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December 14, 2001
TO: Defined
Contribution Plan Participating Employers
FROM: Joseph
Zisa, Plan Manager
SUBJECT: Program
Changes Affecting Payroll Operations for the State Employees
Deferred Compensation Plan (IRC 457b)
On June 7, 2001 President
Bush signed the federal Economic Growth and Tax Relief Reconciliation
Act of 2001. This legislation contains a number of requirements
and plan options that will change the defined contribution plans
administered by the Division of Pensions and Benefits.
This letter contains
a summary of the changes that will be effective in 2002 for
the State's section 457 plan, the New Jersey State Employees
Deferred Compensation Plan.
Employer
Payroll Deferral Reporting Requirements
No changes are required
in the methods used to report payroll deferrals or the types
of information reported to the Division of Pensions and Benefits.
Normal Deferral
Limit
Under the Economic
Growth and Tax Relief Reconciliation Act, 457(b) Deferred Compensation
Plan participants can defer up to the lesser of $11,000 or 50%
of compensation for the tax year 2002.
To calculate the maximum
deferral amount for Deferred Compensation, the member's tax
deferred contributions to other plans must first be subtracted
from gross pay. These plans and their applicable IRS code are
shown below:
- Mandatory pension contributions
- 414(h)
- SACT Tax Deferred - 403(b)
- ACTS - 403(b)
- Alternate Benefit Program
voluntary contributions - 403(b)
- Tax$ave (Premium Option Plan,
Unreimbursed Medical Spending Account, Dependent Care Spending
Account) - 125
The maximum deferral
for the 457(b) Deferred Compensation Plan is then 50% of the
remaining salary up to the stated dollar limitation.
After 2002 the dollar
maximums for the State Employees Deferred Compensation Plan
will increase by $1,000 for each of the following tax years
up to $15,000 in tax year 2006, after which the maximum will
be indexed for inflation in $500 increments.
Coordination
of 457(b) Deferrals with Contributions to Other Plans
Coordination of 457(b)
deferrals with 403(b) salary reductions is not required after
December 31, 2001. Prior to December 31, 2001, a member's ability
to defer salary to a 457(b) deferred compensation plan was reduced
by salary reductions under a 403(b) tax-sheltered annuity program
such as those offered under SACT, ACTS, or ABP. For example,
in 2001 the 457(b) deferral limit was $8,500. If a member had
a salary reduction agreement under SACT/Tax-Shelter for $3,000,
the deferral limit under 457(b) was reduced to $5,500; therefore
the total deferral/reduction for the year was $8,500 between
the two programs.
Starting in 2002 this
coordination requirement is eliminated from section 457 of the
Internal Revenue Code. Therefore, unless the member's salary
deferrals are otherwise limited, an individual may defer $11,000
to the 457(b) deferred compensation plan and another $11,000
to any 403(b) tax-sheltered annuity program for a total deduction
of $22,000 without invoking any of the permitted catch-up provisions.
Traditional
Catch-up Limit
In the three years
prior to retirement a Deferred Compensation Plan member may
defer twice the normal limit. The eligibility requirements for
this elective option under the plan remain unchanged. Prior
to January 1, 2002, the annual catch-up deferral limit was set
at $15,000. After December 31, 2001, the amount will be twice
the prevailing normal deferral limit; for example, $22,000 in
2002 and $24,000 in 2003. The amount will increase until it
reaches $30,000 in 2006 and thereafter be affected by indexing
in the same manner as the normal deferral limit. A member must
still have sufficient underutilization of deferrals (catch-up
dollars) from prior years of plan participation and the election
may only be used once. Members must still apply to take advantage
of this catch-up provision. Members who have already used their
three years of catch-up are not permitted to "re-start"
catch-up under the higher limits.
"Enhanced"
Deferral Amount for Those Age 50 or Older
A new "enhanced"
deferral amount is permitted for those members age 50 or older.
The new amount will first be effective in tax year 2002. The
amount will be permitted in addition to the normal deferral
amount (lesser of $11,000 or 50% of compensation for the tax
year 2002) and be available to anyone at least 50 years of age
at any point during the tax year. The "enhanced" deferral
amount will not be available during any tax year in which the
member elects to use the higher, traditional catch-up limit.
The additional amount
available will be $1,000 in tax year 2002 for a maximum deferral
of $12,000 and will increase by $1,000 per year through 2006
when it reaches $5,000 after which the maximum will be indexed
for inflation in $500 increments. The member does not have to
do anything to take advantage of this deferral other than select
a contribution amount high enough to reach the maximum contribution
limit.
Minimum Deferral
Amount Reduction
To encourage greater
participation, the Deferred Compensation Board has reduced the
minimum contribution levels permitted under the rules of the
plan. Beginning January 1, 2002, Deferred Compensation Plan
participants may defer as little as the larger of 1% of pay
or $10 per pay, $20 per month.
If you have any questions
about this subject, please call the Defined Contributions Unit
at (609) 292-3440.
December 14, 2001
TO: Defined
Contribution Plan Participating Employers
FROM: Joseph
Zisa, Plan Manager
SUBJECT: Program
Changes Affecting Payroll Operations for the State-Administered
Defined Contribution Plans (IRC 403b and 457b)
On June 7, 2001 President
Bush signed the federal Economic Growth and Tax Relief Reconciliation
Act of 2001. This legislation contains a number of requirements
and plan options that will change the defined contribution plans
administered by the Division of Pensions and Benefits.
This letter contains
a summary of the changes that will be effective in 2002 for
the State's section 457 and 403(b) plans. These plans include
the New Jersey State Employees Deferred Compensation Plan, the
Supplemental Annuity Collective Trust of New Jersey (SACT),
the Additional Contributions Tax Sheltered Program (ACTS), and
the Alternate Benefit Program (ABP).
Employer
Payroll Deferral Reporting Requirements
No changes are required
in the methods used to report payroll deferrals or the types
of information reported to the Division of Pensions and Benefits.
Normal Deferral
Limit - 457(b) & 403(b) Plans
Under the Economic
Growth and Tax Relief Reconciliation Act, 457(b) Deferred Compensation
Plan participants can defer up to the lesser of $11,000 or 50%
of compensation for the tax year 2002.
To calculate the maximum
deferral amount for the 457(b) Deferred Compensation Plan, the
member's tax deferred contributions to other plans must first
be subtracted from gross pay. These plans and their applicable
IRS code are shown below:
- Mandatory pension contributions
- 414(h)
- SACT Tax Deferred - 403(b)
- ACTS - 403(b)
- Alternate Benefit Program
voluntary contributions - 403(b)
- Tax$ave (Premium Option Plan,
Unreimbursed Medical Spending Account, Dependent Care Spending
Account) - 125
The maximum deferral
for the 457(b) Deferred Compensation Plan is then 50% of the
remaining salary up to the stated dollar limitation.
Participants in 403(b)
tax-sheltered annuity plans (SACT tax deferred, ACTS, and ABP
additional voluntary contributions) can defer up to the lesser
of $11,000 or 100% of compensation (without reduction for deferrals
to other plans) for the tax year 2002.
After 2002 the dollar
maximums for all plans will increase by $1,000 for each of the
following tax years up to $15,000 in tax year 2006, after which
the maximum will be indexed for inflation in $500 increments.
Coordination
of 457(b) Deferrals with Contributions to Other Plans
Coordination of 457(b)
deferrals with 403(b) salary reductions is not required after
December 31, 2001. Prior to December 31, 2001, a member's ability
to defer salary to a 457(b) deferred compensation plan was reduced
by salary reductions under a 403(b) tax-sheltered annuity program
such as those offered under SACT, ACTS, or ABP. For example,
in 2001 the 457(b) deferral limit was $8,500. If a member had
a salary reduction agreement under SACT/Tax-Shelter for $3,000,
the deferral limit under 457(b) was reduced to $5,500; therefore
the total deferral/reduction for the year was $8,500 between
the two programs.
Starting in 2002 this
coordination requirement is eliminated from section 457 of the
Internal Revenue Code. Therefore, unless the member's salary
deferrals are otherwise limited, an individual may defer $11,000
to the 457(b) deferred compensation plan and another $11,000
to any 403(b) tax-sheltered annuity program for a total deduction
of $22,000 without invoking any of the permitted catch-up provisions.
457(b) Traditional
Catch-up Limit
In the three years
prior to retirement, a Deferred Compensation Plan member may
defer twice the normal limit. The eligibility requirements for
this elective option under the plan remain unchanged. Prior
to January 1, 2002, the annual catch-up deferral limit was set
at $15,000. After December 31, 2001, the amount will be twice
the prevailing normal deferral limit; for example, $22,000 in
2002 and $24,000 in 2003. The amount will increase until it
reaches $30,000 in 2006 and thereafter be affected by indexing
in the same manner as the normal deferral limit. A member must
still have sufficient underutilization of deferrals (catch-up
dollars) from prior years of plan participation and the election
may only be used once. Members must still apply to take advantage
of this catch-up provision. Members who have already used their
three years of catch-up are not permitted to "re-start"
catch-up under the higher limits.
403(b) and
457(b) "Enhanced" Deferral Amount for Those Age 50
or Older
A new "enhanced"
deferral amount is permitted for those members age 50 or older.
The new amount will first be effective in tax year 2002. The
amount will be permitted in addition to the normal deferral
amount (lesser of $11,000 or 50% of compensation for the tax
year 2002) and be available to anyone at least 50 years of age
at any point during the tax year. The "enhanced" deferral
amount will not be available during any tax year in which the
member elects to use the higher, traditional catch-up limit.
The additional amount
available will be $1,000 in tax year 2002 for a maximum deferral
in each plan of $12,000 and will increase by $1,000 per year
through 2006 when it reaches $5,000 after which the maximum
will be indexed for inflation in $500 increments. The member
does not have to do anything to take advantage of this deferral
other than select a contribution percentage amount high enough
to reach the maximum contribution limit.
457(b) Minimum
Deferral Amount Reduction
To encourage greater
participation, the Deferred Compensation Board has reduced the
minimum contribution levels permitted under the rules of the
plan. Beginning January 1, 2002, Deferred Compensation Plan
participants may defer as little as the larger of 1% of pay
or $10 per pay, $20 per month.
If you have any questions
about this subject, please call the Defined Contributions Unit
at (609) 292-3440.
December 3, 2001
TO: Public
Employees' Retirement System Certifying Officers, Institutions
of Higher Education
FROM: Janice
C. Curtin
Assistant
Director, Pension Operations
SUBJECT: Return
to PERS Employment after Retirement
Acting Governor
DiFrancesco signed Chapter 253, P.L. 2001 into law on November
15, 2001. This law allows retired members of the Public Employees'
Retirement System (PERS) to accept employment in teaching
positions with institutions of higher education, regardless
of salary, without being subject to suspension of their retirement
benefits and re-enrollment in the PERS.
The law defines
institutions of higher education to include Rutgers - the State
University, the University of Medicine and Dentistry of New
Jersey, the New Jersey Institute of Technology, the State colleges
and universities, and the county colleges.
The law already
permitted PERS retirees to return to work without affecting
their retirement benefits, as long as their salary was below
$10,000 per calendar year. Chapter 253 eliminates the earnings
limit only for teaching positions at institutions
of higher education.
PERS members must
have a valid retirement to take advantage of this law. That
is, they must have terminated all PERS covered employment prior
to their retirement and due and payable dates, their retirement
must be due and payable, and they must have at least a thirty-day
break in employment after their effective retirement date. In
other words, members must terminate employment prior to their
retirement date and not start PERS covered employment again
until after they have been issued their first retirement check.
If you have questions
about this law, contact our Office of Client Services at (609)
292-7524.
