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DIVISION MEMORANDUM 2015-05

TO THE HEADS OF ALL STATE AGENCIES

ATTENTION: Personnel and Payroll Officers
SUBJECT: July 2015 Retiree Health Fund Contribution Adjustments

I. INTRODUCTION

Under the SEBAC 2009 Agreement new employees and those with less than five years of service 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 came first. A three-year phase-in of Retiree Health Fund contributions for longer-term employees began in July 2013 and will be completed in July 2015. This memorandum describes how the final phase 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. In July 2014 the OPE2 contribution was increased to 2% of compensation. Effective with the first full pay period beginning after July 1, 2015, the OPE2 contribution level will be increased to 3%. Agency personnel do not need to take any action to implement this change.

This 3% deduction under code OPE2 will remain in effect until an employee completes 10 years of contributions, separates from service, or retires, whichever comes first. Employees who are currently contributing 3% of compensation to the Retiree Health Fund under deduction code OPEB will not see any change.

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

State employee members of TRS have the amount of their Retiree Health Fund contributions offset by the health fund assessment they make pursuant to Section
10-183b-7 of the General Statutes.

In July 2014 TRS members who did not previously contribute to the Retiree Health Fund began paying 0.75% of compensation under deduction code OTR2. In July 2015, the OTR2 deduction will be increased to 1.75% of compensation. The deduction change will be implemented via CORE-CT without the need for agency action. TRS members 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 07/10/2015 08/07/2015
Special Bi-weekly 07/24/2015 08/07/2015
Semi-Monthly 08/01/2015 08/14/2015
Monthly 08/01/2015 08/07/2015

Employees Subject to Contribution Requirement

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

1. Employees who are not eligible for State-paid healthcare coverage (includes those working less than 0.5 Full-time equivalent (FTE));
2. Adjunct faculty members in higher education who are intermittently eligible for State-paid healthcare coverage; 1

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 benefits does not relieve an employee from the obligation to make contributions to the Retiree Health Fund.

Compensation subject to Retiree Health Fund Contribution

Retiree Health Fund contributions are 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 make 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 contributions during such leave, except to the extent their Worker's Compensation benefits are 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 becoming eligible for retiree health coverage can seek a refund of amounts paid into the Retiree Health Fund unless such employee is in the process of applying for a disability retirement benefit. If a terminated employee is subsequently rehired, any service during which refunded OPEB contributions were 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 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


1 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 to the Retiree Health Fund for the full period required by the applicable SEBAC Agreement in order to receive benefits.

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