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Pensions and Benefits
RULE CHANGES
2009
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. N.J.A.C. refers to the New Jersey Administrative Code, and the numbers identify the title and specific chapter citations.

View the New Jersey Register and New Jersey Administrative Code online.

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


Public Notices

There are no Public Notices for 2009 at this time.


Proposed Rules

PERS Proposed Readoption with Amendments N.J.A.C. 17-2; Proposed New Rule N.J.A.C. 17:2-4.17; Proposed Repeals N.J.A.C. 17:2-1.8, 2.8, 4.5 and Proposed Repeals and New Rules N.J.A.C. 17:2-1.13 and 2.7 (Public Employees' Retirement System)

Proposed Amendment N.J.A.C. 17:2-8.3, Prosecutors Part (Public Employees' Retirement System)

Proposed Amendment N.J.A.C. 17:4-4.1, Creditable Compensation (Police and Firemen's Retirement System)

Proposed Amendment N.J.A.C. 17:2-2.1 (Public Employees' Retirement System)

Proposed Amendment N.J.A.C. 17:3-2.1 (Teachers' Pension and Annuity Fund)

Proposed Readoption with Amendments: N.J.A.C. 17:9 (State Health Benefits Commission)


Adoptions

Adopted Amendment N.J.A.C. 17:2-8.3; Cite as 41 N.J.R. 4462(a) (PERS Prosecutors Part) - December 7, 2009

Adopted Amendment: N.J.A.C. 17:3-2.1; Cite as 41 N.J.R. 3111(a) (TPAF) - August 17, 2009

Adopted Amendment: N.J.A.C. 17:2-2.1; Cite as 41 N.J.R. 3110(a) (PERS) - August 17, 2009

Readoption with Amendments: N.J.A.C. 17:9; Cite as 41 N.J.R. 2037(a) (SHBP) - May 4, 2009

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PROPOSED RULES


TREASURY — GENERAL
DIVISION OF PENSIONS AND BENEFITS

41 N.J.R. 4667(a)

Proposed Readoption with Amendments: N.J.A.C. 17:2

Proposed New Rule: N.J.A.C. 17:2-4.17

Proposed Repeals: N.J.A.C. 17:2-1.8, 2.8 and 4.5

Proposed Repeals and New Rules: N.J.A.C. 17:2-1.13 and 2.7

Public Employees' Retirement System

Authorized By: Public Employees' Retirement System Board of Trustees, Kathleen Coates, Secretary.

Authority: N.J.S.A. 43:15A.

Calendar Reference: See Summary below for explanation of exception to calendar requirement.

Proposal Number: PRN 2009-383.

Submit comments by February 19, 2010 to:

Susanne Culliton
Assistant Director
Division of Pensions and Benefits
PO Box 295
Trenton, NJ 08625-0295

The agency proposal follows:

Summary

The Board of Trustees of the Public Employees' Retirement System (PERS) is responsible for reviewing the administrative rules within N.J.A.C. 17:2. When the Board becomes aware of a change in the laws or a court decision that could affect the PERS, 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 of Pensions and Benefits (Division) and the Board's staff to determine if the current rules require clarification, whenever practicable, so that they are consistent with the rules governing the Teachers' Pension and Annuity Fund (TPAF).

The Board of Trustees of the PERS proposes to readopt the current rules within N.J.A.C. 17:2, which expire on January 24, 2010, with the following amendments, repeals and new rules. The rules proposed for readoption with amendments, repeals and new rules affect the administration, enrollment, insurance and death benefits, membership, purchases and eligible service, retirement, transfer aspects and Prosecutors Part associated with the PERS. Pursuant to N.J.S.A. 52:14B-5.1c, by filing this notice of proposal with the Office of Administrative Law on or before January 24, 2010, the expiration date of N.J.A.C. 17:2 is extended 180 days to July 23, 2010.

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.

The rules proposed for readoption and the proposed amendments, repeals and new rules reflect the requirement for eligibility and amounts of benefits available that are mandated within the statutes governing the PERS. The chapter originally became effective prior to September 1, 1969. Pursuant to Executive Order No. 66 (1978), the chapter expired on October 9, 1984 and was adopted as new rules, effective December 17, 1984. The chapter was readopted on November 8, 1989. Chapter 2 expired on November 8, 1994 and was adopted as new rules effective February 21, 1995. The Chapter was readopted effective December 17, 1999 and on January 24, 2005. The following is a discussion of the rules proposed for readoption with amendments, repeals and new rules. Throughout the rules, the Division of Pensions and Benefits is addressed as the Division and technical amendments are proposed to establish consistency and conformity in the language and the use of defined words and terms.

Subchapter 1. Administration

N.J.A.C. 17:2-1.1, Board meetings and 1.2, Fiscal year, would remain unchanged.

N.J.A.C. 17:2-1.3, Officers and committees, is amended at subsection (a) to add the statutory references for both the election of a representative to the Pension System Actuary Selection Committee and a representative to the State Investment Council. Subsection (b) remains unchanged and subsection (c) is amended as discussed below under the new Subchapter 1A, Definitions. Subsection (d) is amended to delete the reference to the finance committee. This committee has not been active in many years. It is the Secretary that provides reports to the Board for review.

N.J.A.C. 17:2-1.4, Election of member-trustee, is amended at subsection (a) to include N.J.S.A. 43:15A-17, the statutory authority for election to the PERS Board. Subsection (b) remains unchanged. Paragraph (c)4 is amended to include the word "Board" to clarify that it is the Board Secretary that the paragraph is referring to. Paragraph (c)5 is amended to eliminate the references to the master list of members and challenges or questions concerning eligible voters since the list of members that is compiled by the Division and stored in a computer data base that is no longer printed. The procedure to challenge the results of an election is stated in N.J.A.C. 17:2-1.4(i). Paragraph (d)4 is amended to further clarify the specific information that is required on the petition form. Paragraph (d)6 is amended to change the references from "ballots" to "election packets." Throughout this section this change was made. The ballot is contained in the packet with all the biographical information and voting information. Existing subparagraph (e)1iii is deleted since this method of voting was the least used of the methods and has been eliminated. In paragraph (e)4 the word "receipt" is changed to "notice" to clarify that the certifying officer has the responsibility of disseminating the election packets to employees pursuant to N.J.S.A. 43:15A-67 and 80. Subsection (f) is amended to include that an analysis of the frequency of use of paper ballots vs. the cost of providing ballots in the election packets will be conducted for future elections. Members who do not have access to an electronic ballot may request a paper ballot from the vendor. Paragraph (g)3 is replaced to clarify that the biographical information of each candidate is included on the ballot in the election packet. New paragraph (g)4 is added to clarify that endorsements are not permitted in the biographical sketches submitted by the candidates for the Board. The Division does not wish to print information that is not substantiated and the process for verifying each endorsement could be very time consuming. Endorsements for candidates appear on all of the union web pages and in the union newsletters and are not a necessary addition to biological sketches. Paragraph (h)4 is amended to clarify the election procedures. Subsection (j) is amended to clarify that in the event the victorious candidate is found to be unable or unwilling to serve prior to commencing the term as trustee, the candidate who obtained the next highest number of votes in that election shall serve as trustee. The changes to N.J.A.C. 17:2-1.4 are similar to the language found in the Police and Firemen's Retirement System (PFRS), N.J.A.C. 17:4-1.4.

At N.J.A.C. 17:2-1.5, Certifying officer (employer), subsection (a) remains unchanged and subsection (b) is amended to provide the statutory reference N.J.S.A. 43:15A-80, which resulted from Section 80 of P.L. 1954, c. 84. Subsections (c) and (d) remain unchanged.

At N.J.A.C. 17:2-1.6, Records, subsection (a) is amended to include the word "approved" minutes and subsections (b) through (d) are deleted since the text is available in N.J.A.C. 17:1-1.2. Subsection (e) is recodified as subsection (b) and the word "accepted" is added since the Board of Trustees does not approve but accepts the annual report by the system's actuary. Existing subsection (f) is recodified as subsection (c) with only a technical change.

N.J.A.C. 17:2-1.7, Appeal from Board decisions, would remain unchanged.

N.J.A.C. 17:2-1.8, Suspension of pension checks, is being repealed as N.J.A.C. 17:1-1.13 governs this issue.

N.J.A.C. 17:2-1.9, Verified discrepancy in member's age, would remain unchanged.

N.J.A.C. 17:2-1.10 remains reserved.

N.J.A.C. 17:2-1.11, Proof of age and 1.12, State employees; biweekly salaries, would remain unchanged.

N.J.A.C. 17:2-1.13 is repealed with a new section, Age determination. The existing rule is repealed and reorganized since the language is outdated and no longer applicable. New subsections (a) through (c) are added to reflect the applicable age factor for purposes of enrollment, purchasing additional service credit and for calculating a retirement option, respectively. New subsections (d) and (e) are added to clarify the calculation of an Option 1 reserve balance upon death of a retired member and the calculation of the Group Life Insurance benefits, respectively, upon the death of an active employee.

New Subchapter 1A, Definitions, is added to define the terms "base salary," "Board," "Division," "extra compensation," "'System' or 'PERS,'" "TPAF" and "work year." These terms are all defined in various sections throughout the current rules. This section serves to provide a central location for frequently used terms.

Subchapter 2. Enrollment

N.J.A.C. 17:2-2.1, Enrollment eligibility, remains unchanged.

At N.J.A.C. 17:2-2.2, Multiple employment's, the heading is updated and subsection (a) remains unchanged. Subsection (b) is amended to include the wording "prior to July 1, 2007." The enactment of P.L. 2007, c. 92, established a Defined Contribution Retirement Program for certain newly elected and appointed officials. An elected official who has already established membership in the retirement system prior to July 1, 2007 is not impacted by this legislative change if they are continuously re-elected to the same office and choose to participate in the program.

At N.J.A.C. 17:2-2.3, Ineligible persons, paragraphs (a)1 through 4 remain unchanged. Paragraph (a)5 is amended to correct the cross-reference from N.J.A.C. 17:2-2.4(c) to (d), since this is the correct reference that addresses this issue. Paragraphs (a)6 through 11 remain unchanged, with the exception of technical amendments. The Board purposes to add new paragraphs (a)12 through 15 to clarify the following administrative procedures involved with the enactment of P.L. 2007, c. 92, which prohibits membership in the PERS for (1) any new elected officials who holds a State or local public office on or after July 1, 2007; (2) any official who is directly appointed by the Governor on or after July 1, 2007, including those subject to advice and consent or an official appointed in a substantially similar fashion by a local entity; (3) any employee working under a Professional Services Contract as of January 1, 2008; and (4) any independent contractor as set forth in regulation or policy of the Federal Internal Revenue Service.

N.J.A.C. 17:2-2.4, Enrollment date, remains unchanged.

N.J.A.C. 17:2-2.5, Optional enrollment, is amended at subsection (a) to clarify that, pursuant to the enactment of P.L. 2007, c. 92, an optional enrollment does not apply to elected officials upon the expiration of the term of office held as of June 30, 2007. Subsection (b) remains unchanged.

N.J.A.C. 17:2-2.6, Enrollment eligibility of professors and instructors employed on a temporary, provisional or adjunct basis by public institutions of higher education, is amended at subsection (a) to include the language "prior to November 2, 2008." The enactment of P.L. 2008, c. 89, provides that an adjunct faculty member or part-time instructor at a public institution of higher education in the State whose employment agreement begins after the effective date of this legislation will be eligible for membership in the Alternate Benefit Program (ABP) instead of PERS. In paragraph (b)1 the language "less than three academic credits" is added to clarify that there has always been a minimum threshold to establish enrollment eligibility. Most higher education teaching assignments are typically three academic credits, which is the basis of post-secondary curriculum. Since it is only necessary to teach one class to be an adjunct faculty or part-time instructor, it is reasonable to require a minimum threshold of three academic credits for enrollment purposes.

N.J.A.C. 17:2-2.7, Enrollment following deferred retirement, is repealed and replaced with a new rule that is reorganized as new subsections (a) through (e), to reflect the changes necessary as a result of the enactment of P.L. 2007, c. 103 and P.L. 2008, c. 89. These pension reforms amended the statutory age-related reductions for early retirement benefits for members who enrolled in the PERS after the effective dates of these laws, and, in the case of P.L. 2008, c. 89, amended the age for receipt of service retirement or deferred retirement benefits to age 62. Additionally, the enactment of P.L. 2008, c. 89 increased the minimum annual salary for PERS participation for those members who enroll on or after November 2, 2008.

As a result of these changes in the PERS retirement benefit structure and enrollment eligibility, it is necessary to clarify when a vested member returning to public employment prior to attaining the age to commence receipt of deferred retirement benefits may continue to accrue retirement system service and salary in the former account, or must enroll under a new membership account. The length of time that has elapsed since the last pension contribution to the previous account is critical in determining whether the original membership account remains open, as N.J.S.A. 43:15A-7(e) provides for expiration of membership after two years of inactivity, subject to certain exceptions pursuant to N.J.S.A. 43:15A-8. Members returning to PERS-eligible employment after the expiration of the prior account are assigned a new enrollment date, and are subject to all enrollment, contribution and retirement eligibility requirements associated with that new enrollment date.

Further, it is necessary to clarify that members who are required to establish a new account due to the expiration of the prior account may elect to aggregate all service and salary credit within the new account, subject to all requirements associated with the new enrollment date. In some instances, this could mean that an individual who re-enrolled on or after November 2, 2008, would not be eligible for retirement benefits until the attainment of age 62. The transfer of all prior vested service to the new account is optional however, and the reenrolling member may elect to leave the prior vested account intact, and qualify for the receipt of deferred retirement based upon that service under the provisions of N.J.S.A. 43:15A-38. No retirement benefits shall be payable until the member has terminated all PERS eligible employment.

N.J.A.C. 17:2-2.8, Enrollment eligibility of provisional or temporary employees occupying full-time police and fire titles, is repealed because it is incorrect. A temporary or provisional employee who holds a PFRS position is not permitted to enroll into PERS while awaiting permanent appointment to his or her position. In repealing this section, the Board is able to clarify the legislative intent regarding the enrollment eligibility of a provisional or temporary employee. The Board relies on enrollment and membership statutes N.J.S.A. 43:15A-7 and 75, which govern PERS positions and case law in explaining the necessity of the repeal.

At N.J.A.C. 17:2-2.9, Eligibility and enrollment of employees of bi-state and multi-state agencies pursuant to P.L. 2003, c. 263 (N.J.S.A. 43:15A-73), paragraph (a)3 is amended to cite the correct statutes for PERS eligibility requirements. New subsection (b) is added to clarify that employees who meet the criteria for the Defined Contribution Retirement Program are ineligible for membership in PERS. Effective January 1, 2008, a person performing professional services for a political subdivision of this State or of a board of education, or of any agency, authority or instrumentality thereof, under a professional services contract is prohibited from becoming a member of the PERS. Subsections (b) through (g) will be recodified as new subsections (c) through (h) with no change in the text.

N.J.A.C. 17:2-2.10, Enrollment eligibility of on-call employees who have not established membership; including, but not limited to, substitute teachers, replacement teachers, and bedside or home instructors, remains unchanged.

Subchapter 3. Insurance and Death Benefits

N.J.A.C. 17:2-3.1, Compulsory and option enrollment, 3.2, Computation of insurance benefits, 3.3, Contributory insurance rate, 3.4, New enrollments and transfers; contributory insurance premiums and 3.5, Leave for illness; life insurance coverage, remain unchanged, with the exception of technical amendments.

At N.J.A.C. 17:2-3.6, Survivor benefits, subsections (a) and (b) would remain unchanged. A new subsection (c) is included to clarify the Division's long-standing practice of calculating an Option 1 reserve balance upon the death of a retired member. The factor used in this calculation is based upon the beneficiary's age at the time of the member's death. If the beneficiary's age is six months or more past their birthday the factor is based upon their age on their next birthday. New subsection (d) is included to clarify the calculation of group life insurance benefits upon the death of an active employee.

N.J.A.C. 17:2-3.7, Withdrawal application; contributory insurance, is amended to include a technical change and to clarify the Division's long-standing practice that if the member submits a contributory insurance withdrawal application, the contributory insurance cannot be reinstated under the membership account number in which the cancellation was exercised.

At N.J.A.C. 17:2-3.8, Withdrawal and return; contributory insurance, new subsection (b) is added to clarify the Division's long-standing practice that group life insurance coverage ceases 31 days subsequent to the member's termination date from employment in accordance with N.J.S.A. 43:15A-93.

N.J.A.C. 17:2-3.9, Retired life insurance coverage, remains unchanged.

At N.J.A.C. 17:2-3.10, Contributory insurance premiums; leave of absence and workers' compensation, subsection (a) is amended to clarify that contributory insurance will remain in effect for up to two years while a member is on a leave of absence without pay for personal illness. Subsection (b) is amended to include language that defines the specific time period that a member is eligible to submit payments to the Division to continue group life insurance. Subsection (c) is amended to state that, pursuant to N.J.S.A. 43:15A-25.1, a member's contributory insurance coverage will remain in effect for members who are receiving periodic benefits directly from workers' compensation. In addition, no premiums are required to continue coverage.

N.J.A.C. 17:2-3.11, Ten month members, 3.12, Beneficiary designation; pension contributions, 3.13, Benefits payable under P.L. 1984, c. 96, as amended by P.L. 1995, c. 221, 3.14, Acceptable designation of beneficiaries and 3.15, Suspension, remains unchanged, with the exception of several technical amendments.

Subchapter 4. Membership

N.J.A.C. 17:2-4.1, Creditable compensation, is amended in paragraphs (a)1 and 2, to delete the terms "Base salary" and "Extra compensation" as they are now defined in new Subchapter 1A, Definitions. Recodified paragraph (a)6 and is amended to clarify when specific types of compensation are added to base salary it is considered a trade-in and a form of extra compensation. Existing subparagraph (a)2ix is deleted since subparagraphs (a)2ix and x have the same meaning. New paragraph (a)9 is added to clarify that service and salary credited will not be granted in cases where members are receiving salary when no services have been provided. Subsections (b) and (c) remain unchanged. Subsection (d) is amended to clarify that, in those cases where a justification of an increase in salary is not substantiated, the Division may adjust the compensation accordingly. Further, these additions explain the Division's practice to investigate increases in compensation beyond those reasonably anticipated. In subsections (e) through (h) the word "Division" replaces the term "Board" since it is the Division that investigates increases in compensation.

N.J.A.C. 17:2-4.2, Leave with pay, remains unchanged.

At N.J.A.C. 17:2-4.3, School year members; 10 and 12 months, subsections (a) through (c) remain unchanged and subsection (d) is amended for the reasons discussed above under new Subchapter 1A, Definitions.

N.J.A.C. 17:2-4.4, Loan tolerance, remains unchanged.

N.J.A.C. 17:2-4.5, Service and salary credit; awards of back pay, is repealed since this section applies to each of the various retirement systems. It will become a new section in General Administration as N.J.A.C. 17:1-2.18, to be proposed in early 2010.

N.J.A.C. 17:2-4.6, Minimum adjustment, is amended since the loan tolerance has been increased from $ 10.00 to $ 50.00. The Board believes that this amount is de minimus in light of the fact that the cost of auditing balances of less than $ 50.00 far outweighs the write-off amounts. This will mirror the language found at N.J.A.C. 17:2-4.4.

N.J.A.C. 17:2-4.7, Part-time hourly, on-call or per diem salary and 4.8, Military leave prior to August 1, 1974; employer contributions remain unchanged.

N.J.A.C. 17:2-4.9, the heading, Eligibility for loan, is amended to "Loans," to clarify that this section refers to more than just the eligibility for a loan. The existing section will become new subsection (a) to clarify that loans from the PERS are subject to I.R.C. §72(p) (2007) of the Internal Revenue Code. A new subsection (b) is added to address the change in the rate of interest per annum for loans, as well as the administrative fee pursuant to P.L. 2007, c. 92.

N.J.A.C. 17:2-4.10, Waiver of retirement benefits upon withdrawal, is amended to clarify that the Division shall inform the member how to obtain the estimated amount of the retirement allowance, since the Division does not automatically provide an estimate upon withdrawal.

N.J.A.C. 17:2-4.11, Termination; withdrawal, remains unchanged.

N.J.A.C. 17:2-4.12, Deductions, is amended at subsections (a) and (b) as discussed in new Subchapter 1A, Definitions.

N.J.A.C. 17:2-4.13, Active employment; membership requirement, remains unchanged.

N.J.A.C. 17:2-4.14, Continuance of membership; transfer, is amended to clarify that members can only continue their PERS memberships when temporarily employed in positions covered by the system if the existing membership account is still active when the employment begins.

N.J.A.C. 17:2-4.15, Ineligible service, and 4.16, Creditable service, Law Enforcement Officers, would remain unchanged.

New N.J.A.C. 17:2-4.17, Maximum compensation limit for pension contributions based upon annual maximum contribution base for Social Security, is added to address the changes created with the enactment of P.L. 2007, c. 103. This legislation created the Defined Contribution Retirement Program (DCRP). It imposes a maximum compensation limit upon which contributions will be made to PERS for public employees who become members of the retirement system on or after July 1, 2007. The maximum amount will be the amount of base or the contractual salary equivalent to the annual maximum wage contribution base for Social Security, pursuant to the Federal Insurance Contributions Act. A new member for whom this annual maximum will be reached in any year will become a participant of the DCRP for the excess portion of compensation beyond the Social Security cap. Notice of the annual PERS compensation limit will be published as a public notice by the Office of Administrative Law annually.

Subchapter 5. Purchases and Eligible Service

At N.J.A.C. 17:2-5.1, Eligibility for purchase, subsection (a) would remain unchanged. Subsection (b) is amended to delete the word "written" as the Division provides a member with various media to submit a purchase request. It is further amended to state the Division's administrative practice, that is, if the Purchase Cost Quotation expires prior to authorization, a new purchase cost is calculated using the member's current purchase cost factors, including any age and income change that may affect the cost. New subsection (c) is included to address the Division's administrative practice regarding the denial of a purchase request.

N.J.A.C. 17:2-5.2, New enrollment purchase or rate adjustment, and 5.3, Reestablishing military leave credit, remain unchanged.

N.J.A.C. 17:2-5.4, Compulsory contributions (back deductions), is amended at subsection (a) by adding language to clarify the changes created by the enactment of P.L. 2007 c. 103, which is discussed above in relation to N.J.A.C. 17:2-4.17. Subsection (b) remains unchanged.

N.J.A.C. 17:2-5.5, Optional purchase of eligible service, is amended at paragraph (a)3 to clarify the purchase of temporary service. N.J.S.A. 43:15A-11 provides for the purchase of continuous temporary employment that resulted without interruption in enrollment and the purchase of substitute employment immediately prior to permanent employment. It is necessary to add new subparagraph (a)3i to define temporary service without interruption, subparagraph (a)3ii to define substitute service and subparagraph (a)3iii to define intermittent service. The current rules do not adequately set forth the eligibility requirements, which reflect the administrative practice on this issue.

Subparagraph (a)4i is amended to add the language that union leave after January 12, 2007 is considered leave for personal reasons. This modification is in accordance with legislation, P.L. 2005 c. 368, which provided a one-year window to purchase all unpaid union leave prior to January 12, 2006, this option expired on January 12, 2007. In addition, new subparagraph (a)4iii is amended to include language, which defines that maternity leave is considered personal illness and also sets forth the requirements necessary for the purchase of maternity leave. New subparagraph (a)4iv provides the Division's definition of the termination of a leave of absence.

Paragraph (a)5 is amended by deleting the word "non-veterans" and adding the word "members," to clarify that all members may purchase continuous service. Paragraph (a)6 is amended by adding language to further clarify the purchase of service for non-veterans hired prior to July 1, 1966, whose employers have not adopted the retirement system. Existing paragraph (a)7 is amended to explain that a purchase request will be denied if a member is eligible to receive a retirement benefit from another retirement system based upon this service. New subparagraph (a)7i is added to clarify that the purchase of out-of-State service cannot be used to qualify for an ordinary disability retirement. New subparagraph (a)7ii is added to comply with the enactment of P.L. 2008, c. 89.

Existing paragraph (a)8 is deleted since intermittent service is now found in new subparagraph (a)3iii. The language was also amended as discussed above in relation to new Subchapter 1A, Definitions. The Board proposes to amend paragraph (b)1 to clarify that the definition of active duty military service is the same as the Federal definition found at 10 U.S.C. §101 but was not included the definition in the Administrative Code. Also, language was added in this paragraph, to set forth the number of days of active duty service required in order to purchase a month of service. This language is consistent with the requirements stated in N.J.A.C. 17:2-2.4. Paragraph (b)2 is amended to include language that Federal government service is not eligible for purchase if the member is eligible to receive a retirement benefit from the Federal employment. Also, a new subparagraph (b)2i is added to be consistent with the requirements of N.J.S.A. 43:15A-42. New subparagraph (b)2ii is added to comply with the enactment of P.L. 2008, c. 89, to clarify that the purchase of this service can no longer be used to qualify for State-paid or employer-paid health benefit coverage in retirement. Subsections (c) and (d) remain unchanged, with the exception of technical amendments.

The heading of N.J.A.C. 17:2-5.6, Methods of payment, is amended to Methods of payment for purchase of service credit, to clarify the subject of the section. Paragraphs (a)2 and 3 are amended to delete the word "extra" and replace it with the word "additional" since it is additional payroll deductions not extra deductions. This change is also included in the existing paragraph (a)4, which is recodified as subsection (b). Existing paragraph (a)5 is recodified as subsection (c) and the Board proposes to add new language to set forth the procedures for using direct rollovers and transfers of funds to pay for the purchase. Federal law was amended to permit this method of payment and the Division has established the administrative practice of accepting rollovers and transfers in accordance with I.R.C. §401(a)(31) (2007).

N.J.A.C. 17:2-5.7 (Reserved), 5.8, Per diem credit, 5.9 (Reserved) and 5.10 (Reserved) remain unchanged.

N.J.A.C. 17:2-5.11, Service ineligible for purchase, is amended to restructure the section as 6 separate paragraphs to identify the types of employment or service that are ineligible for purchase. These types of purchases are frequently requested from members and are not an exhaustive list of types of service request.

N.J.A.C. 17:2-5.12, Correction of errors for prior service credit and 5.13, Lump sum purchases, remain unchanged.

Subchapter 6. Retirements

At N.J.A.C. 17:2-6.1, Applications, subsection (a) is amended to include the requirement that applications cannot be filed beyond a one-year time frame. Frequently, the member's retirement plans are not finalized resulting in changes to the retirement date, type, option, beneficiary and sometimes cancellation. These changes may also result in loss of health benefit coverage to the member and his or her dependents. This requirement is necessary to ensure that Division resources are allocated to support the efficient and timely processing of retirements.

Subsection (b) is amended due to concerns expressed from Division staff that a reasonable time frame must be established in order to receive the documentation necessary to process the various types of retirements. A 90-day time frame to provide the Division with the requested additional information is reasonable and is consistent with other Division processing time frames. Subsections (c) and (d) remain unchanged. Paragraphs (e)1 and 2 are amended to clarify that the required documentation must be received within six months of the date of filing a disability retirement application. If it is not received, the retirement will be canceled and the member will be required to complete a new disability application, for a future retirement date. Disability applicants require more time to obtain medical records, incident and accident reports, Workers' Compensation reports and other information that will support the member's claim regarding the disability. New paragraphs (e)3 and 4 provide clarity in the disability retirement process since members should only file one retirement application at a time. Filing multiple applications may cause processing errors in a member's pension account and creates unnecessary work for the Division staff. If the Board denies the disability application then the member must submit a written statement accepting the alternate retirement type within 30 days of the Board's decision to retain the original retirement date. Subsection (f) is amended to separate the subsection into two subsections. New subsection (g) explains the processing of a retirement allowance when a member has reenrolled in the retirement system.

N.J.A.C. 17:2-6.2, Effective date, remains unchanged.

At N.J.A.C. 17:2-6.3, Effective dates; change, subsection (a) remains unchanged. Subsection (b) is amended to delete the phrase "Except in the event of deferred retirement" as deferred retirement applicants are not treated any differently than those applying for other retirement types. The Board proposes amending subsection (c) to clarify that it is necessary for a member to specify the effective date of retirement when filing an application for a deferred retirement. The enactment of P.L. 2008, c. 89 increased the normal retirement age for a retirement benefit from age 60 to 62 for members of PERS who enrolled into the system on or after November 2, 2008. Subsection (d) is deleted since this issue is addressed in N.J.A.C. 17:2-6.3(a) and (b). Existing subsection (e) is recodified as subsection (d) and is amended to clarify that members must not receive compensation for sick or vacation time after retirement that is paid on regular payroll. This would negate the receipt of retirement benefits until the payments cease.

N.J.A.C. 17:2-6.4, Outstanding loan, 6.5, Willful negligence, 6.6, (Reserved), 6.7, Disability determination, 6.8, Option selection; accidental disability denied, 6.9, Employer and employee notices, and 6.10, Involuntary disability application, would remain unchanged.

At N.J.A.C. 17:2-6.11, Early retirement; reduction, subsection (a) is amended as a result of the passage of P.L. 2008, c. 89, which increased the retirement age for a service retirement benefit from age 60 to 62 for members of the PERS who enrolled into the system on or after November 2, 2008. Subsection (b) is amended to clarify that this reduction formula will only apply to members who were enrolled prior to the effective date of P.L. 2007, c. 103. A new subsection (c) is included to address the changes in the early retirement reduction formula provided by the enactment of P.L. 2007, c. 103. New subsection (d) is added to address the changes provided by the enactment of P.L. 2008, c. 89, for members who enrolled in the PERS after the effective date of this law.

At N.J.A.C. 17:2-6.12, Service retirement; eligibility, subsection (a) is amended as a result of P.L. 2008, c. 89, to clarify that it only applies to members enrolled prior to November 2, 2008, and to delete the wording "at the election of the member" since it is actually the completion of a retirement application that begins the retirement process. A new subsection (b) is added to address the changes provided by the enactment of P.L. 2008, c. 89, which increased the age for retirement eligibility from age 60 to 62 for members of PERS who enrolled into the system on or after the effective date of this law.

N.J.A.C. 17:2-6.13, Disability retirant; annual medical examinations, remains unchanged.

At N.J.A.C. 17:2-6.14, Disability retirant; annual report (employment, earnings, test and adjustment), subsection (a) is amended as discussed in relation to new Subchapter 1A, Definitions. Subsection (b) is amended to clarify that the Division can request members to provide their Federal tax returns in order to verify income information. In paragraph (c)1, the words "difference between" is deleted and the wording "sum of" is included since all gross earned income is reviewed by the Division. The recovery of excess earnings is limited to the pension portion of the retirement allowance, which is the Division's administrative practice when reviewing disability retirees' earnings from employment. This reduction of benefits shall be made only after proof of excess earnings is submitted. Paragraphs (c)2 and 3 and subsection (d) would remain unchanged.

At N.J.A.C. 17:2-6.15, Disability retirements; filing after more than two years' discontinuance of service, subsection (a) is amended as discussed above in regards to new Subchapter 1A, Definitions. Subsection (b) remains unchanged.

N.J.A.C. 17:2-6.16, Compulsory retirement; Law Enforcement Officers (LEO), 6.17, Approved allowance, 6.18, Option 1 benefit, 6.19, (Reserved), 6.20, Final compensation; 10 and 12-month members reported monthly, 6.21, Determination of last year's salary; veterans paid on a monthly basis, 6.22, Waiver, 6.23, (Reserved), 6.24, Final compensation; biweekly salary computation for employees reported on a biweekly basis and 6.25, Determination of last year's salary; veterans reported on a biweekly basis, would remain unchanged.

N.J.A.C. 17:2-6.26, Medical examination; physician, is amended to make the section specific to disability retirement applications and reflect the Division's long-standing administrative practice that independent medical evaluations are only necessary when the requested medical documentation provided by the member and their personal physicians is insufficient to establish total and permanent disability. The Medical Review Board may require that the ordinary disability applicant receive an independent medical evaluation to support the disability claim.

N.J.A.C. 17:2-6.27, Work-related travel; accidental disability retirement and accidental death benefit coverage would remain unchanged.

Subchapter 7. Transfers

N.J.A.C. 17:2-7.1, Honorable services; interfund transfers; State-administered retirement systems is amended for the reasons as discussed above in relation to new Subchapter 1A, Definitions. Subsections (b) and paragraphs (c) 1 through 4 remain unchanged. Subparagraph (c)5ii is amended for the reasons as discussed above in relation to new Subchapter 1A, Definitions. Subparagraph (c)5iii is amended to delete the phrase "has expired" and add the language "is inactive" since different membership categories were established with the enactment of P.L. 2007, c. 103 and P.L. 2008, c. 89. Vested members who have accounts that are inactive for more than two years have no additional rights than any other member once the account has become inactive Paragraph (c)6 remains unchanged. New paragraph (c)7 is added to clarify the Division's practice that a member's original enrollment date established in the former system shall be transferred into the new system.

At N.J.A.C. 17:2-7.2, Intrafund transfers; State-administered retirement systems, paragraph (a)1 would remain unchanged. Paragraph (a)2 is amended in keeping with the provisions of N.J.S.A. 43:15A-7e and 8, which clarify that vested status does not preserve the right of transfer if more than two-years has elapsed since the last contribution. Paragraph (a)3 and subsection (b) are amended for the reasons discussed above in regards to new Subchapter 1A, Definitions.

Subchapter 8. Prosecutors Part

N.J.A.C. 17:2-8.1, Definitions, 8.2, (Reserved), 8.3, Contribution rate, 8.4, Ineligibility for credit in the Prosecutors Part, 8.5 Interfund transfers, 8.6 Purchase of service and 8.7 Eligibility for loan, would remain unchanged, except for technical amendments.

At N.J.A.C. 17:2-8.8, Vesting, subsection (a) remains unchanged. Subsection (b) is amended to include the increase in the retirement age for deferred or service retirement benefits from age 60 to 62 for members who enrolled into the system on or after the effective date of P.L. 2008, c. 89.

N.J.A.C. 17:2-8.9, Withdrawal from Prosecutors Part or regular PERS service, remains unchanged, with the exception of technical amendments.

