Telephone: (860) 702-3480
Facsimile:(860) 702-3556


May 18, 2010

ATTENTION:    Personnel and Payroll Officers
SUBJECT:    Existing Employees - 3% Retiree Health Fund Contributions

Comptroller's Memorandum 2010-11 addressed the implementation of the SEBAC 2009 Agreement's requirement that newly hired and certain existing employees contribute 3% of their compensation to the Retiree Health Fund in order to qualify for retiree health benefits. New hires and employees rehired after July 1, 2009 should have already begun contributing to the Retiree Health Fund.

This memorandum supplements Comptroller's Memorandum 2010-11 by summarizing the rules to be applied in determining whether employees hired before July 1, 2009 are required to contribute to the Retiree Health Fund and, if so, establishing an end date for those contributions. The Division will be posting answers to frequently asked questions on its web page. For existing employees subject to the 3% contribution, deductions should commence with the pay period beginning July 2, 2010 for the check dated July 30, 2010.

I. Identifying Existing Employees with Less than Five Years of Service

Existing employees with less than 5 years of State service as of July 1, 2010, must contribute to the Retiree Health Fund until the earlier of the date when they complete 10 years of service or retire after qualifying for retiree health coverage (restricted to those aged 52 or older and employed by the State on April 21, 2009).

CORE-CT has posted a job aid with queries to help agencies to identify employees subject to the 3% deduction. They include:

-Employees first hired after July 1, 2005 and before June 30, 2009;
-Employees first hired before July 1, 2005 with fewer than 5 years of accrued service as of July 1, 2010 as a result of unpaid leave; or
-Employees rehired between July 1, 2005 and June 30, 2009 with less than 5 years service as of July 1, 2010.

The agency's task will be to determine each affected employee's accrued service as of July 1, 2010 (deducting unpaid leave, as set forth below), and then to enter the deduction end date-10 years minus accrued service as of 7/1/10-in CORE-CT.

Under the "safe haven" rule described in Comptroller's Memorandum 2010-11 employees who have been employed by the State for six years as of July 1, 2010 are presumed to meet the 5-year service requirement, provided they have no more than one year of unpaid leave.

II. Calculating Accrued Service for Existing Employees.

The following rules should be used to determine if an employee has met the 5-year service requirement as of July 1, 2010.

A. Service to be Credited. Only service during which an employee was eligible for State-paid health benefits will be credited toward the completion of the initial 5-year period. Certain positions, including those for temporary and seasonal work, are ineligible for State-paid health benefits and/or retirement plan participation. Service in these positions will not count towards fulfilling the minimum 5-year service requirement.

For most State employees, healthcare-eligible service will be credited from the date of hire, even though actual coverage did not commence until the first day of the second month after employment began. For durational employees who are required to complete a minimum service period before becoming eligible for State-paid health benefits (for example, six months or 1044 hours), the entire qualifying minimum service period, will be excluded from the 5-year service calculation.

B. Academic Year Schedules. Healthcare-eligible employees whose employment is based on an academic year schedule will receive a full year's credit for each academic year during which he or she was eligible for State-paid health insurance benefits; a half-year's credit will be counted for each full semester of service. Academic year employees with fewer than 5 calendar years of service (those hired after July 1st but before the beginning of the fall semester of 2005) will be credited with 5 years of State service if they completed 10 full semesters of healthcare-eligible service before July 1, 2010.

C. Rehired Employees. Only prior-healthcare eligible service will count in determining whether a rehired employee has 5 years of State service as of July 1, 2010. Prior healthcare-eligible service will be credited even if the employee incurred a permanent break in service or previously obtained a refund of State retirement plan contributions.

D. Treatment of Unpaid Leave Occurring before July 1, 2010. Since the release of the Comptroller's Memo 2010-11, agencies have posed a number of questions about the impact of unpaid leave on an employee's completion of the initial 5-year service needed to avoid the 3% Retiree Health deduction. The Division has now received additional guidance from the SEBAC bargaining parties on treatment of unpaid leave. The following rules should be applied:

-Unpaid leave during which the employee was eligible for continued healthcare benefits should be deducted from each employee's credited service time only if such unpaid leave resulted in an employee not receiving a paycheck in a calendar month;

-Workers Compensation leave should not be deducted from accrued service;
-Unpaid military leave for active duty wartime service will be deducted unless the employee has purchased that time for retirement purposes upon return from military service.

III. End Date for 3% Contributions for Existing Employees.

The deduction end date on the CO-1300 form should be the date the employee is expected to complete 10 years of service, based on accrued service as of July 1, 2010. Existing employees who may qualify for retiree health benefits by transitioning to retirement at age 62 or older after 5 years of actual State service will required to make the 3% contribution until they either complete 10 years service or retire whichever comes first.

For example, an employee age 60 with three years of service as of 7/1/2010 will have the 3% deduction start on 7/02/2010; the estimated deduction end date should be 7/02/2017. If that employee retires on 8/01/2012 (at age 62 with 5 years service) his obligation to contribute to the Retiree Health Fund would be deemed complete at that time.

Note: Because CORE-CT pay periods and check dates are not set up 10 years in advance, the deduction end date is an estimate and will need to be adjusted as each employee nears completion of 10 years service.

IV. Starting Deductions Effective in July 2010

Pursuant to Special Act 09-06 the Legislature enacted the SEBAC 2009 Agreement into law and extended application of the health care coverage to managers and employees not subject to bargaining unit representation and employees of boards and commissions. Employees required to make the 3% contribution should be asked to fill out and sign the CO-1300 to be certain that all prior service is accurately reflected. However, agencies are not required to wait until they receive an affected employee's signed form to start the 3% Retiree Health Fund deduction on July 2, 2010.

V. Retention of CO-1300 Forms

Agencies should retain the original CO-1300 form in the employee's personnel file. Comptroller's Memorandum 2010-11 directed agencies to forward copies of all CO-1300 forms on which an exemption to the Division. Going forward the agency should forward to the Division only those CO-1300's with an exemption based on alternative retiree health coverage. The C0-1300 has been revised accordingly and will be posted on the Division's web page.

Do not exempt any employee from the requirement to contribute to the Retiree Health Fund until proof of alternative retiree coverage has been provided in the form of a signed Affidavit (CO-1303) and Waiver of Retiree Coverage (CO-1304) or such other proof as the Comptroller may require. When the employee provides sufficient documentation of such coverage, a refund may be processed.

The Division will be posting fill-able versions of the Comptroller's forms CO-1300 to CO 1305 on its web page along with answers to frequently asked questions. Agency personnel may direct inquiries to 860-702-3486.



By: Thomas C. Woodruff, Ph.D.
Division Director



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