TO: Participating SHBP Employers
FROM: Janice
F. Nelson
Assistant
Director for Health Benefits
SUBJECT: Required
Notices To SHBP Enrollees
Federal law mandates
employers to provide notice of requirements of certain pieces
of federal legislation to employees and their dependents upon
their enrollment in the employers group health insurance. State
Health Benefits Program (SHBP) participating employers have been
providing initial notices for several years concerning the Consolidated
Omnibus Budget Reconciliation Act (COBRA) program. To this must
now be added an initial notice about the federal Health Insurance
and Portability Accounting Act (HIPAA).
The attached documents
provide everything you, as an employer, need to comply with the
initial notice requirements of both COBRA and HIPAA. Enclosure
one is a cover letter forwarding the required notices. You should
modify this enclosure to reflect its being mailed from your location
to an employee and dependents. NOTE: To meet federal requirements,
the letter must be addressed to the employee and Family, it must
be mailed (first class mail is sufficient), and a copy must be
retained to prove compliance. The second and third enclosures
can be used "as is" as attachments to your modified enclosure
one. Enclosure two updates and replaces the previous COBRA initial
notification provided you. Enclosure three is a new HIPAA notice.
Federal law also requires
that all enrollees - employees and dependents - in employer provided
health plans be notified annually of HIPAA requirements and how
the employer's plan compares with them. The notice at enclosure
three will meet this requirement. You will have to mail a copy
to all your SHBP enrolled employees to satisfy the requirement
to properly notify dependents. Please complete your mailing prior
to the annual open enrollment period.
Questions about this
memorandum should be directed to the Employer Hotline at (609)
777-1082. Leave a message and a staff member will return your
call within one business day.
To: State Health
Benefits Program Participating Employers
From: Janice
F. Nelson
Assistant
Director,State Health Benefits Program
Subject: Health
Insurance Portability and Accountability Act (HIPAA) Update
The federal Health
Insurance Portability and Accountability Act (HIPAA) of 1996 contained
a number of provisions that affect the State Health Benefits Program
(SHBP) and its participating employers. The first to affect the
SHBP was the notification of coverage requirement to employees
and family members who lose medical coverage. This requirement
was effective in June 1997 and You were sent information, along
with a model certificate of group health plan coverage, in my
HIPAA memoranda of June and August 1997.
In addition to the
notification requirement mentioned above, HIPAA requires plans
to implement the following provisions, or file for an exemption
where applicable, by the beginning of their next plan year, which
is January 1998 for the SHBP:
-
Limit restrictions
of coverage for preexisting conditions;
-
Offer a special
enrollment period to individuals who meet certain conditions;
-
Eliminate discrimination
against participants and beneficiaries based on health status;
-
Provide a minimum
level of hospital coverage for newborns and mothers;
-
Provide parity
in mental health benefits;. and
-
Provide annual
notice to covered members of any plan provisions not in compliance
with HIPAA requirements.
The SHBP offers fourteen
medical plans to employees. These include twelve HMOs, all of
which are insured plans;, the Traditional Indemnity Plan, which
is a self-insured indemnity plan; and NJ PLUS, a self-insured
point-of-service plan. Self-insured, nonfederal governmental plans,
such as the Traditional Plan and NJ PLUS, may elect exemption
from HIPAA requirements on a year to year basis, provided that
an annual election form is filed with the federal Health Care
Financing Since SHBP HMOs are all insured plans, they do not qualify
for exemption and must comply with all HIPAA requirements.
Requirement #1 -
Restrictions for preexisting coverage
All SHBP plans exceed
this HIPAA requirement since they have no preexisting condition
restrictions. No further action is required.
Requirement #2 -
Special enrollment periods for employees
HIPAA permits an employee
or employee's dependent who declined coverage because of other
medical coverage to have an opportunity for special enrollment
should the other coverage end. For example, an employee enrolled
in the Traditional Plan may decline to enroll his wife and children
because they have coverage under another plan. If the wife's coverage
ends, the HIPAA requirement would permit the employee to enroll
her and the children in the SHBP at that time. The SHBP already
has a provision like this in effect in cases where both spouses
work for employers participating in the SHBP.
The State Health Benefits
Commission has voted not to file an exemption from this requirement
for the Traditional Plan and NJ PLUS, therefore effective January
1, 1998, all SHBP plans will comply with this HIPAA requirement
for employees. To use this special enrollment provision, the employee
will be required to file a completed SHBP application within 30
days of the loss of the dependent's insurance coverage and attach
an affidavit of proof of loss of insurance. Detailed instructions
will be provided when we finish development of the affidavit.
Requirement #3 -
No discrimination against participants based on health status
While the SHBP does
not have any preexisting coverage requirements, the law governing
it does provide for the delay of coverage if an employee is not
actively at work on the date coverage was to become effective.
If the employee is absent for health reasons, then this restriction
would be a form of discrimination, according to HIPAA, against
an employee because of health status.
The State Health Benefits
Commission has voted not to file an exemption from this requirement
for the Traditional Plan and NJ PLUS. Therefore, effective January
1, 1998, all SHBP plans will comply with this HIPAA requirement.
Note: the "actively at work" requirement is only being waived
for employees not at work due to illness. It is still in effect
for those employees not at work because of other reasons, such
as job abandonment.