N.J.A.C. 17:2-8.10, Retirement effective date, and 8.11, Election of largest possible retirement allowance, would remain unchanged.

At N.J.A.C. 17:2-8.12, Service retirement, subsection (a) remains unchanged. Subsections (b) and (c) are amended to delete the word "written" and add "retirement" in an effort to clarify that a retirement application must be submitted to the Division to begin the retirement process. Subsection (d) would remain unchanged.

N.J.A.C. 17:2-8.13, Eligibility for disability and accidental death retirement benefit, would remain unchanged, with the exception of technical amendments.

At N.J.A.C. 17:2-8.14, Retirement date for prosecutors having both regular and Prosecutors Part Public Employees' Retirement System service, subsection (a) remains unchanged. Subsection (b) is amended to include the increase in the retirement age for deferred or service retirement benefits from age 60 to 62 for members who enrolled into the system on or after the effective date of P.L. 2008, c. 89. Subsection (c) would remain unchanged.

N.J.A.C. 17:2-8.15, Options at retirement, and 8.16, Return to employment, would remain unchanged.

As the Board has provided a 60-day comment period on this notice of proposal, this notice is excepted from the rulemaking calendar requirement pursuant to N.J.A.C. 1:30-3.3(a)5.

Social Impact

The rules involving the Public Employees' Retirement System benefits the members, retirees, beneficiaries and participating employers of the Fund. The members, participating employers, retirees and survivors of retirees rely on the efficient operation of the retirement system to provide them with both monthly retirement benefits and information needed regarding their individual accounts. The members rely upon the predictability of the rules, which guide the administration of their benefits and the stability of the Fund. The protections and guarantees that these rules afford its members mandate their continued existence.

Many of the proposed amendments are of a purely technical nature, such as providing a proper procedure for reviewing and scanning documents, name changes or changing dates. Some are proposed as a result of the passage of major pension reform legislation impacting PERS retirement benefit structure and enrollment eligibility. These reforms amended the statutory age-related reductions for early retirement benefits for members who enrolled in the PERS after the effective date of these laws, and in the case of P.L. 2008, c. 89, amended the age for receipt of service retirement or deferred retirement benefits to age 62. Additionally, the enactment of P.L. 2008, c. 89, increased the minimum annual salary for PERS participation for those members who enroll on or after November 2, 2008.

It is important to note that the Division has made various changes in the language of the PERS rules to mirror the language found in TPAF. Also, some of the clarifications made in the proposed amendments to the rules explain long-standing administrative practice, which is more comprehensively set forth in a rule. Additionally, as the case law has developed over time, it has become necessary to amend and/or repeal rules, which have become either moot or partially unenforceable. The Division recognizes that there is a general societal interest in making sure a public retirement system is well run and available to its members.

Economic Impact

The rules proposed for readoption with amendments, new rules and repeals, will not present any economic effects on the public; they will continue existing, long-standing, regulatory requirements. The rules do not impose any additional recordkeeping or other requirements, and will serve to preserve the efficient administration and operation of the Public Employees' Retirement System. The rules will enable the Division to continue to provide for benefits in a manner that meets the statutory and contractual requirements.

The current procedures as set forth in N.J.A.C. 17:2 have proven to be effective over time in the proper administration of the Public Employees' Retirement System. Without the administrative rules to provide for the efficient operation of the Fund, financial disparities may result.

Most of the proposed amendments are technical in nature and do not have an economic impact. Some will have a positive economic impact. The proposed addition of Subchapter 1A, specifically expanding the definition of extra compensation, will provide for more efficient guidelines in determining if compensation received by a member is actually justified or has the salary been boosted in anticipation of retirement, which is blatant pension abuse. In turn, investigating these salary adjustments overall, generates savings to the State and the local employers that participate in PERS. Also, the Division will not permit members who are performing duties, which are not integral to the effective functioning of their position, to receive credit for their service. In addition, the amendment to minimum adjustment, which increased the amount of adjustments to a member's account from $ 2.00 to $ 50.00 will have a positive administrative impact since there will be a decease in the number of accounts audited by the Division. Also, the amendment to loans that provides that the rate of interest per annum for loans from the State-administered retirement system shall be a commercially reasonable rate as required by the Internal Revenue Code and the inclusion of an administrative fee for processing loans will impact the number of loans processed by the Division. The administrative fee will have a positive economic impact to the retirement system.

To the extent the proposed amendments reiterate statutory requirements; they will have no new economic impact. The Division will continue to monitor the impact of these rules through research and review of new legislation. The Division is not aware of any provisions in these rules that would impose any hardship or costs on the members of the Public Employees' Retirement System or on the public in general.

Federal Standards Statement

A Federal standards analysis is not required for the rules proposed for readoption with amendments, new rules and repeals because N.J.S.A. 43:15A-7 governs the subject of this rulemaking, and there are no Federal requirements or standards that affects the subject of this rulemaking, other than those mentioned below.

The proposed amendment to N.J.A.C. 17:2-4.9, will provide further clarification regarding the requirement that loans from PERS are subject to Federal regulation. In addition, N.J.A.C. 17:2-4.9 continues to ensure compliance with Internal Revenue Service regulations made effective on January 1, 2002, at I.R.C. §72(p) (2007), which requires that loan balances not exceed $ 50,000.

The proposed amendment to N.J.A.C. 17:2-5.5(b)1 sets forth a definition of the types of military services that are eligible for purchase as honorable service, which is in compliance with the Federal definition found at 10 U.S.C. §101 of the Internal Revenue Code.

The proposed amendment to N.J.A.C. 17:2-5.6(c) will provide further clarification regarding lump sum payments and partial lump sum payments, which can include the direct rollover of tax-deferred contributions from financial plans that qualify under the terms specified under I.R.C. §401(a)(31) (2007) of the Internal Revenue Service.

Jobs Impact

The operation of the rules proposed for readoption with amendments, new rules and repeals will not result in the generation or loss of jobs. The Division of Pensions and Benefits invites any interested parties to submit any data or studies concerning the jobs impact of these proposed readopted rules with their written comments.

Agriculture Industry Impact

The rules proposed for readoption with amendments, new rules and repeals will not have any impact on the agriculture industry.

Regulatory Flexibility Statement

The rules of the Public Employees' Retirement System only affect public employers and employees. Thus, the rules proposed for readoption with amendments, new rules and repeals do not impose any reporting, recordkeeping or other compliance requirements upon small businesses, as defined under the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq. Therefore, a regulatory flexibility analysis is not required.

Smart Growth Impact

The rules proposed for readoption with amendments, new rules and repeals would not have any impact on the achievement of smart growth, and implementation of the State Development and Redevelopment Plan.

Housing Affordability Impact

The rules proposed for readoption with amendments, new rules and repeals will have no impact on affordable housing in New Jersey and the regulation would not evoke a change in the average costs associated with housing because the rules only applies to how the PERS is administered.

Smart Growth Development Impact

The rules proposed for readoption with amendments, new rules and repeals will have no impact on smart growth and the regulation will not evoke a change in housing production in Planning Areas 1 or 2 or within designated centers under the State Development and Redevelopment Plan in New Jersey because the rules only applies to how the PERS is administered.

Full text of the rules proposed for readoption may be found in the New Jersey Administrative Code at N.J.A.C. 17:2.

Full text of the rules proposed for repeal may be found in the New Jersey Administrative Code at N.J.A.C. 17:2-1.8, 1.13, 2.7, 2.8 and 4.5.

Full text of the proposed amendments and new rules follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):

SUBCHAPTER 1. ADMINISTRATION

17:2-1.3 Officers and committees

(a) The members of the Board shall elect a chairperson and vice chairperson[, and a]. A representative to the Pension System Actuary Selection Committee as provided for by N.J.S.A. 43:4b-1, shall be elected by the Board whenever the selection of a new actuary is needed. A representative to the State Investment Council shall be elected pursuant to N.J.S.A. 52:18A-83 and N.J.A.C. 17:1-1.1A, from its membership for the forthcoming year at its regular meeting held in July. [A representative to the Pension System Actuary Selection Committee, as provided for by N.J.S.A. 43:4b-1, shall be elected by the Board whenever the selection of a new actuary is needed.]

(b) (No change.)

(c) The chairperson and the Secretary of the Board shall have the power to act for the Board in any matter which may be referred to them by the Board [of Trustees].

(d) There shall be one standing committee, which is the finance committee pursuant to N.J.S.A. 43:15A-32. The committee shall be appointed by the chairperson at the July meeting for the forthcoming fiscal year. The [finance committee] Secretary shall [review] provide all investment transactions and financial reports [referred to it by the Secretary] for presentation to the Board at its regular monthly meetings. The committee shall consist of five members, three of whom shall be elected members of the Board.

17:2-1.4 Election of member-trustee

(a) The procedures as required by N.J.S.A. 43:15A-17 for the election of a State, municipal[,] or county trustee representative to the [Public Employees' Retirement System (]PERS[)] Board of Trustees are set forth in this section.

(b) (No change.)

(c) The following shall apply to election notices:

1. At least nine months prior to the expiration of the term of each elected trustee or immediately upon a vacancy on the Board, a notice shall be prepared and distributed by the Secretary of the Board or a contracted vendor through the certifying officers to each member who is eligible to vote[.];

2. The election notice shall:

i.-ii. (No change.)

iii. State that nominating petitions are required and that the petition forms are available from the Board Secretary at the Division [of Pensions and Benefits];

iv.-v. (No change.)

vi. Include any other information regarding a particular election, as specified by the Board of Trustees[.];

3. Election notices shall be forwarded in bulk and in appropriate number to the certifying officer or other appropriate fiscal officer of each employing agency, together with instructions as to who is to receive the notices[.];

4. A confirmation form [also] shall also be forwarded to each certifying officer or appropriate fiscal officer. Such form shall be returned to the Board Secretary or contracted vendor and shall include documentation of:

i. (No change.)

ii. The extent to which the certifying officer or other appropriate fiscal officer has distributed the notice to eligible members[.]; and

5. Election notices shall be distributed to each eligible member [who is eligible to vote, as shown on a master list of members that shall be recorded and stored at the Board Secretary's Office and made available for review to any candidate at the Division of Pensions and Benefits] through the certifying officer of each employing location. Only active members of the PERS may vote in the election of member-trustees of the Board of Trustees of the PERS. [Any challenges or questions concerning eligible voters shall be made prior to the close of the voting deadline. Failure to challenge the list or any part of it in writing prior to the voting deadline shall disallow any challenges or questions raised after the close of voting.]

(d) The following shall apply to [nominated] nominating petitions:

1. Nominating petition forms shall be available from the Office of the Board Secretary of the PERS[.];

2. Nominating petitions shall be forwarded to each active or retired member who requests them after the Division verifies the member's eligibility to run for such election[.];

3. The petition forms shall explain that:

i. For State trustee, at least 500 active State members, who are eligible to vote for the position, are required to sign the petition for the candidate[.];

ii. For municipal trustee, at least 500 active municipal members, who are eligible to vote for the position, are required to sign the petition for the candidate[.]; or

iii. For county trustee, at least 500 active county members, who are eligible to vote for the position, are required to sign the petition for the candidate[.];

4. [The] Each petition form shall require the candidate's name, membership number and employer, [and the] as well as the petitioner's name, signature, employer, pension membership or Social Security number [of each petitioner.];

5. The form shall explain that an active member shall sign only one petition, with State members petitioning for a State candidate, municipal members petitioning for a municipal candidate[,] and county members petitioning for a county candidate[.];

6. The dates for filing and returning the petitions shall be identified, as well as the approximate date that [ballots] election packets shall be sent to employers for distribution to voters[.];

7. Candidates named on the petitions shall sign each petition in a designated space indicating their willingness to be a candidate[.]; and

8. If only one candidate is nominated for a position, the candidate shall be deemed elected to the position without balloting. A notice to the certifying officers shall be distributed for posting at the employing locations, indicating no contest, since only one candidate was nominated by petition.

(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. (No change.)

ii. Internet access (electronic vote); or

[iii. Fax server (electronic vote); or]

[iv.] iii. 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] vote, including notification that shall advise the member that 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.-vi. (No change.)

vii. [Information stating] Notification that the candidate receiving a plurality of [all] the legal votes cast shall be declared elected to the position [subject to approval by the Board];

viii. [Information on how] Notification that the first vote cast shall be counted as the official vote and subsequent votes will be rejected; and

ix. A statement regarding the confidentiality and security used by the vendor to protect the election process against fraudulent and/or multiple voting[.];

3. The ballot positions shall be determined by a drawing conducted at a time and place determined by the Board Secretary. All candidates may attend such drawing by contacting the Board Secretary['s Office.]; and

4. A [receipt] notice shall be signed by each certifying officer [or representative,] acknowledging the receipt and distribution of the election packets. It is the responsibility of the certifying officer to ensure that such election packets are properly distributed to all eligible employees pursuant to N.J.S.A. 43:15A-67 and 80.

(f) The Board [shall] may assess the percentage of returned votes after the conclusion of each respective 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 [the] 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 [need to] be included in the initial election packet, then the following apply to the distribution of paper ballots upon member request:

1. Active members may contact the vendor handling the election to request a paper ballot if the voter is unable to cast a ballot through any of the other electronic methods mentioned in (e) above. Members shall provide the vendor with their proper ballot[/] and pension number and home address[.];

2. Upon proper [notification or] request by an eligible voter, the vendor shall mail a paper ballot to the voter's home address, together with instructions for casting the ballot, biographical information about the candidates[,] and a postage-paid return envelope[.]; and

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

(g) The following [applies] shall apply to biographical information:

1. An informational sheet of biographical information regarding each candidate shall be prepared by the candidate and submitted to the Secretary [for approval.];

2. The Secretary shall inform each candidate that the [approved] biographical information will be included with the [ballot] election packet[.];

[3. The biographical information shall be distributed to the certifying officer of each employing agency at the time of distribution of the election packets, or otherwise distributed as approved by the Board of Trustees. The employer should post this information at appropriate places throughout the workplace of each employing agency so that the members of the retirement system shall have a reasonable opportunity to read and consider the biographical information regarding the candidates.]

3. The biographical information on each candidate shall be included on the ballot and provided to those eligible to vote as part of the election packet sent to employers for distribution; and

4. Endorsements are not permitted in the biographical information.


(h) [Vote tabulation shall be as follows] The following shall apply to vote tabulation:

1. Only a member's first vote shall be counted as the official electronic or paper ballot. All duplicate or subsequent votes shall be considered invalid and not included in the final election count[.];

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

3. The Secretary of the Board shall oversee the election process to ensure that the vendor complies with all of the requirements and to assure the validity of the final election count[.]; and

4. The eligible candidates for the election shall be [informed as to the method and the date of counting the ballots and shall be] invited to [be present or to be represented at the counting of the ballots] the presentation of the final results of the election.

(i) The following [applies] shall apply to recount procedures:

1. Any candidate or member[,] who shall have reason to believe that an error has been made in counting or declaring the vote[,] may request, in writing, within 20 days of the certification of the results of the election, that the Board of Trustees, at its next regular meeting or at a special meeting, hold a hearing to consider the request and determine whether a recount shall be held. The Board shall notify all candidates of its decision within 10 days thereafter. At such hearing, any member of the Board who is a candidate on the contested ballot shall not vote in the Board's decision on the request. [All candidates] Candidates on the contested ballot shall be invited to attend the Board's meeting and may present evidence to support their beliefs[.];

2. If a candidate or other interested party requests a recount, in writing, within the prescribed time, this request shall be reviewed and granted by the Board of Trustees, if a recount could possibly affect the results of the election. All ballots received [then] shall then be recounted and the recount shall be supervised by the Board Secretary. The Board Secretary shall certify the results of the recount to the Board of Trustees. If a recount is not requested within 20 days, the ballots may be destroyed[.]; and

3. (No change.)

(j) [If there are at least three candidates in an election for member-trustee and] In the event, the victorious candidate dies or [declines] is unable or unwilling to serve as such member-trustee prior to the beginning of the candidate's term as trustee, the candidate who obtained the next highest number of votes in that election (that is, the first runner-up) shall be selected to fill the Board vacancy caused by the death or inability or unwillingness to serve of the successful candidate. If the Board selects the first runner-up in such election and that person is unable or unwilling to accept the position, then the Board shall select the candidate who obtained the next highest number of votes in that election. If there is no second runner-up, the Board shall conduct a new election to fill the Board vacancy. For purposes of this provision, a member-trustee's term begins upon the taking of the oath of office.

17:2-1.5 Certifying Officer (employer)

(a) (No change.)

(b) The Certifying Officer shall be responsible for the duties described by N.J.S.A. 43:15A-67 and [Section] 80 and any other section, which refers to the Department head.

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

17:2-1.6 Records

(a) In addition to the provisions of N.J.A.C. 17:1-1.2, the approved minutes of the Board are a matter of public record and may be inspected during regular business hours in the Office of the Board Secretary.

[(b) The mailing addresses of all active and retired members are considered to be a part of the member's confidential files and shall not be released for any purpose.

(c) 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.

(d) All medical testimony obtained in connection with an application for disability retirement shall be restricted for the confidential use of the Board 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. A copy of the Board appointed physician's medical report cannot be released until after the Board's initial determination. In no event shall the report be released to any individual not authorized in writing to receive the report.]

[(e)] (b) The annual report of the system's actuary shall not be released until it has been [approved] accepted by the Board of Trustees.

[(f)] (c) Original documents, if available, shall only be viewed by appointment at the Division [of Pensions and Benefits].

17:2-1.8 (Reserved)

17:2-1.13 Age determination

(a) For purposes of enrollment, the age assigned to the applicant is based on the applicant's age on the date of enrollment. However, if the applicant is six months or more past their birthday, the assigned age for enrollment will be their age on their next birthday.

(b) For purposes of purchasing additional service credit, the age used to determine the applicable actuarial factor is based on the applicant's age on the date the purchase request is received by the Division. However, if on that date the applicant is six months or more past their birthday, the purchase actuarial factor will be based upon their age on their next birthday.

(c) For purposes of calculating a retirement option selection, the age used to determine the applicable actuarial reduction factor is based upon the member and designated beneficiary(s) ages at the effective date of retirement. If on that date, either the member or the designated beneficiary(s) age is six months or more past their birthday, the age used for the option selection will be based upon their age on their next birthday.

(d) For purposes of calculating an Option 1 reserve balance upon the death of a retired member, when the beneficiary(s) elects an annuity certain (specified number of years) or a life annuity, the applicable factor is based upon the beneficiary(s) age at the time of the member's death. If the beneficiary(s) age is six months or more past their birthday, the factor is based upon their age on their next birthday.

(e) For purposes of calculating the group life insurance benefits upon the death of an active employee when the beneficiary(s) elects an annuity certain (specified number of years) or a life annuity, the applicable factor is based upon the beneficiary's(s) age at the time of the member's death. The factor is based solely on the beneficiary(s) age at the time of the member's death; not rounded up to the next birthday.

SUBCHAPTER 1A. DEFINITIONS

17:2-1A.1 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 the annual compensation of a member, plus the value of maintenance, if applicable, in accordance with contracts, ordinances, resolutions or other established salary policies of the member's employer for all employees in the same position, or all employees covered by the same collective bargaining agreement, which is paid in regular, periodic installments in accordance with the payroll cycle of the employer.

"Board" means the Board of Trustees of the Public Employees' Retirement System, vested with the general responsibility for the proper operation of the System pursuant to N.J.S.A. 43:15A-17.

"Division" means the Division of Pensions and Benefits, Department of the Treasury, in the State of New Jersey.

"Extra compensation" means individual salary adjustments, which are granted primarily in anticipation of a member's retirement; or as additional remuneration for performing temporary duties beyond the regular work day or work year.

"System" or "PERS" means the Public Employees' Retirement System created pursuant to N.J.S.A. 43:15A-1 et seq.

"TPAF" means the Teachers' Pension and Annuity Fund, created pursuant to N.J.S.A. 18A:66-56.

"Work year" means either a 10-month contracted employee who works from September through June of each year and is compensated for each month or a 12-month contracted employee who works throughout the year and is compensated for each month.


SUBCHAPTER 2. ENROLLMENT

17:2-2.2 Multiple employment['s]

(a) (No change.)

(b) [An] Prior to July 1, 2007, an elected official must also enroll on the basis of such office, if the elected official [is] was enrolled [or is enrolling] on the basis of other public employment. If the elected official was employed in the optional position first, the enrollment date for the optional position is established as the effective date of enrollment of the position [which] that required the elected official to establish membership in the retirement system. If the individual [has] had already established membership in the retirement system, the effective date of enrollment of the optional employment is established as the date of hire.

17:2-2.3 Ineligible persons

(a) The following classes of persons are ineligible for membership in the [system] System:

1.-4. (No change.)

5. Any employee who is employed on a seasonal basis. Seasonal employment is a category of occasional employment in which the employer, consistent with past practices, does not expect to lead to permanent employment and is not a temporary position as defined under N.J.A.C. 17:2-[2.4(c)]2.4(d). To qualify as seasonal employment, work periods shall not extend beyond six consecutive months for locations that report contributions on a 12-month basis, or five consecutive months for locations that report contributions on a 10-month basis, and severance of the employer/employee relationship shall occur during breaks in employment[,]; and such breaks shall exceed 30 consecutive days;

6.-9. (No change.)

10. Any retired member, as defined in (a)7 above, who returns to employment with an institution of higher education in a teaching position covered by the PERS pursuant to N.J.S.A. 43:15A-57.2; [and]

11. Any retired member, as defined in (a)7 above, who becomes employed by the State Department of Education in a position of critical need as determined by the State Commissioner of Education, or becomes employed by a board of education in a position of critical need as determined by the superintendent of the district on a contractual basis for a term of not more than one year pursuant to N.J.S.A. 43:15A-57.2. The retired member so reemployed may renew a contract for one additional year, pursuant to N.J.S.A. 43:15A-57.2, provided that the total period of employment with any individual board of education does not exceed a two-year period. The cancellation, reenrollment[,] and additional retirement allowance provisions and the compensation limitations shall apply if the retired member becomes employed within 120 days of retirement in a position with the employer from which the member retired[.];

12. Any official who commences service in a State or local elective public office on or after July 1, 2007, except for those who established membership in the PERS prior to July 1, 2007 based on service while continuously serving in the same elected office;

13. Any official who is directly appointed by the Governor as of July 1, 2007, to serve at the Governor's pleasure during his or her term of office; also, an official whose gubernatorial appointment requires the advice and consent of the Senate, or who is appointed in a substantially similar fashion by a local entity (county, municipality, etc.). A member who enrolled in the PERS prior to July 1, 2007, and whose membership has not expired pursuant to the provisions of N.J.S.A. 43:15A-7(e) or 8(a), shall continue as a PERS member while serving in that appointed position;

14. Any employee working under a Professional Services Contract as of January 1, 2008, as defined by N.J.S.A. 40A:11-5, 18A:18A-5, 18A:64A-25.5 and 43:15A-7.2; and

15. Any independent contractor as set forth in regulation or policy of the Federal Internal Revenue Service.

17:2-2.5 Optional enrollment

(a) Any employee, other than a veteran, who was considered an optional enrollee prior to July 1, 1966, under the previous rules of the board, shall continue to retain the option to enroll or not enroll if his employer does not change. This section shall not apply to elected officials upon the expiration of the term of office held as of June 30, 2007.

(b) (No change.)

17:2-2.6 Enrollment eligibility of professors and instructors employed on a temporary, provisional or adjunct basis by public institutions of higher education

(a) [Professors] Prior to November 2, 2008, professors and instructors, employed on a temporary, provisional or adjunct basis by public institutions of higher education, who are not in regularly appointed teaching or administrative staff positions, in classified or unclassified positions with a Civil Service employer, or in regularly budgeted positions with a non-Civil Service employer, [shall be] were eligible for enrollment if they:

1. [Earn] Earned more than the minimum threshold salary required for enrollment;

2. [Work] Worked for the entire normal school year; and

3. [Have] Had their services renewed for the succeeding school year.

(b) Professors and instructors employed on a temporary, provisional or adjunct basis by public institutions of higher education who are not in regularly appointed teaching or administrative staff positions, in classified or unclassified positions with a Civil Service employer, or in regularly budgeted positions with a non-Civil Service employer, shall not be eligible for enrollment on the basis of any course they teach, which:

1. Provides [no] less than three academic credits; or

2. (No change.)

17:2-2.7 Enrollment following deferred retirement

(a) For a member who has enrolled in the retirement system prior to November 2, 2008, the membership account under which a member elected deferred retirement who resumes regular service prior to age 60 shall be continued provided the member returns to service within the two-year period stipulated by N.J.S.A. 43:15A-7(e), or the longer period provided by N.J.S.A. 43:15A-8(a).

(b) Should a member who has enrolled in the retirement system prior to November 2, 2008, who elected a deferred retirement, resume regular service prior to age 60 after the period for continued membership stipulated by N.J.S.A. 43:15A-7(e) or 8(a) has expired, then such member shall be enrolled in the retirement system under a new membership account and shall be subject to such benefits and requirements as shall apply to new members of the retirement system as of the date of such new enrollment.

(c) For a member who has enrolled in the retirement system on or after November 2, 2008, the membership account under which a member elected deferred retirement who resumes regular service prior to age 62 shall be continued provided the member returns to service within the two-year period stipulated by N.J.S.A. 43:15A-7(e), or the longer period provided by N.J.S.A. 43:15A-8(a).

(d) Should a member who has enrolled in the retirement system on or after November 2, 2008, and who elected a deferred retirement, resume regular service prior to age 62 after the period for continued membership stipulated by N.J.S.A. 43:15A-7(e) or 8(a) has expired, then such member shall be enrolled in the retirement system under a new membership account and shall be subject to such benefits and requirements as shall apply to new members of the retirement system as of the date of such new enrollment.

(e) In the event that (b) or (d) above applies, the member may elect to transfer all service credit associated with the previously vested membership to the new membership account and such service credit will be subject to the benefits and requirements as shall apply to new members of the retirement system as of the date of such new enrollment. Should the member elect not to transfer the service credit associated with the vested membership to the new membership account, no benefits shall be payable from the previous application for deferred retirement until such time as the member has terminated all PERS eligible employment.

17:2-2.8 (Reserved)


17:2-2.9 Eligibility and enrollment of employees of bi-state and multi-state agencies pursuant to P.L. 2003, [c.263] c. 263 (N.J.S.A. 43:15A-73)

(a) For the purposes of the resolution to adopt the provisions of the PERS for a bi-state or multi-state agency, the "category of officers or employees who may enroll in the retirement system" shall be defined as those employees:

1.-2. (No change.)

3. Who meet the PERS eligibility requirements found at N.J.S.A. 43:15A-[6 et seq]7 and 7.3.

(b) Those employees who do not meet the eligibility requirements found at N.J.S.A. 43:15A-7, or who are subject to professional services contracts as set forth in N.J.S.A. 43:15A-7.2 or who meet the eligibility requirements for the Defined Contribution Retirement Program found at N.J.S.A. 43:15C-2 are ineligible for membership in PERS.

Recodify existing (b) through (g) as (c) through (h) (No change in text.)

SUBCHAPTER 3. INSURANCE AND DEATH BENEFITS

17:2-3.1 Compulsory and optional enrollment

(a) For the purpose of contributory insurance, all compulsory enrollees, including veterans, under age 60 at the time their enrollment application is filed, shall be required to participate in the contributory insurance program for one year (12 calendar months) from the date of enrollment, or the effective date of insurance premium deduction, whichever is later. Proof of insurability shall be required for all compulsory and optional enrollees, age 60 and older at the time their enrollment application is filed with the Division [of Pensions and Benefits], in order to qualify for noncontributory and contributory insurance coverage.

(b) Optional enrollees under age 60 at the time their enrollment application is filed with the Division [of Pensions and Benefits] may qualify for noncontributory and contributory insurance coverage only if they were actively at work performing all of the duties that the position requires at the time they made application for enrollment, and such application was filed within one year from the date they first became eligible for enrollment in the system. If an application for an optional enrollee is not received within one year after the optional enrollee became eligible for enrollment, evidence of insurability will be required for the noncontributory and contributory coverage.

(c) (No change.)

17:2-3.6 Survivor benefits

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

(c) In calculating an Option 1 reserve balance upon the death of a retired member, when the beneficiary(s) elects an annuity certain (specified number of years) or a life annuity, the applicable factor is based upon the beneficiary's age at the time of the member's death. If the beneficiary(s) age is six months or more past their birthday the factor is based upon their age on their next birthday.

(d) In calculating the group life insurance benefits upon the death of an active employee when the beneficiary(s) elects an annuity certain (specified number of years) or a life annuity, the applicable factor is based upon the beneficiary's age at the time of the member's death. The factor is based solely on the beneficiary(s) age at the time of the member's death and is not rounded up to the next birthday.


17:2-3.7 Withdrawal application; contributory insurance

A properly executed contributory insurance withdrawal application must be in the possession of the [Retirement System] Division before termination of the contributory coverage can be effected. Such withdrawal application cannot be retroactive and the contributory insurance will not be reinstated under the membership account number in which the cancellation was exercised.

17:2-3.8 Withdrawal and return; contributory insurance

(a) Withdrawal from contributory insurance coverage shall apply only to the membership account under which the cancellation was exercised. Any person who has canceled his or her contributory insurance coverage and withdraws from membership in the System shall, upon his or her subsequent reenrollment in the System, be subject to the provisions of N.J.A.C. 17:2-3.1.

(b) If a member is covered by group life insurance during employment, the coverage shall cease 31 days subsequent to the member's termination date from employment, regardless of the cause of termination. A member may convert the life insurance at the member's expense as set forth in N.J.A.C. 17:2-3.13(b).

17:2-3.10 Contributory insurance premiums; leave of absence and workers' compensation

(a) Contributory insurance coverage will [be] remain in effect for up to two years while a member is on an official leave of absence without pay for the personal illness of the member without premiums paid by the member. The employer shall provide to the Division [of Pensions and Benefits] proof of the official leave of absence.

(b) Contributory insurance coverage will [be] remain in effect while a member is on an official leave of absence without pay for the following reasons, provided that insurance premiums are paid [in advance] by the member within 31 days of the official start date of the leave. It is the member's responsibility to make arrangements directly with the Division to continue these premium payments:

1.-2. (No change.)

(c) Contributory insurance coverage will [be] remain in effect for members who are receiving periodic benefits [through] directly from workers' compensation [provided that insurance premiums are paid in advance by the member. It is the member's responsibility to make arrangements directly with the Division to continue these premium payments]. No premiums are required pursuant to N.J.S.A. 43:15A-25.1.

17:2-3.12 Beneficiary designation; pension contributions

(a) When a member establishes multiple status by becoming employed by one or more additional employers in an eligible position or positions and files an enrollment application, the beneficiaries designated on the most recently submitted enrollment application supersede any older designations of beneficiaries on file with the Division [of Pensions and Benefits].

(b) (No change.)

SUBCHAPTER 4. MEMBERSHIP

17:2-4.1 Creditable compensation

(a) The compensation of a member subject to pension and group life insurance contributions and creditable for retirement and death benefits in the system shall be limited to base salary[,] and shall not include extra compensation. [For purposes of this section:

1. "Base salary" means the annual compensation of a member, plus the value of maintenance, if applicable, in accordance with contracts, ordinances, resolutions or other established salary policies of the member's employer for all employees in the same position, or all employees covered by the same collective bargaining agreement, which is paid in regular, periodic installments in accordance with the payroll cycle of the employer; and

2. "Extra compensation" means individual salary adjustments which are granted primarily in anticipation of a member's retirement or as additional remuneration for performing temporary duties beyond the regular workday or work year.] Forms of compensation that have been identified as extra compensation include, but are not limited to:

Recodify existing i. through v. as 1. through 5. (No change in text.)

[vi.] 6. Sell-backs, trade-ins, waivers[,] or voluntary returns of accumulated sick leave, holiday pay, vacation, overtime, compensatory time[,] or any other payment or benefit in return for an increase in base salary. An example of a trade-in is compensation added to base salary or to salary in a new contract that correlates with compensation on an excluded item in an old contract (for example, clothing allowance);

Recodify existing vii. and viii. as 7. and 8. (No change in text.)

[ix. Increments or adjustments granted for retirement credit;]

9. Compensation in the absence of services;


Recodify existing x. through xiii. as 10. through 13. (No change in text.)

(b)-(c) (No change.)

(d) With respect to all claims for benefits, the Division [of Pensions and Benefits] shall investigate increases in compensation reported for credit [which] that exceed the reasonably anticipated annual compensation increases for members of the retirement system based upon either the increase in the Consumer Price Index for the time period of the increases and the table of assumed salary increases recommended by the actuary and adopted by the Board. [or based on] The Division may also consider the averages of the regular increases in the employees' compensation preceding the periods in which the extra compensation was received or the average increases granted to employees in different bargaining units of the same employer. [Those cases where a violation of law is suspected shall be referred to the Board.] In those cases where a justification of an increase in salary is not substantiated, the Division may adjust the compensation accordingly.

(e) In connection with an investigation of an increase in compensation, the [Board] Division may:

1. [May require] Require that a notarized statement under oath be obtained from the member's employer that the reported compensation was not granted primarily in anticipation of retirement[,] and conforms with the statutes and rules governing the retirement system[.];

2. [May require] Require an employer to provide any record or information it deems necessary for the investigation, including, but not limited to, collective bargaining agreements, employment contracts, ordinances, resolutions, minutes of public meetings (closed or open), job descriptions, salary histories, promotional lists or notices or any other record or information related to the increase in compensation; and

3. [May refer] Refer any suspected submission of false information in violation of N.J.S.A. 43:15A-55, [these rules,] this chapter or other laws of the State of New Jersey to the Attorney General for review and initiation of criminal proceedings, if warranted.

(f) Failure to satisfactorily respond to a request by the [Board] Division for documents or information related to an increase in compensation may result in the denial of credit for the increase in compensation.

(g) A determination by the [Board] Division that a member's compensation for pension purposes includes extra compensation may result in:

1.-5. (No change.)

(h) Employer contributions shall not be revised or refunded because of a determination by the [Board] Division that a denial of credit for increases in compensation is warranted under this [rule] section.