December 2001
TO: SHBP
Participating Local Government Employers
SHBP Participating
Local Education Employers
State Biweekly
Benefits Administrators
State Monthly
Human Resource Directors/Benefit Administrators
FROM: New
Jersey State Health Benefits Program
SUBJECT: Changes
in Chiropractic Care for Traditional Plan and NJ PLUS Members
The State Health
Benefits Commission recently adopted a change in policy for
chiropractic care for members enrolled in the Traditional
Plan and NJ PLUS. The policy change will be effective
January 1, 2002.
The new policy
allows for a 30-visit maximum per benefit year. Members will
no longer need to submit updated medical records and/or treatment
plans for review and approval for services rendered on or after
January 1, 2002.
For all services
received prior to January 1, 2002, the current chiropractic
claim and utilization review program will continue to apply.
Horizon Blue Cross Blue Shield of New Jersey has already notified
Traditional Plan and NJ PLUS members who are currently in review
status for chiropractic care of this change in policy.
Traditional Plan
and NJ PLUS members with questions regarding this change of
policy should contact Horizon Blue Cross Blue Shield of New
Jersey at 1-800-414-SHBP (7427).
October
2001
TO: State
Health Benefits Program Participating Employers
FROM: Florence
J. Sheppard, Assistant Director, Health Benefits
SUBJECT: Combining
Service Credit Under Multiple Retirement Systems to Qualify
for Employer-paid State Health Benefits Program Coverage
P.L. 2001, Chapter
209, signed on August 15, 2001 by Acting Governor DiFrancesco,
amended the statutes (N.J.S.A. 52:14-17.25 et seq.) governing
a retiree's eligibility for state or employer-paid coverage
under the State Health Benefits Program (SHBP). Chapter 209
provides for an aggregation of nonconcurrent pension credit
in multiple pension funds to qualify for the 25 or more years
of service credit needed for State or employer-paid retired
SHBP benefits. Chapter 209 did not change the definition of
a qualified retiree under the provisions of P.L. 1997, Chapter
330 which provides for the State payment of a portion of SHBP
coverage for retired Police and Firemen's Retirement System
members and law enforcement officers.
Before Chapter 209,
retirees of the State, boards of education and state and county
colleges, excepting those who retired on disability retirement
benefits, needed 25 or more years of service credit in a single
retirement system to qualify for State-paid retired SHBP coverage.
Local participating employers could also choose to provide employer-paid
SHBP coverage to their retirees who accrued 25 years of creditable
service in a single State or locally administered retirement
system.
Chapter 209 now permits
the 25-year service credit requirement to be met by combining
nonconcurrent service credit in one or more State or
locally administered retirement systems.
The member must be
receiving a retirement benefit from each membership and cannot
have withdrawn or allowed the accounts to expire.
For example, a member
with 15 years in a PERS account, who then accrues 10 years of
nonconcurrent service in the TPAF, and retires and begins to
receive a benefit from both accounts could be eligible. Conversely,
a member with 15 years in a PERS account and 10 years in a TPAF
account, who had concurrent service for 2 of those years, would
not be eligible because they would only have 23 years of nonconcurrent
service.
To qualify for coverage
based on combined service in more than one retirement system,
members must:
- Retire and collect a benefit
from each retirement system;
- Have more than 25 years of
nonconcurrent service credit in total;
- Retire from the last retirement
system after the effective date of this law, August 15,
2001;
- Be eligible for employer-paid
SHBP coverage immediately prior to retirement from the last
contributing employer in the retirement system for retirees
of the State or participating local employers who have agreed
by resolution to pay for the coverage of their retirees.
In order to receive state-paid SHBP coverage as a retiree
of a school board or county college, a retiree must be eligible
for employer-paid coverage immediately prior to retirement
or separation from the school board or county college. The
school board or county college must have been the retiree's
last contributing employer; and
- Notify the Division of Pensions
and Benefits that they have an aggregate of 25 or more years
of nonconcurrent service in more than one public retirement
system in New Jersey.
Please note,
the provisions of Chapter 209 are not retroactive. This new
law does not affect members who retired prior to August 15,
2001.
Chapter 209 also changed
the legal basis for Chapter 48, P.L. 1999 resolutions by removing
the reference to the local government law (N.J.S.A. 40A:10-23).
Local government units participating in the SHBP can use the
provisions of Chapter 48 for greater flexibility in defining
which employees qualify for post-retirement SHBP coverage. Chapter
48 provided that employers may, under uniform conditions, assume
the cost of post-retirement medical coverage for retirees and
their dependents who have:
- Retired on a disability pension;
and/or
- Retired with 25 or more years
of service credit in one or more State or locally administered
retirement systems and a period of service of up to 25 years
with the employer at the time of retirement, such period
as established by the employer; or
- Retired upon or after the
attainment of age 65 with 25 or more years of service credit
in one or more State or locally administered retirement
systems and a period of service of up to 25 years with the
employer at the time of retirement, such period as established
by the employer; or
- Retired on or after age 62
with at least 15 years of service with the employer.
If you would like
more information regarding the filing of a Chapter 48 resolution,
please review the certifying officers' letter, dated May 18,
1999, which may be found at www.state.nj.us/treasury/pensions/epbam/exhibits/pdf/hr0426.pdf
September 2001
TO: Certifying
Officers of Municipal Authorities Participating in the State
Health Benefits Program
FROM: Florence
Sheppard
Assistant Director, Health Benefits
SUBJECT: Health
Care Waivers
On July 31, 2001,
Chapter 189, P.L. 2001 became law with provisions affecting
municipal authorities participating in the State Health Benefits
Program (SHBP). This legislation allows a municipal authority
that participates in the SHBP or another group health benefit
plan to:
-
permit employees,
who receive health care benefits as a dependent of their
spouse, to waive coverage and receive an incentive. The
incentive cannot exceed 50% of the amount saved by the municipality
because of the waiver of benefits.
-
permit an employee,
who has waived coverage under the provisions of this law,
to immediately resume health coverage if they lose their
coverage as a dependent.
The decision of
the municipal authority to allow its employees to waive coverage
and the amount of the incentive to be paid cannot be subject
to the collective bargaining process.
The law requires
employees participating in the SHBP to file a waiver with the
Division of Pensions and Benefits when they accept an incentive
in lieu of health coverage, and a declaration when they revoke
the waiver. The attached State
Health Benefits Program Coverage Waiver/Reinstatement
form is to be used for these purposes in conjunction with the
SHBP Application. This form is to be completed by any employee
electing to waive health coverage to receive a cash incentive.
The form is also to be used by an employee to reinstate waived
health coverage due to the loss of the employee's spousal coverage.
The employee must attach the form to a completed New Jersey
State Health Benefits Application when filing with the Division.
Any municipal authority
contemplating exercising its right to offer a cash incentive
to waive health benefits should discuss with legal counsel the
federal income tax consequences of such an action on its employees.
If a cash incentive provided by an employer is not part of an
Internal Revenue Code Section 125 plan, the health benefits
provided to its other employees may be subject to federal taxes.
Municipal authorities considering offering a cash incentive
are urged to seek the advice of counsel that is knowledgeable
with federal and state tax matters, especially with regard to
employee benefits plans.
If you have any question
regarding this law, please call the Division's Office of Client
Services at (609) 292-7524.
Attachment
September 2001
TO:
Certifying Officers of the Police and
Firemen's Retirement System
FROM:
Thomas P. Bryan, Director
SUBJECT: Request
for List Of Contracts Covering PFRS Members
The Police and Firemen's
Retirement System (PFRS) Board of Trustees has asked the Division
of Pensions and Benefits to establish a program to monitor changes
in pensionable compensation of members participating in the
PFRS. The Board expects this program to include the review of
individual employment agreements and collective bargaining unit
contracts for PFRS members to ensure that compensation reported
by employers as creditable for pension purposes meets the definition
established in N.J.A.C. 17:4-4-1.
As a preliminary step
in the development of this program, the Division needs to identify
the number and type of contracts pertinent to PFRS members.
Please complete the attached
form listing this information and return it by October 30,
2001.
Instructions:
Under Agreement or Contract, list the bargaining unit
representing a group of covered employees and the union that
represents that group, e.g., Superior Officers Association,
PEA. For individual contracts, list the title(s) covered under
the agreement, e.g., Chief of Police, Fire Chief.
Under # Employees
Covered, list the number of employees covered under a collective
bargaining contract. For individual employment contracts, list
the first initial and last name of the covered member. Under
Contract Period, list the starting and ending dates of
the current contract period.
Sample Chart
|
Agreement
or Contract
|
# Employees Covered
|
Contract
Period (From to dates)
|
| Superior Officers Association,
FOP |
36
|
7/1/99 - 6/30/03 |
| Chief of Police |
W. Brown
|
10/1/00 - 9/30/02 |
If you have any questions
about this letter or the form, please contact the External Audit
Unit at (609) 292-3664. The e-mail address is mike.czyzyk@treas.state.nj.us
attachment
September 2001
TO:
Certifying
Officers,
Teachers'
Pension and Annuity Fund (TPAF)
Public Employees' Retirement
System (PERS)
Police and Firemen's Retirement
System ( PFRS)
State Police Retirement
System (SPRS)
Alternate Benefit Program (ABP)
FROM: Thomas
P. Bryan, Director
SUBJECT: Benefit
Continuation for Employees Called to Active Duty During Operations
Noble Eagle and Enduring Freedom
President George W.
Bush announced a call-up of reserve forces as part of Operation
Noble Eagle and Operation Enduring Freedom in response to the
recent terrorist attacks against the United States. Acting Governor
Donald T. DiFrancesco issued Executive Order #133 extending
benefits to certain State employees called-up to military duty
for Operation Noble Eagle and Operation Enduring Freedom.
This memorandum provides
guidance to employers on the subject of continuation of benefits
of employees called-up for military duty.
Leave of
Absence with Pay for Military Service - State Employees (Includes
those receiving full pay, differential pay or no pay).
Employees covered
by Executive Order #133 receive the following benefits while
in active military service:
- Full seniority and benefits
consistent with state and federal military reemployment
and seniority rights upon termination of active duty and
return to state employment.
- Health benefits, life insurance,
and pension coverage during active duty service as though
they were on a paid leave of absence.
- Differential pay between their
State gross salary and their military base pay.
Health Benefits.
Although health benefits coverage can continue for employees
who are called-up for military duty, it may not be in their
interest to do so. This is particularly the case if there is
a cost to the employee for continuing the coverage. Employees
with single coverage will have their full medical needs met
by the military. Family members could possibly have their needs
met by the military or other coverage. Therefore, employees
should be given the option of waiving the health benefits coverage
in case they do not need the coverage while the employee is
on military duty. If not expressly waived, that coverage will
be continued while the employee is on military duty. If coverage
is not waived and is continued, the employee will be responsible
for normal employee contributions for this coverage. These contributions
will be deducted from any differential pay provided. If there
is no differential pay or if it is insufficient to cover the
health benefits contributions, the employee contributions will
be collected from the employee upon return from military duty.
The employee should
be given the attached form, Waiver
of State Health Benefits Program Coverage While on Military
Duty, so the option to cancel coverage can be exercised.
Dependent coverage cannot be continued without the employee
being covered except under the provisions of COBRA.
Differential Pay
and Deductions. The Office of Management and Budget will
issue detailed guidance on this subject. Employees' regular
pension contributions, contributory group life insurance premiums,
and medical and dental premium payments will be deducted from
their pay or paid by employers in the absence of sufficient
pay. Upon the employee's return from military duty, the employer
will collect any payments that were made on the employee's behalf.
If pension back deductions,
arrears, and loan payments are not met from differential pay,
their collection should be automatically resumed when the employee
returns to employment. Employees who wish to make supplemental
retirement plan contributions based on their full salary may
do so upon return from military duty by filing a USERRA
form, which is attached and described on page 3.