Requirement #4 -
Minimum hospital stay coverage for newborns and mothers
All SHBP plans currently
meet this HIPAA requirement since they already provide the hospital
stay lengths included in the federal law. No further action is
required.
Requirement #5 -
Parity in mental health benefits
The law governing
the SHBP limits major medical coverage for mental health benefits
under the Traditional Plan to a lifetime limit of $20,000 with
an annual limitation of $10,000., This limitation is subject to
a restoration clause of $2,000 per year ( with the total restoration
may not to exceed $20,000. The NJ PLUS plan design limits coverage
for mental health benefits to a lifetime limit of $50,000 with
an annual limitation of $15,000. The NJ PLUS restoration clause
is also $2,000 per year. In contrast to these mental health benefits,
the general lifetime limit for major medical benefits in the Traditional
Plan and out-of-network benefits in NJ PLUS is $1 million, with
restoration of up to $2,000 per annum.
The State Health
Benefits Commission has filed for exemption from this requirement
filed with the federal Health Care Financing Administration for
calendar year 1998. Therefore, for the present time, the maximum
annual and lifetime dollar limits for mental health benefits in
the Traditional Plan and NJ PLUS will not change.
SHBP HMOs, which do
not have dollar limits for coverage for mental health services,
do restrict the number of covered visits per year (generally 30
per year). This type of restriction is permitted under HIPAA.
Therefore, all of the SHBP HMOs are already in compliance with
HIPAA.
Participant Notification
(Requirement #6)
SHBP participating
employers must provide a copy of the enclosed notice to any new
employee newly enrolling in the SHBP. It complies with the HIPAA
requirement to notify plan participants of any deviation from
HIPAA provisions.
The Division of Pensions
and Benefits will notify employees and their dependents of the
above actions through our SHBP newsletters and open enrollment
publications. These will be sent to participating employers for
distribution. The Division will also notify enrolled retirees
and their dependents about HIPAA and the SHBP's exemption from
the mental health parity requirement.
The State Health Benefits
Commission has requested that Buck Consultants provide analysis
and recommendations concerning various alternatives in plan design
of mental health benefits. Since the mental health limitations
currently in effect are detailed in the law governing the SHBP,
a change in plan design may require legislative action.
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.
ENCLOSURE:
Notice to Participants
about Federal Health Insurance Requirements
The Health Insurance
Portability and Accountability Act (HIPAA), the Mental Health
Parity Act, and the Newborns' and Mothers' Health Protection Act,
federal laws enacted in 1996, contain a number of provisions that
affect the State Health Benefits Program (SHBP). HIPAA requires
group health plans to implement the following provisions that
are contained in the three federal laws by the beginning of their
next plan year, which is January 1, 1998 for the SHBP:
#1 - Limit the use
of preexisting condition restrictions to a maximum of twelve months;
#2 - Offer a special enrollment period to employees and dependents
who do not enroll in the plan when initially eligible because
they have other coverage, and who subsequently lose that coverage;
#3 - Eliminate discrimination against participants and beneficiaries
based on health status;
#4 - Provide a minimum level of hospital coverage for newborns
and mothers, generally 48 hours for a vaginal delivery and 96
hours for a cesarean delivery; and
#5 - Provide parity in mental health benefits., that is, any dollar
limitations applied to mental health treatment cannot be lower
than those on medical and surgical benefits.
The SHBP offers 14
medical plans to employees. These include 12 HMOs, all of which
are insured plans;, the Traditional Plan, which is a self-insured
indemnity plan; and NJ PLUS, a self-insured point-of-service plan.
Self-insured, nonfederal governmental plans, such as the Traditional
Plan and NJ PLUS, may elect exemption from the above HIPAA requirements
on a year to year basis. Insured plans, like all of the SHBP HMOs,
do not qualify for exemption and must comply with all HIPAA requirements.
Effective January
1, 1998,
all SHBP plans meet or exceed HIPAA requirements #1 through #4
above. SHBP HMOs also comply with requirement #5 above. The Traditional
Plan and NJ PLUS will not be HIPAA compliant on mental health
parity (requirement #5) in 1998 because the State Health Benefits
Commission has filed an exemption from this requirement. The mental
health limits for the Traditional Plan and NJ PLUS that are described
in the New Jersey State Health Benefits Program Medical Plans
Information Handbook will remain in effect throughout 1998.
The SHBP will conduct
a study in 1998 to review the design of mental health benefits
in the Traditional Plan and NJ PLUS.
September 16, 1997
TO: Certifying
Officers,
Public Employees' Retirement System
Teachers' Pension and Annuity Fund
FROM: Margaret
M. McMahon
Director
SUBJECT: Reduced
Pension Contributions
Employee pension contributions
for members of the Public Employees' Retirement System (PERS)
and the Teachers' Pension and Annuity Fund (TPAF) will be reduced
for all of calendar year 1998 from 5% to 4.5% of pensionable salary.
Please take appropriate action to implement this change.
This change results
from enactment of the Pension Security Legislation (Chapters 113,
114, & 115 of P.L. 1997), signed by Governor Whitman on June
5, 1997. These laws also resulted in $2.75 billion being deposited
in the various State administered pension systems, which fully
fund these systems. Additionally, local employer pension contributions
to PERS normally due April 1, 1998, will not be required (except
for early retirement incentives from previous years) because sufficient
excess assets are already in the system to offset those payments.