17:2-4.3 School year members; 10 and 12 months

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

(d) If a member terminates a position that requires less than 12 months to constitute one full year of service at the end of the normal academic school year and accepts a 12-month position with the same employer or another employer that participates in the [Public Employees' Retirement System] PERS and begins employment on or before the date that was established by the previous year's contract position, such member will receive service credit within the [Public Employees' Retirement System] PERS for the period between the end of the previous contract and the new 12-month position.

17:2-4.5 (Reserved)

17:2-4.6 Minimum adjustment

In order to facilitate the reconciliation of a member's account upon death, no [rebates] refunds or additional contributions shall be made [where an adjustment involves an amount of $ 2.00 or less during a calendar quarter.] to a member's loan and arrearages balances, if such adjustments involve amounts of $ 50.00 or less. Unresolved differences of $ 50.00 or less will be written off.

17:2-4.9 [Eligibility for loan] Loans

(a) Only active contributing members of the System may exercise the privilege of obtaining a loan. 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 loan is subject to [Federal regulation] I.R.C. §72(p) (2007) of the Internal Revenue Code.

(b) The rate of interest per annum for loans from the State-administered retirement systems shall be a commercially reasonable rate as required by the Internal Revenue Code to be determined by the State Treasurer on January 1 of each calendar year. An administrative fee in an amount set by the State Treasurer for each calendar year may be charged for any loan requested pursuant to N.J.S.A. 43:15A-34.

17:2-4.10 Waiver of retirement benefits upon withdrawal

Any member, who makes application for withdrawal from the System, who may otherwise be eligible to make application for a retirement benefit, shall be required to execute and file a statement with the System, setting forth the benefits the member is waiving in favor of withdrawal, before the member's application for withdrawal may be processed. If a member is eligible to begin receiving a monthly retirement allowance (age 60 or more, or 25 years or more of credited service), the Division shall inform the member [of] how to obtain 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.

17:2-4.12 Deductions

(a) A full pension and contributory insurance deduction shall be taken for the [Public Employees' Retirement System] PERS in any payroll period (monthly or biweekly) in which the member is paid a sufficient amount to make a full normal deduction, plus any other arrears or loan deductions then in effect.

(b) No deductions shall be taken, nor service credit given, in any pay period for employers who report on a biweekly basis or in any month, for employers who report on a monthly basis, in which the employee's salary is not sufficient to cover the required deductions for the [Public Employees' Retirement System] PERS.

17:2-4.14 Continuance of membership; transfer

Once an employee establishes membership in the retirement system, [the] a member who has maintained an active membership account is eligible to continue such active membership, should the member be temporarily employed in a position covered by the [system] System.

17:2-4.17 Maximum compensation limit for pension contributions based upon annual maximum wage contribution base for Social Security

(a) Members who are enrolled on or after July 1, 2007 are subject to a maximum compensation limit for pension contributions. The maximum compensation limit is based on the annual maximum wage contribution base for Social Security, which is subject to change each calendar year. Compensation above the maximum will be subject to Defined Contribution Retirement Program (DCRP) rules.

(b) Members enrolled in PERS, who also participate in the DCRP based on (a) above will receive service credit in their corresponding PERS account, and will be eligible to retire under the rules of the PERS. The salaries used in the calculation of the retirement benefits are limited to the maximum compensation amounts in effect when the salary is earned.

SUBCHAPTER 5. PURCHASES AND ELIGIBLE SERVICE

17:2-5.1 Eligibility for purchase

(a) (No change.)

(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 purchase cost quotation letter[.], which quotes the terms of the purchase. If the purchase cost quotation expires prior to authorization and subsequently the member requests the purchase of such service, the purchase cost will be subject to recalculation based upon all cost factors in effect at the time of the new purchase request.

(c) Upon denial of a purchase, the member may subsequently resolve the basis of the denial and request the Division to resubmit the purchase request. The purchase cost will be subject to the calculation based on all cost factors in effect at the time of the resubmitted purchase request.

[(c)] (d) 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 Board [of Trustees] shall disallow the purchase of all or a portion of former service it deems to be dishonorable in accordance with N.J.S.A. 43:1-3c.

17:2-5.4 Compulsory contributions (back deductions)

(a) An employee who was required to enroll and whose application was filed beyond his or her compulsory date of enrollment[,] will be required to make retroactive contributions to the date of compulsory enrollment. Contributions will be calculated on the basis of the member's current salary at the full pension rate of contribution assigned as of his or her compulsory date of enrollment with regular interest. For members enrolled on or after July 1, 2007, the member's salary for each calendar year will be limited by the maximum compensation as determined by N.J.A.C. 17:2-4.17.

(b) (No change.)

17:2-5.5 Optional purchases of eligible service

(a) A shared-cost purchase is one in which the member pays only the employee's share and not the employer's share of the purchase. A member may purchase all or a portion of such eligible service. A shared-cost purchase will be calculated on the basis of the actuarial purchase factor established for the member's age at the time of the purchase request times the higher of either the member's current annual base salary or highest fiscal year base salary. The following types of purchases are shared-cost purchases:

1.-2. (No change.)

3. [After August 6, 2001, continuous] Continuous temporary service without interruption, substitute service or intermittent service immediately preceding enrollment[;] is eligible for purchase provided the following conditions are met:

i. Continuous temporary service without interruption must be employment without a break in service. For an employer that reports on a monthly basis, a break in service is defined as no salary earned by an employee during a month. For an employer that reports on a biweekly basis, a break in service is defined as no salary earned by an employee during a biweekly pay period;

ii. Substitute service is eligible provided the employment immediately precedes enrollment. Immediately preceding enrollment is defined as employment rendered during the month or biweekly pay period prior to the date of enrollment. The period(s) of substitute service that a member can request to purchase must meet the following criteria:

(1) A year of substitute service wherein a 10-month employee worked an average of 10 days per month and an aggregate of 100 days during a regular work year. A 12-month employee is required to have worked an average of 10 days per month and an aggregate of 120 days per year;

(2) Substitute service for a period of less than one year immediately preceding enrollment is eligible for purchase provided the member works a minimum average of 10 days per month for each month of substitute service; and

(3) When more than one year of substitute service is requested for purchase, each year of substitute service rendered prior to enrollment is reviewed and each year is required to meet the criteria set forth under the provisions of (a)3ii(1) above; and

iii. Intermittent service, as defined by N.J.A.C. 17:2-2.3(a)8 must result without interruption in permanent employment with the same employer. The intermittent service must have been in a position which satisfied the job's requirement for experience needed to qualify for the permanent title;


4. Leaves of absence without pay:

i. The period of the leave for personal reasons, which does not exceed 93 days. Child care is considered leave for personal reasons. Union leave after January 12, 2007 is considered leave for personal reasons;

ii. (No change.)

iii. Maternity leave is considered personal illness. A certification from a physician that a member was disabled due to pregnancy and resulted in a disability for the period in excess of three months is required. Absent physician certification, three months is the maximum period of purchase for maternity leave. The birth of a child constitutes the start of child care leave of absence immediately following maternity; and

iv. A leave of absence shall be deemed to have ended upon resignation, termination or return to covered payroll;

5. [Non-veterans] Members may purchase continuous service subsequent to the date their employer adopted the retirement system, provided the service was with the same employer to the date of enrollment;

6. Non-veterans[,] hired prior to July 1, 1966, whose employers have not adopted the retirement system and are otherwise eligible for enrollment, may enroll any time and purchase continuous service retroactive to July 1, 1966, provided the service was with the same employer to the date of enrollment;

7. Eligible out-of-State public employment, up to a total purchase of 10 years[.] provided the member is not receiving or eligible to receive a retirement benefit from any other system for the same period of time.

i. As provided in N.J.S.A. 43:15A-42, out-of-State service cannot be used to qualify for an ordinary disability retirement[;].

ii. For purchase applications received November 1, 2008 or later, out-of-State purchases cannot be used to qualify for post-retirement medical benefits; and

[8. Intermittent service, as defined by N.J.A.C. 17:2-2.3(a)8, which resulted, without interruption, in permanent employment with the same employer. The intermittent service shall have been in a position which satisfied, in whole or in part, the job's requirement for experience needed to qualify for the permanent title; and]

[9.] 8. Non-concurrent [Teachers' Pension and Annuity Fund] TPAF service if a dual member of TPAF and PERS pursuant to P.L. 2001, [c.6] c. 6 (N.J.S.A. 43:15A-14). All or a portion of non-concurrent service in the PERS from an expired or withdrawn account may be purchased.

(b) The types of purchases indicated in (b)1 through 3 below are considered to be full-cost purchases. A member may purchase all or a portion of such eligible service. The lump sum purchase cost shall be calculated on the basis of the actuarial purchase factor established for the member's nearest age at the time of the purchase request times the higher of either the member's current annual base salary or highest fiscal year base salary. The computed lump sum purchase cost shall then be doubled to establish the full cost to the member. This cost is calculated in this manner as N.J.S.A. 43:15A-73.1 provides that the employer shall not be liable for any costs of purchasing this service; therefore, the member must pay both the employee and employer share.

1. Active duty military service prior to enrollment. Active military service that is eligible for purchase means honorable full-time duty in the active military service of the United States[.], which is the same as the Federal definition found at 10 U.S.C. §101. Such term includes full-time training duty, and attendance, while in the active military service, at a school designated as a service school by law or by the Secretary of the military department concerned. It cannot include periods of service of less than 30 days. It does not include weekend drills or annual summer training of a national guard or reserve unit nor does it include periods when the member was on-call. It also does not include time spent in the Reserved Officers Training Corps or as a cadet or midshipman at one of the service academies. Military service before enrollment cannot be used to qualify for an ordinary disability retirement[;]. Members must serve a minimum of 17 days active duty within a month for that month to be eligible for purchase of service credit;

2. Employment with the Federal government[.], provided the member is not receiving or eligible to receive a retirement benefit from the Federal retirement system for the same period of time.

i. Pursuant to N.J.S.A. 43:15A-42, U.S. Government service cannot be used to qualify for an ordinary disability retirement;

ii. For purchase applications received November 1, 2008 or later, U.S. Government purchases cannot be used to qualify for post-retirement medical benefits; and

3. (No change.)

(c) A member shall be eligible to purchase an aggregate of up to 10 years of out-of-State public employment, military service and Federal employment provided that the member is not receiving nor is entitled to receive a retirement allowance for such service from any other public retirement system and provides proof to the Division [of Pensions and Benefits] that the member has withdrawn from such other system. A qualified veteran shall be eligible to purchase an additional five years of military service rendered during periods of war for an aggregate of 15 years of such service.

(d) (No change.)

17:2-5.6 Methods of payment for purchase of service credit

(a) Methods of payment include the following:

1. (No change.)

2. Partial lump sum; balance by [extra] additional payroll deductions; or

3. [Extra] Additional payroll deductions equal to at least one-half of the full regular pension deduction for a maximum period of 10 years[;].

[4.] (b) [Extra] Additional payroll deductions under (a) 2 or 3 above will include regular interest for the term of the installment.

[5.] (c) [Direct rollover/trustee-to-trustee transfer of funds:] Lump sum payments and partial lump sum payments can include the direct rollover or transfer of tax-deferred contributions from financial plans that qualify under terms specified [by the Internal Revenue Service] under I.R.C. §401(a)(31) (2007). All payments remitted to the Division must be accompanied by A properly completed direct rollover Transfer Request for the Purchase of Service Credit form[s as specified by the Division]. Checks remitted to the Division without the required forms shall be returned to the member. A lump sum rollover payment for a purchase cannot exceed the lump sum cost of that purchase. Checks in an amount greater than the lump sum cost of the purchase shall be returned to the member.

17:2-5.11 Service ineligible for purchase

(a) A member will not be granted, nor may a member purchase, prior service or membership credit, including, but not limited to, the following situations:

1. Service rendered outside of the United States, with the exception of [eligible] service rendered [in certain instances] to a local school board in territories or possessions of the United States, Washington, DC and the Canal Zone[, is not purchasable.];

2. Additional service credit for U.S. Government or out-of-State employment periods during leaves of absence;

3. Service rendered that is concurrent with service time or employment that the member has received membership service credit in the Fund;

4. Any service rendered, which was covered by the Alternate Benefits Program (ABP) or another defined contribution plan, including any service associated with pension contributions transferred to the ABP;

5. A period of time when a member was on a suspension without pay during their employment; or

6. Any public service that was not eligible for either compulsory or optional enrollment in a public-administered retirement system at the time the service was rendered.

SUBCHAPTER 6. RETIREMENT

17:2-6.1 Applications

(a) Applications for retirement must be made on forms required by the System. Such forms must be completed in all respects and filed with the Division [of Pensions and Benefits (Division) on or] before the requested date of retirement. A member's retirement application becomes effective on the first of the month following receipt of application unless a future date is requested. Applications can be filed no more than one year in advance unless filing for a deferred retirement and the member's PERS eligible employment has ended. Members enrolled [at] in multiple PERS [locations] positions must retire from employment in all covered positions before a retirement shall become effective.

(b) [In] Except for a disability retirement application, in the event a member files an incomplete application, [the] all deficiencies, except the employer certification, shall be brought to the member's attention and the member shall be required to [file a completed application with the Division] provide the additional information within 90 days to enable processing. If there is no response within the 90-day time frame, the application will expire and the member will be required to refile. This section shall not apply to information provided by the employer.

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

(e) [In addition to the foregoing requirements:] As to an application for disability retirement, the following shall apply:

1. An application for a physical disability retirement must be supported by at least two medical reports, one by the member's personal or attending physician and the other may be either hospital records supporting the disability or a report from a second physician[; and]. The required documentation must be received within six months of the date of filing the disability retirement application. If it is not received, the retirement will be canceled and the member must complete a new disability application for a future retirement date;

2. An application for a mental health medical disability retirement must be supported by at least two medical reports, one by the member's personal or attending psychiatrist or psychologist and the other in the form of either hospital records supporting the disability or a report from a second psychiatrist or psychologist or from the member's personal or attending physician or licensed clinical social worker. The required documentation must be received within six months of the date of filing the disability retirement application. If it is not received, the retirement will be canceled and the member must complete a new disability application for a future retirement date;

3. A member filing for a disability retirement shall not file a separate application for any other type of retirement, while a disability application is pending; and

4. If a disability retirement application is denied by the Board and the applicant qualifies for any other retirement benefit, the applicant must submit a written statement accepting the alternate retirement type. If the applicant submits the written statement within 30 days of the Board's decision, the applicant may retain the retirement date designated on the disability retirement application.


(f) Retired members, who return to public employment, shall have their previous retirement allowances cancelled and be reenrolled in the System pursuant to N.J.S.A. 43:15A-44, for those who retired on disability retirements, or N.J.S.A. 43:15A-57.2, for those who retired on early, service, veteran or deferred retirements. [A member who ceases covered employment and retires again must file a new retirement application with the Division in accordance with (a) through (d) above in order to initiate payment of the retirement allowance. The previous retirement allowance shall then be reinstated, and the new retirement allowance, based on the member's subsequent covered employment, shall commence. The previous and subsequent retirement allowances shall then be combined and paid in one monthly benefit check. The retirement allowance shall become effective on the first of the month following receipt of the application unless a future date is requested.]

(g) A member who previously retired pursuant to (a) through (d) above and is reenrolled pursuant to (f) above must file a new retirement application in order to initiate payment of the retirement allowance. Except in the case of disability retirement, the previous retirement allowance shall then be reinstated, and the new retirement allowance, based on the member's subsequent covered employment, shall commence. The previous and subsequent retirement allowances shall then be combined and paid in one monthly benefit check. The retirement allowance shall become effective on the first of the month following receipt of the application unless a future date is requested.

[(g)] (h) (No change in text.)

17:2-6.3 Effective dates; change

(a) (No change.)

(b) [Except in the event of deferred retirement, if] If a member requests a change of retirement date or option selection before the member's retirement allowance becomes due and payable, said change will require approval of the Board and the revised retirement allowance shall not become due and payable until 30 days have elapsed following the effective date or the date the Board met and approved the change in the member's retirement application, whichever is later.

(c) A deferred retirement shall become effective on the first of the month following the member's 60th birthday, or 62nd birthday for those members enrolled on or after November 2, 2008. [At the election of a 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. 43:15A-38(b) and requests that date as the retirement date.] Should the member's birthday fall on the first of the month, the member may elect the retirement to commence on that date, provided that an application is received by the Division in accordance with N.J.A.C. 17:2-6.1.

[(d) In the case of deferred retirement, if an applicant desires to amend the retirement application, the amended application must be filed with the Division a minimum of one month prior to the effective date of retirement.]

[(e)] (d) Should the member continue to receive a salary beyond the effective date of retirement, no retirement benefits shall be paid for the period where the member received salary and no salary or service credit shall be provided for the service rendered after the effective date of retirement. This restriction also applies to payments of accrued sick or vacation time that is paid in periodic payments on the employer's regular payroll schedule.

17:2-6.11 Early retirement; reduction

(a) Retirement with 25 or more years of credited service before the first of the month in which a member attains age 60 or age 62 for a member who enrolled on or after November 2, 2008, shall be classified as "early" retirement.

(b) [The] For members enrolled prior to July 1, 2007, the statutory reduction of one quarter of one percent applies to each month prior to the month in which the member attains age 55 and for the month in which the member attains age 55 if the member's 55th birthday occurs after the 15th day of the month.

(c) For members enrolled on or after July 1, 2007 and prior to November 2, 2008, if under the age of 60, the reduction will be one percent per year (1/12 of one percent per month) for each year under age 60 but over age 55; and three percent per year (1/4 of 1 percent per month) for each year under age 55.

(d) For members enrolled on or after November 2, 2008 if under the age of 62 the reduction will be one percent per year (1/12 of one percent per month) for each year under age 62 but over age 55; and three percent per year (1/4 of one percent per month) for each year under age 55.


17:2-6.12 Service retirement; eligibility

(a) A member enrolled prior to November 2, 2008 becomes eligible for "Service" retirement on the 1st of the month following the member's 60th birthday. [At the election of a member, if] 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. 43:15A-47a, and requests that date.

(b) A member enrolled on or after November 2, 2008 becomes eligible for a "Service" retirement on the 1st of the month following the member's 62nd birthday. If the member's 62nd birthday falls on the first of the month, the retirement shall become effective on that date, provided the member files a timely retirement application pursuant to N.J.S.A. 43:15A-47a, and requests that date.

17:2-6.14 Disability retirant; annual report (employment, earnings, test and adjustment)

(a) Pursuant to N.J.S.A. 43:15A-44, if a disability retirant is engaged in gainful employment that does not require reenrollment in the [Public Employees' Retirement System] PERS, then the amount of the retirant's pension benefit and cost-of-living increases based on the pension benefit, but not the annuity benefit, shall be reduced to an amount, which when added to the amount then earned, shall not exceed the amount of salary now attributable to the position from which the member retired.

1. For the purposes of determining the amount of salary attributable to the position from which the member retired, the Division [of Pensions and Benefits (Division)] shall apply the salary assumption used by the System's actuaries in each calendar year of retirement to the retirant's final year's salary.

2. (No change.)

(b) Earnings from employment in New Jersey shall be obtained through the New Jersey Department of Labor and Workforce Development. For all other earnings, the disability retirants shall be required to file a report with the System, which may include copies of the retirant's IRS 1040 forms and W-2 forms and any other proofs of employment requested of a specific retirant indicating the type of employment they are engaged in, if any, and the gross earned income realized therefrom as of December 31 of the prior year. The Division may also require the retirant to complete Federal Form 4506-T, Request for Transcript of Tax Return.

(c) If the Department of Labor and Workforce Development or a retirant reports employment and earnings, then the following tests shall be made by the Division:

1. If the retirant is engaged in employment, and the gross earned income for the preceding calendar year exceeds the [difference between] sum of the pension portion of the retirement benefit and the salary the retirant would have been receiving had the retirant continued to work for the former employer, the retirant shall be billed for the amount of the [overpayment] excess earnings, limited to the pension portion of the retirement allowance. Further, the Division shall assume that the retirant continues to be employed at the same level of salary for the current year. Therefore, a dollar for dollar reduction [may] shall be made in anticipation of excess earnings in the current year. [If,] After proof is submitted in the subsequent year, if it is determined that the salary earned in the previous year was higher, appropriate repayment to the System shall be requested by the Division. If the salary earned was less, then a refund shall be made minus any outstanding amounts owed. If the gainful employment ends, the retirant must notify the Division in order to have the amount of reduction recalculated.

2.-3. (No change.)

(d) (No change.)

17:2-6.15 Disability retirements; filing after more than two years' discontinuance of service

(a) Following the filing of a disability retirement application, a vested member, who has not withdrawn [his or her] contributions from the retirement system, and has discontinued service for more than two consecutive years, and who was otherwise eligible for disability retirement at the time service was discontinued, shall be approved to receive disability retirement benefits by the Board [of Trustees], if:

1. The applicant demonstrates to the satisfaction of the Board [of Trustees] that [he or she] the applicant was physically or mentally incapacitated for the performance of duty at the time service was discontinued and continues to be so incapacitated, with the same disability or disabilities, at the time of filing; and

2. The applicant factually demonstrates to the satisfaction of the Board [of Trustees] that service was discontinued because of the disability or disabilities.

(b) (No change.)

17:2-6.26 Medical examination; physician

N.J.S.A. 43:15A-42[, 43 and 44] requires [the Retirement System or] the Board to designate physicians to perform medical examinations. [A designated physician shall not be a member's personal physician, except in the case of a member whose personal physician has identified the member as having a probable abbreviated life expectancy (referred to as an "imminent death" case), if corroborating medical evidence of the diagnosis can be obtained.] When an applicant provides sufficient medical documentation as set forth in N.J.A.C. 17:2-6.1 and the Medical Review Board concurs, then no further evaluation is necessary. However, if the medical documentation is not sufficient to establish total and permanent disability after a review by the Medical Review Board, then an independent medical evaluation shall be required.

SUBCHAPTER 7. TRANSFERS

17:2-7.1 Honorable services; interfund transfers; State-administered retirement systems

(a) The receipt of a public pension or retirement benefit is expressly conditioned upon the renderings of honorable service by a public officer or employee. Therefore, the Board [of Trustees] of the new State-administered retirement system shall disallow the transfer of all or a portion of prior service of any member of the former State-administered retirement system for misconduct occurring during the member's prior public service, which renders that prior service, or part thereof, dishonorable.

(b) (No change.)

(c) The [system] System will transfer membership to any State-administered retirement system as follows:

1.-4. (No change.)

5. The member is not eligible to transfer service credit if any of the following conditions apply:

i. (No change.)

ii. The member has credit in the former system for service earned after the date of enrollment in the new system (concurrent service) unless the member meets the criteria established by P.L. 2001, [c.341] c. 341 (N.J.S.A. 43:15A-14). P.L. 2001, [c.341] c. 341 provides that a member of the [Teacher's Pension and Annuity Fund (]TPAF[)] at the time of enrollment in the [Public Employees' Retirement System (]PERS[)] may transfer the non-concurrent TPAF service if the member ceased to be an active contributing member of the TPAF three or less years from the date of enrollment in the PERS. The member must apply to transfer this service no more than two years from the date of the last contribution to the TPAF, unless the member is vested in the TPAF, or the member's TPAF account has not expired due to the provisions of N.J.S.A. 18A:66-8. A member who transfers service under this provision shall receive credit for the salaries earned in both the TPAF and PERS during the period of concurrent service; or

iii. The account [has expired] is inactive; that is, it has been more than two years from the date of the last contribution [and the member is not vested,] nor has the member's account remained active due to the provisions of N.J.S.A. 43:15A-8.

6. (No change.)

7. The member's original enrollment date established in the former system shall be transferred into the new system.

(d)-(e) (No change.)

17:2-7.2 Intrafund transfers; State-administered retirement systems

(a) Members who leave one public employer and take a position with another public employer covered by the same pension system are immediately eligible to transfer their membership to their new employers, as long as the following conditions are met:

1. (No change.)

2. [The account has not expired; that is, it] It has not been more than two years [between] since the date of the last contribution[, the member is vested,] or the member's account has remained active due to the provisions of N.J.S.A. 43:15A-[8]7e and 8; and

3. The account has not been canceled due to Board [of Trustees] action. It is the responsibility of the employer to establish the employee's status. For accounts that are withdrawn, expired or canceled, an enrollment application is needed, and the standard enrollment rules are again in effect.

(b) To transfer the member's account to the new employer, the new employer should file a Report of Transfer with the Division [of Pensions and Benefits] within 10 working days of the date employment begins. If more than one year elapses between the date that the member was required to contribute to the retirement system and the date contributions were first certified, the employer shall be assessed a late enrollment employer liability penalty plus delayed appropriation costs.

SUBCHAPTER 8. PROSECUTORS PART

17:2-8.1 Definitions

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

. . .

"Service" as a prosecutor as defined by N.J.S.A. 43:15A-155 shall include service as the following. For members employed as prosecutors on January 7, 2002, service shall also include any [Public Employees' Retirement System] PERS service credited to a member's account on January 7, 2002. Pursuant to P.L. 2003, c. 140, for an individual nominated and appointed pursuant to Article VII, Section II, paragraph 1 of the New Jersey Constitution to the position of a county prosecutor after January 7, 2002, service shall also include regular [Public Employees' Retirement System] PERS service credited as of the date of appointment.

1.-3. (No change.)

. . .

17:2-8.6 Purchase of service

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

(c) An active member who wishes to purchase service credit shall file an application with the Division [of Pensions and Benefits]. The cost shall be calculated in accordance with N.J.A.C. 17:2-5.5. The member must pay into the annuity savings fund, the amount required by applying the factor, supplied by the actuary, to the member's age at the time of purchase and to the member's salary at that time or to the highest annual compensation for service in this State during any fiscal year, including a fiscal year for which credit is purchased, whichever is the highest. Such purchase may be made in regular installments, equal to at least one-half the full normal contribution to the retirement system over a maximum period of 10 years.

17:2-8.8 Vesting

(a) A prosecutor with service in both the Prosecutors Part and the regular [Public Employees' Retirement System] PERS may use the combined noncurrent service in order to meet the 10-year vesting requirement found at N.J.S.A. 43:15A-38 for a member of the PERS.

(b) If the prosecutor begins receipt of a Prosecutors Part retirement benefit prior to the date of eligibility to receive a PERS retirement benefit, the Prosecutors Part service credit shall be subtracted from the member's active account and any credited regular PERS service would remain. A retired member of the Prosecutors Part who does not have 10 or more years of credited regular PERS service remaining in the active account after the Prosecutors Part service is subtracted, and whose regular PERS account will not be active pursuant to N.J.S.A. 43:15A-7e when the member attains the age of 60 or the age of 62 for those members who enroll on or after November 2, 2008, cannot collect a benefit based on that service. An application for return of contributions made on the basis of such other public service, if no part of the service was used in the calculation of a retirement allowance or to qualify for payment of health benefits, may be approved.

17:2-8.9 Withdrawal from Prosecutors Part or regular PERS service

(a) (No change.)

(b) If a prosecutor is a member of the [Public Employees' Retirement System] PERS on the basis of other public service, no application for a return of contributions shall be approved until the prosecutor has terminated all service covered by the System and makes application for a return of all contributions made to the System. An application for return of contributions made on the basis of such other public service, if no part of the service was used in the calculation of a retirement allowance or to qualify for payment of health benefits, may be approved.

(c) (No change.)

17:2-8.12 Service retirement

(a) (No change.)

(b) A member who was employed as a prosecutor on January 7, 2002 may retire with 20 or more years of creditable Prosecutors Part service at any age by filing a [written] retirement application, duly attested, stating at what time subsequent to the execution and filing thereof the member desires to be retired.

(c) A member who was not employed as a prosecutor on January 7, 2002 may retire at age 55 by filing a [written] retirement application, duly attested, stating at what time subsequent to the execution and filing thereof the member desires to be retired.

(d) (No change.)

17:2-8.13 Eligibility for disability and accidental death retirement benefit

(a) A prosecutor who has a total of 10 years of nonconcurrent New Jersey service in the Prosecutors Part, regular [Public Employees' Retirement System] PERS, or a combination thereof, may be eligible for an ordinary disability retirement allowance as provided by N.J.S.A. 43:15A-42. The benefit shall be the same as that provided by N.J.S.A. 43:15A-45.

(b)-(d) (No change.)

17:2-8.14 Retirement date for prosecutors having both regular and Prosecutors Part [Public Employees' Retirement System] PERS service

(a) (No change.)

(b) A prosecutor who has both regular and Prosecutors Part PERS service may, after filing the necessary application, begin receipt of the Prosecutors Part benefit at age 55, or at any age with 20 or more years of service if the member was employed as a prosecutor as of January 7, 2002. The member may begin receipt of the remaining regular PERS benefit at age 60 or at age 62 for those members who enroll on or after November 2, 2008 based on the member's final average salary in the regular PERS covered position in accordance with the PERS retirement rules, so long as the member is vested in the regular PERS account, or the regular PERS account is still active pursuant to N.J.S.A. 43:15A-7e. The maximum amount of the PERS benefit shall be determined as of the effective date of retirement from the Prosecutors Part. Should a retired member of the Prosecutors Part return to employment prior to receipt of the regular PERS retirement benefit, that PERS benefit shall not increase and the provisions of N.J.A.C. 17:2-8.16 shall apply. If the member has 25 years or more of regular PERS service, the member may begin receipt of the regular PERS benefit at any age after filing the necessary application.

(c) (No change.)


TREASURY — GENERAL
DIVISION OF PENSIONS AND BENEFITS

41 N.J.R. 3040(a)

Proposed Amendment: N.J.A.C. 17:2-8.3

Public Employees' Retirement System, Prosecutors Part

Authorized By: Public Employees' Retirement System Board of Trustees, Kathleen Coates, Board Secretary.

Authority: N.J.S.A. 43:15A-17.

Calendar Reference: See Summary below for explanation of exception to calendar requirement.

Proposal Number: PRN 2009-239.

Submit comments by October 16, 2009 to:

Susanne Culliton
Administrative Practice Officer
Division of Pensions and Benefits
PO Box 295
Trenton, NJ 08625-0295

The agency proposal follows:

Summary

P.L. 2001, c. 366, which became law on January 7, 2002, established a separate part of the Public Employees' Retirement System (PERS), which has specific retirement benefits for prosecutors.

Chapter 366 established within the PERS a special Prosecutors Part for any county prosecutor, first assistant county prosecutor or assistant county prosecutor; the Director of the Division of Criminal Justice in the Department of the Law and Public Safety; any assistant director, deputy director, assistant attorney general or deputy attorney general employed by the Department of Law and Public Safety and assigned to the Division of Criminal Justice; and any criminal investigator in the Division of Criminal Justice ineligible for enrollment in the Police and Firemen's Retirement System (PFRS). These positions are defined as prosecutors for the purpose of this law. The prosecutors must serve as a prosecutor on or after the effective date of the law to be eligible in the Prosecutors Part.

P.L. 2001, c. 366, §3 provides that "prosecutors shall contribute at a rate established by the board..." this grants the Board the statutory authority to establish member contribution rates. Further, N.J.S.A. 43:15A-19, provides that at "least once in every 3-year period, the actuary shall make an actuarial investigation... and shall make a valuation of the assets and liability of the various funds created by this act." On December 18, 2002 the Board of Trustees established the initial contribution rate at 7.5 percent based on the recommendations of the Fund's actuary. The rate was effective January 7, 2002, the date Prosecutors Part was established.

N.J.A.C. 17:2-8, Prosecutors Part, was effective January 24, 2005 and will expire on January 24, 2010. The rate provisions were promulgated as part of these implementing rules for the Prosecutors Part and published as N.J.A.C. 17:2-8.3. The existing rule confirmed the rate of contribution that was previously established by the Board of Trustees and provided that the rate shall be reviewed by the System's actuaries and adjusted by the Board of Trustees as necessary.

The proposed amendments to N.J.A.C. 17:2-8.3, Contribution rate, amend subsections (a) and (b) to bring greater clarity to the procedure for review and adjustment of the contribution rate for Prosecutors Part. The proposed amendment to Existing subsection (a) deletes the 7.5 percent rate of contribution and provides that the Board shall establish the rate upon recommendation of the actuary using consistent and generally-accepted actuarial standards, as established by the Governmental Accounting Standards Board. This is the procedure that was initially used to establish the rate at 7.5 percent and is the procedure under which the current rate of 8.5 percent was established. This actuarial standard is required by law pursuant to N.J.S.A. 43:3C-13. Under the proposed amendment, the percentage rate established by the Board of Trustees is not set forth the rule.

Further, existing subsection (b) states that the rate of contribution shall be reviewed by the System's actuaries periodically and adjusted by the Board as necessary. The amendment to subsection (b) provides that the Board of Trustees will review the contribution rate at every three-year period as part of the valuation by the PERS's actuary and whenever the PERS, PFRS, Teachers' Pension and Annuity Fund (TPAF) or State Police Retirement System (SPRS) rate is adjusted by the Legislature. The proposed amendment provides that adjustments shall be made as necessary by the Board and that notice of any change in the rate shall be published through Notice in the New Jersey Register and shall become effective on the date authorized by the Board. This amendment provides additional notice to the public and effected employees of a contribution rate adjustment. Heretofore, notice of proposed changes in the rate is provided by the Board through action taken at its open pubic meeting and publication of its agenda in advance of its meetings. This provision will provide additional notice through publication of notice in the New Jersey Register. The change in rate will be effective at the date authorized by the Board.

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 is not subject to the provision of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

Social Impact

The proposed amendment to N.J.A.C. 17:2-8.3 will provide those eligible for the Prosecutors Part with clarification of contribution rates since they will be provide notice in the New Jersey Register of any changes to the rate and its effective date, rather than a fixed rule (for example, 7.5 percent) limited to N.J.A.C. 17:2-8.3(a).

The Board is not aware of any provisions in the proposed amendment that would impose any hardship or costs on the members of the State-administered retirement system in New Jersey or on the public in general.