Alternate Benefit
Program (ABP). ABP employee contributions will be
based upon the gross differential salary. Employer contributions
to the ABP will be based upon full base salary and should be
paid regardless of whether the employee receives differential
pay. Employees who wish to make contributions based on
their full salary may do so upon return from military duty by
filing a USERRA
form, which is attached and described on page 3.
Leave of
Absence with Pay for Military Service - Local Employees
Local employers and
independent authorities are not covered by the Executive Order.
They have the option of paying compensation, however, to their
employees who are called to active military duty. Whatever policy
the employer adopts should be applied consistently to all affected
employees.
Local employers who
elect to consider employees called up for military duty as on
a paid leave of absence should continue to report and remit
regular pension contributions, and, if appropriate, State Health
Benefits Program payments in the normal manner. If an employee
receives no differential pay or if the differential pay is insufficient
to cover all deductions in effect at the time of activation,
the employer should pay the deductions for an employee's regular
pension contributions, contributory group life insurance, and,
if appropriate, State Health Benefits Program coverage. The
employer may then bill the employee for these costs after the
military leave is over. If the differential pay is not sufficient
to cover back deductions, arrears, and loans, indicate that
in the remarks column of the Report of Contributions. If
you file your Report of Contributions by tape, do not reflect
any of these payments and resume deductions upon the employee's
return from military duty.
Leaves of
Absence for Military Service without Pay
This situation applies
to those employees whose employers elect not to extend similar
benefits available to State employees under the Executive Order.
Public employees who
are called to military duty and are not considered as
being on a paid leave of absence may have pension entitlements
when they return to work under the provisions of the Uniformed
Services Employment and Reemployment Rights Act of 1994 (USERRA)
38 USC 4301 et seq. USERRA provides that an employee who leaves
a civilian employer for the purpose of serving in the uniformed
services, and who returns to employment with the employer, is
entitled to restoration of certain pension and similar benefits
that would have accrued but for the employee's absence due to
qualified military service. These employees shall be treated
as not having incurred a break in service with the employer
by reason of the member's period of service in the uniformed
services. The period of service shall count as if the member
had never left for the purposes of vesting or determining eligibility
for retirement and health benefits, but not for benefits calculation
purposes. For example, a member with 24 years of pension credit
and 1 year of eligible service in the uniformed services would
have 25 years of service and would be eligible to collect a
retirement benefit before age 60 for PERS and TPAF members,
or be eligible for employer paid health benefit coverage (if
this benefit is available). However, the actual pension calculation
would use the 24 years of service. An example for vesting purposes
would be that a member with 7 years of pension credit and 3
years of eligible service in the uniformed services would be
vested.
When the member returns
to covered employment within the time frames specified under
USERRA, the employer shall notify the Division in writing that
the member has returned from service in the uniformed services
and the dates of such service using the attached USERRA
form.
The member may also
receive pension credit for the period of uniformed service by
making the employee pension contributions that would have been
required had the member not left employment to serve in the
uniformed services. The member may request in writing that the
Division schedule back deductions based upon the salary the
member would have received but for the period of service; or
if the determination of such rate is not reasonably certain,
on the basis of the member's average rate of compensation during
the 10 or 12 month period immediately preceding such service.
The salary is then multiplied by the member's rate of contribution
in effect when the member returned for the period of time in
which no credit was received in the system for that service.
Any payment to the plan described in this paragraph shall be
made during the period that begins on the date of reemployment
and continues for the lesser of either five years or three times
the period of the uniformed service. The member may choose to
pay the amount in one lump sum instead of back deductions. The
Division must receive the request for this time within the lesser
of either five years or three times the period of the uniformed
service from the date of reemployment, to receive credit for
such service. If the member decides to make contributions for
this service, those contributions or lump sum payment shall
be deferred from federal taxation.
The member is also
permitted to make additional elective deferrals (Deferred Compensation,
ACTS or SACT) in an amount not exceeding the maximum amount
the employee would have been permitted to contribute during
the period of military service if the employee had actually
been employed by the employer during that period.
Life Insurance.
Coverage for noncontributory death benefits continues
for 93 days after the last day of paid covered employment. A
member may convert coverage to an individual policy directly
with Prudential within the 31 days beyond the 93 days of coverage
as described above. If a member wants to keep converted coverage
after reemployment, the member must prove insurability to restore
the coverage through the retirement system. If the coverage
is not converted or the converted coverage is surrendered, the
coverage is reinstated automatically upon return to employment.
For continuation of
existing contributory insurance coverage under PERS and
TPAF, the member must prepay the contributions to the Division
directly for the 93 days of coverage.
Health Insurance.
A military leave of absence is treated as any other leave of
absence without pay for health insurance purposes under SHBP.
Notwithstanding the availability of health care services available
through the military, employees may want to continue coverage
under the State Health Benefit Program (SHBP) for themselves
or their dependents.
For a Local employee
in the SHBP, coverage terminates on the last day of the first
month for which the employee received no salary payment. The
employer may elect to permit the employee to continue their
benefit coverage from the SHBP for up to nine months for themselves
and eligible dependents by repaying the full cost of the coverage
to the employer in advance. If the employee is still on leave
beyond the time for which coverage has been purchased, coverage
may then be extended under COBRA for a period not to exceed
18 months. If the employer does not offer this payment option
while on leave, then the employee may elect to continue coverage
under COBRA for a maximum time period of 18 months.
Employees and/or dependents
have the right to continue their SHBP benefits under COBRA for
the full 18 months. In these cases, the employees need not be
covered. A dependent may independently elect to continue benefits
under COBRA.
Upon return to employment,
the employee must complete an SHBP enrollment application to
reinstate benefits. The coverage is reinstated on the actual
date of return to employment.
Please contact the
Office of Client Services at (609) 292-7524 or e-mail us at
pensions.nj@treas.state.nj.us
if you have any questions about this subject.
Attachments:
Request
for USERRA - Eligible Service
Waiver
of State Health Benefits Program Coverage While on Military
Duty
September 2001
TO: Certifying
Officers of the Police and Firemen's Retirement System
FROM: Thomas
P. Bryan, Director
Subject:
Conversion of PERS Service Credit to PFRS Service
Credit
Acting Governor DiFrancesco
signed Chapter 201, P.L. 2001, into law on August 8, 2001. This
law converts all of the service credit earned in the Public
Employees' retirement System (PERS) to full Police and Firemen's
Retirement System (PFRS) service credit for members who transferred
to the PFRS under the provisions of Chapter 247, P.L. 1993.
The new law also requires the reimbursement of any payments
made by PFRS members who opted to pay for the conversion of
their PERS service to PFRS service under the provisions of Chapter
247.
There is no cost to
the member or the employer for this benefit enhancement. The
law provides for funding of the benefit with excess assets from
the PFRS fund.
Those members already
retired who did not pay the cost to convert PERS service to
PFRS service will have their retirement allowance recalculated.
The law will be effective on the first of the month following
ninety days after enactment. Therefore, it will affect all retirements
beginning December 1, 2001.
The Division of Pensions
and Benefits will take the following steps to implement this
law.
- Notifying all affected retirees
of the increase in retirement benefits caused by this law.
(A copy of the letter sent to retirees who do not have a
PFRS loan is attached for information purposes only).
- Notifying, through the employer,
all active employees affected by this law. (A copy of the
letter sent to active employees who do not have a PFRS loan
is attached for information purposes only).
- Instructing employers to stop
payroll deductions for members still paying the liability
for converting their PERS service to PFRS service under
Chapter 247. A certification of payroll deductions will
be sent for each affected member to stop these deductions
effective September 30, 2001 (September 28 check for employees
paid by State Centralized Payroll). If the member is also
paying for the purchase of additional service credit through
arrears, the balance due on that purchase will be separated
and recertified effective October 1, 2001. Payments must
be stopped on a specific future date so refunds can be calculated
accurately.
- Refunding payments made by
PFRS members to convert their PERS service to PFRS service
under Chapter 247. If the member or retiree has a PFRS loan,
then the refund will be applied to the loan balance. Revised
loan certifications will be sent to employers, as necessary,
to stop or adjust the loan repayment schedule.
- Recalculating retirement allowances
of members and, where appropriate, survivors, of PFRS members
who retired with Chapter 247 benefits. Changes will appear
in the January 1, 2002 check.
If you have any questions,
please call the Office of Client services at (609) 292-7524.
attachment
A
attachment B
Text of letter to
active employees transferred to PFRS under the provisions of
Ch 247, P.L. 1993 who did not convert PERS service to PFRS service.
Dear (Active Employee),
Acting Governor DiFrancesco
signed Chapter 201, P.L. 2001, into law on August 8, 2001. This
law converts all of your service credit earned in the Public
Employees' retirement System (PERS) to service credit in the
Police and Firemen's Retirement System (PFRS). This means that
when you retire, you will be entitled to receive the full benefits
under the PFRS rather than partial benefits from both the PERS
and the PFRS.
The law will be effective
on the first of the month following ninety days after enactment.
Therefore, it will affect all retirements beginning December
1, 2001. If you retire between now and the effective date of
the law, your benefit will be recalculated when the law takes
effect.
There is no cost to
you for this benefit enhancement. The law provides for funding
of the benefit with excess assets from the PFRS fund.
If you have any questions,
please call the Office of Client services at (609) 292-7524.
Text of letter to
retirees were transferred to PFRS under the provisions of Chapter
247, P.L. 1993 who will have their retirement allowance changed
due to Chapter 201, P.L. 2001.
Dear (Retiree),
Acting Governor DiFrancesco
signed into law a bill that will enhance your monthly retirement
benefit. Chapter 201, P.L. 2001, signed on August 8, 2001, converts
all of your service credit earned in the Public Employees' retirement
System (PERS) to service credit in the Police and Firemen's
Retirement System (PFRS). When you retired, we calculated your
pension using the PERS formula for your PERS service credit
and the PFRS formula for your PFRS service credit. We then added
the two benefits together to produce your monthly retirement
allowance. Since the PFRS retirement formula provides a significantly
higher retirement benefit than that of the PERS, your retirement
allowance will increase when we recalculate your retirement
allowance using all PFRS service credit.
The law will be effective
on the first of the month following ninety days after enactment,
December 1, 2001. Therefore, you will see your first enhanced
benefit payment in your retirement allowance check for December,
which will be dated January 1, 2002. There is no provision in
the law for any retroactive adjustment to benefits. If you are
now receiving a Cost-of-Living Adjustment (COLA), your COLA
will also increase because it is based on a percentage of your
enhanced retirement benefit. Prior to you receiving your increased
benefit, we will send you a revised summary of your retirement
benefits that will include information on the amount of your
enhanced benefit as well as any survivor's benefit payable.
If you chose an option
on your PERS Application for Retirement Allowance to leave a
pension benefit to a beneficiary upon your death, that PERS
death benefit eligibility will cease on December 1, 2001. Instead,
you will have the death benefits that other PFRS retirees have.
The PFRS provides a pension of 50% of final compensation to
your spouse upon your death plus an additional pension to your
unmarried children under age 18. It also provides life insurance
equal to half of your final compensation.
There is no cost to
you for this benefit enhancement. The law provides for funding
of the benefit with excess assets from the PFRS fund.
If you have any questions,
please call the Office of Client services at (609) 292-7524.
September 2001
TO:
Certifying
Officers
Teachers'
Pensions and Annuity Fund
FROM: John
D. Megariotis
Assistant
Director, Finance
SUBJECT: Member
Contribution Rate Change
Chapter 133, P.L.