The minimum repayment
schedule for pension loans and the minimum deduction for service
credit purchases, which are based on the normal pension contribution
rate, will not change from the current levels. This is because
the reduction of employee contributions is not a permanent reduction
of the normal contribution rate; it is a temporary reduction.
Employer representatives
responsible for completing the Certification of Service and Final
Salary for retiring members must remember to take the reduced
contribution rate into account when projecting deductions that
will be made from base salary after January 1, 1998.
If there are sufficient
excess assets available in the pension systems, the reduced contribution
rate for employees could be extended through 1999. You will be
notified if this is the case in September of next year.
For more information
about the pension security legislation, visit the Division of
Pensions and Benefits Home page on the world wide web. Our Internet
address (URL) is shown below.
http://www.state.nj.us/treasury/pensions
Print
this Certifying Officer Letter in Adobe Acrobat PDF format.
To print this
fact sheet in pdf, you must have a PDF
viewer which is available free
from Adobe.
September 3, 1997
TO: Participating
SHBP Employers
State Benefits Administrators
FROM: Janice
F. Nelson
Assistant Director for Health Benefits
SUBJECT: Traditional
Plan Identification Card Reissue
The State Health Benefits
Program (SHBP) will be reissuing identification cards for all
participants of the Traditional Plan during the end of September
and early October. Cards for active group members will be sent
in bulk to employers for distribution directly to participants.
Cards for retirees and COBRA members will be mailed to home addresses
by Blue Cross Blue Shield of New Jersey.
The new cards are
made of flexible material which provides more space on the face
of the card for information that will facilitate claims filing.
The switch to the new material also reduces the cost of both producing
and mailing cards to members. Members can continue to use their
old cards until they receive the new cards.
Cards for NJ PLUS
members will also be converted to the flexible materials. However,
these cards will not be reissued in bulk. As new members are enrolled
and existing members change coverage, replace lost cards, or request
additional cards, the new flexible cards will be supplied.
We appreciate your
assistance in providing these new Traditional Plan cards to your
employees. Questions about this memorandum should be directed
to the Employer Hotline at (609) 777-1082. Leave a message and
a staff member will return your call within one business day.
If you do not receive the new Traditional Plan identification
cards for your employees by October 3, 1997, contact BCBSNJ at
1-800-414-SHBP (7427).
August 1997
TO: Participating
SHBP Employers
FROM: Janice F. Nelson, Assistant Director for Health Benefits
SUBJECT: Health
Insurance Portability and Accountability Act Update
In June,
we provided you information on how the federal Health Insurance
Portability and Accountability Act (HIPAA) affects participating
employers in the State Health Benefits Program (SHBP). We outlined
the various notifications employers must send to employees and
family members who lose medical coverage.
Several employers
have contacted us and indicated a difficulty in supplying the
names of dependents to be included on the Certificate of Coverage.
They had the names on file, but had to go to manual personnel
files to obtain them. Other employers did not have the names on
file and were having to call the Division of Pensions and Benefits
for the names of the covered dependents.
HIPAA regulations
include a transition rule, in effect until June 30, 1998, that
may offer some assistance to employers in meeting the Certificate
requirement. The transition rule permits the employer to list
the employee and level of coverage (e.g., employee and spouse,
family) instead of listing the dependents if the employer does
not have reasonable access to dependent names. However, if a Certificate
for a dependent is requested, then the employer must make reasonable
efforts to obtain the name of the covered dependent. Again, this
transition rule is only in effect until June 30, 1998. After that,
employers must list each dependent on the Certificate. By that
date, our new State Health Information Processing System may have
features in place to assist employers in meeting this HIPAA reporting
requirement.
We are attaching a
revised copy of the Certificate of Coverage that corrects a typographical
error in item 8. Although the instructions supporting the form
had correct information on item 8, the typographical error was
confusing to some individuals.
Questions about this
memorandum should be directed to the Employer Hotline at (609)
777-1082. Leave a message and a staff member will return your
call within one business day.
July 10, 1997
TO: Certifying Officers
Police and Firemen's Retirement System (PFRS)
FROM: Margaret M.
McMahon
Director
SUBJECT: Chapter
137, P.L. 1997
Chapter 137, Public
Law of 1997 was approved and signed by Governor Whitman on June
27, 1997 and became effective immediately. This law extends membership
in the Police and Firemen's Retirement System (PFRS) for certain
members beyond July 1, 1997 but in no case beyond January 1, 1998.
This law permits any
member of PFRS to continue membership in the PFRS after attaining
age 65 provided the member had not attained 25 years of service
by June 27, 1997. Membership in PFRS may continue up until the
time one of the following three events occurs:
Chapter 137 also
contains a provision that only applies to members of PFRS who
are classified as policemen as defined by the retirement system
and are employed by an agency other than the State of New Jersey.
The provision allows the employer (other than the state) to extend
the membership of a policeman in PFRS who would have been forced
to retire on July 1, 1997 to January 1, 1998. To qualify under
this provision the member must:
For any employer
who adopts a resolution extending the membership for policemen
as described above, any civil service employment list used to
fill vacant policemen positions that either existed on June 27,
1997 or becomes effective on or before December 31, 1997, will
not expire or be canceled before February 1, 1998.