Economic Impact

The proposed amendment provides an economic benefit by clarifying and detailing how the member contribution rate is established. Pursuant to the proposed amendment; the 7.5 percent as set forth in the rule (subsection (a)) will be deleted but actuary review and recommendations based on actuarial standards is required, Board action at a public meeting continues to be required, and the rule increases the notice afforded by requiring publication of an adjusted rate in the New Jersey Register. Accordingly, since these amendments clarify the existing method of establishing the contribution rate, there is no economic impact to the proposed amendment. The Division of Pensions and Benefits does not have any other information to provide an economic impact on this amendment.

Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 43:15A-17 governs the subject of the proposed amendment to N.J.A.C. 17:2-8.3, and there is no Federal requirement or standard that affects the subject to this rulemaking.

Jobs Impact

The Board does not anticipate any creation or loss of jobs as a result of the proposed amendment.

Agriculture Industry Impact

The proposed amendment will not have any impact on the agriculture industry.

Regulatory Flexibility Statement

A regulatory flexibility analysis is not required since the proposed amendment does not have any effect on small businesses as the term is defined in N.J.S.A. 52:14B-16 et seq., the Regulatory Flexibility Act, and only affects members of the Prosecutors Part of the Public Employee's Retirement System.

Smart Growth Impact

The proposed amendment will not have any impact on the achievement of smart growth and implementation of the State Development and Redevelopment Plan.

Housing Affordability Impact

Since the proposed amendment rules apply to the contribution rate of the Prosecutors Part of the Public Employee's Retirement System, it will have no impact on the average cost of housing or on affordable housing in New Jersey.

Smart Growth Development Impact

The proposed amendment will not have any impact on new construction with Planning Areas 1 and 2, or within designated centers, under the State Development and Redevelopment Plan and will have an insignificant impact on smart growth, as the rule pertains to the contribution rate of the Prosecutors Part of PERS.

Full text of the proposal follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):

SUBCHAPTER 8.    PROSECUTORS PART

17:2-8.3   Contribution rate

(a) The rate of contribution to the Prosecutors Part of the Public Employees' Retirement System shall be [7.5] a percent of base salary as established by the Board of Trustees. The amount of the members' contribution rate shall be established upon recommendation of the actuary using consistent and generally-accepted actuarial standards, as established by the Governmental Accounting Standards Board.

(b) The rate of contribution shall be reviewed by the System's actuaries periodically and adjusted by the Board as necessary. The Board of Trustees shall review the contribution rate at every three-year period as part of the valuation by the PERS System's actuary and whenever the PERS, PFRS, TPAF or SPRS rate is adjusted by the Legislature. A notice of any change in the rate shall be published through a notice in the New Jersey Register and shall become effective on the date authorized by the Board.


TREASURY — GENERAL
DIVISION OF PENSIONS AND BENEFITS
POLICE AND FIREMEN'S RETIREMENT SYSTEM

41 N.J.R. 2775(a)


Proposed Amendment: N.J.A.C. 17:4-4.1

Creditable Compensation
 
Authorized by: Police and Firemen's Retirement System Board of Trustees, Wendy Jamison, Secretary.
 
Authority: N.J.S.A. 43:16A-13(7).
 
Calendar Reference: See Summary below for explanation of exception to calendar requirement.
 
Proposal Number: PRN 2009-216.
 
Submit comments by September 18, 2009 to:

Susanne Culliton
Division of Pensions and Benefits
PO Box 295
Trenton, NJ 08625-0295

The agency proposal follows:
 
Summary

The Police and Firemen's Retirement System (PFRS) proposes to amend N.J.A.C. 17:4-4.1, Creditable compensation, due to concerns expressed regarding the term "base salary."

It is proposed that N.J.A.C. 17:4-4.1(a)1 and 2 be amended to clarify the meaning of "base salary" and delete subparagraph (a)2xiii in its entirety. Regarding the definition of the term "base salary" the amendments propose to include amounts paid as part of regular compensation only when it has been established that there are regular pension contributions paid. Further, subparagraph (a)2xiii is proposed to be deleted in its entirety as it is vague and ambiguous. The Board of Trustees has had difficulty administering this section, which has been referred by the regulated community as untenable.

A 60-day comment period is provided 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.
 
Social Impact

The proposed amendment will have a beneficial effect on members and on the PFRS. The amendment to base salary will clarify that amounts included in base compensation must have regular pension contributions remitted on a regular basis. The proposed amendment to N.J.A.C. 17:4-4.1(a)2xiii recognizes compensation as part of base salary without limiting the number of years of service for pension purposes.
 
Economic Impact

The proposed amendment will have a positive economic impact on the PFRS and all employers. This is because the rule recognizes base salary for pension calculation purposes and provides clarity, so all locations can understand what portion of salary is creditable.

The Division of Pensions and Benefits will continue to monitor the impact of the proposed amendment. The Division is not aware of any provisions in the proposed amendment that would impose any hardship or costs on PFRS members or on the public in general.
 
Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 43:16A-13(7) governs the subject of this rulemaking, and there is no Federal requirement or standard that affects the subject of this rulemaking.
 
Jobs Impact

The operation of the proposed amendment will not result in the generation or loss of jobs.

The Division of Pensions and Benefits invites any interested parties to submit any data or studies concerning the jobs impact of the proposed amendment with their written comments.
 
Agriculture Industry Impact

The proposed amendment will not have any impact on the agriculture industry.
 
Regulatory Flexibility Statement

The rules of the Police and Firemen's Retirement System only affect public employers, public employees and their dependents and beneficiaries. Thus, the proposed amendment does not impose any reporting, recordkeeping or other compliance requirements upon small businesses, as defined under the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq. Therefore, a regulatory flexibility analysis is not required.
 
Smart Growth Impact

The proposed amendment will not have any impact on the achievement of smart growth and implementation of the State Development and Redevelopment Plan.
 
Housing Affordability Impact

The proposed amendment will have an insignificant impact on affordable housing in New Jersey and there is an extreme unlikelihood that the rule would evoke a change in the average costs associated with housing because the rules pertain to creditable compensation for the members of the PFRS.
 
Smart Growth Development Impact

The proposed amendment will have an insignificant impact on smart growth and there is an extreme unlikelihood that the rule would evoke a change in housing production in Planning Areas 1 or 2 or within designated centers under the State Development and Redevelopment Plan in New Jersey because the rules pertain to creditable compensation for the members of the PFRS.
 
Full text of the proposal follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):
 
SUBCHAPTER 4. MEMBERSHIP
 
17:4-4.1   Creditable compensation
 
(a) The compensation of a member subject to pension contributions and creditable for retirement and death benefits in the system shall be limited to base salary, and shall not include extra compensation.
 
1. "Base salary" means [the annual] any amounts paid as part of regular compensation of a member, in accordance with established salary policies of the member's employer for all employees in the same position, or all employees covered by the same collective bargaining agreement[,] for which there are regular pension contributions paid, and which is paid in regular, periodic installments in accordance with the payroll cycle of the employer.
 
2. "Extra compensation" means individual salary adjustments, which are granted primarily in anticipation of a member's retirement or as additional remuneration for performing temporary duties beyond the regular workday. Forms of compensation that have been identified as extra compensation include, but are not limited to:
 
i.-x. (No change.)
 
xi. Any form of compensation, which is not included in the base salary of all employees in the same position or covered by the same collective bargaining agreement or employment policy who are members of the retirement system and who receive the compensation; and
 
xii. Retroactive increments or adjustments made at or near the end of a member's service, unless the adjustment was the result of an across-the-board adjustment for all similarly situate personnel[; and].
 
[xiii. Any form of compensation which is not included in a member's base salary during some of the member's service and is included in the member's base salary upon attainment of a specified number of years of service.]


TREASURY GENERAL
DIVISION OF PENSIONS AND BENEFITS

41 N.J.R. 1712(a)

Proposed Amendment: N.J.A.C. 17:2-2.1

Public Employees' Retirement System

Social Security Coverage

Authorized By: Public Employees' Retirement System Board of Trustees, Kathleen Coates, Secretary.

Authority: N.J.S.A. 43:15A-7 and 43:15A-17.

Calendar Reference: See Summary below for explanation of exception to calendar requirement.

Proposal Number: PRN 2009-106.

Submit comments by June 19, 2009 to:

Susanne Culliton
Division of Pensions and Benefits
PO Box 295
Trenton, NJ 08625-0295

The agency proposal follows:

Summary

The Public Employees' Retirement System (PERS) proposes to amend N.J.A.C. 17:2-2.1, Social Security coverage, as a result of legislative pension reform. P.L. 2008, c. 89 (Chapter 89) (codified at N.J.S.A. 43:15A-7), increases the salary threshold for participation and stipulates that the Director of the Division of Pensions and Benefits (Divisions) adjust the minimum annual salary each year, in accordance with changes in the Consumer Price Index (CPI). These changes will affect those individuals who become members of the system on or after November 2, 2008.

Chapter 89 provides the Division Director with the necessary authority to adjust the minimum annual salary each year, by regulation. As the higher salary threshold did not become effective until November 2, 2008 and adoption of the amendment cannot occur until 2009; the initial indexing of the minimum salary will not take place until the beginning of the calendar year following the adoption of the proposed amendment (January 1, 2010).

Chapter 89 requires the Director's annual adjustment to be in accordance with changes in the CPI but by no more than four percent. Further, the CPI is defined in Chapter 89 as "the average of the annual increase, expressed as a percentage, in the consumer price index for all urban consumers in the New York City and Philadelphia metropolitan statistical areas during the preceding calendar year as reported by the United States Department of Labor." The Division is required to provide the participating employers with the minimum annual salary before the end of each calendar year. However, the United States Department of Labor does not release the CPI data until after the end of each calendar year. Therefore, the Division is interpreting the use of "preceding year" to mean the last year in which CPI data is available. The Division therefore, proposes to use data from the prior year in the calculation to ensure that employers can receive these updates well in advance of the new calendar year.

To determine the annual minimum dollar amount the Division will divide the CPI index from New York City (NYC) and from Philadelphia (PH) for the first full calendar year prior to July 31 of the current year by the CPI of NYC and PH for the second full calendar year prior to July 31 of the current year. The percentage of increase shall be no less than zero and no more than four percent for any given year. Further, the final calculated dollar amount shall be rounded down to the nearest $ 100.00.

At N.J.A.C. 17:2-2.1, the Division proposes to delete the heading, "Social Security coverage" and add the new heading "Enrollment eligibility." The heading will then reflect the addition of a salary requirement, which is also a prerequisite for participation in the PERS. Subsection (a) is amended to further clarify that the position must be covered by Social Security. Also, since both subsection (a) and (b) discuss Social Security coverage, subsection (b) is being merged with existing subsection (a). New subsections (b) and (c) are proposed to identify those who will be affected by the changes to the law (employees hired after November 2, 2008) and also to define the method in which the annual dollar threshold will be indexed on a yearly basis, as discussed above. New paragraphs (b)1 through 3 are added to explain the Division's procedure for calculating the adjustment to the minimum annual salary. Proposed new subsection (d) contains a description of how the Division will adjust the minimum annual base salary. The example that follows shows how the Division would calculate the 2009 minimum annual base salary, if such a calculation were to be made:


(Annual NYC CPI 2007 +
Annual PH CPI 2007)
------------------------- X $7,500=2009 minimum compensation amount
(Annual NYC CPI 2006 +
(Annual PH CPI 2006)


(226.940+ 216.743)
--------------------- X $7,500=2009 minimum compensation amount
(220.700+ 212.100)

(443.683)
------------ X $7,500=2009 minimum compensation amount
(432.8)

1.025 x $ 7,500 = 2009 minimum annual base salary

$ 7,687.50 = 2009 minimum annual base salary (not rounded)

$ 7,600 = 2009 minimum annual base salary (rounded)

As the Division has provided a 60-day comment period on this notice of proposal, this notice is excepted from the rulemaking calendar requirement pursuant to N.J.A.C. 1:30-3.3(a)5.

Social Impact

The proposed amendment benefits the members, retirees, beneficiaries and participating employers of the various pension systems. These members rely on the efficient operation of the pension systems to provide them with monthly retirement benefits, with proper crediting of service, with death benefits and with the information they need regarding their individual accounts. They also rely upon the presence and predictability of the rules, which guide the administration of their benefits. The protections and guarantees that these rules afford its members mandate their continued existence.

Economic Impact

The rules of the Public Employees' Retirement System provide for the efficient operation of the pension systems administered by the State of New Jersey. The efficient operation of the system provides a benefit to members and retirees, as well as to public employers, by allowing for the timely delivery of retirement benefits.

The proposed amendments will not present any economic effects on the public; but rather provide employers with the minimum annual salary upon which employees shall be eligible for enrollment in the retirement system, pursuant to Chapter 89. The proposed amendments will also help the Division continue to provide for the continued delivery of retirement benefits, as well as the proper accounting of members' service credit and contributions to the pension systems without change. Further, the proposed amendments will now, and in the future, enable the Division to continue to provide for the retirement benefits of the retirees in a manner that more than adequately, meets the statutory and contractual requirements.

Without the administrative rules to provide for the efficient operation of the pension systems, financial chaos may occur, thus adversely affecting the taxpayers whose employee contributions help to fund the systems.

Federal Standards Statement

A Federal standards analysis is not required for the proposed amendments because there are no Federal requirements or standards that affect the subject of this rulemaking, except that there is reference to compliance with the Consumer Price Index as reported by the United States Department of Labor, Bureau of Labor Statistics, but this standard is not exceeded.

Jobs Impact

The operation of the proposed amendments will not result in the generation or loss of jobs. The Division invites any interested parties to submit any data or studies concerning the jobs impact of these proposed amendments with their written comments.

Agriculture Industry Impact

The proposed amendments will not have an impact on the agriculture industry.

Regulatory Flexibility Statement

A regulatory flexibility analysis is not required because the proposed amendments have no affect on small businesses as the term is defined in N.J.S.A. 52:14B-16 et seq., and only affects members and retirees of the public pension systems in New Jersey.

Smart Growth Impact

The proposed amendments will not have any impact on the achievement of smart growth and implementation of the State Development and Redevelopment Plan.

Housing Affordability Impact

The proposed amendment will have an insignificant impact on affordable housing in New Jersey and there is an extreme unlikelihood that the rule would evoke a change in the average costs associated with housing because the rule only applies to how the PERS minimum salary requirements will be annually updated.

Smart Growth Development Impact

The proposed amendment will have an insignificant impact on smart growth and there is an extreme unlikelihood that the rule would evoke a change in housing production in Planning Areas 1 or 2 or within designated centers under the State Development and Redevelopment Plan in New Jersey because the rule only applies to how the PERS minimum salary requirements will be annually updated.

Full text of the proposal follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):

SUBCHAPTER. 2. ENROLLMENT

17:2-2.1 [Social Security coverage] Enrollment eligibility

(a) [Social Security coverage as a public employee is] A position with a public employer must be covered by Social Security as a prerequisite for membership in the system. [(b)] In the case of multiple employments, Social Security coverage is required in each position or employment for each to qualify for membership.

(b) Subsection (c) below shall only be applicable to individuals who become members of PERS on or after November 2, 2008.

(c) Pursuant to the provisions of N.J.S.A. 43:15A-7, the $ 7,500 minimum annual base salary for participation in the retirement system shall be adjusted annually by the Director of the Division in accordance with changes in the Consumer Price Index, but by no more than four percent. For the calendar year beginning January 1, 2010, the minimum base annual salary required for enrollment will be adjusted annually to reflect increases in the Consumer Price Index. For purposes of this calculation, "Consumer Price Index" means the average of the annual increase in the consumer price index for all urban consumers, not seasonally adjusted for all items, in the New York City and Philadelphia metropolitan statistical areas during the preceding calendar year as reported by the United States Department of Labor, Bureau of Labor Statistics.

1. The adjustment factor for a calendar year shall be calculated as a fraction, pursuant to the following:

i. The numerator shall be the annual Consumer Price Index for all urban consumers in the New York City metropolitan statistical area for the calendar year ending December 31 of the first year preceding the July 1 calculation date, plus the annual Consumer Price Index for all urban consumers in the Philadelphia metropolitan statistical area for the same time period; and

ii. The denominator shall be the annual Consumer Price Index for all urban consumers in the New York City metropolitan statistical area for the calendar year ending December 31 of the second year preceding the July 1 calculation date, plus the annual Consumer Price Index for all urban consumers in the Philadelphia metropolitan statistical area for the same time period.

2. If the value of the calculation in (c)1 above is less than zero for a calendar year, then the adjustment factor for the calendar year shall be equal to zero. If the value of that fraction is greater than 1.04 for a calendar year, then the adjustment factor for the calendar year shall be equal to 1.04.

3. The adjustment shall be calculated on or about July 1 each calendar year to become effective on January 1 of the subsequent calendar year.

4. Increases in the minimum annual base salary shall be made in multiples of $ 100.00, except that any increase, which is not a multiple of $ 100.00 will be rounded to the next lowest multiple of $ 100.00. Each annual adjustment shall not be more than four percent when compared to the preceding year's minimum annual base salary.

(d) The calculation and any needed adjustments pursuant to (c) above shall be published via a notice of administrative change in the New Jersey Register revising the minimum annual base salary.


TREASURY GENERAL
DIVISION OF PENSIONS AND BENEFITS

41 N.J.R. 1713(a)

Proposed Amendment: N.J.A.C. 17:3-2.1

Teachers' Pension and Annuity Fund
 
Enrollment Eligibility
 
Authorized By: Teachers' Pension and Annuity Fund Board of Trustees, Mary Ellen Rathbun, Secretary.
 
Authority: N.J.S.A. 18A:66-4 and 18A:66-56.
 
Calendar Reference: See Summary below for explanation of exception to calendar requirement.
 
Proposal Number:
PRN 2009-105.
 
Submit comments by June 19, 2009 to:
   Susanne Culliton
   Division of Pensions and Benefits
   PO Box 295
   Trenton, NJ 08625-0295
 
The agency proposal follows:
 
Summary

The Teachers' Pension and Annuity Fund (TPAF or Fund) proposes to amend N.J.A.C. 17:3-2.1, Enrollment eligibility, as a result of legislative pension reform. P.L. 2008, c. 89 (Chapter 89) (codified at N.J.S.A. 18A:66-4), increases the salary threshold for participation and stipulates that the Director of the Division of Pensions and Benefits (Division) adjust the minimum annual salary each year, in accordance with changes in the Consumer Price Index (CPI). These changes will affect those individuals who become members of the Fund on or after November 2, 2008.

Chapter 89 provides the Division Director with the necessary authority to adjust the minimum annual salary each year, by regulation. As the higher salary threshold did not become effective until November 2, 2008, and adoption of the amendment cannot occur until 2009; the initial indexing of the minimum salary will not take place until the beginning of the calendar year following the adoption of the proposed amendment (January 1, 2010).

Chapter 89 requires the Director's annual adjustment to be in accordance with changes in the CPI, but by no more than four percent. Further, the CPI is defined in Chapter 89 as "the average of the annual increase, expressed as a percentage, in the consumer price index for all urban consumers in the New York City and Philadelphia metropolitan statistical areas during the preceding calendar year as reported by the United States Department of Labor." The Division is required to provide the participating employers with the minimum annual salary before the end of each calendar year. However, the United States Department of Labor does not release the CPI data until after the end of each calendar year. Therefore, the Division is interpreting the use of "preceding year" to mean the last year in which CPI data is available. The Division therefore, proposes to use data from the prior year in the calculation to ensure that employers can receive these updates well in advance of the new calendar year.

To determine the annual minimum dollar amount the Division will divide the CPI index from New York City (NYC) and from Philadelphia (PH) for the first full calendar year prior to July 31 of the current year by the CPI of NYC and PH for the second full calendar year prior to July 31 of the current year. The percentage of increase shall be no less than zero and no more than four percent for any given year. Further, the final calculated dollar amount shall be rounded down to the nearest $ 100.00.

At N.J.A.C. 17:3-2.1(a)3, the Division proposes to add language to clarify that the salary of $ 500.00 per year for the position is only applicable for individuals who became members of the TPAF prior to November 2, 2008. New subsection (g) is added to identify those who will be affected by the changes to the law (employees hired on or after November 2, 2008) and also to define the method in which the annual dollar threshold will be indexed on a yearly basis, as discussed above. New paragraphs (g)1 through 4 are added to explain the Division's procedure for calculating the adjustment to the minimum annual salary. Proposed new subsection (h) contains a description of how the Division will adjust the minimum annual base salary.

The example that follows shows how the Division would calculate the 2009 minimum annual base salary, if such a calculation were to be made:
 
 
(Annual NYC CPI 2007 +
Annual PH CPI 2007)
----------------------  X $7,500=2009 minimum compensation amount
(Annual NYC CPI 2006 +
(Annual PH CPI 2006)

 
(226.940+ 216.743)
-------------------  X $7,500=2009 minimum compensation amount
(220.700+ 212.100)
 
(443.683)
----------  X $7,500=2009 minimum compensation amount
(432.8)


1.025 x $ 7,500 = 2009 minimum annual base salary

$ 7,687.50 = 2009 minimum annual base salary (not rounded)

$ 7,600 = 2009 minimum annual base salary (rounded)

As the Division has provided a 60-day comment period on this notice of proposal, this notice is excepted from the rulemaking calendar requirement pursuant to N.J.A.C. 1:30-3.3(a)5.
 
Social Impact

The proposed amendments benefit the members, retirees, beneficiaries and participating employers of the various pension systems. These members rely on the efficient operation of the pension systems to provide them with monthly retirement benefits, with proper crediting of service, with death benefits and with the information they need regarding their individual accounts. They also rely upon the presence and predictability of the rules, which guide the administration of their benefits. The protections and guarantees that these rules afford its members mandate their continued existence.
 
Economic Impact

The rules of the Teachers' Pension and Annuity Fund provide for the efficient operation of the pension systems administered by the State of New Jersey. The efficient operation of the system provides a benefit to members and retirees, as well as to public employers, by allowing for the timely delivery of retirement benefits.

The proposed amendments will not present any economic effects on the public; but rather provide employers with the minimum annual salary upon which employees shall be eligible for enrollment and continued participation in the retirement system, pursuant to Chapter 89. The proposed amendments will also help the Division continue to provide for the continued delivery of retirement benefits, as well as the proper accounting of members' service credit and contributions to the pension systems without change. Further, the proposed amendments will now, and in the future, enable the Division to continue to provide for the retirement benefits of the retirees in a manner that more than adequately, meets the statutory and contractual requirements.

Without the administrative rules to provide for the efficient operation of the pension systems, financial chaos may occur, thus adversely affecting the taxpayers whose employee contributions help to fund the systems.
 
Federal Standards Statement

A Federal standards analysis is not required for the proposed amendments because there are no Federal requirements or standards that affect the subject of this rulemaking, except that there is reference to compliance with the Consumer Price Index as reported by the United States Department of Labor, Bureau of Labor Statistics, but this standard is not exceeded.
 
Jobs Impact

The operation of the proposed amendments will not result in the generation or loss of jobs. The Division invites any interested parties to submit any data or studies concerning the jobs impact of this proposed amendment with their written comments.
 
Agriculture Industry Impact

The proposed amendment will not have an impact on the agriculture industry.
 
Regulatory Flexibility Statement

A regulatory flexibility analysis is not required because the proposed amendment has no affect on small businesses as the term is defined in N.J.S.A. 52:14B-16 et seq., and only affects members and retirees of the public pension systems in New Jersey.
 
Smart Growth Impact

The proposed amendment will not have any impact on the achievement of smart growth and implementation of the State Development and Redevelopment Plan.
 
Housing Affordability Impact

The proposed amendments will have an insignificant impact on affordable housing in New Jersey and there is an extreme unlikelihood that the rule would evoke a change in the average costs associated with housing because the rule only applies to how the TPAF minimum salary requirements will be annually updated.
 
Smart Growth Development Impact

The proposed amendments will have an insignificant impact on smart growth and there is an extreme unlikelihood that the rule would evoke a change in housing production in Planning Areas 1 or 2 or within designated centers under the State Development and Redevelopment Plan in New Jersey because the rule only applies to how the TPAF minimum salary requirements will be annually updated.
 
Full text of the proposal follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):
 
SUBCHAPTER 2.    ENROLLMENT
 
17:3-2.1   Enrollment eligibility
 
(a) Any person appointed by the State, local board of education[,] or charter school to a position listed in the definition of "teacher" found at N.J.S.A. 18A:66-2(p) or as a regular, full-time or part-time employee in a position that meets the following conditions shall be required to become a member of the Fund effective as of the date of their employment:
 
1. - 2. (No change)
 
3. [The] Prior to November 2, 2008, the salary for the position is $ 500.00 or more within a year.
 
(b)-(f) (No change)
 
(g) Pursuant to the provisions of N.J.S.A. 18A:66-4, for individuals who became members of TPAF on or after November 2, 2008, the $ 7,500 minimum annual base salary for participation in the retirement system shall be adjusted annually by the Director of the Division in accordance with changes in the Consumer Price Index, but by no more than four percent. For the calendar year beginning January 1, 2010, the minimum base annual salary required for enrollment will be adjusted annually to reflect increases in the Consumer Price Index. For purposes of this calculation, "Consumer Price Index" means the average of the annual increase in the consumer price index for all urban consumers, not seasonally adjusted for all items, in the New York City and Philadelphia metropolitan statistical areas during the preceding calendar year as reported by the United States Department of Labor, Bureau of Labor Statistics.
 
1. The adjustment factor for a calendar year shall be calculated as a fraction, pursuant to the following:
 
i. The numerator shall be the annual Consumer Price Index for all urban consumers in the New York City metropolitan statistical area for the calendar year ending December 31 of the first year preceding the July 1 calculation date, plus the annual Consumer Price Index for all urban consumers in the Philadelphia metropolitan statistical area for the same time period; and
 
ii. The denominator shall be the annual Consumer Price Index for all urban consumers in the New York City metropolitan statistical area for the calendar year ending December 31 of the second year preceding the July 1 calculation date, plus the annual Consumer Price Index for all urban consumers in the Philadelphia metropolitan statistical area for the same time period.
 
2. If the value of the calculation in (g)1 above is less than zero for a calendar year, then the adjustment factor for the calendar year shall be equal to zero. If the value of that fraction is greater than 1.04 for a calendar year then the adjustment factor for the calendar year shall be equal to 1.04.
 
3. The adjustment shall be calculated on or about July 1 each calendar year to become effective on January 1 of the subsequent calendar year.
 
4. Increases in the minimum annual base salary shall be made in multiples of $ 100.00, except that any increase, which is not a multiple of $ 100.00 will be rounded to the next lowest multiple of $ 100.00. Each annual adjustment shall not be more than four percent when compared to the preceding year's minimum annual base salary.
 
(h) The calculation and any needed adjustment pursuant to (g) above shall be published via a notice of administrative change in the New Jersey Register revising the minimum annual base salary.


TREASURY GENERAL
DIVISION OF PENSIONS AND BENEFITS

41 N.J.R. 101(a)

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

Proposed New Rule: N.J.A.C. 17:9-1.9

Proposed Repeal and New Rule: N.J.A.C. 17:9-5.9

State Health Benefits Program

Authorized By: State Health Benefits Commission, Frederick J. Beaver, Secretary.

Authority: N.J.S.A. 52:14-17.27.

Calendar Reference: See Summary below for explanation of exception to calendar requirement.

Proposal Number: PRN 2009-23.

Submit comments by March 6, 2009 to:

Susanne Culliton
Assistant Director
Division of Pensions and Benefits
PO Box 295
Trenton, NJ 08625-0295

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) within N.J.A.C. 17:9. When the Commission becomes aware of a change in the laws or a court decision that affects the SHBP, the administrative rules are reviewed and, 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. As the Commission has provided a 60-day comment period, this proposal is excepted from the rulemaking calendar requirement pursuant to N.J.A.C. 1:30-3.3(a)(5).

Accordingly, the Commission proposes to readopt the current rules within N.J.A.C. 17:9, which expire on April 7, 2009, pursuant to N.J.S.A. 52:14B-5.1c with the following amendments, deletions and new rules. 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 SHBP 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 and new rules reflect the requirements for eligibility, enrollments, charges and terminations that are mandated within the statutes governing the SHBP. Chapter 9 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 thereafter readopted in 1993, 1998 and 2003.

Subchapter 1. Administration

N.J.A.C. 17:9-1 addresses Commission meetings, the issue of what is considered a public record, appeals from Commission decisions, employer participation in the SHBP, the voluntary termination of employers, and the required notice of termination, the default of an employer, prohibition of employer incentives for non-enrollment, definitions of words and terms used in this chapter. Amendments to N.J.A.C. 17:9-1.1 are proposed to provide clarity as to the notice required by the Open Public Meetings Act, N.J.S.A. 10:4-13, and reflect the changes made in the composition of the Commission. Specifically, the reference to the Public Employees' Committee of the AFL-CIO or the New Jersey Education Association is deleted from the text since the enactment of P.L. 2007, c. 103 created the School Employees' Health Benefits Commission. Additionally, the rule has been amended to reflect that if State Ethics Commission training is required, the Commission members shall complete same prior to hearing any appeals before the Commission. N.J.A.C. 17:9-1.2, Records, addresses meeting minutes and their availability to the public. The amendments proposed provide that minutes of the Commission meetings may be inspected under supervision of a representative of the SHBP or other representatives of the office, and not the Manager of Policy and Planning. The minutes of closed sessions pertaining to individual claims information or any other personal information will be redacted in compliance with the Federal Health Insurance Portability and Accountability Act of 1996 (HIPAA). Additionally, the Division of Pensions and Benefits is referred to as the Division throughout the text and is defined at N.J.A.C. 17:9-1.8.

N.J.A.C. 17:9-1.3, Appeals from Commission decisions, refers to members who disagree with the decision of the claims administrator and have exhausted all appeals within the plan, and who may request that the matter be considered by the Commission. The Commission is also responsible for notifying members in writing of all Commission decisions. Amendments are proposed in this section by deleting reference to the Traditional Plan since it is no longer offered in the statute. The State Health Benefits Commission is referred to as Commission and the State Health Benefits Program is referred to as SHBP throughout the text of the rule and both are defined at N.J.A.C. 17:9-1.8. Thus, subsection (a) refers to the SHBP in its entirety. Subsection (b) has been deleted in its entirety as it refers to NJ PLUS and has been revised through the amendments to subsection (a).

N.J.A.C. 17:9-1.4, Employer participation, addresses employers joining the SHBP and their responsibility to adopt a resolution furnished by the Division to comply with the statutes and rules associated with the SHBP. An amendment is proposed to remove the reference to the State Health Benefits Commission by referring to it as the Commission.

N.J.A.C. 17:9-1.5, Voluntary termination of employer; notice, addresses when a participating employer voluntarily terminates coverage for the employer's active and retired employees a resolution must be received by the Commission and all active employees must receive notification of the termination of coverage. The Division will notify the COBRA participants and retired members of the termination of coverage. Amendments are proposed in subsection (a) to require the governing body of the local employer and State independent authorities to approve a resolution to terminate. In subsections (b) and (d), the reference to N.J.S.A. 52:14-17.29k was added to the list of individuals to receive notice of termination of coverage. In subsection (d) the Division also amended the COBRA language.

N.J.A.C. 17:9-1.6, Default of employer; notice, refers to participating employers that do not provide payment to the SHBP and are considered in default after 31 days of the coverage period for which charges were due. Amendments are proposed in this section to include the offices of the State Treasurer and the Department of Community Affairs. The reference to Local Finance is changed to the Division of Local Government Service to accurately reflect the title of the agency. The reference to the Alternative Benefits Program carriers is deleted as these carriers are no longer responsible for deducting any SHBP cost from their distributions. Any such costs are billed directly by the SHBP. Subsection (b) was further amended to include those participants eligible to be enrolled pursuant to N.J.S.A. 52:14-17.29k. Lastly, subsection (c) was added to reflect the requirement of P.L. 2008, c. 24, that the Division of Revenue shall be responsible for collecting any outstanding debt.

N.J.A.C. 17:9-1.7, Employer incentives for non-enrollment, addresses local employers other than the State that offer an incentive to waive coverage if that employee is eligible for other health coverage. The word prohibited was deleted from the heading as the rule deals with when an incentive for waiver of coverage is permitted. Amendments are proposed in subsection (a) to eliminate all references to the former chapter laws to provide for one reference to the current statute providing clarity in reading. Subsection (b) reflects the change in the law that expanded to all local employers the option to offer an incentive for waiver of coverage, pursuant to P.L. 2007, c. 92. Subsection (c) was added to eliminate confusion about the need to file a resolution for adoption of the wavier incentive.

N.J.A.C. 17:9-1.8 Definitions, pertains to words and terms frequently used in this chapter. Amendments are proposed in this section. Specifically, base salary was removed as it has differing definitions throughout the rules and is defined within each rule that uses the term. "Category of coverage" has been amended to include member and spouse/partner and whether prescription drug coverage is provided in the health coverage and to update the reference to retirees with Medicare coverage. The following words and terms, which are used in the rules are added: Chapter 375 Dependents; civil union partner; COBRA, dependent; Director; Division; eligible employer; local-administered pension fund; local employer; member; NJ DIRECT 10; NJ DIRECT 15; participating local employers; pension fund; PPO; SHBP (as the acronym used to replace all references to the State Health Benefits Program) spouse; State-administered pension fund; State employer; State biweekly employer; State monthly employer; and successor plan. The phrases "State biweekly sub-group" and "State monthly sub-group" have been deleted since they are subcategories of the definition eligible State employer and have been individually defined. The term "subscriber" is deleted from the rules, since the term "participants" can be inserted for both members and employer groups.

New N.J.A.C. 17:9-1.9, Certifying officer (employer), pertains to the responsibilities and duties of the certifying officer as described in N.J.S.A. 52:14-17.43. Proposed new rule 17:9-1.9 is added to further clarify the duties and responsibilities of the certifying officer, since it has never been specifically defined under the SHBP. The addition identifies the duties and provides consistency in the relationship between the Division and local employers who also participate in the various State-administered pension systems.

