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Pensions and Benefits
RULE CHANGES
2003
Proposed Rules Public Notices Adoptions

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The Division of Pensions and Benefits posts proposed rules — new rules, amended rules and readoptions of existing rules — on this Web site to inform members, retirants, employers and other interested parties.

Proposed rules are first published in the New Jersey Register, a bi-weekly publication prepared by the Office of Administrative Law. The Division then posts, on this site, summaries of the proposed rules. After adoption, a rule becomes part of the New Jersey Administrative Code.

If you would like to learn more regarding a proposed rule, the numbers in the parentheses before the proposed rule refer to the volume and page number in which the entire proposal is found in the Register. NJAC refers to the New Jersey Administrative Code, and the numbers identify the title and specific chapter citations.

Proposed changes are either in bold print or are underlined. Deletions are bracketed [so].


Public Notices

Public Notice Cite as 35 N.J. Reg. 5451(a) December 1, 2003. DIVISION OF PENSIONS AND BENEFITS Notice of Proposal to Include the Non-Civil Service Position of Chief of Police, Brookdale Community College in the Police and Firemen's Retirement

Public Notice Cite as 35 N.J. Reg. 5450(b) December 1, 2003. DIVISION OF PENSIONS AND BENEFITS NOTICE OF PROPOSAL TO INCLUDE THE CIVIL SERVICE POSITIONS OF CHIEF, FIRE APPARATUS (UFD) IN THE POLICE AND FIREMEN'S RETIREMENT SYSTEM

Public Notice N.J.A.C. 17:9-6.10(i); October 7, 2003. STATE HEALTH BENEFITS COMMISSION
STATE HEALTH BENEFITS PROGRAM NOTICE OF INCREASES IN THE AMOUNTS OF COPAYMENTS AND THE MAXIMUM OUT-OF-POCKET EXPENSES UNDER THE RETIREE PRESCRIPTION DRUG CARD PLAN

Public Notice N.J. Reg. 4148(b); September 2, 2003. TREASURY-GENERAL

Public Notice N.J. Reg. 2958(a); July 8, 2003. TREASURY-GENERAL

Public Notice N.J.R. 2958(b); July 8, 2003. TREASURY-GENERAL

Public Notice NJR 35:11; 35 N.J. Reg. 2533(c); June 2, 2003. TREASURY-GENERAL


Proposed Rules

Proposed Amendment: N.J.A.C. 17:7-3.9 ALTERNATE BENEFIT PROGRAM AWARDS OF BACK PAY. Cite as 35 N.J.R. 5525(a) (ABP)

Proposed Readoption with Amendments: N.J.A.C. 17:6

Proposed Repeals: N.J.A.C. 17:6-3.7, 3.8, 3.9 and 3.10 Consolidated Police and Firemen's Pension Fund Rules. Cite as 35 N.J. Reg. 2409(a) [Consolidated PFRS]

Proposed Readoption with Amendments: N.J.A.C. 17:10 Judicial Retirement System. Cite as 35 N.J. Reg. 388(a) [JRS]

Proposed Readoption N.J.A.C. 17:1 General Administration. Cite as 35 N.J. Reg. 387(a)

Proposed Amendment: N.J.A.C. 17:2-2.3 Ineligible Persons. Cite as 34 N.J. Reg. 1364(a) [PERS]


Adoptions

Adopted Amendment: N.J.A.C. 17:4-1.1 POLICE AND FIREMEN'S RETIREMENT SYSTEM BOARD MEETINGS Cite as 36 N.J. Reg. 1359(a) (PFRS) - March 15, 2004

Adopted Amendment N.J.A.C. 17:9-1.0 PROCUREMENT OF STATE HEALTH BENEFIT PROGRAM CONTRACTS Cite as 36 N.J. Reg. 1359(b) (SHBP) - March 15, 2004

Adopted Amendments: N.J.A.C. 17:1-13.1 and 13.2 NEW JERSEY STATE EMPLOYEES' CAFETERIA PLAN; ESTABLISHMENT OF PLAN; UNREIMBURSED MEDICAL SPENDING ACCOUNT 36 N.J. Reg. 1358(a)
General Administration - March 15, 2004

Adopted Amendment N.J.A.C. 17:2-1.4 ELECTION OF MEMBER-TRUSTEE Cite as 36 N.J. Reg. 1198(a) (PERS)

Adopted Amendment N.J.A.C. 17:1-4.2 PURCHASE TERMS; GRACE PERIOD Cite as 36 N.J. Reg. 661(a) GENERAL ADMINISTRATION - February 2, 2004

Adopted Amendment N.J.A.C. 17:9-1.1 Commission Meetings Cite as 36 N.J. Reg. 440(a) State Health Benefits Commission - January 20, 2004

Adopted New Rule to amend N.J.A.C. 17:4-1.4 and 1.13: ELECTION OF ACTIVE MEMBER-TRUSTEE
ELECTION OF RETIRED MEMBER-TRUSTEE Cite as 36 N.J. Reg. 439(a) (PFRS) - January 20, 2004

Adopted New Rule: N.J.A.C. 17:1-8.5 Calculation of Cost-of-Living Adjustment (COLA) Under P.L. 2002, C.109 Cite as 35 N.J. Reg. 5551(a) General Administration - December 15, 2003

Adopted Readoption with Amendments: N.J.A.C. 17:9

Adopted New Rules: N.J.A.C. 17:9-1.4 and 5.5

Adopted Repeals: N.J.A.C. 17:9-1.7, 2.8, 2.14, 3.3, 3.5, 3.6, 3.7, 5.2, 5.7, 5.8 and 9.8

Adopted Repeals and New Rules: N.J.A.C. 17:9-8.1, 9.1 and 9.5

Adopted Recodification with Amendments: N.J.A.C. 17:9-2.17 as 6.8 State Health Benefits Program. Cite as 35 N.J. Reg. 5149(a) - November 3, 2003

Adopted Repeal: N.J.A.C. 17:3-2.6 Ineligible Positions; Interim Appointment To Boards Of Education For Those Not Covered By The Provisions Of P.L. 2001, C.355 (N.J.S.A. 18A:66-53.2B). Cite as 35 NJR 5148(a) [TPAF] - November 3, 2003

Adopted Amendment: N.J.A.C. 17:2-6.15 Disability Retirements; Filing After More Than Two Years' Discontinuance of Service. Cite as 35 N.J. Reg. 4734(a) [General] - October 7, 2003

Adopted Rules: N.J.A.C. 17:1-11 VOLUNTEER EMERGENCY-WORKERS SURVIVORS PENSION Cite as 35 N.J. Reg. 4733(a) GENERAL ADMINISTRATION - October 7, 2003

Readoption of N.J.A.C. 17:6 Consolidated Police and Firemen's Pension Fund Cite as35 NJR 4124(a) - September 2, 2003

Adopted Repeal and New Rules: N.J.A.C. 17:1 Division of Pensions and Benefits, General Administration. Cite as 35 NJR 3594(a) [Treasury/General] - August 4, 2003

Adopted Amendment: N.J.A.C. 17:4-2.5 Age Requirements. Cite as 35 NJR 2186(a). [PFRS] - May 19, 2003

Adopted amendment N.J.A.C. 17:9-6.8 Premium-sharing for retired State Health Benefit Coverage and reimbursement for Medicare Part B costs. Cite as 35 NJR 124 [SPRS] - May 5, 2003

Adopted Amendment N.J.A.C. 17:9-6.11Aggregation of nonconcurrent pension credit to qualify for employer-paid retired SHBP benefits under P.L. 2001, c. 209. Cite as 35 NJR 1925 [PFRS] - May 5, 2003

Adopted Amendment: N.J.A.C. 17:5-4.3 Methods of Repayment. Cite as 35 N.J.Reg. 230 [SPRS] - January 6, 2003

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DIVISION OF PENSIONS AND BENEFITS
ALTERNATE BENEFIT PROGRAM
AWARDS OF BACK PAY

Proposed New Rule: N.J.A.C. 17:7-3.9

Cite as 35 N.J.R. 5525(a)

The agency proposal follows:

Summary

The Division of Pension and Benefits has recently received a number of awards of back pay for members of the Alternate Benefits Program (ABP). The Division has been processing these awards in the same manner as those awards made in the Public Employees' Retirement System (see N.J.A.C. 17:2-6.6), the Teachers' Pension and Annuity Fund (N.J.A.C. 17:3-6.6) and the Police and Firemen's Retirement System (N.J.A.C. 17:4-6.6).

Because there are no guidelines in the New Jersey Administrative Code for awards of back pay for members of the ABP, the Division believes that a new rule is necessary detailing what information must be included in an award of back pay in order for that award to be implemented by the Division so as to allow the granting of service to be used toward the attainment of 25 years of service needed to be eligible to receive employer-paid post-retirement medical (PRM) coverage for the member. The proposed rule would also state what salaries to use in calculating pension deductions as well as the requirement that the certifying officer send the Division a copy of the award. The proposed rule would also clarify that no investment earnings would be required on what the pension deductions would have made had the member worked continuously, and that employer contributions are only available pursuant to N.J.A.C. 17:7-3.3 so long as the award would make the participant meet the definition of a full-time regularly appointed teaching or administrative staff member (50 percent or more of base salary).

A 60-day comment period is provided and, therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

Full text of the proposed new rule follows:

17:7-3.9 Awards of back pay

(a) A member shall receive credit for any month or biweekly pay period for which a full normal deduction is received by the Alternate Benefits Program.

(b) A member who appeals the suspension or termination of the member's employment and is awarded back pay for all, or a portion, of that employment for the stated period of such suspension or termination shall receive credit for the period covered by the award, provided a full normal pension contribution is received from the member or deducted from the value of the award. The amount of the employee pension contribution will be determined by the provisions of the award. If the member receives full back pay, including normal salary increases, then the contribution will be computed on the base salaries that the employee would have earned for the reinstated, suspended or terminated period. When the settlement is less than the full back pay, the employee pension contribution will be based upon the salary that the member was receiving for pension purposes prior to the suspension or termination of employment.

(c) In no case shall the award of back payment be less than the value of the normal pension contributions due. If the amount of the award of back pay is mitigated so that the member does not receive an amount equal to or greater than the value of the normal pension contributions due, then the member is required to remit the normal pension contribution to the employer who shall then submit it to the appropriate investment carrier.

(d) The member is not entitled to investment profits or losses that the contributions would have made had the member receiving the award of back pay been employed continuously.

(e) The member is not entitled to the employer contributions for the period of the award unless the member receives an award equal to at least 50 percent of full back pay pursuant to N.J.A.C. 17:7-3.3

(f) It is the responsibility of the certifying officer to provide a letter attesting to the base salary or salaries to be used to compute pension contributions and to provide a copy of the resolution or legal document that details the terms of the award.


PUBLIC NOTICE
DIVISION OF PENSIONS AND BENEFITS
Notice of Proposal to Include the Non-Civil Service Position of
Chief of Police, Brookdale Community College in the Police and Firemen's Retirement

Cite as 35 N.J. Reg. 5451(a)

Take notice that in compliance with N.J.A.C. 17:4-2.1(h), and the recommendation of the Director of the Division of Pensions and Benefits, and as determined by the Board of Trustees of the Police and Firemen's Retirement System, the above title meets the definition of "policeman" or "fireman" as defined by N.J.S.A. 43:16A-1(2). The Board of Trustees of the Police and Firemen's Retirement System hereby proposes to include the positions listed above as eligible titles in the Police and Firemen's Retirement System.

Interested parties should comment by December 31, 2003 to JoAnn Martin, Board and Trustee Administration, Division of Pensions and Benefits, PO Box 295, Trenton, NJ 08625-0295.


PUBLIC NOTICE
DIVISION OF PENSIONS AND BENEFITS
NOTICE OF PROPOSAL TO INCLUDE THE CIVIL SERVICE POSITIONS OF
CHIEF, FIRE APPARATUS (UFD) IN THE POLICE AND FIREMEN'S RETIREMENT SYSTEM

(Cite as 35 N.J. Reg. 5450(b)

Take notice that in compliance with N.J.A.C. 17:4-2.1(h), and the recommendation of the Director of the Division of Pensions and Benefits, and as determined by the Board of Trustees of the Police and Firemen's Retirement System, the above title meets the definition of "policeman" or "fireman" as defined by N.J.S.A. 43:16A-1(2). The Board of Trustees of the Police and Firemen's Retirement System hereby proposes to include the positions listed above as eligible titles in the Police and Firemen's Retirement System. Interested parties should comment by December 31, 2003 to JoAnn Martin, Board and Trustee Administration, Division of Pensions and Benefits, PO Box 295, Trenton, NJ 08625-0295.

35 N.J.R. 5450(b)


POLICE AND FIREMEN'S RETIREMENT SYSTEM
BOARD MEETINGS

Adotped Amendment: N.J.A.C. 17:4-1.1

Cite as 36 NJR 1359(a)

Adopted March 15, 2004

The agency proposal follows:

Summary

The Police and Firemen's Retirement System (PFRS) proposes to amend N.J.A.C. 17:4-1.1, Board meetings, by changing the meeting date from the third Monday of the month to the second Monday. The proposed amendment is necessary for a number of reasons. First, it is necessary to ease the administrative burden of two boards in one week for Division staff, including Director Beaver and the Deputy Attorney General. Currently the PFRS and PERS Boards meet in the third week of each month. By amending the date, the Board offices would have one Board meeting per week and could devote more time to each Board meeting. Second, earlier monthly Board meeting dates would allow the Retirement Bureau to make changes to PFRS members' accounts before the retired payroll deadlines. Finally, in the past, many holidays or other conflicts fell on the third Monday causing the Board to change its usual meeting date.

A 60-day comment period is provided and, therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

Full text of the proposal follows:

17:4-1.1 Board meetings (a) The Board of Trustees shall meet on the [third] second Monday of each month or at such other time as may be deemed necessary by the Board. (b) (No change.)


GENERAL ADMINISTRATION
NEW JERSEY STATE EMPLOYEES' CAFETERIA PLAN
ESTABLISHMENT OF PLAN; UNREIMBURSED MEDICAL SPENDING ACCOUNT

Adopted Amendments: N.J.A.C. 17:1-13.1 and 13.2

36 N.J. Reg. 1358(a)

Adopted March 15, 2004

The agency proposal follows:

Summary

The Division of Pensions and Benefits proposes to clarify at N.J.A.C. 17:1- 13.1 that part-time employees eligible for coverage under P.L. 2003, c.172 are not eligible for participation under Tax$ave. Current rules for the New Jersey State Employees Tax Savings Program (Tax$ave) at N.J.A.C. 17:1-13 restrict eligibility for participation to State employees who are eligible to participate in the State Health Benefits Program (SHBP). At the time these rules were established, every employee eligible to participate in the SHBP received employer-paid coverage. P.L. 2003, c.172 (N.J.S.A. 52:14- 17.33a) (Chapter 172), signed into law on September 4, 2003, allows a part- time State employee or a part-time faculty member at a public institution of higher education that participates in the SHBP to participate in the SHBP managed care plan for themselves and eligible dependents. Chapter 172 requires the employee or faculty member to pay the full cost of coverage plus the administrative cost, unless the employer is obligated to pay all or a portion of such costs in accordance with the provisions of a binding collective negotiations agreement and requires the State Health Benefits Commission to establish remittance procedures for the cost of the coverage. Since the new law does not create any additional benefits for these part-time employees other than this limited SHBP eligibility, participation in the Tax$ave would be a benefit not anticipated in the new legislation.

Current Tax$ave rules specify that the only medical expenses qualifying for reimbursement in the Unreimbursed Medical Flexible Spending Account are those expenses identified by the Internal Revenue Service (IRS) as being tax deductible. The IRS recently issued Revenue Ruling 2003-102 which permits the costs for antacids, aspirin, cough medicine, allergy medications and other over-the-counter drugs purchased without a prescription to be reimbursed through a flexible spending account (FSA) and enjoy the same tax-advantaged treatment as prescription drugs even though they are not tax deductible as a medical expense.

The IRS reached its decision to include the over-the-counter drugs by distinguishing between the definition of "medical care" and the definition of "qualified medical expenses" in the IRS Code. While "medical care" includes both prescription and nonprescription drugs, the latter are explicitly excluded from the definition of "qualified medical expenses," the definition that most health accounts currently use to determine eligibility for reimbursement. The IRS has determined that an expense for "medical care" can be excluded from income (not counted as an employee's income subject to tax) even though the definition of "qualified medical expenses" still applies for the purpose of itemizing medical expenses that can be deducted from income taxes owed, for people choosing to itemize deductions. Previously, the IRS took the position that "qualified medical expenses" applied in both cases, income tax exclusions and income tax deductions. This broader definition would allow employees to save if they use the pre-tax dollars in their FSA to pay for over-the-counter drugs.

The Division of Pensions and Benefits proposes to amend N.J.A.C. 17:1-13.2, Unreimbursed medical spending account, to include in the definition of qualified medical expenses, those expenses that meet the IRS' definition of medical care which are those costs for diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body (26 U.S.C. § 213(d)(1)).

The Division also proposes to add the acronyms IRS and UMSA after the initial use of their official titles and to clarify at N.J.A.C. 17:1-13.2(a)1 that these are examples of tax deductible medical expenses.

A 60-day comment period is provided that, therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

Full text of the proposal follows:

17:1-13.1 Establishment of plan [All] State employees eligible to participate in the State Health Benefits Program, except those part-time employees participating due to the provisions of P.L. 2003, c.172 (N.J.S.A. 52:14-17.33a), are eligible to participate in the New Jersey State Employees' Cafeteria Plan set forth in this subchapter.  In each calendar year, each employee may participate in one or more of the plan options described in this subchapter.

17:1-13.2 Unreimbursed medical spending account (a) Each employee may elect to reduce his or her salary, through regular payroll deductions, by a specified dollar amount to create an unreimbursed medical spending account (UMSA) to provide for the direct payment or reimbursement by the State, or its plan administrator, of any or all medical and dental expenses not reimbursed, or only partially reimbursed, under the employee's health benefit plan or any other benefit plan, and considered by the Internal Revenue Service (IRS) to be a tax deductible medical expense.  Also eligible for reimbursement are certain expenses for medical care, that is, costs for diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body, that the IRS determines may be reimbursed by an UMSA even though these expenses are not deductible for the purpose of itemizing medical expenses for Federal taxes. 1. Examples of eligible tax deductible medical expenses are orthodontia, surgery (including cosmetic surgery), and the deductible portion of medical and dental expenses under the employee's health benefits plan, as well as coinsurance amounts. 2.-3. (No change.)


STATE HEALTH BENEFITS COMMISSION
PROCUREMENT OF STATE HEALTH BENEFIT PROGRAM CONTRACTS

Adopted New Rules: N.J.A.C. 17:9-10

Cite as 36 NJR 1359(b) (SHBP)

Adopted March 15, 2004

The agency proposal follows:

Summary

N.J.S.A. 52:14-17.28 directs the State Health Benefits Commission (Commission) to contract for health benefits on behalf of eligible public employees and their dependents. It is the intent of the proposed new rules to establish procedures to be followed by the Commission in the procurement of health benefit contracts for eligible public employees and their dependents. Although N.J.S.A. 52:14-17.28 grants the Commission the ability to purchase health benefit contracts, the Commission has utilized the services of the State's purchaser, the Division of Purchase and Property (P & P), to date when publicly bidding SHBP contracts.

There are advantages to using the Commission's power to purchase. Health benefits-contracting requires significant knowledge of the health benefits industry, products, companies and other intricate issues and pitfalls included in picking one vendor over another. That experience and knowledge resides at the Commission and Division of Pensions and Benefits, the agency charged with the responsibility to administer the State Health Benefits Program (SHBP).

While many of the proposed rules are substantially similar to those of P & P found at N.J.A.C. 17:12, amendments have been made to customize them to the needs of the Commission and Division. New rules such as the one regarding negotiated procurements have been added. The proposed rules establish guidelines regarding the public bidding of SHBP contracts.

The proposed rules detail the purpose of this new subchapter, the source for public information, definitions, the bidding process, advertising, requirements for bidding, performance security, procurement methodology, notice of bidding opportunities, requirements for bidding, performance security, bid openings, bid errors, evaluation of bid proposals, evaluation of bid proposals permitting negotiation, preference laws for out-of-State vendors, protest procedures, appeals to the Commission, discovery procedures, contract execution, exceptions to sealed bidding, contract rescission, contract cancellation, waiver of time periods and authority to contract.

A 60-day comment period is provided and, therefore, pursuant to N.J.A.C.

1:30-3.3(a)5, this proposal is not subject to the provisions of N.J.A.C.

1:30-3.1 and 3.2 governing rulemaking calendars.

Full text of the proposed new rules follows:

SUBCHAPTER 10. PROCUREMENT OF STATE HEALTH BENEFIT PROGRAM CONTRACTS

17:9-10.1 Purpose

This subchapter establishes the rules governing the procurement of contracts by the State Health Benefits Commission for health benefit services and related actuarial and auditing services. The Commission, created by Section 3 (N.J.S.A. 52:14-17.26) of the New Jersey Health Benefits Program Act, P.L. 1961, c.49 (N.J.S.A. 52:14-17.25 et seq.) as amended and supplemented, is responsible for negotiating and arranging for the purchase of such services.

17:9-10.2 Source for public information

The public may obtain information concerning the Commission's procurement program and pending procurements by writing to the Director, Division of Pensions and Benefits, PO Box 295, Trenton, New Jersey 08625-0295.

17:9-10.3 Definitions

The following words and terms, as used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise:

"Auctioning" means, in a negotiated procurement, the practice of promoting price bidding between bidders by disclosing other bidders' prices and/or holding repeated rounds of best and final offers.

"Best and final offer" means, in a procurement permitting negotiations, the bid proposal resubmitted by the bidder at the end of negotiations.

"Bidder" refers to the vendor submitting a bid proposal in response to a Request for Proposal.

"Bid proposal" refers to the bidder's offer to furnish services in response to a Request for Proposal.

"Bid list" refers to a list of vendors maintained by the Division of Pensions and Benefits who have expressed an interest in submitting bid proposals in response to future Requests for Proposals.

"Bypass" refers to a contract award to other than the lowest priced responsive bidder. A bypass occurs when the Commission determines that the bid proposal that is most advantageous to the State is not the lowest priced, responsive bid proposal.

"Commission" means the State Health Benefits Commission.

"Competitive range" refers to those responsive bid proposals determined to have a reasonable possibility of being selected for contract award.

"Contract" is a written agreement between the Commission and the contractor setting forth obligations, including: performance of work, furnishing of labor and materials, and the basis of payment.

"Contract documentation" refers to paperwork verifying that the selected bidder has satisfied the conditions precedent to contract execution. Examples include: evidence of compliance with State Affirmative Action requirements, N.J.S.A. 10:5-31 et seq.; evidence of compliance with the MacBride principles of nondiscrimination in employment, N.J.S.A. 52:34-12.2; evidence of business registration with the Division of Revenue; required certificates of insurance; and required performance security.

"Contract execution" refers to the signing of the contract by the selected bidder and the Director following Commission approval and the selected bidder's submission of contract documentation.

"Contractor" refers to the individual, partnership, firm, corporation, company, or joint venture contracting with the Commission for the performance of the work that is the subject of the Request for Proposal.

"Day" means business day, not including Saturday, Sunday or a State legal holiday.

"Director" refers to the Director of the Division of Pensions and Benefits.

"Division" refers to the Division of Pensions and Benefits.

"Evaluation committee" refers to a formal selection committee established by the Director to evaluate bid proposals received in response to a Request for Proposal on the basis of price and other factors, as set forth in the Request for Proposal.

"Evaluation criteria" refers to factors set forth within the Request for Proposal, usually weighted, specifying the basis for the technical evaluation of bid proposals received.

"Filed" means received by the Director.

"Negotiation" refers to discussions conducted with responsive bidders whose bid proposals are determined to be within the competitive range.

"Notice of Intent to Award" refers to the Director's correspondence to all bidders advising of the Commission's contract award decision.

"Performance security" means a guarantee, in the form of a deposit or a bond, submitted by the selected bidder subsequent to the Notice of Intent to Award and prior to contract execution, that the selected bidder will complete the contract and that the Commission will be protected from loss in the event the selected bidder fails to complete the contract.

"Protest" refers to a timely challenge of a Request for Proposal requirement or to the Commission's contract award decision.

"Request for Proposal" or "RFP" refers to all documents, whether attached or incorporated by reference, used for soliciting bid proposals for the services specified therein.

"Responsible bidder" refers to a bidder who has demonstrated integrity and the capability to successfully provide the services being procured.

"Responsive bidder" refers to a bidder whose bid proposal conforms to all material requirements of the RFP.

"State" refers to the State of New Jersey.

"Technical leveling" means, in a negotiated procurement, helping a bidder bring its bid proposal up to the level of other bid proposals through successive rounds of negotiations by pointing out the weaknesses that remain in the bid proposal due to the bidder's lack of diligence, competence or inventiveness.

"Technical transfusion" means, in a negotiated procurement, the disclosure of the contents of one bidder's bid proposal to another bidder to help the other bidder improve its bid proposal.

17:9-10.4 Procurement methodology

(a) All purchases shall be through formal, advertised sealed bidding, except as provided in this subchapter.

(b) The Director shall prepare the RFP for formal, advertised, sealed bidding at the request of the Commission.

(c) The Director shall structure the RFP for formal, advertised, sealed bidding to provide for a single contract award to a single bidder, unless contract awards to two or more bidders are permitted as hereinafter provided in this subchapter.

(d) The Director may structure an RFP for formal, advertised, sealed bidding to include multiple price lines encompassing more than one service or group of services, with a separate contract award for each price line.

(e) The Director may structure an RFP for formal, advertised, sealed bidding to be awarded to two or more bidders on the basis of one or more of the following criteria:

1. The anticipated demand for health care services by employees of the State and their dependents and employees and dependents of participating local government employers and the ability of potential bidders to meet the anticipated demand;

2. The need for comprehensive in-State and out-of-State health care networks and/or the need for diversity in health care plans offered; and/or

3. The need for cost efficient, timely delivery of auditing and actuarial services.

(f) The Director may structure the RFP for formal, advertised, sealed bidding to provide for negotiation.

17:9-10.5 Notice of formal, advertised, sealed bidding opportunities

(a) A notice of bid opportunity shall be advertised in newspapers or other such media as allowed by law and selected by the Commission, as will give best notice thereof to bidders. Advertisements shall be placed a minimum of 30 calendar days in advance of bid opening.

(b) Notice of bid opportunity and the RFP shall be published on the Division's Web site a minimum of 30 calendar days in advance of bid opening.

(c) If an amendment to a published RFP is necessary, notice of the amendment and the amendment shall be published on the Division's Web site a minimum of five working days in advance of bid opening.

(d) The Division shall maintain a list of vendors having expressed an interest in bidding in response to a particular contract initiative. Vendors on the list shall be provided e-mail notice of the publication on the Division's Web site of any RFP that they have expressed an interest in receiving and e-mail notice of the publication on the Division's Web site of any subsequent amendment to such RFP. However, the mere placement of a vendor's name on the bid list does not create an absolute entitlement to notice. It is the vendor's responsibility to exercise due diligence in reviewing legal notices and the Division's Web site to ensure its participation in bidding opportunities.

17:9-10.6 Requirements for formal, advertised, sealed bidding

(a) In order to be eligible for consideration for award of contract, the bidder's bid proposal must:

1. Be submitted on or before the opening date and time and at the place specified in the RFP;

2. Be signed by an individual with the authority to legally bind the bidder;

3. Include all required completed forms;

4. Be accompanied by bid security when required;

5. Include pricing information;

6. Be preceded by the bidder's attendance at any pre-bid conference for which attendance is mandatory. However, the Director reserves the right to allow a vendor to meet a pre-bid conference attendance requirement by listening to a tape recording of the pre-bid conference. This right may be exercised by the Director upon a vendor's verifiable demonstration of extenuating circumstances, which prevented attendance, or for other factors deemed, by the Director, to be in the State's best interest;

7. Contain initials of an individual with the authority to legally bind the bidder adjacent to any price alterations. If a unit price in a bid proposal has been altered or appears to be an alteration, the initials must appear adjacent to the alteration. Examples of alterations include, but are not limited to, cross outs, erasures, whiteouts, writeovers, and strikeovers, with re-entered prices;

8. Be prepared in ink or typewritten. If information essential to a bid evaluation, including, but not limited to, price, terms and production description, is submitted in pencil, the bid proposal shall be rejected unless  that same essential information appears elsewhere in the bid proposal, either typewritten or printed, and provided that the information is entirely consistent with the information submitted in pencil and does not invite any other interpretation;

9. Include a completed Ownership Disclosure Form or have a completed Ownership Disclosure Form on file with the State, in conformance with N.J.S.A. 52:25-24.2; and

10. Be sealed. Telephone, telefacsimile or electronic bid proposals will not be accepted for publicly advertised bid solicitations requiring the submittal of sealed bids.

(b) Any bid proposal failing to comply with the provisions of (a) above shall be subject to automatic rejection.

17:9-10.7 Performance security

(a) Based upon the Director's review of market conditions and evaluation of potential risk to the Commission and the State, the RFP may require that performance security be posted by the selected bidder prior to contract execution.

(b) Performance security, in the amount set forth in the RFP, shall consist of a certified or cashier's check drawn to the order of "New Jersey State Health Benefits Commission," a performance bond issued by an insurance or security company authorized to do business in the State of New Jersey, or an irrevocable letter of credit issued by a Federally insured financial institution and naming the "New Jersey State Health Benefits Commission" as beneficiary.

17:9-10.8 Bid opening

(a) Bid proposals must be received prior to or at the time and place designated in the RFP for bid opening. Late bid proposals will be rejected. The Director may extend the time for bid opening when a vendor notifies the Director of the vendor's intent to bid but, due to an emergency, timely delivery of the bid proposal is not possible. The bidder making such request must do so prior to the time of the scheduled bid opening. If the Director determines that a delayed bid opening is in the State's best interest, the Director shall designate a revised bid opening time.

(b) For RFPs not having a negotiation component, the bidder's name, address and bid pricing will be read at bid opening. Bid proposals will be made available for public review thereafter upon request and as scheduled by the Director.

(c) For RFPs having a negotiation component, only the names and addresses of the bidders will be read at bid opening. Bid proposals shall be made available for public review, upon request and scheduling by the Director, after issuance of the Notice of Intent to Award by the Director.

(d) Each bid proposal and, if applicable, each best and final offer will be available for public inspection in accord with the Open Public Records Act, N.J.S.A. 47:1A-1 et seq. Within its bid proposal, the bidder must identify any data or materials it asserts are exempt from public inspection under the Act and explain the basis for such assertion. The assertion that the entire bid proposal or prices bid are exempt from public inspection under the Act is not acceptable and will result in the rejection of the bid proposal.

17:9-10.9 Bid errors

(a) Prior to bid opening, a bidder discovering an error in its bid proposal may withdraw the bid proposal by notifying the Director in writing. The bidder may submit a revised bid proposal provided it is received prior to bid opening.

(b) After bid opening, a bidder discovering an error in its bid proposal must make written application to the Director for authorization to withdraw its bid proposal. The Director shall consider the bidder's good faith in making the request, as evidenced by whether the mistake relates to a material term of the RFP; whether the mistake occurred notwithstanding the bidder's exercise of reasonable care; and whether the State would be significantly prejudiced by granting the request.

17:9-10.10 Evaluation of bid proposals

(a) An evaluation committee shall be appointed by the Director prior to bid opening to evaluate bid proposals received.

(b) Prior to bid opening, the evaluation committee shall establish weights for the evaluation criteria set forth in the RFP. Weights established will be date- stamped prior to bid opening. For RFPs having a negotiation component, weights established will not be made public until after the Director's issuance of the Notice of Intent to Award. For RFPs not having a negotiation component, weights established will be made public at bid opening.

(c) Bid proposals shall be reviewed by the evaluation committee to ensure that each meets the requirements for bidding set forth at N.J.A.C. 17:9-10.6 and is responsive to the material requirements of the RFP. A bid proposal not meeting the requirements for bidding set forth at N.J.A.C. 17:9-10.6 and/or not responsive to the material requirements of the RFP shall receive no further consideration.

(d) The evaluation committee may request a bidder to clarify its bid proposal. The process of clarification, however, is not an opportunity for a bidder to revise or modify its bid proposal.

(e) Responsive bid proposals in the competitive range will be evaluated by the evaluation committee on the basis of price and the evaluation criteria set forth in the RFP.

(f) The evaluation committee may recommend bypassing a lower priced responsive bid proposal on the basis of:

1. The superiority of the higher priced responsive bid proposal;

2. Issues relating to the integrity of the bidder submitting the lower priced responsive bid proposal; and/or

3. The documented poor performance of the bidder submitting the lower priced responsive bid proposal.

(g) The evaluation committee shall submit a contract award recommendation, based on price and the evaluation criteria in the RFP, to the Director.

(h) The Director shall review the evaluation committee's contract award recommendation and any other documentation the Director deems relevant. The Director shall submit the evaluation committee's contract award recommendation, and any comments the Director may have relating thereto, to the Commission for consideration.

(i) The Commission shall review the evaluation committee's contract award recommendation, the Director's comments, if any, and any other documentation the Commission deems relevant. The Commission shall make a decision to award or not award the contract on the basis of price and the evaluation criteria set forth in the RFP.

(j) In the event the decision of the Commission is to award a contract, the Director shall issue a Notice of Intent to Award to the selected bidder. The Director shall provide a copy of the Notice of Intent to Award to all bidders. The Notice of Intent to Award shall identify all outstanding contract documentation and the time being afforded the selected bidder to submit all outstanding contract documentation to the Director. The selected bidder's failure to provide all outstanding contract documentation to the Director within the time afforded shall constitute cause for the Commission to rescind the Notice of Intent to Award. In such instance the Commission may instruct the Director to reissue the Notice of Intent to Award to another bidder.

(k) In the event the decision of the Commission is not to award a contract, the Director shall provide written notice to all bidders.

17:9-10.11 Evaluation of bid proposals permitting negotiation

(a) In addition to the requirements for the evaluation of bid proposals set forth at N.J.A.C. 17:9-10.10, the following requirements shall apply to negotiated procurements:

1. The evaluation committee's option to negotiate shall be expressly set forth in the RFP;

2. Mandatory requirements of the RFP are not negotiable;

3. Negotiations are limited to responsive bidders in the competitive range;

4. The evaluation committee shall notify each responsive bidder in the competitive range in general terms of the deficiencies in its bid proposal;

5. The evaluation committee may hold more rounds of negotiations with one responsive bidder in the competitive range than with another;

6. Negotiations shall be structured to safeguard information and ensure that all responsive bidders in the competitive range are treated fairly. Technical transfusion, technical leveling and auctioning are precluded;

7. Following completion of negotiations, the evaluation committee shall provide written notice to all responsive bidders in the competitive range that negotiations have concluded. Such notice shall advise all responsive bidders in the competitive range of the time and place for submission of best and final offers;

8. Each responsive bidder in the competitive range is limited to one best and final offer. The best and final offer can modify any aspect of the bid proposal, provided mandatory requirements of the RFP are satisfied; and

9. Best and final offers are not negotiable. Evaluation of best and final offers by the evaluation committee shall be on the basis of price and the evaluation criteria set forth in the RFP.

17:9-10.12 Preference laws; out-of-State bidders

(a) Pursuant to N.J.S.A. 52:32-1.4, when another state has residential preference laws, rules or regulations that disadvantage a bidder not having its principal place of business in that state, the Commission may reciprocally apply such disadvantage to an out-of-State bidder having its principal place of business in such state.

(b) The Commission may waive the reciprocal application of another state's residential preference law, rules or regulations when such waiver would be in the best interest of the Commission and the State.

17:9-10.13 Protest

A protest of either an RFP requirement or a contract award decision of the Commission is not a contested case subject to the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq.

17:9-10.14 Protest of an RFP requirement

(a) A vendor objecting to an RFP requirement should submit a written protest to the Director no later than 15 days prior to bid opening to permit the Director adequate time to review the merits of such protest and issue a decision prior to bid opening.

(b) Such protest shall include all arguments, materials or other documentation supporting the vendor's objection to the RFP requirement.

(c) A protest of an RFP requirement will not be considered after bid opening.

(d) In the event a protest results in an amendment to an RFP requirement, such amendment shall be published in accordance with N.J.A.C. 17:9-10.5. In such event, the Director may reschedule bid opening to ensure the receipt of responsive bid proposals.

(e) In the event a protest results in an amendment to an RFP requirement 15 or fewer days prior to the originally scheduled bid opening, any protest of an RFP requirement thereafter shall be limited to the RFP amendment.

(f) Appeal from the Director's decision shall be to the Commission. Such appeal must be filed with the Director within five days of receipt of the Director's decision. If necessary, the Director shall reschedule bid opening to permit time for the Commission's consideration of an appeal and issuance of a final agency decision.

17:9-10.15 Protest of a Commission contract award decision

(a) Protest of a Commission contract award decision must be filed with the Director within 10 days of the bidder's receipt of the Notice of Intent to Award.

(b) The protest must set forth in detail the specific grounds for challenging the Commission's contract award decision. The protest must include all arguments, materials and/or other documentation that may support the protester's position that the Commission's contract award decision was in error.

(c) The Director shall afford the selected bidder the opportunity to comment on the merits of the protest. Upon receipt of the selected bidder's comments, if any, the Director shall review the written protest, the selected bidder's comments, if any, the RFP, the bid proposal(s) in question, pertinent administrative rules, statutes and case law and any related documentation the Director deems appropriate. Thereafter, the Director shall issue a written decision.

(d) Appeal from the Director's decision shall be to the Commission. Such appeal must be filed with the Director within five days of the protestor's and/or selected bidder's receipt of the Director's decision.

17:9-10.16 Appeal to Commission

(a) In the event of an appeal to the Commission from the Director's decision relating to either a protest of an RFP requirement or a protest of a Commission contract award decision:

1. The Commission shall have sole discretion to determine if an oral presentation by the protester is necessary to reach an informed final agency decision on the merits of the protest. In the event the Commission determinesthat it can reach an informed final agency decision upon a review of the written record, such review shall constitute the informal agency hearing;

2. Oral presentations are fact-finding for the benefit of the Commission. The Commission has the discretion to limit attendance at an oral presentation to the protestor and, in the event the protest relates to a contract award decision, the selected bidder; and

3. The Commission may appoint a hearing officer. In such case, the hearing officer's report shall be advisory in nature. All parties shall receive a copy of the hearing officer's report and shall have 10 days to provide written comments or exceptions thereto to the Commission. Subsequent to the 10-day period for comments or exceptions, the Commission shall render its final agency decision.

17:9-10.17 Discovery procedures

The Director or the Commission is entitled to request, receive and review copies of any and all records and documents deemed relevant to the issues and arguments set forth in a protest. Upon receipt of such request, the protesting bidder or, in the event of a protest of a Commission contract award decision, the selected bidder shall promptly provide the requested records and documents free of charge in the time, place and manner specified. Failure to comply may, at the discretion of the Director or the Commission, constitute sufficient basis to resolve the protest against the noncomplying party. The Director or the Commission may also consider relevant information requested and received from other parties as deemed appropriate.

17:9-10.18 Contract execution

In the event a challenge to a Commission contract award decision is not filed within 10 days of the Director's issuance of the Notice of Intent to Award or, if filed, is resolved in favor of the selected bidder, and the selected bidder has submitted all required contract documentation to the Director, the Director will execute the contract with the selected bidder.