2001 decreases the rate of pension contributions for TPAF members
to 3 percent of salary effective January 1, 2002. This TPAF
employee contribution rate will remain in effect through 2002
and will continue there after as long as the excess assets of
the TPAF permit. This is not a permanent change in the normal
contribution rate of 5 percent of salary. Therefore, the minimum
repayment for pension loans and the minimum deduction for the
purchase of service credit, which is based on the full 5 percent
contribution rate, will not change.
If you have any questions
regarding this matter, please contact this Division's Audit/Billing
Section at (609) 292-3630.
September
2001
TO:
Participating
State Health Benefits Program Local
Government
Employers and Independent State
Authorities
that Pay Post-Retirement MedicalCosts for Retirees
FROM: Janice
F. Nelson
Deputy
Director
SUBJECT: Local
Group Rate Actions for Retiree Coverage - Local Government Employers
This
memorandum details the actions taken by the State Health Benefits
Commission on June 29, 2001 concerning State Health Benefits
Program (SHBP) rates and plan changes that affect retirees.
For simplicity, this memorandum will only address the rate actions
that apply to the retired coverage rates for Local Government
Employers and Independent State Authorities. All rate actions
are effective January 1, 2002 and are based upon the recommendation
of the Commission's actuarial consultant, Milliman USA.
Unfortunately,
medical trend rates for employer-sponsored health plans are
returning to levels not seen since the early 1990s. This is
occurring nationally, and New Jersey is not exempt from the
forces driving these costs. Health care trend is the forecasted
percentage change in a health plan's per capita claim cost.
Factors such as utilization, improvements in technology, general
inflation, mandated benefits, and changes in the mix of services
are all components of trend. Nationally, industry experts have
been reporting trends of 9%-15% for medical plans. Prescription
drug plans are reporting trends of 18-20% for active employees
and retirees younger than age 65. Higher trends are expected
for retirees age 65 and older.
Milliman
USA reports that both medical and prescription drug trends experienced
by the SHBP in its largest plans were higher than anticipated
at the last renewal analysis. This means that the claims experience
for the group has been worse than expected. This pattern of
higher trends is consistent with the nationwide results of other
employers with similar programs, and is a result of increased
utilization and higher medical costs resulting from factors
such as continued advances in medical technology. In addition,
the new rates had to take into account three additional months
of trend due to the one-time use of an 18 month rating period
(July 2000 through December 2001) instead of the usual 12 month
period to transition SHBP rates from a fiscal to a calendar
year basis. As a result of incorporating the three months of
additional trend, the 2002 calendar year rate increases are
higher by approximately 2% on medical coverage and 5% on prescription
drug coverage.
It
was necessary that the Commission approve the recommended increases
in order to ensure that the State Health Benefit Program would
have sufficient premium to cover the anticipated claims for
the period. Since the SHBP self-funds most of its plans, the
claims experience used in projecting 2002 costs are based upon
the actual claims experience of the group. Rates for the self-funded
plans are established on a self-supporting basis without margin
or any intent to increase the plan balances.
Effective
January 1, 2002
|
Plan
Name
|
Non-Medicare
Retirees
|
Medicare
Retirees
|
|
Traditional
Plan
|
30.4%
|
30.5%
|
|
NJ
PLUS
|
36.3%
|
21.4%
|
|
Aetna
USHealthcare
|
12.2%
|
23.7%
|
|
Amerihealth
|
16.0%
|
17.7%
|
|
CIGNA
|
14.8%
|
23.7%
|
|
Health
Net (formerly PHS)
|
6.2%
|
9.3%
|
|
Oxford
|
8.3%
|
5.0%
|
|
University
|
13.9%
|
12.8%
|
Prescription
drug coverage through a card plan is included in all medical
plans.
Actions
Taken by the State Health Benefits Commission to Control Rising
Costs
The
Commission approved the following plan changes to control rising
costs:
- Change
in the SHBP Traditional and NJ PLUS Retiree Prescription
Drug Card Plan retail pharmacy network - Effective January
1, 2002 retirees covered under this plan will have a customized
network of participating retail pharmacies. The current
network arrangement requires pharmacies in the network to
provide brand name drugs at 13% off the Average Wholesale
Price (AWP). Pharmacies that elect to participate in the
new custom network will guarantee 15% off the AWP for brand
drugs. These cost savings reduced the rate increases required
for the Traditional Plan and NJ PLUS Medicare retiree rates
by about 1.1-1.6% and are reflected in the chart above.
A
disruption analysis performed by Horizon Blue Cross and Blue
Shield and Merck-Medco indicates that this modest reduction
in retail pharmacy network size (from 99% of NJ pharmacies
to about 90% of NJ pharmacies) will inconvenience about 5%
of our members overall. These retirees will need to switch
to other, nearby pharmacies to continue to enjoy the benefits
of their card plan. The analysis performed by Horizon and
Merck-Medco indicates that 100% of NJ members will have access
to a participating network retail pharmacy within reasonable
distance from their home. Retirees that have moved out of
New Jersey will also continue to enjoy easy access to a participating
retail pharmacy under the custom network.
- Change
in the Traditional Plan and NJ PLUS Retiree Prescription
Drug Card Co-pays and Out-of-Pockets Maximum - In addition
to the change in the retail pharmacy network detailed above,
the Commission approved changes in the Traditional Plan
and NJ PLUS retiree prescription drug pilot plan co-payments
and out-of-pocket maximums as required by NJAC 17:9-6.10.
Effective January 1, 2002, retail co-payments for retirees
enrolled in the Traditional Plan and NJ PLUS will be as
follows: $5 generic, $11 preferred brand and $21 non-preferred
brand for a 30 day supply (an increase of $1 in both brand
drug categories). Mail-order co-payments will also go up
by $1 for the brand drug categories ($5 generic, $16 preferred
brand, $26 non-preferred brand). The annual out-of-pocket
maximum for prescription drug expenses will increase from
$300 to $345.
- Change
in Prescription Drug Benefits Provided by HMOs -The
Commission has updated the retiree prescription drug benefit
provided by SHBP HMOs to a 3-tier design to encourage the
use of less expensive brand name drugs when multi-source
drugs are available. HMOs will provide prescription cards
with retail pharmacy co-pays of $5/$10/$20 (generic/preferred
brand/non-preferred brand) and appropriate co-pays for mail
order. Milliman USA has indicated that the change in retiree
co-pays reduced the HMO rates for Medicare retirees by about
1.5%. This reduction is reflected in the HMO rate actions
listed above.
Since
Horizon HMO has been eliminated from the medical plans offered
by the SHBP, Horizon HMO members will receive a direct mailing
informing them of the elimination of the HMO. No action is required
unless they wish to select another plan other than NJ PLUS.
Horizon HMO members who do not complete an application during
open enrollment to transfer to another health plan will automatically
be transferred to NJ PLUS effective January 1, 2002.
Please
be assured the State Health Benefits Commission shares your
concern about rising health care costs and your commitment to
provide high quality health plans to employees and retirees
at the best available price.
Calendar
Year 2002 SHBP rate charts are attached. Information concerning
plan and rate changes will be sent to retirees this fall.
If
you have questions, contact Client Services at (609) 292-7524
or call the Employer Hotline at (609) 777-1082 and leave a message.
A staff member will return your call on the next business day.
September
2001
TO:
Participating
State Health Benefits Program
Local
Education Employers
FROM: Janice
F. Nelson
Deputy
Director
SUBJECT: Local
Group Rate Actions - Education Employers
This
memorandum details the actions taken by the State Health Benefits
Commission on June 29, 2001 concerning State Health Benefits
Program (SHBP) plan changes and rates. For simplicity, this
memorandum will only address the rate actions that apply to
the active employee rates for Local Education Employers. All
rate actions are effective January 1, 2002 and are based
upon the recommendation of the Commission's actuarial consultant,
Milliman USA.
Unfortunately,
medical trend rates for employer-sponsored health plans are
returning to levels not seen since the early 1990s. This is
occurring nationally, and New Jersey is not exempt from the
forces driving these costs. Health care trend is the forecasted
percentage change in a health plan's per capita claim cost.
Factors such as utilization, improvements in technology, general
inflation, mandated benefits, and changes in the mix of services
are all components of trend. Nationally, industry experts have
been reporting trends of 9%-15% for medical plans. Prescription
drug plans are reporting trends of 18-20% for active employees
and retirees younger than age 65. Higher trends are expected
for retirees age 65 and older. A recent annual survey in the
August 15th issue of Managed Healthcare Market Report
indicates that employers are reporting 15% increases in their
managed care plans for 2002, with Texas, Florida, New Jersey,
Ohio, Iowa, and Alabama experiencing the worst increases.
Milliman
USA reports that both medical and prescription drug trends experienced
by the SHBP in its largest plans were higher than anticipated
at the last renewal analysis. This means that the claims experience
for the group has been worse than expected. This pattern of
higher trends is consistent with the nationwide results of other
employers with similar programs, and is a result of increased
utilization and higher medical costs resulting from factors
such as continued advances in medical technology. In addition,
the new rates had to take into account three additional months
of trend due to the one-time use of an 18 month rating period
(July 2000 through December 2001) instead of the usual 12 month
period to transition SHBP rates from a fiscal to a calendar
year basis. As a result of incorporating the three months of
additional trend, the 2002 calendar year rate increases are
higher by approximately 2% on the medical plans and 5% on the
prescription drug plans.
It
was necessary that the Commission approve the recommended increases
in order to ensure that the State Health Benefit Program would
have sufficient premium to cover the anticipated claims for
the period. Since the SHBP self-funds most of its plans, the
claims experience used in projecting 2002 costs are based upon
the actual claims experience of the group. Rates for the self-funded
plans are established on a self-supporting basis without margin
or any intent to increase the plan balances.
Effective
January 1, 2002
|
For
employers that provide a separate prescription drug card
plan (no coverage for prescription drugs is provided
through the SHBP medical plans)
|
For
employers that do not provide a separate prescription
drug card plan (coverage for prescription drugs is
provided through the SHBP medical plans)
|
|
Plan
Name
|
Rate
Action
|
Plan
Name
|
Rate
Action
|
|
NJ
PLUS
|
12.0%
|
NJ
PLUS
|
8.5%
|
|
Traditional
Plan
|
22.0%
|
Traditional
Plan
|
24.5%
|
|
Aetna
USHealthcare
|
8.7%
|
Aetna
USHealthcare
|
11.7%
|
|
Amerihealth
|
12.2%
|
Amerihealth
|
16.0%
|
|
CIGNA
|
12.4%
|
CIGNA
|
14.5%
|
|
Health
Net (formerly PHS)
|
8.6%
|
Health
Net (formerly PHS)
|
6.2%
|
|
Oxford
|
9.4%
|
Oxford
|
8.2%
|
|
University
|
13.1%
|
University
|
14.1%
|
|
SHBP
Employee Prescription Card Plan
|
17.4%
|
******NA*****
|
|
Actions
Taken by the State Health Benefits Commission to Control Rising
Costs
The
Commission approved the following plan changes to help control
rising costs:
- Change
in the SHBP Employee Prescription Drug Card Plan retail
pharmacy network - Effective October 1, 2001 employees
covered under this plan will have a customized network of
participating retail pharmacies. The current network arrangement
requires pharmacies in the network to provide brand name
drugs at 13% off the Average Wholesale Price (AWP). Pharmacies
that elect to participate in the new custom network will
guarantee 15% off the AWP for brand drugs. These cost savings
reduced the rate increase required for the prescription
drug card plan by about 2.7%, and are reflected in the chart
above.
A
disruption analysis performed by Horizon Blue Cross and Blue
Shield and Merck-Medco indicates that this modest reduction
in retail pharmacy network size (from 99% of NJ pharmacies
to about 90% of NJ pharmacies) will inconvenience about 5%
of our members overall. These employees will need to switch
to other, nearby pharmacies to continue to enjoy the benefits
of their card plan. The analysis performed by Horizon and
Merck-Medco indicates that 100% of NJ members will have access
to a participating network retail pharmacy within reasonable
distance from their home.