Subchapter 2. Coverage

N.J.A.C. 17:9-2.1, Enrollment and charges, addresses employee eligibility for enrollment in the SHBP. Amendments are proposed in this section. The word "charges" is deleted from the heading, since N.J.A.C. 17:9-5.3 addresses charges. Local participating employers are removed to clarify that those eligible employees and their dependents must enroll in the same plan. The enactment of P.L. 2007, c. 62, provided for premium sharing for local employee coverage, which was previously prohibited and therefore allows for local employers to negotiate, through the collective bargaining process, the employee health benefit coverage.

N.J.A.C. 17:9-2.2, Enrollment form, describes the responsibility of the employee to file an enrollment form and supply appropriate legal documentation verifying dependent relationship. Amendments are proposed in this section. The proposed amendments provide clarification that appropriate legal documentation verifying the dependent's relationship with the subscriber is required before enrollment is approved. The examples of appropriate legal documentation are set forth at N.J.A.C. 17:9-3.3(a). In addition, if more than 60 days pass since the first eligibility for enrollment, then the employee may file the enrollment during the next open enrollment period with coverage to be effective according to the schedule for that open enrollment.

N.J.A.C. 17:9-2.3, Annual open enrollment period, describes the procedures associated with the open enrollment period. Amendments are proposed in this section. These proposed amendments would add the phrase "according to the schedule for that open enrollment period," for the same reasons set forth above.

N.J.A.C. 17:9-2.4, Coverage changes; exceptions, describes the types of coverage changes that are permitted and the responsibility of the employee to report such changes by completing the required enrollment form. Amendments are proposed in this section. The proposed amendments would provide clarification throughout this section to include civil unions since the State of New Jersey recognizes these partnership as having all the rights and privileges as married couples. In paragraph (a)8, the circumstances for a child resuming eligibility as a dependent are defined and an application is required within 60 days of the qualifying event. New paragraph (a)11 is added to codify the provisions of P.L. 2007 c. 62, which allows local employers the flexibility to negotiate health benefits with employees. Local employer contracts provide for a variety of health plan arrangements and this section permits the employer to implement those provisions at other times besides regular open enrollment.

N.J.A.C. 17:9-2.5, Employee coverage requirements, addresses the conditions and requirements in which coverage shall become effective. Amendments are proposed in this section in that a new paragraph (a)6 is included to codify the requirement that employees must provide full legal documentation in order to cover dependents.

N.J.A.C. 17:9-2.6, Effective date for new hires; State employees and dependents, addresses the procedure to establish an effective date of coverage. There are no amendments proposed.

N.J.A.C. 17:9-2.7, Effective date for new hires; local employees and dependents, refers to the procedure to establish an effective date for the local employee. There are no amendments proposed.

N.J.A.C. 17:9-2.8, Transfers, addresses the procedure and requirements for transferring an employee from one SHBP participating employer to another. There are no amendments proposed.

N.J.A.C. 17:9-2.9, HMO; elections, addresses service area for a participating HMO and procedure should a subscriber move out of the HMO service area. Proposed amendments to paragraph (b)2 remove the text referring to the "Traditional Plan, NJ PLUS or an eligible HMO." Since the enactment of P.L. 2007, c. 103, these plans have been replaced with a successor plan to the Traditional and NJ PLUS plans, NJ DIRECT 10 and NJ DIRECT 15, respectively, as well as two eligible HMOs.

N.J.A.C. 17:9-2.10, Coverage for survivors-death of active employee, addresses the continuity of coverage in the event of accidental or ordinary death of subscriber. Amendments are proposed in this section, which include the addition of civil union partners and, in subsection (c), retroactive coverage for up to one year may be granted to the eligible survivor provided payment of health benefits charges is made. This is to clarify the existing administrative procedures for coverage of survivors in the death of an active employee. The one-year limit is consistent with current Division practice and reflects annual budgeting processes for both State and local employers.

In N.J.A.C. 17:9-2.11, the heading has been amended to "Out-of-network, NJ DIRECT; eligible charges at enrollment (local employees)" and only the plan names have been changed in this section. The proposed amendments reflect the plans available in the SHBP. Subsection (a), (b) and (c) are amended to delete the Traditional Plan, major medical coverage or NJ PLUS and include NJ DIRECT, since the enactment of P.L. 2007, c. 103. Subsection (c) is further amended to remove language pertaining to charges that would have been paid by the "basic plan," if the employee had such coverage. This statement no longer applies to current health benefit contracts and is referring to an obsolete plan design.

N.J.A.C. 17:9-2.12, Extension of coverage charges, addresses the charges associated with the payment of claims in respect to illness while under the extension provisions. There are no amendments to this section.

N.J.A.C. 17:9-2.13, Duplication of benefits, details that benefits under two plans cannot duplicate each other. Therefore, they are not considered eligible for reimbursement under the employee's medical plan. There are no amendments in this section.

N.J.A.C. 17:9-2.14, Policy provisions adoption, addresses the provisions contained in the SHBP contracts. This section is amended to include the prescription drug plan, since it is a benefit available under the SHBP and its provisions are included in the SHBP contracts. Also, reference to the plans' handbook supplements the master contracts are included to clarify that the plans' provisions can periodically change and these amendments can be readily updated through the plans' handbooks.

Subchapter 3. Dependents

The Commission proposes to amend N.J.A.C. 17:9-3.1 and 3.2 to include civil union partners throughout the sections.

N.J.A.C. 17:9-3.1, Dependents and children defined, addresses words and terms used in this chapter. A minor amendment has been made to this section in that civil union partners have been added.

In N.J.A.C. 17:9-3.2, Military service, dependents that enlist in the military service shall not be considered eligible for coverage during military service. A minor amendment has been made to this section in that the phrase civil union partner is added.

N.J.A.C. 17:9-3.3, Certification of dependency, addresses the issue that appropriate documentation must be submitted for each dependent to be enrolled verifying the dependent's relationship with the subscriber. This section is amended to clarify existing administrative procedure that appropriate legal documentation for each dependent to be enrolled verifying the dependent's relationship with the subscriber must be provided with the health benefit enrollment application. Examples of acceptable documentation are relocated from subsection (b) to (a).

N.J.A.C. 17:9-3.4, Children with disabilities age 23 or older; determination of eligibility for continuation of coverage, describes the procedure for the continuation of coverage for children with disabilities.

N.J.A.C. 17:9-3.5, Multiple coverage; employee and spouse, addresses the procedures associated with any plan offered by the SHBP other than an HMO, an employee who is the spouse or eligible partner of another employee may elect to forego coverage as an employee and be enrolled for coverage as a dependent. The amendments in this section refers to any plan other than a HMO. Further, the language is amended to remove Traditional Plan coverage and include civil union partner throughout the section.

Subchapter 4. Employees

N.J.A.C. 17:9-4.1, State employee defined; 4.2, State; full-time defined; and 4.3, Ineligible employees defined; are all proposed without change.

N.J.A.C. 17:9-4.4, State; ineligible employees defined, college or university or payroll agencies identified in N.J.A.C. 17:9-4.1 are added to paragraph (a)5, to more accurately reflect current administrative practice.

N.J.A.C. 17:9-4.5, Local; employee defined is proposed without change.

At N.J.A.C. 17:9-4.6, Local; full-time defined, the Commission proposes an amendment to subsection (b) to remove the Department of Personnel's rulemaking authority, since the enactment of P.L. 2008, c. 29 abolished this Department.

N.J.A.C. 17:9-4.7, Multiple positions, addresses full-time employment of an employee who holds multiple positions with the same employer; no changes are proposed in this section.

Subchapter 5. Charges

N.J.A.C. 17:9-5.1, Separate experience; State and Local, refers to the experience of claims for the purposes of determining rates. There are no changes in this section.

In N.J.A.C. 17:9-5.2, Charges; interest charge, the Commission proposes an amendment to remove the language referencing the Traditional Plan since this plan has been eliminated as a result of the enactment of P.L. 2007, c. 103. The employer may request a premium delay of 30 or 60 days after the customary due date for such charges.

In N.J.A.C. 17:9-5.3, Local Employer payment of charges, the obligations of the participating employer other than the State to pay premium or periodic charges for health benefits coverage may be determined by means of a binding collective negotiations agreement. The proposed amendment to subsection (b) includes the language that "in the absence of any collective negotiations agreement, the employer may modify the payment obligations as it deems appropriate." This addition better reflects current administrative practice since there are employees that have no collective bargaining unit.

N.J.A.C. 17:9-5.4, Local employer resolution; P.L. 1974, c. 88; P.L. 1979, c. 54; P.L. 1999, c. 48, describes the requirements of these statutes. Only minor amendments have been proposed in this section. The proposed amendments to this section include the language "partners" referring to both domestic and civil union partners. Also, reference to the Traditional Plan and NJ PLUS is removed and is replaced with NJ DIRECT. In addition, subsection (e) is amended to require that the employee must meet the retirement system service credit and employment service requirement established by the resolution adopting the provisions of P.L. 1999, c. 48. This addition clarifies current administrative practice.

N.J.A.C. 17:9-5.5, Medicare refunds, describes the procedure for reimbursements made for Medicare Part B. Amendments are proposed in this section to include the use of the phrase civil union partner throughout, along with a technical correction.

N.J.A.C. 17:9-5.6, Refunds rejected, addresses refunds that are requested and denied. The Commission proposes to remove the word "domestic" since the word "partner" includes both domestic and civil union partners.

N.J.A.C. 17:9-5.7, Retroactive charges; payment due, addresses the calculation of charges when retroactive periods of coverage are involved. There are no changes in this section.

In N.J.A.C. 17:9-5.8, Charges and coverage; 10-month employees, employees hired on a 10-month contract shall have any premiums deducted from their wages they receive in September to establish coverage at the beginning of their employment. There are no changes in this section.

N.J.A.C. 17:9-5.9, Premium-sharing for active employee State Health Benefits Coverage, is proposed for repeal and replaced with a new rule, Health contribution for active employee State Health Benefit Coverage, which states, pursuant to P.L. 2007, c. 103, codified at N.J.S.A. 51:14-17.28b, a deduction in the amount of 1.5 percent of base salary shall be made for each covered employee. The new rule further states that for purposes of this section, base salary is defined as an employee's annual base salary, not including any bonuses, overtime or longevity payment.

Subchapter 6. Retirement

N.J.A.C. 17:9-6.1, Retired employee defined, is amended at paragraph (b)2 and subparagraph (b)3ii to delete the words "employer-paid" since some retired employees of educational and local employers participating in this program may not be eligible for employer-paid coverage but may be eligible for continuing coverage at their own cost. Thus, the words were unnecessary and were eliminated to avoid confusion. In subparagraph (b)4iii, the language "either directly or through the retirement system or fund" is deleted, since the enactment of P.L. 2007, c. 103 created a separate fund outside of the pension plans for funding and payment of post-retirement medical benefits for retired State and educational employees. In addition, in subsections (d) and (h) civil union is added and domestic is removed since the language "partner" refers to both domestic and civil union partners. At subsection (i), the language "or terminates" is deleted because a retired employee can waive a specific coverage, if necessary. If the retired employee "terminates" from coverage, then he or she cannot reenroll back into the terminated coverage.

N.J.A.C. 17:9-6.2, Coverage for prospective retirants, describes the continuity of coverage for retired members and the necessity for the Board of Trustees to approve retirement applications. Should there be a gap in active to retired health benefits; the employee must submit personal payments to the SHBP in order to continue coverage. Proposed amendments to this section remove the language "under the Alternate Benefits Program" since investment carrier can refer to both the Alternate Benefits Program and the Defined Contribution Retirement Program (DCRP). The DCRP was enacted by P.L. 2007, c. 92. Multiple investment carriers are associated with these retirement systems. In paragraph (a)3, the word "domestic" is removed. In subsection (b), eligible domestic partner is removed and text is added that any retired employee or eligible survivor not responding to the second notice within a 30-day period will not be permitted to enroll in the SHBP at a later date. This addition better reflects the administrative practice of the SHBP.

N.J.A.C. 17:9-6.3, Retiree coverage; limitation, addresses the issue that only the retiree is permitted to change coverage to include dependents provided that appropriate legal documentation verifying the dependent's relationship with the subscriber is submitted within 60 days of a change in family status. The Commission proposes to amend this section to include the phrase "along with appropriate legal documentation described at N.J.A.C. 17:9-3.3(a)" throughout this section to reflect current administrative practice. In addition, "civil union" is included and "domestic" is removed since partnership refers to both domestic and civil union partners. In subsection (b) the reference to pension or pension check is removed since retirement allowance already exists in the text and is a better description of the benefit. Subsection (c) is deleted since the enactment of P.L. 2007 c. 103 eliminated the NJ PLUS plan and several of the HMO plans were eliminated through the public bid process and the text in subsection (d) with the relocation of the word "coverage" is recodified as subsection (c).

N.J.A.C. 17:9-6.4, Suspension of allowance, pertains to the termination of SHBP coverage when a retiree's retirement allowance is suspended, and is restored when the allowance is reinstated. No amendments are proposed.

N.J.A.C. 17:9-6.5, Discontinuance of allowance, pertains to when a retired member's or beneficiary's retirement allowance is discontinued then the health benefit coverage may be terminated. The proposed amendments to this section pertain to when the retirement allowance is reinstated, the health insurance coverage will resume and may be retroactive to the date of reinstatement "but in no case for more than one year." It is the administrative practice of the SHBP for coverage to be retroactive for up to one year only. This is consistent with the practice of the Division and allows State and local employers to budget for this retroactive coverage.

N.J.A.C. 17:9-6.6, Beneficiary, dependent or survivor, pertains to the termination of dependent for the survivor upon the death of the retired member and the opportunity for the survivor to continue coverage in the SHBP. The proposed amendments in this section eliminate the word "domestic" when referring to domestic or civil union partners.

N.J.A.C. 17:9-6.7, Coverage for PFRS and SPRS accidental death benefit recipients, addresses the accidental death benefits for the surviving spouse, eligible partner and children as defined by statute and their participation in the SHBP. Proposed amendments to this section eliminate the word "domestic" when referring to domestic or civil union partners.

N.J.A.C. 17:9-6.8, Premium-sharing for retired employee State Health Benefit Coverage and reimbursement for Medicare Part B costs, pertains to the reimbursement for Medicare Part B after retirement up to a cap of $ 46.10 for those State employees hired prior to July 1, 1995, who accrue 25 years of service credit or retire on a disability retirement after July 1, 1997 and have retiree premium-sharing obligations. There are several amendments proposed in this section. The Commission proposes to amend this section by removing all reference to the Traditional Plan and NJ PLUS and adding NJ DIRECT 10 and NJ DIRECT 15 throughout. The enactment of P.L. 2007, c. 103 created a successor plan to the Traditional Plan and a replacement for NJ PLUS, thus eliminating them. This section also adds and/or amends key dates for the accrued years of service when electing retiree health coverage and the dates of acquiring 25 years of service credit to determine if a premium deduction for health coverage is applicable. Subsection (b) is amended so that those employees hired before December 11, 1995, who accrue 25 years of service or retire on a disability retirement after July 1, 1997 but before July 1, 2000, will have payroll deductions for the NJ DIRECT 10 coverage using a base salary as of the first pay period of the calendar year in which retirement occurred. In addition, premium-sharing for retired employees has several amendments with regard to employment date of hire and the retirement date for establishing the rate of payment for participation in the SBHP. In paragraph (e)3, language has been added regarding the enactment of P.L. 2007, c. 103, which created a health contribution of 1.5 percent of the retirement allowance for participation in the SHBP plans. The Retiree Wellness Program is also referenced in this section, for those retirees who chose to waive the health contribution by participating in this program.

N.J.A.C. 17:9-6.9, Eligibility for State payment of retiree coverage under, P.L. 1997, c. 330, pertains to certain retirees of the Police and Firemen's Retirement System, Consolidated Police and Firemen's Retirement System and Public Employees' Retirement System that may be eligible for health benefit coverage under this statute. There are only minor proposed amendments in this section in that the word "domestic" is being removed from subsection (e) as partner refers to both civil union partner and domestic partner.

N.J.A.C. 17:9-6.10, Retiree prescription drug plan, which contains the terms associated with this program and the process whereby retirees can participate in the program is described is proposed without change.

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, pertains to employer-paid SHBP coverage based on combined service in more than one New Jersey public retirement system. There are no changes in this section.

Subchapter 7. Termination

N.J.A.C. 17:9-7.1, Termination effective date, pertains to the cessation of active SHBP employee coverage and identifies the circumstances and effective date of the termination. The Commission proposes to add the phrase "provided the member makes the appropriate remittance for coverage" in this section to clarify that the participant must provide the remittance for coverage in order to maintain their SHBP coverage.

N.J.A.C. 17:9-7.2, Termination of eligibility, addresses the circumstances for termination of an employee's and eligible dependents coverage. One amendment is proposed, which adds, coverage for dependents will end if the dependent child becomes eligible for SHBP coverage due to employment, since this is an established administrative practice of the SHBP and once a dependent child is employed and eligible for SHBP coverage, that individual ceases to be a qualified dependent.

N.J.A.C. 17:9-7.3, Continuation of coverage, describes the circumstances when an employee or an employee's eligible dependent may continue coverage. An amendment is proposed to make the sentence read grammatically correct and to add the word "partner" in Subparagraph (a)3i.

N.J.A.C. 17:9-7.4, Voluntary termination, pertains to the circumstances when a subscriber or the subscriber's dependents may elect to voluntarily terminate coverage at any time.

Subchapter 8. Employee Prescription Drug Plan

N.J.A.C. 17:9-8.1, Employee Prescription Drug Plan, describes the establishment of the plan and the rules associated with the provisions of N.J.S.A. 52:14-17.29(f). An amendment is proposed to eliminate paragraph (c)2 since it is no longer necessary to specify that there is no right to conversion in the plan, pursuant to P.L. 2007, c. 103.

N.J.A.C. 17:9-8.2, Prescription drug cards, pertains to the identification cards issued by the carrier upon enrollment into the plan. There are no changes in this section.

N.J.A.C. 17:9-8.3, Termination, effective date, addresses the effective date of health coverage termination, which is the last day of the coverage period or month that the last payroll deduction was made from the employee's salary for the coverage. The Commission proposes to delete the words "of dependents" in subsection (a) because of changes in premium share, which permit employers to charge premium sharing for the employee, as well as, the dependent.

Subchapter 9. State Employee Group Dental Program

N.J.A.C. 17:9-9.1, Employee Dental Plans, pertains to the establishment, and rules of the Dental Expense Plan and the Dental Plan Organization. The language in paragraph (c)1 is deleted. There is no conversion privilege permitted in any of the plans in the SHBP, therefore, it is not necessary to site it in this paragraph. The School Employees' Health Benefits Program is referenced in paragraphs (c)6 and 7, since the enactment of P.L. 2007, c. 103 established this program.

N.J.A.C. 17:9-9.2, Dental identification cards, addresses the dental cards that are issued by the dental carrier. There are no amendments to this section.

In N.J.A.C. 17:9-9.3, Enrollment charges, the employee authorizes the taking of deductions to pay for the employee's share of the cost of the coverage. There are no amendments in this section.

N.J.A.C. 17:9-9.4, Waiting period--Orthodontics under the Dental Expense Plan, pertains to the 10 months or more of continuous service required before the participant can become eligible for orthodontics. There are no amendments in this section.

N.J.A.C. 17:9-9.5, Covered expenses, refers to the dental plans handbooks that contains the specific provisions of the program. There are no amendments to the section.

N.J.A.C. 17:9-9.6, Deductible, refers to the annual employee dental plans deductible. There are no amendments to this section.

Subchapter 10. Procurement of Contracts

N.J.A.C. 17:9-10.1 though 10.23 pertain to the rules governing the procurement of contracts by the SHBP. There are no proposed amendments to this subchapter.

Subchapter 11. Establishment of Part-time Employees Group

N.J.A.C. 17:9-11.1, Establishment of the Part-time Employees Group, pertains to the establishment of this group by the provisions of N.J.S.A. 52:14-17.33a. An amendment is proposed in subsection (d), which removes the language that there is no right of conversion from the Part-Time Employees Group to non-group coverage since there is no conversion privilege in any of the SHBP plans.

N.J.A.C. 17:9-11.2 is amended to remove part-time faculty at county colleges since these are not SEHBP locations.

N.J.A.C. 17:9-11.3 is amended to remove the language NJ PLUS and replace it with NJ DIRECT 15 since the enactment of P.L. 2007, c. 103 eliminated the NJ PLUS plan.

N.J.A.C. 17:9-11.4, 11.5 and 11.6 pertains to payment, cost and effective date of coverage and there are no amendments to these sections.

N.J.A.C. 17:9-11.7, Effect of full-time employment on participation in the part-time employees group, the Commission proposes to remove the phrase "employer-paid" and add the words as a full time employee, which explains the eligibility for coverage more fully and avoids confusion.

N.J.A.C. 17:9-11.8, Termination of coverage due to non payment of premiums, and N.J.A.C. 17:9-11.9, Termination of coverage due to termination of employment with an eligible employer, are proposed without change.

N.J.A.C. 17:9-11.10, Coverage in retirement, states that the employee that participates in the Part-time Employee Group and retires shall not be eligible for employer-paid or State-paid health benefits in retirement. The employee shall be eligible to continue coverage at retirement at his or her own expense. An amendment is proposed throughout this section to remove the language "NJ PLUS" and replace it with "NJ DIRECT 15" since the enactment of P.L. 2007, c. 103 eliminated the NJ PLUS plan. In addition, in subsection (b), the language "or pension check" was deleted because retirement allowance is provided in the rule and has the same meaning.

Subchapter 12. Retiree Dental Expense Plan

N.J.A.C. 17:9-12.1, The Retiree Dental Expense Plan, pertains to the establishment and rules contained in the provisions of N.J.S.A. 52:14-17.29(f). The Commission proposes to amend this section to include the School Employees' Health Benefits Program since the enactment of P.L. 2007, c. 103 created this new program. In addition, paragraph (c)2 is deleted since there is no conversion privileges associated with any of the SHBP plans.

N.J.A.C. 17:9-12.2, Plan Premiums, pertains to the premiums payments that are deducted directly from the retiree's monthly retirement allowance. No amendments are proposed in this section.

N.J.A.C. 17:9-12.3, Plan progressive coinsurance and design, describes the plan's three tier coinsurance. There are no amendments in this section.

N.J.A.C. 17:9-12.4, Covered expenses, pertains to the plan handbook, which contains the specific provisions for services. There are no amendments proposed.

N.J.A.C. 17:9-12.5, Deductible, pertains to the charges incurred by a retiree prior to enrollment in the Plan and there are no proposed amendments.

Subchapter 13. Chapter 375 Dependents

N.J.A.C. 17:9-13.1, Eligible criteria, pertains to dependents that remain in the SHBP after age 23 under the provisions of P.L. 2005, c. 375 and supplemented by P.L. 2008, c. 38, codified at N.J.S.A. 52:14-17.29k. There is one amendment in this section. The Commission proposes to amend subsection (a) to include eligibility when a dependent is 30 years of age or younger.

N.J.A.C. 17:9-13.2, Enrollment, addresses the enrollment process for Chapter 375 dependents. In paragraph (a)1, the text "certificate of creditable coverage" was added because the certificate is a requirement of HIPAA regulations, the dependent must have had prior coverage within a 30-day period to be eligible for enrollment.

N.J.A.C. 17:9-13.3, Coverage available, pertains to medical plan coverage since dental or vision benefits are not eligible for Chapter 375 dependents.

N.J.A.C. 17:9-13.4, Premium rates and payment for coverage, is amended so that the Commissio shall determine the premium rates for the Chapter 375 Dependent coverage as provided by P.L. 2008, c. 38. Initially the premium rates were set on the basis of the anticipated experience of the group. The section is also amended to include the language or dependent is responsible for the cost of the SHBP coverage since the dependent is also one of the responsible parties for the cost of the SHBP coverage.

N.J.A.C. 17:9-13.5, Termination of coverage, pertains to the events that shall terminate Chapter 375 dependent coverage. Paragraph (a)1 is amended to include that the dependent is eligible for coverage until his or her 31st birthday under the provisions of Chapter 375. Additionally, paragraph (a)4 includes the language dependent, since Chapter 375 dependents are considered one of the responsible parties for the cost of the premium payment.

N.J.A.C. 17:9-13.6, Notice of Termination of coverage for nonpayment of premiums, pertains to the Division's notification process to Chapter 375 dependents for non-payment of premiums. There is an amendment proposed in subsection (a) that includes the term "dependent," since Chapter 375 dependents are considered one of the responsible parties for the cost of the premium 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.

Social Impact

The rules involving the SHBP affect, and work to the benefit of, the past, present and future public employees who are or willing to be participants in the SHBP.

In the past, the rules of the SHBP provided for the efficient operation of the benefits programs administered by the Division. The efficient operation of these programs provided a social benefit to members and retirees, as well as to public employers by allowing for the efficient delivery of health benefits at affordable group rates. The rules proposed for readoption with amendments and new rules would continue the existing, longstanding, regulatory requirements, which provided for the efficient administration and operation of the SHBP. The proposed new rules will provide for the continued delivery of health benefits systems.

The participating retirees, survivors of retirees, active members and participating employers, rely on the efficient operation of the SHBP to provide them with comprehensive group health benefit coverage. Participants rely upon the presence and predictability of the rules, which guide the administration of their benefits and the stability of the SHBP. The protections and guarantees that these rules afford members mandate their continued existence.

The taxpaying public is affected by these rules in the sense that public monies are used to fund the benefits and they, too, benefit from the proper and efficient administration of the SHBP that the rules require.

Many of the proposed amendments are of a purely technical nature, such as providing language reflecting the offering of benefits to dependents, which include spouse, civil union partner and domestic partner deleting "NJ PLUS" and the "Traditional Plan" and replacing them with "NJ DIRECT 15" and "NJ DIRECT 10," and defining certain terms used throughout the rules. Other proposed amendments will have a social impact specifically on members, retirees, beneficiaries and former members of the SHBP, and not society as a whole. However, there is a general societal interest in making sure the health plan for public employees is administered effectively and efficiently.

The proposed amendments would have a social impact through the changes to the rules guiding the Commission. They also have a social impact on participating employers, as well as employees. The proposed amendments make it more clear when coverage takes effect for new employers and more clearly define what premium-share arrangements may be provided. The proposed amendments also detail who the employer must notify if they terminate participation, when coverage ceases if the employer is in default, what incentives are available and when they may be used by employers.

Amendments explaining the procedure regarding retroactive participation in the plan clarifies this situation for those affected. Clarifying what documentation is acceptable to establish dependent eligibility is also helpful and will assist the Division in preventing fraud.

Economic Impact

In the past, the rules of the SHBP provided for the efficient operation of the benefit programs administered by the Division. The efficient operation of these health benefit programs provided a benefit to all participants, as well as to public employers by allowing for the timely delivery of benefits at affordable group rates.

Readoption of the rules and the proposed amendments and new rules themselves will not present any economic effects on the public because the readoption will merely continue existing, long-standing, regulatory requirements. The rules proposed for readoption and the proposed amendments and new rules will serve to preserve the efficient administration and operation of the SHBP. Further, the rules proposed for readoption with amendments will enable the Division to continue to provide for the health benefits of participants in a manner, which more than adequately meets the statutory and contractual requirements.

The current procedures as set forth in N.J.A.C. 17:9 have proven to be effective over time in the proper administration of the SHBP. Without the administrative rules to provide for the efficient operation of the SHBP, financial chaos may occur.

In the future, the rules proposed for readoption will continue to guide the efficient operation of the SHBP.

The proposed amendments and new rules would have an economic impact by permitting employer incentives, which would allow specific employers to save money by permitting employees with other coverage to waive employer paid coverage. This would also be an economic benefit to the employee who would receive a financial incentive to waive coverage.

The proposed amendments and new rules would also have an economic impact on participating employees. The clarifications regarding when an employee must file for coverage, when open enrollments take place, when changes of coverage take effect and what exceptions there are for coverage changes would be an economic benefit to employees by allowing them to add dependents or obtain coverage through the employer and not have to pay for the entire cost of coverage.

When termination of coverage is a possibility, it is an economic benefit to know what the termination process is, under what circumstances coverage may continue, what premiums the member must pay and when a member may re-enroll after a voluntary or involuntary termination of coverage.

The general public also benefits when health plans for public employees are administered in an efficient and cost effective manner.

To the extent that the proposed amendments and new rules reiterate statutory requirements; they will have no new economic impact. The Division will continue to monitor the impact of these rules through research and review of new legislation. The Division is not aware of any provisions in these rules, which would impose any hardship or costs on the participants of the SHBP or on the public in general.

Federal Standards Statement

A Federal standards analysis is not required for the rules proposed for readoption with amendments, a repeal and new rules because N.J.S.A. 52:14-17.27 governs the subject of this rulemaking. There are no Federal requirements or standards that affect the subject of this rulemaking, except that there is a reference to compliance with the Health Insurance Portability and Accountability Act (HIPAA), 42 U.S.C. §§1320d et seq., but this law is not exceeded.

Jobs Impact

The rules proposed for readoption with amendments, new rules and a repeal will not result in the generation or loss of jobs.

The Division invites any interested parties to submit any data or studies concerning the jobs impact of the proposed readoption of the rules with amendments, new rules and a repeal with their written comments.

Agriculture Industry Impact

The rules proposed for readoption with amendments, a repeal and new rules will not have any impact on the agriculture industry.

Regulatory Flexibility Statement

The rules of the SHBP only affect participating public employers, employees, retirees and survivors. Thus, the rules proposed for readoption with amendments, a repeal and new rules do not impose any reporting, recordkeeping or other compliance requirements upon small businesses, as defined under the Regulatory Flexibility Act, N.J.S.A. 52:14B-1 et seq. Therefore, a regulatory flexibility analysis is not required.

Smart Growth Impact

The rules proposed for readoption with amendments, a repeal and new rules will not have any impact on the achievement of smart growth and implementation of the State Development and Redevelopment Plan.

Housing Affordability Impact

The proposed amendments will have an insignificant impact on affordable housing in New Jersey and there is an extreme unlikelihood that the amendments would evoke a change in the average costs associated with housing because the rules concern the administration of the State Health Benefits Commission.

Smart Growth Development Impact

The proposed amendments will have an insignificant impact on smart growth and there is an extreme unlikelihood that the amendments would evoke a change in housing production in Planning Areas 1 or 2 or within designated centers under the State Development and Redevelopment Plan in New Jersey because the rules concern the administration of the State Health Benefits Commission.

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

Full text of the rule proposed for repeal may be found in the New Jersey Administrative Code at N.J.A.C. 17:9-5.9.

Full text of the proposed amendments and new rules follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):

SUBCHAPTER 1. ADMINISTRATION

17:9-1.1 Commission meetings

(a) The State Health Benefits Commission shall meet, as necessary, at the call of the Chairperson or the Secretary provided that the required public notice has been given, pursuant to the provisions of the Open Public Meetings Act, N.J.S.A. 10:4-13.

(b) (No change.)

(c) If a member is unable to attend a meeting, the member, [if an ex-officio member, or the Public Employees' Committee of the AFL-CIO or the New Jersey Education Association] if a member who is authorized by statute to appoint a designee, shall designate, in writing, an alternate. The person so designated shall be permitted to vote on business brought before the Commission.

(d) All Commission members and alternates shall complete all mandatory training required by either the implementing regulations of the Federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) or the State Ethics Commission prior to hearing any appeals before the Commission.

17:9-1.2 Records

(a) The Secretary of the Commission shall maintain minutes of the Commission meetings in compliance with the Open Public Meetings Act (OPMA), N.J.S.A. 5:10-1 et seq. Public session minutes are public records [and] subject to access under the Open Public Records Act (OPRA), N.J.S.A. 47:1-1 et seq and the requirements of the Federal Health Insurance Portability and Accountability Act (HIPAA), 42 U.S.C. §§3210d et seq. Minutes of closed sessions pertaining to the claims of any individual shall be redacted of all personal identifying information unless the individual member waives his or her privacy interest and consents in writing to disclosure in accord with HIPAA. Minutes of executive sessions shall be subject to disclosure pursuant to the OPMA after the Commission determines the need for confidentiality no longer exists. Records of the Commission subject to public access under OPRA may be inspected during regular business hours at the office of the Division [of Pensions and Benefits] under supervision of [the Manager of Policy and Planning,] a representative of the State Health Benefits Program or other representatives of the office. All requests for records under OPRA shall be made in writing on the required form and submitted to the Department of the Treasury Government Records Unit.

(b) [Records considered confidential include all matters related to the coverage of] To protect the personal privacy of individual participants and their families, the mailing addresses of active and retired participants and all matters related to an individual's files related to an individual's coverage and claims shall be maintained as confidential. Protected health information shall not be released to any person except as permitted under HIPAA in response to a valid HIPAA Authorization for Release of Information in a form acceptable to the Division as described in 45 CFR 164.508 or as otherwise authorized by HIPAA. The requesting party shall have the burden of demonstrating to the satisfaction of the Division that the confidential materials may be released under HIPAA.

17:9-1.3 Appeals from Commission decisions

(a) Any member of the [Traditional Plan] SHBP who disagrees with the decision of the claims administrator 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] of the Commission, and must contain the reason for the disagreement and all available 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 NJ PLUS or a health maintenance organization (HMO) who disagrees with a determination 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)] (b) 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 (d) and (e) as (c) and (d) (No change in text.)

17:9-1.4 Employer participation

(a) An employer joining the [program] SHBP must adopt the resolution furnished by the Division [of Pensions and Benefits] and must agree to comply with the statutes and [regulations] rules 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)-(c) (No change.)

17:9-1.5 Voluntary termination of employer; notice

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

(b) When a participating employer voluntarily terminates coverage, the coverage for the employer's active and retired employees, participants under N.J.S.A. 52:14-17.29k 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.

(c) (No change.)

(d) The Division [of Pensions and Benefits] shall act to notify all affected [Consolidated Omnibus Budget Reconciliation Act of 1985, 29 U.S.C. §§ 1161-1168, (] COBRA[)] participants, participants under N.J.S.A. 52:14-17.29k, and retired members of the termination of coverage. Upon request from the employer, the Division shall forward a list of the names and addresses of terminating retirees, participants under N.J.S.A. 52:14-17.29k, 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) (No change.)