17:9-10.19 Exceptions to formal, advertised, sealed bidding

(a) The Commission may contract without formal, advertised, sealed bidding in one or more of the following situations:

1. Services to be performed are of a technical and professional nature;

2. Bid prices after advertising are not reasonable or independent, provided that each responsive bidder is provided the opportunity to submit revised prices;

3. The purchase is from the Federal or any State government or political subdivision thereof;

4. Public exigency, that is, life, health and/or other emergencies, requiring the immediate delivery of the services; and/or

5. Only one source of supply is available.

(b) Prior to finalization of any contract pursuant to (a) above, the proposed contractor shall provide the Director with evidence of compliance with Ownership Disclosure requirements, N.J.S.A. 52:25-24.2; evidence of compliance with State Affirmative Action requirements, N.J.S.A. 10:5-31 et seq.; evidence of compliance with MacBride principles of nondiscrimination in employment, N.J.S.A. 52:34-12.2; evidence of business registration with the Division of Revenue; required certificates of insurance; and required performance security.

(c) Prior to recommending a contract award to the Commission for approval pursuant to (a)1 and/or 2 above, the Director shall seek competition from a minimum of three firms. Proposals received shall be evaluated on the basis of price and other factors.

17:9-10.20 Contract rescission

(a) The Commission may, in the following circumstances, rescind a contract and obtain services from another vendor, charging the defaulting contractor the difference in price, if any, and administrative costs incurred:

1. Refusal of a contractor to bring services into compliance with the contract in the time or manner specified by the Director or the Commission; and/or

2. Refusal of a contractor to answer inquiries from the Division, the Director or the Commission within a reasonable period following receipt thereof.

17:9-10.21 Mutual cancellation of contract

Upon receipt of a written request from a contractor, the Commission may, under extraordinary circumstances, agree to a mutual cancellation of the contract. The Commission may require the contractor pay the difference in price, if any, associated with securing the services from another source and any administrative expenses associated therewith.

17:9-10.22 Waiver of time periods

The Director or the Commission may, in instances where public exigency exists or where there is potential for substantial cost benefit or other advantage, modify or amend the time periods set forth in this subchapter. In such an instance, the Director or the Commission shall give adequate notice to the parties involved.

17:9-10.23 Authority to contract

Nothing in the rules set forth in this subchapter shall preclude the Commission from requesting the Division of Purchase and Property to contract on the Commission's behalf for medical benefit services and related actuarial and auditing services. In such instance, the procurement rules, policies and procedures of the Division of Purchase and Property, N.J.A.C. 17:12, shall govern.


PUBLIC EMPLOYEES' RETIREMENT SYSTEM
ELECTION OF MEMBER-TRUSTEE

Adopted Amendment: N.J.A.C. 17:2-1.4

Cite as 36 N.J. Reg. 1198(a)

Adopted March 1, 2004

The agency proposal follows:

Summary

The Public Employees' Retirement System (PERS) proposes to amend N.J.A.C. 17:2-1.4 due to recent concerns regarding identity theft, as well as the advent of electronic voting.  The Division currently uses an outside vendor to mail and tabulate approximately 236,000 ballots for members of the Public Employees' Retirement System.  Members may vote using either the traditional paper ballots or they may also vote using fax, touch-tone phone and Internet access.  Only the paper ballot has required a member's signature.  A member would sign the ballot on the outside of the envelope and the signature would then be removed by the vendor to insure that the ballot is secret.  Members have expressed concern that someone other than the vendor could detach their signature.  They have pointed out that none of the other methods of voting require signatures.

In response to the members concerns, the PERS Board of Trustees proposes to amend the voting requirements to eliminate the need for signatures.  The vendor no longer uses color-coded ballots, and so the Board also proposes to eliminate this requirement from N.J.A.C. 17:2-1.4(e)1iv.

A 60-day comment period is provided for this notice of proposal and, therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

Full text of the proposal follows:

17:2-1.4 Election of member-trustee

(a)-(d) (No change.)

(e) The following applies to distribution of election packets:

1. The Board reserves the right to authorize a vendor to collect votes through one or more of the following election processes. All active eligible members shall have an opportunity to cast a ballot through one of the following:

i.-iii. (No change.)

iv. [Color-coded paper] Paper ballot (postage-paid, self-seal return mailer).

2. For each eligible voter, there shall be forwarded to the certifying officer individual member packets with instructions for balloting which shall include the following information:

i.-iii. (No change.)

iv. Instructions on how to properly cast a paper ballot, including notification that shall advise the member that [the vendor shall sever the envelope containing the voter's signature from the ballot, thus assuring a secret ballot. Unsigned ballots,] mutilated ballots, illegible ballots, ballots with write-in votes, ballots with multiple votes or ballots where it cannot be determined for whom the member intended to vote [for] shall be declared invalid and not considered in the final election count;

v. (No change.)

(f) The Board shall assess the percentage of returned votes after the conclusion of each respective election and determine whether or not the paper ballot should continue to be incorporated in the election packet as denoted in (e) above.  The Secretary shall notify the vendor handling the election of the Board's decision regarding continued inclusion of the paper ballot in the initial election packet. If members cannot cast an electronic ballot, they shall have an opportunity to cast a paper ballot. If the Board determines that paper ballots no longer need to be included in the initial election packet, then the following apply to the distribution of paper ballots upon member request:

1.-2. (No change.)

[3. The instructions shall also advise that the vendor shall sever the envelope containing the voter's signature from the ballot, thus assuring a secret ballot.]

[4.] 3.  [Unsigned ballots, mutilated] Mutilated ballots, illegible ballots, ballots with write-in votes, ballots with multiple votes or ballots where it cannot be determined whom the member intended to vote for shall be declared invalid and not considered in the final election count.

(g)-(j) (No change.)


GENERAL ADMINISTRATION
PURCHASE TERMS; GRACE PERIOD

Adopted Amendment: N.J.A.C. 17:1-4.2

Cite as 36 N.J. Reg. 661(a)

Adopted February 2, 2004

Summary

The Division of Pensions and Benefits has begun publicizing the availability of applying tax-deferred contributions to the cost of a purchase of service credit.  For the past year, the Division has been accepting rollovers from various financial plans and has realized the 60-day grace period for making purchases of service does not provide enough time for rollovers.  A number of plans only issue rollovers on a monthly basis. 

The Division proposes to amend N.J.A.C. 17:1-4.2 by changing the 60-day grace period for purchases to a 90-day period.  This should provide enough time for the member to contact the financial plan and for the plan to issue the rollover to the Division.  If the purchase is not authorized within the 90-day period, then the cost quotation would be recalculated.

A 60-day comment period is provided for this notice of proposal; therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this notice of proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

Full text of the proposal follows:

17:1-4.2 Purchase terms; grace period

A member who receives a written optional purchase cost quotation is given a [60-day] 90-day grace period to confirm that he or she wishes to make the purchase of credit. If the confirmation of the purchase is not received from the member within [60] 90 days, the cost of purchase must be recalculated to determine if any change in the cost is warranted as a result of change in age or salary.


PUBLIC NOTICE
Cite as 35 N.J.R. 4791(b)

STATE HEALTH BENEFITS COMMISSION
STATE HEALTH BENEFITS PROGRAM

NOTICE OF INCREASES IN THE AMOUNTS OF CO-PAYMENTS
AND THE MAXIMUM OUT-OF-POCKET EXPENSES
UNDER THE RETIREE PRESCRIPTION DRUG CARD PLAN

Take notice that N.J.A.C. 17:9-6.10(i) requires the State Health Benefits Commission to publish notice of any increases in the amounts of the co-payments and the maximum out-of-pocket expenses under the retiree prescription drug card plan.  After a review of the rising costs of prescription drugs and consultation with the Commission's actuarial consultant, the Commission has determined that an increase in co-payments and the maximum out-of-pocket expenses is necessary (see N.J.A.C. 17:9-6.10(f) and (h)).  

Therefore, in accordance with the provisions of this pilot program and the formula for increasing co-payments, effective January 1, 2004, co-payments for retirees enrolled in the Traditional Plan and NJ PLUS will be as follows:

Type of Drug Product  Retail Pharmacy Mail-Order Pharmacy
Generic $6.00 $6.00
Preferred Brand  $13.00 $19.00
Other Brands  $26.00 $32.00

The maximum annual out-of-pocket expenses for prescription drug benefits for a participant will increase from $397.00 to $474.00.


POLICE AND FIREMEN'S RETIREMENT SYSTEM
ELECTION OF ACTIVE MEMBER-TRUSTEE
ELECTION OF RETIRED MEMBER-TRUSTEE

Cite as 36 N.J. Reg. 439(a)

Adopted 1/20/04

Summary

The Police and Firemen's Retirement System (PFRS) proposes to amend N.J.A.C. 17:4-1.4 and 1.13 due to recent concerns regarding identity theft as well as the advent of electronic voting.  The Division currently uses an outside vendor to mail and tabulate ballots for approximately 40,000 police and 6,500  fire members of the PFRS.  Members may vote using either the traditional paper ballots or they may also vote using fax, touch tone phone and internet access.  Only the paper ballot has required a member's signature.  A member or retiree would sign the ballot on the outside of the envelope and the signature would then be removed by the vendor to insure that the ballot is secret.  Members have expressed concern that someone other than the vendor could detach their signature.  They have pointed out that none of the other methods of voting require signatures. 

In response to the members' concerns, the PFRS Board of Trustees proposes to amend the voting requirements to eliminate the need for signatures, by deleting N.J.A.C. 17:4-1.3(f)3 and 1.13(e)4 and 5, and amending N.J.A.C. 17:4- 1.13(e)6. The Board also proposes to eliminate the requirement at N.J.A.C. 17:4-1.13(d)4 that the retired member provide a social security number on the petition for reasons of security and would add that the retired  member could use the retirement number, instead.  In N.J.A.C. 17:4-1.4(b) the word "firemen" has been amended to "firefighter" in order to make the rule gender neutral.

The vendor no longer uses color-coded ballots, and so the Board also proposes to eliminate this requirement from N.J.A.C. 17:4-1.4(e)1iv.  The Board also proposes to correct a grammatical error in N.J.A.C. 17:4-1.13(d)3 by making the word "petitions" singular and deleting the word "signature."  The Board also wishes to correct a grammatical error at N.J.A.C. 17:4-1.4(f) 3 (current (f)4) and 1.13(e)5 (current (e)7) by moving the preposition "for" before the word "whom."  Finally, to be consistent, the Board proposes to add the phrase "deemed to be" prior to "elected" at N.J.A.C. 17:4-1.4(h)2 and 1.13(e)6 (current (e)8).

A 60-day comment period is provided, and, therefore, pursuant to N.J.A.C.

1:30-3.3(a)5, this proposal is not subject to the provisions of N.J.A.C.

1:30-3.1 and 3.2 governing rulemaking calendars.

Full text of the proposal follows:

17:4-1.4 Election of active member-trustee

(a) (No change.)

(b) Eligible candidates shall include any active member of the Police and Firemen's Retirement System. Only police members may seek police seats, and only fire members may seek [firemen] firefighter seats on the Board of Trustees. All candidates shall comply with any and all requirements as provided by law and these rules. Any candidate who fails to comply with the law and these rules is automatically disqualified as a candidate.

(c)-(d) (No change.)

(e) The following apply to distribution of election packets:

1. The Board reserves the right to authorize a vendor to collect votes through one or more of the following election processes. All active eligible members shall have an opportunity to cast a ballot through one of the following:

i.-iii. (No change.)

iv. [Color-coded paper] Paper ballot (postage-paid, self seal return mailer).

2. For each eligible voter, there shall be forwarded to the certifying officer individual member packets with instructions for balloting which shall include the following information:

i.-iii. (No change.)

iv. Instructions on how to properly cast a vote, including notification that shall advise the member that [the vendor shall sever the envelope containing the voter's signature from the ballot, thus assuring a secret ballot. Unsigned ballots] mutilated ballots, illegible ballots, ballots with write-in votes, ballots with multiple votes or ballots where it cannot be determined for whom the member intended to vote shall be declared invalid and not considered in the final election count;

v.-ix. (No change.)

(f) The Board shall assess the percentage of returned votes after the conclusion of each election and determine based upon an analysis of the frequency of use of the paper ballots versus the cost of providing the paper ballots whether or not a paper ballot should continue to be incorporated in the election packet in future elections as denoted in (e) above. The Secretary shall notify the vendor handling the next election of the Board's decision regarding continued inclusion of the paper ballot in the initial election packet. If members cannot cast an electronic ballot, they shall have an opportunity to cast a paper ballot. If the Board determines that paper ballots shall no longer be included in the initial election packet, then the following apply to the distribution of paper ballots upon member request:

1.-2. (No change.)

[3. The instructions shall also advise that the vendor shall sever the envelope containing the voter's signature from the ballot, thus assuring a secret ballot.]

[4. Unsigned ballots, mutilated] 3. Mutilated ballots, illegible ballots, ballots with a write-in vote, multiple votes or any other ballot where it cannot be determined for whom the voter intended to vote [for] shall be declared invalid and not considered in the final election count.

(g) (No change.)

(h) The following apply to vote tabulation:

1. (No change.)

2. The candidate receiving the highest number of all legal votes contained in (e) and (f) above shall be [deemed to be] elected to the position.

3.-4. (No change.)

(i)-(j) (No change.)

17:4-1.13 Election of retired member-trustee

(a)-(c) (No change.)

(d) The following shall apply to nominating petitions:

1.-2. (No change.)

3. The nominating petition[s] forms for retired member-trustees shall explain that a minimum of 100 retired members [signature] who are eligible to vote for the positions are required to sign the nominating petition for the candidate.

4. The nominating petition form shall require the candidate's name and the name of the employing agency from which the member retired and shall require the social security number or retirement number of each retired member. If the social security number or retirement number is not provided, the name shall be disqualified.

5.-8. (No change.)

(e) The following shall apply to the distribution of ballots:

1.-3. (No change.)

[4. The ballot will require the signature of the retired member identified upon it. Signatures on ballots or envelopes shall be assumed to be the signature of the voter unless challenged within 20 days of the closing of balloting.]

[5. The instructions shall also advise that the signatures identifying the voter shall be severed from the ballot before it is removed from the envelope, thus assuring a secret ballot.]

[6. Failure to sign a ballot or voting]

  4. Voting for more candidates than instructed will be cause for rejection of the ballot.

[7.]5. Mutilated ballots, illegible ballots, ballots with a write-in vote or multiple votes or any other ballot where it cannot be determined [who] for whom the voters intended to vote [for] shall be declared invalid and cannot be considered.

 [8] 6. The candidate receiving the highest number of legal votes shall be deemed to be elected to that position.

Recodify existing 9.-10. as 7.-8. (No change in text.)


Cite as35 N.J. Reg. 4148(b)

PUBLIC NOTICE
DIVISION OF PENSIONS AND BENEFITS

NOTICE OF PROPOSAL TO INCLUDE THE CIVIL SERVICE POSITIONS OF POLICE CHIEF, PALISADES INTERSTATE PARK COMMISSION,
POLICE LIEUTENANT, PALISADES INTERSTATE PARK COMMISSION, POLICE SERGEANT, PALISADES INTERSTATE PARK COMMISSION,
AND POLICE OFFICER, PALISADES INTERSTATE PARK COMMISSION IN THE POLICE ANDFIREMEN'S RETIREMENT SYSTEM

Take notice that in compliance with N.J.A.C. 17:4-2.1(h), and the recommendation of the Director of the Division of Pensions and Benefits, and as determined by the Board of Trustees of the Police and Firemen's Retirement System, the above titles meet the definition of "policeman" or "fireman" as defined by N.J.S.A. 43:16A-1(2). The Board of Trustees of the Police and Firemen's Retirement System hereby proposes to include the positions listed above as eligible titles in the Police and Firemen's Retirement System.  Interested parties should comment by October 2, 2003 to JoAnn Martin, Board and Trustee Administration, Division of Pensions and Benefits, PO Box 295, Trenton, NJ 08625-0295.


STATE HEALTH BENEFITS PROGRAM
COMMISSION MEETINGS

Adopted Amendment: N.J.A.C. 17:9-1.1

Cite as 36 N.J.R. 440(a)

Adopted January 20, 2004

The agency proposal follows:

Summary

P.L. 2003, c.71 provides for the addition of two members to the membership of the State Health Benefits Commission. The current members are the State Treasurer who serves as the Chairman, the Commissioner of Banking and Insurance, and the Commissioner of Personnel. The two new members will be a State employees' representative chosen by the Public Employees' Committee of the AFL-CIO and a representative chosen by the New Jersey Education Association, which represents the largest number of employees of employers other than the State participating in the State Health Benefits Program. N.J.A.C. 17:9-1.1(b) provides that any two members of the Commission shall constitute a quorum for the purpose of conducting business. If only two members are present, the vote must be unanimous for a motion to pass. It is the practice of the Treasurer and the Commissioners to designate one of their senior staff members to represent them on the Commission although the Treasurer and Commissioners retain the ability to serve directly on the Commission.

The Commission proposes to amend N.J.A.C. 17:9-1.1(b) by changing the quorum requirement from two to three in response to the addition of two new members of the Commission. The Commission also proposes to add the requirement that at least two of the quorum be ex-officio members to ensure that the Administration's position on a given issue is afforded appropriate weight. The Commission proposes to amend N.J.A.C. 17:9-1.1(c) by specifying who may designate an alternate to the Commission and that the designation must be in writing to provide better documentation.

The Commission proposes to add a new subsection (d) requiring that all Commission members and alternates shall complete mandatory training required by the implementing regulations of the Federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) prior to hearing any appeals before the Commission in order to become compliant with the new HIPAA regulations. In subsection (c), the Commission also proposes to change "he" to "the member" and to delete the phrase, "a person to represent him as his" before "alternate." These proposed amendments have already been proposed as part of the readoption of the rules of the State Health Benefits Program which were published for initial comment in the June 16, 2003 New Jersey Register at 35 N.J.R. 2587(a).

A 60-day comment period is provided and, therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.


GENERAL ADMINISTRATION
CALCULATION OF COST-OF-LIVING ADJUSTMENT (COLA) UNDER P.L. 2002, C.109

New Rule: N.J.A.C. 17:1-8.5

Cite as 35 N.J. Reg. 5551(a)

Adopted December 15, 2003

The agency proposal follows:

Summary

The Director of the Division of Pensions and Benefits was authorized by P.L. 2002, c.109 (Chapter 109) to promulgate rules and regulations as deemed necessary for the effective operation of that act.

Chapter 109 authorizes a qualifying county pension fund to adjust annually, by resolution of its board of chosen freeholders, the pension benefits paid to retired county employees or their survivors, in order to reflect annual increases in the cost of living. The cost-of-living adjustment (COLA) in the pension benefits paid would be equal to 60 percent of the change in the Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers (CPI-W), U.S. City Average, All Items, 1982-84=100.

For the State-administered retirement systems, the first COLA is available in the 25th month after retirement. Subsequent adjustments are computed annually and the adjustment is reflected in the February 1st check (which is payment for the month of January). If a beneficiary is entitled to receive a monthly pension upon the member's death, the COLA is applied to that benefit based upon the year of retirement. The rate of increase is equal to 60 percent of the percentage of change between the average CPI for the calendar year in which the member retired and the average CPI for the 12-month period ending August 31st immediately preceding the year when the adjustment is payable.

Chapter 109 defined the "benefit year" to be used in calculating the cost- of-living increase for retirants and beneficiaries of retirants who retired prior to calendar year 2003 as the calendar year 2003. Because Chapter 109 became effective immediately upon approval, the Division believes that the legislation intended the Division to use the CPI increases in effect for calendar year 2003 and so wishes to clarify through a rulemaking that while the benefit may become payable in 2003, the calculation for the increased benefit shall be done using the index used to calculate the COLA for those who have been retired for 25 months as of January 1, 2003 which would be the index for 2001.

The Division also wishes to clarify that the cost-of-living increases do not become effective until 25 months after the member's retirement date for those who do not have 25 months of retirement benefits as of the effective date of the county's resolution. The benefit year used to calculate these increases would be the year that the member retired.

N.J.A.C. 17:1-8.5 is proposed so as to be codified within Subchapter 8, Pension Adjustment Program, of new N.J.A.C. 17:1 as proposed at 35 N.J.R. 1854(a).

A 60-day comment period is provided for this notice of proposal; therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this notice of proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

17:1-8.5 Calculation of cost-of-living adjustment (COLA) under P.L. 2002, c.109

(a) The calculation for the increased benefit under P.L. 2002, c.109 for all employees who retired prior to January 1, 2001 shall be done by the Division of Pensions and Benefits using the calendar year 2001 average Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers (CPI-W), U.S. City Average, All Items.

(b) The calculation for the increased benefit under P.L. 2002, c.109 for all employees who retired effective January 1, 2001 or thereafter shall be done using the average CPI for the calendar year in which the employee retired.

(c) The calendar year used to calculate the above increases for beneficiaries will be based upon the year in which the employee retired. If the employee retired prior to January 1, 2001, the provisions of (a) above would apply. If the employee retired effective January 1, 2001 or thereafter, the provisions of (b) above would apply.

(d) On or before November 15th of each year, the Division of Pensions and Benefits shall provide employers participating under the provisions of P.L. 2002, c.109 with a rate chart to be used to calculate the above increases.


Consolidated Police and Firemen's Pension Fund

Readoption of N.J.A.C. 17:6

Cite as35 NJR 4124(a)

The rules of the Consolidated Police and Firemen's Pension Fund, N.J.A.C. 17:6 were readopted and may be read in the September 2, 2003 NJ Register. 



STATE HEALTH BENEFITS PROGRAM
COMMISSION MEETINGS

Proposed Amendment: N.J.A.C. 17:9-1.1

Cite as 35 N.J. Reg. 3745(a)

The agency proposal follows:

Summary

P.L. 2003, c.71 provides for the addition of two members to the membership of the State Health Benefits Commission. The current members are the State Treasurer who serves as the Chairman, the Commissioner of Banking and Insurance, and the Commissioner of Personnel. The two new members will be a State employees' representative chosen by the Public Employees' Committee of the AFL-CIO and a representative chosen by the New Jersey Education Association, which represents the largest number of employees of employers other than the State participating in the State Health Benefits Program. N.J.A.C. 17:9-1.1(b) provides that any two members of the Commission shall constitute a quorum for the purpose of conducting business. If only two members are present, the vote must be unanimous for a motion to pass. It is the practice of the Treasurer and the Commissioners to designate one of their senior staff members to represent them on the Commission although the Treasurer and Commissioners retain the ability to serve directly on the Commission.


Cite as 35 N.J. Reg. 2958(a)

PUBLIC NOTICE
TREASURY -GENERAL

DIVISION OF PENSIONS AND BENEFITS

NOTICE OF PROPOSAL TO INCLUDE THE CIVIL SERVICE POSITION OF FIRE FIGHTER/EMERGENCY MANAGEMENT TECHNICIAN
IN THE POLICE AND FIREMEN'S RETIREMENT SYSTEM

Take notice that in compliance with N.J.A.C. 17:4-2.1(h), and the recommendation of the Director of the Division of Pensions and Benefits, and as determined by the Board of Trustees of the Police and Firemen's Retirement System, the above title meets the definition of "policeman" or "fireman" as defined by N.J.S.A. 43:16A-1(2). The Board of Trustees of the Police and Firemen's Retirement System hereby proposes to include the positions listed above as eligible titles in the Police and Firemen's Retirement System.

Interested parties should comment by August 6, 2003 to JoAnn Martin, Board and Trustee Administration, Division of Pensions and Benefits, PO Box 295, Trenton, NJ 08625-0295.


Cite as 35 N.J.R. 2958(b)

PUBLIC NOTICE
TREASURY - GENERAL

DIVISION OF PENSIONS AND BENEFITS

NOTICE OF PROPOSAL TO INCLUDE THE CIVIL SERVICE POSITION OF: DIRECTOR OF CUSTODY OPERATIONS 1, DEPARTMENT OF CORRECTIONS;
DIRECTOR OF CUSTODY OPERATIONS 2, DEPARTMENT OF CORRECTIONS; SUPERVISING INTERSTATE ESCORT OFFICER, DEPARTMENT OF CORRECTIONS; SENIOR INTERSTATE ESCORT OFFICER, DEPARTMENT OF CORRECTIONS; AND SENIOR CORRECTIONS OFFICER, BILINGUAL SPANISH AND ENGLISH, DEPARTMENT OF CORRECTIONS IN THE POLICE AND FIREMEN'S RETIREMENT SYSTEM

Take notice that in compliance with N.J.A.C. 17:4-2.1(h), and the recommendation of the Director of the Division of Pensions and Benefits, and as determined by the Board of Trustees of the Police and Firemen's Retirement System, the above title meets the definition of "policeman" or "fireman" as defined by N.J.S.A. 43:16A-1(2). The Board of Trustees of the Police and Firemen's Retirement System hereby proposes to include the positions listed above as eligible titles in the Police and Firemen's Retirement System.

Interested parties should comment by August 6, 2003 to JoAnn Martin, Board and Trustee Administration, Division of Pensions and Benefits, PO Box 295, Trenton, NJ 08625-0295.


GENERAL ADMINISTRATION
VOLUNTEER EMERGENCY-WORKERS SURVIVORS PENSION

Adopted Rules: N.J.A.C. 17:1-11

Cite as 35 N.J. Reg. 4733(a)

October 7, 2003

The agency proposal follows:

Summary

P.L. 2002, c.134, which was effective on January 9, 2003, and is retroactive to January 1, 2000, revises the statute authorizing municipalities to pay pensions to the widow and minor children of volunteer personnel who die in the course of volunteer service.

Under this law, the class of personnel eligible for the pension, which presently includes volunteer firefighters, first aid workers, and rescue squad workers, is expanded to include emergency medical technicians.  The class of survivors eligible to receive the pension is expanded to include widowers as well as widows, children if the widow remarries and dependent parents if there is no widow or children.

The pension will now be paid by the State for eligible volunteers dying on or after January 1, 2000. Previously, the municipality was responsible for this benefit. The municipality must file a resolution with the State to provide this benefit. Pensions under this law commence in the first calendar year after the year of death, but no earlier than January 1, 2004.

The amount of the annual pension is $15,000 for unmarried widows, widowers and eligible children where there is no surviving spouse. An annual pension of $10,000 is payable to the eligible children if the widow or widower remarries. A $5,000 annual pension is payable to the dependent parents if there is no surviving spouse or eligible children.

The Treasurer of the State of New Jersey has assigned responsibility for the administration of this pension benefit to the Division of Pensions and Benefits. The Division is therefore proposing this new subchapter to describe the nature of the pension benefit, the pension application process, the pension approval process and when the pension terminates.

A 60-day comment period is provided for this notice of proposal; therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this notice of proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

Full text of the proposal follows:

SUBCHAPTER 11. [(RESERVED)] VOLUNTEER EMERGENCY-WORKERS SURVIVORS PENSION

17:1-11.1 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings unless the context clearly indicates otherwise:

"Child" means a deceased volunteer firefighter's, emergency medical technician's, or first aid or rescue squad worker's unmarried child or children who are:

1. Under the age of 18;

2. Eighteen years of age or older and enrolled in a secondary school;

3. Under the age of 24 and enrolled in a degree program in an institution of higher education for at least 12 credit hours in each semester; or

4. Of any age who, at the time of the volunteer emergency-worker's death, is disabled because of a mental or physical incapacity, is unable to do any substantial, gainful work because of the disability, and the disability has lasted or can be expected to last for a continuous period of not less than 12 months, as certified by a licensed medical doctor.

"Division" means the Division of Pensions and Benefits, the agency charged by the Treasurer with responsibility for administering the Volunteer Emergency-Workers Survivors Pension.

"First aid" or "rescue squad" means any duly incorporated first aid and emergency or volunteer ambulance and rescue squad association providing volunteer public first aid, ambulance or rescue services within the municipality.

"Dependent parent(s)" means the parent of the volunteer emergency-worker who is receiving at least one-half of his or her support from the volunteer emergency-worker in the 12-month period immediately preceding the volunteer emergency-worker's death in the course of volunteer service. The dependency of such a parent will be considered terminated by marriage of the parent subsequent to the death of the volunteer emergency-worker.

"Survivor's pension" means the benefit payable pursuant to N.J.S.A. 43:12-28.1.

"Volunteer emergency worker" means a volunteer firefighter, emergency medical technician, or first aid or rescue squad worker who has died as the result of injuries sustained in the course of performance of duty, not as a result of willful negligence, after January 1, 2000.

"Widow" means the woman to whom the volunteer emergency-worker was married on the date of his death and who has not remarried.

"Widower" means the man to whom the volunteer emergency-worker was married on the date of her death and who has not remarried.

17:1-11.2 Survivor's pension payable pursuant to N.J.S.A. 43:12- 28.1

(a) The survivor's pension pursuant to N.J.S.A. 43:12-28.1 shall equal $15,000 annually and shall be paid to the eligible widow or widower monthly until their death or remarriage, or, should there be no surviving widow or widower, to the eligible child or children of the volunteer emergency-worker split equally among the children.

(b) If the volunteer emergency-worker's surviving widow or widower remarries or dies leaving an eligible child or children, a survivor's pension equal to a total of $10,000 annually shall be paid to the child or children, split equally among the children.

(c) If the volunteer emergency-worker leaves no surviving widow, widower or child, a survivor's pension equal to a total of $5,000 annually shall be paid to the dependent parent(s).

17:1-11.3 Eligibility for a survivor's pension

(a) The governing body of any municipality served by the volunteer emergency-worker shall, by resolution, determine the eligibility for a survivor's pension of the widow, widower, children or parent of the volunteer emergency-worker who has died as the result of injuries sustained in the course of performance of duty, not as a result of willful negligence, as a member of the volunteer fire company or first aid or rescue squad on or after January 1, 2000.

(b) If the volunteer emergency-worker is sponsored by a county, the governing body of the municipality being served by the volunteer emergency- worker at the time of the incident resulting in the volunteer emergency- worker's death shall, by resolution, determine the eligibility for a survivor's pension of the widow, widower, children or parent of any volunteer emergency- worker who has died as the result of injuries sustained in the course of performance of duty, not as a result of willful negligence, within the borders of the municipality after January 1, 2000.

(c) The governing body of any municipality served by a volunteer fire company or first aid or rescue squad duly incorporated within the municipality shall, by resolution, determine the eligibility for a survivor's pension of the widow, widower, children or parent of any volunteer emergency worker who has died as the result of injuries sustained in the course of performance of duty, not as a result of willful negligence, outside of the borders of the municipality after January 1, 2000.

(d) The municipal governing body may determine that the widow, widower, children or parent of a volunteer emergency worker is eligible for a survivor's pension whenever a volunteer dies while responding to, preparing for, during or returning from an emergency to which he or she was properly dispatched.

17:1-11.4 Application for a survivor's pension

(a) After the municipal governing body determines, by resolution, the eligibility of a widow, widower, children or parent for a survivor's pension, a certified copy of the resolution shall be filed by the municipal clerk with the Division within 10 days of adoption.

(b) The resolution must be accompanied by a certified death certificate of the volunteer emergency-worker, a copy of the accident or police report, and an application for the survivor's pension. The application must be completed in all respects and filed with the Division on or before the date benefits are to begin. The application must include a copy of the marriage certificate in the case of a widow or widower, a copy of the birth certificate(s) in the case of a child or children, or a copy of the volunteer emergency worker's tax return indicating the dependency of the parent(s). The child's birth certificate must name the volunteer emergency worker as the child's parent, unless the child was legally adopted, in which case, a copy of legal documentation evidencing the adoption is required.

(c) The Division shall provide for payment of the survivor's pension, starting in January of the calendar year following the year of death of the volunteer emergency worker or the year next following the year in which P.L. 2003, c.134 (N.J.S.A. 43:12-28.1) was enacted, whichever is later.

(d) If the municipal governing body determines, by resolution, the eligibility of a widow, widower, children or parent for a survivor's pension, after the January of calendar year in which the benefit should have started, the Volunteer Emergency-Workers Survivors Pension shall be paid on a prospective basis only. Eligibility for benefits shall begin with the first month following the receipt of the resolution.

17:1-11.5 Ineligibility to receive two survivor's benefits

A survivor who is eligible for accidental death benefits under another State-administered retirement system cannot receive a survivor's pension through the Volunteer Emergency-Workers Survivors Pension for the same event.

17:1-11.6 Survivor pension benefits

(a) Payment of benefits to eligible survivors shall become effective February 1st, which is payment for January, of the calendar year following the year of the date of death of the volunteer emergency worker. Payment in the amount of [FN1]/12 of the annual benefit shall be made on a monthly basis. Payment shall terminate on the first of the month subsequent to the date in which the survivor no longer qualifies for the benefit.

(b) Eligibility for the payment of benefits to eligible children or parents after the remarriage or death of the widow or widower shall begin on the first of the month subsequent to the date of the widow or widower's death or remarriage. A new application must be filed with the Division before benefits may begin.


DIVISION OF PENSIONS AND BENEFITS
STATE HEALTH BENEFITS PROGRAM

Adopted Readoption with Amendments: N.J.A.C. 17:9
Adopted New Rules: N.J.A.C. 17:9-1.4 and 5.5
Adopted Repeals: N.J.A.C. 17:9-1.7, 2.8, 2.14, 3.3, 3.5, 3.6, 3.7, 5.2, 5.7, 5.8 and 9.8
Adopted Repeals and New Rules: N.J.A.C. 17:9-8.1, 9.1 and 9.5
Adopted Recodification with Amendments: N.J.A.C. 17:9-2.17 as 6.8

Cite as 35 N.J. Reg. 5149(a)

Adopted November 3, 2003

The agency proposal follows:

Summary

The State Health Benefits Commission (Commission)is responsible for reviewing the administrative rules governing the State Health Benefits Program (SHBP or Program) within N.J.A.C. 17:9. When it becomes aware of a change in the laws or a court decision that affects the Program, the administrativerules are reviewedand, if changes are mandated, then steps are taken to propose rule changes to conform to the new statute or court decision. Additionally, the rules are periodically reviewed to ascertain if the current rules continue to be necessary and/or cost efficient. Because the Division has provided a 60-day comment period, pursuant to N.J.A.C. 1:30-3.3(a)5, this proposal is excepted from the rule making calendar requirement.

Accordingly, the State Health Benefits Commission proposes to readopt the current rules within N.J.A.C 17:9, which expire on July 13,2003, with the following amendments, deletions and new rules, and to extend the expiration date for such rules to January 9,2004, pursuant to N.J.S.A.52:14B-5.1c. The current rules deal with the administration, coverage, dependents, employees, charges, retirement, termination, prescription drug program and dental expense programs associated with the SHBP.

Members and participating employers rely on the Program for the efficient and cost effective administration of their health benefits.They rely upon the presence and predictability of the rules that guide the administration of health benefits. The protections and guarantees that these rules afford the members mandate the rules' continued existence.

The rules proposed for readoption and the proposed amendments, repeals and new rules reflect the requirements for eligibility, enrollments, charges and terminations that are mandated within the statutes governing the State Health Benefits Program. Chapter 9 of Title 17 originally became effective prior to September 1,1969. Pursuant to Executive Order No.66 (1978), the Chapter was readopted in 1983. Pursuant to Executive Order No.66(1978), Chapter 9 expired on June 6,1988 and was subsequently adopted as new rules effective October 3,1988 and was the reafter readopted in 1993 and 1998.

Following is a discussion of the proposed amendments, repeals and new rules.

The Commission proposes to add "and Benefits " to the Division of Pensions and Benefits' name throughout these rules. The Commission also proposes to replace gender specific pronouns throughout this Chapter with the words "employee" or " member" and to capitalize the words "Traditional Plan."

Subchapter 1. Administration

Subchapter 1 concerns Commission meetings, what is considered a public record, appeals from Commission decisions, the voluntary termination of employers, notice, the default of an employer, guide lines regarding local employers and the purchase of contracts, employer incentives for employee nonenrollment, and definitions of words and terms used in this chapter.

The Commission proposes to amend N.J.A.C.17:9-1.1 by changing "chairman" to "Chairperson" and capitalizing "Secretary." The Commission also proposes to change the phrase, "designate a person to represent him as his" to" designate analternate."

The proposed amendment at N.J.A.C.17:9-1.2(a)changes the person that supervises the inspection of records from the"Chief of the Health Benefits Bureau" to the "Manager of Policy and Planning, State Health Benefits Program to better reflect the area responsible for the review of records. The proposed amendment at N.J.A.C.17:9-1.2(b) would delete the words"major medical" to broaden the definition of claims. Because this information is not to be released, the phrase "where no official purpose or reason for inspection is indicated" would also be deleted.

The proposed amendment at N.J.A.C.17:9-1.3(a) would deletet the reference to NJPLUS, because it would be included in N.J.A.C.17:9-1.3(b). The phrase, "one of the claims administrators for that plan" would be changed to "the claims administrator" because this section will only deal with the Traditional Plan. The existing condition that any and all appeal processes within the plan be exhausted before appealing to the Commission would be added to better correspond to actual practice and the requirements for appeal for members of NJ PLUS and HMOs found at subsection(b). The requirement that any appeal contain all supporting documentation would also be added for the purpose of avoiding administrative delay in the consideration of appeals. The proposed amendment to N.J.A.C.17:9-1.3(b) would spell out "health maintenance organization" before using the acronym "HMO" and would add NJ PLUS to this subsection. A new N.J.A.C.17:9-1.3(c)would be added regarding the appeal of administrative determinations. Existing subsections (c) and (d) would become (d) and (e) without change.

The proposed new rule at N.J.A.C.17:9-1.4 is needed to clarify what employers must do to begin participation in the SHBP, and when coverage would be effective for their employees. Proposed subsections (b) and (c) are derived, inpart, from N.J.A.C.17:9-1.5. Moving the provisions of N.J.A.C.17:9-1.5 to subsections (b) and (c) consolidates the information regarding employer participation and clarifies coverage effective dates.

The proposed amendments at N.J.A.C.17:9-1.5(b)would eliminate the words "for the purposes of local coverage." Only local participating employers may terminate coverage, so this phrase is not necessary. Proposed amendments would also delete the following:

"The Commission may, from time to time, establish a re-entry application period not to exceed 30 days for those employers who have terminated coverage. During this period, an employer who has terminated coverage only once may submit are solution for automatic re-entry. The re-entry shall be effective upon a date set by the Commission which date shall be not less than 60 days nor more than 365 days following the receipt of the resolution for re-entry. Automatic re-entry into the program will be permitted only once. " and move it to N.J.A.C.17:9-1.4(b), except for the words "only once, automatic," and the two sentences, "The re-entry shall be effective upon a date set by the Commission which date shall be not less than 60 days nor more than 365 days following the receipt of the resolution for re-entry. Automatic re-entry into the program will be permitted only once "which have been deleted in their entirety. The proposed amendments at N.J.A.C.17:9-1.5(b)1 would delete the first sentence and move the remainder to N.J.A.C.17:9-1.4(c). "Which date shall be not less than 60 days nor more than 365 days following the Commission's approval" would also be deleted, and the sentence, "The Commission may establish a rate differential based on the employer's experience" would be rule and brings all sections regarding entry and re-entry into another. The proposed amendments at N.J.A.C.17:9-1.5(d) would clarify that it applies only to "affected Consolidated Omnibus Budget Reconciliation Act of 1985, 29U.S.C.§§1161through1168 (COBRA) and retired members." This change is necessary because this rule does not apply to board of education retirees with free benefits, or to Medicare eligible teachers who had lesst han 25 years of service. A list of retirees and COBRA subscribers is only forwarded if the employer requests it, therefore, the Commissioner proposes to reword this section as follows: "Upon request from the employer, the Division shall forward a list of the names and addresses of terminating retirees and COBRA participants so that the employer may offer the man opportunity to enroll under its new group health insurance plan "to better reflect actual practice.