- Elimination
of Horizon HMO as a SHBP offering - The Department of
the Treasury, Division of Purchase and Property has announced
its intention to award the SHBP contracts for administrative
services for NJ PLUS and the Traditional Plan to Horizon
Blue Cross Blue Shield of New Jersey effective January 2002.
The Commission therefore voted to eliminate the Horizon
HMO plan from the list of SHBP HMOs during the upcoming
open enrollment period for the following reasons:
- Since
the NJ PLUS network is identical to the Horizon HMO network
(NJ PLUS actually has one additional hospital that is not
part of the HMO network) HMO members can be moved into the
NJ PLUS network with zero disruption of participating providers.
Further, NJ PLUS members have in-network access to large
physician and hospitals networks in New York, Pennsylvania
and Delaware that are not part of the Horizon HMO network.
- Since
NJ PLUS in-network benefits are generally comparable to
the HMO benefits and NJ PLUS provides out-of-network coverage
to members, HMO members will benefit from the move to the
NJ PLUS plan.
- The
administrative service fees charged by Horizon for its HMO
are considerably higher than the fees Horizon will be paid
for the administration of NJ PLUS. This is primarily due
to the size of the plans. While NJ PLUS covers more than
250,000 employees, retirees, and dependents, Horizon HMO
only covers about 25,000 participants. The elimination of
the smaller HMO plan and the transfer of its members to
NJ PLUS will save the SHBP approximately $4.5 million overall
in administrative service fees. Local education employers
will receive their share in these savings through lower
premiums for the employees transferred from Horizon HMO
to NJ PLUS. Had the HMO remained in the SHBP, its premiums
would have increased by 18.3% for employers that provide
a separate prescription drug card and 19.2% for employers
that do not provide a separate drug card. Because of the
transfer to NJ PLUS, rates for these employees will decrease
approximately -8% for employers that provides separate prescription
drug card and -17% for employers that do not.
Horizon
HMO members will receive further information through a direct
mailing informing them of the elimination of the HMO. No action
is required unless they wish to select another plan other than
NJ PLUS. Horizon HMO members who do not complete an application
during open enrollment to transfer to another health plan will
automatically be transferred to NJ PLUS effective January 1,
2002.
Please
be assured the State Health Benefits Commission shares your
concern about rising health care costs and your commitment to
provide high quality health plans to your employees at the best
available price.
Calendar
Year 2002 SHBP rate charts are attached. Information concerning
plan changes will be sent to you for distribution to your employees
later this month.
If
you have questions, contact Client Services at (609) 292-7524
or call the Employer Hotline at (609) 777-1082 and leave a message.
A staff member will return your call on the next business day.
September
2001
TO: Participating
State Health Benefits Program
Local
Government Employers
and
Independent State Authorities
FROM: Janice
F. Nelson
Deputy
Director
SUBJECT: Local
Group Rate Actions - Local Government Employers
This
memorandum details the actions taken by the State Health Benefits
Commission on June 29, 2001 concerning State Health Benefits
Program (SHBP) plan changes and rates. For simplicity, this
memorandum will only address the rate actions that apply to
the active employee rates for Local Government Employers and
certain independent state authorities. All rate actions are
effective January 1, 2002 and are based upon the recommendation
of the Commission's actuarial consultant, Milliman USA.
Unfortunately,
medical trend rates for employer-sponsored health plans are
returning to levels not seen since the early 1990s. This is
occurring nationally, and New Jersey is not exempt from the
forces driving these costs. Health care trend is the forecasted
percentage change in a health plan's per capita claim cost.
Factors such as utilization, improvements in technology, general
inflation, mandated benefits, and changes in the mix of services
are all components of trend. Nationally, industry experts have
been reporting trends of 9%-15% for medical plans. Prescription
drug plans are reporting trends of 18-20% for active employees
and retirees younger than age 65. Higher trends are expected
for retirees age 65 and older. A recent annual survey in the
August 15th issue of Managed Healthcare Market Report
indicates that employers are reporting 15% increases in their
managed care plans for 2002, with Texas, Florida, New Jersey,
Ohio, Iowa, and Alabama experiencing the worst increases.
Milliman
USA reports that both medical and prescription drug trends experienced
by the SHBP in its largest plans were higher than anticipated
at the last renewal analysis. This means that the claims experience
for the group has been worse than expected. This pattern of
higher trends is consistent with the nationwide results of other
employers with similar programs, and is a result of increased
utilization and higher medical costs resulting from factors
such as continued advances in medical technology. In addition,
the new rates had to take into account three additional months
of trend due to the one-time use of an 18 month rating period
(July 2000 through December 2001) instead of the usual 12 month
period to transition SHBP rates from a fiscal to a calendar
year basis. As a result of incorporating the three months of
additional trend, the 2002 calendar year rate increases are
higher by approximately 2% on the medical plans and 5% on the
prescription drug plans.
It
was necessary that the Commission approve the recommended increases
in order to ensure that the State Health Benefit Program would
have sufficient premium to cover the anticipated claims for
the period. Since the SHBP self-funds most of its plans, the
claims experience used in projecting 2002 costs are based upon
the actual claims experience of the group. Rates for the self-funded
plans are established on a self-supporting basis without margin
or any intent to increase the plan balances.
Effective
January 1, 2002
|
For
employers that provide a separate prescription drug
card plan (no coverage for prescription drugs is
provided through the SHBP medical plans)
|
For
employers that do not provide a separate prescription
drug card plan (coverage for prescription drugs
is provided through the SHBP medical plans)
|
|
Plan
Name
|
Rate
Action
|
Plan
Name
|
Rate
Action
|
|
NJ
PLUS
|
15.5%
|
NJ
PLUS
|
11.6%
|
|
Traditional
Plan
|
22.0%
|
Traditional
Plan
|
20.0%
|
|
Aetna
USHealthcare
|
8.7%
|
Aetna
USHealthcare
|
11.7%
|
|
Amerihealth
|
12.2%
|
Amerihealth
|
16.0%
|
|
CIGNA
|
12.4%
|
CIGNA
|
14.5%
|
|
Health
Net (formerly PHS)
|
8.6%
|
Health
Net (formerly PHS)
|
6.2%
|
|
Oxford
|
9.4%
|
Oxford
|
8.2%
|
|
University
|
13.1%
|
University
|
14.1%
|
|
SHBP
Employee Prescription Card Plan
|
17.4%
|
******NA*****
|
|
Actions
Taken by the State Health Benefits Commission to Control Rising
Costs
The
Commission approved the following plan changes to control rising
costs:
- Change
in the SHBP Employee Prescription Drug Card Plan retail
pharmacy network - Effective October 1, 2001 employees
covered under this plan will have a customized network of
participating retail pharmacies. The current network arrangement
requires pharmacies in the network to provide brand name
drugs at 13% off the Average Wholesale Price (AWP). Pharmacies
that elect to participate in the new custom network will
guarantee 15% off the AWP for brand drugs. These cost savings
reduced the rate increase required for the prescription
drug card plan by about 2.7%, and are reflected in the chart
above.
A
disruption analysis performed by Horizon Blue Cross and Blue
Shield and Merck-Medco indicates that this modest reduction
in retail pharmacy network size (from 99% of NJ pharmacies
to about 90% of NJ pharmacies) will inconvenience about 5%
of our members overall. These employees will need to switch
to other, nearby pharmacies to continue to enjoy the benefits
of their card plan. The analysis performed by Horizon and
Merck-Medco indicates that 100% of NJ members will have access
to a participating network retail pharmacy within reasonable
distance from their home.
- Change
in Prescription Drug Benefits Provided by HMOs - This
change only affects employers that do not have a
separate prescription card plan and therefore provide prescription
drug coverage through the SHBP medical plans. The Commission
has updated the prescription drug benefit provided by SHBP
HMOs to a 3-tier design to encourage the use of less expensive
brand name drugs when multi-source drugs are available.
HMOs will provide prescription cards with retail pharmacy
co-pays of $5/$10/$20 (generic/preferred brand/non-preferred
brand) and appropriate co-pays for mail order. Milliman
USA has indicated that the change in employee co-pays reduced
the rates for HMOs for employers that do not provide a separate
prescription drug card by about 1.5%. This reduction is
reflected in the HMO rate actions listed above.
- Elimination
of Horizon HMO as a SHBP offering - The Department of
the Treasury, Division of Purchase and Property has announced
its intention to award the SHBP contracts for administrative
services for NJ PLUS and the Traditional Plan to Horizon
Blue Cross Blue Shield of New Jersey effective January 2002.
The Commission therefore voted to eliminate the Horizon
HMO plan from the list of SHBP HMOs during the upcoming
open enrollment period for the following reasons:
- Since
the NJ PLUS network in New Jersey is identical to the Horizon
HMO network (NJ PLUS actually has one additional hospital
that is not part of the HMO network) HMO members can be
moved into the NJ PLUS network with zero disruption of participating
providers. Further, NJ PLUS members have in-network access
to large physician and hospitals networks in New York, Pennsylvania
and Delaware that are not part of the Horizon HMO network.
- Since
NJ PLUS in-network benefits are generally comparable to
the HMO benefits and NJ PLUS provides out-of-network coverage
to members, HMO members will benefit from the move to the
NJ PLUS plan.
- The
administrative service fees charged by Horizon for its HMO
are considerably higher than the fees Horizon will be paid
for the administration of NJ PLUS. This is primarily due
to the size of the plans. While NJ PLUS covers more than
250,000 employees, retirees, and dependents, Horizon HMO
only covers about 25,000 participants. The elimination of
the smaller HMO plan and the transfer of its members to
NJ PLUS will save the SHBP approximately $4.5 million overall
in administrative service fees. Local governments and authorities
will receive their share in these savings through lower
premiums for the employees transferred from Horizon HMO
to NJ PLUS. Had the HMO remained in the SHBP, its premiums
would have increased by 18.3% for employers that provide
a separate prescription drug card and 19.2% for employers
that do not provide a separate drug card. Because of the
transfer to NJ PLUS, rates for these employees will increase
by approximately 5.5% for employers that provide a separate
prescription drug card and decrease by -10% for employers
that do not.
Horizon
HMO members will receive further information through a direct
mailing informing them of the elimination of the HMO. No action
is required unless they wish to select another plan other than
NJ PLUS. Horizon HMO members who do not complete an application
during open enrollment to transfer to another health plan will
automatically be transferred to NJ PLUS effective January 1,
2002.
Please
be assured the State Health Benefits Commission shares your
concern about rising health care costs and your commitment to
provide high quality health plans to your employees at the best
available price.
Calendar
Year 2002 SHBP rate charts are attached. Information concerning
plan changes will be sent to you for distribution to your employees
later this month.
If
you have questions, contact Client Services at (609) 292-7524
or call the Employer Hotline at (609) 777-1082 and leave a message.
A staff member will return your call on the next business day.
August 20, 2001
TO: State
Monthly Human Resource Directors/Benefits Administrators
FROM: Janice
F. Nelson
Deputy
Director
SUBJECT: Fall
2001 SHBP Open Enrollment
The State Health Benefits
Program (SHBP) Open Enrollment period for State monthly employees
will begin on October 1, and end on October 31, 2001. Completed
employer certified health benefit and/or dental applications
must arrive at the Health Benefits Bureau no later than November
8, 2001. All changes to coverage made during the fall open enrollment
will be effective on January 1, 2002.
Unions representing
most State employees have contracts in effect that provide for
premium sharing arrangements with the State. The contracts are
identical with respect to their premium sharing provisions.
There is no premium cost to any employee who enrolls in NJ PLUS.