(b) The Secretary of the Commission will notify the offices of the State Treasurer; the Attorney General['s office,]; the Department of Community Affairs, Division of Local [Finance] Government Service; and the Department of Education [and the Alternate Benefits Program carriers], if applicable. The Division [of Pensions and Benefits] will notify the employer and affected COBRA participants, participants under N.J.S.A. 52:14-17.29k and retired subscribers of the termination of coverage. The employer is responsible for notifying its active employees affected by this termination.

(c) Under the provisions of P.L. 2008 c. 24, the Division of Revenue of the Department of the Treasury will be responsible for collecting any outstanding debt. If necessary, the amount owed will be deducted from any amount that might otherwise be remitted by any State agency to the debtor.

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

(a) 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] SHBP.

(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] Any participating local employer, other than the State is allowed 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.

(c) As the employer's certifying agent must sign each individual waiver application, no general resolution is required for the adoption of the waiver incentive.

17:9-1.8 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.]

"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, member and spouse/partner, parent and child, and family coverage, and [for] whether prescription drug coverage is provided in the health coverage. For retirees only, [with and without] the category also reflects the Medicare entitlement of the member and spouse/partner.

"Chapter 375 Dependents" means all adult children, which are defined as dependents in their parent's State health benefits coverage pursuant to P.L. 2005, c. 375 and supplemented by P.L. 2008, c. 38, which is codified at N.J.S.A. 52:14-17.29k.

"Civil union partner" means a person, who is of the same sex as the employee, with whom a legally recognized union is formed. The relationship must also satisfy the definition of a civil union as set forth in N.J.S.A. 37:1-2, civil union certificates issued to same-sex couples are accepted under the New Jersey civil union statutes. Whenever reference is made to "marriage," "husband," "wife," "spouse," "family," "immediate family," "dependent," "next of kin," "widow," "widower," "widowed" or another word, which in a specific context denotes a marital or spousal relationship, the same shall include a civil union partner; or a domestic partnership formed outside the State of New Jersey.

. . .

"COBRA" means the Federal Consolidated Omnibus Budget Reconciliation Act of 1985, 42 U.S.C. §§1161-1168, which requires most employers sponsoring group health plans to offer employees and their eligible dependents the opportunity to temporarily extend their group health coverage in certain instances where coverage under the plan would otherwise end.
. . .

"Dependent" refers to any individual covered under the SHBP in addition to the subscriber (see N.J.A.C. 17:9-4.1).

"Director" means the Director of the Division of Pensions and Benefits.

"Division" means the Division of Pensions and Benefits.

. . .

"Eligible Employer" is a public agency, the employees of which, if otherwise eligible, may join any of the retirement systems established by statute to provide retirement benefits for public employees. The term does not apply to school employers or their employees.

"Local employer" means public employers, such as counties, municipalities and authorities, including independent State authorities not designated as "State employers" for SHBP purposes.

"Locally-administered retirement system" means an agency established under State law to provide a system of retirement benefits for public employers, which is not administered by the Division.

"Member" means any individual covered under the SHBP, regardless of whether the person is a subscriber or a dependent.

"NJ DIRECT10" means the coverage created by P.L. 2007, c. 103 as a successor plan to the "Traditional Plan" indemnity coverage.

"NJ DIRECT15" means the State's managed care plan created by P.L. 2007, c. 103 as a replacement to the "NJ PLUS" coverage.

. . .

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

"State monthly sub-group" means a State payroll location or employment unit which reports to the program on a monthly basis.]

"PPO" means Preferred Provider Organization duly authorized to operate in the State which is under contract with the Commission to participate in the program.

"SHBP" means the State Health Benefits Program.

"Spouse" means a person of the opposite sex to whom one has been joined in a properly recorded legal ceremony authorized by law (as defined by N.J.S.A. 37:1-1). New Jersey recognizes legal marriages performed in other states or jurisdictions but does not recognize "common law" or any other form of marriage without a formal license (N.J.S.A. 37:1-10).

"State-administered pension fund" means a retirement system administered by the Division, including such systems as the Alternate Benefits Program.

"State-administered retirement system" means an agency established under State law to provide a system of retirement benefits for public employees.

"State biweekly employer" means an agency whose employees are paid through the State's Centralized Payroll System.

"State Employer" means the State of New Jersey and those agencies so designated by statute as "State employers" for SHBP purposes.

"State monthly employer" means an agency defined by statute as a "State employer" for SHBP purposes but independent of the State's Centralized Payroll System.


"Successor plan" means a managed care plan that replaces the Traditional Plan and provides an in-network level of benefits as well as out-of-network benefits to participants with a payment of 80 percent of reasonable and customary.

17:9-1.9 Certifying officer (employer)

(a) The chief fiscal officer or other officer duly designated by a resolution of each county, municipality or public agency, and the personnel officer of the Division, Bureau or Institution of the State locations, shall serve as certifying officer for that unit.

(b) The certifying officer shall be responsible for the duties described by N.J.S.A. 52:14-17.43, including providing documentation requested by the Commission or the Division in a timely manner.

(c) The certifying officer shall be responsible for all other duties relating to matters concerning the SHBP.

(d) Upon the request of the Commission, the certifying officer shall be required to sign a statement, verifying that any information reported is accurate to the best of the officer's knowledge, and conforms with the statutes and rules governing the SHBP.


SUBCHAPTER 2. COVERAGE

17:9-2.1 Enrollment [and charges]

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

17:9-2.2 Enrollment form

Within 60 days of the time an employee first becomes eligible to apply for coverage, the employee shall file a completed enrollment form indicating the employee's election to enroll or not to enroll for coverage on the employee's own behalf; and the employee's election to enroll or not to enroll any eligible dependents for coverage under one of the [State Health Benefits Program] SHBP options. A dependent must be listed on the enrollment form to be enrolled for coverage. Appropriate legal documentation, as described in N.J.A.C. 17:9-3.3(a), verifying the dependent's relationship with the subscriber is required before enrollment is approved. If more than 60 days have passed since first [eligibility] eligible 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.] according to the schedule for that open enrollment period.

17:9-2.3 Annual open enrollment period

(a) Except as permitted under N.J.A.C. 17:9-2.4, any active employee or COBRA subscriber who did not elect to enroll for coverage for themselves or for their dependents at the time such employee or dependent first becomes eligible for coverage shall subsequently be permitted to enroll themselves and their dependents only during the annual open enrollment period, with coverage effective [the first coverage period in January] according to the schedule for that open enrollment period.

(b) (No change.)

(c) The [State Health Benefits] Commission may establish a special enrollment period at any time it deems necessary to do so.

17:9-2.4 Coverage changes; exceptions

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

1. Marriage, civil union and eligible domestic partnerships. Any employee who marries or enters into [a] an eligible domestic partnership or a civil union may enroll the employee[, or the employee and the employee's spouse or eligible domestic partner, as defined by N.J.A.C. 17:9-1.8 ] and eligible dependents, if any, for any appropriate type of coverage by [completing and forwarding a new enrollment form] applying for coverage within the period beginning 60 days prior to the marriage, [or] domestic partnership or civil union and ending 60 days after such marriage, [or] domestic partnership or civil union. In the event that the spouse or [domestic] partner [of such employee] is already enrolled as an employee, the provisions of N.J.A.C. 17:9-3.5 shall apply to such spouse's or [domestic] partner's enrollment. A copy of the marriage certificate or certificate of domestic partnership or civil union must be submitted with the completed application to add the spouse [or domestic]/partner.

2. Divorce; separation; termination of domestic partnership or end of civil union. Any employee who has been enrolled or has been covered as a dependent of an enrolled employee and is subsequently divorced or ends a civil union pursuant to N.J.S.A. 2A:34 or terminates a domestic partnership pursuant to N.J.S.A. 26:8A-10 may enroll and delete from coverage or cover any eligible dependents by completing and forwarding a new enrollment form within 60 calendar days after the divorce or termination of the domestic partnership or civil union of such employee or dependent of an employee who was covered previously under the spouse's/[or domestic] partner's contract. A change of enrollment of this nature may also be made in the case of separation.

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

4. (No change.)

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

6. An employee, spouse, eligible domestic or civil union partner or dependent ceases to be covered by other group health coverage. If the employee, spouse, domestic or civil union partner or other dependent has other group health coverage, and then becomes ineligible for that other coverage due to qualifying events, such as termination of employment, divorce, termination of domestic or civil union partnership, death, or reduction in hours worked, the employee may enroll in any plan or for any coverage in the [State Health Benefits Program] SHBP provided that the employee submits a new enrollment application accompanied by proof of the prior coverage, within 60 days of the qualifying event.

7. (No change.)

8. [Upon the divorce or termination of domestic partnership of] A child resuming eligibility as a dependent child. An employee may enroll, for any coverage, [a] an otherwise eligible child under age 23 who, [following a divorce or termination of domestic partnership] having previously been ineligible as a dependent child, resumes dependent status, resides with the parent and is financially dependent upon the parent. This applies to children whose marriage, civil union, or domestic partnership has been dissolved, as well as to children who had been considered independent by nature of employment. 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 or dissolution of the civil union or termination of the domestic partnership or the date the child ends employment in order to obtain coverage retroactively to the date of the [divorce or termination] re-qualifying event. Otherwise, enrollment shall be permitted only during an open enrollment.

9.-10. (No change.)

11. Deference to local employer contracts. When a local employer's contract limits coverage choices of an employee for a specified period of time after the employee's hire date, the employee may increase coverage levels provided an enrollment application is submitted within 60 days following the attainment of additional benefits provided in the contract.

(b) An employee may change the employee's enrollment and the enrollment of the employee's eligible dependents to any type of coverage under conditions other than those specified in (a) above, only during the annual enrollment period, or during a special [State Health Benefits Program] SHBP 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] SHBP open enrollment period. For provisions governing coverages and charges for 10-month employees, see N.J.A.C. 17:9-5.8(c).

17:9-2.5 Employee coverage requirements

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

1.-3. (No change.)

4. An enrollment form has been legibly completed by the employee and the certifying officer of the 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[.]; and

6. The employee has provided appropriate legal documentation for each dependent to be enrolled showing the dependent's relationship with the subscriber, as set forth in N.J.A.C. 17:9-3.3(a).

17:9-2.9 HMO; elections

(a) (No change.)

(b) 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. (No change.)

2. Transfer participation to [the Traditional Plan, NJ PLUS or an eligible HMO in the new area] one of the other plans available under the SHBP.

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

(a) (No change.)

(b) Unless the employer or the State pays for surviving spouses or surviving eligible domestic or civil union partners, 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 up to one year may be granted provided the payment of charges is made.

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

(a) For purposes of local coverage, all eligible charges incurred by an eligible employee or the employee's covered dependents, from January 1 of a calendar year to the effective date of coverage for the employee's participating employer, will be considered toward satisfying the deductibles and coinsurance required under the [Traditional Plan major medical coverage or] out-of-network NJ [PLUS] DIRECT.

(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] DIRECT coverage.

(c) The charges considered are to be eligible charges under [the Traditional Plan major medical or] out-of-network NJ [PLUS] DIRECT 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 coinsurance for which the employee has been reimbursed by any source.

17:9-2.14 Policy provisions adoption

The [State Health Benefits] Commission adopts by reference all of the policy provisions contained in the contracts between the health, prescription drug and dental plans and the [State Health Benefits] Commission, as well as any subsequent amendments thereto, to the exclusion of all other possible coverages. The plans handbook supplements the master contracts and contains the specific provisions for services to be covered and those which are excluded.

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, foster children and children of an eligible domestic or civil union partner 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.

"Dependents" means an employee's spouse, eligible domestic or civil union partner and the employee's unmarried children through the end of the calendar year in which they reach the age of 23 years who live with the employee in a regular parent-child relationship. "Dependents" also means unmarried children and those not in a domestic partnership or civil union, covered by their parents under the [State Health Benefits Program] SHBP prior to the attainment of age 23, who:

1.-3. (No change.)

"Living with" shall be defined so as to include children in the case of divorce or termination of a domestic partnership or civil union 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 and children of an eligible domestic or civil union partner must reside with the employee.

17:9-3.2 Military service

A spouse, eligible domestic or civil union partner or child enlisting or inducted into military service shall not be considered eligible for coverage during such military service.

17:9-3.3 Certification of dependency

(a) An employee who elects to enroll an eligible dependent for any coverage shall report such dependent's relationship or status on the enrollment form and [such] provide appropriate legal documentation for each dependent to be enrolled verifying the dependent's relationship with the subscriber. Examples of acceptable documentation include birth certificates, sworn affidavits, marriage certificates, certificates of domestic partnership or civil union, divorce and separation decrees, custody agreements and court orders. This list is not meant to be all inclusive and does not imply acceptance of any of the above without proper authentication. Such listing of the dependent shall constitute the required certification that at the time of enrollment such dependent is substantially dependent upon the employee for support and maintenance.

(b) A person who, although listed as an eligible dependent, is found to be ineligible [or whose eligibility cannot be verified subsequent to enrollment] shall be removed from coverage by the [State Health Benefits Program] SHBP and the level of coverage of the employee or retiree shall be adjusted accordingly. Coverage for that person as a dependent shall be restored [retroactively to the date of eligibility] if acceptable documentation is provided to the Division [of Pensions and Benefits], by the employee or retiree, within 60 days of written notification of the dependent's termination. If acceptable documentation is received after 60 days, the dependent shall not be restored retroactively and can only be added at the next permissible enrollment opportunity. [Examples of acceptable documentation include both certificates, sworn affidavits, marriage certificates, certificates of domestic partnership, divorce and separation decrees, custody agreements and court orders. This list is not meant to be all inclusive and does not imply acceptance of any of the above without proper authentication.]

17:9-3.4 Children with disabilities age 23 or older; determination of eligibility for continuation of coverage

(a) The determination as to the continuation of certain children with disabilities as "dependents" as defined by N.J.A.C. 17:9-3.1 shall be made by the [State Health Benefits Program's] SHBP's medical advisors. A form requesting continuance of enrollment for an eligible dependent with disabilities must be submitted to the [State Health Benefits Program] SHBP no later than January 31 of the year following the calendar year in which the child attained the age of 23.

(b) Children with disabilities who are age 23 or older at the time their parents obtain coverage under the [State Health Benefits Program] SHBP who are determined by the [State Health Benefits Program's] SHBP's medical advisors to be incapable of self-sustaining employment by reason of mental or physical disabilities and who meet the requirements of "dependents" as defined by N.J.A.C. 17:9-3.1, shall not be enrolled for coverage as "dependents" as defined by N.J.A.C. 17:9-3.1 unless:

1. They were covered as dependents under a public employer's group plan immediately preceding that employer's entrance into the [State Health Benefits Program] SHBP; or

2. They were covered as dependents under a public employer's group plan immediately preceding their parents' entrance into the [State Health Benefits Program] SHBP under the provisions of N.J.S.A. 52:14-17.32f (qualified retirees of the Teachers' Pension and Annuity Fund), [N.J.S.A.] 52:14-17.32f1 (qualified retirees of the Public Employees' Retirement System who retired from boards of education or county colleges), [N.J.S.A.] 52:14-17.32i (qualified firefighter or law enforcement retirees from the Police and Firemen's Retirement System, Public Employees' Retirement System and Consolidated Police and Firemen's Pension Fund) or the provisions of the Intergovernmental Transfer Program (established under N.J.S.A. 11A:2-11).

17:9-3.5 Multiple coverage; employee and spouse

(a) [For Traditional Plan coverage] In any plan offered other than an HMO, an employee who is the spouse or eligible domestic or civil union partner 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 or eligible [domestic] partner as an employee while covered as a dependent. The employee of an employer other than the State, who has enrolled such spouse or eligible [domestic] partner, 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 spouses or eligible [domestic] partners 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 or eligible [domestic] partner who is an employee of the State and eligible for coverage.

(c) If spouses or eligible [domestic] partners 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 or eligible [domestic] partner, under [the Traditional Plan or NJ PLUS] any plan offered other than an HMO, but only one may elect coverage for the employee and for their qualified dependents, including the spouse or eligible [domestic] partner, 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 or eligible [domestic] partner.

SUBCHAPTER 4. EMPLOYEES

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 person who is not on a State, college or university payroll or payroll of agencies identified in N.J.A.C. 17:9-4.1;

6. (No change.)

17:9-4.6 Local; full time defined

(a) (No change.)

(b) Where an otherwise eligible employee elects a voluntary furlough, as authorized by P.L. 1993, [c.297] c. 297 for State employees and extended to local employers [through the Department of Personnel's rulemaking authority (see] pursuant to N.J.A.C. 4A:6-1.23(b)[)], 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, if any, as the employee's contribution for coverage.

17:9-5.2 Charges; interest charges

(a) (No change.)

(b) For the purpose of local coverage, [in the Traditional Plan,] the employer must remit to the Division [of Pensions and Benefits] charges covering a one-month period by the due date printed on the bill.

(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.

17:9-5.3 Local employer payment of charges

(a) (No change.)

(b) With respect to employees for whom there is no majority representative for collective negotiations purposes, the employer may, in its sole discretion, modify the respective payment obligations set forth in law for the employer and such employees for the coverage of the employee and enrolled dependents in a manner consistent with the terms of any collective negotiations agreement binding on the employer. In the absence of any collective negotiations agreement, the employer may modify the payment obligations as it deems appropriate.

(c)-(g) (No change.)

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

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

1.-2. (No change.)

3. Provide for local employer reimbursement of Federal Medicare charges for eligible pensioners and/or their spouses and partners, 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 and partners in accordance with the provisions of P.L. 1972, [c.75] c. 75 (see N.J.A.C. 17:9-5.5);

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

5. (No change.)

(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 P.L. 1979, [c.54] c. 54. Such resolution shall meet the prescriptions of [subsection] (a) [of this section] above.

(c) Under the provisions of P.L. 1981, [c.436] c. 436, as amended, an educational or local employer may also adopt an additional resolution designed to apply the provision of [Chapter] P.L. 1974, c. 88 to surviving spouses and eligible partners of qualified retirees.

(d) Under the provisions of P.L. 1981, [c.436] c. 436, as amended, an educational or local employer may also adopt an additional resolution designed to apply the provision of [Chapter] P.L. 1974, c. 88 to those former employees who retired since the employer adopted the provisions of the [State Health Benefits Program] SHBP but who did not continue coverage because of the cost to the member.

(e) Under the provisions of P.L. 1999, [c.48] 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 retirement system service credit and employment service requirements for the employer payment of coverage as established by the resolution adopting the provisions of P.L. 1999, [c.48] c. 48.

17:9-5.5 Medicare refunds

(a) (No change.)

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

(c) All reimbursements made pursuant to [part] (b) above shall be made payable to the retiree constituting the most timely 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. As with the State, local employers are limited by budget allocations; therefore, retroactive refunds are limited to one year.

(d) In no event shall duplicate reimbursements be made to any retiree for the retiree or the retiree's spouse or eligible domestic or civil union partner. If the spouse or eligible [domestic] partner of a retiree receives reimbursement for Medicare Part B by the State in their retirement allowances, then the spouse or [domestic] partner shall only be eligible for the Medicare Part B reimbursement based upon their employment and not the retiree's employment. Spouses or [domestic] partners reimbursed directly by their employer and not through the State must submit proof that they have waived that other Medicare Part B reimbursement in order to be reimbursed as a spouse or [domestic] partner of the retiree. In addition, the retiree is not eligible to receive reimbursement for the difference between the amounts reimbursed to a spouse or [domestic] partner from other Medicare Part B reimbursement and the amounts reimbursed to the retiree under the SHBP.

(e) (No change.)

17:9-5.6 Refunds rejected

Any request for refund not specified in N.J.A.C. 17:9-3.5 and 5.5 shall be denied. For example, a member and spouse or eligible [domestic] partner may be employed in the same or in different locations, each location participating in the [State Health Benefits Program] SHBP and both having family coverage, or both having member and spouse/[or domestic] partner coverage; in spite of the apparent duplication of coverage, neither of the covered employees would be eligible for a refund. Or, the spouse or eligible [domestic] partner carries only single employee coverage under the State program while 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 SHBP. Or, if one spouse or eligible [domestic] partner applies for Medicare reimbursement for the member and spouse or eligible [domestic] partner, the other shall not receive duplicate reimbursement.

17:9-5.9 Health Contribution for active employee State Health Benefit Coverage

Pursuant to P.L. 2007, c. 103, (N.J.S.A. 51:14-17.28b), a deduction in the amount of 1.5 percent of base salary shall be made for each covered employee. For purposes of this section, base salary means an employee's annual base salary, not including any bonuses, overtime or longevity payment.


SUBCHAPTER 6. RETIREMENT

17:9-6.1 Retired employee defined

(a) "Retired employee" means a person who is eligible for coverage under the [State Health Benefits Program's] SHBP's retiree group. This "retired employee" status, once established, shall continue in effect even though the employer is subsequently disbanded and no successor agency is created upon the dissolution of such employer.

(b) The definition of "retired employee" also includes the following classes of retired employees who are eligible for coverage:

1. (No change.)

2. Retired employees of educational and local employers participating in this Program who were eligible for [employer-paid] coverage as active employees immediately prior to retirement and who continued coverage at retirement;

3. Retired employees of educational and county college employers, regardless of the employer's participation in the [State Health Benefits Program (]SHBP[)] who:

i. (No change.)

ii. Were eligible for [employer-paid] group health plan coverage prior to leaving employment; and

iii. Retired on disability retirements or on benefits based upon 25 or more years of service credit in the Teachers' Pension and Annuity Fund, the Public Employee's Retirement System, the Alternate Benefits Program[,] or in a locally administered pension fund established by N.J.S.A. 18A:66-94 et seq. under the provisions of P.L. 1987, [c.384] c. 384, P.L. 1992, [c.126] c. 126 or P.L. 1995, [c.357] c. 357 ( N.J.S.A. 52:14-17.32f, 52:14-17.32f1 and 52:14-17.32f2);

4. Qualified retired employees of boards of education who receive a retirement benefit from a State or locally administered retirement system and who:

i.-ii. (No change.)

iii. Within 60 days of enrollment in Parts A and B of the Federal Medicare Program, elect to join the SHBP under the provisions of P.L. 1993, c. 8 (N.J.S.A. 52:14-17.32h). A retired employee, upon enrollment in the SHBP pursuant to this rule, who qualified for benefits under the provisions of N.J.S.A. 52:14-17.32f, 17.32f1 or 17.32f2 shall be eligible for coverage paid by the State[, either directly or through the retirement system or fund];

5. Qualified retired employees of local or educational employers who are enrolled for coverage in that employer's plan and who enroll in the [State Health Benefits Program] SHBP when the employer joins the SHBP;

6. Qualified retired employees of participating local employers who retired before the employer joined the [State Health Benefits Program] SHBP but who enroll when offered coverage due to the employer's adoption of the provisions of P.L. 1979, [c.54] c. 54 (N.J.S.A. 52:14-17.38);

7. Qualified retired employees of participating local employers who did not continue coverage into retirement but who elect to enroll in the [State Health Benefits Program] SHBP when offered coverage due to the employer's adoption of the provisions of P.L. 1981, [c.436] c. 436 (N.J.S.A. 52:14-17.38); and

8. Qualified retired employees under the provisions of P.L. 1997, [c.330] c. 330 (N.J.S.A. 52:14-17.32i) codified at N.J.A.C. 17:9-6.9.

(c) "Retired employee" also means an employee whose coverage terminated prior to retirement, if that employee is awarded a disability retirement allowance. Eligibility for retired coverage in the [State Health Benefits Program] SHBP shall begin on the employee's retirement date, but should the approval of the retirement allowance be delayed, coverage shall not be retroactive for more than one year.

(d) The definition of "retired employee" shall include the spouse or eligible domestic or civil union partner of an active or retired employee, provided the spouse or eligible [domestic] partner was covered as a dependent under the [State Health Benefits Program] SHBP immediately preceding the death of the active or retired employee, and further provided that in the case of death of an active employee, the spouse or eligible [domestic] partner is receiving a periodic pension or survivorship benefit from a State or locally administered retirement system or plan.

(e) The definition of "retired employee" shall also include the spouse or eligible [domestic] partner of the employee, provided the spouse or [domestic] partner was eligible for coverage immediately preceding retirement and is enrolled for coverage when the employee retires or is added to coverage pursuant to N.J.A.C. 17:9-6.3(a).

(f)-(g) (No change.)

(h) The definition of "retired employee" shall include any former employee, who retired from a State or locally administered retirement system or the spouse or eligible [domestic] partner of the former employee of an employer who becomes a participating employer if the employee, spouse or eligible [domestic] partner:

1.-2. (No change.)

3. Elects to enroll in the [State Health Benefits Program] SHBP at the time the employer becomes a participating employer.

(i) The definition of "retired employee" shall include an employee who is eligible for continuation of coverage in the SHBP at the time of retirement who waives [or terminates] coverage at that time, or at a later date, because the employee has health benefit coverage (active or retired) through an employer or eligible retiree association as a dependent or as an active employee and who applies for continuation of coverage within 60 days after termination of coverage as a dependent or active employee. An eligible retiree association is an association whose membership is limited based on the employment of the employee or the employee's dependent. A certificate of continued coverage or employer or association letter certifying when coverage terminated must accompany the retiree application.

(j) The definition of "retired employee" shall not include an employee who on cessation of employment, elects a vested, deferred retirement benefit under which payments begin at a future date unless that employee is eligible for coverage under the provisions of P.L. 1987, [c.384] c. 384 or P.L. 1992, [c.126] c. 126 (N.J.S.A. 52:14-17.32f and 52:14-17.32f1).

(k) (No change.)

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 investment carrier 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 investment carrier [under the Alternate Benefits Program].

2. (No change.)

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

(b) Any employee, upon retirement, or an eligible survivor [or eligible domestic partner] of such employee will be notified by regular mail of the right to continuous coverage in the [State Health Benefits Program] SHBP. The retired employee[,] or eligible survivor [or eligible domestic partner] must, within a 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. Any retired employee[,] or eligible survivor [or eligible domestic partner] not responding within the 30-day period shall receive a second notice. Any retired employee or eligible survivor not responding to the second notice within a 30-day period will not be permitted to enroll in the SHBP at a later date.

17:9-6.3 Retiree coverage; limitation

(a) A retiree, but not the retiree's surviving [spouse, eligible surviving domestic partner or] dependent, may change coverage to include a spouse, eligible [domestic] partner and other dependents by submitting a completed application along with appropriate legal documentation, described at N.J.A.C. 17:9-3.3(a), verifying the dependent's relationship with the subscriber within 60 days of a change in family status (marriage, domestic partnership, civil union, birth or adoption of a child, or a significant change in health coverage due to a spouse's or [domestic] partner's employment). The dependent shall be enrolled retroactively to the date of the qualifying event. [A copy of the marriage certificate, certificate of domestic partnership or other documentation proving the dependent's relationship must be submitted with the completed application.]

1. If a retiree, but not the retiree's surviving [spouse, eligible domestic partner or] dependent, wishes to add an eligible spouse, eligible [domestic] partner or dependent and the completed application and legal documentation 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 and legal documentation 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) 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] for such retired employees, will be permitted to continue coverage provided that the retired employee pays for the cost of such coverage in advance on a monthly basis, in which case there will be no health benefit deduction from the retirement allowance [or pension check].

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

[(d)] (c) 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 coverage, is ineligible for coverage under the SHBP.

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

Recodify existing (f) and (g) as (e) and (f) (No change in text.)

17:9-6.5 Discontinuance of allowance

When a retired employee's or beneficiary's retirement allowance is discontinued, the retired employee's or beneficiary's coverage may be terminated upon such discontinuance. Upon the reinstatement of the individual's retirement allowance, health insurance coverage will be resumed and may be made retroactive to the date of reinstatement of the retirement allowance, but in no case for more than one year.

17:9-6.6 Beneficiary, dependent or survivor

(a) (No change.)

(b) An eligible surviving spouse or eligible [domestic] partner will be offered the opportunity to continue participation in the [State Health Benefits Program] SHBP 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. If the surviving spouse or [domestic] partner 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 surviving spouse or [domestic] partner at the group rate.

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

(a) For the purposes of this section, "eligible person" means the surviving spouse, eligible [domestic] partner pursuant to N.J.A.C. 17:1-5.5 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, eligible [domestic] partner 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) An eligible person may participate in the [State Health Benefits Program] SHBP regardless of whether the member's employer is a participating employer. The premiums for the coverage shall be paid by the State of New Jersey, as provided in P.L. 1989, [c.271] c. 271.

(c) Persons eligible to participate in the program under this section shall participate in the retiree group. If there is a surviving spouse or eligible [domestic] partner, eligible children shall participate as dependents of the surviving spouse or [domestic] partner. If there is no surviving spouse or [domestic] partner, 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.)

17:9-6.8 Premium-sharing for retired employee State Health Benefit Coverage and reimbursement for Medicare Part B costs

(a) All State employees, except 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 or eligible [domestic] partner 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, except 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) For employees hired before December 11, 1995, who accrue 25 years of service credit in a State-administered retirement system or retire on a disability retirement after July 1, 1997 but before July 1, 2000, payroll deductions for [Traditional Plan] NJ DIRECT10 coverage shall be determined using a base salary as of the first pay period of the calendar year in which retirement occurred, as follows:

1. Upon retirement, retirees with a base salary of $ 40,000 or more in the year of retirement shall pay the difference between the cost of the [Traditional Plan] NJ DIRECT10 and the average cost for NJ [PLUS] DIRECT15 and participating HMOs as determined hereinafter.

2. (No change.)

(c) Employees hired on or after December 11, 1995 who accrue 25 years of service credit in a State-administered retirement system after July 1, 1997 but before July 1, 2000 or retire on a disability retirement after July 1, 1997 but before August 1, 2000, shall, upon retirement, pay the difference between the cost of [the Traditional Plan] NJ DIRECT10 and the average cost to the State for NJ [PLUS] DIRECT15 and participating HMOs as determined hereinafter.

(d) The average cost for NJ [PLUS] DIRECT15 and participating HMOs for each category of coverage for a rate time period shall be determined as follows:

1. Multiply the number of retirees who elected the category of coverage at the beginning of the rate time period immediately preceding the current rate time period by the premium or periodic charge rate for the category of coverage for the current rate time period for NJ [PLUS] DIRECT15 and each participating HMO.

2. Determine the total premium and periodic charges for all retirees who elected the category of coverage by adding the amounts determined under (d)1 above for NJ [PLUS] DIRECT15 and the participating HMOs.

3. Divide the total premium and periodic charges for all retirees who elected the category of coverage determined under (d)2 above by the total number of retirees who elected the category of coverage at the beginning of the immediately preceding rate time period for NJ [PLUS] DIRECT15 and the participating HMOs.

(e) For retirees who accrue 25 years of service credit in a State-administered retirement system on or after July 1, 2000 but before June 30, 2007 or retire on a disability retirement after July 1, 2000 but on or before July 1, 2007, payroll deductions for [Traditional Plan] NJ DIRECT10 coverage shall be determined as follows:

1. Retirees electing [the Traditional Plan] NJ DIRECT10 shall pay 25 percent of the cost of that plan's premium as established by the [State Health Benefits] Commission pursuant to N.J.S.A. 52:14-17.32b; [and]

2. Retirees electing NJ [PLUS] DIRECT15 or an HMO shall have no premium payment[.]; and

3. For retirees who accrue 25 years of service credit in a State-administered retirement system on or after July 1, 2007, or retire on a disability retirement after July 1, 2007, shall pay a health contribution for NJ DIRECT15 or HMO coverage of 1.5 percent of their retirement allowance or 1.5 percent of 50 percent of the highest salary received in the last five years of employment for Alternate Benefit Program members. The health contribution is waived for retirees who participate in the Retiree Wellness Program. Retirees must elect to participate in the Retiree Wellness Program within 60 days of the date of retirement. If the Retiree Wellness Program is not elected within this time period, the retiree will be required to pay the health contribution of 1.5 percent of the retirement benefit. Retirees not electing to participate in the program when first eligible may elect to participate in the Retiree Wellness Program only during the Division's annual open enrollment.

(f)-(g) (No change.)

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

(a) For the purposes of this section, "qualified retiree" means a person who:

1. Is a retiree from:

i.-ii. (No change.)

iii. The Public Employees' Retirement System of New Jersey (N.J.S.A. 43:15A-6 et seq.), hereinafter referred to as PERS, from a position included in the definition of "law enforcement officer" under section 1 of P.L. 1955, [c.257] c. 257 (N.J.S.A. 43:15A-97), from a PFRS-covered position that would have made the member eligible for enrollment in the PFRS but for age, from a position that would have been eligible for enrollment in the PFRS had the employer joined the PFRS by referendum under the provisions of N.J.S.A. 43:16A-3(2) or from a position that is eligible for participation in PFRS as provided in section 9 of P.L. 1989, [c.204] c. 204 (N.J.S.A. 43:16A-1.2);

2.-4. (No change.)

(b) Pursuant to P.L. 1997, [c.330] c. 330 (N.J.S.A. 52:14-17.32i et seq.), a qualified retiree and his or her eligible dependents, as defined in section 2 of P.L. 1961, [c.49] c. 49 (N.J.S.A. 52:14-17.26), but not survivors, are eligible to participate in the [State Health Benefits Program (]SHBP[)] in accordance with the laws and rules governing the program, regardless of whether the retiree's employer participated in the program, and for State payment of an amount of the premium or periodic charges for the category of coverage elected by the qualified retiree equal to 80 percent of the premium or periodic charges for that category of coverage under the State-managed care plan or health maintenance organization, which provides services in the 21 counties of the State and the lower premium or periodic charges.

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

1. A retired State employee whose premium or periodic charges for health benefits under the [State Health Benefits Program] SHBP are paid by the State pursuant to section 8 of P.L. 1961, [c.49] c. 49 (N.J.S.A. 52:14-17.32) or section 6 of P.L. 1996, [c.8] c. 8 (N.J.S.A. 52:14-17.28b);

2. A retiree of an employer other than the State for whom the employer pays any amounts for health benefits under the SHBP, including Medicare B reimbursements, as authorized by section 7 of P.L. 1964, [c.125] 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.-6. (No change.)

(d) (No change.)

