Health and Life Insurance, Disability and Death Benefits

Transcription

1 A GUIDE TO BENEFITS FOR DEFINED CONTRIBUTION RETIREMENT PLAN PARTICIPANTS Health and Life Insurance, Disability and Death Benefits Health Insurance Death Benefits Life Insurance Disability Protection

2 Health and Life Insurance, Disability and Death Benefits State employees hired on or after 3/31/97 Health Insurance You become eligible for health, dental, and vision insurances after you have terminated service and you have the equivalent of at least 10 years of full-time state service. To participate you must be age 60, or terminate employment directly from state service after meeting the age and service requirements shown below. Position Regular State Employee (Classified and unclassified service not otherwise listed) Covered Employees (Employees in covered positions responsible for the custody and supervision of prisoners) Conservation Officers Age and Service Requirement Age 60 with 10 years of service Age 55 with 30 years of service Age 56 with 10 years of covered service Age 51 with 25 years of covered service The 3 years immediately before termination must be in a covered position. Any age with 25 years of service You must have 23 years as a conservation officer, and the 2 years immediately before termination must be as a conservation officer. Determining Years of Service For most state employees, 2,080 hours equals one year of service. You cannot be credited with more than one year of service in any given year, and you cannot earn more than 80 hours of service credit in a pay period. If you are working less than full time, your total hours will be divided by 2,080 hours to determine your equated years of service. Examples of exceptions to the 2,080-hour year are employees who work for the Legislative Service Bureau (1,950 hours) and the House of Representatives and House Fiscal Agency (1,872 hours). Only complete years count for vesting or health insurance subsidy calculation. Contact ING to get your current years of service. Military Leave of Absence Up to five years of intervening military leave (which interrupts your State of Michigan employment) can be used to meet the vesting requirement for both employer contributions (a four-year vesting requirement) and health insurance (a ten-year vesting requirement). Upon returning from a military leave of absence, complete an Application for Military Leave of Absence Credit (Form R0717G) and return it to the Office of Retirement Services along with the appropriate documentation. You will then be given credit for the years of service, and the state s 4% mandatory contributions missed will be credited to your 401(k) account. The form also gives you the option of making up missed employee contributions in order to qualify for missed employer match money. Non-intervening military service may not be used to meet vesting requirements

3 Insurance Subsidy When you meet the age and service requirements, the state will subsidize your health insurance premiums. For employees hired on or after March 31, 1997, the amount of the subsidy depends on how long you worked for the state. With 10 years of service (full-time or equated to full-time), a 30% premium subsidy is available. This subsidy increases by an additional 3% for each additional full year of service. The maximum subsidy level is 90% for those who have 30 or more years of state employment. Health Insurance Subsidy Table Years of Service Insurance Subsidy % Once you become eligible for Medicare, your state subsidy percentage remains the same. The amount you pay each month will be recalculated to reflect your new Medicare Supplemental premium amount. Be sure to enroll in Medicare Parts A and B when you (or your dependents) first become eligible. Example: 10 years of service: 30% Subsidy 20 years of service: 60% Subsidy Pre-Medicare Premium $ $ State Subsidy 30% Subsidy: $ % Subsidy: $ Participant Monthly Share $ $ Post-Medicare Supplemental Premium $ $ State Subsidy 30% Subsidy: $ % Subsidy: $ Participant Monthly Share $ $

4 Duty or Non-duty Disability If you have been approved for a duty or non-duty disability benefit, the state will pay the maximum health premium subsidy allowed by statute (currently 90%) and 90% of your dental and vision premium. Dependent Health Insurance Subsidy In general, your health benefit dependents may receive a group insurance subsidy after you terminate, as long as you are eligible and remain enrolled. Health benefit dependents are your spouse and unmarried children who are considered dependents under Section 152 of the Internal Revenue Code. If You Die Before Termination of Employment If you die because of an injury or illness resulting from your job activities (a duty-related death), your spouse and health benefit dependents may immediately participate in the insurance programs. The state will pay the maximum health premium allowed by statute (currently 90%) and 90% of your dental and vision premium. Your spouse s insurance subsidy may continue until his or her death; your health benefit dependents insurance subsidy may continue until their eligibility ends (through marriage, age, or other event). If You Die After Termination of Employment If, upon your death, you and your health benefit dependents are eligible for the insurances subsidy, they will remain eligible with the same subsidy rate. Your spouse s insurances continue until his or her death; your health benefit dependents insurance subsidy may continue until their eligibility ends (through marriage, age, or other event). If you left state service with at least 10 years of service but had not yet met the age requirement, upon your death your health benefit dependents can enroll in the health insurances as of the first of the month following the month you would have met the eligibility requirements listed on page 2. The premium subsidy will be based on your total years of service. If you did not have at least 10 years of service when you left employment, your health benefit dependents are not eligible to participate in the insurances. To Enroll in Insurances About three months before you (or your health benefit dependents) meet the insurance eligibility requirements and are ready to enroll for insurance benefits, contact the state s Office of Retirement Services (ORS) to request a Defined Contribution Plan insurance packet. The packet will contain all the forms you will need, along with information about state insurance carriers and rates. Complete and return the forms to ORS with all required verifications listed in the packet. ORS will verify your eligibility and calculate your insurance subsidy amount. Upon notification of eligibility, we will send your insurance enrollment data to the various insurance carriers, and you will receive information packets and the appropriate identification cards from the insurance carriers. If you are eligible for life insurance coverage, you will receive a certificate from the Department of Civil Service Employee Benefits Division along with claim filing instructions for your beneficiaries in the event of your death. You will be billed in advance for your share of insurance premiums