The proposed amendments at N.J.A.C.17:9-1.6(a) would eliminate the phrase, "for purposes of local coverage." Only local participating employers are covered by this section. The proposed amendments would change," coverage will terminate for all employers and their dependents covered by the employer" to "all members enrolled through the terminating employer." It is not technically accurate to say employers "provide coverage." The SHBP provides it for the period during which the employer is participating. The use of the word "employer" here appears to have been a typographical error. The phrase "will terminate" would be amended to" may terminate" as well to allow time fort he employer to make payment. Theproposed amendments at N.J.A.C.17:9-1.6(b) wouldcapitalizethewords"SecretaryoftheCommission"and would add "if applicable" at the end of the first sentence. The proposed amendments would replace the words "every participating employee, active" to "the employer, and affected COBRA and retired subscribers" because the Commission does not currently maintain active employees' addresses. The requirement that the employer notify its active employees would be moved to the last line.

The Commission proposes to repeal N.J.A.C.17:9-1.7. These guidelines were written in 1975 and are obsolete. Uniformity of benefits is still required under the statutes.

The proposed amendments at N.J.A.C.17:9-1.8 would add& quot;Except as allowed by P.L.1995,c.259,P.L.2001,c.189 and P.L.2003,c.3, which are codified a tN.J.S.A.52:14-17.31a" to the beginning of this rule and also "P.L.1995,c.259,P.L.2001,c.189 and P.L.2003,c.3 allow a municipality, a municipal authority created by amunicipality under the municipal sewerage authorities law or a county college to pay an employee an incentive to waive coverage if that employee is covered by another health benefit's coverage. The incentive may be up to 50 percent of the amount saved by the employer in such a case.The employee may enroll immediately into the Program if the other coverage ends. "A new N.J.A.C.17:9-1.8(b) would be added to explain the provisions of these chapters and to clarify that a waiver does not affect the ability to continue coverage in retirement. These changes are necessary to comply with the requirements of P.L.1995, c.259,P.L. 2001, c.189 and P.L.2003,c.3.

The proposed amendments to N.J.A.C.17:9-1.9 would eliminate "for Federal and State income taxes" from the definition of "base salary" to eliminate confusion because the Federal and State income tax laws define taxable income differently. The "category of coverage" definition would be amended to change "husband and wife" to "member and spouse." Because Medicare is now required only for retired coverage where it is the primary coverage, the clarification "for retirees only" would be added before the categories "with and without Medicare." NJ PLUS is better described as a& quot;point of service plan" rather than a "managed care" plan; therefore, the Commission proposes to replace the words "managed care" with the words "point of service"in the definition of NJ PLUS. The definition of "State biweekly sub-group" would be amended to include the words "that is paid through the State Centralized Payroll System" to clarify which group is being referenced. Also,the definition of the term "subscriber" and "participating local employers" would be added.

Subchapter 2. Coverage

The proposed amendments at N.J.A.C.17:9-2.1 would add the clarification that this applies only to employees of local participating employers. State workers, by law, are required to premium share for certain types of coverage. Proposed amendments would also delete the words "for coverage" after "enrollment" and "additional" before "charges" because they are not necessary. "His and her" would be deleted before "employer" and the word "the" added instead. Finally, the clarification that "the employee and any dependents must enroll in the same plan" would be added. This is long standing policy which was never included in the rules by the Commission.

The proposed amendments at N.J.A.C.17:9-2.2 would add the words "to apply" for coverage and would delete the words "complete enrollment and authorization form" and replace them with "file a completed enrollment form" to reflect the actual administrative requirement that an enrollment form be filed and not just completed. "The State Health Benefits Program" is to be added prior to the word "options" due to a change to the name of the enrollment form currently in use and clarify which form is required to be filed. The words "to be provided in the commission's master contract or contracts," are to bedeleted as superfluous. Clarification regarding when and how a dependent can be added and the date of eligibility would also be added.

The proposed amendments at N.J.A.C.17:9-2.3(a) would add the phrase "Except as permitted underN.J.A.C.17:9-2.4" to the beginning of the subsection to clarify the existence of this exception and the word "open" would be added before "enrollment period" to distinguish between the annual enrollment period open to all from any special enrollment period open only to certain members due to a disruption in coverage or providers.The amendments also reflect the SHBP's switch from a fiscal plan year to a calendar plan year basis by replacing the words "July1 in the case of local coverage" to "the first coverage period in January." N.J.A.C.17:9-2.3(b) would be amended to replace "the annual opportunity" with "an opportunity" to eliminate redundancy. It would also replace "to elect" with "to change plan participation" and delete "in a health maintenance organization." "[A]spermitted by N.J.A.C. 17:9-2.4 and 2.10" would replace "where the employee moves and is no longer able to be serviced by a HMO or the HMO is terminated." These amendments would serve to clarify the intent of this rule. Finally, N.J.A.C.17:9-2.3(c) would be amended to delete the phrase "at its discretion in order to optimize benefits" because there are several reasons, including a disruption in coverage or provider availability, that would require a special enrollment to be authorized.

At N.J.A.C.17:9-2.4, Coverage and Plan changes, exceptions would be amended to delete references to Plan changes. In 1999, the Division received advice from the Attorney General that the new Health Insurance Portability and Accountability Act (HIPAA), P.L.104-191, regulations required both coverage and plan changes during certain qualifying events. More recent advice has determined that only coverage changes are required under HIPAA. Plan changes maybe made during the annual open enrollment period. N.J.A.C.17:9-2.4(a) would be amended to change "employee" to "subscriber" to reflect the possibility that it is a dependent who has the COBRA coverage. Only eligibility for coverage is required and not actual coverage; therefore, the requirement of coverage has been eliminated. N.J.A.C.17:9-2.4(a)10 would be amended to add the 60-day window that is available for all qualifying events and to delete thereference to "the employee" in these condsentence. If an employee has retained coverage during a leave for the employee only, he or she may add dependents upon their return. If, while on approved leave, the employee did not retain coverage, then the clarification added applies, that he or she may select any plan or coverage at return or if he or she missed an openenrollment period, or elected not to continue coverage while on leave.

Proposed amendments to N.J.A.C.17:9-2.5 include the deletion of the word "master" before "contract" becauset here is a contract with each provider and no longer a "master" contract. N.J.A.C.17:9-2.5(a)4 would be amended by deleting "registered by the State Centralized Payroll Section" and changing the words "certifying agent" to "certifying officer." The word "local" would be deleted before, and "and filed" would be added after, the word "employer." These changes more accurately reflect current administrative practice. N.J.A.C.17:9-2.5(a)5 would be added to state, "The employee has provided a valid Social Security Number for each individual to be enrolled.A Tax Identification Number will be accepted where an employee or dependent is not eligible for a Social Security Number." The employee must submit a valid Social Security Number with in six months of the birth or adoption of a child. Employees and dependents who are foreign nationals must provide a valid Social Security Number once it is obtained. This corresponds with Federal COBRA requirements. The SHBP has required Social Security Numbers for many years, and the Commission proposes the above language to clarify what is acceptable if a Social Security Number once it is obtained.

The proposed amendment to N.J.A.C.17:9-2.6 would add, concerning coverage, "and is paid through the State Centralized Payroll System" after "biweekly basis" to better identify this group of State employees and their dependents.

N.J.A.C.17:9-2.7 would be amended to add effective date "for new hires" in the section heading to more accurately reflect the subject o f the rule.The same amendment is made to the section heading of N.J.A.C.17:9-2.6. HMO and dependent coverage would be deleted because premium sharing is now required in some cases for employee coverage as well as dependent coverage.

N.J.A.C.17:9-2.8 would be repealed to comply with Federal HIPAA regulations. An employee need not be actively at work for coverage to become effective.

Proposed amendments to subsection (a) of N.J.A.C.17:9-2.9 (recodified as 2.8) would clarify that this section applies to those transferring from one SHBPlocation to another. N.J.A.C.17:9-2.9(b) would be amended to delete the words "traditional coverage or electing HMO participation" which used to be the only options available, and adding "changing plans and coverage" to clarify this section. Clarification would also be added regarding State employees transferring from one State location to another.

The proposed amendment to subsection(a) of N.J.A.C.17:9-2.10 (recodified as 2.9)would delete the sentence "The status of employees who have no HMO election to make will be the same as those described for employees who transfer(SeeN.J.A.C.17:9-2.9(a).),"as it is confusing and is not necessary. Employees would be changed to "subscribers" because this rule also applies to COBRA participants and retirees as well as active employees. N.J.A.C.17:9-2.10(b)1 would be clarified regarding remaining in the current plan, while N.J.A.C.17:9-2.10(b)2 would be consolidated with paragraph(b)3 to allow for the transfer of coverage to any eligible plan.

The proposed amendments to N.J.A.C.17:9-2.11 (recodified as 2.10) would include "death of active employee" in the heading to better identify to whom this rule applies. "Carrier" would be changed to "annuity provider" to clarify that this refers to the Alternate Benefits Program providers and not to insurance carriers. Clarification that benefit premiums would be deducted directly from the retirement benefit would be added to reflect current practice as would the clarification that this does not apply if the employer or the State is paying for the coverage. The "Board of Trustees" would be capitalized insubsection(a) and "up to a period of three months," concerning retroactive coverage insubsection(c), would be eliminated as more time may be needed for coverage.

The proposed amendments to N.J.A.C.17:9-2.12 (recodified as 2.11) would add "Traditional Plan" before& quot;major medical" to better identify what coverage is being referenced. Proposed amendments would also add "out-of-network NJ PLUS" throughout this rule after the words "major medical" to clarify that this rule applies to NJ PLUS as well. TheTraditional Plan has coinsurance and not copayments as previously stated. The last sentence of N.J.A.C.17:9-2.12(a) would be eliminated to correspond with Federal HIPAA rules, that require coverage to begin even if the member is not actively at work at the time coverage is to begin. A new subsection(b) would be added to clarify eligible major medical charges for retiring local employees and their dependents, and would state that "For purposes of retiring members with local coverage, all eligible charges incurred by eligible retirees and their covered dependents from January 1 of a calendar year to the effective date of coverage will be considered toward satisfying the deductibles and co-payment required under the Traditional Plan major medical coverage or out-of-network NJPLUS coverage. " Subsection(b)would become subsection(c), and the word "co-payments" would be changed to "coinsurance." This section applies too their insurance coverage and not co-payments made under that insurance. If an employee has been reimbursed for charges, those charges cannot apply towards the deductible.

The Commission proposes to delete references to major medical coverage in N.J.A.C.17:9-2.13(recodified as 2.12) because the extension of coverage applies to all plans and not just to those that provide major medical coverage. The Commission proposes to repeal existing N.J.A.C.17:9-2.14 because maternity benefits (since 1973) are part of the general coverages available.

The proposedamendments to N.J.A.C.17:9-2.15 (recodified as 2.13) would change the heading to "Duplication of benefits" to better describe this section. "Major Medical" would be replaced by" the employee's medical plan" throughout this section.

N.J.A.C.17:9-2.16( recodified as 2.14) would be amended to delete "carriers" and "health maintenance organizations" and replace them with "health and dental plans. "The broader language should cover all of the contracts that the Commission has and not just those with HMOs. The term "carriers" is no longer used by the Commission to define benefit providers.

The Commission proposes to repeal N.J.A.C.17:9-2.17, as the open enrollment window provided for retired teachers under this rule and pursuant to N.J.S.A.52:14-17.32F expired 15years ago.

Subchapter 3. Dependents

The proposed amendment to N.J.A.C.17:9-3.1 would add "children placed in the employee's custody pending adoption" to the definition of "children." The SHBP covers children after the placement with the subscriber for adoption so long as there is legal documentation evidencing the relationship (as required by N.J.A.C.17:9-2.4(a)7). Because coverage for dependents requires the dependent to be substantially dependent upon the employee for support and maintenance, the clarification that stepchildren must reside with the employee would be added to the definition of "living with."

N.J.A.C.17:9-3.2 would be amended to include the words "eligible for coverage" after "shall not be considered" to correct a previous omission. The Commission proposes to relocate N.J.A.C.17:9-3.3 as N.J.A.C.17:9- 6.3(d) because it only applies to retired coverage and is better placed in Subchapter 6, Retirement. The subsection text would delete the words "active," as in "any active or retired employee," to correspond with a recent law change (N.J.S.A.52:14-17.32, whereby active employees no longer enroll in Medicare), and "he is" to make the regulation gender neutral." By reason of age or disability"would be added to clarify who must enroll in Medicare and "of the retiree" would be added to better define dependent.

N.J.A.C.17:9-3.4 remains unchanged, but is recodified as 3.3.

N.J.A.C.17:9-3.5 would be repealed, as its subject is covered by N.J.A.C.17:9-2.4(a)7.

N.J.A.C.17:9-3.6 and 3.7 would also be repealed due to Federal rule changes under HIPAA, that requires coverage to begin even if the dependent is in a hospital or institution.

N.J.A.C.17:9-3.8 remains unchanged, but is recodified as N.J.A.C.17:9- 3.4.

N.J.A.C.17:9-3.9 would be recodified as 3.5 and amended to clarify that this section deals with Traditional Plan major medical coverage. These amendments provide that a refund shall be authorized in the case of an employee who is paying the full cost of dependent coverage and what coverage is available when both husband and wife are eligible for coverage. New subsections (b) and (c) would be added to provide when a refund shall be authorized in the case of any employee who is paying full cost of dependent coverage, what coverage is available when both husband and wife are eligible for coverage. New subsections(b) and (c) would be added to reflect the law change regarding HMO coverage found at N.J.S.A.52:14-17.31.

Subchapter 4. Employees

The Commission proposes to amend N.J.A.C.17:9-4.1 to include New Jersey Institute of Technology and State colleges and universities as designated by the "College Board of Trustees" and to delete the Delaware River Joint Toll Bridge Commission, which has not participated in the SHBP for more than 15 years. The paragraphs would be recodified to reflect these amendments.

The Commission proposes to amend N.J.A.C.17:9-4.2(a)4 to replace the words "Section 4 of this subchapter" with "N.J.A.C.17:9-4.4" which is the correct Code reference form. N.J.A.C.17:9-4.2(a)7 would be deleted because its provisions were effective only until June30,1994, and are no longer valid. N.J.A.C.17:9-4.3(a)9 would be repealed and similar language to that rule has now been incorporated in N.J.A.C.17:9-6.3(d). The Commission is proposing to add at N.J.A.C.17:9-4.3(a)9, "Any person suspended from work for more than one full coverage period as the result of disciplinary action" to the list of those ineligible for coverage. This will more accurately reflect current administrative practice.

The Commission proposes to amend N.J.A.C.17:9-4.4 by deleting N.J.A.C. 17:9-4.4(a)5 and 7 to more accurately reflect current administrative practice. The Commission has deleted text relating to Federal employees as employees of a state other than New Jersey. These employees are now covered if they otherwise meet the definition of full-time employee. N.J.A.C.17:9- 4.4(a)8 would become (a)6 and would be amended to delete the word "Employees" from the "State Health BenefitsA ct" to reflect the current statutorily designated name of the Act.

The Commission proposes to amend N.J.A.C.17:9-4.5 by adding the qualifications necessary for an employee to be covered as appointive officer. The new definition is based on the recent Administrative Lawcase, Cozine v. State Health Benefits Commission OALDkt.No.TYP7635-00.

N.J.A.C.17:9-4.6 would be amended to add the clarification that employers may grandfather all of their employees who met the location's previous definition of "full-time," but who no longer do, based on the location's amended resolution. Each location may now, by resolution, define "full-time" so long as it is greater than 20hours.

The proposed amendment to N.J.A.C.17:9-4.7, concerning multiple positions, would eliminate "at the same time, if the employee would otherwise be eligible for coverage in anyone of such positions." This would be replaced by "with the same employer which in the aggregate would meet the eligibility requirements for coverage as a full-time employee. If an employee hold smultiple public positions with multiple employers, the employee must meet the eligibility requirements fo rcoverage with each employer." Th proposed amendment states that if an employee has more than one position with the same employer, those positions can be added together to meet the definition of "full-time." If the positions are with different employers, the employee mus meet the definition of "full-time" at each location for coverage.

Subchapter 5. Charges

The proposed amendment to N.J.A.C.17:9-5.1 would replace the word "should" with "may" and add the sentence "The Commission may particularize subgroups for the purposes of determining rates"to clarify the Commission's powers regarding rate determinations.

The Commission proposes to repeal N.J.A.C.17:9-5.2 because there is no longer a two-month waiting period before employers may join the SHBP.

The proposed amendment to N.J.A.C.17:9-5.3 (recodified as 5.2) would delete the word "Advance" from the section heading and add a new subsection(a) which states "(a) By adoption of the appropriate resolution, the employer may request a premium delayo f 30 or 60 days after the customary due date for such charges. If the employer terminates participation, any amounts outstanding must be paid with the final billing. "This codifies existing administrative practice. Current subsections (a) and (b) are recodified as (b) and (c). The requirement in subsection (a) that employers remit directly to the HMO would be deleted because this is not current practice.

The proposed amendment to subsection (b) of N.J.A.C.17:9-5.4 (recodified as 5.3) would include the "dollar amount toward" dependent coverage for all employees covered in the program to clarify what amounts the employer can pay toward dependent coverage. The term "proportion of the cost" would also be changed to "percentage of the cost" to better reflect what the employer must pay. N.J.A.C.17:9-5.4(c) would be amended to include the phrase, after employer, "submits are solution in a form prescribed by the State Health Benefit Commission to change the amount paid toward or the proportion of the cost of dependent coverage." The phrase "agrees to pay all of the cost for dependent coverage" after "local employer" will be deleted because all employees must be resolicited whenever there is a change in the cost of coverage, and not just when the employer agrees to pay all of the cost of dependent coverage.

Proposed amendments to N.J.A.C.17:9-5.5 (recodified as 5.4) include reformatting the citations and adding reference to P.L.1999,c.48, which was recently enacted. The amendments also reference the new requirements for, by resolution, adopting any of the age and service requirements found in N.J.S.A.52:14-17.38 in determining eligibility to qualify for employer-paid post-retirement medical benefits, set forth under this new law and adding HMO coverage to N.J.A.C.17:9-5.5(a)4. Proposed amendments to N.J.A.C. 17:9-5.5(b) would add educational employers who may also adopt the provisions of Chapter 88, and would eliminate the 1964 date and replace it with those who retired prior to the employer joining the SHBP. Proposed new subsections (c) and (d) would detail the provisions of Chapter 436, which allows locations to provide coverage for surviving spouses. Proposed (e) would also add the requirements for filing are solution under Chapter48.

The Commission proposes to repeal N.J.A.C.17:9-5.7 because refunds for multiple coverage have been consolidated into N.J.A.C.17:9-3.9.

The Commission proposes to repeal N.J.A.C.17:9-5.8 and replace it with a new rule, N.J.A.C.17:9-5.5, regarding the same subject, Medicare refunds. P.L.1996,c.8 (N.J.S.A.52:14-17.28b) eliminated the requirement that Medicare reimbursements be made for active employees. The proposed new rule deals with Medicare reimbursements for retired employees, the frequency of these payments, and any retroactivity of payment available.

Proposed amendments to N.J.A.C.17:9-5.9 (recodified as 5.6)would change "husband and wife" to "member and spouse." Because N.J.A.C.17:9-5.7 is being repealed, reference to it would be deleted.

Proposed amendments to N.J.A.C.17:9-5.10 (recodified as 5.7) would change the words "the employee is actually enrolled" to "the subscriber's effective date of coverage" to better clarify what charge to use in determining retroactive charges.

Proposed amendments to N.J.A.C.17:9-5.11 (recodified as 5.8)would delete "provided their employment resumes in September" because 10-month employees are covered during the summer even if they do not resume employment in September. The Commission also proposes to clarify tha the 10-month biweekly employees paid through centralized payroll would be enrolled as of the pay period nearest to September 1.

N.J.A.C.17:9-5.12 (recodified as 5.9) would remain unchanged.

Subchapter 6. Retirement N.J.A.C.17:9-6.1 would remain unchanged.

Proposed amendments to N.J.A.C.17:9-6.2 would change the word "carrier" to "annuity provider" to clarify that the annuity is paid through the Alternate Benefit Program. Carrier, for SHBP purposes, is usually a health benefits provider. The gender specific pronouns would also be amendedand the 15-day period following receipt of an offering letter is extended to 30 days to reflect actual practice. The amendments to N.J.A.C.17:9-6.2(a)3 provide that retroactive coverage for no more than six months maybe granted to an eligible spouse of a retired employee, if the retroactive and currently due premiums are received. Second notices have not been sent by certified mail for more than 10years; therefore, the Commission proposes to delete this requirement.

The Commission proposes to add the phrases "but not the retiree's surviving spouse or dependent" after the word "retiree" in N.J.A.C.17:9-6.3(a )and (a)1 to clarify that only the retiree may make changes to coverage level following certain events listed in the rule, including a change in family status, birth or adoption of a child. The Commission proposes to replace the word "Pensioner(s)" with "Retired employees" in N.J.A.C.17:9-6.3(b),(c) and (e) for clarification purposes only. The billing period has been amended to read from "a quarterly basis" to "a monthly basis" to reflect actual practice. Premium costs are very high at this time, and the requirement that retirees pay three months at a time has been a financial burden on our retired members. The word "pension" deduction would be changed to "health benefit" deduction and the clarification "from the retirement allowance or pension check" would be added. If the retiree pays directly, premiums are not deducted. The clarification at subsection (c) that the retired employee may change coverage if no longer able to be serviced by the in network NJ PLUS would also be added. Proposed new subsection (d) is a relocation o fN.J.A.C.17:9-3.3 which requires that a retired member or dependent be enrolled in Medicare A and B when eligible. Existing subsection (d )would be recodified as subsection (e). Existing subsection (e) would be deleted because retired employees entering the SHBP are not limited in their selection of coverage any longer.

Proposed amendments to N.J.A.C.17:9-6.4 would change the section heading to "Suspension of allowance" to better reflect the subject of this rule, and references to disability and earnings tests would be eliminated so that it applies to all suspensions of allowances and not just those for exceeding the earnings limiton a disability. Coverage may be made retroactive if requested; therefore, coverage on a prospective basis would be deleted. Also the Commission proposed to delete the sentence "However,where the employer is liable for the charge payment, the coverage shall be continued without interruption " because coverage ceases until a retirement benefit is resumed; therefore, the employer may not pay for coverage during a suspension.

Proposed amendments to N.J.A.C.17:9-6.5 change "retirant" to"retired employee" to reflect current terminology. References to designated representative would be deleted because this rule is not concerned with the reasons for discontinuance of an allowance, but that an allowance is discontinued. If retired employees are not eligible for retirement benefits, they do not qualify for retiree coverage; therefore, their former employers may not pay for their coverage under the retiree group. The last sentence regarding discontinuance of allowance will be deleted because termination of coverage for this reason is treated in the same manner as other terminations of coverage.

Proposed amendments to N.J.A.C.17:9-6.6 would eliminate the prospective basis only restriction. Coverage may be retroactive if requested by the covered person for six months. If a retired employee wanted a longer period of retroactivity, he or she would have to appeal to the Commission through the normal appeals process.

N.J.A.C.17:9-6.7 would be amended to eliminate references to "widow and widowers" and would use the term "surviving spouse" instead.

N.J.A.C.17:9-6.8 would remain unchanged.

Proposed amendment to N.J.A.C.17:9-6.9 would add the words "any amounts" before "health benefits" to clarify that employer payment of any portion of the premium or periodic payment negates eligibility for P.L.1997,c.330 coverage. "Or after" would be added to "on July 1,1998" to clarify that a member who has retired coverage provided after the date of the law would also be ineligible under P.L.1997,c.330. The clarification that Medicare B reimbursements are included as payments for health benefits would also be added.

There would be no changes to N.J.A.C.17:9-6.10.

Subchapter 7. Termination

The Commission proposes to replace the phrase "full-time employment" in N.J.A.C.17:9-7.1 with "SHBP coverage" to clarify that the Commission only determines when SHBP coverage terminates. The Commission also proposes to add a new subsection (b) which will clearly set forth the termination process for those employees who must, but fail, to pay for their benefits. This has been administrative practice for many years but has not been codified. The Commission proposes a new subsection (c) which would cover those members who are awaiting approval of a retirement benefit. It would provide that the coverage would not be terminated if the retiring member agrees,in writing, to the deduction of any retroactive SHBP premiums owed by the subscriber from the retirementbenefitwhenapprovedorthereturnofpensioncontributionsifit isnotapproved.

Proposed amendments to N.J.A.C.17:9-7.2 would eliminate the reference to conversion rights because members now may enroll in COBRA coverage at group rates for 18 months and do not need to convert to an individual policy at the termination of their active coverage. The Commission proposes to better organize the list for the reasons for termination for both the employee and the employee's dependents. The existing list is proposed for deletion, and a new list created reordering the content of most of the existing list, which has been included in N.J.A.C.17:9-7.2 (c) and (d). The existing language regarding part time employment and leave of absences will remain, while the references to workers' compensation will be moved to N.J.A.C.17:9-7.3, Continuance of coverage.

Proposed amendments to N.J.A.C.17:9-7.3 would amend the heading to "Continuation of coverage" to indicate when coverage which would normally terminate, continues. Specific instances of events that would trigger the right to a continuation of coverage, including a workers' compensation award, leave of absence and family leaves, would be listed.

The proposed amendment to N.J.A.C.17:9-7.4 would add language regarding the reinstatement of coverage in accordance with The Federal Health Insurance Portability and Accountability Act of 1996, 42U.S.C.§§1301etseq. (HIPAA).

Subchapter 8. Employee Prescription Drug Plan

The Commission proposes to repeal and propose a new N.J.A.C.17:9-8.1, breaking the section down into separate sections dealing with the establishment ofthe program, the requirement for the employee to elect this coverage, the similarity of these rules to those of the State Health Benefits Program and the exceptions to these similarities. These amendments will better clarify this section.

The proposed amendments to N.J.A.C.17:9-8.2 would eliminate references to booklets, which are provided to the member by the member's human resource office and which are easily obtained from the Division, employers or the internet, and would deal exclusively with identification cards. In the past, home addresses were not stored in the Division's computers. Now that the Division has most current addresses, cards are mailed to the subscriber if possible. If the Division does not have a current address, the card is still sent to the employer. Only some State employees have their bargaining unit on their drug cards, therefore, the Commission wishes to clarify this requirement. Replacement cards are issued when requested and not only in the case of divorce or separation. Therefore, subsection (b) is deleted as unnecessary.

The proposed amendments to N.J.A.C.17:9-8.3 would, instead of repeating termination provisions in subsection (b), cite N.J.A.C.17:9-7.2 which are the same termination provisions for both the State Health Benefits Program and the prescription drug plan.

Subchapter 9. State Employee Group Dental Program

Proposed amendments to Subchapter 9 o fN.J.A.C.17:9 would include the amendment of the heading of the subchapter to reflect the accurate name of the plan. At one time, the Dental Expense Program was the only option available. Since June 1984, the Dental Program was expanded to include dental provider organizations (DPOs). Thus, the heading of this subchapter would be changed to the State Employee Group Dental Program to reflect that it is now comprised of more than one Plan.

N.J.A.C.17:9-9.1 is proposed for repeal and a new rule proposed that would make it similar to N.J.A.C.17:9-8.1 by breaking it down into separate sections dealing with the establishment of the plan, that it is optional for the employee to elect this coverage, the similarity of these rules to those of the State Health Benefits Program and the exceptions to these similarities.

Proposed amendments to N.J.A.C.17:9-9.2 would clarify that cards will be mailed directly to the employee's home. Booklets are provided to the member by the member's human resource office and are readily available from employers, the Division and the internet, and do not need to be addressed in administrative code.

Proposed amendments to N.J.A.C.17:9-9.3 would change the wording from one- half of the premium charges, which is the current cost, to the cost of the employee's share, so that should there be increases or decreases in the employee's share of the cost, arule amendment would not be necessary. The Commission has the authority to set rates as provided by N.J.S.A.52:14- 17.25etseq.

N.J.A.C.17:9-9.4 would be amended to add that a new enrollment form must be completed to add dependents.

N.J.A.C.17:9-9.5 would be repealed and a new rule proposed to eliminate references to when the plan first began in 1975 and to state that if a member does not enroll dependents when first eligible, they must wait until an open enrollment period.

In N.J.A.C.17:9-9.6, the 10-month waiting period for orthodontics only applies to those participating in the Dental Expense Program and not the DPOs. The two-month wait for initial coverage applies to all of the State Health Benefits Program and so the Commission proposes to eliminate it from this section.

Covered expenses may change whenever a new contract is negotiated and they are outlined in the plan booklets which supplement the master contract. Therefore, the Commission proposes to delete the coverages listed in this rule and replace it with references to the coverages outlined in the planbooklet.

The Commission proposes to repeal N.J.A.C.17:9-9.8. This policy has already been stated in the rules of the SHBP, and only exceptions to those rules are being retained.

Full text of the proposed readoption may be found in the New Jersey Administrative Code at N.J.A.C. 17:9.

Full text of the proposed repeals may be found in the New Jersey Administrative Code at N.J.A.C. 17:9-1.7, 2.8, 2.14, 3.3, 3.5, 3.6, 3.7, 5.2, 5.7, 5.8, 8.1, 9.1, 9.5 and 9.8.

Full text of the proposed amendments and new rules follows:

SUBCHAPTER 1. ADMINISTRATION

17:9-1.1 Commission meetings

(a) The Commission shall meet, as necessary, at the call of the [chairman] Chairperson or the [secretary] Secretary.

(b) (No change.)

(c) If a member is unable to attend a meeting, [he] the member shall designate [a person to represent him as his] an alternate. The person so designated shall be permitted to vote on business brought before the Commission.

17:9-1.2 Records

(a) The minutes of the Commission meetings are public records and may be inspected during regular business hours at the office of the Division of Pensions and Benefits under supervision of the [Chief of the Health Benefits Bureau] Manager of Policy and Planning, State Health Benefits Program or other representatives of the office.

(b) Records considered confidential include all matters related to the coverage of individual participants and their families, mailing addresses of active and retired participants and individual files related to [major medical] claims [where no official purpose or reason for inspection is indicated].

17:9-1.3 Appeals from Commission decisions

(a) Any member of the [traditional plan or NJ PLUS plan] Traditional Plan who disagrees with the decision of [one of] the claims administrator[s for that plan] and has exhausted all appeals within the plan, may request that the matter be considered by the State Health Benefits Commission. Requests for consideration must be directed to the Secretary, State Health Benefits Commission, and must contain the reason for the disagreement and all supporting documentation. Appeals shall be considered at the regular monthly meetings of the Commission. It shall be the responsibility of the member to provide the Commission with any medical or other information that the Commission may require in order to make a decision.

(b) Any member of [an] NJ PLUS or a health maintenance organization (HMO) who disagrees with a determination [of medical necessity] made by NJ PLUS or an HMO or any member of NJ PLUS or an HMO who feels that NJ PLUS or the HMO has violated the terms and conditions of its contract may request that the matter be considered by the State Health Benefits Commission. Such an appeal can only be considered after the member has exhausted the NJ PLUS or HMO's grievance process. Appeals shall be considered at the regular monthly meetings of the Commission.

(c) Any person who disagrees with a determination made by the Division of Pension and Benefits regarding their enrollment or eligibility in SHBP, may request that the matter be considered by the State Health Benefits Commission.

Recodify existing (c)-(d) as (d)-(e) (No change in text.)

17:9-1.4 [(Reserved)] Employer participation

(a) An employer joining the program must adopt the resolution furnished by the Division of Pensions and Benefits and must agree to comply with the statutes and regulations adopted by the State Health Benefits Commission. The effective date of coverage for employers with fewer than 250 employees, the Consolidated Omnibus Budget Reconciliation Act of 1985, 29 U.S.C. §§ 1161- 1168 (COBRA) participants and retired members will be the first day of the month following a period beginning 75 days after the receipt by the State Health Benefits Commission of the completed resolution. The effective date of coverage for employers with 250 or more employees, COBRA participants and retired members will be the first day of the month following a period beginning 90 days after the receipt by the State Health Benefits Commission of the completed resolution.

(b) The Commission may, from time to time, establish a re-entry application period for those employers who have terminated coverage. During this period, an employer who previously terminated coverage with the program may submit a resolution for re-entry.

(c) If an employer requests re-entry during any period other than that established by (b) above, the Commission shall consider the relevant facts accompanying the resolution, including any hardship or emergency, the impact of re-entry on the program and individual members, and whether re-entry is consistent with statutory law or judicial determinations. The Commission shall approve or disapprove the resolution for re-entry and shall so notify the employer within 30 days following receipt of the resolution. The Commission may establish an administrative charge upon the employer reasonably based upon the approximate cost to the Commission of re-enrolling the employer.

17:9-1.5 Voluntary termination of employer; notice

(a) A resolution furnished by the Division of Pensions and Benefits must be completed by employers who wish to voluntarily terminate their participation in the program.

(b) [For purposes of local coverage, when] When a participating employer voluntarily terminates coverage, the coverage for the employer's active and retired employees and COBRA participants shall terminate as of the first of the month following a 60-day period beginning with the receipt of the resolution by the Health Benefits Commission.  [The Commission may, from time to time, establish a re-entry application period not to exceed 30 days for those employers who have terminated coverage. During this period, an employer who has terminated coverage only once may submit a resolution for automatic re-entry. The re-entry shall be effective upon a date set by the Commission which date shall be not less than 60 days nor more than 365 days following the receipt of the resolution for re-entry. Automatic re- entry into the program will be permitted only once.]

[1. An employer who has terminated coverage more than once may submit a resolution for re-entry during the re-entry application period. The Commission shall consider the relevant facts accompanying the resolution, including any hardship or emergency, the impact of re-entry on the program and individual members, and whether re-entry is consistent with statutory law or judicial determinations. The Commission shall approve or disapprove the resolution for re-entry and shall so notify the employer within 30 days following receipt of the resolution. If the Commission approves the re-entry, the re-entry shall be effective upon a date determined by the Commission, which date shall be not less than 60 days nor more than 365 days following the Commission's approval. The re-entry shall be contingent upon the employer's reimbursement to the Commission of administrative expenses reasonably based upon the approximate cost to the Commission of re-enrolling the employer.]

(c) (No change.)

(d) The Division of Pensions and Benefits shall act to notify all [retired employees or survivors] affected Consolidated Omnibus Budget Reconcilation Act of 1985, 29 U.S.C. §§ 1161-1168 (COBRA) and retired members of the termination of coverage [and to send a list of the names and addresses to the terminating employer for his or her information, upon his or her request]. Upon request from the employer, the Division shall forward a list of the names and addresses of terminating retirees and COBRA participants so that the employer may offer them an opportunity to enroll under its new group health insurance plan.

17:9-1.6 Default of employer; notice

(a) [For purposes of local coverage, a] A participating employer will be considered in default 31 days after the beginning of the coverage period for which charges were due. At that point, coverage [will] may terminate for all [employers and their dependents covered by the] members enrolled through the terminating employer.

(b) The [secretary of the commission] Secretary of the Commission will notify the Attorney General's office, the Division of Local Finance, the Department of Education and the Alternate Benefits Program carriers, if applicable. The Division of Pensions  and Benefits will notify [every participating employee, active] the employer and affected COBRA and retired [, or survivors,] subscribers of the termination of coverage. The employer is responsible for notifying its active employees affected by this termination

[17:9-1.7 Guidelines; local employers; purchase of contracts]

[Pursuant to the provisions of N.J.S.A. 52:14-17.25 et seq., it is the policy of the State Health Benefits Commission that when local governments purchase insurance contracts of health benefits, such as prescription drug, dental expense and vision care coverages, such contracts and coverage therein must adhere to the guidelines approved by the State Health Benefits Commission for such contracts or coverages, as such guidelines were transmitted to all public employers by the Division of Pensions. Local governments cannot deviate from such guidelines in purchasing such contracts or coverages without the approval of the State Health Benefits Commission.]

17:9-[1.8] 1.7 Employer incentives for non-enrollment prohibited

(a) [An] Except as allowed by P.L. 1995, c.259, P.L. 2001, c.189 and P.L. 2003, c.3, which are codified at N.J.S.A. 52:14-17.31a, an employer shall not offer a financial enticement of cash or anything else of value to an employee who elects not to enroll or to terminate enrollment in the State Health Benefits Program.

(b) P.L. 1995, c.259, P.L. 2001, c.189 and P.L. 2003, c.3 allow a municipality, a municipal authority created by a municipality under the municipal sewerage authorities law or a county college to pay an employee an incentive to waive coverage if that employee is eligible for other health coverage. The incentive may be up to 50 percent of the amount saved by the employer in such a case. The employee may enroll immediately into the program if the other coverage or the waiver ends but must repay, on a pro rata basis, any amount received which represents an advance payment for a period of time during which coverage is resumed. An employee who waives coverage under this rule is not precluded from continuing coverage into retirement.

17:9-[1.9] 1.8 Definitions

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise:

"Base salary" means an employee's annual base salary as of the first pay period of the calendar year [for Federal and State income taxes].

"Category of coverage" means one of the options used for determining the rates for the premium or periodic charges for different levels of coverage under the program which include single, [husband and wife] member and spouse, parent and child, and family coverage, and for retirees only, with and without Medicare.

"NJ PLUS" is the name of the [State managed care] State's Point of Service plan as defined in Section 2 (N.J.S.A. 52:14-17.26) of the Act.

"Participating local employers" means public employers who elect to participate in the SHBP.

"State biweekly sub-group" means a State payroll location or employment unit [which] that is paid through the State Centralized Payroll System and reports to the program on a biweekly basis.

"Subscriber" means the person in whose name the coverage is listed.

17:9-2.1 Enrollment and charges

[Each] For local participating employers, each eligible employee shall be eligible to enroll for coverage without cost to the employee; and each employee's eligible dependents shall be eligible for enrollment [for coverage] provided that the [additional] charges for such coverage shall be paid by the employee as required by [his or her] the employer. For employees of the State and local participating employers, the employee and any dependents must enroll in the same plan.

17:9-2.2 Enrollment form

[At] Within 60 days of the time [each] an employee first becomes eligible to apply for coverage, the employee shall [complete] file a completed enrollment [and authorization] form[s] indicating the employee's election to enroll or not to enroll for coverage on [his or her] the employee's own behalf; and the employee's election to enroll or not to enroll [his or her] any eligible dependents for coverage under one of the State Health Benefits Program options [to be provided in the Commission's master contract or contracts]. A dependent must be listed on the enrollment form to be enrolled for coverage. If more than 60 days have passed since first eligibility for enrollment, then the enrollment form shall not be processed and will be returned to the employer. The employee may then file the enrollment form during the next open enrollment period with coverage to be effective on the first coverage period in January.

17:9-2.3 Annual open enrollment period

(a) [Any] Except as permitted under N.J.A.C. 17:9-2.4, any active employee or COBRA subscriber who [shall] did not elect to enroll for coverage for [himself or herself] themselves or for their dependents at the time such employee or dependent first becomes eligible for coverage shall subsequently be permitted to enroll [himself or herself] themselves and [[his or her] their dependent[s] only during the annual open enrollment period, [which is the month of April of each year with coverage effective for the first coverage period in July in the case of State coverage and the month of March] with coverage effective [July 1 in the case of local coverage] the first coverage period in January.