(e) The surviving spouse or eligible [domestic] partner of a retiree who was eligible or was enrolled for benefits under N.J.S.A. 52:14-17.32i et seq., shall be eligible to continue coverage, at full cost, in the [State Health Benefits Program] SHBP. If the deceased retiree would have been eligible for such coverage but was not enrolled due to active health benefit coverage as an employee or dependent, the surviving spouse or eligible [domestic] partner may enroll in the SHBP, on a prospective basis, within six months after the retiree's death. The surviving spouse or eligible [domestic] partner must inform the SHBP that they wish to enroll for coverage and must fill out an enrollment form and pay the required premiums before coverage may become effective.

(f) (No change.)

17:9-7.1 Termination effective date

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

(c) Unless the subscriber requests termination of coverage, SHBP coverage for a member who is awaiting approval of a retirement benefit shall continue until the retirement is either approved or denied provided the member makes the appropriate remittance for coverage. Any retroactive SHBP premiums owed by the subscriber shall be deducted from the retirement benefit when approved, the withdrawal check, the return of pension contributions, or from any retirement or death benefit received by the member's surviving [spouse, domestic partner or] dependent.

17:9-7.2 Termination of eligibility

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

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

1.-2. (No change.)

3. The dependent enters the Armed Forces; [or]

4. The subscriber fails to make required premium payment(s) for dependents[.]; or

5. The dependent child becomes eligible for SHBP coverage due to employment.

17:9-7.3 Continuation of coverage

(a) The coverage of an employee, and an employee's dependents, may be continued 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] SHBP. 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. (No change.)

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 or partner. It does not provide for a leave due to the personal illness of the employee.

ii.-iv. (No change.)

17:9-7.4 Voluntary termination

A subscriber may elect voluntarily to terminate coverage for the subscriber or the subscriber's dependents at any time, but termination of the subscriber's own coverage shall automatically terminate the coverage of the subscriber's dependents. Such voluntary termination shall be effected by written notice thereof to the State Health Benefits Bureau by use of the New Jersey [State Health Benefits Program] SHBP 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. Coverage may be reinstated for retirees after termination of the retiree and eligible dependents only as permitted in [Subchapter] N.J.A.C. 17:9-6.

17:9-8.1 Employee Prescription Drug Plan

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

(c) The rules for eligibility and for determining the effective dates of coverage are the same as those of the [State Health Benefits Program] SHBP 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. (No change.)

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

[3.] 2. 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] SHBP 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] 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] SHBP medical plan in which the member is enrolled; and

[4.] 3. 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] SHBP medical plans except as Federally or State mandated.

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) (No change.)

17:9-9.1 Employee Dental Plans

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

(c) The rules are the same as those of the [State Health Benefits Program] SHBP 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. There is no right of conversion from a Plan participating in the Employee Dental Plans to non-group coverage;]

Recodify existing 2. and 3. as 1. and 2. (No change in text.)

[4.] 3. All employees enrolled for coverage are required to participate in the Plan for a minimum 12-month period while eligibility for coverage exists unless the minimum enrollment requirement is waived by the [State Health Benefits] Commission;

Recodify existing 5. and 6. as 4. and 5. (No change in text.)

[7.] 6. An employer who does not participate in the [State Health Benefits Program] SHBP or School Employees' Health Benefits Program is ineligible for participation in the Employee Dental Plans; and

[8.] 7. An employer who elects to participate in the Employee Dental Plans must remain in the Plans for a minimum of 12 months before terminating coverage unless the employer terminates participation in the [State Health Benefits Program] SHBP or School Employees' Health Benefits Program.

SUBCHAPTER 10. PROCUREMENT OF STATE HEALTH BENEFITS 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] 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.

17:9-11.1 Establishment of Part-time Employees Group

(a) The [State Health Benefits Program] SHBP Part-Time Employees Group was established under the provisions of P.L. 2003, [c.172] c. 172 (N.J.S.A. 52:14-17.33a).

(b) (No change.)

(c) The laws and [regulations] rules governing the [State Health Benefits Program] SHBP, except as modified in this subchapter, are construed to apply to part-time employees or faculty members and their dependents to the extent possible.

(d) 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, or other termination of the group coverage. [There is no right of conversion from the Part-Time Employees Group to nongroup coverage.]

(e)-(h) (No change.)

17:9-11.2 Eligible part-time employees

Part-time employees of the State, including employees of the State colleges and universities, New Jersey Building Authority, New Jersey State Library, Palisades Interstate Parkway Commission, and the Commerce and Economic Growth Commission[, as well as part-time faculty at county colleges] participating in the SHBP, are eligible to enroll if they are members of the State-administered retirement system.

17:9-11.3 Coverage available

(a) The State Managed Care Plan is NJ [PLUS] DIRECT15.

(b) Pursuant to P.L. 2003, [c.172] c. 172 (N.J.S.A. 52:14-17.33a), members of the Part-time Employees Group shall be eligible for coverage in NJ [PLUS] DIRECT15. Members shall also be eligible for coverage under the State Employee Prescription Drug Plan. There shall be no prescription drug coverage under NJ [PLUS] DIRECT15.

(c) Eligible employees may waive enrollment in the State Employee Prescription Drug Plan, but in no case shall they be allowed to enroll in the State Employee Prescription Drug Plan without also being enrolled in NJ [PLUS] DIRECT15.

(d) There is no eligibility for dental or vision or any other benefit created by P.L. 2003, [c.172] c. 172.

17:9-11.5 Cost of coverage

The [State Health Benefits] Commission may adopt separate rates for the Part-time Employees Group reflecting the actual cost of the benefit plus administrative costs.

17:9-11.7 Effect of full-time employment on participation in the Part-time Employees Group

A member of the Part-time Employees Group who changes from part-time to full-time status cannot be enrolled for [employer-paid] full-time employee coverage until the employee has established eligibility for coverage by serving the normal waiting period prescribed for new enrollees. In no event will the waiting period for full-time coverage include any part-time service rendered by the employee.

17:9-11.10 Coverage in retirement

(a) Participation in the Part-time Employees Group pursuant to this section shall not qualify the employee or faculty member for employer-paid or State-paid health care benefits in retirement. Upon retirement, such employees or faculty members who were enrolled in NJ [PLUS] DIRECT15 immediately prior to retirement shall be eligible to continue NJ [PLUS] DIRECT15 coverage as a retiree at their own expense. Prescription drug benefits [under NJ PLUS] shall be provided through the Retiree Prescription Drug Card Plan (N.J.A.C. 17:9-6.10).

(b) Whenever possible, the cost of retiree coverage will be deducted directly from the retirement allowance [or pension checks]. Where the available retirement allowance [or pension check] is less than the charge for coverage, no amount will be deducted to pay for the cost of the coverage; instead, the retiree will be permitted to continue coverage if the retiree pays for the full cost of coverage in advance on a monthly basis.

(c) An eligible surviving spouse or eligible [domestic] partner will be offered the opportunity to continue participation in NJ [PLUS] DIRECT15 subsequent to the death of the retiree. Coverage will be limited to only those dependents covered at the time of the retiree's death. The surviving spouse or eligible [domestic] partner must pay the full costs.

17:9-12.1 [The] Retiree Dental Expense Plan

(a) The Retiree Dental Expense Plan (Plan) was established under the provisions of N.J.S.A. 52:14-17.29(F) and became effective as of January 1, 2005. The Plan is available to retirees eligible for participation in the [State Health Benefits Program] SHBP and School Employees' Health Benefit Program and their eligible dependents. New retirees may enroll by completing an application at the time of retirement. The Plan is a Dental Expense Plan, which is a traditional indemnity-type plan, which allows the employee to select any licensed dentist for dental care.

(b) (No change.)

(c) The rules are the same as those of the [State Health Benefits Program] SHBP 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. Coverage is not continued in the event of termination from the [State Health Benefits Program] SHBP. There is no eligibility to continue retired dental coverage under the Federal [Consolidated Omnibus Budget Reconciliation Act of 1985, 29 U.S.C. §§1161 through 1168 (]COBRA[)] law;

[2. There is no right of conversion from the Plan to non-group coverage;]

Recodify existing 3. and 4. as 2. and 3. (No change in text.)

SUBCHAPTER 13. CHAPTER 375 DEPENDENTS

17:9-13.1 Eligibility criteria

(a) In order for a dependent to qualify for and remain eligible for [State Health Benefits Program] SHBP coverage after age 23 as a Chapter 375 dependent, the dependent must be a covered person's child by blood or law who:

1. Is [less than] 30 years of age or younger;

2.-5. (No change.)

17:9-13.2 Enrollment

(a) Enrollment of a Chapter 375 eligible dependent is voluntary. A separate election will be required for enrollment, change in or a voluntary termination of coverage for a Chapter 375 eligible dependent. If an employee or retiree (subscriber) does not elect coverage for a Chapter 375 eligible dependent by December 31, 2007, the subscriber may thereafter enroll the dependent as follows:

1. Submission of an enrollment application and certificate of creditable coverage to the Division no later than 30 days after the dependent meets all eligibility criteria under N.J.A.C. 17:9-13.1. Coverage will be effective the first coverage period of the month, 60 days after the dependent meets all eligibility criteria.

2. (No change.)

(b) (No change.)

17:9-13.3 Coverage available

(a) An enrolled Chapter 375 dependent shall be provided coverage in the same medical plan in which the subscriber is enrolled. In the event the subscriber participates in a [State Health Benefits Program (]SHBP[)] prescription drug plan, the Chapter 375 dependent shall also qualify for participation in the same SHBP prescription drug plan.

(b) (No change.)

17:9-13.4 Premium rates and payment for coverage

The Commission shall determine premium rates for enrolled Chapter 375 dependents[, initially on the basis of the anticipated experience of the group and annually thereafter on the basis of the actual experience of the group] as provided by P.L. 2008, c. 38. The subscriber or dependent is responsible for the cost of the [State Health Benefits Program] SHBP coverage for each enrolled Chapter 375 dependent.

17:9-13.5 Termination of coverage

(a) [State Health Benefits Program (]SHBP[)] coverage for a Chapter 375 dependent shall terminate in the event:

1. The Chapter 375 dependent no longer meets all of the criteria for eligibility at N.J.A.C. 17:9-13.1 except that the dependent shall be eligible for coverage until his or her 31st birthday;

2.-3. (No change.)

4. The employee, [or] retiree or dependent fails to make required premium payments for the Chapter 375 dependent; or

5. (No change.)

(b)-(c) (No change.)

17:9-13.6 Notice of Termination of coverage for nonpayment of premiums

(a) If a subscriber or dependent fails to make a required premium payment for a Chapter 375 dependent by the end of the month in which premium payment is due, the Division shall notify the subscriber or dependent of the overdue amount on the next billing statement. Such notice shall advise the subscriber or dependent that the Chapter 375 dependent's right to continue coverage will be terminated if payment of the overdue premium payment and the current premium payment due is not remitted to the Division within 30 days. If payment is not remitted within 30 days, the Division shall terminate the Chapter 375 dependent's coverage effective the last day of the month for which premiums were paid.

(b) (No change.)


ADOPTIONS


TREASURY — GENERAL
DIVISION OF PENSIONS AND BENEFITS

41 N.J.R. 4462(a)

Adopted Amendment: N.J.A.C. 17:2-8.3

Public Employees' Retirement System

Prosecutors Part


Proposed: August 17, 2009 at 41 N.J.R. 3040(a).

Adopted: October 21, 2009 by the Public Employees' Retirement System Board of Trustees, Kathleen Coates, Board Secretary.

Filed: October 22, 2009 as R.2009 d.351, without change.

Authority: N.J.S.A. 43:15A-17.

Effective Date: December 7, 2009.

Expiration Date: January 24, 2010.

Summary of Public Comment and Agency Response:

No comments were received.

Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 43:15A-17 governs the subject of the adopted amendment to N.J.A.C. 17:2-8.3 and there is no Federal requirement or standard that affects the subject to this rulemaking.

Full text of the adoption follows:

SUBCHAPTER 8. PROSECUTORS PART

17:2-8.3 Contribution rate

(a) The rate of contribution to the Prosecutors Part of the Public Employees' Retirement System shall be a percent of base salary as established by the Board of Trustees. The amount of the members' contribution rate shall be established upon recommendation of the actuary using consistent and generally-accepted actuarial standards, as established by the Governmental Accounting Standards Board.

(b) The rate of contribution shall be reviewed by the System's actuaries periodically and adjusted by the Board as necessary. The Board of Trustees shall review the contribution rate at every three-year period as part of the valuation by the PERS System's actuary and whenever the PERS, PFRS, TPAF or SPRS rate is adjusted by the Legislature. A notice of any change in the rate shall be published through a notice in the New Jersey Register and shall become effective on the date authorized by the Board.


TREASURY — GENERAL
DIVISION OF PENSIONS AND BENEFITS

TEACHERS' PENSION AND ANNUITY FUND

41 N.J.R. 3111(a)

Adopted Amendment: N.J.A.C. 17:3-2.1

Enrollment Eligibility

Proposed: April 20, 2009 at 41 N.J.R. 1713(a).

Adopted: July 2, 2009 by the Teachers' Pension and Annuity Fund Board of Trustees, Mary Ellen Rathbun, Secretary.

Filed: July 16, 2009 as R.2009 d.253, without change.

Authority: N.J.S.A. 18A:66-4 and 18A:66-56.

Effective Date: August 17, 2009.

Expiration Date: April 21, 2013.

Summary of Public Comment and Agency Response:

No comments were received.

Federal Standards Statement

A Federal standards analysis is not required for the adopted amendments because there are no Federal requirements or standards that affect the subject of this rulemaking, except that there is reference to compliance with the Consumer Price Index as reported by the United States Department of Labor, Bureau of Labor Statistics, but this standard is not exceeded.

Full text of the adoption follows:

SUBCHAPTER 2.    ENROLLMENT

17:3-2.1   Enrollment eligibility

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

1.-2. (No change)

3. Prior to November 2, 2008, the salary for the position is $ 500.00 or more within a year.

(b)-(f) (No change)

(g) Pursuant to the provisions of N.J.S.A. 18A:66-4, for individuals who became members of TPAF on or after November 2, 2008, the $ 7,500 minimum annual base salary for participation in the retirement system shall be adjusted annually by the Director of the Division in accordance with changes in the Consumer Price Index, but by no more than four percent. For the calendar year beginning January 1, 2010, the minimum base annual salary required for enrollment will be adjusted annually to reflect increases in the Consumer Price Index. For purposes of this calculation, "Consumer Price Index" means the average of the annual increase in the consumer price index for all urban consumers, not seasonally adjusted for all items, in the New York City and Philadelphia metropolitan statistical areas during the preceding calendar year as reported by the United States Department of Labor, Bureau of Labor Statistics.

1. The adjustment factor for a calendar year shall be calculated as a fraction, pursuant to the following:

i. The numerator shall be the annual Consumer Price Index for all urban consumers in the New York City metropolitan statistical area for the calendar year ending December 31 of the first year preceding the July 1 calculation date, plus the annual Consumer Price Index for all urban consumers in the Philadelphia metropolitan statistical area for the same time period; and

ii. The denominator shall be the annual Consumer Price Index for all urban consumers in the New York City metropolitan statistical area for the calendar year ending December 31 of the second year preceding the July 1 calculation date, plus the annual Consumer Price Index for all urban consumers in the Philadelphia metropolitan statistical area for the same time period.

2. If the value of the calculation in (g)1 above is less than zero for a calendar year, then the adjustment factor for the calendar year shall be equal to zero. If the value of that fraction is greater than 1.04 for a calendar year then the adjustment factor for the calendar year shall be equal to 1.04.

3. The adjustment shall be calculated on or about July 1 each calendar year to become effective on January 1 of the subsequent calendar year.

4. Increases in the minimum annual base salary shall be made in multiples of $ 100.00, except that any increase, which is not a multiple of $ 100.00 will be rounded to the next lowest multiple of $ 100.00. Each annual adjustment shall not be more than four percent when compared to the preceding year's minimum annual base salary.

(h) The calculation and any needed adjustment pursuant to (g) above shall be published via a notice of administrative change in the New Jersey Register revising the minimum annual base salary.


TREASURY — GENERAL
DIVISION OF PENSIONS AND BENEFITS

PUBLIC EMPLOYEES' RETIREMENT SYSTEM

41 N.J.R. 3110(a)

Adopted Amendment: N.J.A.C. 17:2-2.1

Social Security Coverage

Proposed: April 20, 2009 at 41 N.J.R. 1712(a).

Adopted: July 15, 2009 by the Public Employees' Retirement System Board of Trustees, Kathleen Coates, Secretary.

Filed: July 16, 2009 as R.2009 d.252, without change.

Authority: N.J.S.A. 43:15A-7 and 43:15A-17.

Effective Date: August 17, 2009.

Expiration Date: January 24, 2010.

Summary of Public Comment and Agency Response:

No comments were received.

Federal Standards Statement

A Federal standards analysis is not required for the adopted amendment because there are no Federal requirements or standards that affect the subject of this rulemaking, except that there is reference to compliance with the Consumer Price Index as reported by the United States Department of Labor, Bureau of Labor Statistics, but this standard is not exceeded.

Full text of the adoption follows:

SUBCHAPTER. 2.   ENROLLMENT

17:2-2.1   Enrollment eligibility

(a) A position with a public employer must be covered by Social Security as a prerequisite for membership in the system. In the case of multiple employments, Social Security coverage is required in each position or employment for each to qualify for membership.

(b) Subsection (c) below shall only be applicable to individuals who become members of PERS on or after November 2, 2008.

(c) Pursuant to the provisions of N.J.S.A. 43:15A-7, the $ 7,500 minimum annual base salary for participation in the retirement system shall be adjusted annually by the Director of the Division in accordance with changes in the Consumer Price Index, but by no more than four percent. For the calendar year beginning January 1, 2010, the minimum base annual salary required for enrollment will be adjusted annually to reflect increases in the Consumer Price Index. For purposes of this calculation, "Consumer Price Index" means the average of the annual increase in the consumer price index for all urban consumers, not seasonally adjusted for all items, in the New York City and Philadelphia metropolitan statistical areas during the preceding calendar year as reported by the United States Department of Labor, Bureau of Labor Statistics.

1. The adjustment factor for a calendar year shall be calculated as a fraction, pursuant to the following:

i. The numerator shall be the annual Consumer Price Index for all urban consumers in the New York City metropolitan statistical area for the calendar year ending December 31 of the first year preceding the July 1 calculation date, plus the annual Consumer Price Index for all urban consumers in the Philadelphia metropolitan statistical area for the same time period; and

ii. The denominator shall be the annual Consumer Price Index for all urban consumers in the New York City metropolitan statistical area for the calendar year ending December 31 of the second year preceding the July 1 calculation date, plus the annual Consumer Price Index for all urban consumers in the Philadelphia metropolitan statistical area for the same time period.

2. If the value of the calculation in (c)1 above is less than zero for a calendar year, then the adjustment factor for the calendar year shall be equal to zero. If the value of that fraction is greater than 1.04 for a calendar year, then the adjustment factor for the calendar year shall be equal to 1.04.

3. The adjustment shall be calculated on or about July 1 each calendar year to become effective on January 1 of the subsequent calendar year.

4. Increases in the minimum annual base salary shall be made in multiples of $ 100.00, except that any increase, which is not a multiple of $ 100.00 will be rounded to the next lowest multiple of $ 100.00. Each annual adjustment shall not be more than four percent when compared to the preceding year's minimum annual base salary.

(d) The calculation and any needed adjustments pursuant to (c) above shall be published via a notice of administrative change in the New Jersey Register revising the minimum annual base salary.


TREASURY — GENERAL
DIVISION OF PENSIONS AND BENEFITS

41 N.J.R. 2037(a)

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

Adopted New Rule: N.J.A.C. 17:9-1.9

Adopted Repeal and New Rule: N.J.A.C. 17:9-5.9

State Health Benefits Program

Proposed: January 5, 2009 at 41 N.J.R. 101(a).

Adopted: April 1, 2009 by the State Health Benefits Commission, Frederick J. Beaver, Secretary.

Filed: April 6, 2009 as R.2009 d.150, with substantive and technical changes not requiring additional public notice and comment (see N.J.A.C. 1:30-6.3).

Authority: N.J.S.A. 52:14-17.27.

Effective Dates: April 6, 2009, Readoption; May 4, 2009, Amendments and New Rules.

Expiration Date: April 6, 2014.

Summary of Public Comments and Agency Responses:

Two comments were received from Paul L. Kleinbaum, Esquire, on behalf of the New Jersey State Police Benevolent Association (PBA) by letter dated March 2, 2009. The two comments are as follows:

1. COMMENT: The first comment involved N.J.A.C. 17:9-5.9, wherein the PBA asserts that the proposed new rule appears to go far beyond P.L. 2007, c. 103, which revised N.J.S.A. 52:14-17.28b. The PBA asserts that the statutory changes only apply to State employees. They argue that there are many local government employees who are participants in the State Health Benefits Plan (SHBP). Additionally, the PBA asserts that the State may have imposed a contribution rate of 1.5 percent for certain employees for whom there is no majority representative and certain unions representing State employees may have agreed to such a contribution rate in collective bargaining. However, unions representing other State employees, notably PBA Local 105, have not agreed to any contribution rate.

RESPONSE: The State Health Benefits Commission (SHBC) thanks the commenter for his comments. The commenter correctly points out that this change in law applies only to State employees and that employees in unions who have not yet settled their contracts are not currently subject to this health benefit contribution. Therefore, the text of the rule has been changed to be more clear and reflect same. The use of the word "State" appears before employee and "as negotiated" at the end of the relevant sentence.

2. COMMENT: This comment involved a very similar issue as the first comment, as it relates to N.J.A.C. 17:9-6.8(e)3. The PBA argues that the proposed rule appears to apply to any retiree of a State-administered retirement system, whether an employee of a State, or of any local, government. The PBA also asserts that the applicable provisions of the law apply only to retirees of employment with the State and for whom there was no majority representative. The contribution rate, if any of a retiree formerly employed by the State, not retirees of municipal or county government, who was represented by a majority representative would be based on the terms of a binding collective bargaining agreement.

RESPONSE: The SHBC thanks the PBA for this comment. The SHBC acknowledges the concerns of the Commenter herein and revised the rule to conform with the statutory language. Therefore, the word "State" appears before retirees and "as negotiated" were added to the text of the rule.

Summary of Agency-Initiated Change:

At N.J.A.C. 17:9-1.8, the definition of civil union partner, the Division found it necessary to add to the adopted language, "from other jurisdictions" in order to comply with governing legislation, N.J.S.A. 37:1-2 and advice received from the Attorney General.

Federal Standards Statement

A Federal standards analysis is not required for the rules readopted with amendments, repeal and new rules because N.J.S.A. 52:14-17.27 governs the subject of this rulemaking. There are no Federal requirements or standards that affect the subject of this rulemaking, except that there is reference to compliance with the Health Insurance Portability and Accountability Act (HIPAA), 42 U.S.C. §§1320d et seq., but this law is not exceeded.

Full text of the readopted rules can be found in the New Jersey Administrative Code at N.J.A.C. 17:9.

Full text of the adopted amendments and adopted new rules follows (additions indicated in boldface *thus*; deletions indicated in brackets *[thus]*):

SUBCHAPTER 1. ADMINISTRATION

17:9-1.1 Commission meetings

(a) The State Health Benefits Commission shall meet, as necessary, at the call of the Chairperson or the Secretary provided that the required public notice has been given, pursuant to the provisions of the Open Public Meetings Act, N.J.S.A. 10:4-13.

(b) (No change.)

(c) If a member is unable to attend a meeting, the member, if a member who is authorized by statute to appoint a designee, shall designate, in writing, an alternate. The person so designated shall be permitted to vote on business brought before the Commission.

(d) All Commission members and alternates shall complete all mandatory training required by either the implementing regulations of the Federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) or the State Ethics Commission prior to hearing any appeals before the Commission.

17:9-1.2 Records

(a) The Secretary of the Commission shall maintain minutes of the Commission meetings in compliance with the Open Public Meetings Act (OPMA), N.J.S.A. 5:10-1 et seq. Public session minutes are public records subject to access under the Open Public Records Act (OPRA), N.J.S.A. 47:1-1 et seq and the requirements of the Federal Health Insurance Portability and Accountability Act (HIPAA), 42 U.S.C. §§3210d et seq. Minutes of closed sessions pertaining to the claims of any individual shall be redacted of all personal identifying information unless the individual member waives his or her privacy interest and consents in writing to disclosure in accord with HIPAA. Minutes of executive sessions shall be subject to disclosure pursuant to the OPMA after the Commission determines the need for confidentiality no longer exists. Records of the Commission subject to public access under OPRA may be inspected during regular business hours at the office of the Division under supervision of a representative of the State Health Benefits Program or other representatives of the office. All requests for records under OPRA shall be made in writing on the required form and submitted to the Department of the Treasury Government Records Unit.

(b) To protect the personal privacy of individual participants and their families, the mailing addresses of active and retired participants and all matters related to an individual's files related to an individual's coverage and claims shall be maintained as confidential. Protected health information shall not be released to any person except as permitted under HIPAA in response to a valid HIPAA Authorization for Release of Information in a form acceptable to the Division as described in 45 CFR 164.508 or as otherwise authorized by HIPAA. The requesting party shall have the burden of demonstrating to the satisfaction of the Division that the confidential materials may be released under HIPAA.

17:9-1.3 Appeals from Commission decisions

(a) Any member of the SHBP who disagrees with the decision of the claims administrator and has exhausted all appeals within the plan, may request that the matter be considered by the Commission. Requests for consideration must be directed to the Secretary of the Commission, and must contain the reason for the disagreement and all available supporting documentation. Appeals shall be considered at the regular 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 person who disagrees with a determination made by the Division regarding their enrollment or eligibility in SHBP, may request that the matter be considered by the Commission.

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

17:9-1.4 Employer participation

(a) An employer joining the SHBP must adopt the resolution furnished by the Division and must agree to comply with the statutes and rules adopted by the Commission. The effective date of coverage for employers with fewer than 250 employees, COBRA participants and retired members will be the first day of the month following a period beginning 75 days after the receipt by the 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 Commission of the completed resolution.

(b)-(c) (No change.)

17:9-1.5 Voluntary termination of employer; notice

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

(b) When a participating employer voluntarily terminates coverage, the coverage for the employer's active and retired employees, participants under N.J.S.A. 52:14-17.29k 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 Commission.

(c) (No change.)

(d) The Division shall act to notify all affected COBRA participants, participants under N.J.S.A. 52:14-17.29k, and retired members of the termination of coverage. Upon request from the employer, the Division shall forward a list of the names and addresses of terminating retirees, participants under N.J.S.A. 52:14-17.29k, 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) (No change.)

(b) The Secretary of the Commission will notify the offices of the State Treasurer; the Attorney General; the Department of Community Affairs, Division of Local Government Service; and the Department of Education, if applicable. The Division will notify the employer and affected COBRA participants, participants under N.J.S.A. 52:14-17.29k and retired subscribers of the termination of coverage. The employer is responsible for notifying its active employees affected by this termination.

(c) Under the provisions of P.L. 2008 c. 24, the Division of Revenue of the Department of the Treasury will be responsible for collecting any outstanding debt. If necessary, the amount owed will be deducted from any amount that might otherwise be remitted by any State agency to the debtor.

17:9-1.7 Employer incentives for non-enrollment

(a) Except as allowed by 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 SHBP.

(b) Any participating local employer, other than the State is allowed 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.

(c) As the employer's certifying agent must sign each individual waiver application, no general resolution is required for the adoption of the waiver incentive.

17:9-1.8 Definitions

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

. . .

"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, member and spouse/partner, parent and child, and family coverage, and whether prescription drug coverage is provided in the health coverage. For retirees only, the category also reflects the Medicare entitlement of the member and spouse/partner.

"Chapter 375 Dependents" means all adult children, which are defined as dependents in their parent's State health benefits coverage pursuant to P.L. 2005, c. 375 and supplemented by P.L. 2008, c. 38, which is codified at N.J.S.A. 52:14-17.29k.

"Civil union partner" means a person, who is of the same sex as the employee, with whom a legally recognized union is formed. The relationship must also satisfy the definition of a civil union as set forth in N.J.S.A. 37:1-2*[, civil]**. Civil* union certificates issued to same-sex couples *from other jurisdictions* are accepted under the New Jersey civil union statutes. Whenever reference is made to "marriage," "husband," "wife," "spouse," "family," "immediate family," "dependent," "next of kin," "widow," "widower," "widowed" or another word, which in a specific context denotes a marital or spousal relationship, the same shall include a civil union partner; or a domestic partnership formed outside the State of New Jersey.

. . .

"COBRA" means the Federal Consolidated Omnibus Budget Reconciliation Act of 1985, 42 U.S.C. §§1161-1168, which requires most employers sponsoring group health plans to offer employees and their eligible dependents the opportunity to temporarily extend their group health coverage in certain instances where coverage under the plan would otherwise end.

. . .

"Dependent" refers to any individual covered under the SHBP in addition to the subscriber (see N.J.A.C. 17:9-4.1).

"Director" means the Director of the Division of Pensions and Benefits.

"Division" means the Division of Pensions and Benefits.

. . .

"Eligible Employer" is a public agency, the employees of which, if otherwise eligible, may join any of the retirement systems established by statute to provide retirement benefits for public employees. The term does not apply to school employers or their employees.

"Local employer" means public employers, such as counties, municipalities and authorities, including independent State authorities not designated as "State employers" for SHBP purposes.

"Locally-administered retirement system" means an agency established under State law to provide a system of retirement benefits for public employers, which is not administered by the Division.

"Member" means any individual covered under the SHBP, regardless of whether the person is a subscriber or a dependent.

"NJ DIRECT10" means the coverage created by P.L. 2007, c. 103 as a successor plan to the "Traditional Plan" indemnity coverage.

"NJ DIRECT15" means the State's managed care plan created by P.L. 2007, c. 103 as a replacement to the "NJ PLUS" coverage.

. . .

"PPO" means Preferred Provider Organization duly authorized to operate in the State which is under contract with the Commission to participate in the program.

"SHBP" means the State Health Benefits Program.

"Spouse" means a person of the opposite sex to whom one has been joined in a properly recorded legal ceremony authorized by law (as defined by N.J.S.A. 37:1-1). New Jersey recognizes legal marriages performed in other states or jurisdictions but does not recognize "common law" or any other form of marriage without a formal license (N.J.S.A. 37:1-10).

"State-administered pension fund" means a retirement system administered by the Division, including such systems as the Alternate Benefits Program.

"State-administered retirement system" means an agency established under State law to provide a system of retirement benefits for public employees.

"State biweekly employer" means an agency whose employees are paid through the State's Centralized Payroll System.

"State Employer" means the State of New Jersey and those agencies so designated by statute as "State employers" for SHBP purposes.

"State monthly employer" means an agency defined by statute as a "State employer" for SHBP purposes but independent of the State's Centralized Payroll System.

"Successor plan" means a managed care plan that replaces the Traditional Plan and provides an in-network level of benefits as well as out-of-network benefits to participants with a payment of 80 percent of reasonable and customary.

17:9-1.9 Certifying officer (employer)

(a) The chief fiscal officer or other officer duly designated by a resolution of each county, municipality or public agency, and the personnel officer of the Division, Bureau or Institution of the State locations, shall serve as certifying officer for that unit.

(b) The certifying officer shall be responsible for the duties described by N.J.S.A. 52:14-17.43, including providing documentation requested by the Commission or the Division in a timely manner.

(c) The certifying officer shall be responsible for all other duties relating to matters concerning the SHBP.

(d) Upon the request of the Commission, the certifying officer shall be required to sign a statement, verifying that any information reported is accurate to the best of the officer's knowledge, and conforms with the statutes and rules governing the SHBP.

SUBCHAPTER 2. COVERAGE

17:9-2.1 Enrollment

An eligible employee shall be eligible to enroll for coverage for the employee and the employee's eligible dependents. The employee and any dependents must enroll in the same plan.

17:9-2.2 Enrollment form

Within 60 days of the time an employee first becomes eligible to apply for coverage, the employee shall file a completed enrollment form indicating the employee's election to enroll or not to enroll for coverage on the employee's own behalf; and the employee's election to enroll or not to enroll any eligible dependents for coverage under one of the SHBP options. A dependent must be listed on the enrollment form to be enrolled for coverage. Appropriate legal documentation, as described in N.J.A.C. 17:9-3.3(a), verifying the dependent's relationship with the subscriber is required before enrollment is approved. If more than 60 days have passed since first eligible 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 according to the schedule for that open enrollment period.

17:9-2.3 Annual open enrollment period

(a) Except as permitted under N.J.A.C. 17:9-2.4, any active employee or COBRA subscriber who did not elect to enroll for coverage for themselves or for their dependents at the time such employee or dependent first becomes eligible for coverage shall subsequently be permitted to enroll themselves and their dependents only during the annual open enrollment period, with coverage effective according to the schedule for that open enrollment period.

(b) (No change.)

(c) The Commission may establish a special enrollment period at any time it deems necessary to do so.

17:9-2.4 Coverage changes; exceptions

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

1. Marriage, civil union and eligible domestic partnerships. Any employee who marries or enters into an eligible domestic partnership or a civil union may enroll the employee and eligible dependents, if any, for any appropriate type of coverage by applying for coverage within the period beginning 60 days prior to the marriage, domestic partnership or civil union and ending 60 days after such marriage, domestic partnership or civil union. In the event that the spouse or partner is already enrolled as an employee, the provisions of N.J.A.C. 17:9-3.5 shall apply to such spouse's or partner's enrollment. A copy of the marriage certificate or certificate of domestic partnership or civil union must be submitted with the completed application to add the spouse/partner.

2. Divorce; separation; termination of domestic partnership or end of civil union. Any employee who has been enrolled or has been covered as a dependent of an enrolled employee and is subsequently divorced or ends a civil union pursuant to N.J.S.A. 2A:34 or terminates a domestic partnership pursuant to N.J.S.A. 26:8A-10 may enroll and delete from coverage or cover any eligible dependents by completing and forwarding a new enrollment form within 60 calendar days after the divorce or termination of the domestic partnership or civil union of such employee or dependent of an employee who was covered previously under the spouse's/partner's contract. A change of enrollment of this nature may also be made in the case of separation.