Employees will pay 5 percent of the premium cost if enrolled
in an HMO, or 25 percent of the premium cost if enrolled in
the Traditional Plan. These percentages apply regardless of
salary level or date of hire.
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 not
paid through Centralized Payroll. 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 location's payroll schedule.
These fliers are designed
to assist your employees in making informed decisions concerning
their health care. Please distribute them to your employees
prior to the start of the Open Enrollment.
Also included with
this letter are:
- A sample copy of the fall
2001 Health Capsule
newsletter. The Health Capsule provides additional detail
on changes being made to the health and dental plans for
the 2002 plan year. The newsletters are scheduled for delivery
to monthly employers prior to the start of the Open Enrollment.
- A flier to publicize the SHBP's
Unified Provider Directory. The Unified Provider Directory
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 Unified Provider Directory
through the SHBP homepage at: www.state.nj.us/treasury/pensions/shbp.htm
- 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 numbers are not for member services. Please
do not give these numbers to your employees.)
Also scheduled for
distribution, for the start of the Open Enrollment, are revised
copies of the SHBP Summary Program Description (SPD),
SHBP Comparison Chart, and the State Employees
Group Dental Program Handbook.
- Because of the changes to
the health plans and the State Group Dental Program, you
will be receiving a supply of the revised SPD and the revised
Dental Program Handbook, sufficient for distribution
to all of your employees who are currently enrolled in the
those programs.
- You will also receive a starter
supply of the SHBP Comparison Chart (with information
on how to request additional copies).
The SHBP Open Enrollment
now runs concurrently with the State Employees Tax Savings Program
(Tax$ave) Open Enrollment. Tax$ave is a benefit program, available
to State employees who are eligible for the SHBP. Tax$ave can
save your employees tax money by paying health benefit premiums
and eligible unreimbursed medical and/or dependent care expenses
from before-tax dollars. See the Tax$ave 2002 Open Enrollment
materials for more information (watch for your Tax$ave mailing
to arrive separately).
If you have any questions
about the Open Enrollment, please contact our Office of Client
Services at (609) 292-7524. Thank you for your cooperation.
Enclosures:
1. Health
and Dental
Plan Rate Charts/Fliers
2. Unified
Provider Directory Flier
3. Health
Capsule newsletter
4. Health/Dental
Plan Marketing Contacts
August 20, 2001
TO: State
Departmental Human Resource Directors
State
Biweekly Benefits Administrators
FROM: Janice
F. Nelson
Deputy Director
SUBJECT: Fall
2001 State Health Benefits Program (SHBP) Open Enrollment
The State Health Benefits
Program (SHBP) Open Enrollment period for State biweekly employees
will begin on September 4, and end on October 5, 2001. Completed
employer certified health benefit and/or dental applications
must arrive at the Health Benefits Bureau no later than October
15, 2001. All changes to coverage made during the fall open
enrollment will be effective on December 29, 2001.
Unions representing
most State employees have contracts in effect that provide for
premium sharing arrangements with the State. The contracts are
identical with respect to their premium sharing provisions.
There is no premium cost to any employee who enrolls in NJ PLUS.
Employees will pay 5 percent of the premium cost if enrolled
in an HMO, or 25 percent of the premium cost if enrolled in
the Traditional Plan. These percentages apply regardless of
salary level or date of hire.
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.
State employees paid
through the State's Centralized Payroll Unit should be given
this flier with their August 31 paychecks. (A supply
of the flier will be available from OMB Check Distribution as
of August 24, 2001.)
Also included with
this letter are:
- A sample copy of the fall
2001 Health Capsule
newsletter. The Health Capsule provides additional detail
on changes being made to the health and dental plans for
the 2002 plan year. The newsletters are scheduled for delivery
to payroll locations on or before August 24, 2001.
- A flier to publicize the SHBP's
Unified Provider Directory. The Unified Provider Directory
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 Unified Provider Directory
through the SHBP homepage at: www.state.nj.us/treasury/pensions/
shbp.htm
- 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 numbers are not for member services. Please
do not give these numbers to your employees.)
Also scheduled for
distribution, for the start of the Open Enrollment, are revised
copies of the SHBP Summary Program Description (SPD),
SHBP Comparison
Chart, and the State Employees Group Dental
Program Handbook.
- Because of the changes to
the health plans and the State Group Dental Program, you
will be receiving a supply of the revised SPD and the revised
Dental Program Handbook, sufficient for distribution
to all of your employees who are currently enrolled in the
those programs.
- You will also receive a starter
supply of the SHBP
Comparison Chart (with information on how to request
additional copies).
The SHBP Open Enrollment
now runs concurrently with the State Employees Tax Savings Program
(Tax$ave) Open Enrollment. Tax$ave is a benefit program, available
to State employees who are eligible for the SHBP. Tax$ave can
save your employees tax money by paying health benefit premiums
and eligible unreimbursed medical and/or dependent care expenses
from before-tax dollars. See the Tax$ave 2002 Open Enrollment
materials (to be distributed September 7, 2001) for more information.
If you have any questions
about the Open Enrollment, please contact our Office of Client
Services at (609) 292-7524. Thank you for your cooperation.
Enclosures:
1. Health
and Dental
Plan Rate Charts/Flier
2. Unified
Provider Directory Flier
3. Health
Capsule newsletter
4. Health/Dental
Plan Marketing Contacts
August 27, 2001
TO: State
University and College Benefits Administrators
State
Monthly Benefits Administrators
FROM:
John D. Megariotis
Assistant
Director, Finance
SUBJECT:
Open Enrollment For The New Jersey State Employees
Tax Savings
Program (Tax$ave 2002)
The Annual Open Enrollment
for the calendar year 2002 New Jersey State Employees Tax Savings
Program (Tax$ave 2002) will be conducted from September 14 through
October 31, 2001. Employees of the State, State Universities,
and State Colleges, who are eligible for participation in the
New Jersey State Health Benefits Program, may participate in
Tax$ave.
This fall, the Tax$ave
2002 Open Enrollment period coincides with the State Health
Benefits Program (SHBP) Open Enrollment for medical, dental,
and prescription drug benefits. While Tax$ave is a separate
program from the SHBP, the two programs complement each other.
Tax$ave allows employees to save taxes on any SHBP premiums
they pay and lets them set aside pre-tax income to pay many
of the expenses not covered by the SHBP plans.
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).
UMSA and DCSA are
also referred to as Flexible Spending Accounts (FSA's).
Tax$ave offers eligible
employees the opportunity to increase their available income
by reducing their federal tax liability. Each year eligible
employees should review their personal financial circumstances
and decide if they wish to participate or not. Open Enrollment
offers employees the opportunity to conduct this review and
then act on their decision.
Premium Option
Plan
Enrollment in the
Premium Option Plan is automatic. This saves your employees
tax money by paying health and dental premiums from pre-tax
dollars and reducing their tax liability. If an employee does
not wish to take advantage of the Premium Option Plan in 2002
(and therefore pay more in federal, Social Security, and Medicare
taxes) he or she should file a Declination of Premium Option
Plan (POP) form.
Flexible
Spending Accounts
Unlike the POP or
the plans of the SHBP, prior participation in a Tax$ave FSA
in 2001 does not carry over automatically into 2002.
Employees must enroll again to participate in an FSA for
calendar year 2002.
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.
All election forms must be postmarked no later than October
31, 2001, to be accepted. Those postmarked after October
31, 2001 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 2002 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, October 31, 2001.
- Internet: Again this
year employees have the ability to enroll (or reenroll)
over the Internet. Go to the Horizon Healthcare webpage
through a link from the Division of Pensions and Benefits'
Tax$ave page at: www.state.nj.us/treasury/pensions/taxsave.htm
and follow the simple directions. The deadline for enrollment
over the Internet is midnight, October 31, 2001.
Tax$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 would participate in Tax$ave
if they were made aware and understood the value of the tax
savings offered by the program. (A separate letter will be provided
specifically addressing the State Health Benefits Program Open
Enrollment for health, dental, and prescription drug plans.)
Enclosed is the Tax$ave
Open Enrollment
Milestones chart that lists the critical dates of the Tax$ave
2002 Annual Open Enrollment and outlines the efforts being made
to educate employees. Please use this chart as a checklist to
guide your activities during the open enrollment.
The Division will
also provide State Monthly employers, State Universities, and
State Colleges with sufficient copies of the Tax$ave
2002 Open Enrollment News and the Premium
Option Plan 2002 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$ave
2002 Open Enrollment News that announces the open enrollment,
outlines the components of the program with emphasis on
its tax saving advantages, and identifies the October 31,
2001 deadline for submission of all election materials.
A copy of this newsletter is enclosed;
- The Premium
Option Plan 2002 pamphlet that explains the advantages
and disadvantages of participation. A copy of this POP pamphlet
is enclosed; and
- An FSA pamphlet that describes
the UMSA and DCSA plans. This pamphlet has been redesigned
for the 2002 plan year.
These publications
will be shipped to employers early in September and you should
distribute them to your employees before the Open Enrollment
start date on September 14, 2001.
The other open enrollment
materials you will need are the Declination
of Premium Option Plan (POP) for Plan Year 2002 form and
the FSA Election Kits. This letter includes a minimal supply
of the declination forms. These can be copied for use by those
few employees who do not wish to participate in the POP and,
therefore, pay more in tax. (Note: do not distribute POP Declination
forms to employees unless they ask for one.) A new FSA Election
Kit for 2002 will be sent directly to benefits administrators
by Horizon Healthcare, along with a request form for additional
kits. Please provide the FSA Election Kits to those employees
who request them.
We also encourage
you to provide your employees with reminders of the Tax$ave
Open Enrollment to ensure they don't allow this opportunity
to slip by without action.
If an employee chooses
not to save under the Tax$ave Premium Option Plan and wants
to pay federal income, Social Security, and Medicare taxes on
the salary used to pay their medical and dental premiums in
2002, they must complete a POP form declining the federal tax
break they could receive. Employees should request these forms
from you. We will be instructing employees to return the Declination
of Premium Option Plan (POP) forms to benefits administrators
by October 31, 2001. Benefits administrators must then forward
declination forms to payroll.
Upon request, Horizon
Healthcare will provide Tax$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.
Your involvement in
the Tax$ave Open Enrollment is key to your employees receiving
the valuable benefits offered by this program. We appreciate
your cooperation. If you have any questions about Tax$ave 2002
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$ave Internet site at: www.state.nj.us/treasury/pensions/taxsave.htm
Enclosures:
Tax$ave 2002 Open
Enrollment Milestones
Request
for Tax$ave 2002 Employee Seminars
Tax$ave
2002 Open Enrollment News (sample)
The Premium Option
Plan 2002 Pamphlet
(sample)
Declination
of Premium Option Plan (POP) for Plan Year 2002 (three copies
enclosed)
Tax$ave Pamphlet -
Savings You Can Bank On.(sample)
August 27, 2001
TO:
State
Department Human Resource Directors
State Biweekly Payroll Locations Benefits Administrators
FROM: John
D. Megariotis
Assistant Director, Finance
SUBJECT:
Open Enrollment For The New Jersey State Employees
Tax Savings Program (Tax$ave 2002)
The Annual Open Enrollment
for the calendar year 2002 New Jersey State Employees Tax Savings
Program (Tax$ave 2002) will be conducted from September 14 through
October 31, 2001. Employees of the State, state universities
and colleges, Palisades Interstate Parkway Commission, and the
NJ Commerce and Economic Growth Commission, who are eligible
for participation in the New Jersey State Health Benefits Program,
may participate in Tax$ave.
This fall, the Tax$ave
2002 Open Enrollment period coincides with and extends beyond
the State Health Benefits Program (SHBP) Open Enrollment for
medical, dental, and prescription drug benefits. While Tax$ave
is a separate program from the SHBP, the two programs complement
each other. Tax$ave allows employees to save taxes on any SHBP
premiums they pay and lets them set aside pre-tax income to
pay many of the expenses not covered by the SHBP plans.