(b) The annual open enrollment period will be[the annual] an opportunity for employees [to elect] to change plan participation [in a health maintenance organization] for themselves and their dependents. The change in the election cannot be made more frequently than once a year except [where the employee moves and is no longer able to be serviced by a health maintenance organization or the health maintenance organization is terminated] as permitted under N.J.A.C. 17:9-2.4 or 2.10

(c) The State Health Benefits Commission may [, at its discretion, in order to optimize benefits] establish a special enrollment period at any time it deems necessary to do so.

17:9-2.4 Coverage [and Plan] changes; exceptions

(a) An employee may change the employee's enrollment and the enrollment of the employee's dependents to any type of coverage [or plan] if such changes result from a change in family, dependency or employment status of the employee or the employee's dependents [, or if the employee moves out of the coverage area]. Such changes will be permitted under the following conditions:

1. Marriage. Any employee who marries may enroll the employee, or the employee and the employee's spouse and eligible dependents, if any, for any appropriate type of coverage [or plan] by completing and forwarding a new enrollment form within the period beginning 60 days prior to the marriage and ending 60 days after such marriage. In the event that the spouse of such employee is already enrolled as an employee, the provisions of N.J.A.C. 17:9-[3.9] 3.5 shall apply to such spouse's enrollment.

2. Divorce; separation. Any employee who has been enrolled or has been covered as a dependent of an enrolled employee and is subsequently divorced may enroll [in any plan,]and delete from coverage or cover any eligible dependents by completing and forwarding a new enrollment form within 60 calendar days after the divorce of such employee or dependent of an employee who was covered previously under the spouse's contract. A change of enrollment of this nature may also be made in the case of separation.

3. Death of spouse or dependent child. Any employee who is enrolled as the dependent of another employee who dies may thereupon enroll as an employee, and may enroll any eligible dependents, for any appropriate coverage [or plan] by completing and forwarding a new enrollment form within 60 days following the death. Any employee may, upon the death of a spouse or dependent child who is enrolled as a dependent, enroll the employee and any other eligible dependents for any appropriate coverage [or plan] by completing and forwarding a new enrollment form within 60 days following the death.

4. Return from military leave. Any employee, upon return from any period of military leave without pay, may enroll the employee and any eligible dependents for any appropriate coverage [or plan] by completing and forwarding an enrollment form within 60 days after the date of the employee's return to active full-time employment. In the event a dependent of an employee is discharged from military service, the employee may enroll such dependent for any appropriate coverage within the time specified above.

5. When last dependent child reaches age 23 or marries prior to that time. Any employee who shall have enrolled one or more dependent children as dependents may enroll for any coverage [or plan] at the time the last such dependent child reaches age 23, marries prior to that time or becomes otherwise ineligible, by completing and forwarding a new enrollment form.

6. (No change.)

7. Birth, adoption or guardianship of dependent children. When an employee acquires qualified dependents through birth, placement for adoption, adoption, legal guardianship of children, or the assumption of direct support of children, the employee may enroll the employee and any eligible dependents for any appropriate type of coverage [or plan] by completing and forwarding a new enrollment form within the period beginning 60 days prior to and ending 60 days after the birth, placement for adoption, the adoption, the guardianship or the assumption of direct support of children. Such application regarding placement for adoption, adoption, assumption of direct support of children, and guardianship shall be accompanied by legal documentation evidencing the relationship.

8. Upon the divorce of a dependent child. An employee may enroll, for any coverage [or plan], a child under age 23 who, following a divorce, resides with the parent and is financially dependent upon the parent. The employee and child must enroll in the same plan. An application for coverage shall be submitted within 60 days of the entry of a judgment of divorce in order to obtain coverage retroactively to the date of the divorce. Otherwise, enrollment shall be permitted only during an open enrollment.

9. COBRA enrollment. When an employee or dependent enrolls in the COBRA group, the employee or dependent may, within 60 days of the qualifying event, select any plan. In order for an employee or dependent to enroll in health benefit, dental or prescription coverage through COBRA, the [employee] subscriber must have [had] been eligible for that coverage in the active group.

10. Upon return to employment from an approved leave of absence. [Upon] Within 60 days after the return to employment from an approved leave of absence, the employee may elect to change coverage [or plan] to add [the employee and] any eligible dependent(s) who had been removed from this group coverage while the employee was on such leave. If the employee elected not to continue his or her benefits while on leave or missed the open enrollment period, the employee may elect to enroll in any plan or coverage level as appropriate.

(b) An employee may change the employee's enrollment and the enrollment of the employee's eligible dependents to any type of coverage [or plan] under conditions other than those specified in (a) above, only during the annual enrollment period, or during a special State Health Benefits Program open enrollment period.

(c) An employee who wishes to change the employee's enrollment and the enrollment of the employee's eligible dependents for any of the reasons included in (a) above, but who has failed to complete and forward the required enrollment form within the time limits therein prescribed, may effect such change of enrollment only during the annual enrollment period or during a special State Health Benefits Program open enrollment period. For provisions governing coverages and charges for 10-month employees, see N.J.A.C. 17:9-[5.11(c)] 5.8(c).

17:9-2.5 Employee coverage requirements

(a) For each employee who shall elect to be covered [for himself or herself], coverage shall become effective only after all of the following conditions have been satisfied:

1. The [master] contract or contracts are effective;

2. (No change.)

3. The employee satisfies the definition of "employee, is eligible for coverage; [and]

4. An enrollment form has been legibly completed by the employee and [registered by the State Centralized Payroll Section or] the certifying [agent] officer of the [local] employer and filed with the Health Benefits Bureau of the Division of Pensions and Benefits within the prescribed time limits[.]; and

5. The employee has provided a valid Social Security number for each individual to be enrolled. A Tax Identification Number will be accepted when an employee or dependent is not eligible for a Social Security number. The employee must submit a valid Social Security number within six months of the birth or adoption of a child. Employees and dependents who are foreign nationals must provide a valid Social Security number once it is obtained.

17:9-2.6 Effective date for new hires; State employees and dependents

For State employees and their dependents for whom an enrollment application has been filed with the Division of Pensions and Benefits, coverage is effective on the first day of the fifth payroll period of employment for a sub-group which reports on a biweekly basis [and is paid through the State Centralized Payroll System], or the first day following the completion of two months of continuous service for a sub-group which reports on a monthly basis. If employee deductions are required for [HMO] coverage, deductions begin on the first day of the third payroll period of employment for biweekly sub-groups and approximately one month prior to the effective date of coverage for monthly sub-groups.

17:9-2.7 Effective date for new hires; local employees and dependents

For local employees and their dependents for whom an enrollment application has been filed with the Division of Pensions and Benefits, coverage is effective on the first day following the completion of two months of continuous service. If employee deductions are required for [HMO or dependent] coverage, deductions begin approximately one month prior to the effective date [of coverage].

17:9-[2.9]2.8 Transfers

(a) In order to provide mobility to employees [of participating employers, as well as of the State, employees who transfer from one State payroll to another, or from one participating employer to another, or from the State to a participating employer, or from a participating employer to the State], transferring their employment from one SHBP participating employer to another, the employee may continue coverage under the program as long as they enter the service of the new employer in a period for which contributions have already been made; however, if coverage has been terminated, the employee will again have to satisfy the two-month, continuous-employment waiting period and the actively-at-work requirement in order to obtain the coverage again.

(b) For employees who will have the option of [traditional coverage or electing HMO participation] changing plans and coverage upon a transfer, as described in [subsection] (a) [of this section]above, a 30-day period will be available for the selection of coverage during which period their former coverage will be continued. State biweekly employees transferring from one State biweekly payroll location to another while coverage is still in force cannot make any plan changes since they are not changing employers.

17:9-[2.10] 2.9 HMO; elections

(a) [Employees] Subscribers who locate in an area serviced by a participating HMO will have a 30-day period for the selection of coverage during which period their former coverage will be continued. [The status of employees who have no HMO election to make will be the same as the described for employees who transfer. (See N.J.A.C. 17:9-2.9(a).)]

(b) [Employees] Subscribers who are participating in an eligible HMO but who move out of the area serviced by that HMO will have a 30- day period to select one of the following options:

1. Continue participation in [the former] their current HMO Plan; or

2. Transfer participation to the Traditional Plan, NJ PLUS or an eligible HMO in the new area[, if such is available in the new area.]; or[]

[3. Transfer coverage into the traditional program.]

17:9-[2.11]2.10 Coverage for survivors-death of active employee

(a) For purposes of the continuity of coverage in the event of accidental or ordinary death where the survivors are eligible for periodic pension benefits for life, or until a dependent child is no longer eligible for such benefits, coverage may be extended until such time as the application for such death benefits is formally approved by the [board of trustees] Board of Trustees of the retirement system paying the benefit, or by the [ carrier] annuity provider underwriting the individual annuity contracts. If it is not necessary for [a board of trustees] the Board of Trustees to approve the application, then the application for such benefits will be considered approved when the necessary action has been taken by the Division of Pensions and Benefits, the local retirement system, or the [carrier] annuity provider.

(b) [The] Unless the employer or the State pays for surviving spouses, the eligible survivor of the deceased employee must submit personal payments to the health benefits program in order to continue coverage. Once the survivor's annuity begins, the cost of benefits shall be deducted directly from the retirement benefit.

(c) Should coverage lapse through no fault of the survivor, who would be eligible to continue such coverage, retroactive coverage may be granted [up to a period of three months] provided the payment of charges is made.

17:9-[2.12]2.11 [Major Medical] Traditional Plan major medical[;] and out-of-network NJ PLUS; eligible charges at enrollment (local employees)

(a) For purposes of local coverage, all eligible charges incurred by an eligible employee or [his or her] the employee's covered dependents, from January 1 of a calendar year to the effective date of coverage for [his or her] the employee's participating employer, will be considered [to satisfy] <<+toward satisfying+>> the deductibles and [co-payments] coinsurance required under the [Major Medical] Traditional Plan major medical coverage or out-of- network NJ PLUS. [The above provision is contingent upon the eligible employee being actively at work on the effective date of coverage and his or her dependents not be deferred as stated under N.J.A.C. 17:9-2.8(b).]

(b) For purposes of retiring members with local coverage, all eligible charges incurred by eligible retirees and their covered dependents from January 1 of a calendar year to the effective date of coverage will be considered toward satisfying the deductibles and coinsurance required under the Traditional Plan major medical or out-of-network NJ PLUS coverage.

[(b)](c) The charges considered are to be eligible charges under the [Major Medical] Traditional Plan major medical or out- of-network NJ PLUS contract and no charges will be considered that would have been paid by the basic plan, had the employee had such coverage. No charges will be used to satisfy the deductibles and [co-payments]  coinsurance for which the employee has been reimbursed by any source [ where any employer participated under another contract].

17:9-[2.13]2.12 [Major Medical; extension] Extension of coverage charges

(a) For purposes of the payment of claims [under the Major Medical contract], if immediately prior to [his or her] entry into the eligible classes, an employee or dependent was covered under the extension of coverage provisions [of the Major Medical contract], such coverage will be effective immediately but solely with respect to charges incurred in connection with the illness for which such person was covered under said extension if the following conditions are satisfied:

1.-2. (No change.)

(b) (No change.)

17:9-[2.15] 2.13 [Major Medical; separate plans] Duplication of benefits

If the State or local employer adopts separate plans for all employees or for some portion of covered employees [for prescription drug reimbursement, vision care, or other health care benefits], largely duplicating [or minimizing the] benefits provided under the [Major Medical program] SHBP medical plan, such services or benefits for the participants of such separate plans will no longer be considered eligible for reimbursement under the [Major Medical program to the extent benefits are provided under such plans] employee's medical plan.

17:9-[2.16] 2.14 Policy provisions adoption

The State Health Benefits Commission adopts by reference all of the policy provisions contained in the contracts between the [carriers, the health maintenance organizations] health and dental plans and the State Health Benefits Commission as well as any subsequent amendments thereto, to the exclusion of all other possible coverages.

Agency Note: N.J.A.C. 17:9-2.17 is proposed for recodification as N.J.A.C. 17:9-6.8.

SUBCHAPTER 3. DEPENDENTS

17:9-3.1 Dependents and children defined

The following words and terms, when used in this chapter, shall have the following meanings unless the context clearly indicates otherwise.

"Children" includes stepchildren, legally adopted children , children placed in the employee's custody pending adoption, and foster children who are substantially dependent upon the employee for support and maintenance. This includes children in a guardian-ward, legal relationship who are living with the employee.

"Living with" shall be defined so as to include children in the case of divorce who may not actually be living with the covered parent, but where such covered parent is required to provide for the support and maintenance of such children, and the parent's application for dependent coverage is documented by a copy of an appropriate court order. Stepchildren must reside with the employee.

17:9-3.2 Military service

A spouse or child enlisting or inducted into military service shall not be considered eligible for coverage during such military service.

17:9-[3.4] 3.3 (No change in text.)

17:9-[3.8]3.4 (No change in text.)

17:9-[3.9]3.5 Multiple coverage; employee and spouse

(a) [An] For Traditional Plan coverage, an employee who is the spouse of another employee may elect to forego coverage as an employee and to be enrolled for coverage as a dependent, in which event no coverage shall be provided for such spouse as an employee while covered as a dependent. The employee of an employer other than the State, who has enrolled such spouse, and who is required to pay the full cost of dependent coverage, may receive a refund from the Division of Pensions and Benefits equivalent in amount to the employer's cost for single coverage pursuant to N.J.S.A. 52:14-17.31. When both husband and wife are covered as employees, only one may enroll their children as dependents

(b) A similar refund shall be authorized in the case of an employee of a local participating employer who is paying the full cost of dependent coverage for a spouse who is an employee of the State and eligible for coverage.

(c) If a husband and wife are both eligible for coverage under the program as employees:

1. Each may elect coverage as an employee and for their qualified dependents, including the spouse, under the Traditional Plan or NJ PLUS, but only one may elect coverage for the employee and for their qualified dependents, including the spouse, in a participating health maintenance organization; and

2. Each may elect single coverage in any participating health maintenance organization, provided that the employee is not covered under a participating health maintenance organization as a dependent of a spouse.

17:9-4.1 State employee defined

(a) For purposes of State coverage, "employee" shall mean an appointive or elective officer or full-time employee of the State including employees of:

1. Rutgers, the State University of New Jersey;

[2. Delaware River Joint Toll Bridge Commission (Free Bridges);]

[3.]2. Palisades Interstate Park Commission;

[4.]3. University of Medicine and Dentistry of New Jersey;

4. New Jersey Institute of Technology;

5. The State colleges and universities as designated by their boards of trustees; and

[5.]6. (No change in text.)

17:9-4.2 State; full-time defined

(a) For purposes of State coverage, "full-time" shall mean:

1.-3. (No change.)

4. Public defenders who are paid on the basis of an average 30-hour work week schedule, notwithstanding [Section 4 of this Subchapter]  N.J.A.C. 17:9-4.4;

5. Employees of the University of Medicine and Dentistry of New Jersey who are paid for a minimum of 20 hours per week, notwithstanding N.J.A.C. 17:9- 4.4; and

6. Teaching assistants and graduate assistants at Rutgers, the State University, who are paid for a minimum of 15 hours, notwithstanding N.J.A.C. 17:9-4.4[;].

[7. Deputy attorneys general in the Office of the Attorney General and the Divisions of Criminal Justice, Gaming and Law in the Department of Law and Public Safety, who are paid for a minimum of 20 hours per week, notwithstanding the provisions of N.J.A.C. 17:9-4.4, until June 30, 1994.]

(b) (No change.)

17:9-4.3 Ineligible employees defined

(a) For purposes of State and local coverage, "employee" shall not mean:

1.-8. (No change.)

[9. Any retiree, who is otherwise eligible for benefits but who, although he is eligible to enroll in the Federal Medicare Program, is not covered by the complete Federal program.]

9. Any person suspended from work without pay for more than one full coverage period as the result of disciplinary action for the period of suspension.

17:9-4.4 State; ineligible employees defined

(a) For purposes of State coverage, "employee" shall not mean any person who is paid:

1.-4. (No change.)

[5. Any employee who is on a Federal payroll or combination of Federal and State payrolls;]

[6.]5.(No change in text.)

[7. Any person who is on the payroll of another state, whether or not such person is also on a New Jersey State payroll;]

[8.]6. Any otherwise eligible employee for whom the State, directly or indirectly, provides benefits under any other plan, which benefits have a value equal to or in excess of the benefits payable under the State [Employees] Health Benefits Act.

17:9-4.5 Local; employee defined

(a)For purposes of local coverage, "employee" shall mean an appointive or elected officer or full-time employee of the local employer, including an employee who is compensated on a fee basis as a convenient method of payment of wages or salary, but who is not a self-employed, independent contractor compensated in a like manner.

(b) To qualify for coverage as an appointive officer, an employee must be:

1. Appointed to an office specifically established by law, ordinance, resolution or such other official action required by law for establishment of a public office by an appointing authority. A person appointed under a general authorization, such as, "to appoint officers" or "to appoint such other officers," or similar language, is not eligible to participate as an appointive officer and must qualify for participation as a full-time employee; and

2. The employee must be invested with some portion of political power partaking in any degree in the administration of civil government, and the duties of such employment must emanate from the sovereign authority. The employee's duties must be integral to local government, and the employee must have some authority to make decisions on behalf of the civil government.

17:9-4.6 Local; full time defined

(a) For purposes of local coverage, "full-time" shall mean:

1. (No change.)

2. The employer, at its option, may grandfather all employees who were eligible for coverage under the location's previous definition of "full- time."

[2.]3. (No change in text.)

(b) (No change.)

17:9-4.7 Multiple positions

For purposes of State and local coverage, "full-time" shall mean employment of an employee who holds multiple public positions [at the same time, if the employee would otherwise be eligible for coverage in any one of such positions] with the same employer which in the aggregate would meet the eligibility requirements for coverage as a full time employee. If an employee holds multiple public positions with multiple employers, the employee must meet the eligibility requirements for coverage with each employer to get coverage from that employer.

SUBCHAPTER 5. CHARGES

17:9-5.1 Separate experience; State and local

The experience of local employers [should] may be considered separately from that of the State. The Commission may particularize subgroups for the purposes of determining rates

17:9-[5.3] 5.2 [Advance charges] Charges; interest charges

(a) By adoption of the appropriate resolution, the employer may request a premium delay of 30 or 60 days after the customary due date for such charges. If the employer terminates participation, any amounts outstanding must be paid with the final billing.

[(a)](b) For the purpose of local coverage, in the [ traditional program] Traditional Plan, the employer must remit to the Division of Pensions and Benefits charges covering a one-month period [in advance of the coverage date whereas charges for HMO coverage are remitted directly to the HMO in which the employee is enrolled] by the due date printed on the bill.

[(b)] (c) If the transmittal report and full payment of health benefits charges are not received within 15 days of the due date, as cited on the monthly transmittal mailed from the Division of Pensions and Benefits, interest at the rate of one percent per annum above the average annualized daily rate of return on the State Cash Management Fund as published by the Division of Investment for the most recent fiscal year shall be applied to the total transmittal of health benefits charges from the 16th day until the payment is received. The interest penalty will also be applied if payment is received by the Health Benefits Bureau without the transmittal report for proper distribution.

17:9-[5.4] 5.3 Local employer payment of dependent charges

(a) (No change.)

(b) Any employer who elects to pay any portion of the cost for dependent coverage shall pay the same dollar amount toward or [proportion] percentage of the cost of such dependent coverage for all employees covered in the program.

(c) However, when a local employer [agrees to pay all of the cost for dependent coverage] submits a resolution provided by the State Health Benefit Commission to change the amount paid toward the cost of dependent coverage, all employees must be resolicited with respect to coverage for themselves and their dependents.

(d) The employer shall give all [of his] employees an opportunity for completing, and forwarding a new enrollment form within 60 days following the employer's assumption of the dependent premium charges.

(e) (No change.)

17:9-[5.5] 5.4 Local employer resolution; [Chapter 88, P.L. 1974] P.L. 1974, c.88; [Chapter 54, P.L. 1979] P.L. 1979, c.54; P.L. 1999, c.48

(a) A local employer will satisfy the requirements of [Chapter 88, P.L. 1974] P.L. 1974, c.88, by adopting a resolution designed to:

1. (No change.)

2. Continue as long as the [State is paying the cost if its eligible pensioners and their dependents in accordance with the provisions of Chapter 75, P.L. 1972] employer participates in the program;

3. Provide for local employer reimbursement of Federal Medicare charges for eligible pensioners and/or their spouses, as well as the payment of health insurance charges required by the program, on a basis comparable to the reimbursement made by the State to its eligible pensioners and their spouses in accordance with the provisions of [Chapter 75, P.L. 1972] P.L. 1972, c.75 (see N.J.A.C. 17:9-[5.8]5.5);

4. Require the local employer to pay the full cost of Traditional, [or] NJ PLUS, or HMO coverage;

5. Provide for an effective date not earlier than the first day of the month at least 90 days following receipt of the local employer's resolution on forms approved by the [division] Division.

(b) A local employer may also adopt an additional resolution designed to apply to all eligible pensioners and their dependents who retired on or after July 1, 1964, in accordance with the provisions of [Chapter 54, P.L. 1979] P.L. 1979, c.54. Such resolution shall meet the prescriptions of subsection (a) of this section.

(c) Under the provisions of P.L. 1981, c.436, as amended, an educational or local employer may also adopt an additional resolution designed to apply the provision of Chapter 88 to surviving spouses of qualified retirees.

(d) Under the provisions of P.L. 1981, c.436, as amended, an educational or local employer may also adopt an additional resolution designed to apply the provision of Chapter 88 to those former employees who retired since the employer adopted the provisions of the State Health Benefits Program but who did not continue coverage because of the cost to the member.

(e) Under the provisions of P.L. 1999, c.48 (N.J.S.A. 52:14-17.38), a participating local employer, excluding employers deemed to be covered by N.J.S.A. 52:14-17.28b or employees of school boards covered by N.J.S.A. 52:14-17.32f, 17.32f1 and 17.32f2 may by resolution adopt any of the age and service requirements found in N.J.S.A. 52:14-17.38 in determining eligibility to qualify for employer-paid post-retirement medical benefits. A participating local employer may also negotiate payment obligations with their employees for post-retirement medical benefits. The payment obligations of the participating local employer shall be the payment obligations applicable to the employee on the date the employee retires on a disability pension or the date the employee meets the service credit and service requirements for the employer payment of coverage as established by the resolution adopting the provisions of P.L. 1999, c.48.

[17:9-5.6 (Reserved)]

17:9-5.5 Medicare refunds

(a) Where authorized by law, a participating local employer paying for the cost of coverage for enrollment in a SHBP Plan for a retiree subscriber may reimburse the retiree for all or part of the cost of Part B of the Federal Medicare program for the retiree subscriber and enrolled spouse, as appropriate. The participating local employer is responsible for the payment of such reimbursements.

(b) All reimbursements made pursuant to (a) above shall be made payable to the retiree subscriber constituting the most timely charge payment for Medicare Part B coverage. The amount of the reimbursement shall be determined by law or, through a collective bargaining agreement or contract, but in no case shall it exceed the standard monthly cost of Medicare Part B. The reimbursement shall be made as frequently as determined by the participating local employer, but not less frequently than annually.

(c) In no event shall duplicate reimbursements be made to any subscriber for the subscriber or the subscriber's spouse.

(d) For retirees of the State, since Medicare Part B premiums reimbursements are dependent upon sufficient, annual appropriations from the legislature, eligible reimbursements regarding Medicare Part B premiums will include only those premiums that have been paid within the 12 months immediately preceding the date of submission on the appropriate claim for reimbursement form by the retiree subscriber. Medicare Part B premiums paid prior to the 12 months immediately preceding the date of submission of the appropriate claim for reimbursement form are not eligible for reimbursement.

17:9-[5.9] 5.6 Refunds rejected

Any request for refund not specified in N.J.A.C. [17:9-5.7 and 5.8] 17:9-3.5 and 5.5 shall be denied. For example, a [ husband and wife] member and spouse may be employed in the same or in different locations, each location participating in the State Health Benefits Program and both having family coverage, or both having [husband and wife] member and spouse coverage; in spite of the apparent duplication of coverage, neither of the covered employees would be eligible for a refund. Or, the [wife] spouse carries only single employee coverage under the State program while [her husband] the member is covered by a plan in private industry where the employer pays for employee and dependent coverage; no refund would be payable since both would have to have been in public employment covered by the State program. Or, if one spouse applies for Medicare reimbursement for [himself or herself and his or her] the member and spouse, the other shall not receive duplicate reimbursement.

17:9-[5.10]5.7 Retroactive charges; payment due

Retroactive charges covering the entire period of retroactivity will be calculated on the basis of the charge in effect on the [date the employee is actually enrolled] subscriber's effective date of coverage.

17:9-[5.11]5.8 Charges and coverage; 10-month employees

(a) Employees hired as of September 1 under a 10-month contract shall have [charges] any premiums for which they may be responsible deducted from the wages they received in September to establish their coverage as of the beginning date of their employment. In order to continue a 10-month employee's coverage during the months of July and August, sufficient charges will be deducted prior to the expiration of their 10-month contract to continue their coverage during the heretofore mentioned months[, provided their employment resumes in September].

(b) Regarding 10-month contract State employees paid on a biweekly basis through the State's Centralized Payroll System, the effective date of coverage for September enrollments will be the period which is the one nearest September 1.

(c) (No change.)

17:9-[5.12]5.9 (No change in text.)

SUBCHAPTER 6. RETIREMENT

17:9-6.2 Coverage for prospective retirants

(a) For purposes of retired coverage, continuity of coverage may be extended until such time as the application for retirement is formally approved or denied by the Board of Trustees of the retirement system paying the benefit or by the [carrier] annuity provider underwriting the individual annuity contracts.

1. If it is not necessary for a Board of Trustees to approve the application, then the retirement application will be considered approved when the necessary action has been taken by the Division of Pensions and Benefits, the local retirement system, or the [carrier] annuity provider under the Alternate Benefits Program.

2. (No change.)

3. Should coverage lapse through no fault of the retired employee or [his or her] the retired employee's spouse who would be eligible to continue such coverage, retroactive coverage for no more than six months may be granted, provided [charges] that the retroactive and currently due premiums are received.

(b) Any employee, upon retirement, or an eligible survivor of such employee will be notified by regular mail of [his or her] the right to continuous coverage in the State Health Benefits Program. The retired employee or eligible survivor must, within a [15-day] 30-day period following the receipt of the letter offering retired continuing coverage, submit the appropriate application and, if required, the charges for such coverage[, if required]. Any retired employee or eligible survivor not responding within the [15-day] 30-day period shall receive a second notice [by certified mail].

17:9-6.3 [Retired] Retiree coverage; limitation

(a) A retiree , but not the retiree's surviving spouse or dependent, may change coverage to include a spouse and other dependents by submitting a completed application within 60 days of a change in family status (marriage [or divorce], birth or adoption of a child, [death] or a significant change in health coverage due to spouse employment). The dependent shall be enrolled retroactively to the date of [eligibility] the qualifying event.

1. If a retiree, but not the retiree's surviving spouse or dependent, wishes to add an eligible spouse or dependent and the completed application is not received within 60 days of a family status change, there shall be a minimum waiting period of two full months upon the Division's receipt of a completed application to change coverage. A dependent may be enrolled as of the first day of the month following the two-month waiting period. A dependent added in this manner may be added to a retiree's contract only once.

(b) [Pensioners] Retired employees, whose original retirement allowance or pension is less than the charge to be deducted to pay for the cost of the coverage to such [pensioners retired employees, will be permitted to continue coverage provided that the [ pensioner] retired employee pays for the cost of such coverage in advance [on a quarterly basis] on a monthly basis, in which case there will be no [pension] health benefit deduction from the retirement allowance or pension check.

(c) If the [pensioner] retired employee moves and is no longer able to be serviced by a health maintenance organization (HMO) or the [organization] NJ PLUS network, or the HMO in which the retired employee is enrolled is terminated, the [pensioner] retired employee will have a 30-day period [for the selection of] to select coverage under another [participating organization or the traditional coverage] SHBP Plan.

(d) Any person who is otherwise eligible for benefits as a retired employee or dependent of a retired employee, but who, although eligible to enroll in the Federal Medicare program by reason of age or disability, is not covered by the complete Federal Medicare coverage Part A and B, is ineligible for coverage under the SHBP.

[(d)](e) A [pensioner] retired employee and/or spouse, who has maintained coverage in the State Health Benefits Program following retirement and is subsequently removed from such coverage for not having the complete Federal Medicare coverage Parts A and B as required by statute, will be permitted to obtain prospective reentry into the State Health Benefits Program once proof of complete Federal Medicare coverage Part A and B has been provided to the Division of Pensions and Benefits.

[(e) Coverage for a retired employee or the spouse of a retired employee of an employer who becomes a participating employer in the State Health Benefits Program shall be limited to that which is comparable to the coverage which the employer or spouse had under the group medical insurance plan of the employer immediately prior to the date the employer became a participating employer.]

17:9-6.4 [Disability earnings] Suspension of allowance

A [retirant] retired employee, whose [disability] retirement allowance has been suspended [as his or her income exceeded the limits established by law], shall have his or her health insurance terminated upon the suspension of [his or her] the allowance. Upon the reinstatement of the individual's allowance, [his or her] coverage will resume. [on a prospective basis only. However, where the employer is liable for the charge payment, the coverage shall be continued without interruption.]

17:9-6.5 Discontinuance of allowance

When a [retirant, beneficiary, or their designated representative fails to furnish information which results in the discontinuance of the] retired employee's or beneficiary's retirement allowance is discontinued, the [retirant's] retired employee's or beneficiary's coverage may be terminated upon such discontinuance. [ However, where the employer is liable for the charge payment, the coverage shall be continued without interruption.] Upon the reinstatement of the individual's retirement allowance, [his or her] health insurance  coverage will be resumed and may be made retroactive to the date of reinstatement of the retirement allowance. [The same applies whenever an allowance is discontinued such as in cases involving possible incompetency, change of guardian or other arrangements which may temporarily cause the suspension of the payment.]

17:9-6.6 Beneficiary, dependent or survivor

(a) An eligible beneficiary or survivor will have their coverage discontinued upon the death of the [retirant] retired employee but will be given the opportunity to continue coverage [on a prospective basis only, once they have filed proper applications for pensions and Benefits]. Coverage may be made retroactive for as much as six months provided the necessary charges are paid. [Any request for retroactive coverage in excess of six months shall be submitted to the secretary.]

(b) An eligible [dependent who is not the recipient of any monthly retirement benefit from a State-administered retirement system upon the death of the retired member,] surviving spouse will be offered the opportunity to continue participation in the State Health Benefits Program subsequent to the death of the retired member. The coverage will be no greater than the coverage that was in effect at the time of the retired member's death and will be limited to only those dependents covered at the time of the member's death. [The] If the surviving spouse is not the recipient of any monthly retirement allowance from a State-administered retirement system upon the death of the retired member, the Division of Pensions and Benefits will bill the [appropriate dependent] surviving spouse at the group rate [then in effect for such coverage on a quarterly calendar basis].

17:9-6.7 Coverage for PFRS and SPRS accidental death benefit recipients

(a) For the purposes of this section, "eligible person" means the [widow or widower] surviving spouse and child, as defined in N.J.S.A. 43:16A-1, of a member of the Police and Firemen's Retirement System, to or for whom an accidental death benefit is payable under N.J.S.A. 43:16A-10, and the surviving spouse and child, as defined in N.J.S.A. 53:5A-3, of a member of the State Police Retirement System, to or for whom an accidental death benefit is payable under N.J.S.A. 53:5A-14.

(b) (No change.)

(c) Persons eligible to participate in the program under this section shall participate in the retiree group. If there is a [widow or widower, or] surviving spouse, eligible children shall participate as dependents of the [widow or widower, or] surviving spouse. If there is no [widow or widower, or] surviving spouse, eligible children shall participate as members of the program, and their eligibility to participate shall continue as long as they qualify as children under the laws governing the retirement system of the deceased member.

(d) (No change.)

17:9-6.9 Eligibility for State payment of retiree coverage under P.L. 1997, c.330

(a)-(b) (No change.)

(c) The following persons are not eligible for benefits under P.L. 1997, c.330 (N.J.S.A. 52:14-17.32i et seq.).

1. (No change.)

2. A retiree of an employer other than the State for whom the employer pays [premium or periodic charges] any amounts for health benefits under the SHBP, including Medicare B reimbursements, as authorized by section 7 of P.L. 1964, c.125 (N.J.S.A. 52:14-17.38) and pursuant to a collective negotiations agreement, ordinance, or resolution on or after July 1, 1998;

3. A retiree of an employer other than the State for whom the employer pays [premium or periodic charges] any amounts for health benefits as authorized by N.J.S.A. 40A:10-23, including Medicare B reimbursements, and pursuant to a collective negotiations agreement, ordinance, or resolution, for the life of the retiree, on or after July 1, 1998;

4. A retiree of an employer other than the State for whom the employer pays [premium or periodic charges] any amounts for health benefits as authorized by N.J.S.A. 40A:10-23, including Medicare B reimbursements, and pursuant to a collective negotiations agreement, ordinance, or resolution, for a period of time less than the life of the retiree while the employer is paying [the amount of the premium or periodic charges] any amounts for health benefits, on or after July 1, 1998;

5.-6. (No change.)

(d) (No change.)

SUBCHAPTER 7. TERMINATION

17:9-7.1 Termination effective date

a) Cessation of active [full-time employment] SHBP employee coverage shall be deemed to occur on the last day of eligibility for the coverage period for which charges have been paid.

(b) If a SHBP subscriber does not remit payment by the end of the month in which payment is due and owing, the SHBP shall notify the member by regular mail that the right to continue coverage will be suspended if payment in full is not remitted within 30 days of the suspension notice. If no payment is made, the SHBP shall generate a notice of termination to the member indicating the termination date and restating the amounts due to reinstate coverage. Termination shall be effective on the last day of the month for which premiums were paid. The SHBP shall not reinstate the member unless the member remits the entire balance due. Once coverage terminates, reinstatement is not automatic and will only be done after a review of the individual's circumstances by the SHBP.

(c) Cessation of SHBP coverage for a member who is awaiting approval of a retirement benefit shall not occur if the retiring member agrees, in writing, to the deduction of any retroactive SHBP premiums owed by the subscriber from the retirement benefit when approved, the withdrawal check, or the return of pension contributions.

17:9-7.2 Termination [conversion rights; effective dates] of eligibility

(a) The coverage of an employee and such employee's eligible dependents shall [be terminated; subject to the conversion rights,] terminate whenever such employee's eligibility shall cease for any of the reasons given in [subsection] (c) [of this section] below.

(b) The effective date of termination shall be the last day of the coverage period corresponding to the payroll period or month in which the last payroll deduction was made from the employee's salary for [the] coverage [ of dependents], if any are required, or the last charge shall have been paid by the State for the employee's and/or [his or her] the employee's dependents' coverage or by the local employer for the employee and/or [his or her] the employee's dependents, as the case may be.

[(c) The reasons for the termination of eligibility are as follows:]

[1. Leave of absence without pay: The coverage of an eligible employee and of an employee's dependents during any period of authorized leave of absence without pay shall terminate on the last day of the second coverage period following the last payroll period or month for which the employee received a salary payment; except that coverage of such employee and such employee's dependents may be continued by such employee, provided that the employee shall pay in advance the total charge required for the employee's coverage and coverage of the employee's dependents during such period of authorized leave of absence without pay; provided that no period of continued coverage, as provided above, shall exceed a total of 20 biweekly payroll periods, or nine months, during which the employee receives no pay.]

[2. Change to part-time status. In the event that an employee's active full-time employment shall cease and employee shall become a "part-time" employee, such employee's coverage, and the coverage of such employee's dependents, shall be terminated.]

[3. An employee whose coverage terminated as a result of a change from full-time to part-time status cannot be reenrolled until he or she has reestablished his or her eligibility for coverage by serving the normal waiting period prescribed for new enrollees. In no event will the waiting period include any part-time service rendered by the employee.]

[4. The coverage of an employee whose eligibility has ceased because of his or her resignation, temporary layoff, separation through a reduction in force, or any other reason, and the coverage of his or her dependents shall be terminated subject to the conversion rights.]

[5. An employee, who has an award pending, or who received an award of periodic benefits under Workers' Compensation, may continue his or her coverage and the coverage of his or her dependents, provided that the employee shall pay to his or her employer in advance that portion, if any, of the charges due from the employees to continue the coverage under his or her existing coverage.]

[6. A retired employee or surviving spouse who voluntarily discontinues coverage because of a return to covered public employment, may reenroll in the State Health Benefits Program upon termination of the covered public employment.]

c) Coverage for the employee and the employee's dependents will terminate if:

1. The subscriber voluntarily terminates coverage;

2. The employee terminates employment;

3. The employee's hours are reduced so the employee no longer qualifies for coverage as a full-time employee. An employee whose coverage terminated as a result of a change from full-time to part-time status cannot be reenrolled until the employee has reestablished eligibility for coverage by serving the normal waiting period prescribed for new enrollees. In no event will the waiting period include any part-time service rendered by the employee;

4. The employee is on a leave of absence and the employee does not make required premium payments. The coverage of an eligible employee and of an employee's dependents during any period of authorized leave of absence without pay shall terminate on the last day of the second coverage period following the last payroll period or month for which the employee received a salary payment if the total charge for the coverage is not paid by the employee;

5. The employee enters the Armed Forces, is eligible for government- sponsored health services and is not receiving differential pay from the State or local employer;

6. The subscriber's employer ceases to participate in the SHBP;

7. The subscriber dies;

8. The employee is suspended; or

9. The employee is on a furlough or extended furlough and fails to make required premium payments in advance.

d) In addition to the above, coverage for dependents will end if:

1. The dependent no longer meets the SHBP definition of an eligible dependent found at N.J.A.C. 17:9-3.1;

2. The dependent dies;

3. The dependent enters the Armed Forces; or

4. The subscriber fails to make required premium payment(s) for dependents.

17:9-7.3 [Termination; Basic Benefits] Continuation of coverage

(a)-The [Basic Benefits] coverage of an employee, and an employee's dependents, may be continued [after termination of coverage under this group for any reason except voluntary termination, on a direct remittance basis under Left Group Coverage, as provided in the Commission's Master Contract or Contract.] if:

1. The employee has an award pending or received an award of periodic benefits under Workers' Compensation and the employee is not otherwise covered as an employee or retiree under the State Health Benefits Program. The employee may continue coverage and the coverage of the employee's dependents, provided that the employee shall pay to the employer in advance that portion, if any, of the charges due from the employee to continue the coverage;

2. The employee is on an approved leave of absence without pay. The coverage of such employee and such employee's dependents may be continued by such employee, provided that the employee shall pay in advance the total charge required for the employee's coverage and coverage of the employee's dependents during such period of authorized leave of absence without pay; provided that no period of continued coverage, as provided above, shall exceed a total of 20 biweekly payroll periods, or nine months, during which the employee receives no pay; or

3. The employee is on an approved State or Federal Family Leave.

i. The State Family Leave Act (N.J.S.A. 34:11B-1 et seq.) entitles an employee to continue 12 weeks of SHBP coverage in any 24-month period at the expense of their employer. This includes all health care benefits, including Prescription Drug, Dental and Vision Care benefits if the employer provides them. State Family Leave includes leave from employment to provide care for the birth or adoption of a child, or the serious illness of a child, parent or spouse. It does not provide for a leave due to the personal illness of the employee.

ii. The Federal Family Leave Act (Family and Medical Leave Act of 1993, 29 U.S.C. §§ 2601 et seq.) has benefits similar to the State Family Leave Act with the exception that the Federal act also requires that leave be permitted for the employee's own serious illness of up to 12 weeks in any 12- month period.

iii. In cases where the employee on an approved Family Leave has a deduction, the employer must make arrangements with the employee to receive direct payment for the required employee contribution. If the SHBP does not receive full payment from the employer, then the employee's benefit coverage will be terminated under the termination provisions of the SHBP program.

iv. The time an employee spends on Federal or State family leave shall not count as part of the COBRA eligibility period should an employee receive approval from their employer to extend the leave.