If you have any questions
concerning this law, please call Client Services at (609) 292-7524.
June 9, 1997
Dear New Jersey State
College/Monthly Payroll Agency:
United Concordia Dental
Provider Organization (DPO) and CIGNA DPO will no longer be offered
through the New Jersey State Health Benefits Program (SHBP) beginning
with the 1997 plan year. United Concordia and CIGNA DPO enrollees
should have completed applications to transfer to another
dental plan offered through the SHBP during the recent 0pen Enrollment
period.
For your information,
enclosed are copies of letters to CIGNA and United Concordia enrollees.
The letters explain the extension of benefits currently in progress
which are as follows: If employees or dependents covered by CIGNA
DPO or United Concordia DPO were already in treatment for a crown
or restoration (tooth prepared), appliance or modification of
an appliance (impression taken), root canal therapy (pulp chamber
opened) or orthodontia treatment, those services will be continued
to conclusion through their CIGNA or United Concordia dental provider.
The SHBP will allow
former enrollees of either of these two plans, who did not transfer
to another plan during the past Open Enrollment period, but wish
to have dental coverage, the opportunity to enroll in a new dental
plan. They may enroll in a new plan through July 3, 1997. The
effective date of enrollment in the new plan should be the first
of the next available month. If forms are too late for a July
1 effective date, they should be made effective August 1 and there
will be a break in coverage. If enrollment forms are not submitted,
employees should be terminated July 1, 1997.
If you have any questions
concerning premium or dental coverage for your employees please
contact the Division of Pension and Benefits.
Sincerely,
Leonard Leto
Manager, Policy and Planning
June 9, 1997
Dear New Jersey State
Payroll/Benefit Administrators:
The United Concordia
Dental Provider Organization (DPO) and CIGNA DPO will no longer
be offered through the New Jersey State Health Benefits Program
(SHBP) beginning with the 1997 plan year.
For State Biweekly
employees paid through Centralized Payroll, the effective date
of enrollment into their new dental plan will occur July 1. This
represents a change from the July 5th effective date provided
in communication materials distributed during the recent Open
Enrollment period. If Biweekly employees also added dependents
to their dental plan during the Open Enrollment period, coverage
for those added dependents will be effective July 5th.
Former CIGNA and United
Concordia enrollees who did not transfer during the past Open
Enrollment period, but wish to have dental coverage and want to
enroll in another plan offered by the SHBP, may be permitted to
do so through July 3, 1997. Forms submitted through June 13, 1997
may be made effective July 1, 1997. Forms submitted after July
13th will become effective August 2, 1997 and dental coverage
will not be provided from July 1, 1997 through August 1,1997.
Letters have been
sent to CIGNA and United Concordia enrollees providing information
on termination dates and the extension of benefits in progress.
Additionally, those enrollees, who did not transfer to another
plan during the recent open enrollment period, were advised of
a special opportunity to enroll in a new SHBP dental plan.
If you have any questions
concerning the dental coverage of former enrollees of United Concordia
or CIGNA, please contact the Division of Pensions and Benefits.
Sincerely,
Leonard Leto
Manager, Policy and Planning
June 5, 1997
Dear CIGNA Dental
Plan Organization Enrollee:
You recently received
a letter providing you with information concerning the termination
of your dental benefits through CIGNA.
Our records indicate
that you did not complete an application to transfer to
another dental plan offered through the State Health Benefits
Program (SHBP) during the recent open-enrollment period and therefore
your CIGNA Dental Plan Organization (DPO) coverage will
terminate June 30,1997, and you will no longer have dental coverage
through the SHBP.
If you wish to have
dental coverage and want to enroll in another plan offered by
the SHBP, you may do so through July 3, 1997. Your enrollment
into your new dental plan will become effective August 2, 1997.
You will not have SHBP dental coverage from July 1, 1997 through
August 1,1997.
To take advantage
of this special enrollment opportunity, contact your payroll/benefits
administrator and complete a dental enrollment application prior
to July 3, 1997.
Sincerely,
Leonard Leto
Manager, Policy and Planning
900 CIGNA
June 4, 1997
Dear CIGNA Dental
Plan Organization Enrollee:
Effective July 1,
1997, the CIGNA Dental Plan Organization (DPO) will no longer
participate in the State Health Benefits Program (SHBP).
As a CIGNA DPO enrollee,
you should have completed an application to transfer to
another dental plan offered through the SHBP during the recent
open-enrollment period. If you transferred to another dental plan
during the open enrollment, you will be enrolled in your new dental
plan on July 1,1997. If you did not complete and file a new dental
application, your CIGNA DPO coverage will terminate June 30,
1997 and you will no longer have dental coverage through the SHBP.
NOTE: for State Biweekly
employees paid through Centralized Payroll, the effective date
of enrollment into your new dental plan will occur within a payroll
period (July 1) and represents a change from the July 5th effective
date provided in communication materials distributed during the
recent open enrollment. If you also added dependents to your dental
plan during the open enrollment, their coverage will be effective
July 5th.
