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 2014-01
TO THE HEADS OF ALL STATE AGENCIES

June 16, 2014

ATTENTION: Personnel and Payroll Officers
SUBJECT: July 2014 Retiree Health Fund Contribution Adjustments

I. INTRODUCTION

Under the SEBAC 2009 Agreement new employees and those with less than five years of service as of July 2010 were required to contribute 3% of compensation to the Retiree Health Fund to offset the cost of future retiree health coverage. The SEBAC 2011 Agreement required all employees to contribute to the Retiree Health Fund for 10 years or until retirement, whichever comes first. The collection of contributions under SEBAC 2011 began in July 2013, and will be phased in over a period of three years. The second part of the phase-in will occur in July 2014. This memorandum describes how the process will be implemented.

II. DISCUSSION

Phase in of Contribution Amounts - SERS/ARP Members

In July 2013, approximately 37,000 members of the State Employees Retirement System (SERS) and the Alternate Retirement Program (ARP) began contributing 0.5% of compensation to the Retiree Health Fund using the OPE2 deduction code. Beginning in July 2014 the amount of the contribution under the OPE2 code will be increased in CORE-CT from 0.5% to 2% of compensation. Agency personnel do not need to take any action to implement this change.

This deduction percentage will remain in effect until July 2015, at which point it will be increased to 3% for SERS and ARP members. Employees who are currently contributing 3% of compensation to the Retiree Health Fund will continue to do so.

Phase in of Contribution Amounts -Teachers Retirement System (TRS) Members

State employee members of TRS are entitled to have the amount of their Retiree Health Fund contributions offset by the health fund assessment they pay pursuant to Section 10-183b-7 of the General Statutes. Because such members were making a 1.25% contribution to the TRS for retiree coverage they did not make any contribution to the Retiree Health Fund last year.

Beginning in July 2014 TRS members who did not previously contribute will begin paying 0.75% of compensation to the Retiree Health Fund. The code for this deduction is OTR2. In July 2015 and thereafter the Retiree Health Fund deduction for TRS members will be 1.75% of compensation unless the contribution amount required under Section 10-183b-7 changes. The deduction will be implemented via CORE-CT. TRS members who are currently contributing 1.75% of compensation to the Retiree Health Fund under deduction code OTRS will continue to do so.

Deduction Start Date

The start dates for the new contribution levels will be as follows:

Pay Frequency Deduction Start Date Effective Check Date
Bi-weekly 07/11/2014 08/08/2014
Special Bi-weekly 07/25/2014 08/08/2014
Semi-Monthly 08/01/2014 08/15/2014
Monthly 08/01/2014 08/01/2014

Employees Subject to Contribution Requirement

All employees are required to contribute to the Retiree Health Fund with exception of the following:

1. Employees who are not eligible for State-paid healthcare coverage (includes those working part-time, less than 0.5 Full-time equivalent (FTE), temporary or seasonal employees);

2. Adjunct faculty member in higher education who are intermittently eligible for State-paid healthcare coverage. If an adjunct faculty member completes sufficient actual service to qualify for retiree health coverage, he or she will be required to pay the required percentage of compensation for the full 10-year period (or such lesser period as may be required);

3. Employees who are not eligible to participate in a State of Connecticut retirement plan (for example, those holding J-1 or F-1 visas); or

4. An employee who demonstrates that he or she is entitled to retiree health coverage from another source (other than COBRA, Medicare or spouse's policy).

Waiver of active employee health insurance does not relieve an employee from the obligation to make contributions to the Retiree Health Fund.

Compensation subject to Retiree Health Fund Contribution

The contribution to the Retiree Health Fund will be based upon earnings defined as salary in Section 5-154(h) of the Pension Agreement. In the event an employee has multiple part-time positions, which cumulatively make him or her eligible for healthcare coverage, the deduction will be based on compensation from all positions.

An employee who has both a full-time position, which entitles him or her to healthcare coverage, and a part-time position will have Retiree Health Fund contributions based on the full-time position only.

Effect of Leave on Duration of Contributions

1. Unpaid Leave. The Retiree Health Fund contribution will be suspended during unpaid leave. Any calendar month of unpaid leave will extend the duration of the required contributions by one month, unless the employee elects to make up the missed contributions prior to retirement.

2. Paid Leave. The Retiree Health Fund contribution will be collected during paid leaves of absence where an employee receives his or her regular compensation by using accrued sick of vacation time.

Employees on paid Military Leave will have such service credited towards fulfillment of their obligation to contribute to the Retiree Health Fund, even if they do not receive a check from the State during that period. For those receiving compensation under the State’s Military Pay Differential Leave, the Retiree Health Fund deduction will be collected from the Pay Differential amount paid by the State.

3. Workers Compensation Leave. Employees on Workers Compensation leave shall have that time credited towards their Retiree Health Fund contribution requirement but are not be required to make any contribution during such leave, except to the extent their Worker’s Compensation pay is supplemented by sick or vacation time.

4. Disability Retirement. Employees who qualify for disability retirement under SERS (or its equivalent for state-employee members of TRS or ARP) shall be deemed to have fulfilled their obligation to contribute towards the Retiree Health Fund as of the time they are granted disability retirement or its equivalent. If such employee subsequently returns to State service, he or she shall resume required contributions to the Retiree Health Fund.

Employees leaving State Service before Qualifying for Retiree Coverage.

An employee who leaves State service before qualifying for retiree coverage can seek a refund of amounts paid into the Retiree Health Fund unless such employee is applying for a disability retirement benefit. If a terminated employee is subsequently rehired, any service during which the deduction was previously collected will not count towards fulfillment of that employee’s obligation to contribute to the Retiree Health Fund (or as actual state service for purposes of retiree healthcare eligibility) unless the employee repays any refunded contributions in full.

Employees leaving State Service after qualifying for retiree health coverage are not eligible for a refund Retiree Health Fund contributions.

III. CONCLUSION

Updated Frequently Asked Questions will be posted on the Healthcare Policy & Benefit Services Division website shortly. Agency Payroll and Human Resources personnel with questions should e-mail Margaret.Haering@ct.gov or telephone 860-702-3486.

Very truly yours,


THOMAS C. WOODRUFF, Ph.D.
Division Director

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