17:9-7.4 Voluntary termination

[An employee] A subscriber may elect voluntarily to terminate [his or her] coverage for the subscriber or [ coverage for his or her] the subscriber's dependents at any time, but termination of the [employee's] subscriber's own coverage shall automatically terminate the coverage of [his or her] the subscriber's dependents. Such voluntary termination shall be effected by written notice thereof to the State Health Benefits Bureau by use of the [enrollment and authorization form] New Jersey State Health Benefits Program application. Coverage may be reinstated for active employees after termination for the eligible employee and eligible dependents in accordance with the provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and during any subsequent open enrollment period. [Termination notices for employees enrolled in an HMO will be sent, directly to the HMO by the employer.] Coverage may be reinstated for retirees after termination of the retiree and eligible dependents only as permitted in Subchapter 6.

SUBCHAPTER 8. EMPLOYEE PRESCRIPTION DRUG [PROGRAM] PLAN

17:9-8.1 Employee Prescription Drug Plan

a) The Employee Prescription Drug Plan was established under the provisions of N.J.S.A. 52:14-17.29(F

b) Separate election shall be required for enrollment and for a change in, or a termination of, coverage in the Employee Prescription Drug Plan

c) The rules for eligibility and for determining the effective dates of coverage are the same as those of the State Health Benefits Program as administered by the State Health Benefits Commission in accordance with the provisions of N.J.S.A. 52:14-17.25 et seq. with the following exceptions

1. Except under the provisions of the Federal COBRA law, prescription drug coverage is not continued in the event of death, retirement, or other termination of the group coverage

2. There is no right of conversion of Employee Prescription Drug Plan coverage to non-group coverage

3. Employers, other than the State of New Jersey, may offer to their employees and eligible dependents enrollment in the State Employee Prescription Drug Plan, or another free-standing prescription drug plan, or elect to have prescription drug coverage under the offering of their State Health Benefits Program medical plans

i. If the employer elects to offer a free-standing prescription drug plan, the employee's share of the cost for this prescription drug plan may be determined by a formula different from that used to determine the employee's share of the cost of health coverage. The employee may pay a share of the cost of prescription drug coverage for the employee and for the employee's covered dependents as required by a bargaining unit agreement. The employer may establish by ordinance or resolution, rules for the employee's share of the cost for those employees not covered under a bargaining agreement

ii. If an employer, other than the State of New Jersey, offers a free- standing prescription drug plan other than the State Employee Prescription Drug Plan, this Plan must be comparable in design, as determined by the Commission, to the State Employee Prescription Drug Plan. If an employee declines the employer's offering of a prescription drug plan, no reimbursement for prescription drugs will be provided under the State Health Benefits Program medical plan in which the member is enrolled; and

4. Prescription drug classifications that are not eligible for coverage under the employer's prescription drug plan are also not eligible for coverage under the State Health Benefits Program medical plans except as Federally or State mandated.

17:9-8.2 Prescription drug cards [and booklets]

[(a) All identification] Identification cards shall be issued by the carrier upon initial enrollment or change of coverage. Identification cards may be reissued periodically [Each] For State employees, each issue [shall] may reflect the bargaining unit in which the State employee participates. All cards [and booklets] will be mailed directly to the subscriber's home whenever possible. Otherwise, cards are to be distributed through the payroll and personnel officers. [Requests for the general booklet shall be made to the Division.]

[(b) Applications for the replacement of cards will be accepted from those certifying a loss of their card, or in the case of divorce or separation, where coverage may be continued to a dependent.]

17:9-8.3 Termination; effective date

(a) The effective date of termination shall be the last day of the coverage period corresponding to the payroll period or month in which the last payroll deduction was made from the employee's salary for the coverage of dependents, if any are required, or the last charge shall have been paid by the State for employee's and/or his or her dependents' coverage or by the local employer for the employee and/or his or her dependents, as the case may be. Coverage may continue under the conditions set forth in N.J.A.C. 17:9-7.3.

(b) Eligibility shall be terminated [as follows] in accordance with the provisions of N.J.A.C. 17:9-7.2.

[1. In the case of leave of absence without pay, the coverage of an eligible employee and of an employee's dependents during any period of authorized leave of absence without pay shall terminate on the last day of the second coverage period following the last payroll period or month for which the employee received a salary payment, except that coverage of such employee and such employee's dependents may be continued by such employee, provided that the employee shall pay in advance the total charge required for the employee's coverage and coverage of the employee's dependents during such period of authorized leave of absence without pay; provided that no period of continued coverage, as provided above, shall exceed a total of 20 biweekly payroll periods, or nine months, during which the employee receives no pay.]

[2. In the event that an employee's active full-time employment shall cease and employee shall become a "part-time" employee, such employee's coverage, and the coverage of such employee's dependents, shall be terminated.]

[3. An employee whose coverage terminated as a result of a change from full-time to part-time status cannot be reenrolled until he or she has reestablished his or her eligibility for coverage by serving the normal waiting period as prescribed for new enrollees. In no event will the waiting period include any part-time service rendered by the employee.]

[4. The coverage of an employee whose eligibility has ceased because of his or her resignation, temporary layoff, separation through a reduction in force, or any other reason, and the coverage of his or her dependents, shall be terminated.]

[5. An employee, who has an award pending, or who received an award of periodic benefits under Workers' Compensation, may continue his or her coverage and the coverage of his or her dependents, provided that the employee shall pay to his or her employer in advance that portion, if any, of the charges due from the employees to continue the coverage under his or her existing coverage.]

[6. Where the otherwise eligible employee elects a voluntary furlough, as authorized by P.L. 1993, c.297, coverage shall continue with the employer paying the costs as if the member were an active employee.]

SUBCHAPTER 9. STATE EMPLOYEE GROUP DENTAL [EXPENSE] PROGRAM

17:9-9.1 State Employee Group Dental Program

a) The State Employee Group Dental Program was established under the provisions of N.J.S.A. 52:14-17.29(F

b) The program is voluntary. A separate election will be required for enrollment and for a change in, or a voluntary termination of, coverage in the State Employee Group Dental Program

c) The rules for eligibility and for determining the effective dates of coverage are the same as those of the State Health Benefits Program as administered by the State Health Benefits Commission in accordance with the provisions of N.J.S.A. 52:14-17.25 et seq. with the following exceptions

1. Except under the provisions of the Federal Consolidated Omnibus Budget Reconciliation Act of 1985, 29 U.S.C. §§ 1161-1168 (COBRA) law, coverage is not continued in the event of death, retirement, or other termination of the group coverage

2. There is no right of conversion from a Plan participating in the State Employee Group Dental Program to non-group coverage

3. Duplicate coverage is not permitted; an individual may be covered as an employee or as a dependent but not as both an employee and a dependent

4. Coverage may be continued during an approved leave of absence without pay of not more than three months (six biweekly pay periods) provided the employee pays the entire premium in advance (employer and employee shares of the premium for employees and dependents);

5. All employees enrolled for coverage are required to participate in the plan for a minimum 12-month period while eligibility for coverage exists unless minimum enrollment requirement is waived by the State Health Benefits Commission

6. Dependent coverage may be increased or decreased if a qualifying event occurs as defined by N.J.A.C. 17:9-2.4; and

7. If the member ceases to be eligible for coverage as defined in N.J.A.C. 17:9-7.2, coverage will terminate.

(d) Where the otherwise eligible employee elects a voluntary furlough, as authorized by N.J.S.A. 11A:6-1.1, coverage shall continue with the employer paying the costs as if the member were an active employee, provided that the employee remits in advance to the employer the amount required for the employee's contribution for coverage.

(e) Where the otherwise eligible employee elects a voluntary furlough extension, coverage may continue as if the member were an active employee provided that the employee pays the entire premium in advance (employer and employee shares for employee and dependents) unless the requirement is waived by the Merit System Board of the Department of Personnel.

17:9-9.2 Dental [expense cards and booklets] identification cards

[(a)] Identification cards will be [reissued periodically to assure the validity of coverage. All other cards will be] issued by the carrier [during the contract year] upon the initial enrollment or change of coverage. Identification cards will be reissued periodically to assure the validity of coverage. All cards [and booklets] will be [distributed through the payroll and personnel officers. Upon termination of employment or coverage, payroll and personnel officers shall make every effort to obtain a return of the identification card]  mailed directly to the employee's home.

[(b) Applications for the replacement of cards will be accepted from those certifying a loss of their card or, in the case of divorce or separation, where coverage may be continued to a qualified dependent.]

17:9-9.3 Enrollment charges

Each eligible employee who enrolls for coverage shall be required to authorize the taking of deductions in order to pay for [one half of the premium charges for himself and his qualified dependents] the employee's share of the cost of coverage for the employee and enrolled dependents.

17:9-9.4 Enrollment forms

At [a] the time each employee first becomes eligible for coverage, [he] the employee may complete an enrollment [and authorization] form[s] indicating [his] the employee's election to enroll for coverage on [ his] the employee's own behalf and on behalf of [ his] the employee's qualified dependents under one of the options to be provided in the [master] contract. When new dependents are acquired subsequent to enrollment, the employee must complete a new enrollment application within 60 days of the event to add such dependent(s) to the coverage. In the absence of any authorization for payroll deductions, coverage cannot be extended.

17:9-9.5 Annual enrollment period

An employee who does not select coverage for the employee, or for the employee's eligible dependents when first eligible, may complete and submit an enrollment application to start such coverage during any subsequent open enrollment period

17:9-9.6 Waiting period--orthodontics under the dental expense plan

[There shall be a two-month (four biweekly pay periods) waiting period before coverage can begin on behalf of employees who have applied for themselves and their qualified dependents. In addition to such two-month waiting period, there shall be an additional eight-month waiting period before participants will be eligible for orthodontic benefits.] Credit for qualified State service immediately preceding [their] the employee's election to participate [at the inception of] in the plan or during any annual enrollment period [can be counted] shall count towards establishing the 10 months or more of continuous service required for orthodontics. Otherwise, all other benefits will be available and such participants will become eligible for orthodontics as soon as 10 months of continuous qualified State service has been accumulated.

17:9-9.7 Covered expenses

[While the master contract] The Plan handbook supplements the master contracts and contains the specific provisions for services to be covered and those which are excluded. [with the necessary limitations pertaining to different types of services, essentially the State Dental Expense Program will provide for the reimbursement of 80 percent of the usual, customary, and reasonable charges for diagnostic, prophylaxis, restorative, palliative, endodontic, oral surgical, and orthodontic procedures performed by licensed dentists (or dental hygienists), allowing for a $25.00 annual deductible per eligible member with a $75.00 maximum family deductible (three deductibles). Among other limitations, orthodontics is delimited to the correction of bite problems, caused by the malformation of tooth or bone structure, for covered persons who have not reached their 19th birthdate with a maximum of $800.00, including charges for diagnosis and active and retention treatment.]


TEACHERS' PENSION AND ANNUITY FUND
INELIGIBLE POSITIONS; INTERIM APPOINTMENT TO BOARDS OF EDUCATION FOR THOSE
NOT COVERED BY THE PROVISIONS OF P.L. 2001, C.355 (N.J.S.A. 18A:66-53.2B)

Cite as 35 NJR 5148(a)

Adopted Repeal: N.J.A.C. 17:3-2.6

Adopted November 3, 2003

The agency proposal follows:

Summary

N.J.A.C.17:3-2.6 became effective on December 20, 1999 in response to Attorney General's advice regarding whether a consultant or independent contractor can fill a certificated interim position with a board of education under the pension statutes. After applying a detailed analysis using the 20 factors set forth in IRS Revenue Ruling 87-41,1987-1C.B.296 to the certificated interim position, the memorandum concluded that the interim position in question was not that of a consultant, but that of an employee. It added that public employers should not be permitted to skirt the statutes governing the retirement system by classifying their workers as independent contractors or consultants.

The Teachers' Pension and Annuity Fund (TPAF) Board of Trustees, in accord with the above mentioned memorandum, determined that a new rule was necessary to clarify when a certificated employee in an interim or temporary position with a board of education is ineligible for enrollment into the retirement system, and when enrollment is required.

After the promulgation of N.J.A.C.17:3-2.6, there were a number of appeals brought to the TPAF Board of Trustees requesting extensions of the six-month period in which a retiree is ineligible for membership in the TPAF. The Board, after reviewing many of these requests for extensions, determined in 2001 that amendment of the rule was necessary. The amendment provided for, at the TPAF Board's discretion, an additional extension of no more than six months. The amendment provided factors for the Board to consider when determining whether an extension is warranted.

On January 6,2002, P.L.2001,c.355 was enacted. This law provided a one- year exception for enrollment in the retirement system for certificated superintendents and administrators in positions of critical need and also provided for an additional year of employment if necessary. The Board then amended N.J.A.C.17:3-2.6 to exclude those covered under the statute. Upon further consideration, though, the Board has determined that chapter 355 (N.J.S.A.18A:66-53.2b)covers the only exception to the enrollment after retirement provisions, and, therefore, the rule is contrary to current statute and must be repealed. For the above stated reasons, the Teachers' Pension and Annuity Fund Board of Trustees believes it is necessary to repeal this rule.

A 60-day comment period is provided and, therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rule making calendars.

Full text of the proposal follows:

17:3-2.6 [Ineligible positions; interim appointment to Boards of Education for those not covered by the provisions of P.L. 2001, c.355 (N.J.S.A. 18A:66-53.2b)]

(Reserved)

[(a) Any person retired from the Teachers' Pension and Annuity Fund who is not covered by the provisions of P.L. 2001, c.355 (N.J.S.A. 18A:66- 53.2b), whose benefit has become due and payable as provided by N.J.A.C. 17:3-6.3 from the Teachers' Pension and Annuity Fund who is temporarily appointed to any position listed in N.J.A.C. 17:3-2.1 or the functional equivalent thereof, shall be ineligible for enrollment in the retirement system if the total time for all interim appointments with one board of education does not exceed six months. If the total time for all the interim appointments with one board of education exceeds six months, the individual shall be declared an employee for pension purposes and shall be enrolled in the Fund effective the first day of the seventh month of service.]

[(b) At the TPAF Board's discretion, an extension of no more than six months of service with one board of education may be granted on a case-by-case basis. The retired member must submit the request for an extension. Factors to be considered by the TPAF Board when considering an extension include, but are not limited to, the following:]

[1. The availability of an on-site replacement;]

[2. External factors such as:]

[i. Pending litigation;]

[ii. Medical leaves/death;]

[iii. Construction/reconstruction;]

[iv. Disasters; and]

[v. Rapid turnover of interims in the position;]

[3. The degree of student contact;]

[4. Whether a contract has been issued for the position (interim to fill gap until new hire is able to start position);]

[5. The time of year; and]

[6. The board of education's policy on hiring including:]

[i. Quality of search;]

[ii. Length of search; and]

[iii. Rejection factors.]


NEW JERSEY REGISTER
VOLUME 35, NUMBER 11
MONDAY, JUNE 2, 2003
35 N.J. Reg. 2533(c)

PUBLIC NOTICE
TREASURY-GENERAL

DIVISION OF PENSION AND BENEFITS

NOTICE OF PROPOSAL TO INCLUDE THE NON-CIVIL SERVICE POSITIONS OF CORRECTION OFFICER, SOMERSET COUNTY, CORRECTION CORPORAL, SOMERSET COUNTY, CORRECTION SERGEANT, SOMERSET COUNTY, CORRECTION LIEUTENANT, SOMERSET COUNTY, CORRECTION CAPTAIN, SOMERSET COUNTY, CORRECTION CHIEF, SOMERSET COUNTY, SHERIFF'S OFFICER, SOMERSET COUNTY, SERGEANT SHERIFF'S OFFICER, SOMERSET COUNTY, LIEUTENANT SHERIFF'S OFFICER, SOMERSET COUNTY, CAPTAIN SHERIFF'S OFFICER, SOMERSET COUNTY AND CHIEF SHERIFF'S OFFICER, SOMERSET COUNTY IN THE POLICE AND FIREMEN'S RETIREMENT SYSTEM

Take notice that in compliance with N.J.A.C. 17:4-2.1(h), and the recommendation of the Director of the Division of Pensions and Benefits, and as determined by the Board of Trustees of the Police and Firemen's Retirement System, the above titles meet the definition of "policeman" or "fireman" as defined by N.J.S.A. 43:16A-1(2). The Board of Trustees of the Police and Firemen's Retirement System hereby proposes to include the positions listed above as eligible titles in the Police and Firemen's Retirement System.

Interested parties should comment by July 2, 2003 to JoAnn Martin, Board and Trustee Administration, Division of Pensions and Benefits, PO Box 295, Trenton, NJ 08625-0295.


CONSOLIDATED POLICE AND FIREMEN'S PENSION FUND
CONSOLIDATED POLICE AND FIREMEN'S PENSION FUND RULES

Proposed Readoption with Amendments: N.J.A.C. 17:6

Proposed Repeals: N.J.A.C. 17:6-3.7, 3.8, 3.9 and 3.10

Cite as 35 N.J. Reg. 2409(a)

Summary

The Division of Pensions and Benefits has recently reviewed the administrative rules within N.J.A.C. 17:6 concerning the Consolidated Police and Firemen's PensionFund. Accordingly,the Division of Pensions and Benefits proposes to readopt the current rules within N.J.A.C. 17:6, which expireonNovember23,2003.

With the following amendments and deletions, and to extend the expiration date for such rules to May 21, 2004, pursuant to N.J.S.A.52:14B-5.1c. The current rules deal with the administration and retirement aspects associated with the Consolidated Police and Firemen's Pension Fund.

The Consolidated Police and Firemen's Pension Fund is a closed Fund which has not had any active contributing members since March 1, 1994. The declining membership(as of July 2002)totaled 233 retirees with an additional 965 beneficiaries receiving benefits for a total of 1,198 beneficiaries and retirees still collecting benefits. The average age of the retirees is almost 90.

Because all members have retired, and there will be no new members to use the retirement rules, the Commission of the Consolidated Police and Firemen's Pension Fund(Commission)proposes to repeal most of Subchapter 3. The Commission is proposing the following amendments and repeals:

The Commission proposes to amend N.J.A.C.17:6-1.1(a) by eliminating the reference to emiannual meetings in June and December and replacing it with an annual meeting as required by N.J.S.A.43:16-6.2. If an additional meeting is necessary, the Secretary of the Commission will schedule it.Presently,the retired members of the Commission are both in their nineties, and the Division does not wish to require them to attend an additional meeting unless there is some business that must be addressed.

N.J.A.C.17:6-1.2 would be amended to clarify that both the business of the Fund as well as the finances would be conducted on a fiscal year. This has been done for many years. The language for this section would be the same as found in the "fiscal year" definition at N.J.A.C.17:2-1.2 and 17:3-1.2.

The Commission proposes to amend N.J.A.C.17:6-1.3 by eliminating the reference to the June meeting and replace it with the "annual" meeting. Because it is an annual meeting, the words "of each year" would be deleted because they are edundant "Board" would be replaced with "Commission." The Director of the Division now appoints the Secretary without the Commission; therefore, reference to the Commission in this section would be eliminated. N.J.A.C.17:6-1.4,1.5,1.6,1.7 and 1.8 would remain unchanged.

N.J.A.C.17:6-3.3,3.4 and 3.5 would also remain unchanged.

The Commission proposes to repeal N.J.A.C.17:6-3.7,3.8,3.9 and 3.10.

These rules deal with the disability retirement process, when a retirement is due and payable and what physicians to use for medical examinations for disability retirements. Because the last active member retired in 1994, these rules are no longer necessary. A 60-day comment period is provided on this notice of proposal and, therefore, pursuant to N.J.A.C.1:30-3.3(a)5, this proposal is not subject to the provisions of N.J.A.C.1:30-3.1 and 3.2 governing rule making calendars.

17:6-1.1 Commission meetings

(a) The Commission shall meet [semiannually on the second Wednesday of June and December] annually at the beginning of each year unless [a change is declared in order by] the Secretary [at an appropriate time] determined that an additional meeting is required [and subject to the exception of the annual meeting prescribed by] pursuant to N.J.S.A. 43:16-6.2.

(b) (No change.)


GENERAL
DISABILITY RETIREMENTS;
FILING AFTER MORE THAN TWO YEARS' DISCONTINUANCE OF SERVICE


Adopted Amendment: N.J.A.C. 17:2-6.15

Cite as 35 N.J. Reg. 4734(a) 

Adopted October 7, 2003

Summary

N.J.A.C. 17:2-6.15 was first adopted to permit members to file for disability retirements after they have discontinued service for more than two consecutive years. Active membership in the retirement system ceases after discontinuance of service for two consecutive years.

Under the former rules and operating procedures of the Division, members could not file for disability retirements if their active membership had ceased. There were several cases in recent years where members were clearly disabled and discontinued service because of their disabilities, but did not file for disability retirements within two years of the discontinuation o fservice.

The Board was originally concerned regarding the operation of this rule and Imposed a five-year test period. After more than four years of applying the rule, the Board has determined that it wishes to continue providing the exception. Because the Board does not wish to limit the periodthatthisrule would be effective, the Board proposes to delete N.J.A.C.17:2-6.15(d). The Board also proposes to deleteN.J.A.C.17:2-6.15(c) because any new retirements under this rule would be effective after the application for retirement allowance was filed and in no case would a retirement application be retroactive to the February 1,1999 date.

A 60-day comment period is provided on this notice of proposal and, therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this proposal is not subject to the provisions of N.J.A.C.1:30-3.1 and 3.2 governing rulemaking calendars.

17:2-6.15 Disability retirements; filing after more than two years' discontinuance of service (a)-(b) (No change.) [(c) This rule shall be applicable to all vested members and former members whose retirements were effective prior to February 1, 1999, but disability retirements under this rule shall not be effective prior to February 1, 1999.] [(d) This section shall be effective until December 31, 2003, unless such effectiveness is extended through amendment of this subsection.]


TREASURY-GENERAL
Division of Pensions and Benefits
General Administration


Adopted Repeal and New Rules: N.J.A.C. 17:1

Cite as 35 NJR 3594(a)

Adopted August 4, 2003

Summary

When the Division of Pensions and Benefits becomes aware of a change in the laws or a court decision that possibly could affect the operations of the Retirement Systems, the administrative rules are reviewed and, if changes there in are mandated, steps are taken to propose changes to those rules to conform to the new statute or court decision. Additionally, the rules are periodically reviewed by the Division's staff to ascertain if the current rules are necessary and/or cost efficient. The chapter originally became effective prior to September 1,1969. Pursuant to Executive Order No.66( 1978), the chapter was readopted in 1983. Pursuant to Executive Order No.66, Chapter 1 expired on May6,1993 and was adopted as new rules effective August 2,1993. Chapter 1 was readopted in 1998.

In early 2002, the Division of Pensions and Benefits began a thorough review of Chapter 1, which included input from all levels of Division personnel. After careful scrutiny of the current rules in N.J.A.C.17:1, the Division determined that it made sense to repeal the existing rules so that new rules could be promulgated and better organized to reflect the current operating procedures and policy within the State-administered retirement systems. In order to maintain the current chapter in effect pending the adoptionpending the adoption of the proposed repeal and new rules, the Division has also proposed there adoption without change of this chapter. The proposed readoption was published on January 21, 2003 and may be found at 35N.J.R.387(a).

Accordingly, the Division of Pensions and Benefits proposes to repeal the existing chapte rand to propose new rules as follows. In the rules governing the general administration of the Division of Pensions and Benefits, there are those which are common to all employee benefit programs administered by the Division as well as those which are unique to specific systems, such as the Central Pension Fund and the State Agency for Social Security. The current rules dealt with accounting procedures, the Central Pension Fund, claims and credit, hearings, honorable service, pension adjustments, Social Security, unemploymen insurance, administrative practices involved in the administration of all of the State-administered retirement systems and health benefits programs and the New Jersey State Employees' Cafeteria Plan.

The proposed new rules would make the chapter more user friendly. Rules regarding retirement would be placed together as would rules regarding accounting practices, or administrative practices. Previously the rules were not separated by specific Division operations but were grouped together. The proposed new rules would reorganize the chapter in to more exact subchapters to better identify what aspect of the systems is being discussed. The new subchapters would be Administrative Practices; Accounting; Enrollment, Membership, Transfers and Withdrawals; Membership, Transfers and Withdrawals; Purchases and Eligible Service; Insurance and Death Benefits; Honorable Service; Retirements; Pension Adjustment Program; Social Security; Unemployment Insurance; Central Pension Fund; and NJ State Employee Cafeteria Plan. Many of the rules proposed are existing rules with minor corrections, such as the addition of gender neutral pronouns, or the addition of the Division's full name. Other rules reflect issues with which the Division has only had to deal with recently, such as bankruptcies and domestic relations orders.

Subchapter 1. AdministrativePractices

Proposed Subchapter 1 would be administrative practices and would consolidate all rules regarding the Division of Pensions and Benefits administrative practice at the beginning of the chapter, where they will be more easily accessed.

Proposed new rule N.J.A.C.17:1-1.1 would be added, detailing the organization and history of the Division of Pensions and Benefits.

N.J.A.C.17:1-1.2, Records, would consolidate all rules regarding records availability throughout the Division. This rule was formerly N.J.A.C. 17:1-4.1.

N.J.A.C.17:1-1.3, Hearing request, would detail the information needed to request a hearing. This rule was formerly N.J.A.C.17:1-5.1 and additions have been made to the rule to reflect the language currently used by the Division when outlining a member's right to appeal. The required notice has been expanded through the efforts of the Board Secretaries and the Attorney General's Office to include more information regarding the appeals process. The new paragraphs are to replace the existing notice.

N.J.A.C. 17:1-1.4, Mail distribution, would outline the process by which mail is received and distributed within the Division.

N.J.A.C.17:1-1.5,formerlyN.J.A.C. 17:1-.12, Annual statements, would provide the mailing schedules for annual member statements in the State- administered retirement systems.

N.J.A.C.17:1-1.6,formerlyN.J.A.C.17:1-1.13, Annual statements; supplemental annuity, would provide the mailing dates for annual statements for members of the supplemental annuity collective trust.

N.J.A.C.17:1-1.7, formerly N.J.A.C.17:1-1.15, Endorsements, which deals with what the Division will accept as a signature, would have a new subsection (f )which will clarify that an individual holding a power of attorney and acting in behalf of a member who makes application to designate, or change a beneficiary, may only designate the member's estate as the beneficiary for all death benefits payable on the member's account unless the power of attorney form specifically grants the the individual the right to designate beneficiaries. This has been a long standing requirement of the Division.

Proposed N.J.A.C.17:1-1.8, Priorities, formerly N.J.A.C.17:1-12.1, would list the priority of deductions from the monthly retirement allowances.

N.J.A.C.17:1-1.9, Bankruptcy, subsequent loans, formerly N.J.A.C. 17:1- 12.3, would be amended to better reflect the process in place regarding the effect of bankruptcies on loan balances. Subsequent loans taken after bankruptcy no longer require that the loan balance before the bankruptcy be added to the repayment schedule. The rule would also clarify that the loan deductions may be started again after a written request from the member and that the loan balance may be repaid through deductions from the retirement check or any benefits due from the retirement system at the member's death.

Proposed N.J.A.C.17:1-1.10, Survivor certifications, formerly N.J.A.C.17:1-4.23, and proposed N.J.A.C.17:1-1.11, Leaves of for maternity, formerly N.J.A.C.17:1-4.33, would remain unchanged from the existing text. Proposed new rule N.J.A.C.17:1-1.12, Domestic relations orders, would clarify what may be withheld, when it will be withheld and when withholdings will cease under domestic relations orders. The Division has been processing court orders for alimony, support or equitable distribution withholdings due to Attorney General advice as well as court decisions since the early 1990s, but has not published guide lines regarding what information the Division needs in an order to make the order acceptable for implementation.

Subchapter 2. Accounting

Subchapter 2, which was formally reserved, would become Accounting and all rules regarding the accounting practices for the Division of Pensions and Benefits would be consolidated under this section.

Proposed N.J.A.C.17:1-2.1, Receipts deposited, formerly N.J.A.C.17:1-1.1,and N.J.A.C.17:1-2.2, Remittance; limitation, formerly N.J.A.C. 17:1-1.2, would remain unchanged from the existing rules except for the proposed recodification in the new accounting subchapter.

Proposed N.J.A.C.17:1-2.3, Due dates for transmittals and reports, formerly N.J.A.C.17:1-1.3,would be changed from existing text by eliminating references to the Consolidated Police and Firemen's Pension Fund because there have been no active members of this Fund since 1994. Members of the Judicial Retirement System became State employees pursuant to P.L.1994,c.162, paid as State biweekly employees. Therefore they do not need to be separately listed. Existing subsections (c), (d) and (e) would be recodified as( b), (c) and (d) and existing (e) and (f) would also be consolidated. Existing subsections (g) and (h) would become (e) and (f). N.J.A.C.17:1-2.3(f )would change the date that the transmittals are due for State Health Benefits Program from the 24th of the preceding month for which the premium is due, to the 15th of the current month. Reporting agencies are considered in default if premiums are not paid wthin 15 days of the due date, and the rule would reflect actual Division practice. These billing practices have been in effect for many years, but have not been promulgated. The Division of Pensions and Benefits no longer receives transmittals for Social Security, therefore, the Division proposes to delete subsection (i) and add a new subsection (g) regarding 403 (b) salary reductions.

The Division proposes at N.J.A.C.17:1-2.4, Delinquent notices, formerly N.J.A.C.17:1-1.4, to change the current language by more accurately reflecting the process in place, should an employer not respond to a delinquent notice. This change would also clarify that this process only applies to delinquencies for the Report of Contributions.

Proposed N.J.A.C.17:1-2.5, Interest charges; delinquent transmittals; report of contributions, formerly N.J.A.C.17:1-2.5 would be changed to add the report of contributions to the title to better reflect the subject of the rule. Proposed changes would clarify that the six percent interest charge applies to the Teachers' Pension and Annuity Fund and Public Employees' Retirement System while employers in the Police and Firemen's Retirement System are charged a 10 percent interest charge as provided for by N.J.S.A. 43:16A-15.

Proposed N.J.A.C.17:1-2.6, Disbursement authorizations, formerly N.J.A.C.17:1-1.6, would remain unchanged from the existing rule.

The Division proposes at N.J.A.C.17:1-2.7, Disbursement; schedules, formerly N.J.A.C.17:1-1.7, to replace the word "rebates" with "refunds" to more accurately reflect the term used by the Division. Refunds may now be made more than once a week; therefore, the Division proposes to include language to reflect this.

Because many disbursements are made through electronic fund transfer, the Division proposes to clarify that N.J.A.C.17:1-2.8, Disbursement; limitations, formerly N.J.A.C.17:1-1.8, applies to those disbursements made by check.

Proposed N.J.A.C.17:1-2.9, Adjustmentstatements, formerly N.J.A.C.17:1-1.9, would be amended to reflect current practices and to clarify who is getting the refund. Local employees would be added to the list of those who receive direct payment. New information regarding clearing account overages would be added and the interest rate of "six percent" would be replaced with "at the current rate of interest earned by the annuity savings fund." This rate is set by statute in each of the retirement systems and is currently 83/4 percent.

ProposedN.J.A.C.17:1-2.10,Minimumadjustments,formerlyN.J.A.C. 17:1-1.10 replacestheword"rebates"to"refunds"toreflectDivisionusage.

"Bad balances"would be replaced by "unresolved differences" to better reflect current usage. Proposed changes to N.J.A.C.17:1-1.10(d)1 and 2 would current usage. Proposed changes to N.J.A.C.17:1-1.10(d) 1 and 2 would ed to the Division before the member had to reimburse the Division to $50.00.This would benefit the member. N.J.A.C.17:1-1.10(d)3 increases the repayment period from 12 months to a maximum period of 10 years.This would also benefit the member.

Proposed N.J.A.C.17:1-2.11, Annual reports of salary changes, formerly N.J.A.C.17:1-1.14, would be changed from existing text to reflect that reports may now be received by February 15 and August 15 to be processed in time for the next report of salary changes instead of the first of the month. County colleges are sent their report of salary changes at the same time as boards of education, so, the Division proposes to add them to this rule.

Proposed N.J.A.C.17:1-2.12, Lost pension checks, formerly N.J.A.C.17:1-1.16, would remain unchanged from existing text except for the change of the word" have"at N.J.A.C.17:1-2.12(a)3 to"has" to be grammatically correct.

Proposed N.J.A.C.17:1-2.13, Administrative expenses; proration among systems, formerly N.J.A.C.17:1-1.17, would be changed from existing text by adding a comma after the word "account" in th efirst sentence to be grammatically correct. A supplemental statement is also prepared for the State Health Benefits Program, therefore, this requirement would be moved to N.J.A.C.17:1-2.13(a)2. Former N.J.A.C.17:1-1.17(a)3, 4 and 5 would be deleted because this has not been Division practice for many years. Subsection

(c)would be reworded to better reflect current practice in which the State is reimbursed on a monthly basis for operational costs. Vouchers were replaced many years ago with electronic transfers.

The Division proposes at N.J.A.C.17:1-2.14, Employees reported on biweekly salaries, formerly N.J.A.C.17:1-1.20, to make it apply to all employees reported on a biweekly basis and not just those paid by centralized payroll. Available computer systems have made biweekly reporting possible for local employers.

Proposed N.J.A.C.17:1-2.15, Credit for partial month service, formerly N.J.A.C.17:1-4.34, would be changed to clarify that a member would receive, or may purchase a full month or biweekly pay period of credit so long as the member received enough salary or may purchase a full month or biweekly pay period of credit so long as the member received enough salary in that month or pay period to make a full pension deduction. The requirement of working 16 days in a month to receive credit for that month has not been in effect for many years, and has been deleted.

Proposed N.J.A.C.17:1-2.16, Workers' compensation without pay; employer's obligation regarding employee contributions, formerly N.J.A.C.17:1-4.39, would eliminate the word "disability" before benefits through workers' compensation and by adding the clarification that an employer is no longer responsible for the payment of an employee's pension contributions if the employee voluntarily resigns from employment "for reasons other than the inability to perform the job's functions due to the incident that was the basis or the workers' compensation award. "This clarification would benefit the employee who would not have resigned but for the injuries sustained at work.

Subchapter 3 .Enrollment, Membership, Transfers and Withdrawals

Subchapter 3, formerly the rules of the Central Pension Fund, would become, Enrollment, Membership, Transfers and Withdrawals.

The Division is attempting to organize this chapter in a way which will make the rules pertaining to more members at the beginning of the chapter. The Central Pension Fund is a very small fund that consists of the administration of a series of noncontributory pension acts. No reserves are established for the payments of these pensions. The rules of the Central Pension Fund will be found at new Subchapter 12.

Proposed N.J.A.C.17:1-3.1, Compulsory enrollments; failure to enroll, formerly N.J.A.C.17:1-4.2, would be revised by making all gender specific pronouns, neutral and changing the word "prescribed" to the more common, "required." The Division also would clarify the method of calculating the employer and employee costs and the period of time to be used.

Proposed N.J.A.C. 17:1-3.6, Insurance coverage; ineligibility, formerly N.J.A.C. 17:1-4.7 would remain unchanged from the existing text.

Proposed N.J.A.C. 17:1-3.7, Deduction schedules, formerly N.J.A.C. 17:1- 4.8, is different because the reference to Centralized Payroll has been deleted because the Division expects local employers to be able to report on a biweekly basis in the near future and would like this rule to apply to all deductions.

Proposed N.J.A.C. 17:1-3.8, Withdrawal application; processing, formerly N.J.A.C. 17:1-4.14, would be changed from the existing text to include clarification that a member cannot withdraw contributions if the member is a multiple, has a claim pending for worker's compensation, is on a leave of absence, has resumed covered employment, or was dismissed with charges pending. The amendments to the rule will make it substantially similar to the rules regarding withdrawals in all the retirement systems (see N.J.A.C. 17:2- 4.11, 17:3-4.11, 17:4-4.10, 17:5-3.8).

Proposed N.J.A.C. 17:1-3.9, Waiver of retirement benefits upon withdrawal, formerly N.J.A.C. 17:1-4.15, would be changed from existing text to clarify when an estimate of retirement benefits is required before a waiver may be signed.

Proposed N.J.A.C. 17:1-3.10, Peacetime military service; service credit, formerly N.J.A.C. 17:1-4.36, would be changed from existing text at N.J.A.C. 17:1-3.10(c)9 and 12 by changing the reference to the 10 or 12 month period immediately preceding such service to the year preceding such service. This would clarify what period would be used in the calculation.

Proposed N.J.A.C. 17:1-3.11, Compensation limit for exclusion from membership after retirement, formerly N.J.A.C. 17:1-4.38, differs from existing text by changing the calendar year to 2002 and the compensation limit from $10,000 to $15,000. These changes are necessary due to the enactment of P.L. 2001, c.278 which changed the amount a PERS retired member could earn before being required to re-enroll in the retirement system. The clarification that this rule only applies to retirees of the PERS would also be added.

Proposed N.J.A.C. 17:1-3.12, Interfund transfers; accumulated interest, formerly N.J.A.C. 17:1-12.5 would remain unchanged from existing text.

Subchapter 4. Purchases and Eligible Service The Division proposes to change the heading of Subchapter 4, which formerly was Claims and Credit, to Purchases and Eligible Service, to better reflect the subject matter of the subchapter.

Proposed N.J.A.C. 17:1-4.1, Purchases; calculation, interest on outstanding purchases or cash discount requested, formerly N.J.A.C. 17:1-4.13, would remain unchanged from existing text.

Proposed N.J.A.C. 17:1-4.2, Purchase terms; grace period, formerly N.J.A.C. 17:1-4.12, would remain unchanged from existing text.

Proposed N.J.A.C. 17:1-4.3, Final compensation; salaries to be used for a period of purchased service, formerly N.J.A.C. 17:1-4.27, would remain unchanged from existing text.

Proposed N.J.A.C. 17:1-4.4, Purchase of service credit; continuation of death benefits coverage; maternity leaves of absence, formerly N.J.A.C. 17:1-12.6, would be changed from existing text to add "and Benefits" to the Division's name.

Subchapter 5. Insurance and Death Benefits

Subchapter 5, Hearings, provided for the right to request a hearing, the time frame to request a hearing and that Administrative Hearings will be conducted by the Office of Administrative Law. The Division proposes to merge this subchapter of one rule into the new administrative practices subchapter and to create a new Subchapter 5, Insurance and Death Benefits.

Proposed N.J.A.C. 17:1-5.1, Multiple beneficiaries, formerly N.J.A.C. 17:1-4.9, would remain unchanged from the existing rule.

Proposed N.J.A.C. 17:1-5.2, Optional settlements; group life insurance, formerly N.J.A.C. 17:1-4.30, would remain unchanged from the existing rule.

Proposed N.J.A.C. 17:1-5.3, Accrued increase; limitations, formerly N.J.A.C. 17:1-7.7, would remain unchanged from the existing rule.

