's Social Security number on the copy of the marriage/partnership documentation.

DENTAL PLAN INFORMATION

• Employee Dental Plans Update - Oral Evaluations and cleanings were changed for administrative ease of processing claims for all dental plans. These changes were 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, 2005, they cannot make a dental plan change during this open enrollment period.
  
  
• Retiree Dental Expense Plan - The Retiree Dental Expense Plan, administered for the SHBP by Aetna Dental, is now available to all retirees when they 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. A description of the plan and a chart outlining the benefits of the Retiree Dental Expense Plan is available in Fact Sheet #73, Retiree Dental Expense Plan, 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 Retiree Prescription Drug Plan under NJ PLUS and the Traditional Plan, effective January 1, 2006, retail pharmacy copayments for a 30-day supply will increase to $8 for generic drugs; $16 for preferred brand name drugs; and $33 for all other brand name prescription drugs. The mail order copayments for a 90-day supply will increase to $8 for generic drugs, $25 for preferred brand name drugs, and $41 for all other brand name prescription drugs. At the time of this writing, the out-of-pocket maximum for the 2006 plan year was yet to be determined by the State Health Benefits Commission. Please visit: www.state.nj.us/treasury/pensions/shbp.htm for an update when it becomes available.

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.)

HEALTH AND DENTAL PLAN APPLICATIONS - As a result of last year's expansion of the SHBP Dental Plans to local government and educational employers, the Health Benefits Bureau has two separate applications: one application is for enrolling into the health plans (including prescription drug coverage) and the other application is for enrolling into the Employee Dental Plans. The health and dental applications are available for download from the SHBP home page at: www.state.nj.us/treasury/ pensions/shbp.htm

HEALTH PLAN COMPARISON SUMMARY 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 Plan Comparison Summary charts - One for State Active employees and one for Local/Educational Active employees and all retirees (State and 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 2006 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 were revised for the 2005 plan year. Please continue to use these editions of the handbooks for the 2006 plan year.

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$ave) Open Enrollment Period runs concurrent with the SHBP Open Enrollment Period (October 1 - October 31, 2005). Tax$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.

Unreimbursed Medical Claim Period Extended - Any balance remaining in a Tax$ave Unreimbursed Medical Spending Account as of December 31, can now be used for eligible expenses incurred from January 1 through March 15 of the following year. While this does not eliminate the use-it-or-lose-it rule completely, employees now have a longer period to obtain covered services and avoid forfeiting unused funds. See the Tax$ave Open Enrollment announcement letter or the Tax$ave 2006 newsletter for details.

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.

September 6, 2005

The State Health Benefits Program (SHBP) Open Enrollment Period for local government employees will begin on October 1, 2005 and end on October 31, 2005. All changes to coverage made during this open enrollment will be effective on January 1, 2006.

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 7, 2005.

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

RATES FOR 2006

The State Health Benefits Commission has approved new health and prescription drug plan rates for the 2006 plan year. These rates are based upon the recommendation of the Commission's actuarial consultant, Aon Consulting. Since the SHBP self-funds most of its plans, the claims experience used in projecting 2006 costs are based upon the actual claims experience of the group.

Effective January 1, 2006, SHBP plan rates for the Local Government Active Group will see the following percentage of increase:

MEDICAL AND PRESCRIPTION DRUG PLAN CHANGES

• Employees who are newly married, or enrolling in the SHBP for the first time during the Open Enrollment, and are enrolling their spouse as a dependent are required to provide a copy of the marriage certificate at the time of enrollment. Similarly, if an employee is enrolling an eligible domestic partner as a dependent, a copy of the NJ Certificate of Domestic Partnership is required at the time of enrollment. To ensure that the documentation submitted is properly matched to the employee's record, the Health Benefits Bureau is requesting that employers provide the employee's Social Security number on the copy of the marriage/partnership documentation.

DENTAL PLAN INFORMATION

• Employee Dental Plans - The SHBP Employee Dental Plans are now available to participating local employers who adopt this benefit for their active employees and eligible dependents. Employers and employees should see Fact Sheet #37, SHBP Employee Dental Plans, for a description of the plans and a chart outlining the benefits.
  
  
• Retiree Dental Expense Plan - The Retiree Dental Expense Plan, administered for the SHBP by Aetna Dental, is now available to all retirees when they 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. A description of the plan and a chart outlining the benefits of the Retiree Dental Expense Plan is available in Fact Sheet #73, Retiree Dental Expense Plan, 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 Retiree Prescription Drug Plan under NJ PLUS and the Traditional Plan, effective January 1, 2006, retail pharmacy copayments for a 30-day supply will increase to $8 for generic drugs; $16 for preferred brand name drugs; and $33 for all other brand name prescription drugs. The mail order copayments for a 90-day supply will increase to $8 for generic drugs, $25 for preferred brand name drugs, and $41 for all other brand name prescription drugs. At the time of this writing, the out-of-pocket maximum for the 2006 plan year was yet to be determined by the State Health Benefits Commission. Please visit: www.state.nj.us/treasury/pensions/shbp.htm for an update when it becomes available.

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, 2006 through December 31, 2006.

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.)

HEALTH AND DENTAL PLAN APPLICATIONS - As a result of last year's expansion of the SHBP Dental Plans to local government and educational employers, the Health Benefits Bureau has two separate applications: one application is for enrolling into the health plans (including prescription drug coverage if provided) and the other application is for enrolling into the Employee Dental Plans (if provided). The health and dental applications are available for download from the SHBP home page at: www.state.nj.us/treasury/ pensions/shbp.htm

HEALTH PLAN COMPARISON SUMMARY CHARTS - SHBP Plan Comparison Summary charts for Local/Educational Active employees and all retirees are currently being printed and copies will be shipped to local employers for the start of the open enrollment period.

SUMMARY PROGRAM DESCRIPTION (SPD) BOOKLET - The SHBP Summary Program Description has been revised for the 2006 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 were revised for the 2005 plan year. Please continue to use these editions of the handbooks for the 2006 plan year.

ONLINE INFORMATION

The SHBP's plan comparisons, member handbooks, newsletters, and rate information are available over the Int