About Tax$ave
Tax$ave consists of
three components:
1.The Premium
Option Plan (POP);
2.The Unreimbursed
Medical Spending Account (UMSA); and
3.The Dependent Care
Spending Account (DCSA).
UMSA and DCSA are
also referred to as Flexible Spending Accounts (FSA's).
Tax$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.
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 2002
(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
Unlike the POP or
the plans of the SHBP, prior participation in a Tax$ave FSA
in 2001 does not carry over automatically into 2002.
Employees must enroll again to participate in an FSA for
calendar year 2002.
Employees have three
ways of enrolling in the Tax$ave FSA accounts this year: mail,
telephone, and Internet. The Tax$ave publications will provide
the following instructions to employees:
- Mail: FSA Election
Applications must be mailed directly to Horizon Healthcare.
All election forms must be postmarked no later than October
31, 2001, to be accepted. Those postmarked after October
31, 2001 will be returned without action. Benefits offices
should not be involved in processing or mailing FSA Election
Applications.
- Telephone: Employees
may either enroll (or reenroll) in the UMSA or DCSA plans
for 2002 over the phone by calling Horizon Healthcare's
automated voice response unit at 1-800-224-4426. This is
a great opportunity to quickly and easily go through the
process of a new or repeat enrollment. Horizon will inform
current participating employees of this opportunity through
a direct mailing in September. The deadline for enrollment
by telephone is midnight, October 31, 2001.
- Internet: Again this
year employees have the ability to enroll (or reenroll)
over the Internet. Go to the Horizon Healthcare webpage
through a link from the Division of Pensions and Benefits'
Tax$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, October 31, 2001.
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$ave offers
them. We believe that more employees would participate in Tax$ave
if they were made aware and understood the value of the tax
savings offered by the program. (A separate letter will be provided
specifically addressing the State Health Benefits Program Open
Enrollment for health, dental, and prescription drug plans.)
Enclosed is the Tax$ave
Open Enrollment
Milestones chart that lists the critical dates of the Tax$ave
2002 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 initial announcement
of the open enrollment to employees paid through Centralized
Payroll was made in an August 17 paycheck message. On the September
14 paychecks there will be another Tax$ave 2002 Open Enrollment
announcement message and three payroll inserts. These inserts
are:
- The Tax$ave 2002
Open Enrollment News that announces the open enrollment,
outlines the components of the program with emphasis on
its tax saving advantages, and identifies the October 31,
2001 deadline for submission of all election materials.
A copy of this newsletter is enclosed;
- An FSA pamphlet that describes
the UMSA and DCSA plans. This pamphlet has been redesigned
for the 2002 plan year; and
- The Premium
Option Plan 2002 pamphlet that explains the advantages
and disadvantages of participation. A copy of this POP pamphlet
is enclosed.
The other open enrollment
materials you will need are the Declination
of Premium Option Plan (POP) for Plan Year 2002 form and
the FSA Election Kits. This letter includes a minimal supply
of the declination forms. These can be copied for use for 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.) A new FSA Election
Kit for 2002 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.
In addition to announcing
the open enrollment to employees paid through Centralized Payroll
with their August 17 and September 14 paychecks, we will provide
reminder messages about the Tax$ave 2002 Open Enrollment to
employees through pay stub messages on October 12 and October
26. A copy of the text of these messages
is enclosed.
If an employee chooses
not to save under the Tax$ave Premium Option Plan and wants
to pay federal income, Social Security, and Medicare taxes on
the salary used to pay their medical and dental premiums in
2002, 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 October 31, 2001. Benefits administrators must then forward
declination forms to payroll. State biweekly employee POP declination
forms must reach Centralized Payroll by November 16, 2001.
Upon request, Horizon
Healthcare will provide Tax$ave educational seminars, at your
workplace, for interested employees. The seminars are about
60 minutes in duration (including questions and answers). These
have proven to be very successful educational tools and we strongly
encourage you to make one available to your employees. Please
see the enclosed request form to schedule a Horizon Healthcare
representative.
Your involvement in
the Tax$ave Open Enrollment is key to your employees receiving
the valuable benefits offered by this program. We appreciate
your cooperation. If you have any questions about Tax$ave 2002
or the open enrollment, call the Horizon Healthcare Insurance
Agency, Inc. at 1-800-224-4426, or visit the Division of Pensions
and Benefits' Tax$ave Internet site at: www.state.nj.us/treasury/pensions/taxsave.htm
Enclosures:
Tax$ave 2002 Open
Enrollment Milestones
Request
for Tax$ave 2002 Employee Seminars
Open
Enrollment Check Messages
Tax$ave
2002 Open Enrollment News (sample)
The
Premium Option Plan 2002 Pamphlet (sample)
Declination
of Premium Option Plan (POP) for Plan Year 2002 (three copies
enclosed)
Tax$ave Pamphlet -
Savings You Can Bank On.(sample)
August 2001
TO: Certifying
Officers
Public Employees' Retirement System
Teachers' Pension and Annuity Fund
Police and Firemen's Retirement System
FROM: William
H. Kale, Assistant Director, Client Services
SUBJECT: Purchase
of Military Service Prior to Enrollment for Members with Vested
Rights to Military Reserve Retirement Benefits
If a member of the
Public Employees' Retirement System (PERS), Teachers' Pension
and Annuity Fund (TPAF), or the Police and Firemen's Retirement
System (PFRS) had a vested right to a military retirement benefit,
the Division of Pensions and Benefits prohibited them from purchasing
service credit for active military service in accordance with
state statutes. (See N.J.S.A. 43:15A-60.1 for members of the
PERS, N.J.S.A. 18A:66-13.1 for members of the TPAF, and N.J.S.A.
43:16A-11.8 for members of the PFRS.)
The Division of Pensions
and Benefits recently asked for clarification from our legal
advisor, the Office of the Attorney General, regarding the interaction
between the above-cited New Jersey statutes and the federal
law on this subject. The federal law, 10 U.S.C. 12736, protects
members who are receiving or entitled to receive a reserve
military pension from being denied state or local pension
benefits for which they would otherwise be eligible.
The Attorney General's
Office has advised the Division that all future purchase requests
for active military service should be considered in light of
the controlling federal standard under the Supremacy Clause.
That is, federal law in this area preempts state law. Therefore,
the division will no longer apply the prohibitions found in
NJ statute against purchasing prior active military service
to members eligible for a military retirement based on service
in the reserves. However, if the person's eligibility for
a military retirement is based on active military service rather
than on reserve military service, the person will still be prohibited
from purchasing credit for prior military service.
Members who are receiving,
or will be eligible to receive a military retirement through
their reserve military service are, as of July 2001, eligible
to purchase credit for prior active military service in accordance
with the provisions of the applicable New Jersey Administrative
Code. These citations are N.J.A.C. 17:2-5.5(b) and (c) for members
of the PERS, N.J.A.C. 17:3-5.5(b) and (c) for members of the
TPAF and N.J.A.C. 17:4-5.3(b) and (c) for members of the PFRS.
This change in our
practice to conform to overriding federal statutes does not
alter the type of military service eligible for purchase. Only
active military service may be purchased. Reserve military service
time, such as reserve unit drill periods and reserve unit annual
training, is still not eligible for purchase.
Members eligible for
a purchase of active military service should submit an Application
to Purchase Service Credit to the Division of Pensions
and Benefits. If you have any questions about this subject,
call the Division's Office of Client Services at (609) 292-7524.
August 2001
To:
Certifying Officers
Public
Employees' Retirement System
Teachers'
Pension and Annuity Fund
Police
and Firemen's Retirement System
State
Police Retirement System
Judicial
Retirement System
Alternate
Benefit Program
From: William
H. Kale
Assistant
Director, Client Services
Subject: Proposed
Amendments to the New Jersey Administrative Code
The recent enactment
of Public Law 2001, Chapter 5, which revises the administrative
rule-making process requires administrative agencies to further
publicize any proposed rule making. Proposed new rules and amendments
are currently published in The New Jersey Register, a
bi-weekly publication of the Office of Administrative Law, and
posted to www.state.nj.us/treasury/pensions,
the Division of Pensions and Benefits web page. In the future,
notices of proposed rulemaking will also be sent directly to
those most affected by the proposals.
Therefore, the Division
of Pensions and Benefits will be sending, from time to time,
notice of proposed new rules and amendments to existing rules
to our Certifying Officers. These proposed changes may impact
the administration of the Public Employees' Retirement System
(PERS), the Police and Firemen's Retirement System (PFRS), the
Teachers' Pension and Annuity Fund (TPAF), the State Police
Retirement System (SPRS), the Judicial Retirement System (JRS)
and the Alternate Benefit Program (ABP).
There are a number
of proposed amendments, identified below, to the New Jersey
Administrative Code (N.J.A.C.) which appear in the August 6th
publication of the New Jersey Register. If you wish to view
the text of any of these proposals, go to our web page and click
on proposed rule changes.
Service Purchase
- PERS, TPAF, PFRS
Proposed amendments
to N.J.A.C. 17:2-5.6, for members of the PERS, N.J.A.C. 17:3-5.6
for members of the TPAF and N.J.A.C. 17:4-5.4 for members of
the PFRS eliminate the minimum payment requirements for the
initial partial lump sum payment for purchases. Currently, if
a member wishes to make an initial partial lump sum payment
toward a purchase, that sum must be at least $250.00. Many years
ago, when the $250.00 minimum was adopted, it represented a
large percentage of the entire purchase cost. Now, in many cases,
it may equal less than the monthly minimum payment amount of
one half of a full regular pension deduction. After these proposed
rules are adopted, the Division will accept any amount as an
initial partial lump sum payment.
Creditable Compensation
- TPAF
Proposed amendments
to N.J.A.C. 17:3-4.1 for members of the TPAF would clarify the
meaning of compensation of members, for purposes of calculating
employee contributions to the TPAF and for determining benefits
under the Fund. The basic design of the Fund is that members
pay contributions to the TPAF based upon their salaries during
their active service to pay for statutorily defined death and
retirement benefits. Compensation for pension purposes does
not include bonuses, overtime pay, adjustments in anticipation
of retirement and other types of remuneration not included in
base salary. The proposed amendment would clarify that compensation
for teaching a sixth period would be creditable so long as it
is reported in regular periodic installments in accordance with
the payroll cycle of the employer. The proposed amendment would
also include as creditable, compensation for those employees
who are required, as part of their positions, to work additional
days in the summer months.
Board Organization
- PFRS
Proposed N.J.A.C.
17:4-1.3 would add to the officers of the PFRS Board of Trustees,
the positions of first and second vice chairperson.
Effective Retirement
Date - JRS
Proposed N.J.A.C.
17:10-5.11 for members of the Judicial Retirement System would
allow judges who are required to retire on their 70th
birthday, to begin to receive their retirement benefits as of
that date and not beyond that date as currently stated.
If you have any comments
on any of these proposed amendments, please submit them within
30 days of the receipt of this memorandum to Mindy Smith-Sopko,
Administrative Practice Officer, at the Division's address.
August 24, 2001
TO: State
Health Benefits Program Participating Local Employers
State Health Benefits Program Participating
Local Education Employers
FROM: Janice
F. Nelson
Deputy Director
SUBJECT: SHBP
Open Enrollment 2001
The State Health Benefits
Program (SHBP) Open Enrollment period for local government and
local Board of Education employees will begin on October
1, 2001, and end on October 31, 2001. Completed employer
certified health applications must arrive at the Health Benefits
Bureau no later than November 8, 2001. All changes to coverage
made during this open enrollment will be effective on January
1, 2002.