Subchapter 6. Honorable Service

There are no proposed changes to this subchapter. The rules currently found in Subchapter 6, N.J.A.C. 17:1-6.1, Honorable service, and N.J.A.C. 17:1- 6.2, Indictments, dismissals, litigation or appeals would remain unchanged from the existing rules.

Subchapter 7. Retirements

The current Subchapter 7, the Pension Adjustment Program, was established pursuant to N.J.S.A. 43:3B-1 through 6, P.L. 1958, c.143 and covers all eligible pensioners of the State-administered retirement systems regarding employer payments and delinquencies, administrative fees, return to public employment, waiver, and accrued increases. The Division proposes a new Subchapter 7, Retirements.The Pension Adjustment Program would then be found under Subchapter 8.

Proposed N.J.A.C. 17:1-7.1, Retirement quotations, formerly N.J.A.C. 17:1-4.16, would be revised from the existing text to reflect current Division practice. Quotations of benefits are now always mailed regardless of how many estimates have been done and all options are quoted if a beneficiary is listed. The rule would be made gender neutral and the "B" in "board" would be capitalized. References to maximum allowance would be eliminated because the maximum allowance is now referred to as the maximum option.

Proposed N.J.A.C. 17:1-7.2, Retroactive salary increases, formerly N.J.A.C. 17:1-4.17, would remain unchanged from the existing rule.

Proposed N.J.A.C. 17:1-7.3, Final compensation, formerly N.J.A.C. 17:1- 4.18, would be revised from the existing text to eliminate the set 15 percent increase in salary at retirement and replace it with language similar to that used in the creditable compensation rules for the retirement systems (N.J.A.C. 17:2-4.1, 17:3-4.1, 17:4-4.1). The words "Boards" and "Commissions" would be capitalized throughout.

Proposed N.J.A.C. 17:1-7.4, Biweekly salary computation; retirement and death benefits (final compensation or last year's salary), formerly N.J.A.C. 17:1-4.19, would be changed from the existing rule to eliminate references to State biweekly employees and centralized payroll. he Division of Pensions and Benefits expects more employers to begin reporting contributions on a biweekly basis and would like this rule to apply to all employers and not just State locations. The word "prescribed" would be changed to "covered" to clarify what period is covered and "within the covered period" would be replaced with "for the covered period" to better indicate that the retroactive salary must be for services rendered during the time period covered and not just paid during that time period.

Proposed N.J.A.C. 17:1-7.5, Disability applications; priorities, formerly N.J.A.C. 17:1-4.20, would reword section (a) to make it clearer than the existing language. The words, "Secretaries, Boards and Commissions" would also be capitalized.

Proposed N.J.A.C. 17:1-7.6, Medical examinations; out-of-State, formerly N.J.A.C. 17:1-4.26, would be changed from the existing rule by setting off the phrase "for members who live out of State" by commas and eliminating the requirement that the doctor be a New Jersey physician, so that members who live out of State may be seen by a doctor chosen by the Division who is closer to where they live.The word"independent" would replace "New Jersey" because the doctor would no longer have to be from New Jersey. The Division currently uses doctors from many of the neighboring states.

Proposed N.J.A.C. 17:1-7.7, Post-retirement employment; employer certification, formerly N.J.A.C. 17:1-4.28 would be changed from the existing rule to include the capitalization of the form title, "Certification of Service and Final Salary." Subsection (b) would be eliminated because the Division has not asked for affirmation that a member had terminated employment since the early 1980s. Because there is no longer a subsection (b), the "(a)" codification would also be eliminated.

Proposed N.J.A.C. 17:1-7.8, Employer resolution; involuntary disability application, formerly N.J.A.C. 17:1-4.29, would be different from the current rule because subsection (b) would be eliminated. Medical reports are to be submitted by the member and not the employer.

Proposed N.J.A.C. 17:1-7.9, Workers' compensation; reduction of retirement allowance, formerly N.J.A.C. 17:1-4.32, would differ from the existing rule to change the gender specific pronouns to gender neutral ones and to clarify at paragraph (a)3 that any remaining balance due under the provisions of paragraph (a)2 would reduce the survivor benefits payable.

Proposed N.J.A.C. 17:1-7.10, Ordinary disability applications; medical examinations, formerly N.J.A.C. 17:1-4.37, would remain unchanged from the existing rule except for the capitalization of the "B" in "board" and the "C" in "commission" and the addition of "and Benefits" to the Division's title.

Proposed N.J.A.C. 17:1-7.11, Waiver, formerly N.J.A.C. 17:1-7.6, would be amended from the existing language to include the addition of "and Benefits" to the Division's name and the replacement of the word "prescribed" with the more common "required." The Division no longer needs 30 days before a benefit may be reinstated; therefore, the Division proposes to delete this requirement. Clarification that there will be no retroactive payments of waived benefits would be added.

Subchapter 8. Pension Adjustment Program

The Pension Adjustment Program was established pursuant to N.J.S.A. 43:3B-1 through 6, P.L. 1958, c.143 and covers all eligible pensioners of the State-administered retirement systems regarding employer payments and delinquencies, administrative fees, return to public employment, waiver, and accrued increases. The Pension Adjustment Program was formerly found at Subchapter 7. The Division proposes to move the Pension Adjustment Program to Subchapter 8.

Proposed N.J.A.C. 17:1-8.1, Employer payments, multiple enrollees, formerly N.J.A.C. 17:1-7.1, would remain unchanged from the existing rule.

Proposed N.J.A.C. 17:1-8.2, Employer payments; delinquencies, formerly N.J.A.C. 17:1-7.2, would also remain unchanged except for the capitalization of the "D" in "division."

Proposed N.J.A.C. 17:1-8.3, Return to public employment; pension adjustments, formerly N.J.A.C. 17:1-7.4, would remain unchanged from the existing rule.

Proposed N.J.A.C. 17:1-8.4, Employer payments, formerly N.J.A.C. 17:1- 7.8, would differ from the existing rule by the addition of "and Benefits" to the Division's name.

Subchapter 9. Unemployment Insurance

Subchapter 9, Unemployment Insurance, prescribes the due dates for contributions and reports, employer responsibility regarding benefit claims, verification of claim payments and employee eligibility for coverage, termination of employment and the designated contractor. Unemployment compensation for certain public employees was made possible for the first time under the provisions of P.L. 1971, c.346. Effective January 1, 1972 coverage was extended to employees of the State or any of its instrumentalities employed in a hospital or institution of higher education. The Division was requested by the Treasury Department to coordinate the administration of the program and specifically the receipt and transmittal of payroll deductions for State employees to the Division of Unemployment Compensation. With the extension of Unemployment Compensation to all eligible employees in 1978, the State designated a contractor to monitor and audit the claims paid by Unemployment in order to verify the State's experience under the program. The contractor reports to the Division which is responsible for this activity as well as the accounting function. This subchapter remains unchanged from the existing rules except for the addition of "and Benefits" to the Division's title at N.J.A.C. 17:1-9.1 and 9.6 and the clarification at N.J.A.C. 17:1-9.5 that pertinent information regarding the separation must be provided to the designated contractor. A separation notice is no longer required.

Subchapter 10. Social Security

Existing Subchapter 8, Social Security, is now proposed as Subchapter 10. The subchapter on Social Security previously dealt with records, Social Security Referendum, the Federal-State Agreement and Modifications, coverage and wage issues, benefit and claim issues, single check contributions and administrative fees, wage reports copies, transmittals and forms, late filing penalties, Social Security coverage, excluded services and administrative fees. The State Agency for Social Security was initially established pursuant to N.J.S.A. 43:22-1 et seq., P.L. 1951, c.253, and became effective with the execution of a Federal-compact on Social Security coverage in December, 1952. Under the terms of the State statute, the work of the State agency was delegated to the Director of the Division of Pensions and Benefits. In the mid 1980s employers began remitting Social Security contributions directly to the Social Security Administration. Any disputes or questions regarding these contributions are handled between the employer and Social Security, and the Division no longer helps with resolution of these issues. Therefore, the Division proposes to repeal existing N.J.A.C. 17:1-8.2, 8.5, 8.7, 8.8, 8.9, 8.10, 8.11, 8.12 and 8.14 which dealt with the records, wage reporting, administrative fees, and penalties associated with the remitting of Social Security benefits. The Division is still responsible for processing modifications to the Federal-State agreement and processing Social Security referendum; therefore, N.J.A.C. 17:1-8.3, 8.4, 8.6 and 8.13 would remain. The Division proposes to add "and Benefits" to the Division's name at N.J.A.C. 17:1-8.4 and to make the gender specific pronoun in N.J.A.C. 17:1-8.13, gender neutral. The Division also proposes to relocate N.J.A.C. 17:1-8.3 as 10.1, 8.4 as 10.2, 8.6 as 10.3, and 8.13 as 10.4.

Subchapter 11 is reserved.

Subchapter 12. Central Pension Fund

The Central Pension Fund is administered by the Division in accordance with the governing statute and the rules of the State House Commission, where applicable. The scope of the fund extends to: Heath Act Pensioners, in accordance with N.J.S.A. 43:5-1 through 4, consisting of persons employed by the State as of January, 1921, Veterans Act Pensioners, in accordance with N.J.S.A. 43:4-1 through 6, Annuity for widows of governors, in accordance with N.J.S.A. 43:8-2m, and Special Pensioners, in accordance with various laws of the State authorizing payment to designated individuals. The rules of the Central Pension Fund which used to be found at Subchapter 3 will now be found at new Subchapter 12.

Proposed N.J.A.C. 17:1-12.1, Application required, formerly N.J.A.C. 17:1-3.1,would be changed from the existing rule to change the "health" act to the "Heath" act which is found at N.J.S.A. 43:5-1 through 4. There is no Health Act that the Division is aware of. The Division proposes to refer to itself as the "Division" in the last line and not by its full title.

Proposed N.J.A.C. 17:1-12.2, Disability certification form, formerly N.J.A.C. 17:1-3.2, would be changed to add "and Benefits" to the Division's title.

The Division proposes to repeal N.J.A.C. 17:1-3.3 because there are no longer any active employees who fall under the provisions of Veterans Act Pensioners (N.J.S.A. 43:4-1 through 6).

Proposed N.J.A.C. 17:1-12.3, Withholding forms, formerly N.J.A.C. 17:1- 3.4, would correct the form title which is now the W-4P, Retired Federal Income Tax Withholding Form.

Proposed N.J.A.C. 17:1-12.4, Surrogate's certification, formerly N.J.A.C. 17:1-3.5, changes the "health act" to the "Heath Act" for the reasons stated above.

Subchapter 13. New Jersey State Employees' Cafeteria Plan

Subchapter 13, New Jersey State Employees' Cafeteria Plan, addresses the establishment of the plan, establishment of the plan, unreimbursed medical spending account, premium conversion, dependent care spending amount, salary reduction elections, claims for payment from plan accounts, forfeiture of account balances and compliance with the Internal Revenue Code.

N.J.A.C. 17:1-13.3 would change the name of "premium conversion" to the "premium option plan as it is now referred to. Gender specific pronouns would become gender neutral. The remainder of the rules in Subchapter 13 would remain unchanged from the rules proposed for repeal.

A 60-day comment period is provided for this notice of proposal; therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this notice of proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

Full text of the proposed repeal may be found in the New Jersey Administrative Code at N.J.A.C. 17:1.

Full text of the proposed new rules follows:

CHAPTER 1 GENERAL ADMINISTRATION
SUBCHAPTER 1.
ADMINISTRATIVE PRACTICES

17:1-1 Description of the Division of Pensions and Benefits

(a) The Division of Pensions and Benefits is the successor to the former Bureau of Public Employees' Pensions created in June 1952. Under the general reorganization acts of 1948, the pension funds were located within the State Division of Budget and Accounting. In 1950 they were transferred to the Division of Investment under the statute creating that division.

(b) The Division of Pensions and Benefits, under the Department of the Treasury, was created by Chapter 70, P.L. 1955. All administrative functions of the State pension funds, except for the investment of the assets retained in the Division of Investment, were assigned to the Division of Pensions and Benefits.

(c) The Division of Pensions and Benefits is responsible for one of the largest public employee benefits program in the nation. It administers a comprehensive benefit program that enables public employers throughout the State to attract and retain skilled and talented employees. These include State employees, teachers, police officers, fire fighters, correction officers, judges, and many other local employees whose jobs are fundamental to the safety and well being of all New Jersey residents. The Division administers nine separate pension systems.

(d) The Division also administers the State Health Benefits Program (SHBP) that includes health plans, dental plans, and a prescription drug card plan. This program provides coverage for employees, retirees, and their dependents, of the State and participating local employers.

(e) The Division's benefits programs include the following three supplemental retirement savings programs; the New Jersey State Employees Deferred Compensation Plan, Supplemental Annuity Collective Trust (SACT) and the Additional Contributions Tax Sheltered Program (ACTS). The Division also administers the IRC Section 125 program, termed Tax$ave, for State employees.

(f) The following Boards and Commissions provide oversight and direction to the benefits programs:

1. Public Employees' Retirement System Board;

2. Teachers' Pensions and Annuity Fund Board;

3. Police and Firemen's Retirement System Board;

4. State Police Retirement System Board;

5. Consolidated Police and Firemen's Pension Fund Commission;

6. State House Commission for the Judicial Retirement System;

7. State Health Benefits Commission;

8. New Jersey State Employees Deferred Compensation Board;

9. Supplemental Annuity Collective Trust Council;

10. Pension and Health Benefits Review Commission; and

11. The Investment Council.

(g) The Director is responsible for the coordination of the functions of the Division, the development of the Division budget and communication with other branches of State government, local government and the public. The Director serves as the Secretary to the Supplemental Annuity Collective Trust Council, the State Health Benefits Commission and the State House Commission in its capacity as the Board of Trustees for the Judicial Retirement System. The Director is also responsible for legal and legislative matters and Board of Trustees administration. In addition, the Treasurer has delegated the responsibility of maintaining the Federal-State Agreement for Social Security to the Director of the Division of Pensions and Benefits.

(h) The Division of Pensions and Benefits falls under the jurisdiction of the New Jersey Department of the Treasury. The Director of the Division of Pensions and Benefits reports directly to the State Treasurer. The Treasurer is an ex-officio member of all State pension boards and commissions.

(i) The administrative rules that apply generally to all of the retirement systems and benefit plans that the Division of Pensions and Benefits administers may be found in this chapter. The administrative rules of the various retirement systems and benefit plans may be found in N.J.A.C. 17:2 through 17:10.

17:1-1.2 Records

(a) The records of all employee benefit programs administered by the Division of Pensions and Benefits are public records and may be inspected during regular business hours at the office of the respective bureau, and under supervision of the Bureau Chief or other representatives of the office.

(b) Records considered confidential include protected health information (PHI) as defined by the Federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), Pub. L. 104-191, medical reports submitted for any purpose, mailing addresses of active and retired members, individual files pertaining to beneficiary designation and any other matters pertaining to individual accounts where no official purpose or reason is indicated for inspection. Further records considered to be confidential may be found at N.J.A.C. 17:44-2.

(c) All medical testimony obtained in connection with an application for disability retirement shall be restricted for the confidential use of the Boards of Trustees. The Division shall release a copy of the examining physician's medical report to the member, the member's attorney or any person authorized by the member in writing to receive a copy of such report. In no event shall the report be released to any individual not authorized by the member in writing to receive the report.

(d) Charges for copies of pension records which have been deemed to be public information will be made in accordance with the provisions of N.J.S.A. 47:1A-2. (e) Requests for access to government records must be in accordance with the Department of Treasury's procedures as provided by N.J.A.C. 17:44.

17:1-1.3 Hearing request

(a) The Division, Board or Commission shall cause to be given to the applicant written notice of its decision. Said notice shall inform the applicant of their right to request a hearing in the event the applicant disagrees with the decision of the agency and the manner in which such request must be made.

(b) The decision by the agency shall be final unless the applicant shall file a request for a hearing within 45 days after the date of the written notice of the decision.

(c) Administrative hearings will be conducted by the Office of Administrative Law pursuant to the provisions of N.J.S.A. 52:14B-1 et seq. and N.J.A.C. 1:1.

(d) The following statement shall be incorporated in every written notice setting forth the Division, Board or Commission's determination in a matter where such determination is contrary to the claim made by the claimant or the claimant's legal representative:

"(1) If you disagree with the determination of the Board (Commission), you may appeal by submitting a written statement to the Board (Commission) within 45 days after the date of written notice of the determination. The statement shall set forth in detail the reasons for your disagreement with the Board (Commission's) determination and shall include any relevant documentation supporting your claim. If no such written statement is received within the 45-day period, the determination by the Board (Commission) shall be final.

(2) The Board (Commission) shall determine whether to grant an administrative hearing based upon the standards for a contested case hearing set forth in the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq., and the Uniform Administrative Procedure Rules, N.J.A.C. 1:1-1 et seq.

(3) Administrative hearings shall be conducted by the Office of Administrative Law pursuant to the provisions of N.J.S.A. 52:14B-1 et seq. and N.J.A.C. 1:1-1 et seq.

(4) If the granted appeal involves solely a question of law, the Board (Commission) may retain the matter and issue a final determination which shall include detailed findings of fact and conclusions of law based upon the documents, submissions and legal arguments of the parties. The Board's (Commission's) final determination may be appealed to the Superior Court, Appellate Division.

(5) If the granted appeal involves a question of facts, the Board (Commission) shall submit the matter to the Office of Administrative Law."

17:1-1.4 Mail distribution

(a) All mail sent to the Division of Pensions and Benefits will be received, opened and sorted by the mail section, with the exception of registered or certified mail which will be sent directly to the addressee.

(b) The mail section will send all correspondence to the appropriate administrative bureau in the Division, where the correspondence should be acknowledged or answered in a timely manner.

17:1-1.5 Annual statements; retirement system

(a) Statements of members' accounts are mailed annually to employers for active members who contributed to the Public Employees Retirement System, the Police and Firemen's Retirement System, the State Police Retirement System, the Alternate Benefits Program and the Teachers' Pension and Annuity Fund who are reported through the State's Centralized Payroll System during the second quarter of a calendar year.

(b) Statements of members' accounts are mailed annually to employers for active members who contributed through local employers to the Teachers' Pension and Annuity Fund, Judicial Retirement System and the Legislative members of the Public Employees' Retirement System during the last quarter of a calendar year.

(c) Interim statements will not be supplied except upon request for good cause.

17:1-1.6 Annual statements; supplemental annuity for participants of the tax sheltered and nontax sheltered Supplemental Annuity Collective Trust.

17:1-1.7 Endorsements

a) In cases where incapacity prevents a complete personal endorsement, but the member or beneficiary is able to make his or her mark, this is acceptable providing the signature of two witnesses appear on the check. Such witnesses' signatures and the member's mark must be registered with the Division on a signature card. In addition, a doctor's certificate shall be filed with the Division indicating that the member or beneficiary is physically but not mentally incapable of endorsing the check.

(b) In cases where a member or beneficiary is mentally or physically incompetent, the appointment of a legal guardian, conservator or committee will be required. The Division must be supplied with a copy of the legal document and the guardian's signature must be registered with the Division on a signature card. In cases where an incompetent retired member or beneficiary is confined to a State institution in New Jersey (under Department of Human Services) in lieu of guardianship, his or her retirement allowance may be continued upon court order (N.J.S.A. 30:4-67.1) directing the retirement system to make payment to the chief administrative officer for the use and care of said member or beneficiary during the period of confinement.

(c) Under certain conditions, the Division will honor an agreement executed between a retiree or beneficiary and a bank, savings and loan association, insured Federal credit union or insured State chartered credit union, with such institution assuming full responsibility for the receipt and collection of the pension checks in the absence of the personal endorsement of the retiree or beneficiary. The agreement must be consummated on the appropriate approved form which will be provided for this purpose by the retirement system. The agreement cannot be executed where a retiree or beneficiary is mentally or physically incompetent, or where the allowance will be deposited in an account other than the retiree's personal account.

(d) A person holding a power of attorney will be permitted to endorse a check payable to such person as attorney for the retiree or beneficiary. However, a power of attorney form prescribed by the Division must be duly executed and filed with the Division before the attorney's signature will be accepted as a proper endorsement on a check issued to the retiree or beneficiary.

(e) Retirees and beneficiaries may periodically be requested to complete a card, requiring notarization, which indicates their social security number, date of birth, and signature; if circumstances prevent notarization, two witnesses may be accepted in lieu of notarization. In the event the Division does not receive the notarized signature card within 45 days, a final request will be sent to the retiree or beneficiary, advising him or her that if it is not returned within 30 days, the monthly benefits will be suspended until a personally endorsed, notarized card has been received.

(f) When an individual holding a power of attorney and acting on behalf of a member makes application for a retirement allowance, the power of attorney may choose any option available and may designate the individual to receive a monthly retirement allowance under the options that provide for a survivor's benefit.

(g) An individual holding a power of attorney and acting on behalf of a member shall designate the member's estate as the beneficiary for all life insurance benefits and any other benefits payable which are not covered by

(f) above, on the member's account unless the power of attorney form specifically grants the individual the right to designate beneficiaries.

17:1-1.8 Priorities

(a) In the event the Division of Pensions and Benefits is required to establish priorities for the performance of a particular obligation, such priorities shall be made known to all members involved and shall be established in the following order:

1. Those who are retiring or who contemplate retirement within the year;

2. Those who are at or beyond the normal retirement age; and

3. All other members.

(b) The priority of deductions from the monthly retirement allowance shall be the following:

1. State Health Benefits Program premium deductions;

2. Federal tax;

3. Internal Revenue Service levy;

4. Loan deduction;

5. State tax; and

6. Other

17:1-1.9 Bankruptcy; subsequent loans

a) Any member of a State-administered retirement system, which permits loans to its members, who has payroll deductions for an outstanding loan balance in suspense as a result of bankruptcy proceedings, will be permitted to obtain another loan from that retirement system if the member is otherwise eligible to obtain such loan. The loan repayment schedule for loans taken after the date of filing for bankruptcy will not include the aggregate outstanding balance of the previous loan or loans. However, the amount eligible to be borrowed is affected by the existing outstanding loan balance.

(b) A member or retired member's outstanding loan balance is not discharged by bankruptcy. Although the pension loan deductions will be terminated, the outstanding loan balance and interest is still due and payable. A member or retired member may voluntarily request reinstatement of the pension loan deductions after the completion of the bankruptcy proceedings.

(c) If a bankruptcy action is dismissed, an active or retired member must submit a written request for reinstatement of the loan deductions. An active member's loan balance will be reevaluated, with interest, and loan deductions will resume. A retired member will continue to pay the loan amount prior to the bankruptcy. When the loan is near completion, the interest from the date of retirement to the date the loan is satisfied will be added to the retired member's repayment schedule.

17:1-1.10 Survivor certifications

Widows, widowers, parents and guardians of minor children receiving pension checks may be contacted annually by letter or certificate of eligibility to determine eligibility for the continuation of monthly benefits.

17:1-1.11 Leaves of absence for maternity; benefits; nondiscrimination

In accordance with the Attorney General's opinion AAA M79-4158, rendered in January, 1981, public employees, who are on authorized leaves of absence for maternity, will not be treated any differently from other public employees, who are on authorized leaves of absence for personal illness, concerning their rights, duties and obligations regarding their pension or other related employee benefit programs.

17:1-1.12 Domestic relations orders

(a) The Division of Pensions and Benefits will honor court orders for child support, alimony or equitable distribution. The matrimonial order must require the Division of Pensions and Benefits to withhold the specified amounts. The matrimonial order must also designate a specific dollar amount, a specific percentage of the gross monthly retirement benefit, or a percentage of the gross monthly retirement benefit the member will receive based on the specific number of years and months of service the member accrued while married.

(b) Payment of benefits to an alternate payee cannot begin until the member either retires and begins receiving a monthly retirement allowance or withdraws their contributions from the retirement system.

(c) All withholdings mandated under a matrimonial order shall cease upon the death of either the retired member or the alternate payee.

(d) The Division of Pensions and Benefits cannot guarantee the implementation of any irrevocable designation of death benefits or selection of retirement option. Such designation or selection remains the prerogative of the member.

SUBCHAPTER 2. ACCOUNTING

17:1-2.1 Receipts deposited

(a) All routine receipts as of noon of any working day, which are identifiable as to origin and propriety, are to be deposited the same day.

(b) All other checks are to be deposited as soon as possible.

(c) If checks are not in the amount of the billing and there is no dispute as to the amount involved, such checks will be returned to the remitter and the obligation will be considered as not having been paid; the remitter will be so advised.

17:1-2.2 Remittance; limitation

The monthly transmittal remittances for pension contributions to the Division by employers shall be by electronic fund transfer (EFT). All other remittances to the Division shall be by check, bank draft or money order.

17:1-2.3 Due dates for transmittals and reports

(a) Monthly remittances and transmittal reports for the Police and Firemen's Retirement System, Teachers' Pension and Annuity Fund and the Public Employees' Retirement System are due in the Division of Pensions and Benefits by the 10th day of the month following the close of the preceding month for which contributions are required.

(b) The monthly report to the carriers of the Alternate Benefit Program shall be due from the Centralized Payroll Unit on the 20th day of the month following the close of the preceding month for which deductions or reductions were required.

(c) Monthly reports for Alternate Benefit Program participants of county colleges and State monthly locations are due in the Division of Pensions and Benefits the fifth day of the month following the close of the preceding month, with the exception that those institutions which are prepaying both the employer and employee contributions and have agreed to be fully accountable and responsible for the timely submission of such contributions shall submit the monthly reports to the Division of Pensions by the 15th day of the month following the close of the preceding month.

(d) Quarterly transmittals and reports, including the remittance for the third month of the calendar quarter, for the Public Employees' Retirement System, Teachers' Pension and Annuity Fund, and the Police and Firemen's Retirement System are due in the Division of Pensions and Benefits the 10th day of the month following the close of the preceding quarter.

(e) Payroll deductions for pension, contributory insurance and the Supplemental Annuity Program and salary reductions for the Tax Sheltered Supplemental Annuity Program shall be remitted on a biweekly basis immediately following the payroll payment dates for State employees reported by the Centralized Payroll System.

(f) Monthly remittances and transmittals for the State Health Benefits Program are due the 15th day of each month. Reporting agencies will be considered in default if premiums are not paid within 15 days following the due date for which premiums are required.

(g) Salary reductions under I.R.C. § 403(b), made on behalf of an employee, are to be transmitted through the electronic fund transfer system and credited within five business days from the pay date.

17:1-2.4 Delinquent notices

(a) Reporting agencies which do not file timely reports, transmittals or remittances will receive a delinquent notice.

(b) In the event the employer does not respond to the delinquent notice for the Report of Contributions, and if the report is not received in a timely manner to update the members of the local employer's report, the mayor, school superintendent or person of a similar authority will be sent a letter advising of the delinquency and the ramifications of such delinquency.

17:1-2.5 Interest charges; delinquent transmittals; report of contributions

(a) If payment in full, representing the monthly transmittal and report of contributions or charges, is not made within 15 days of the due dates for such transmittals and reports, interest at the rate of six percent per annum for the Teachers' Pension and Annuity Fund and the Public Employees' Retirement System, and 10 percent per annum for the Police and Firemen's Retirement System shall commence to run against the total transmittal of contributions or charges for the period on the first day after such 15th day.

(b) The penalty will also apply where the moneys have been forwarded but without the report necessary to distribute such moneys to the proper accounts.

17:1-2.6 Disbursement authorizations

All checks disbursed, requiring the signature of the State Treasurer, are forwarded with signed authorizations to the Department of the Treasury.

17:1-2.7 Disbursement schedules

(a) All disbursements, other than the regular pension payrolls, including the payment of loans, withdrawals and refunds, should be made at least once a week.

(b) The pension payrolls are disbursed by the cash control section of the Treasury Department at the end of each calendar month.

17:1-2.8 Disbursement; limitations

All disbursements returned by the Federal post office as "undelivered" shall be credited to the appropriate account. Disbursements that are made by check shall be delivered by the Federal post office unless otherwise authorized by the Director of the Division of Pensions and Benefits.

17:1-2.9 Adjustment statements

(a) Adjustment statements are mailed as audits are completed.

(b) When an overpayment notice is mailed, a check is issued unless the employing agency offers an explanation for the variance.

(c) Overpayments are returned to the employer from which they were received; in the case of overpayments covering local employees, State employees reported on a biweekly basis, multiple members, and on post audit overpayments, the member is made the payee.

(d) For Clearing Account overages which are the result of quarterly transmittal overpayments, these monies shall be refunded directly to the employer.

(e) One month after shortage statements are mailed, a second notice is sent if payment has not been received.

(f) One month after the second notice, a letter is sent advising the reporting agency that the shortage will be certified with interest as a back deduction or as an arrears obligation if payment is not received within 30 days. (g) If the member is off the payroll so that such extra deduction cannot be certified, the shortage will be established > in the member's account and will be subject to an interest charge at the current rate of interest earned by the annuity savings fund per annum calculated from the date of the first notice forwarded to the member.

17:1-2.10 Minimum adjustments

(a) In order to facilitate the reconciliation of members' accounts upon death, no refunds or additional contributions shall be made to a member's loan and arrearages balances if such adjustments involve amounts of $10.00 or less. Unresolved differences of $10.00 or less will be written off.

(b) Unresolved differences of $50.00 or less in accounts that have been withdrawn will be written off. However, if a withdrawn member provides sufficient documentation that monies are due from the withdrawn account, such refunds shall be made, notwithstanding the fact that the unresolved difference had been previously written off.

(c) Unresolved differences of $50.01 to $100.00 which are owed to a withdrawn member shall be paid without any further analysis of the member's account. Payment will be made to the employee and forwarded to the last employer of record.

(d) Rules concerning the unresolved differences in retirement accounts are as follows:

1. No refunds or additional contributions shall be required for retired members if the adjustments involve amounts that range from a positive $25.00 to a negative $50.00 for pensions and $50.00 for contributory life insurance premiums. All balances within these ranges will be written off.

2. In the event the positive balance is greater than $25.00 or negative balance is greater than $50.00 for pensions but produces a monthly retirement adjustment of less than $2.00, no recalculation or monthly benefits will be computed. Positive balances will be refunded and negative balances will be written off.

3. All money found to be due and payable subsequent to a member's retirement shall be repaid in one sum or scheduled for repayment over a period not to exceed 10 years.

(e) Audit differences of $2.00 or less in the reporting of members' pension contributions or contributory life insurance premiums during a quarter will not require a cash adjustment.

(f) Audit differences of $8.00 or less in the reporting of members' pension contributions or contributory life insurance premiums covering an annual period are not subject to cash adjustments.

17:1-2.11 Annual reports of salary changes

(a) Employers are provided with one copy of the report of salary changes.

b) The report of salary changes will be sent to reporting agencies of the Public Employees Retirement System except boards of education, and the Police and Firemen's Retirement System with their quarterly report for the fourth quarter. The reporting agencies must file the report of salary changes with the Division by February 15.

(c) The report of salary changes will be sent to boards of education and community colleges with their quarterly reports for the second quarter. The reporting districts must file the report of salary changes with the Division by August 15.

(d) A report of salary change may be filed with the Division during any quarter of the calendar year. Such report of salary change must be filed on or before the 15th day of the second month of the quarter to assure timely projection for the next quarterly report of contributions.

17:1-2.12 Lost pension checks

(a) Upon receiving notification that a retiree or other payee has not received a particular check for whatever reason, the Division of Pensions and Benefits shall send the payee an affidavit of non-receipt for completion.

1. Upon receipt of the affidavit of non-receipt, the Division shall send a stop payment order to the bank upon which the check was drawn. However, if theft is alleged, a stop payment order shall be sent to the bank immediately upon notification of the alleged theft.

2. Upon receipt of an acknowledgment from the bank of the stop payment notice, the Division shall issue a replacement check.

3. If the payee refuses to execute the affidavit, the procedure set forth in this subsection will be followed but a replacement check will not be issued until 90 days after the check date has passed.

(b) The Division of Pensions and Benefits, upon being notified that the retiree has not received a particular check, shall review its canceled check file.

1. If the check has been paid, a copy of the check, together with a forged check affidavit, shall be sent to the retiree.

2. Upon receipt from the retiree of the properly executed affidavit and issuance of a credit by the bank to the account, a replacement check shall be issued.

17:1-2.13 Administrative expenses; proration among systems

(a) Not later than 60 days after receipt of the expenditures by account, the Division of Pensions and Benefits will prepare a complete fiscal statement indicating the administrative expenses incurred by the Division within its State appropriation for the previous fiscal year ending the prior June 30.

1. Such statement will reflect the total expenses incurred in each account within the Division's appropriation;

2. Supplemental statements will be prepared allocating specific costs attributable to each of the Retirement Systems and State Health Benefits Program within the operation of the respective bureaus; and

3. Included in the administrative expenses incurred by the Division shall be those of the State Division of Investment as the expenses of that Division pertain to the investment of monies appropriate to each Retirement System or Fund calculated on the number of transactions processed for the respective Systems.

(b) To the extent that there are costs which are attributable to the Division as a whole, as distinguished from costs attributable to each separate program administered by the Division, all Systems will share in the cost of the Division's expenses on a pro rata basis.

(c) The State shall be reimbursed on a monthly basis for operational costs.

17:1-2.14 Employees reported on biweekly salaries

(a) Retirement, death benefits and service credit will be determined on the basis of biweekly pay periods for employees reported on a biweekly basis.

(b) In the event a member is reported on a combination of monthly and biweekly pay periods, the member's last year's salary or final compensation and service credit will be computed on a proportional basis.

17:1-2.15 Credit for partial month service

(a) For retirement purposes, a full month of service credit will be granted to any enrolled member who has received enough salary in a particular month to withhold a full monthly pension deduction. In the case of an enrolled member who is reported on a biweekly basis, a full pay period of service credit will be granted if the member has received enough salary in a particular pay period to withhold a full biweekly pension deduction.

(b) In order to purchase a full month of service credit for previous, eligible service, an employee must have received enough salary in a particular biweekly pay period or month to have had withheld a full biweekly or monthly pension deduction.

17:1-2.16 Workers' compensation without pay: employer's obligation regarding employee contributions

(a) An employer is responsible for the payment of an employee's pension contributions while the employee is receiving periodic benefits through workers' compensation.

(b) An employer is not responsible for the payment of an employee's pension contributions while the employee is receiving a periodic award of benefits through workers' compensation without pay if a valid termination from employment has occurred. If an employer ceases payment of employee pension contributions due to a valid termination, as listed in (b)3 or 4 below, the employer shall notify the Division of Pensions and Benefits in writing of the reasons for the cessation of payments. A valid termination exists when:

1. The employee voluntarily files for a retirement allowance that is subsequently approved;

2. The employer files an involuntary disability retirement application for the employee that is subsequently approved;

3. The employee voluntarily resigns from employment for reasons other than the inability to perform the job's functions due to the incident that was the basis for the workers' compensation award; or

4. The employee is terminated by the employer for reasons unrelated to a workers' compensation award.

SUBCHAPTER 3. ENROLLMENT, MEMBERSHIP, TRANSFERS AND WITHDRAWALS

17:1-3.1 Compulsory enrollments; failure to enroll

(a) In most retirement systems, there are employees who are required to enroll as a member of the retirement system as a condition of employment.

(b) In some cases, the employee may fail to file an application for enrollment even though the employee and employer have been advised of the compulsory nature of enrollment. In these cases, the certifying officer is obligated to complete the employee's section of the enrollment application as well as such other information required on the enrollment application. Upon receipt of a properly completed enrollment application, the member's beneficiary designation may be accepted provided the member has signed the enrollment application.

(c) In the event of the member's death where no benefits are payable to a specific survivor, all benefits otherwise payable would be paid to the member's estate since the employee has not made the necessary beneficiary designation which is part of the enrollment application.

(d) For the purpose of establishing an employer's liability on delinquently filed enrollment applications, as well as the member's requirement to prove insurability, one year shall cover the 12-month period plus an additional two months to allow for administrative processing, elapsing between the employee's date of enrollment or transfer and the date the enrollment application or report of transfer is received by the Division of Pensions and Benefits.

(e) For the purpose of calculating the employer and employee costs for the employer's liability, the cost shall be calculated by multiplying the member's salary at enrollment by the current remitting pension rate times the period of service. For purposes of calculating the period of service, the service shall be the period between the date of enrollment or transfer and the date deductions are certified to begin.

17:1-3.2 Multiple enrollments; contributions

In some retirement systems, an employee may be enrolled in the system on the basis of more than one position with more than one employer participating in the retirement system. Within the limits of the statute and board rules, such an employee shall be required to enroll from each position.

17:1-3.3 Enrollment schedules

(a) Employees appointed on or after the 17th of a month will be enrolled as of the first of the following month.

(b) An optional enrollee is enrolled as of the first of the month following the date the enrollment application is received.

17:1-3.4 Proof of veteran's status

Members wishing to establish veteran status with the retirement system must submit copies of their discharge papers (DD 214) to the NJ Department of Military and Veterans Affairs. A member who fails to submit evidence of military discharge will be enrolled as a nonveteran and this nonveteran classification shall not be altered until such time as the member's military discharge papers are received by the Department of Military and Veterans Affairs, confirming eligibility for a veteran classification.

17:1-3.5 Intrafund transfers

An active member of the Teachers' Pension and Annuity Fund, the Police and Firemen's Retirement System or the Public Employees' Retirement System who terminates employment with one participating employer but transfers to another covered position within the same retirement system with a different employer may continue such membership.

17:1-3.6 Insurance coverage; ineligibility

Any member who is not eligible for noncontributory insurance shall also be ineligible for contributory insurance coverage.

17:1-3.7 Deduction schedules

All deductions will be certified to begin on the first of the month for quarterly reporting units, or the beginning of a biweekly pay period for members who are reported on a biweekly basis.

17:1-3.8 Withdrawal application; processing

a) Withdrawal applications which are filed prior to the member's resignation or the termination of compensation, will not be processed until the effective date of the later of the two conditions.

(b) Under the terms of the statutes a member may withdraw from a retirement system only if the member terminates all covered employment.

(c) No application shall be approved, if:

1. The member is on official leave of absence;

2. The member certifies that employment has not ended or that the member has taken another position covered by the retirement system;

3. The member has been dismissed or suspended from employment. In this event, such a member will be eligible to withdraw if the member has formally resigned from the position or there is no legal action contemplated or pending and the dismissal has been adjudged final;

4. A multiple member has not terminated employment in all covered

5. The member has a claim pending for Workers' Compensation benefits.

17:1-3.9 Waiver of retirement benefits upon withdrawal

If a member is eligible to begin receiving a monthly retirement allowance (due to the member's age or years of creditable service), the Division shall inform the member of the estimated amount of the retirement allowance and shall require the member to sign a waiver of such benefits, should the member still wish to withdraw.

17:1-3.10 Peacetime military service; service credit

(a) A member or former member, or a person required to be a member, of a State-administered retirement system who leaves employment covered by a State- administered retirement system to enter the uniformed services of the United States and returns to covered employment within the time period and under the circumstances required for entitlement to reemployment rights under Federal law (38 U.S.C. §§ 4301 et seq.), may obtain service credit in the State- administered retirement system as provided in this section.

(b) A member reemployed under this section 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 for the purposes of vesting or determining eligibility for retirement and health benefits, even if the member does not make contributions to the retirement system for the period of service.

(c) The types of service or situations eligible for reemployment rights include regular active duty, initial active duty for training, active and inactive duty training for members of reserve components and National Guard units, and situations where an employee leaves employment for the uniformed services or for examination of fitness for the uniformed services and is not taken into the uniformed services.