Other than for emergencies,
we recommend that you refrain from beginning any new course of
treatment (especially long treatment services such as orthodontia)
that cannot be completed by June 30, 1997 with your CIGNA dental
professional. If you or your covered dependent(s) have begun treatment
for a crown or restoration (tooth prepared), appliance or modification
of an appliance (impression taken), root canal therapy (pulp chamber
opened) or orthodontia treatment, services will be continued to
conclusion through your current CIGNA dental professional, regardless
of whether you transfer to another dental plan offered through
the SHBP, or you terminate your dental coverage.
If you have any problem
receiving treatment to complete the above mentioned services,
please notify your employer and have them contact the Division
of Pensions and Benefits.
Sincerely,
Leonard Leto
Manager, Policy and Planning
June 1997
TO: Participating
SHBP Employers
FROM: Janice
F. Nelson
Assistant Director
for Health Benefits
SUBJECT: Health
Insurance Portability and Accountability Act (HIPAA)
The federal Health
Insurance Portability and Accountability Act (HIPAA) that was
signed into law last year included provisions that will affect
participating employers in the State Health Benefits Program (SHBP).
These new provisions restrict a group health plan's ability to
set preexisting condition limitations. Since the SHBP has no preexisting
condition provisions, the impact of HIPAA on participating employers
primarily concerns notification requirements to employees and
family members who lose medical coverage. The new requirements
which must be fulfilled by SHBP participating employers are listed
immediately below. Each is described in detail later in this memorandum.
- Employees and family members
of employees losing medical plan coverage after June 1, 1997
must be automatically provided a Certificate of Coverage.
- Employees and family members
of employees who lost medical plan coverage between October
1, 1996 and May 31, 1997 must be provided a Special Notice
of Coverage or a Certificate of Coverage before June 1, 1997.
- Upon request, employees and
family members of employees who lost medical plan coverage
between July 1, 1996 and October 1, 1996 must be provided
a Certificate of Coverage.
Certificate of Coverage
Required After June 1, 1997
Employees and family
members who lose medical plan coverage after June 1, 1997, regardless
of the reason for the loss, must be provided a Certificate of
Coverage which shows the length of time they have been continuously
covered under the plan. The Certificate of Coverage must be provided
within fourteen days of the loss of coverage or notification to
the employer of the loss of coverage, whichever is later. This
time period for providing the Certificate of Coverage is identical
to that required for COBRA Notification. If COBRA Notification
is required by law, the Certificate of Coverage should be mailed
with the COBRA package. If COBRA Notification is not required,
the Certificate must be mailed independently. A sample Certificate
of Coverage and instructions for completing it are enclosed.
You should maintain
a copy of any Certificate of Coverage you send out to employees
and or their family members as proof of meeting the requirement
and for future use. Anyone eligible for a Certificate, or their
designated agent, may request another copy of the Certificate
at any time within 24 months of its issuance. Having a copy on
file will save you time and facilitate this reissuance.
If an employee or
family member losing SHBP medical plan coverage continues that
coverage under COBRA, another Certificate of Coverage will be
issued by the SHBP COBRA Administrator upon termination of the
COBRA coverage.
HIPAA contains provisions
that allow group health providers receiving a Certificate of Coverage
to follow up with the issuer to obtain details regarding plan
coverage. If a provider contacts you for detailed coverage information,
send them a copy of Fact Sheet #36 Available Health Plans in
the State Health Benefits Program, and refer them to
the plan phone numbers contained in the Fact Sheet for further
information.
Special Notice
of Coverage or Certificate of Coverage Required before June 1,
1997.
Employees and their
family members who lost medical plan coverage between October
1, 1996 and May 31, 1997 must be provided a Special Notice of
Coverage or a Certificate of Coverage before June 1, 1997. The
Special Notice of Coverage (a sample is enclosed) informs the
member of their right to a Certificate of Coverage and how to
obtain one. If you wish, you may opt to send only the Certificate
of Coverage and skip the Special Notice of Coverage. If you have
not already met this requirement, you should do so immediately
to demonstrate a good faith effort to comply with HIPAA provisions.
Certificate of
Coverage for Members Who Departed Before October 1, 1996.
Employees and their
family members who lost medical plan coverage between June 1,
1996 and October 1, 1996 must be provided a Certificate of Coverage
upon request. You have no requirement, however,
to inform these individuals of this right under HIPAA.
Other HIPAA Provisions
HIPAA established
other requirements regarding benefits coverage, employee and dependent
eligibility, and plan information that may have to be provided
to enrolled members. These requirements will have an impact on
the SHBP as a whole, but are not of an immediate concern to employers
like the notification requirements discussed above. As we develop
our policies to implement special provisions of HIPAA, we will
make appropriate notifications to employers and employees alike.
Questions about this
memorandum should be directed to the Employer Hotline at (609)
777-1082. Leave a message and a staff member will return your
call within one business day.
May 1997
TO: Participating
Local Employers of the State Health Benefits Program
FROM: Margaret M. McMahon, Director
SUBJECT: State Health Benefits Program Premium Holiday
Months
We are pleased to
announce that the months of October and December will be Premium
Holiday months for the Traditional Plan and NJ PLUS.
Two Premium Holidays
Local employers who
were participating in the State Health Benefits Program (SHBP)
on January 1, 1997 can take advantage of both Premium Holidays.