3. Death of spouse, civil union partner, eligible domestic partner or dependent child. Any employee who is enrolled as the dependent of their spouse/partner who dies may thereupon enroll as an employee, and may enroll any eligible dependents, for any appropriate coverage by completing and forwarding a new enrollment form within 60 days following the death.

4. (No change.)

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

6. An employee, spouse, eligible domestic or civil union partner or dependent ceases to be covered by other group health coverage. If the employee, spouse, domestic or civil union partner or other dependent has other group health coverage, and then becomes ineligible for that other coverage due to qualifying events, such as termination of employment, divorce, termination of domestic or civil union partnership, death, or reduction in hours worked, the employee may enroll in any plan or for any coverage in the SHBP provided that the employee submits a new enrollment application accompanied by proof of the prior coverage, within 60 days of the qualifying event.

7. (No change.)

8. A child resuming eligibility as a dependent child. An employee may enroll, for any coverage, an otherwise eligible child under age 23 who, having previously been ineligible as a dependent child, resumes dependent status, resides with the parent and is financially dependent upon the parent. This applies to children whose marriage, civil union, or domestic partnership has been dissolved, as well as to children who had been considered independent by nature of employment. 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 or dissolution of the civil union or termination of the domestic partnership or the date the child ends employment in order to obtain coverage retroactively to the date of the re-qualifying event. Otherwise, enrollment shall be permitted only during an open enrollment.

9.-10. (No change.)

11. Deference to local employer contracts. When a local employer's contract limits coverage choices of an employee for a specified period of time after the employee's hire date, the employee may increase coverage levels provided an enrollment application is submitted within 60 days following the attainment of additional benefits provided in the contract.

(b) An employee may change the employee's enrollment and the enrollment of the employee's eligible dependents to any type of coverage under conditions other than those specified in (a) above, only during the annual enrollment period, or during a special SHBP 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 SHBP open enrollment period. For provisions governing coverages and charges for 10-month employees, see N.J.A.C. 17:9-5.8(c).

17:9-2.5 Employee coverage requirements

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

1.-3. (No change.)

4. An enrollment form has been legibly completed by the employee and the certifying officer of the employer and filed with the Health Benefits Bureau of the Division within the prescribed time limits;

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; and

6. The employee has provided appropriate legal documentation for each dependent to be enrolled showing the dependent's relationship with the subscriber, as set forth in N.J.A.C. 17:9-3.3(a).

17:9-2.9 HMO; elections

(a) (No change.)

(b) 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. (No change.)

2. Transfer participation to one of the other plans available under the SHBP.

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

(a) (No change.)

(b) Unless the employer or the State pays for surviving spouses or surviving eligible domestic or civil union partners, 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 up to one year may be granted provided the payment of charges is made.

17:9-2.11 Out-of-network NJ DIRECT; eligible charges at enrollment (local employees)

(a) For purposes of local coverage, all eligible charges incurred by an eligible employee or the employee's covered dependents, from January 1 of a calendar year to the effective date of coverage for the employee's participating employer, will be considered toward satisfying the deductibles and coinsurance required under the out-of-network NJ DIRECT.

(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 out-of-network NJ DIRECT coverage.

(c) The charges considered are to be eligible charges under out-of-network NJ DIRECT contract. No charges will be used to satisfy the deductibles and coinsurance for which the employee has been reimbursed by any source.

17:9-2.14 Policy provisions adoption

The Commission adopts by reference all of the policy provisions contained in the contracts between the health, prescription drug and dental plans and the Commission, as well as any subsequent amendments thereto, to the exclusion of all other possible coverages. The plans handbook supplements the master contracts and contains the specific provisions for services to be covered and those which are excluded.

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, foster children and children of an eligible domestic or civil union partner 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.

"Dependents" means an employee's spouse, eligible domestic or civil union partner and the employee's unmarried children through the end of the calendar year in which they reach the age of 23 years who live with the employee in a regular parent-child relationship. "Dependents" also means unmarried children and those not in a domestic partnership or civil union, covered by their parents under the SHBP prior to the attainment of age 23, who:

1.-3. (No change.)

"Living with" shall be defined so as to include children in the case of divorce or termination of a domestic partnership or civil union 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 and children of an eligible domestic or civil union partner must reside with the employee.

17:9-3.2 Military service

A spouse, eligible domestic or civil union partner or child enlisting or inducted into military service shall not be considered eligible for coverage during such military service.

17:9-3.3 Certification of dependency

(a) An employee who elects to enroll an eligible dependent for any coverage shall report such dependent's relationship or status on the enrollment form and provide appropriate legal documentation for each dependent to be enrolled verifying the dependent's relationship with the subscriber. Examples of acceptable documentation include birth certificates, sworn affidavits, marriage certificates, certificates of domestic partnership or civil union, divorce and separation decrees, custody agreements and court orders. This list is not meant to be all inclusive and does not imply acceptance of any of the above without proper authentication. Such listing of the dependent shall constitute the required certification that at the time of enrollment such dependent is substantially dependent upon the employee for support and maintenance.

(b) A person who, although listed as an eligible dependent, is found to be ineligible shall be removed from coverage by the SHBP and the level of coverage of the employee or retiree shall be adjusted accordingly. Coverage for that person as a dependent shall be restored if acceptable documentation is provided to the Division, by the employee or retiree, within 60 days of written notification of the dependent's termination. If acceptable documentation is received after 60 days, the dependent shall not be restored retroactively and can only be added at the next permissible enrollment opportunity.

17:9-3.4 Children with disabilities age 23 or older; determination of eligibility for continuation of coverage

(a) The determination as to the continuation of certain children with disabilities as "dependents" as defined by N.J.A.C. 17:9-3.1 shall be made by the SHBP's medical advisors. A form requesting continuance of enrollment for an eligible dependent with disabilities must be submitted to the SHBP no later than January 31 of the year following the calendar year in which the child attained the age of 23.

(b) Children with disabilities who are age 23 or older at the time their parents obtain coverage under the SHBP who are determined by the SHBP's medical advisors to be incapable of self-sustaining employment by reason of mental or physical disabilities and who meet the requirements of "dependents" as defined by N.J.A.C. 17:9-3.1, shall not be enrolled for coverage as "dependents" as defined by N.J.A.C. 17:9-3.1 unless:

1. They were covered as dependents under a public employer's group plan immediately preceding that employer's entrance into the SHBP; or

2. They were covered as dependents under a public employer's group plan immediately preceding their parents' entrance into the SHBP under the provisions of N.J.S.A. 52:14-17.32f (qualified retirees of the Teachers' Pension and Annuity Fund), 52:14-17.32f1 (qualified retirees of the Public Employees' Retirement System who retired from boards of education or county colleges), 52:14-17.32i (qualified firefighter or law enforcement retirees from the Police and Firemen's Retirement System, Public Employees' Retirement System and Consolidated Police and Firemen's Pension Fund) or the provisions of the Intergovernmental Transfer Program (established under N.J.S.A. 11A:2-11).

17:9-3.5 Multiple coverage; employee and spouse

(a) In any plan offered other than an HMO, an employee who is the spouse or eligible domestic or civil union partner 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 or eligible partner as an employee while covered as a dependent. The employee of an employer other than the State, who has enrolled such spouse or eligible partner, and who is required to pay the full cost of dependent coverage, may receive a refund from the Division equivalent in amount to the employer's cost for single coverage pursuant to N.J.S.A. 52:14-17.31. When both spouses or eligible partners 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 or eligible partner who is an employee of the State and eligible for coverage.

(c) If spouses or eligible partners 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 or eligible partner, under any plan offered other than an HMO, but only one may elect coverage for the employee and for their qualified dependents, including the spouse or eligible partner, 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 or eligible partner.

SUBCHAPTER 4. EMPLOYEES

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 person who is not on a State, college or university payroll or payroll of agencies identified in N.J.A.C. 17:9-4.1;

6. (No change.)

17:9-4.6 Local; full time defined

(a) (No change.)

(b) Where an otherwise eligible employee elects a voluntary furlough, as authorized by P.L. 1993, c. 297 for State employees and extended to local employers pursuant to N.J.A.C. 4A:6-1.23(b), 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, if any, as the employee's contribution for coverage.

17:9-5.2 Charges; interest charges

(a) (No change.)

(b) For the purpose of local coverage, the employer must remit to the Division charges covering a one-month period by the due date printed on the bill.

(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, 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.

17:9-5.3 Local employer payment of charges

(a) (No change.)

(b) With respect to employees for whom there is no majority representative for collective negotiations purposes, the employer may, in its sole discretion, modify the respective payment obligations set forth in law for the employer and such employees for the coverage of the employee and enrolled dependents in a manner consistent with the terms of any collective negotiations agreement binding on the employer. In the absence of any collective negotiations agreement, the employer may modify the payment obligations as it deems appropriate.

(c)-(g) (No change.)

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

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

1.-2. (No change.)

3. Provide for local employer reimbursement of Federal Medicare charges for eligible pensioners and/or their spouses and partners, 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 and partners in accordance with the provisions of P.L. 1972, c. 75 (see N.J.A.C. 17:9-5.5);

4. Require the local employer to pay the full cost of NJ DIRECT or HMO coverage;

5. (No change.)

(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 P.L. 1979, c. 54. Such resolution shall meet the prescriptions of (a) above.

(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 P.L. 1974, c. 88 to surviving spouses and eligible partners 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 P.L. 1974, c. 88 to those former employees who retired since the employer adopted the provisions of the SHBP 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 retirement system service credit and employment service requirements for the employer payment of coverage as established by the resolution adopting the provisions of P.L. 1999, c. 48.

17:9-5.5 Medicare refunds

(a) (No change.)

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

(c) All reimbursements made pursuant to (b) above shall be made payable to the retiree constituting the most timely 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. As with the State, local employers are limited by budget allocations; therefore, retroactive refunds are limited to one year.

(d) In no event shall duplicate reimbursements be made to any retiree for the retiree or the retiree's spouse or eligible domestic or civil union partner. If the spouse or eligible partner of a retiree receives reimbursement for Medicare Part B by the State in their retirement allowances, then the spouse or partner shall only be eligible for the Medicare Part B reimbursement based upon their employment and not the retiree's employment. Spouses or partners reimbursed directly by their employer and not through the State must submit proof that they have waived that other Medicare Part B reimbursement in order to be reimbursed as a spouse or partner of the retiree. In addition, the retiree is not eligible to receive reimbursement for the difference between the amounts reimbursed to a spouse or partner from other Medicare Part B reimbursement and the amounts reimbursed to the retiree under the SHBP.

(e) (No change.)

17:9-5.6 Refunds rejected

Any request for refund not specified in N.J.A.C. 17:9-3.5 and 5.5 shall be denied. For example, a member and spouse or eligible partner may be employed in the same or in different locations, each location participating in the SHBP and both having family coverage, or both having member and spouse/partner coverage; in spite of the apparent duplication of coverage, neither of the covered employees would be eligible for a refund. Or, the spouse or eligible partner carries only single employee coverage under the State program while 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 SHBP. Or, if one spouse or eligible partner applies for Medicare reimbursement for the member and spouse or eligible partner, the other shall not receive duplicate reimbursement.

17:9-5.9 Health Contribution for active employee State Health Benefit Coverage

Pursuant to P.L. 2007, c. 103, (N.J.S.A. *[51:14]**52:14*-17.28b), a deduction in the amount of 1.5 percent of base salary shall be made for each covered *State* employee*, as negotiated*. For purposes of this section, base salary means an employee's annual base salary, not including any bonuses, overtime or longevity payment.

SUBCHAPTER 6. RETIREMENT

17:9-6.1 Retired employee defined

(a) "Retired employee" means a person who is eligible for coverage under the SHBP's retiree group. This "retired employee" status, once established, shall continue in effect even though the employer is subsequently disbanded and no successor agency is created upon the dissolution of such employer.

(b) The definition of "retired employee" also includes the following classes of retired employees who are eligible for coverage:

1. (No change.)

2. Retired employees of educational and local employers participating in this Program who were eligible for coverage as active employees immediately prior to retirement and who continued coverage at retirement;

3. Retired employees of educational and county college employers, regardless of the employer's participation in the SHBP who:

i. (No change.)

ii. Were eligible for group health plan coverage prior to leaving employment; and

iii. Retired on disability retirements or on benefits based upon 25 or more years of service credit in the Teachers' Pension and Annuity Fund, the Public Employee's Retirement System, the Alternate Benefits Program or in a locally administered pension fund established by N.J.S.A. 18A:66-94 et seq. under the provisions of P.L. 1987, c. 384, P.L. 1992, c. 126 or P.L. 1995, c. 357 ( N.J.S.A. 52:14-17.32f, 52:14-17.32f1 and 52:14-17.32f2);

4. Qualified retired employees of boards of education who receive a retirement benefit from a State or locally administered retirement system and who:

i.-ii. (No change.)

iii. Within 60 days of enrollment in Parts A and B of the Federal Medicare Program, elect to join the SHBP under the provisions of P.L. 1993, c. 8 (N.J.S.A. 52:14-17.32h). A retired employee, upon enrollment in the SHBP pursuant to this rule, who qualified for benefits under the provisions of N.J.S.A. 52:14-17.32f, 17.32f1 or 17.32f2 shall be eligible for coverage paid by the State;

5. Qualified retired employees of local or educational employers who are enrolled for coverage in that employer's plan and who enroll in the SHBP when the employer joins the SHBP;

6. Qualified retired employees of participating local employers who retired before the employer joined the SHBP but who enroll when offered coverage due to the employer's adoption of the provisions of P.L. 1979, c. 54 (N.J.S.A. 52:14-17.38);

7. Qualified retired employees of participating local employers who did not continue coverage into retirement but who elect to enroll in the SHBP when offered coverage due to the employer's adoption of the provisions of P.L. 1981, c. 436 (N.J.S.A. 52:14-17.38); and

8. Qualified retired employees under the provisions of P.L. 1997, c. 330 (N.J.S.A. 52:14-17.32i) codified at N.J.A.C. 17:9-6.9.

(c) "Retired employee" also means an employee whose coverage terminated prior to retirement, if that employee is awarded a disability retirement allowance. Eligibility for retired coverage in the SHBP shall begin on the employee's retirement date, but should the approval of the retirement allowance be delayed, coverage shall not be retroactive for more than one year.

(d) The definition of "retired employee" shall include the spouse or eligible domestic or civil union partner of an active or retired employee, provided the spouse or eligible partner was covered as a dependent under the SHBP immediately preceding the death of the active or retired employee, and further provided that in the case of death of an active employee, the spouse or eligible partner is receiving a periodic pension or survivorship benefit from a State or locally administered retirement system or plan.

(e) The definition of "retired employee" shall also include the spouse or eligible partner of the employee, provided the spouse or partner was eligible for coverage immediately preceding retirement and is enrolled for coverage when the employee retires or is added to coverage pursuant to N.J.A.C. 17:9-6.3(a).

(f)-(g) (No change.)

(h) The definition of "retired employee" shall include any former employee, who retired from a State or locally administered retirement system or the spouse or eligible partner of the former employee of an employer who becomes a participating employer if the employee, spouse or eligible partner:

1.-2. (No change.)

3. Elects to enroll in the SHBP at the time the employer becomes a participating employer.

(i) The definition of "retired employee" shall include an employee who is eligible for continuation of coverage in the SHBP at the time of retirement who waives coverage at that time, or at a later date, because the employee has health benefit coverage (active or retired) through an employer or eligible retiree association as a dependent or as an active employee and who applies for continuation of coverage within 60 days after termination of coverage as a dependent or active employee. An eligible retiree association is an association whose membership is limited based on the employment of the employee or the employee's dependent. A certificate of continued coverage or employer or association letter certifying when coverage terminated must accompany the retiree application.

(j) The definition of "retired employee" shall not include an employee who on cessation of employment, elects a vested, deferred retirement benefit under which payments begin at a future date unless that employee is eligible for coverage under the provisions of P.L. 1987, c. 384 or P.L. 1992, c. 126 (N.J.S.A. 52:14-17.32f and 52:14-17.32f1).

(k) (No change.)

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 investment carrier 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, the local retirement system, or the investment carrier.

2. (No change.)

3. Should coverage lapse through no fault of the retired employee, the retired employee's spouse or eligible partner who would be eligible to continue such coverage, retroactive coverage for no more than six months may be granted, provided 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 the right to continuous coverage in the SHBP. The retired employee or eligible survivor must, within a 30-day period following the receipt of the letter offering retired coverage, submit the appropriate application and, if required, the charges for such coverage. Any retired employee or eligible survivor not responding within the 30-day period shall receive a second notice. Any retired employee or eligible survivor not responding to the second notice within a 30-day period will not be permitted to enroll in the SHBP at a later date.

17:9-6.3 Retiree coverage; limitation

(a) A retiree, but not the retiree's surviving dependent, may change coverage to include a spouse, eligible partner and other dependents by submitting a completed application along with appropriate legal documentation, described at N.J.A.C. 17:9-3.3(a), verifying the dependent's relationship with the subscriber within 60 days of a change in family status (marriage, domestic partnership, civil union, birth or adoption of a child, or a significant change in health coverage due to a spouse's or partner's employment). The dependent shall be enrolled retroactively to the date of the qualifying event.

1. If a retiree, but not the retiree's surviving dependent, wishes to add an eligible spouse, eligible partner or dependent and the completed application and legal documentation 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 and legal documentation 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) Retired employees, whose retirement allowance is less than the charge to be deducted to pay for the cost of the coverage for such retired employees, will be permitted to continue coverage provided that the retired employee pays for the cost of such coverage in advance on a monthly basis, in which case there will be no health benefit deduction from the retirement allowance.

(c) 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 Federal Medicare Part A and B coverage, is ineligible for coverage under the SHBP.

(d) A retired employee or dependent, who has maintained coverage in the SHBP following retirement and is subsequently removed from such coverage for not having the Federal Medicare Parts A and B coverage as required by statute, will be permitted to obtain prospective reentry into the SHBP once proof of Federal Medicare Part A and B coverage has been provided to the Division.

Recodify existing (f) and (g) as (e) and (f) (No change in text.)

17:9-6.5 Discontinuance of allowance

When a retired employee's or beneficiary's retirement allowance is discontinued, the retired employee's or beneficiary's coverage may be terminated upon such discontinuance. Upon the reinstatement of the individual's retirement allowance, health insurance coverage will be resumed and may be made retroactive to the date of reinstatement of the retirement allowance, but in no case for more than one year.

17:9-6.6 Beneficiary, dependent or survivor

(a) (No change.)

(b) An eligible surviving spouse or eligible partner will be offered the opportunity to continue participation in the SHBP 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. If the surviving spouse or partner is not the recipient of any monthly retirement allowance from a State-administered retirement system upon the death of the retired member, the Division will bill the surviving spouse or partner at the group rate.

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

(a) For the purposes of this section, "eligible person" means the surviving spouse, eligible partner pursuant to N.J.A.C. 17:1-5.5 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, eligible partner 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) An eligible person may participate in the SHBP regardless of whether the member's employer is a participating employer. The premiums for the coverage shall be paid by the State of New Jersey, as provided in P.L. 1989, c. 271.

(c) Persons eligible to participate in the program under this section shall participate in the retiree group. If there is a surviving spouse or eligible partner, eligible children shall participate as dependents of the surviving spouse or partner. If there is no surviving spouse or partner, 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.)

17:9-6.8 Premium-sharing for retired employee State Health Benefit Coverage and reimbursement for Medicare Part B costs

(a) All State employees, except 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 or eligible partner and be subject to payroll deductions for coverage in advance of the coverage period in accordance with standard payroll procedures as set forth below. State employees, except 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) For employees hired before December 11, 1995, who accrue 25 years of service credit in a State-administered retirement system or retire on a disability retirement after July 1, 1997 but before July 1, 2000, payroll deductions for NJ DIRECT10 coverage shall be determined using a base salary as of the first pay period of the calendar year in which retirement occurred, as follows:

1. Upon retirement, retirees with a base salary of $ 40,000 or more in the year of retirement shall pay the difference between the cost of the NJ DIRECT10 and the average cost for NJ DIRECT15 and participating HMOs as determined hereinafter.

2. (No change.)

(c) Employees hired on or after December 11, 1995 who accrue 25 years of service credit in a State-administered retirement system after July 1, 1997 but before July 1, 2000 or retire on a disability retirement after July 1, 1997 but before August 1, 2000, shall, upon retirement, pay the difference between the cost of NJ DIRECT10 and the average cost to the State for NJ DIRECT15 and participating HMOs as determined hereinafter.

(d) The average cost for NJ DIRECT15 and participating HMOs for each category of coverage for a rate time period shall be determined as follows:

1. Multiply the number of retirees who elected the category of coverage at the beginning of the rate time period immediately preceding the current rate time period by the premium or periodic charge rate for the category of coverage for the current rate time period for NJ DIRECT15 and each participating HMO.

2. Determine the total premium and periodic charges for all retirees who elected the category of coverage by adding the amounts determined under (d)1 above for NJ DIRECT15 and the participating HMOs.

3. Divide the total premium and periodic charges for all retirees who elected the category of coverage determined under (d)2 above by the total number of retirees who elected the category of coverage at the beginning of the immediately preceding rate time period for NJ DIRECT15 and the participating HMOs.

(e) For retirees who accrue 25 years of service credit in a State-administered retirement system on or after July 1, 2000 but before June 30, 2007 or retire on a disability retirement after July 1, 2000 but on or before July 1, 2007, payroll deductions for NJ DIRECT10 coverage shall be determined as follows:

1. Retirees electing NJ DIRECT10 shall pay 25 percent of the cost of that plan's premium as established by the Commission pursuant to N.J.S.A. 52:14-17.32b;

2. Retirees electing NJ DIRECT15 or an HMO shall have no premium payment; and

3. For *State* retirees who accrue 25 years of service credit in a State-administered retirement system on or after July 1, 2007, or retire on a disability retirement after July 1, 2007, shall pay a health contribution for NJ DIRECT15 or HMO coverage of 1.5 percent of their retirement allowance*, as negotiated,* or 1.5 percent of 50 percent of the highest salary received in the last five years of employment for Alternate Benefit Program members. The health contribution is waived for retirees who participate in the Retiree Wellness Program. Retirees must elect to participate in the Retiree Wellness Program within 60 days of the date of retirement. If the Retiree Wellness Program is not elected within this time period, the retiree will be required to pay the health contribution of 1.5 percent of the retirement benefit. Retirees not electing to participate in the program when first eligible may elect to participate in the Retiree Wellness Program only during the Division's annual open enrollment.

(f)-(g) (No change.)

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

(a) For the purposes of this section, "qualified retiree" means a person who:

1. Is a retiree from:

i.-ii. (No change.)

iii. The Public Employees' Retirement System of New Jersey (N.J.S.A. 43:15A-6 et seq.), hereinafter referred to as PERS, from a position included in the definition of "law enforcement officer" under section 1 of P.L. 1955, c. 257 (N.J.S.A. 43:15A-97), from a PFRS-covered position that would have made the member eligible for enrollment in the PFRS but for age, from a position that would have been eligible for enrollment in the PFRS had the employer joined the PFRS by referendum under the provisions of N.J.S.A. 43:16A-3(2) or from a position that is eligible for participation in PFRS as provided in section 9 of P.L. 1989, c. 204 (N.J.S.A. 43:16A-1.2);

2.-4. (No change.)

(b) Pursuant to P.L. 1997, c. 330 (N.J.S.A. 52:14-17.32i et seq.), a qualified retiree and his or her eligible dependents, as defined in section 2 of P.L. 1961, c. 49 (N.J.S.A. 52:14-17.26), but not survivors, are eligible to participate in the SHBP in accordance with the laws and rules governing the program, regardless of whether the retiree's employer participated in the program, and for State payment of an amount of the premium or periodic charges for the category of coverage elected by the qualified retiree equal to 80 percent of the premium or periodic charges for that category of coverage under the State-managed care plan or health maintenance organization, which provides services in the 21 counties of the State and the lower premium or periodic charges.

(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. A retired State employee whose premium or periodic charges for health benefits under the SHBP are paid by the State pursuant to section 8 of P.L. 1961, c. 49 (N.J.S.A. 52:14-17.32) or section 6 of P.L. 1996, c. 8 (N.J.S.A. 52:14-17.28b);

2. A retiree of an employer other than the State for whom the employer pays 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.-6. (No change.)

(d) (No change.)

(e) The surviving spouse or eligible partner of a retiree who was eligible or was enrolled for benefits under N.J.S.A. 52:14-17.32i et seq., shall be eligible to continue coverage, at full cost, in the SHBP. If the deceased retiree would have been eligible for such coverage but was not enrolled due to active health benefit coverage as an employee or dependent, the surviving spouse or eligible partner may enroll in the SHBP, on a prospective basis, within six months after the retiree's death. The surviving spouse or eligible partner must inform the SHBP that they wish to enroll for coverage and must fill out an enrollment form and pay the required premiums before coverage may become effective.

(f) (No change.)

17:9-7.1 Termination effective date

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

(c) Unless the subscriber requests termination of coverage, SHBP coverage for a member who is awaiting approval of a retirement benefit shall continue until the retirement is either approved or denied provided the member makes the appropriate remittance for coverage. Any retroactive SHBP premiums owed by the subscriber shall be deducted from the retirement benefit when approved, the withdrawal check, the return of pension contributions, or from any retirement or death benefit received by the member's surviving dependent.

17:9-7.2 Termination of eligibility

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

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

1.-2. (No change.)

3. The dependent enters the Armed Forces;

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

5. The dependent child becomes eligible for SHBP coverage due to employment.

17:9-7.3 Continuation of coverage

(a) The coverage of an employee, and an employee's dependents, may be continued 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 SHBP. 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. (No change.)

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, spouse or partner. It does not provide for a leave due to the personal illness of the employee.

ii.-iv. (No change.)

17:9-7.4 Voluntary termination

A subscriber may elect voluntarily to terminate coverage for the subscriber or the subscriber's dependents at any time, but termination of the subscriber's own coverage shall automatically terminate the coverage of the subscriber's dependents. Such voluntary termination shall be effected by written notice thereof to the State Health Benefits Bureau by use of the New Jersey SHBP 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. Coverage may be reinstated for retirees after termination of the retiree and eligible dependents only as permitted in N.J.A.C. 17:9-6.

17:9-8.1 Employee Prescription Drug Plan

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

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

1. (No change.)

2. 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 SHBP 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 SHBP medical plan in which the member is enrolled; and

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

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, 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) (No change.)

17:9-9.1 Employee Dental Plans

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

(c) The rules are the same as those of the SHBP as administered by the Commission in accordance with the provisions of N.J.S.A. 52:14-17.25 et seq. with the following exceptions:

Recodify existing 2. and 3. as 1. and 2. (No change in text.)

3. All employees enrolled for coverage are required to participate in the Plan for a minimum 12-month period while eligibility for coverage exists unless the minimum enrollment requirement is waived by the Commission;

Recodify existing 5. and 6. as 4. and 5. (No change in text.)

6. An employer who does not participate in the SHBP or School Employees' Health Benefits Program is ineligible for participation in the Employee Dental Plans; and

7. An employer who elects to participate in the Employee Dental Plans must remain in the Plans for a minimum of 12 months before terminating coverage unless the employer terminates participation in the SHBP or School Employees' Health Benefits Program.

SUBCHAPTER 10. PROCUREMENT OF STATE HEALTH BENEFITS PROGRAM CONTRACTS

17:9-10.1 Purpose

This subchapter establishes the rules governing the procurement of contracts by the 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.

17:9-11.1 Establishment of Part-time Employees Group

(a) The SHBP Part-Time Employees Group was established under the provisions of P.L. 2003, c. 172 (N.J.S.A. 52:14-17.33a).

(b) (No change.)

(c) The laws and rules governing the SHBP, except as modified in this subchapter, are construed to apply to part-time employees or faculty members and their dependents to the extent possible.

(d) Except under the provisions of the Federal COBRA law, coverage is not continued in the event of death, or other termination of the group coverage.

(e)-(h) (No change.)

17:9-11.2 Eligible part-time employees

Part-time employees of the State, including employees of the State colleges and universities, New Jersey Building Authority, New Jersey State Library, Palisades Interstate Parkway Commission, and the Commerce and Economic Growth Commission participating in the SHBP, are eligible to enroll if they are members of the State-administered retirement system.

17:9-11.3 Coverage available

(a) The State Managed Care Plan is NJ DIRECT15.

(b) Pursuant to P.L. 2003, c. 172 (N.J.S.A. 52:14-17.33a), members of the Part-time Employees Group shall be eligible for coverage in NJ DIRECT15. Members shall also be eligible for coverage under the State Employee Prescription Drug Plan. There shall be no prescription drug coverage under NJ DIRECT15.

(c) Eligible employees may waive enrollment in the State Employee Prescription Drug Plan, but in no case shall they be allowed to enroll in the State Employee Prescription Drug Plan without also being enrolled in NJ DIRECT15.

(d) There is no eligibility for dental or vision or any other benefit created by P.L. 2003, c. 172.

17:9-11.5 Cost of coverage

The Commission may adopt separate rates for the Part-time Employees Group reflecting the actual cost of the benefit plus administrative costs.

17:9-11.7 Effect of full-time employment on participation in the Part-time Employees Group

A member of the Part-time Employees Group who changes from part-time to full-time status cannot be enrolled for full-time employee coverage until the employee has established eligibility for coverage by serving the normal waiting period prescribed for new enrollees. In no event will the waiting period for full-time coverage include any part-time service rendered by the employee.

17:9-11.10 Coverage in retirement

(a) Participation in the Part-time Employees Group pursuant to this section shall not qualify the employee or faculty member for employer-paid or State-paid health care benefits in retirement. Upon retirement, such employees or faculty members who were enrolled in NJ DIRECT15 immediately prior to retirement shall be eligible to continue NJ DIRECT15 coverage as a retiree at their own expense. Prescription drug benefits shall be provided through the Retiree Prescription Drug Card Plan (N.J.A.C. 17:9-6.10).

(b) Whenever possible, the cost of retiree coverage will be deducted directly from the retirement allowance. Where the available retirement allowance is less than the charge for coverage, no amount will be deducted to pay for the cost of the coverage; instead, the retiree will be permitted to continue coverage if the retiree pays for the full cost of coverage in advance on a monthly basis.

(c) An eligible surviving spouse or eligible partner will be offered the opportunity to continue participation in NJ DIRECT15 subsequent to the death of the retiree. Coverage will be limited to only those dependents covered at the time of the retiree's death. The surviving spouse or eligible partner must pay the full costs.

17:9-12.1 Retiree Dental Expense Plan

(a) The Retiree Dental Expense Plan (Plan) was established under the provisions of N.J.S.A. 52:14-17.29(F) and became effective as of January 1, 2005. The Plan is available to retirees eligible for participation in the SHBP and School Employees' Health Benefit Program and their eligible dependents. New retirees may enroll by completing an application at the time of retirement. The Plan is a Dental Expense Plan, which is a traditional indemnity-type plan, which allows the employee to select any licensed dentist for dental care.

(b) (No change.)

(c) The rules are the same as those of the SHBP as administered by the Commission in accordance with the provisions of N.J.S.A. 52:14-17.25 et seq., with the following exceptions:

1. Coverage is not continued in the event of termination from the SHBP. There is no eligibility to continue retired dental coverage under the Federal COBRA law;

Recodify existing 3. and 4. as 2. and 3. (No change in text.)

SUBCHAPTER 13. CHAPTER 375 DEPENDENTS

17:9-13.1 Eligibility criteria

(a) In order for a dependent to qualify for and remain eligible for SHBP coverage after age 23 as a Chapter 375 dependent, the dependent must be a covered person's child by blood or law who:

1. Is 30 years of age or younger;

2.-5. (No change.)

17:9-13.2 Enrollment

(a) Enrollment of a Chapter 375 eligible dependent is voluntary. A separate election will be required for enrollment, change in or a voluntary termination of coverage for a Chapter 375 eligible dependent. If an employee or retiree (subscriber) does not elect coverage for a Chapter 375 eligible dependent by December 31, 2007, the subscriber may thereafter enroll the dependent as follows:

1. Submission of an enrollment application and certificate of creditable coverage to the Division no later than 30 days after the dependent meets all eligibility criteria under N.J.A.C. 17:9-13.1. Coverage will be effective the first coverage period of the month, 60 days after the dependent meets all eligibility criteria.

2. (No change.)

(b) (No change.)

17:9-13.3 Coverage available

(a) An enrolled Chapter 375 dependent shall be provided coverage in the same medical plan in which the subscriber is enrolled. In the event the subscriber participates in a SHBP prescription drug plan, the Chapter 375 dependent shall also qualify for participation in the same SHBP prescription drug plan.

(b) (No change.)

17:9-13.4 Premium rates and payment for coverage

The Commission shall determine premium rates for enrolled Chapter 375 dependents as provided by P.L. 2008, c. 38. The subscriber or dependent is responsible for the cost of the SHBP coverage for each enrolled Chapter 375 dependent.

17:9-13.5 Termination of coverage

(a) SHBP coverage for a Chapter 375 dependent shall terminate in the event:

1. The Chapter 375 dependent no longer meets all of the criteria for eligibility at N.J.A.C. 17:9-13.1 except that the dependent shall be eligible for coverage until his or her 31st birthday;

2.-3. (No change.)

4. The employee, retiree or dependent fails to make required premium payments for the Chapter 375 dependent; or

5. (No change.)

(b)-(c) (No change.)

17:9-13.6 Notice of Termination of coverage for nonpayment of premiums

(a) If a subscriber or dependent fails to make a required premium payment for a Chapter 375 dependent by the end of the month in which premium payment is due, the Division shall notify the subscriber or dependent of the overdue amount on the next billing statement. Such notice shall advise the subscriber or dependent that the Chapter 375 dependent's right to continue coverage will be terminated if payment of the overdue premium payment and the current premium payment due is not remitted to the Division within 30 days. If payment is not remitted within 30 days, the Division shall terminate the Chapter 375 dependent's coverage effective the last day of the month for which premiums were paid.

(b) (No change.)


 
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