5 If you die due to an injury or illness that is not related to your work (a non-duty death), your spouse and health benefit dependents will be eligible for subsidized insurances if you had at least 10 years of service at the time of death. The subsidy amount will be based on your total full years of service. Your spouse s insurance subsidy may continue until your spouse s death; your health benefit dependents insurance subsidy may continue until their eligibility ends (through marriage, age, or other event). If you die due to an injury or illness that is not related to your work before you have completed 10 years of service, your spouse and health benefit dependents are not eligible for state subsidized insurances. They may continue their insurances under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), but the state will not subsidize the associated premiums. Life Insurance Your life insurance will continue to be paid by the state if you meet both the age and service requirements when you leave state employment. If you leave state employment after you have met the 10-year service requirement but not the age requirement, you waive your right to state-paid life insurance. The benefit will be 25% of the amount of insurance carried at the time you leave state employment. Life insurance continues for your spouse, and each dependent until age 23, in the amount of $1,000. Within 30 days of your termination of employment, you can convert the remaining 75% of your active life insurance to a private direct-pay policy. Your human resource office or the state s Employee Benefits Division can provide a rate schedule and a conversion application if you wish to convert life insurance coverage for yourself or a dependent. To Apply for Disability Your application for disability retirement must be received before termination of employment and within one year from the date you become totally incapacitated. The filing deadline can be extended if the retirement board determines you have good cause for not filing within one year. Any application for disability retirement, regardless of when it is filed, must be for a condition you incurred before your termination from state employment. To apply for a disability benefit, contact the Office of Retirement Services (ORS) to request a Defined Contribution disability application packet. The packet contains information about insurances as well as the forms needed to process your application. You must sign medical release forms that allow an independent medical advisor to obtain and review the medical records pertaining to your injury or illness. Once completed, you will send the forms to Disability Determination Services (DDS). DDS will obtain and review medical documentation and schedule an exam for you with a medical professional if needed. The Retirement Board will review the DDS recommendation and advise ORS of its decision. If approved, ORS will notify you and begin processing your application. If denied, ORS will send you a notice explaining the decision and your appeal rights. Disability Protection The state provides disability protection while you are working. If you become totally incapacitated because of an injury or illness incurred at work, a monthly duty disability benefit may be payable regardless of how long you have been employed by the state. If you become totally incapacitated because of an injury or illness incurred outside of work and have the equivalent of 10 years of full-time state employment, a non-duty disability may be payable. In either case you must be totally incapacitated and the incapacitation is probably permanent. Totally incapacitated means you are unable to perform the duties of your current position, or any position reasonably related to your education, training, or experience. Permanently incapacitated means the incapacitation is likely to last your lifetime. 5

6 For a non-duty disability, the annual benefit is calculated by multiplying your final average compensation times your years of service times 1.5%. Your highest three consecutive years of compensation are averaged to determine your final average compensation. All employer contributions (including any actuarial present value transferred from the Defined Benefit Plan) the state has made to your 401(k) account during your employment, as well as associated investment growth (employer-funded portion), are evaluated. If the current value of these contributions is not equivalent to the result using the annual benefit as calculated in the formula above, the state will make up the difference with a supplemental benefit. For example, if your average annual wage is $40,000 and you have 17 years of service, your annual disability payment is $10,200. If the employer-funded portion of your defined contribution account plus the associated investment growth is sufficient to provide you this income every year for the rest of your life (actuarially determined), the full amount of your benefit will come from your account. If it is not sufficient, the state will pay you the difference up to $10,200. If you have approval for a duty disability, your annual payment will be calculated using the same formula but will not be less than $6,000. The resulting amount will then be offset by the value of the employer contributions plus the associated investment growth. Though the state s Office of Retirement Services (ORS) uses the current value of your employer-funded contributions plus the associated investment growth to calculate your disability benefit, it does not interfere in any way with your 401(k) plan account and does not withdraw funds from your account. If you are approved for a duty or non-duty disability, the state will pay the maximum health premium allowed by statute (currently 90%) and 90% of your dental and vision premium. Your life insurance will continue to be paid by the state provided you are enrolled in the coverage when you terminate employment. This benefit is available until age 65, at which time the coverage is reduced to 25% of active coverage. AT YOUR SERVICE At Your Service ING Office of Retirement Services (ORS) Questions about and access to your 401(k) and 457 Plans, questions about eligibility including vesting, disability, death, and insurance benefits. Contact ORS to apply for insurances, disability benefits, and insurance premium payments after termination :00 am - 8:00 pm P.O. Box Boston, MA :30 am - 5:00 pm P.O. Box Lansing, MI Employee Benefits Division (EBD) Civil Service Commission Conversion of life insurance at retirement and health plan booklets and bulletins for current employees MI-HR Civil Service Commission Assistance when you re terminating employment. Verification of total hours counter

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8 This pamphlet is a summary of the main features of the health care coverage, life insurance benefits, and disability and death benefits for participants in the Tier 2 Defined Contribution Plan. The State Employees' Retirement Act (1943 PA 240 as amended, MCL 38.1) established the Tier 2 Plan and regulates it. If the provisions in this pamphlet conflict with the Retirement Act, the Act controls. The benefits explained in this pamphlet may be changed at any time. MI Bene Guide DC Parts_0509