Premium Holidays include payments for active employees, retirees,
and COBRA participants enrolled in the Traditional Plan and NJ
PLUS. Premium payment for these participants' coverage will not
be required for bills due October 10, 1997 and December 10, 1997.
One Premium Holiday
Employers who join
the SHBP after January 1, 1997 may take advantage of the second
premium holiday. A new employer must continue to participate in
the SHBP for an additional twelve months from the date of the
Holiday or the premium saved during the Holiday will be payable.
Premium Delay
The SHBP routinely
offers employers the ability to delay premium payments for one
or two months. Employers who have taken advantage of premium delay
will also enjoy the Premium Holidays for the bills that would
be payable on October 10, 1997 and December 10, 1997.
Retirees and COBRA
Participants
SHBP local group retirees
and COBRA participants who pay for their own Traditional Plan
or NJ PLUS coverage will not be charged for that coverage during
the Premium Holiday months of October and December 1997. Retirees
who have the cost deducted from their pension checks will have
a message on the check explaining the Premium Holiday. Those retirees
and COBRA participants who are sent a bill for coverage will receive
a bill which will indicate no premium due with an explanation
of the premium holiday.
The State Health Benefits
Program and the Division of Pensions and Benefits are committed
to providing employers and members with high quality programs
in a cost effective manner. The Premium Holidays extended to participants
by the State Health Benefits Program is evidence of that commitment.
If you have any questions
about the SHBP employer bills, please call our Employer Hotline
at (609) 777-1082 and leave a message. A staff member will return
your call on the next work day.
April 1997
TO: Certifying Officers
Public Employees' Retirement System (PERS)
FROM: Margaret
M. McMahon, Director
SUBJECT: CHAPTER
23, P.L. 1997
Governor Whitman recently
signed into law Chapter 23, P.L. 1997. This law makes retired
PERS members who return to work after February 27, 1997 in a PERS
eligible position, ineligible for membership in PERS provided
the annual salary does not exceed $10,000.
Chapter 23 only
applies to retirees of PERS who return to employment in an otherwise
eligible PERS position. It does not alter the membership requirements
of the PERS for any other individuals who are employed in a PERS
eligible position.
A PERS retiree may
be hired in a PERS eligible position without having to resume
active membership provided the annual salary does not exceed $10,000.
The retiree must be off payroll for at least 30 consecutive days
after termination of employment and must be retired from PERS
prior to beginning employment in the position.
If an employee is
retired from PERS and returns to work in two or more PERS eligible
positions with the same employer, the salaries from all eligible
positions are combined when considering the $10,000 limit. However,
if a retiree returns to work in two or more PERS eligible positions
with more than one employer, the salaries earned at each employer
are considered separately when considering the $10,000 limit.
For example, an employee's annual salary at employer A is $9,000
and the annual salary at employer B is $7,500, the employee would
not be eligible for PERS membership at employer A or employer
B.
This law does not
apply to PERS members who previously retired and reenrolled prior
to February 27, 1997. If a member whose base salary does not exceed
$10,000 now wishes to leave the retirement system, the member
must terminate employment, retire and remain off the payroll for
at least 30 days. The member would then be permitted to return
to PERS employment and not jeopardize his/her retirement benefit
provided the annual salary did not exceed $10,000.
Please notify your
employees of the change in the membership eligibility for PERS
retirees under the provisions of Chapter 23.
Should you have any
questions, please contact Client Services at (609) 292-7524.
TO: State College/University
Alternate Benefits Program (ABP) Participants Enrolled in the
State Health Benefits Program (SHBP)
FROM: Margaret
M. McMahon, Director
DATE: April
15, 1997
SUBJECT: State-Paid
Health Benefits in Retirement
In January, State
employees were given a copy of a letter, subject as above, that
described the impact that Chapter 8, P.L. 1996 would have on their
State Health Benefits Program (SHBP) coverage in retirement. Although
the letter was pertinent to all State employees in the SHBP, there
were portions of it, specifically those dealing with the purchase
of pension service and the formal certification of 25 years of
service, that pertained only to members of the Public Employees'
Retirement System (PERS) and the Police and Firemen's Retirement
System (PFRS), and did not pertain to Alternate Benefit Program
(ABP) participants. This letter is specifically directed to ABP
participants to clear up any misconceptions created by the earlier
letter.
Prior to the enactment
of Chapter 8, P.L. 1996, State law provided State-paid health
benefits, up to the cost of the Traditional Plan, for state employees
enrolled in the SHBP who retired with 25 years of service in a
State administered retirement system or who retired on a disability
retirement regardless of the length of service. That law was changed
by Chapter 8, P.L. 1996, which allowed negotiation between the
State and unions on payment of premiums for active employees and
retirees. Members of the SHBP already retired were not affected
by this change in law. The effect of Chapter 8 on State employees
enrolled in the ABP who are eligible for SHBP coverage is outlined
below.
To determine service
time for SHBP purposes, time credited to your ABP account while
working in an ABP covered position is used. Additionally, if you
transferred pension contributions from another New Jersey State
administered public retirement system to the ABP, your ABP account
has been credited with the service attributed to the transferred
contributions. The ABP is a defined contribution plan, that is,
it is a plan whose retirement benefit is solely based on contributions
and investment performance. Because of this, there are no provisions
in the current laws governing the ABP for the purchase of service
credit for military, federal, or other public employment.