This letter includes
preliminary information about changes to this year's open enrollment
procedures, contact information, and a schedule of educational
opportunities for human resource representatives. Enclosed you
will also find a preview issue of the Health Capsule
newsletter and a milestone
chart that lists key open enrollment events and dates.
The SHBP's rate information
for the 2002 plan year will follow in a later mailing.
NEW COMMUNICATION
POLICIES
During the open enrollment
period and throughout the year the employer's human resource
representative is instrumental in assisting and advising employees
in their selection of health plans. It is with this in mind
that the State has renewed its efforts to keep human resource
representatives informed of State Health Benefits Program activities
and changes and to assist the human resource representative
in their day to day responsibilities. To accomplish this renewed
goal, there will be two types of seminars available.
E-SEMINARS
NEW online
e-seminars will be offered for the first time over the Internet.
Through a combined Internet/telephone link-up, human resource
representatives will be able to view a Web-based presentation
with an interactive audio narration providing details on key
open enrollment issues. After the presentation, there will be
a live question and answer session. Attendance for each session
is limited to 30 participants and attendees must pre-register.
You will find a link to the online registration form on the
SHBP homepage at: www.state.nj.us/treasury/pensions/shbp.htm
REGIONAL
SEMINARS
Regional seminars
for human resource representatives will also be offered this
year. It is essential that you or someone from your office attend
either a regional seminar or take part in an e-seminar. Pre-registration
is required - please use the enclosed seminar registration form.
Representatives from
all health plans will be invited to these seminars. The human
resource representatives will be able to ask questions and obtain
marketing information. Provider directories will be available
in limited supply. The availability of the Unified Provider
Directory (see below) and the access to the health plans by
phone for provider information should be sufficient for employees
to select a plan.
WEB-BASED
PRESENTATIONS
Additional Web-based
presentations on the SHBP Open Enrollment will be available
for both employers and employees 24 hours a day, seven days
a week. These will be available for viewing on or before October
1, 2001. You will find the link on the SHBP homepage at: www.state.nj.us/treasury/pensions/shbp.htm
UNIFIED PROVIDER
DIRECTORY
Participating provider
information for all SHBP 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. The
UPD is updated monthly, you
can access the UPD through the SHBP home page at: www.state.nj.us/treasury/pensions/shbp.htm
A flier is included to publicize
the UPD and can be posted or used as a handout to your employees.
HEALTH CAPSULE
NEWSLETTER
The Health
Capsule is written to announce the SHBP Open Enrollment
period to employees and to present important information and
changes that may affect their benefit selection. A supply of
Health Capsule newsletters will be shipped to participating
local government and Board of Education employers by mid-September
for distribution to your employees.
SHBP PLAN
COMPARISON SUMMARY CHART
The SHBP Plan
Comparison Summary chart has been revised and offers
a plan by plan comparison of selected benefits for employees
and retirees to make an informed health plan choice. Copies
of the chart will be provided to you prior to the open enrollment
period for distribution to your employees.
SUMMARY
PROGRAM DESCRIPTION BOOKLET
The revised SHBP
Summary Program Description
Booklet will also be provided to you for distribution
prior to the open enrollment period. The booklet provides an
overview of the SHBP, a description of each plan offered, and
comparisons of selected benefits. In addition it provides important
new information that may have occurred since the last open enrollment,
key phone numbers, and other pertinent health care information.
HEALTH FAIRS
DISCONTINUED
The State Health Benefits
Program (SHBP) has been disappointed by the employees' response
to health fairs that have been held in past years in connection
with the open enrollment period. It is felt that the material
distributed to employers by the SHBP during the annual enrollment
period gives the best information available for employees to
compare the benefits of the various plans and make an informed
choice. With dwindling employee interest in the health fairs,
the SHBP can no longer justify the time and expense of hundreds
of health fairs, particularly at a time when no major changes
to the health plans have occurred.
The SHBP, and it's
participating health plans, will not provide employee
health fairs for this year's open enrollment period.
ADDITIONAL
PLAN INFORMATION
A listing of marketing
contacts for the various health plans is provided. Use these
contacts to obtain provider directories or other plan specific
literature for your employees. (These telephone numbers are
not for member services. Please do not give the
numbers to your employees.)
If you have any questions
about the open enrollment 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. Questions regarding
the informational seminars should be addressed to the contact
person shown on the attached forms. Thank you for your cooperation.
Enclosures:
July
27, 2001
TO: State
Departmental Human Resource Directors
State Biweekly Human Resources Representatives
State Monthly Universities, Colleges and Authorities
FROM: Janice
F. Nelson, Assistant Director for Health Benefits
SUBJECT: SHBP
Open Enrollment 2001
The State Health Benefits
Program (SHBP) Open Enrollment period for State employees
paid through the State's Centralized Payroll Unit will begin
on September 4, 2001 and end on October 5, 2001. Completed
employer certified health benefit and/or dental applications
must arrive at the Health Benefits Bureau no later than October
12, 2001. All changes to coverage made during this open enrollment
will be effective on December 29, 2001.
The SHBP Open Enrollment
for all other State employees will begin on October
1, 2001 and end on October 31, 2001. Completed employer
certified health benefit and /or dental applications must arrive
at the Health Benefits Bureau no later than November 8, 2001.
All changes to coverage made will be effective on January 1,
2002.
In August, Human Resources
Representatives will receive the SHBP's Open Enrollment Announcement
letter along with a preview issue of the Health
Capsule newsletter and an updated list of medical and
dental plans and their costs.
NEW
COMMUNICATION POLICIES
During the open enrollment
period and throughout the year the employer's Human Resources
Representative is instrumental in assisting and advising employees
in their selection of health and dental plans. It is with this
in mind that the State has renewed its efforts to keep Human
Resources Representatives informed of State Health Benefits
Program activities and changes and to assist the Health Benefits
Representative in their day to day responsibilities. To accomplish
this renewed goal, there will be two types of seminars available.
E-SEMINARS
NEW online
e-seminars will be offered for the first time over the Internet.
Through a combined Internet/telephone link-up, Human Resources
Representatives will be able to view a Web-based presentation
with an interactive audio narration providing details on key
Open Enrollment issues. After the presentation, there will be
a live question and answer session. Attendance for each session
is limited to 30 participants and attendees must pre-register.
You will find a link to the online registration form on the
SHBP homepage at: www.state.nj.us/treasury/pensions/shbp.htm
REGIONAL
SEMINARS
Regional seminars
for Human Resources Representatives will also be offered this
year. It is essential that you or someone from your office attend
either a regional seminar or take part in an e-seminar.
Representatives from
all health and dental plans will be invited to these seminars.
The Human Resources Representatives will be able to ask questions
and obtain marketing information. Provider directories will
be available in limited supply. The availability of the Unified
Provider Directory (see below) and the access to the health
and dental plans by phone for provider information should be
sufficient for employees to select a plan.
In addition to rate
and benefit information on medical, dental, and prescription
drug plans, you will be provided with Tax$ave Open Enrollment
information, new dental program changes, and an introduction
to the State's new Long-term Care Program.
WEB-BASED
PRESENTATIONS
Additional Web-based
presentations on the SHBP Open Enrollment will be available
for both employers and employees 24 hours a day, seven days
a week. These will be available for viewing after August 15,
2001. You will find the link on the SHBP homepage at: www.state.nj.us/treasury/pensions/shbp.htm
UNIFIED
PROVIDER DIRECTORY
Participating provider
information for all SHBP 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
HEALTH CAPSULE
NEWSLETTER
The Health
Capsule is written to announce the SHBP Open Enrollment
period to employees and to present important information and
changes that may affect their benefit selection. On August 31,
the Health Capsule newsletter and Open Enrollment fliers
will be distributed with paychecks to all employees paid through
the State's Centralized Payroll Unit. All other State monthly
Human Resources Representatives will receive their Open Enrollment
materials by mid-September for distribution to their employees.
SHBP PLAN
COMPARISON SUMMARY CHART
The SHBP Plan
Comparison Summary chart has been revised and offers
a plan by plan comparison of selected benefits for employees
and retirees to make an informed health plan choice. Copies
of the chart will be provided to you prior to the open enrollment
period for distribution to your employees.
SUMMARY
PROGRAM DESCRIPTION BOOKLET
The revised SHBP
Summary Program Description
Booklet will also be provided to you for distribution
prior to the open enrollment period. The booklet provides an
overview of the SHBP, a description of each plan offered, and
comparisons of selected benefits. In addition it provides important
new information that may have occurred since the last open enrollment,
key phone numbers, and other pertinent health care information.
HEALTH FAIRS
DISCONTINUED
The State Health Benefits
Program (SHBP) has been disappointed by the employees' response
to health fairs that have been held in past years in connection
with the open enrollment period. It is felt that the material
distributed to employers by the SHBP during the annual enrollment
period gives the best information available for employees to
compare the benefits of the various plans and make an informed
choice. With dwindling employee interest in the health fairs,
the SHBP can no longer justify the time and expense of hundreds
of health fairs, particularly at a time when no major changes
to the health plans have occurred.
The SHBP will not
provide health fairs for this year's open enrollment period.
Enclosed you will
find milestone charts (biweekly) (monthly)
that list key Open Enrollment 2001 events and dates, and the
projected delivery schedule for all Open Enrollment publications.
If you have any questions
about the Open Enrollment 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. Questions regarding
the informational seminars should be addressed to the contact
person shown on the attached forms. Thank you for your cooperation.
Enclosures:
FALL 2001 SHBP
OPEN ENROLLMENT MILESTONE CHARTS
for Biweekly State
Employers
Note: If the event
is underlined, you should be accomplishing the event.
|
PROJECTED
DATE
|
EVENT
|
|
August 15
|
Open Enrollment Announcement
Letter with sample rate charts mailed to employers.
|
|
Various dates in August (see
Registration Form)
|
State Employer Benefit Administrator's
SHBP/Tax$ave
Workshops conducted by Division
of Pensions and Benefits in Trenton.
|
|
August 17
|
Initial Open Enrollment paycheck
message to employees.
|
|
August 20 - 31
|
SHBP Summary Program Description
and Comparison Charts shipped to employers. Distribute
to employees.
|
|
August 31
|
Open Enrollment paycheck message
to employees. Health and Dental Rate Charts and Health
Capsule newsletter distributed with payroll.
|
|
September 4
|
Open Enrollment Begins.
|
|
September 14
|
Open Enrollment "reminder"
paycheck message to employees.
|
|
September 28
|
Open Enrollment "last
chance" paycheck message to employees.
|
|
October 5
|
Open Enrollment Ends.
|
|
October 12
|
Employer certified applications
due at the Health Benefits Bureau.
|
|
December 1
|
Begin required deductions
for State employees (start of pay period #26 - check date
December 21).
|
|
December 29
|
Open Enrollment changes effective.
|
For Monthly State
Employers
Note: If the event is underlined,
you should be accomplishing the event.
|
PROJECTED
DATE
|
EVENT
|
|
August 15
|
Open Enrollment Announcement
Letter mailed to employers.
Plan Year 2002 rate charts
sent to employers.
|
|
Various dates in August (see
Registration Form)
|
State Employer Benefit Administrator's
SHBP/Tax$ave
Workshops conducted by Division
of Pensions and Benefits in Trenton.
|
|
September 10-21
|
SHBP Summary Program Description,
Comparison Chart, and the Health Capsule
newsletter shipped to employers. Distribute to employees
along with Health and Dental Rate Charts.
|
|
October 1
|
Open Enrollment Begins.
|
|
October 31
|
Open Enrollment Ends.
|
|
November 8
|
Employer certified
applications due at the Health Benefits Bureau.
|
|
January 1, 2001
|
Open Enrollment changes effective.
|