1. The person must be a member or be required to be a member of a State- administered retirement system prior to leaving employment to enter the uniformed services, must give advance written or oral notice of such service to the employer, unless precluded by military necessity, and must leave the covered employment to enter the uniformed services.

2. The person must return to employment or submit an application for reemployment covered by a State-administered retirement system within the time periods prescribed by Federal law. The cumulative length of the absence and of all previous absences with that employer shall not exceed five years unless otherwise permitted under 38 U.S.C. § 4312(c) to be eligible for reemployment rights. The person must seek reemployment within the time period prescribed by Federal law which is generally 90 days following release from the uniformed services but which differs based on the length and type of service as provided in 38 U.S.C. § 4312(e). In all cases, the time limit for return to employment or to submit an application for reemployment is extended for up to two years for any injury or illness incurred in or aggravated during the uniformed service requiring hospitalization or convalescence which continues after release from the uniformed service.

3. The person's uniformed service must have been honorable or satisfactory.

4. The person shall be denied reemployment rights if:

i. The person is not qualified to perform the duties of the position for which reemployment is sought;

ii. The accommodation, training or effort referred to in 38 U.S.C. § 4313(a)(3), (a)(4) or (b)(2)(B) would impose an undue hardship on the employer;

iii. The employer's circumstances have so changed as to make it impossible or unreasonable to reemploy the person;

iv. The employment from which the person leaves to serve in the uniformed services is for a brief, nonrecurrent period (temporary employment) and there is no reasonable expectation that such employment will continue indefinitely; or

v. The person knowingly provides written notice of intent not to return to a position of employment after service in the uniformed services.

5. The person will not be entitled to service credit in a State-administered retirement system if reemployment is validly denied.

6. The employer shall have the burden of proving that N.J.A.C. 17:1- 3.10(c)4i, ii, iii, iv or v above justified the denial of reemployment rights. For the purposes of (c)4v above, the employer must show that the person knowingly provided clear written notice of intent not to return to a position of employment after service in the uniformed service and in doing so was aware of the specific rights and benefits to be lost.

7. To receive service credit in a State-administered retirement system for peacetime military service, prior to October 13, 1994, the person must have applied within one year following the date of return to employment or the date initial pension contributions are certified to begin in the retirement system if the person's former membership was terminated or was in a different retirement system.

8. The employer shall notify the Division in writing within 30 days that a member has returned from service in the uniformed services and the dates of such service.

9. The member may make contributions to the retirement system for all of the period of service in the uniformed services to obtain credit in the pension system for inclusion of such service in the calculation of benefits. The member must file a written request with the Division so that a schedule of back deductions will be generated. The schedule of back deductions shall be based upon employee's rate of contribution in effect on the date the employee returned to employment multiplied by the salary the employee would have received but for the period of service; or if the determination of such salary is not reasonably certain, on the basis of the employee's average rate of compensation during the year immediately preceding such service 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 begin as soon as practicable after the date of reemployment and shall continue for the lesser of five years or three times the period of the uniformed service. If the member does not request in writing back deductions at the time of return to employment, the member may request to receive credit for such service until the expiration of either five years or three times the period of the uniformed service, whichever is shorter. Repayment still must be made in the above referenced time frame.

10. The member is permitted to make additional elective deferrals to the Supplemental Annuity Collective Trust (SACT), the New Jersey Employees Deferred Compensation Plan, Additional Contributions Tax Sheltered Programs (ACTS) and the Alternate Benefit Program 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.

11. If a person retires prior to paying the total amount of contributions required to obtain service credit for the uniformed service, the total amount of service credit shall be in direct proportion as the amount paid bears to the total amount of contribution obligation.

12. An employer who participates in the Alternate Benefit Program (ABP), reemploying a person under this section, with respect to the period served by a person in the uniformed services, upon reemployment of that person, shall be liable to the employee pension plan for funding any obligation of that plan to provide benefits under that plan, and shall allocate the amount of any employer contribution for that person in the same manner and extent that the allocation occurs for other employees during the same period of service.

However, the employer is not required to make up the earnings that those contributions would have made had the person reemployed under this rule been employed continuously.

i. An employee reemployed under this paragraph who is a member of the defined contribution plan shall be entitled to the above accrued benefits only to the extent that the person makes payments to the plan with respect to such employee contributions.

ii. For the purposes of computing the employer's liability and the employee's contributions, the employee's compensation during the period of service shall be computed at:

(1) The rate the employee would have received but for the period of service; or

(2) If the determination of such rate is not reasonably certain, on the basis of the employee's average rate of compensation during the year immediately preceding such service.

iii. Make-up contributions shall begin on the date of reemployment and shall continue for five years or three times the period of uniformed service, whichever is shorter.

iv. Any employer who reemploys a person under this section shall, within 30 days after the date of reemployment, provide information in writing of such reemployment to the Division of Pensions and Benefits.

17:1-3.11 Compensation limit for exclusion from membership after retirement

Beginning with the calendar year 2002, and for any calendar year thereafter, the Director of the Division of Pensions and Benefits may adjust the compensation limit for exclusion from membership after retirement in the Public Employees' Retirement System. The compensation limit shall be adjusted by increments of $1,000, when $15,000 increased by 3/5 times the change in the Consumer Price Index as defined in N.J.S.A. 43:3B-1f from the Index applicable to calendar year 2001 to the Index applicable to the calendar year immediately preceding the year of adjustment, rounded to the next highest 100 dollars, exceeds the previous compensation limit by $1,000.

17:1-3.12 Interfund transfers; accumulated interest

(a) Notwithstanding the provisions of N.J.A.C. 17:2-7.1, 17:3-7.1, 17:4-7.1 and 17:10-6.1 concerning interfund transfers of members between State-administered retirement systems, accumulated interest credited to the member's account in the former system will only be transferred as part of such member's contributions to the new system if the new system likewise credits interest to its member accounts.

(b) If the new system does not credit interest to its member accounts then only the contributions actually made by the member to the former system will be transferred to the new system when an interfund transfer occurs.

SUBCHAPTER 4. PURCHASES AND ELIGIBLE SERVICE

17:1-4.1 Purchases; cancellation, interest on outstanding purchases or cash discount requested (a) A member who authorizes a purchase of service credit may cancel that purchase at any time on a prospective basis only. No refunds will be made of any lump sum payments, partial payments or installment payments. The member will receive a pro rata credit for the service purchased to the date installment payments cease. Any subsequent requests to purchase the remaining service credit shall be based on the laws and rules in effect on the date that the subsequent request is received.

(b) No more than one request received from a member for the cash discount value of an outstanding arrearage or a purchase quotation for previous service will be honored in a calendar year.

(c) A member who authorizes a purchase which requires installment payments, but who has not had installment payments made toward that purchase for two years due to inactivity in the account, shall be informed by the Division that the remainder of the purchase will be canceled. The member shall receive a pro rata credit for the service purchased to the date that the installment payments ceased. The member may request to pay the cash discount value of the outstanding arrearage for the purchase in full within 60 days of the Division notice. Any subsequent requests to purchase the remaining service credit shall be based on the laws and rules in effect on the date that the subsequent request is received.

(d) A member returning from an approved leave of absence after two years may request that the original purchase be resumed. Such purchase shall be recalculated to include additional regular interest accrued between two years after the date of the last installment payment and the date the purchase is resumed.

(e) For a member who has authorized a purchase of service credit prior to September 8, 1998 and who is inactive, or becomes inactive, the purchase shall remain outstanding. The outstanding balance on the purchase shall include additional regular interest beginning September 8, 2000, or the date of inactivity, whichever is later.

17:1-4.2 Purchase terms; grace period

A member who receives a written optional purchase cost quotation is given a 60-day grace period to confirm that he or she wishes to make the purchase of credit. If the confirmation of the purchase is not received from the member within 60 days, the cost of purchase must be recalculated to determine if any change in the cost is warranted as a result of change in age or salary.

17:1-4.3 Final compensation; salaries to be used for a period of purchased service

(a) If a period of purchased New Jersey service may be included in the period for the calculation of final compensation, actual base salaries paid during such period will be certified and used in the computation.

(b) The period of a purchased leave of absence will not be included in the calculation of final compensation.

17:1-4.4 Purchase of service credit; continuation of death benefits coverage; maternity leaves of absence

In the event of an unpaid leave of absence for maternity, no leave of absence period granted by any public employer can be approved for the subsequent purchase of credit for a period in excess of three months unless the Division of Pensions and Benefits receives a certification from a physician that such member was disabled due to pregnancy and resulting disability for the period in excess of three months. During the first three months of an unpaid leave of absence for maternity, the member shall be presumed to be disabled from the performance of her job duties because of her pregnancy and its resulting disabilities.

SUBCHAPTER 5. INSURANCE AND DEATH BENEFITS

17:1-5.1 Multiple beneficiaries

Where a member has designated more than one beneficiary, in the absence of a specific request, the payment will be made to the beneficiaries on a "share and share alike, survivor or survivors" basis.

17:1-5.2 Optional settlements; group life insurance

As the statutes provide that death benefits under the group life insurance contracts may be paid under any optional settlement made available by the insurance company, the beneficiary will be informed of such opportunity in the correspondence when such optional settlements are possible. If the beneficiary requests advice concerning such settlements, the claim shall be forwarded to the carrier for contact with the beneficiary. The Division will be advised of the final settlement for the recording of the data with the retirement system.

17:1-5.3 Accrued increase; limitations

Upon the death of a retiree or a beneficiary receiving a pension, any payments which were due to the deceased shall be paid to a named beneficiary as established in the records of the State-administered retirement system, or if none is named, to the deceased's estate.

SUBCHAPTER 6. HONORABLE SERVICE

17:1-6.1 Honorable service

(a) The receipt of a public pension or retirement benefit is expressly conditioned upon the rendering of honorable service by a public officer or employee. Pursuant to N.J.S.A. 43:1-3, the Boards of Trustees of the State- administered retirement systems are authorized to order the forfeiture of all or part of the pension or retirement benefit of a member of the fund or system for misconduct occurring during the member's public service which render the member's service or part thereof, dishonorable.

(b) Whenever the Board of Trustees determines that a partial forfeiture of pension or retirement benefits is warranted, it shall order that benefits be calculated as if the accrual of pension rights terminated as of the date the misconduct first occurred unless (c) below applies.

(c) In the limited circumstances where the termination of pension rights as of the date of the misconduct results in no reduction, or a minimal reduction of pension or retirement benefits, or in an excessive forfeiture, as compared to the nature and extent of the misconduct and the years of honorable service, the Board may, in its sole discretion, provide a more equitable relief. Alternate methods available to the Board when a forfeiture of service renders an unreasonable or unjust result include, but are not limited to:

1. Forfeiture of salary credit upon which retirement benefits are based;

2. Forfeiture of system-paid retired State Health Benefits;

3. Forfeiture of right to participate in the retired State Health Benefits Program;

4. Reduction in monthly retirement allowance;

5. Forfeiture of service and/or salary credit in a specific title or rank;

6. Forfeiture of service in excess of that needed to qualify for a specific retirement benefit; or

7. Forfeiture of a percentage of the retirement benefit based on the calculation of the percentage of time which was dishonorable service as compared to the total years and months of service credit.

17:1-6.2 Indictments, dismissals, litigation or appeals

(a) When a member is indicted or dismissed, the matter shall be referred to the Board Secretary's office to determine the status of any claim which may be filed by the member.

(b) No credit shall be granted for the period during which the member's salary has been terminated while under indictment or suspension, until the outcome of the proceedings determines the basis for the award of such credit, if any.

c) All claims for retirement, death benefits and the return of contributions cannot be processed until the matter has been completely resolved to the satisfaction of the Board of Trustees. Resolution of the indictment, dismissal or other charges must be verified by contact with the County Prosecutor's Office, the Attorney General's Office, the Department of Education, the Department of Personnel or other responsible agencies.

(d) Likewise in cases where anything pertaining to a member's employment is in litigation, or under appeal, the matter shall be held in abeyance until the Division determines if claims can be processed or whether the processing of such claims are to be postponed pending a final resolution of the litigation or appeal.

(e) If an indictment regarding charges related to a member's public employment is received by the Boards or Division after the member's date of retirement, the Boards may suspend retirement benefits pending the outcome of the indictment.

SUBCHAPTER 7. RETIREMENTS

17:1-7.1 Retirement quotations

(a) A member who applies for retirement will be sent a statement of the benefits the member can receive. If such an individual has named a beneficiary for retirement purposes all applicable options will be quoted to the member regardless of the option selection the member may have made on the retirement application.

(b) If no response is received from the member prior to the date the member's retirement application must be submitted to the Board for approval, the option selected by the member on the member's retirement application will be submitted to the Board for its approval.

17:1-7.2 Retroactive salary increases

In no event will individual retroactive salary adjustments that have been authorized after the member's effective date of retirement or date of death be used as creditable salary for pension or insurance purposes even if the period covered by the salary adjustment extends to a period before the member's effective date of retirement or date of death.

17:1-7.3 Final compensation

(a) With respect to all claims for benefits, the Division of Pensions and Benefits shall investigate increases in compensation reported for credit which exceed reasonably anticipated annual compensation increases for members of the retirement system based upon consideration of the Consumer Price Index for the time period of the increases, the table of assumed salary increases recommended by the actuary and adopted by the Board, and the annual percentage increases of salaries as indicated in data from the Public Employment Relations Commission, or through other reliable industry sources of information regarding average annual salary increases.

(b) Those cases where a violation of the statute is suspected shall be referred to the respective Board or Commission.

(c) In order to compute the amounts under (a) and (b) above for biweekly employees who are reported biweekly, the actuary will supply factors to convert biweekly salaries to compensate for biweekly payroll schedules. Application of the factors to the salaries reported for pension purposes will develop the wage base for the calculation of benefits.

(d) In computing the amounts under (a) and (b) above in the case of employees reported on a 10-month basis, the total biweekly pays will include those pay periods in the third quarter of each year in which the member does not receive salary. The adjustment as specified in (c) above shall not be made.

(e) If a member was reported on a biweekly basis on any combination of 10-and 12-month contract years in such one or three-year period, the final average compensation or last year's salary period to death or retirement shall be determined on a proportional basis.

(f) The biweekly pay periods for which no contributions were made shall not be used in the calculation with the exception of the pay periods cited in (d) above.

17:1-7.5 Disability applications; priorities

(a) When the Medical Review Board has made a specific recommendation that can be acted upon by the Board or Commission, the Disability Review Section will prepare sufficient copies and forward to the Secretaries of the respective retirement systems those cases that are ready for presentation to the Board or Commission.

(b) The priority in forwarding the cases to the Secretaries of the respective retirement systems shall be in the order of the Boards' or Commission's regular meeting schedule.

(c) If the Medical Review Board has not given a specific medical recommendation upon which the Board or Commission may act, the case will not be forwarded to the Secretary of the retirement system, but the Disability Review Section will proceed in accordance with the advice of the Medical Review Board to obtain additional information needed by the Board or Commission to render a medical recommendation.

17:1-7.6 Medical examinations; out-of-State

(a) The retirement system may arrange medical examinations, for members who live out-of-State, with physicians located in the vicinity of the member's place of residence.

(b) In the event the Board or Commission contemplates the denial of a disability claim based on an out-of-State physician's medical report, the employee will be required to be examined by a physician selected by the Division of Pensions and Benefits.

(c) The independent medical examiner's report and all related data will be reviewed by the Board or Commission to determine whether the member's application for disability benefits will be approved.

17:1-7.7 Post-retirement employment; employer certification

Employers shall certify on the Certification of Service and Final Salary form that the retiring employee has terminated all service.

17:1-7.8 Employer resolution; involuntary disability application

Applications for the involuntary disability retirement of an employee of a local employer must be accompanied by a resolution of the governing body, or in the case of a State employee, by a letter from the State department head, certifying that the employee is disabled and unable to perform the employee's regular or assigned duties.

17:1-7.9 Workers' compensation; reduction of retirement allowance

(a) A member who retires on an accidental disability retirement under the provisions of the applicable statutes governing the various State-administered retirement systems and who receives periodic benefits under the workers' compensation law after the date of retirement shall be subject to a reduction in the pension portion of the member's retirement allowance in the amount of the periodic benefits received after the date of retirement.

1. The reduction shall be a dollar-for-dollar reduction in the pension portion of the retirement allowance in the amount of the periodic benefits for the time period for which the periodic benefits are received.

2. If the retiree receives a retirement allowance without reduction and periodic benefits under the workers' compensation law for any time period after the date of retirement, the retiree shall repay to the retirement system the amount of the pension portion of the retirement allowance which should have been subject to reduction under the applicable statute and this rule. The repayment may be in the form of a lump sum payment or scheduled as deductions from the retiree's retirement allowances and pension adjustment benefits, except that, if the retiree does not respond by remitting payment in a lump sum within 60 days, the Division shall establish a repayment schedule. In the event of the death of the retiree before full repayment of the amount required under this rule, the remaining balance shall be deducted from any death benefits payable on behalf of the retiree.

3. The reduction under this rule shall not affect the retiree's pension adjustment benefits or survivor benefits that may be payable upon the death of the retiree except for any remaining balance due to the Division as provided in (a)2 above.

(b) Any retiree or beneficiary receiving pension adjustment benefits based upon a reduced retirement allowance due to receipt of periodic workers' compensation benefits shall be entitled to receive pension adjustment benefits based upon the full retirement allowance.

17:1-7.10 Ordinary disability applications; medical examinations

(a) Applicants for ordinary disability retirement shall submit with their applications all the medical information they can supply relative to their disability, including reports of their personal physicians and consulting physicians, hospital records, diagnostic test results, and any other medical information which would assist the Medical Review Board and the Board or Commission of the retirement system in determining eligibility of the applicants for disability retirement. The Disability Review Section shall forward the applications and the accompanying medical information to the Medical Review Board.

(b) If the medical information supplied by the applicant is sufficient for the Medical Review Board to make a medical recommendation, it shall return the case to the Disability Review Section with its recommendation. If the Medical Review Board deems that the medical information supplied by the applicant is not sufficient for it to make a medical recommendation, it shall advise the Disability Review Section to arrange to have the applicant examined by a physician or physicians under contract with the Division of Pensions and Benefits to perform disability examinations, or to obtain additional information needed to make its medical recommendation.

(c) The Board or Commission which governs the pension fund or retirement system may request that an applicant be examined or reexamined by a physician or physicians under contract with the Division of Pensions and Benefits, or that additional information be obtained, if it deems that the medical information available is insufficient to make a decision on the eligibility of the applicant for ordinary disability retirement.

17:1-7.11 Waiver

a) Application for waiver in whole or part by a retiree or beneficiary who is eligible to receive the increased allowance shall be made at least 30 days prior to the desired effective date on a form required by the Division of Pensions and Benefits and shall be effective on the first day of a subsequent month.

(b) A waived benefit may be reinstated by application to the Division of Pensions and Benefits prior to the reinstatement date and shall be effective on the first of the month subsequent to the notice of cancellation of the waiver.

There shall be no retroactive payments of any benefits waived thereto.

SUBCHAPTER 8. PENSION ADJUSTMENT PROGRAM

17:1-8.1 Employer payments; multiple enrollees

The liability of the several employers in the case of multiple enrollees (a pensioner receiving benefits from a retirement system on the basis of several positions covered by the same system) will be prorated on the basis of the final salaries reported to the system prior to retirement.

17:1-8.2 Employer payments; delinquencies

(a) The Division of Pensions and Benefits will inform all retirees and beneficiaries of the reason for the suspension of payments.

(b) Retroactive adjustments will be made once the employer's appropriation has been paid.

17:1-8.3 Return to public employment; pension adjustments

(a) When a retiree returns to public employment to a position covered by the same retirement system from which he or she retired and subsequently retires from the post-retirement employment, each retirement will be treated separately for pension adjustment purposes.

(b) The benefit year for each retirement will be the initial year in which the retirement is effective and the member shall satisfy the 24-month waiting period for each retirement before the pension adjustment benefits may be received for that retirement.

(c) If a member was receiving pension adjustment benefits at the time that the initial retirement was cancelled due to the post-retirement employment, he or she shall begin to receive pension adjustment benefits based upon the initial retirement immediately upon the reinstatement of the initial retirement.

17:1-8.4 Employer payments

The employers shall review the detailed tabulations of retirees and beneficiaries provided with the invoice for employer liability submitted by the Division of Pensions and Benefits and shall report any corrections or revisions within 60 days of receipt of the invoice, otherwise invoices must be paid as submitted.

SUBCHAPTER 9. UNEMPLOYMENT INSURANCE

17:1-9.1 Due dates for contributions and reports

State employing subgroups participating in the Unemployment Insurance Program whose employees are not paid by the State Centralized Payroll Unit shall file the required data and reports of unemployment insurance contributions with the Division of Pensions and Benefits by the 15th day following the end of each calendar quarter, together with the remittance for the deductions taken from their eligible employees' salaries or wages. State Centralized Payroll will remit weekly an Unemployment Tax Register report which summarizes the Unemployment Compensation information for covered employees in each of the biweekly payroll units. The register is due within five days of the date the payroll is prepared.

17:1-9.2 Employer responsibility; benefit claims

State payroll units and subgroups shall respond with respect to benefit claims from the Division of Unemployment and Disability Insurance as well as the contractor designated by the State to handle unemployment claims and related activities.

17:1-9.3 Employer verification of claim payments

The designated contractor auditing the program will send the chief personnel or administrative officers a monthly report identifying employees who have filed claims and are in receipt of benefits. The reports must be reviewed by the employing unit to determine if they are correct and any discrepancies must be brought to the attention of the contractor.

17:1-9.4 Employee eligibility for coverage

Determinations will be made by the Division of Unemployment and Disability Insurance relative to an employee's eligibility for coverage in the Unemployment Insurance Program.

17:1-9.5 Termination of employment; separation notice

All employing units must immediately, upon the termination of an employee's services, provide pertinent information regarding the employee's separation to the designated contractor.

17:1-9.6 Designated contractor

A contractor will be designated to develop and maintain a cost control program in accordance with the terms of the contract awarded by the State. The Division of Pensions and Benefits will coordinate the contractor's activities with respect to State employing units and review quarterly reports of claims activity prepared by the contractor.

SUBCHAPTER 10. SOCIAL SECURITY

17:1-10.1 Social Security referendum

(a) As the provisions of P.L. 1956, c.169 contemplate the termination of an entire pension fund and the transfer of its assets, liabilities and membership to the Public Employees' Retirement System upon a successful referendum on the issue of Social Security coverage by a majority vote, when the referendum involves the use of a divided system approach in accordance with the provisions of P.L. 1980, c.86, all of the provisions of P.L. 1956, c.169, shall apply except on a pro rata basis.

(b) Unless the pension fund is terminated in its entirety, the pensions and other benefits granted shall be continued by the pension fund. As the pension fund is not terminated in whole, the actuary shall calculate the liability of each employer only for persons becoming members of the Public Employees' Retirement System, taking into account the pro rata value of assets and liabilities which are transferred to the Public Employees' Retirement System.

(c) As the use of a divided system approach may not result in the termination of the pension fund, the members of the pension fund who are already covered by Social Security and who are not eligible to vote in the referendum shall also be permitted to enroll in the Public Employees' Retirement System on the same optional basis and to the same extent and with the same limitations as those who voted in favor of Social Security coverage.

17:1-10.2 Federal-State agreement; modifications

All modifications of the Federal-State agreement are prepared by the Division of Pensions and Benefits and subject to review by the Attorney General's office.

17:1-10.3 Benefit and claim issues

All benefit and claim issues are the responsibility of the Federal Social Security Administration.

17:1-10.4 Social Security coverage; excluded services

If an employer had previously excluded services which the employer subsequently wishes to cover, the employer shall be required to cover all previously excluded services in order to avoid the issue of discrimination against any particular group of eligible employees.

SUBCHAPTER 11. (RESERVED)

SUBCHAPTER 12. CENTRAL PENSION FUND

17:1-12.1 Application required

For retirement of State employees under the Veterans Retirement Act, N.J.S.A. 43:4-1 et seq., or the Heath Act, N.J.S.A. 43:5-1 et seq., an application on a form provided by the Division of Pensions and Benefits must be prepared by the employee, certified by the employing agency and filed with the Division.

17:1-12.2 Disability certification form

Where disability is the cause for the pension, a certification of the disability by a physician on a form provided by the Division of Pensions and Benefits must be filed with the Division.

17:1-12.3 Withholding forms

A W-4P, "Withholding Certificate for Pension or Annuity Payments," must be filed with the Division of Pensions and Benefits.

17:1-12.4 Surrogate's certification

(a) When a pensioner dies and a residual benefit is payable, the claimant shall file an appropriate certification from the Surrogate's Office with the Division of Pensions and Benefits.

(b) No such certification will be necessary in the case of the Heath Act where there is a named beneficiary surviving the pensioner.

(c) A death certificate and a form for payment will also be required.

SUBCHAPTER 13. NEW JERSEY STATE EMPLOYEES' CAFETERIA PLAN

17:1-13.1 Establishment of plan

All State employees eligible to participate in the State Health Benefits Program are eligible to participate in the New Jersey State Employees' Cafeteria Plan set forth in this subchapter. In each calendar year, each employee may participate in one or more of the plan options described in this subchapter.

17:1-13.2 Unreimbursed medical spending account

(a) Each employee may elect to reduce his or her salary, through regular payroll deductions, by a specified dollar amount to create an unreimbursed medical spending account to provide for the direct payment or reimbursement by the State, or its plan administrator, of any or all medical and dental expenses not reimbursed, or only partially reimbursed, under the employee's health benefit plan or any other benefit plan, and considered by the Internal Revenue Service to be a tax deductible medical expense.

1. Examples of eligible expenses are orthodontia, surgery (including cosmetic surgery), and the deductible portion of medical and dental expenses under the employee's health benefits plan, as well as coinsurance amounts.

2. Eligible expenses include those incurred by the employee's eligible dependents.

3. Note that premium contributions required for any medical or dental coverage are paid through premium conversion and not from the unreimbursed medical spending account.

17:1-13.3 Premium option plan

If an employee selects medical or dental coverage requiring the payment of a premium contribution, the employee's salary will be reduced by the amount of the required premium contribution as part of the plan, and the employee will not have to request this benefit. If, however, an employee does not wish to participate in the premium option plan, the employee must file a declination of premium option plan form with the employee's benefits administrator. An employee's participation in the premium option plan terminates on the employee's last day of employment.

17:1-13.4 Dependent care spending account

Each employee may elect to reduce his or her salary, through regular payroll deductions, by a specified dollar amount to create a dependent care spending account to provide for the direct payment or reimbursement by the State, or its plan administrator, of any or all dependent care expenses as provided in § 129 of the Internal Revenue Code, 26 U.S.C. § 129. Examples of eligible expenses are expenses incurred by the employee for the care of dependents under the age of 13 and dependents, including the employee's spouse, who are physically or mentally incapable of self-care.

17:1-13.5 Salary reduction elections

(a) The plan shall operate on a calendar-year basis, with each employee permitted to make a one-time salary-reduction election for the calendar year. The initial plan year shall commence on June 28, 1996, and shall conclude on December 31, 1996.

(b) Salary-reduction elections shall be made during enrollment periods announced by the Division of Pensions and Benefits and shall be submitted to the plan administrator. Information about the plan administrator and election forms shall at all times be available from the Division of Pensions and Benefits.

(c) In each calendar year, an employee establishing an unreimbursed medical spending account must elect a salary reduction amount of at least $100 but not more than $2,000 for this account.

(d) In each calendar year, an employee establishing a dependent care spending account must elect a salary reduction amount of at least $250 but not more than $5,000 ($2,500 if married, filing separately) for this account.

(e) Once made, a salary-reduction election for a given calendar year is irrevocable; provided, however, that modification or revocation of an election will be permitted if allowable under § 125 of the Internal Revenue Code, 26 U.S.C. § 125, as in certain circumstances involving a change in family status.

17:1-13.6 Claims for payment from plan accounts

(a) Claims for payment of expenses eligible for payment from plan accounts shall be submitted to the plan administrator. Information about the plan administrator and claim forms shall at all times be available from the Division of Pensions and Benefits.

(b) In each calendar year, the total payments from a plan account shall not exceed the total salary reduction amount elected by the employee for that account for that calendar year.

(c) Participation in each plan account will terminate on December 31 of each year. The employee, however, may continue to submit claims for expenses incurred in that calendar year through March 31 of the following year.

(d) Plan accounts may not be used to pay expenses incurred prior to the employee's participation in the account or for periods that an employee is not contributing to the plan.

17:1-13.7 Forfeiture of account balances

In the event that the amount elected by an employee to fund a plan account in a given calendar year exceeds the employee's total claims for expenses incurred in that calendar year (as submitted no later than March 31 of the following calendar year) and eligible for payment from the plan account, the balance in the plan account shall be forfeited to the State.

17:1-13.8 Compliance with Internal Revenue Code

The plan is intended to comply in all respects with the provisions of § 125 of the Internal Revenue Code, 26 U.S.C. § 125.


POLICE AND FIREMEN'S RETIREMENT SYSTEM
Age Requirements

Adopted Amendment: N.J.A.C. 17:4-2.5

Cite as 35 N.J. Reg. 2186(a)

Adopted May 19, 2003

Summary

The Police and Firemen's Retirement System (PFRS) has recently been asked to clarify the intent of subsection (b) of N.J.A.C. 17:4-2.5 which deals with municipalities that have adopted the provisions of the Department of Personnel Merit System and the eligibility for enrollment in the PFRS based on certification to a Merit System list. Subsection (b) has been in existence for more than 30 years.

N.J.S.A. 43:16A-3(1) provides in part that any person becoming a full-time police officer or firefighter must become a member of the Police and Firemen's Retirement System as a condition of employment. It also provides for enrollment in the Police and Firemen's Retirement System provided that the person's age at becoming such full-time policeman or fireman is not over 35 years. N.J.S.A. 43:16A-3(1) also provides that the age requirements are met if a person met the age requirements at the announced closing date of a Department of Personnel  (DOP) examination for such position and was appointed during the existence of the DOP list based on that examination. Candidates must not be one day past the date of their 35th birthday on the announced closing date of the DOP examination.

Municipal statutes also clearly require for police officers (N.J.S.A. 40A:14-127) and fire fighters at N.J.S.A. 40A:14-12 that, "no person shall be appointed as a member or officer of the paid fire department or force or as a paid member or officer of a part-paid fire department or force in any municipality, who is under 21 or over 35 years of age."

There are "exceptions" to the age rule that have sometimes led to confusion. For example, individuals employed by the State of New Jersey or any county who exceed the maximum age requirement for membership in PFRS, but who are otherwise eligible for the position, must establish membership in Public Employees' Retirement System. Those applying for municipal police officer positions may, in accordance with N.J.S.A. 40A:14-127.1, use any former service as a police officer to reduce actual age in order to meet the maximum age requirement of 35 years for the position of a municipal police officer. In any case, no person may be appointed over the age of 45 except for those who were previously involuntarily terminated from their former law enforcement employment.

Individuals seeking employment with a municipality in an eligible PFRS title whose date of hire occurs after the date of their 35th birthday, even after "reductions in age" have been taken into account, cannot establish membership in any State-administered retirement system. Since enrollment in the PFRS is a condition of employment, these individuals cannot be hired.

The tests administered by the DOP for police and fire fighter positions are also used to fill positions in the State, counties and municipalities. Because the State and counties do not have age restrictions in hiring personnel, applicants who are over 35 may still take the tests, and be certified to a list as eligible for those positions. The DOP does not produce a separate list for municipal PFRS candidates nor does it certify lists any longer. Municipalities must check the age of the applicant whom they select from the list to determine whether they meet the age requirements for the PFRS if membership in the PFRS is a condition of employment for the position to be filled.

Therefore, the Board proposes to eliminate subsection (b) that, as written, appears to be contradictory to the statutory requirement found at N.J.S.A. 43:16A-3 and which has caused some confusion.

The Board proposes to add a new subsection (b) which would mirror the exception found at N.J.S.A. 43:16A-3 regarding the applicant who met the age requirements at the announced closing date of a Department of Personnel (DOP) examination for such position and was appointed during the existence of the DOP list based on that examination.

A 60-day comment period is provided for this notice of proposal and, therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this notice of proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

Full text of the proposal follows:

17:4-2.5 Age requirements

(a) Applicants must be appointed to an eligible title on or prior to their 35th birthday.

(b) (Municipalities having adopted the provisions of Civil Service are subject to the determination of that agency in determining eligibility for such appointments. The board will recognize anyone certified from a Civil Service list as having met the age requirements of the system.) The age of candidates for positions covered by the Police and Firemen's Retirement System with employers who have adopted the provisions of Title 11A of the New Jersey Statutes (Civil Service) is determined at the announced closing date of the examination offered by the Department of Personnel for those positions. Candidates must not be one day past the date of their 35th birthday on the announced closing date of the examination. Those candidates meeting the age requirements at that time will be considered as having met the age maximum requirement for the duration of the list promulgated as a result of such examination. (N.J.S.A. 43:16A-3(1))

(c)-(e) (No change.)


JUDICIAL RETIREMENT SYSTEM

Proposed Readoption with Amendments: N.J.A.C. 17:10

Cite as 35 N.J. Reg. 388(a)

Adopted January 21, 2003

Summary

When the Division of Pensions and Benefits becomes aware of a change in the laws or a court decision that possibly could affect the Judicial Retirement System (JRS), the administrative rules are reviewed and, if changes therein are mandated, steps are taken to propose changes to those rules to conform to the new statute or court decision. Additionally, the rules are periodically reviewed by the Division's staff to ascertain if the current rules are necessary and/or cost efficient. After careful scrutiny of the current rules

in N.J.A.C. 17:10, the Division is satisfied that they are necessary and needed for the efficient operation of the System. Accordingly, the Division of Pensions and Benefits proposes to readopt the current rules within N.J.A.C 17:10, which expire on October 19, 2003, pursuant to N.J.S.A. 52:14B-5.1c, with the following amendments, deletions and new rules, and to extend the expiration date for such rules under Executive Order No. 66(1978). The current rules deal with the administration, enrollment, membership, retirement and transfer aspects associated with the Judicial Retirement System.

Members, participating employers, retirees and survivors of retirees rely on the efficient operation of the retirement system to administer retirement benefits and to provide the information they need regarding individual accounts. They rely upon the presence and predictability of the rules that guide the administration of benefits and the stability of the System. The protections and guarantees that these rules afford its members mandate their continued existence.

The rules proposed for readoption and the proposed amendments, repeals and new rules reflect the requirements for eligibility and amounts of benefits available that are mandated within the statutes governing the Judicial Retirement System. The chapter originally became effective November 29, 1973. Pursuant to Executive Order No. 66(1978), the chapter was readopted in 1983 and 1988. Pursuant to Executive Order No. 66, chapter 10 expired on May 6, 1993 and was adopted as new rules effective August 2, 1993. Chapter 10 was readopted in 1998. The current rules deal with the administration, enrollment, membership, retirement and transfer aspects associated with the Judicial Retirement System.

Following is a discussion of the proposed amendments, repeals and new rules.

The Commission proposes to add the words "and Benefits" to "the Division of Pensions" throughout these rules to accurately reflect the Division's name. The Commission also proposes to change any gender specific pronouns to gender neutral pronouns and to capitalize the "c" in "Commission" throughout these rules.

The proposed amendment to N.J.A.C. 17:10-1.1 would add the clarification that the State House Commission acts as the Board of Trustees for the JRS pursuant to N.J.S.A. 43:6A-29. 

N.J.A.C. 17:10-1.2 would remain unchanged.

The proposed amendment to N.J.A.C. 17:10-1.3 would remove the gender specific pronouns and clarify what happens should the chairperson be absent.  "The Division of Pensions and Benefits" would be added instead of the word  "Pensions" after "the Director."

The proposed amendment to N.J.A.C. 17:10-1.4 would eliminate the reference to county certifying officers. All Judges are now State employees and not county employees due to the unification of the Judiciary in 1991 (P.L. 1991, c.91).

The Commission proposes to amend N.J.A.C. 17:10-1.5 by adding subsection  (d) dealing with beneficiary information. The confidentiality of beneficiary information appears at N.J.A.C. 17:1-4.1, Records, in the General Administration chapter, but the Commission believes it also belongs in the JRS rules. Advice from the Attorney General's Office has been interpreted to permit the Division to release beneficiary information once a member's death has been reported to the System; therefore, the Commission proposes to add this information as well. The Commission also proposes to add subsection (e) which will state where in statute the charges for copies of records may be found.

Proposed amendments to N.J.A.C. 17:10-1.6 would capitalize the "c" in Commission and the "t" in the initial "The." The "(a)" codification would be eliminated because there is no subsequent codified provision in the section. 

Proposed amendments to N.J.A.C. 17:10-1.7 would eliminate the reference to certificates of eligibility being mailed on an annual basis. Certificates of eligibility are now only mailed when there is a question regarding the status of a beneficiary (remarriage, death, etc.).

The Commission proposes to amend N.J.A.C. 17:10-1.8 by detailing what the Division of Pensions and Benefits will accept as proof of age and by changing the permissive "will" and "may" to "shall." Proof of age is required to process any retirement or death benefit.

The proposed amendment to N.J.A.C. 17:10-1.9 would eliminate the gender specific pronoun.

N.J.A.C. 17:10-1.10 would remain unchanged.

The Commission proposes to repeal N.J.A.C. 17:10-1.11 and consolidate its provisions with N.J.A.C. 17:10-4.9 which also deals with withdrawals from the JRS.

The proposed amendment to N.J.A.C. 17:10-2.1 would add "in the Judicial Retirement System" after "membership" and would eliminate the gender specific pronouns.

N.J.A.C. 17:10-2.2 would remain unchanged.

Proposed new rules N.J.A.C. 17:10-2.3 and 2.4 would detail who is eligible to purchase service, how a purchase is requested and authorized and that the Commission could disallow a purchase if the former service was dishonorable. N.J.A.C. 17:10-2.4 would add the types of services that are eligible for purchase, the calculation for the purchase cost and the clarification that a member would receive non-judicial service credit toward retirement for a purchase other than a purchase of prior judicial service. Members of the JRS have been eligible to purchase service pursuant to N.J.S.A. 43:6A-14.2 since 1981, but the procedures for purchases had never been added into the New Jersey Administrative Code.

P.L. 2001, c.74 provided for an additional contributory insurance benefit as approved by the Commission. Previously, members of the JRS were only eligible for non-contributory benefits. Therefore, the Commission proposes to amend N.J.A.C. 17:10-3.1 by adding "non-contributory insurance" to its heading as well as adding "non-contributory" before "insurance" in subsection  (a) and the first sentence of subsection (b) and to make all gender specific pronouns neutral.

Proposed new rule N.J.A.C. 17:10-3.2 would mirror rules found in the other retirement systems (see N.J.A.C. 17:2-3.14 for PERS, 17:3-3.13 for TPAF, and 17:4-3.6 for PFRS). When members file for retirement, they designate current beneficiaries which supersede prior beneficiary designations. The proposed new rule will allow the Division to recognize beneficiaries properly designated on a retirement application filed with and accepted by the Division, even if the member withdraws the retirement application prior to retirement. The Division will send written notification to members who withdraw their retirement applications that beneficiaries designated on their retirement applications will remain in effect.

N.J.A.C. 17:10-3.3 would remain unchanged.

The proposed amendment to N.J.A.C. 17:10-3.4 would provide for the payment of the benefit for the month in which the qualifying event takes place. For example, at the present time, should a widow remarry on July 15, the survivor's benefit would cease as of July 1 and there would be no entitlement to benefits for the month of July. The proposed amendment would provide for a benefit for the month in which the event occurred so that the survivor in the above example would receive a benefit for July and the entitlement for benefits would end on July 31.