Employees with
at least 25 years of service credit in the ABP system on June
30, 1997: Chapter 8, P.L. 1996 does not affect your retired
group benefits. The State will pay for the cost of whatever SHBP
plan you choose for you and your covered dependents in retirement,
whenever you retire, up to the cost of the Traditional Plan. Those
terminating employment and taking a deferred retirement annuity
are not normally eligible for SHBP coverage in retirement.
Employees qualifying
for an ABP long term disability before July 1, 1997: Chapter
8, P.L. 1996 does not affect your retired group benefits. The
State will pay for the cost of whatever SHBP plan you choose for
you and your covered dependents, up to the cost of the Traditional
Plan.
Employees who attain
25 years of service credit in the ABP system on or after July
1, 1997: The State will pay for the cost of whatever SHBP
plan you choose for you and your covered dependents in retirement,
up to the cost of the Traditional Plan, in accordance with the
union contract which applies to you at the time you reach 25 years
of service, regardless of the date you retire. If you are not
in a title eligible for union representation, you are considered
non-aligned and rules adopted by the State Health Benefits Commission
will determine the State's and, if applicable, your payment of
SHBP plan costs in retirement. Current union contracts and Commission
rules call for affected retirees to pay a portion of the cost
for the Traditional Plan only with no cost for managed care plans
(NJ PLUS or an HMO). This approach is similar to premium sharing
arrangements now in place for active employees. Naturally, these
arrangements could change in future union contracts when they
are renegotiated.
Employees qualifying
for an ABP long term disability on or after July 1, 1997:
The State will pay for the cost of whatever SHBP plan you choose
for you and your covered dependents, up to the cost of the Traditional
Plan, in accordance with the union contract or Commission rules
which apply to you at the time you qualify for the long term disability.
Current union contracts and Commission rules call for affected
retirees to pay a portion of the cost for the Traditional Plan
only with no cost for managed care plans (NJ PLUS or an HMO).
This approach is similar to premium sharing arrangements now in
place for active employees. Naturally, these arrangements could
change in future union contracts when they are renegotiated.
Given the fact that
ABP membership records are not automated and that ABP members
cannot purchase other service, the Division of Pensions and Benefits
will certify member service when the member nears retirement.
At that time, the Division will determine when the member reached
25 years of service and identify the contract or Commission rules
in effect at that time. You can request this certification from
the Division through your employer when you initiate your retirement
paperwork.
I hope this letter
clears up any confusion you may have experienced from the initial
letter. If you have any further questions, please see your employer's
benefits administrator or call Client Services at (609) 292-7524.
March 28, 1997
TO: Certifying
Officers
Police and Firemen's Retirement System
FROM: Margaret
M. McMahon, Director
Subject: Maximum
Hiring and Retirement Ages
This memorandum announces
policies regarding the reinstatement of mandatory retirement and
maximum enrollment age restrictions for the Police and Firemen's
Retirement System (PFRS). Background information on this subject
is at the end of this memorandum.
( Mandatory Retirement:
After June 30, 1997, PFRS members must retire no later than the
first of the month following their 65th birthday. Members who
are or will be age 65 or older by June 30, 1997, must retire no
later than July 1, 1997.
( Maximum Enrollment
Age: After February 25, 1997, individuals qualified to enroll
in the PFRS in all other respects must also meet the maximum age
restriction, that is, appointed on or before his/her 35th birthday,
to enroll in PFRS.
Individuals hired
in a PFRS eligible title at a Civil Service location on or after
February 25, 1997, must have been age 35 or under as of the closing
date of the examination for that title to establish membership
in PFRS. Note: Individuals meeting this age requirement can be
hired at any time from the Civil Service list while it is still
active and be enrolled in PFRS.
Individuals hired
in a PFRS eligible title at a Non-Civil Service location on or
after February 25, 1997, must have been age 35 or under on the
date of hire to establish membership in PFRS.
Individuals employed
by any State or County location who did not meet the maximum age
requirement described above must establish membership in the Public
Employees' Retirement System (PERS) one year after being provisionally
employed in the title or immediately after being permanently appointed
in the title.
Individuals hired
by any municipality in an eligible PFRS title on or after February
25, 1997, who were over age 35 on the date of hire, cannot establish
membership in any State-administered retirement system.
Note: If the
hiring process was initiated for an individual prior to February
25, 1997, and the individual is hired prior to May 1, 1997, you
may forward an application for enrollment to the Enrollment Bureau
of the Division with a description of the factual matters of the
situation. The Division, in conjunction with the Office of the
Attorney General, will review and make a determination as to eligibility
for PFRS enrollment.
( Members who qualified
for enrollment in the PFRS while the age 35 restriction was not
in force will be allowed to enroll and/or retain membership in
the system on the same basis as any other member.
Background Information
New Jersey statutes
(NJSA 40A:14-12, NJSA 40A:14-127, NJSA 53:1-9 and NJSA 43:16A-5)
and New Jersey Administrative Code (NJAC 17:4-2.5 and NJAC 17:4-6.14)
establish mandatory retirement and maximum hiring ages for the
PFRS. These provisions were superseded in 1993 by federal legislation,
the Age Discrimination in Employment Act (ADEA), so that the state
statute and administrative code could not be enforced.
