COMPTROLLER'S SEAL STATE OF CONNECTICUT 55 ELM STREET
HARTFORD, CONNECTICUT
06106-1775
Telephone: (860) 702-3480
Facsimile:(860) 702-3556
HEALTH CARE COST
CONTAINMENT COMMITTEE
STATE OF CONNECTICUT
OFFICE OF THE STATE COMPTROLLER
HEALTHCARE POLICY & BENEFIT SERVICES DIVISION

DIVISION MEMORANDUM 2012-01
TO THE HEADS OF ALL STATE AGENCIES

March 16, 2012

ATTENTION: Human Resource and Payroll Officers
SUBJECT: New Procedures for Refunding Retiree Health Fund Contributions for Terminated Employees

I. Introduction

Employees who separate from state service before completing enough service to qualify for retiree health coverage are entitled to request a refund of their contributions to the Retiree Health Fund. The purpose of this memorandum is to announce new procedures for processing refund requests for eligible employees. These changes will modify the termination process with the goal of ensuring that Retiree Health Funds will be repaid to eligible terminating employees with their final paycheck.

Effective April 2, 2012, the agency that employed the terminating employee will be responsible for processing requests for refund of Retiree Health Fund contributions for terminating employees. This procedure will remain in effect until July 1, 2013, when virtually all state employees will begin contributing to the Retiree Health Fund.

II. Termination Process Modifications:

As part of the exit interview, HR/PY personnel should advise the terminating employee of the availability of a refund of Retiree Health Fund contributions. At present, the only employees contributing to the Retiree Health Fund are those who were first hired after 7/1/2009 or had less than 5 years of state service as of 7/1/2010. Unless someone is transitioning directly to retirement with retiree health care coverage, most employees who are currently contributing to the Retiree Health Fund will be entitled to claim a refund upon termination. The only exceptions are:

In these situations, no refund is permitted because there has been no separation from state service.

An employee who has obtained a refund from the Retiree Health Fund will be required to repay those contributions within 60 days of returning to state service. If a terminating employee indicates that he or she contemplating a return to state service in the near future, point out the repayment requirement, which might influence the decision to seek a refund. Unless refunded Retiree Health Fund contributions are repaid within 60 days of rehire, the employee will not get retiree healthcare eligibility credit for any prior service during which refunded contributions were made.

A. Completing Refund Request (CO-1301)

If a terminating employee is eligible for and wants to obtain a refund, the following steps should take place. The employee fills out the CO-1301 completely and signs it. Be sure to use the most recent version of the form (http://www.osc.ct.gov/agencies/forms/word/CO-1301%20rev%2011-11.rtf) . (See attached). If the employee is transferring to another agency, staying with your agency in another position, or has an active secondary state position, the employee is not eligible for a refund.

B. Terminate Deduction Code

Upon receipt of a terminating employee's notice of intent to terminate, the agency should immediately stop the OPEB (or OTRS) deduction on the General Deduction Page, effective one day before the last previously confirmed pay period. This will prevent deductions from being taken from subsequent checks and prevent the miscalculation of the refund amount.

The agency calculates the refund amount by running EPM Query #4 under the HRMS Retiree Health Fund Deduction Job Aid (OPEB/OTRS) and records that amount on the CO-1301. To process the refund, the agency completes the deduction override spreadsheet and sends it to Central Payroll, along with the calculation of the employee's unused vacation pay by Pay Confirm Thursday. This should ensure payment of the refund while the employee's record is still active. If the employee delays completion of the CO-1301 or the agency does not process the override in time for the final paycheck, the payment of refund may be delayed for several months.

C. Form Retention and Handling

The agency retains the original of the CO-1301 in the employee's personnel file and sends a copy, signed by the HR/PY officer who processed the refund, to the Office of the State Comptroller, Healthcare Policy & Benefit Services Division, Employee Benefits Unit, 55 Elm Street, Hartford, CT 06106 or via email to OSC.OPEB@po.state.ct.us. The Division will use the forms to audit refunds for terminated employees.

III. No change to Existing Refund Process for Active Employees

The procedures outlined in this memorandum do not apply to Retiree Health Fund refunds issued to active employees who have had deductions taken in error or have demonstrated that they have other retiree coverage.

For refunds to active employees, the agency retains the original CO-1301 in the employee's personnel file and sends a copy to Office of the State Comptroller, Healthcare Policy & Benefit Services Division, Employee Benefits Unit, 55 Elm Street, Hartford, CT 06106 or via email to OSC.OPEB@po.state.ct.us.

Agency Payroll and Human Resources personnel with questions should e-mail Margaret.Haering@po.state.ct.us or telephone 860-702-3486.

Very truly yours,

THOMAS C. WOODRUFF, Ph.D.
Division Director

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