P.L. 1993, c.335, which became effective on December 27, 1993, provided for the payment of the full retirement allowance in the month in which a retiree died. Previously, if a retiree died during the month, only the widow's portion of 25 percent was payable. The proposed amendment to the rule would clarify that the survivor's benefit becomes effective on the first of the month after the retiree's death because the full amount of the benefit is payable in the month that the retiree died.

Proposed new rule N.J.A.C. 17:10-3.5, regarding contributory group life insurance is necessary due to the recent enactment of P.L. 2001, c.74 which provided for an additional contributory insurance benefit as approved by the Commission. P.L. 1997, c.205 (N.J.S.A. 43:6A-17.1) first allowed for contributory insurance in the JRS. N.J.S.A. 43:6A-17.1(i) states that beneficiaries for the contributory insurance must be filed with the Division. When chapter 74 was enacted, it provided that the provisions of the contributory insurance shall be governed by the provisions of the insurance contract approved by the Commission (N.J.S.A. 43:6A-17.1(j)). Because the contract provides that beneficiaries must be designated with the insurance provider and not the Division, the Commission proposes to clarify in this rule that beneficiaries must be designated through the insurance provider.

The proposed amendment to N.J.A.C. 17:10-3.6 would clarify that this section applies to both non-contributory and contributory insurance and would add a new subsection (b) stating that those members wishing to enroll in contributory insurance may do so at any time but must prove insurability first.

The Commission proposes to amend N.J.A.C. 17:10-4.1 by eliminating the reference to all claims involving an increase of 15 percent in salary at retirement and replacing it with language similar to that used in the creditable compensation rules for the other retirement systems (see N.J.A.C. 17:2-4.1, 17:3-4.1 and 17:4-4.1). The Division will investigate any increase if it appears to be in anticipation of retirement and is not limited to those of 15 percent or more.

The proposed amendment to N.J.A.C. 17:10-4.2 would add "member's" before "file" to better indicate whose file is being accessed.

N.J.A.C. 17:10-4.3 would be amended to clarify that life insurance coverage is only in affect for the first 93 days of a suspension per N.J.S.A. 43:6A- 43. The word "Commission" would also be capitalized.

The proposed amendment to N.J.A.C. 17:10-4.4 would change the gender neutral pronouns to the member and capitalize the "s" in "System."

The Commission proposes to eliminate subsection (b) from N.J.A.C. 17:10-4.5. The proposed amendment is needed to comply with Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA), 38 U.S.C. §§ 4301 et seq. which provides that an employee who leaves a civilian employer, and after serving in the uniformed services, returns to employment with the employer, is entitled to restoration of certain pension, profit-sharing, and similar benefits that would have accrued but for the employee's absence due to qualified military service, because USERRA provides for the crediting of service while on a military leave and the dates when a member must return to covered service. The provisions of USERRA as they apply to the State-administered retirement systems may be found at N.J.A.C. 17:1-4.36 in the General Administration chapter. Because there is no subsection (b), the Commission proposes to eliminate the "(a)" before the remaining paragraph.

N.J.A.C. 17:10-4.6 would be amended to have 15 days equal one month of service instead of 20 days to reflect current Division practice.

N.J.A.C. 17:10-4.7 would remain unchanged.

The proposed amendment to N.J.A.C. 17:10-4.8 would change the minimum adjustment from $3.00 annually to $10.00 per quarter to better reflect current Division practice.

The Commission proposes to amend N.J.A.C. 17:10-4.9 by replacing the chapter law citation with a statutory citation and by adding the provisions regarding interest which were formerly found at N.J.A.C. 17:10-1.11.

The proposed amendment to N.J.A.C. 17:10-4.10 would clarify what the member's maximum outstanding loan balance can be. New Internal Revenue Service regulations, effective January 1, 2002, have resulted in changes to the Division's loan policies. Specifically, 26 U.S.C. § 72(p) requires that loan balances not exceed $50,000. The section is amended to provide that the member's total outstanding loan balance shall not exceed the lesser of 50 percent of the accumulated deductions posted to the member's account or  $50,000.

The Commission proposes to amend N.J.A.C. 17:10-5.1 by adding a new subsection (b) which will define all of the benefit options now available to JRS retirees. P.L. 2002, c.54 provided JRS members with the same options that are available to members of the Public Employees' Retirement System and the Teachers' Pension and Annuity Fund. The proposed amendment is substantially similar to the language found in the PERS rules at N.J.A.C. 17:2-6.1 and the TPAF rules at N.J.A.C. 17:3-6.1.

The proposed amendment to N.J.A.C. 17:10-5.2 would include the capitalization of the words "retirement system" and the elimination of Commission approval before a benefit can become payable. The Commission now only meets on a quarterly basis and it would be a financial hardship to require a member to wait three months before receiving Commission approval for a retirement benefit.

The proposed amendment to N.J.A.C. 17:10-5.3 includes the elimination of gender specific pronouns as well as the addition of the requirement that a change in retirement application must be made in writing. This has been Division practice for many years. The clarification of when a retirement allowance is due and payable would also be added. The addition of option selection is necessary in subsection (b) because, previously, there were no options in JRS. The Commission proposes to add the clarification in new subsection (c) (formerly (b)) that a member who turns 60 on the first of the month may use that date for the deferred retirement date. Subsection (c) would become (d) and the approval by the Commission would be eliminated because the Division of Pensions and Benefits is paying benefits in some cases prior to Commission approval. Subsection (d) would be recodified as (e).

N.J.A.C. 17:10-5.4 would remain unchanged.

The proposed amendment to N.J.A.C. 17:10-5.5 would include the addition of  "and payable" after "due" and the elimination of the Commission approval from the definition. As previously stated, the Commission meets only quarterly, and the Division of Pensions and Benefits does not wish to hold up retirement benefits until after Commission approval.

N.J.A.C. 17:10-5.6 and 5.7 would remain unchanged.

The proposed amendment to N.J.A.C. 17:10-5.8 would clarify that the reduction for early retirement is not applied if the member's 60th birthday occurs on or before the 15th of the month, instead of stating the "middle" of the month.

The proposed amendment to N.J.A.C. 17:10-5.9 would clarify that a service retirement may become effective on the first of the month if a member's 60th birthday falls on the first of the month, to eliminate any ambiguities in this area.

The Commission proposes to amend N.J.A.C. 17:10-5.10 by substituting the  "Judicial Retirement System" for "the fund."

N.J.A.C. 17:10-5.11 would remain unchanged.

The proposed amendment to N.J.A.C. 17:10-5.12 would delete paragraph (a)2 because the Division will no longer hold a member's retirement check until a loan is satisfied. Paragraph (a)3 would become paragraph (a)2.

The proposed amendment to N.J.A.C. 17:10-5.13 would add "such person" after the word "however" to be more grammatically correct.

The proposed amendment to N.J.A.C. 17:10-6.1 would be the elimination of the word "check" throughout this rule. The Division uses a wire transfer process to transfer contributions and no longer issues a check to the new system. Subsection (f) is also proposed to be deleted. Age based contribution rates were eliminated in 1982 when a uniform rate of three percent was introduced by P.L. 1981, c.470 (N.J.S.A. 43:6A-34.1).

A 60-day comment period is provided for this notice of proposal; therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this notice of proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars. 

Full text of the proposed readoption may be found in the New Jersey Administrative Code at N.J.A.C. 17:10. 

Full text of the proposed amendments follows:

SUBCHAPTER 1. ADMINISTRATION

17:10-1.1 Commission meetings

The State House Commission shall meet at the call of the counsel to the [commission] Commission. The Commission acts as the Board of Trustees for the Judicial Retirement System and has the general responsibility for the proper operation of the System pursuant to N.J.S.A. 43:6A-29.

17:10-1.3 Officers and committees

(a) The chairperson of the[commission] Commission will preside at all meetings [he or she attends, and in his or her absence]. If the chairperson is absent, another member selected by the majority of the members in attendance will preside for that single meeting.

(b) Upon recommendation of the Director of [Pensions] the Division of Pensions and Benefits, the [commission] Commission will select from the staff of the Division of Pensions and Benefits an assistant secretary, who will serve in the absence of the secretary.

(c) The chairperson will appoint such committees from the [commission]  Commission members as [he or she deems] necessary to facilitate the Commission's operations. Such committee appointments will be for a one-year period, commencing each July 1.

17:10-1.4 Certifying officer

(a) The official properly designated by the Administrative Office of the Courts will serve as the certifying officer. [Additional certifying officers will be designated in each county where necessary.]

(b) (No change.)

17:10-1.5 Records

(a) The minutes of the [commission] Commission are a matter of public record and may be inspected during regular business hours in the office of the secretary.

(b) (No change.)

(c) All medical testimony obtained in connection with an application for disability retirement shall be restricted for the confidential use of the [commission] Commission.

(d) The designations of beneficiaries of all active and retired members are considered to be a part of the member's confidential files and shall only be released after the member's death or upon the member's written request.

(e) Charges for copies of pension records which have been deemed to be public information will be made in accordance with the provisions of N.J.S.A. 47:1A-2.

17:10-1.6 Appeal from [commission] Commission decisions

[(a)] The following statement shall be incorporated in every written notice setting forth the [commission's] Commission's determination in a matter where such determination is contrary to the claim made by the claimant or [his] the claimant's legal representative:

"If you disagree with the determination of the State House Commission in this matter, you may appeal by sending a written statement to the [commission] Commission within 45 days from the date of this letter informing the [commission] Commission of your disagreement and all of the reasons therefor. If no such written statement is received within the 45-day period, this determination shall be considered final."

17:10-1.7 Suspension of pension checks

(a) Monthly pensions will be suspended under the following circumstances and the suspension will continue during the period of default:

1. If a widow, widower, parent or guardian of a minor child(ren) fails to file a certificate of eligibility [which is normally mailed to such beneficiaries on an annual basis] when requested by the Division of Pensions and Benefits;

2. (No change.)

17:10-1.8 Proof of age

(a) As most members are appointed at a later age in this System, all members [will] shall be required to establish proof of their age with the System at the time of their enrollment in the System. If a member is transferring to the Judicial Retirement System from another State-administered retirement system where proof of age was secured, no additional proof of age will be requested. Acceptable proofs of age include birth or baptismal certificates, passports, naturalization papers, Biblical records, affidavits of older members of the immediate family or primary school records.

(b) In the event a member dies before satisfactory evidence of [his] the member's date of birth has been filed with the [system] System, appropriate evidence [may] shall be required before any death claim is processed for settlement.

(c) In the event proof of age has not been filed with the [system] System before retirement, such proof must be filed before any retirement benefits may be disbursed.

17:10-1.9 Judges; biweekly salaries

(a) (No change.)

(b) In the event a judge is reported on a combination of monthly and biweekly pay periods, [his] the judge's service credit will be computed on proportional basis.

[17:10-1.11 Withdrawals; interest]

[(a) A member, who terminates eligible judicial service and who is ineligible or does not elect any benefits for which he or she is eligible, may apply for the return of contributions and appropriate interest thereon.]

[(b) Interest will not be credited to a member's account beyond two years from the last date of contributions made to the Judicial Retirement System.]

SUBCHAPTER 2. ENROLLMENT AND PURCHASES

17:10-2.1 Enrollment date

A new appointee to the several courts shall be considered as beginning [his or her] membership in the Judicial Retirement System on the date of [his or her] taking the oath of office following [his or her] confirmation.

17:10-2.3 Eligibility for purchase

(a) Only active members of the Judicial Retirement System shall be eligible to make application for purchase of credit. An active member is a member who is contributing to the System or who contributed to the System less than two years before the date of the purchase request. Active members who are not currently contributing to the System shall purchase their requested service in a lump sum.

 (b) In order to be eligible to purchase service, a member must submit a written request to purchase service and such purchase must be authorized by the member before the expiration date indicated on the letter which quotes the term of the purchase. In no case can a member receive more than one year of service credit for any calendar or fiscal year.

 (c) The receipt of a public pension or retirement benefit is expressly conditioned upon the rendering of honorable service by a public officer or employee. Therefore, the Commission shall disallow the purchase of all or a portion of former service it deems to be dishonorable in accordance with N.J.S.A. 43:1-3.

17:10-2.3 Optional purchase of eligible service

 (a) A member may purchase all or a portion of former membership in a New Jersey State-administered retirement system. A member may also purchase service rendered in an office, position, or employment of the State of New Jersey, or of a county, municipality, board of education, or public agency of the State of New Jersey provided that the annual salary or compensation was at least $500.00 pursuant to N.J.S.A. 43:6A-14.2.

 (b) The cost of the purchase shall be calculated on the basis of the actuarial purchase factor established for the member's age at the time the Division of Pensions and Benefits receives the purchase request multiplied by the member's current annual salary. The member pays only the employee's share of the purchase cost.

 (c) The member shall receive non-judicial service credit for any eligible purchase of service other than prior judicial service.

SUBCHAPTER 3. INSURANCE AND DEATH BENEFITS

17:10-3.1 Computation of benefits; non-contributory insurance

(a) If a member dies during the first year following [his or her] the member's date of enrollment, the non- contributory insurance benefit shall be 1 1/2 times the annual salary received by the member at the time of [his or her] death.

(b) Where a post audit of insurance claim payments indicates that the salary reported by an employer was incorrect and resulted in the overpayment of [an] a non-contributory insurance claim to a member's designated beneficiary or estate, the employer will be billed for the value of the overpayment of insurance benefits. Where post audits establish the insurance benefits were underpaid, an additional check would be sent to the beneficiary for the value of the underpayment.

17:10-3.2 [(Reserved)] Acceptable designations of beneficiaries; non-contributory insurance

(a) The beneficiary designation on a duly executed retirement application that is filed with and accepted by the Division of Pensions and Benefits supersedes any older designation of beneficiary on file. The designation is effective upon acceptance by the Division, even if the retirement date on the application is in the future or the member withdraws the retirement application.

 (b) The beneficiary or beneficiaries of the non-contributory group life insurance designated on the retirement application shall be the beneficiary or beneficiaries of the active non-contributory group life insurance.

  1. If no beneficiary designation is in effect at the time of the member's death, or if no one is named as beneficiary for non-contributory group life insurance, the Division shall pay the benefit to the member's estate.

17:10-3.4 Survivor benefits

(a) Payment of benefits to eligible survivors shall become effective on the first of the month [of] subsequent to the member's death and shall terminate [as of] on the first of the month [in] subsequent to the date on which the survivor no longer qualifies for such benefits.

(b) In the instance of survivors of members who die in service, the initial pension payment will be for the month following the month in which the member died, and the last payment will cover the month [immediately preceding the month] the survivor dies or ceases to qualify for the continuance of benefits.

17:10-3.5 [(Reserved)] Contributory group life insurance; beneficiary designation

Members enrolled in the contributory group life insurance (Group Term life insurance or Group Variable Universal Life (GVUL) insurance) must designate their beneficiary or beneficiaries directly with the insurance provider. Any change of beneficiary designation for non-contributory group life insurance filed with the Division of Pensions and Benefits shall not effect the beneficiary designation for the contributory group life insurance.

17:10-3.6 Proof of insurability; non-contributory and contributory group life insurance

(a) When proof of insurability is required for non-contributory group life insurance, the member's opportunity to prove such insurability shall expire one year (12 months) from the date the initial written notice is sent advising such member that [he or she] the member must prove insurability by taking a medical examination.

(b) Judicial Retirement System members who are not covered by contributory group life insurance may elect to enroll at any time but must provide evidence of insurability.

SUBCHAPTER 4. MEMBERSHIP

17:10-4.1 Creditable salary

(a) (No change.)

(b) [All claims involving an increase in compensation of more than 15 percent of that of the previous year, as reported to the retirement system, shall be investigated.] With respect to all claims for benefits, the Division of Pensions and Benefits shall investigate increases in compensation reported for credit which exceed the reasonably anticipated annual compensation increases for members of the System. Those cases where a violation of the statute is suspected shall be referred to the [commission] Commission.

17:10-4.2 Approved leave

When benefits are payable involving approved leaves of absence, a certified copy of the approved leave must be available in the member's file or must be confirmed before processing can be completed.

17:10-4.3 Suspension

(a) A suspended member will have non-contributory life insurance coverage continued for the period of the first 93 days of suspension, terminated by resignation or dismissal.

(b) (No change.)

(c) If, during the period of suspension or at the conclusion of the penalty period, adjustment is made in favor of the member, the [commission] Commission may allow retirement credit for the period of the suspension.

17:10-4.4 Termination; resignation

(a) Under terms of the statutes, a member may resign and terminate <<-his or her->> membership in the [system] System only if [he or she] the member terminates all employment. No resignation terminating membership can be accepted if:

1. (No change.)

2. The member certifies that [his or her] employment has not ended or that [he or she] the member has taken another position subject to coverage;

3. The member has been dismissed or suspended from employment. In this event, such a member will be considered as terminating [his or her] membership if[ he or she] the member has formally resigned from [his or her] the position or if there is no legal action contemplated or pending and the dismissal has been adjudged final.

4. (No change.)

17:10-4.5 Eligible credit

[(a)] Only public service in New Jersey may be established for credit in the retirement system.

[(b) No credit shall be established for service during a period of military leave of absence unless the member is credited for the period of service prior to the granting of the leave and for service subsequent to such leave.]

17:10-4.6 Per diem credit

For the purpose of granting credit for service performed on a per diem basis, credit shall be prorated and granted on the basis of [20] 15 days equals one month of credit.

17:10-4.8 Minimum adjustment

In order to facilitate the reconciliation of a member's account, no rebates or additional contributions shall be made where an adjustment involves an amount of [$3.00 or less] $10.00 or less during a calendar quarter.

17:10-4.9 Withdrawals

In accordance with the provisions of [Section 26 of Chapter 470, P.L. 1981]  N.J.S.A. 43:6A-11, and in the event no other benefits are payable, a member of the Judicial Retirement System may apply for and receive [his or her] the member's accumulated deductions to the [retirement system] Retirement System plus regular interest upon [his or her] the member's withdrawal from the [retirement system] Retirement System and upon the filing of a proper application therefor.

(b) Interest will not be credited to a member's account beyond two years from the last date of contributions made to the Judicial Retirement System.

17:10-4.10 Eligibility for loan

Only active contributing members of the System may exercise the privilege of obtaining a loan [and the maximum loan]. The member's total outstanding loan balance shall [be] not exceed the lesser of 50 percent of the accumulated deductions posted to the member's account or $50,000.

SUBCHAPTER 5. RETIREMENT

17:10-5.1 Applications

(a) Applications for retirement must be made on forms prescribed by the [system] System:

1. Such forms must be completed in all respects and filed with the [system] System.

2. In the event a member files an incomplete application, the deficiencies shall be brought to such member's attention and such member will be required to file a completed application with the [system] System to enable acceptance for processing.

3. Before an application for retirement is processed, it must be supported by a copy of the member's resignation from [his or her] the member's judicial office, which has been filed in the Office of the Secretary of State, and a certificate from the certifying officer setting forth the employment termination date and the salary reported in the member's final year of employment.

(b) P.L. 2002, c.54 provides a JRS member the option of selecting a reduced retirement benefit in order to provide a monthly survivor benefit to a named beneficiary. This monthly benefit is in addition to and separate from the statutory benefit already in place for a surviving spouse and dependent children. A member shall, on the retirement application, select one of nine ways (options) to receive retirement benefits. Each option provides the member with a lifetime monthly retirement benefit. Once a retirement benefit becomes due and payable as defined by N.J.A.C. 17:10-5.3, the option cannot be changed. Except under the Maximum Option and Option 1, once a member designates a beneficiary, that beneficiary cannot be changed. The options are as follow:

1. Maximum Option provides the largest allowance for the member but does not include a pension benefit paid to a beneficiary upon the member's death.

  2. Option 1 provides a reducing retirement reserve to one or more beneficiaries. At retirement, a reserve amount is established to pay the member's lifetime retirement allowance. This reserve is reduced each month by the member's original monthly retirement allowance. Upon the member's death, the beneficiary or beneficiaries receive the balance of the reserve, if any.

3. Option 2 provides, upon the member's death, a lifetime monthly retirement allowance equal to 100 percent of the member's monthly retirement allowance to a beneficiary.

  4. Option 3 provides, upon the member's death, a lifetime monthly retirement allowance equal to 50 percent of the member's monthly allowance to a beneficiary.

  5. Option 4 provides, upon the member's death, a lifetime monthly retirement allowance to one or more beneficiaries. The member determines the retirement allowance which in the aggregate cannot be more than the Option 2 allowance.

  6. Option A provides, upon the member's death, a lifetime monthly retirement allowance equal to 100 percent of the member's monthly retirement allowance to a beneficiary. If the member's beneficiary predeceases the member, the member's retirement allowance shall increase to the Maximum Option.

  7. Option B provides, upon the member's death, a lifetime monthly retirement allowance equal to 75 percent of the member's monthly retirement allowance to a beneficiary. If the member's beneficiary predeceases the member, the member's retirement allowance shall increase to the Maximum Option.

8. Option C provides, upon the member's death, a lifetime monthly retirement allowance equal to 50 percent of the member's monthly retirement allowance to a beneficiary. If the member's beneficiary predeceases the member, the member's retirement allowance shall increase to the Maximum Option.

  9. Option D provides, upon the member's death, a lifetime monthly retirement allowance equal to 25 percent of the member's monthly retirement allowance to a beneficiary. If the member's beneficiary predeceases the member, the member's retirement allowance shall increase to the Maximum Option.

 (c) Before an application for retirement may be processed, the Division must receive proof of the member's age, if none is already in the member's record and proof of the beneficiary's age, if the member elected Option A, B, C, D, 2, 3 or 4.

[(b)] (d) In addition to the requirements set forth in (a) through c above, [be supported by a report of the member's personal or attending physician] the application for disability retirement must comply with the provisions of N.J.S.A. 43:6A-12.

17:10-5.2 Effective date

The date of a retirement application will be recognized if it is earlier than the actual date of receipt by the [retirement system]  Retirement System, if it is supported by the signature of the certifying officer. The earlier of certified date on the application, postmark, or date of actual receipt by the [retirement system] Retirement System will be recognized. If this date falls within a calendar month, the retirement will be effected on the first day of the month following the filing [and commission approval].

17:10-5.3 Effective date; changes

(a) A member shall have the right to withdraw, cancel or change an application for retirement at any time before [his or her]the member's pension becomes due and payable [; thereafter, ] by sending a written request signed by the member. Thereafter, the retirement shall stand as approved by the [commission] Commission. A member's retirement allowance shall not become due and payable until 30 days after the date of retirement..

(b) Except in the event of deferred retirement, if a member requests a change [in his or her pension] of retirement date or option selection before [his or her] the member's pension becomes due and payable, said change will require approval of the [commission] Commission and the revised pension shall not become due and payable until one month has elapsed following the effective date [or the date the commission met and approved the change in the member's retirement application, whichever is later].

[(b)] (c) A deferred retirement shall become effective on the first of the month following the member's 60th birthday. At the election of the member, if the member's 60th birthday falls on the first of a month, the retirement shall become effective on that date, provided the member files a timely retirement application pursuant to N.J.S.A. 43:6A-11. In the case of deferred retirement, if an applicant desires to amend [his or her] the retirement application, the amended application must be filed with the [system] Division of Pensions and Benefits a minimum of one month prior to [his or her] the effective date of retirement.

[(c)] (d) Should the member continue to receive a salary beyond the effective date of retirement [after approval of the retirement by the commission], no retirement benefits shall be paid for the period where the member received salary and no salary or service credit shall be approved for the service rendered salary and no salary or service credit shall be provided for the service rendered after the [approved,] effective date of retirement.

[(d)] (e) (No change in text.)

17:10-5.5 Death prior to effective date

A member who retires but who dies before the first payment is due and payable (30 days [hence] after the date of retirement) will be considered an active member.

17:10-5.8 Early retirement defined

Retirement on the first of the month in which a member attains age 60 shall be classed as "early" retirement, although a reduction is not applied if [his] the member's 60th birthday occurs on or before the [middle] 15th of such month.

17:10-5.9 Service retirement; eligibility

A member becomes eligible for "service" retirement on the first of the month following the month in which the member satisfies the conditions of retirement for age and service. At the election of the member, if the member's 60th birthday falls on the first of a month, the retirement shall become effective on that date, provided the member files a timely retirement application.

17:10-5.10 Medical examinations; physicians

Where the statute prescribes that a physician be designated by the [fund] Judicial Retirement System to perform a medical examination, such physician shall be selected from the current membership directory of the Medical Society of New Jersey and the New Jersey Association of Osteopathic Physicians and Surgeons; however, in the cases of those members whose personal physician has identified them as having a probable abbreviated life expectancy, such "imminent death" cases may be processed without the necessity of an examination by a physician designated by the [fund] System if corroborating medical evidence of the diagnosis can be obtained.

17:10-5.12 Outstanding loan

(a) Any member who has an outstanding loan balance at the time of retirement shall repay the loan balance, with interest, as follows:

1. In full as provided by N.J.S.A. 43:6A-34.4; or

[2. By retention of retirement payments, excluding authorized deductions by the retirement system, until the loan balance, with interest, is repaid.]

[i. Authorized deductions include Federal tax liens, health benefit premiums, and Federal and State income tax withholding; or]

[3.] 2. By deductions from retirement benefit payments of the same monthly amount deducted from the member's compensation immediately preceding retirement until the loan balance, with interest, is repaid as authorized by N.J.S.A. 43:6A-34.4. If the member does not request repayment in full, repayment is by deductions in the same monthly amount deducted from the member's compensation immediately preceding retirement.

(b) (No change.)

17:10-5.13 Waiver

If for any reason a pension or portion thereof has been waived by a retired member or beneficiary, the benefit waived shall remain in the Retirement Reserve Fund. Such person may cancel the waiver effective as of the first day of any month subsequent to the receipt of the notice of cancellation; however, [he] such person may not make a claim for payment of any benefits waived prior thereto.

SUBCHAPTER 6. TRANSFERS

17:10-6.1 Interfund transfers; other State systems

(a)-(b) (No change.)

(c) The [system] System will transfer membership to any State-administered system as follows:

1. A member, desiring to transfer [his or her] credits to any State-administered retirement system must file an application for "Transfer of Membership Credit" in place of the customary application for withdrawal of accumulated contributions. This application will void all possible credit against the present system when approved and the new membership shall commence in the new system.

2. [A check covering the] The member's accumulated contributions, full interest included, less any outstanding loan, shall be [drawn payable] transferred to the new system for the account of the respective member. Any outstanding loan or arrears obligation will be scheduled for repayment.

3. A statement reflecting the member's status as of the date of transfer shall accompany the [check] transfer.

4. (No change.)

5. A copy of the transfer application, together with [a check covering the withdrawal value and] a statement of the service credits being transferred, is to be forwarded to the new system.

(d)-(e) (No change.)

[(f) A member who makes a timely transfer in accordance with N.J.S.A. 43:2-1 et seq. will contribute to the new system at a rate based on his or her age at the time of enrollment in the present system and no refund of pension contributions will be made except for those contributions made by veterans covering service prior to January 1, 1955, where applicable. The contribution rate for a member granted a deferred retirement in the present system who makes a timely transfer at the time of enrollment in the new system will be determined in accordance with the rules concerning enrollment after deferred retirement in the new system. A member who does not make a timely transfer will contribute to the new system at a rate based on his or her age at the time of enrollment in the new system.]


GENERAL ADMINISTRATION

Proposed Readoption: N.J.A.C. 17:1

Cite as 35 N.J. Reg. 387(a)

Adopted January 21, 2003

Summary

The Division of Pensions and Benefits is constantly reviewing the administrative rules within N.J.A.C. 17:1 concerning the administrative procedures of the Division and processes involving all of the State administered Retirement Systems. When the Division becomes aware of a change in the laws or a court decision that possibly could affect the operations of the Retirement Systems, the administrative rules are reviewed and, if changes therein are mandated, steps are taken to propose changes to those rules to conform to the new statute or court decision. Additionally, the rules are periodically reviewed by the Division's staff to ascertain if the current rules are necessary and/or cost efficient. After careful scrutiny of the current rules in N.J.A.C. 17:1, the Division is satisfied that they are necessary and needed for the efficient operation of the Retirement Systems. Accordingly, the Division of Pensions and Benefits proposes to readopt N.J.A.C. 17:1, which expires on October 19, 2003, pursuant to N.J.S.A. 52:14B-5.1c, to extend the expiration date for such rules under Executive Order No. 66(1978) to 2008. The chapter originally became effective prior to September 1, 1969. Pursuant to Executive Order No. 66(1978), the chapter was readopted in 1983. Pursuant to Executive Order No. 66, chapter 1 expired on May 6, 1993 and was adopted as new rules effective August 2, 1993. Chapter 1 was readopted in 1998.

In the rules governing the general administration of the Division of Pensions and Benefits, there are those which are common to all employee benefit programs administered by the Division as well as those which are unique to specific systems, such as the Central Pension Fund, Pension Adjustment Program and the State Agency for Social Security. The current rules deal with accounting procedures, the Central Pension Fund, claims and credit, hearings, honorable service, pension adjustments, Social Security, unemployment insurance, administrative practices involved in the administration of all of the State-administered retirement systems and health benefits programs and the New Jersey State Employees' Cafeteria Plan.

N.J.A.C. 17:1 is summarized as follows:

Subchapter 1, Accounting, prescribes the processes by which receipts are deposited and remittances made. It also establishes the due dates for transmittals and reports and delinquent notices. It sets interest charges on delinquent transmittals. It prescribes disbursement authorizations, schedules and limitations. It requires annual statements from the retirement systems and SACT. This subchapter also sets procedures for lost pension checks, minimum adjustments and adjustment statements, mail distribution, endorsements, administrative expenses, manual charges, retired employee health insurance charges, State employees biweekly salary reporting and discontinuance of allowances.

Subchapter 2 is reserved.

Subchapter 3 deals with the Central Pension Fund, which consists of the administration of a series of noncontributory pension acts. No reserves are established for the payments of these pensions. These benefits are administered by the Division in accordance with the governing statute and the rules of the State House Commission, where applicable. The scope of the fund extends to: Health Act Pensioners, in accordance with N.J.S.A. 43:5-1 to 4, consisting of persons employed by the State as of January, 1921, Veterans Act Pensioners, in accordance with N.J.S.A. 43:4-1 to 6, Annuity for widows of governors, in accordance with N.J.S.A. 43:8-2m, and Special Pensioners, in accordance with various laws of the State authorizing payment to designated individuals. This subchapter deals with the application required, the disability certification form, proof of veteran's status, withholding forms and surrogate's certification.

Subchapter 4 involves claims and credits and includes guidelines on recordkeeping, compulsory enrollments, multiple enrollments and enrollment schedules. It explains proof of veteran's status, intrafund transfers and insurance coverage and ineligibility. It deals with beneficiaries, purchases of service credit, and withdrawal from the systems. It also includes rules regarding final compensation, disability retirements, and post retirement employment as well as rules for workers compensation and leaves of absence.

 Subchapter 5, Hearings, provides for the right to request a hearing, the time frame to request a hearing and that administrative hearings will be conducted by the Office of Administrative Law.

 Subchapter 6 deals with honorable service.

Subchapter 7, Pension Adjustment Program, was established pursuant to N.J.S.A. 43:3B-1 through 6, P.L. 1958, c.143 and covers all eligible pensioners of the State administered retirement systems regarding employer payments and delinquencies, administrative fees, return to public employment, waiver, and accrued increases.

 Subchapter 8, Social Security, deals with records, Social Security Referendum, the Federal State Agreement and Modifications, coverage and wage issues, benefit and claim issues, single check contributions and administrative fees, wage reports copies, transmittals and forms, late filing penalties, Social Security coverage, excluded services and administrative fees. The State Agency for Social Security was initially established pursuant to N.J.S.A. 43:22-1 et seq., P.L. 1951, c.253, and became effective with the execution of a Federal-compact on Social Security coverage in December, 1952. Under the terms of the State statute, the work of the State agency is delegated to the Director of the Division of Pensions and Benefits.

Subchapter 9, Unemployment Insurance, prescribes the due dates for contributions and reports, employer responsibility regarding benefit claims, verification of claim payments and employee eligibility for coverage, termination of employment and the designated contractor. Unemployment compensation for certain public employees was made possible for the first time under the provisions of P.L. 1971, c.346. Effective January 1, 1972 coverage was extended to employees of the State or any of its instrumentalities employed

in a hospital or institution of higher education. The Division was requested by the Treasury department to coordinate the administration of the program and specifically the receipt and transmittal of payroll deductions for State employees to the Division of Unemployment Compensation. With the extension of Unemployment Compensation to all eligible employees in 1978, the State designated a contractor to monitor and audit the claims paid by Unemployment in order to verify the State's experience under the program. The contractor reports to the Division which is responsible for this activity as well as the accounting function.

Subchapters 10 and 11 are reserved.

Subchapter 12, Administrative Practices, addresses Division obligation priorities, loans, cash discount value requests, bankruptcies, subsequent loans, transfers for court attendants/sheriff's officers, interfund transfers, accumulated interest, purchase of service credit, continuation of death benefits coverage, maternity leaves of absence, delinquent enrollment, employer liability, and the deadline for county and municipal early retirement incentive resolutions.

 Subchapter 13, New Jersey State Employees' Cafeteria Plan, addresses the establishment of the plan, unreimbursed medical spending account, premium conversion, dependent care spending amount, salary reduction elections, claims for payment from plan accounts, forfeiture of account balances and compliance with the Internal Revenue Code.

A 60-day comment period is provided for this notice of proposal; therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this notice of proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

Full text of the proposed readoption can be found in the New Jersey Administrative Code at N.J.A.C. 17:1. 35 N.J.R. 387(a)


STATE POLICE RETIREMENT SYSTEM
Premium-sharing for retired State Health Benefit Coverage
and reimbursement for Medicare Part B costs

Adopted amendment N.J.A.C. 17:9-6.8

Cite as 35 NJR 1924

Adopted May 5, 2003

Summary

The purpose of these proposed amendments is to continue to fulfill the responsibility of the State Health Benefits Commission established by P.L. 1996, c. 8, which provided, among other things, that the commission may modify the payment obligations for premiums or periodic charges for health benefits coverage under the State Health Benefits Program (SHBP) for the State and State employees and retirees for whom there is no majority representative for collective negotiations purposes in a manner consistent with the terms of any collective negotiations agreement binding upon the State. 

The proposed amendments affect only retired nonaligned uniformed state police officers at the Division of State Police for whom the State pays the cost of health benefits coverage.  The proposed amendments modify the payment obligations for these retirees based on the negotiated labor agreement between the State and the Lieutenants of the Division of State Police.

Troopers, sergeants and lieutenants in the State Police have been granted free health care benefits as a result of collective bargaining.  Nonaligned uniformed State Police officers have never collectively organized, and have been subject to premium sharing.  They have argued that conformity of health care benefits for nonaligned uniformed State Police officers should be comparable to aligned State Police Lieutenants and not to the general population of unaligned State employees.  The State Health Benefits Commission agrees that these officers should be treated in the same manner as their Lieutenants and therefore proposes to amend the rule to attach the payment obligation for SHBP of nonaligned uniformed State Police officers to the payment obligations of those collectively bargained for State Police Lieutenants.

The clarification that those employed by the State after July 1, 1995 would not be eligible for Medicare B reimbursement would also be added.  This reimbursement was eliminated through collective bargaining in the contract that was effective July 1, 1995.

A 60-day comment period is provided for this notice of proposal; therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this notice of proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

17:9-6.8 Premium-sharing forretired State Health Benefit Coverage and reimbursement for Medicare Part B costs

(a)  All State employees, excepting nonaligned uniformed State Police officers, who accrue 25 years of service credit in a State-administered retirement system or retire on a disability retirement after July 1, 1997, for whom there is no majority representative for collective negotiations purposes, and who were hired by the State prior to July 1, 1995, shall, upon retirement, receive Medicare Part B reimbursement after retirement up to a cap of $46.10 per month per eligible employee and the employee's spouse and be subject to payroll deductions for Traditional Plan coverage in advance of the coverage period in accordance with standard payroll procedures as set forth below.  State employees, excepting nonaligned uniformed State Police officers, who accrue 25 years of service credit in a State-administered retirement system or who retire on a disability retirement after July 1, 1997, for whom there is no majority representative for collective negotiations purposes, and who were hired by the State on or after July 1, 1995, shall not be entitled to receive Medicare Part B reimbursement after retirement. 

(b) through (e) No change

(f)bThe premium-sharing obligations for retired nonaligned uniformed State Police officers shall be the same as those for retired Lieutenants of the Division of State Police. 


POLICE AND FIREMEN'S RETIREMENT SYSTEM
Aggregation of nonconcurrent pension credit to qualify for employer-paid retired
SHBP benefits under P.L. 2001, c. 209

Adopted Amendment N.J.A.C. 17:9-6.11

Cite as 35 NJR 1925

Adopted May 5, 2003 

Summary

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 public 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 and universities, 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 public retirement systems.  The member must be receiving a retirement benefit from each membership.  For example, a member with 15 years in a PERS account, who then accrues 10 years of nonconcurrent service in the TPAF, who 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.

The proposed new rule would clarify when a retiree is eligible to use an aggregation of service credit for employer-paid coverage and the requirements for qualifying for that coverage.

A 60-day comment period is provided and, therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

N.J.A.C. 17:9-6.11  Aggregation of nonconcurrent pension credit to qualify for employer-paid retired SHBP benefits under P.L. 2001, c. 209.

 (a)  To qualify for employer-paid SHBP coverage based on combined service in more than one New Jersey public retirement systems, members must:

1. Retire and collect a benefit from each retirement system;

2. Have 25 or more years of nonconcurrent pension service credit in total;

3. Retire from the last retirement system after the effective date of this law, August 15, 2001;

4. 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.  retirees of the State or participating local employers, excepting school boards and county colleges, are not eligible for SHBP coverage if they elect a deferred retirement benefit; or 

5. Be eligible for employer-paid coverage immediately prior to retirement or separation from a school board or county college in New Jersey.  The school board or county college must have been the retiree's last contributing employer in order to receive state-paid SHBP coverage as a retiree of a school board or county college; and

6. 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.  Employer-paid coverage will be effective on the first of the month following the date the eligible member notifies the Division.

(c) The provisions of P.L. 2001, c. 209 do not affect the definition of a qualified retiree under the provisions of P.L. 1997, Chapter 330 (N.J.A.C. 17:9-6.9).


STATE POLICE RETIREMENT SYSTEM
METHODS OF REPAYMENT

Adopted Amendment: N.J.A.C. 17:5-4.3

Cite at 35 NJR 230

Adopted January 6, 2003

The agency proposal follows:

Summary

The State Police Retirement System proposes to eliminate the minimum payment requirement 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 is less than the monthly minimum payment amount of one-half of a full regular pension deduction. Computer systems are also now more advanced and more flexible, and can calculate repayment schedules based on any partial lump sum payment. Therefore, the SPRS proposes to eliminate the requirement that any initial partial lump sum payment toward a purchase be $250.00 or more, and will accept any amount as an initial partial lump sum payment. A 60-day comment period is provided for this notice of proposal; therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this notice of proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

Full text of the proposal follows:

17:5-4.3 Methods of repayment

(a) Methods of repayment include the following:

1. (No change.)

2. Partial lump sum [of $250.00 or more]; balance by extra payroll deductions;

3.-4. (No change.)


 
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