In September 1996,
the federal government eliminated those ADEA restrictions that
applied to the PFRS governing statutes. The State Attorney General
reviewed the federal action and, on February 25, 1997, published
Formal Opinion No. 1 which stated that the PFRS age restrictions
must be enforced again. After reviewing that opinion, the PFRS
Board of Trustees decided on March 3, 1997 to permit the Division
to process PFRS enrollments without regard to age until April
30, 1997. On March 18, 1997 the Office of the Attorney General
clarified the formal opinion saying that, as a matter of law,
the age 35 hiring restriction became effective on the date the
formal opinion was issued, February 25, 1997, which changed the
Board of Trustees' directive.
Individuals who contacted
the Division between the Board's decision on March 3 and the Attorney
General's clarification on March 18 were told that hiring over
age 35 could be done through April 30, 1997. We now know that
this was not the correct interpretation. However, as the note
at the top of this page indicates, hiring situations that occur
before May 1, 1997 will be reviewed on a case by case basis. We
apologize for misleading anyone who may have contacted our office.
Direct general questions
on PFRS membership to Client Services at (609) 292-7524. Use the
Employer Hotline at (609) 777-1082 for specific, detailed questions
on PFRS membership. Leave your name, a detailed message, and your
telephone number and a staff member will get back to you by the
next day. Call the Department of Personnel at (609) 292-4144 with
questions regarding Civil Service hiring.
January 1997
TO: Certifying
Officers
State Colleges and
Universities
FROM: William
H. Kale
Acting Assistant Director,
Client Services
SUBJECT: Chapter
8, P.L. 1996 Information for Employees
Enclosed are two payroll
inserts state biweekly employees will receive with their January
24, 1997 paychecks. The first enclosure is a letter from Margaret
M. McMahon explaining the provisions of Chapter 8, P.L. 1996 as
it relates to State-paid health benefit coverage in retirement.
The second enclosure is the winter edition of the Health Capsule.
The Health Capsule is a newsletter which informs participating
employees about developments in their health benefits program.
This issue contains informative articles about the provisions
of Chapter 8, prescription drug savings through PAID Direct, the
new COBRA administrator, changes in the federal COBRA law, and
more.
Please feel free to
reproduce both inserts for distribution to your employees.
Enclosures
January 1997
TO: State Biweekly
Benefits Administrators
State Human Resource
Directors
FROM: William
H. Kale
Acting Assistant Director,
Client Services
SUBJECT: January
24, 1997 Payroll Inserts
Enclosed are two payroll
inserts state employees will receive with their January 24, 1997
paychecks. The first, at enclosure 1, is a letter from Margaret
M. McMahon explaining the provisions of Chapter 8, P.L. 1996 as
it relates to State-paid health benefit coverage in retirement.
The second, at enclosure 2, is the winter edition of the Health
Capsule. The Health Capsule is a newsletter which informs
participating employees about developments in their health benefits
program. This issue contains informative articles about the provisions
of Chapter 8, prescription drug savings through PAID Direct, the
new COBRA administrator, changes in the federal COBRA law, and
more.
Enclosures
December 1996
TO: Certifying
Officers
FROM: Beneficiary
Services
SUBJECT: WAIVER
OF GROUP LIFE INSURANCE OVER $50,000
Chapter 62, P.L. 1994
permits members of the Public Employees' Retirement System, Teachers'
Pension and Annuity Fund, Police and Firemen's Retirement System
and State Police Retirement System to waive
their noncontributory group life insurance over $50,000 to
avoid a possible tax liability on that benefit. The Internal Revenue
Service classifies all life insurance coverage over $50,000
as a fringe benefit subject to taxation. The amount of life insurance
is not taxable but rather the premium required to pay for the
life insurance coverage is taxable.
In order for you to
provide your employees with correct W-2s for 1996, we have enclosed
a listing of your employees who have waived their noncontributory
group life insurance over $50,000.
If you have any questions
about the listing, please contact us at the address above.
December 1996
TO: Certifying
Officers
State Colleges and
Universities
County Colleges
Office of Student
Assistance
Commission on Higher
Education
FROM: William
H. Kale
Acting Assistant Director,
Client Services
SUBJECT: Considerations
for Choosing between PERS and ABP Handbook
Enclosed for your
use are ten copies of the newly revised 1996 handbook, Considerations
for Choosing between PERS and ABP. The 1996 edition includes
legislative and administrative changes as of October 1, 1996.
The handbook will be a useful tool for your employees eligible
to transfer from PERS to ABP when making the important decisions
concerning their retirement benefits.
If you wish to order
additional copies of the handbook for your employees, you can
call the Employer Request for Forms, 24 hours a day, seven days
a week at (609) 777-4357. Be sure to include the name of the person
to receive the shipment and the physical address of the location
receiving the shipment. You can expect delivery within 15 working
days.
As always the Division
of Pensions and Benefits welcomes your comments and suggestions,
so please write to me directly with your comments on the revised
handbook.
URL: http://www.state.nj.us/treasury/pensions/coletter.htm
June 8, 1997
NJ Division of Pensions
and Benefits
CN-295, Trenton NJ 08625-0295
Telephone: (609) 292-7524
Questions or comments,
e-mail Division
of Pensions and Benefits.