DIVISION MEMORANDUM 2018-02
TO THE HEADS OF ALL STATE AGENCIES

April 6, 2018

The SEBAC 2017 Agreement required employees hired on or after July 1, 2017 to contribute to the Retiree Health Fund for 15 years. For members of the State Employees Retirement System (SERS) and the Alternate Retirement Program the contribution is 3% of compensation. For members of the Teachers Retirement System (TRS), it is 1.75%, which reflects the fact that such members also pay 1.25% of compensation to TRS towards the cost of future retiree health coverage.

Implementation of the SEBAC 2017 Agreement was phased in due to the reconfigurations needed in CORE-CT to accommodate new health premiums, revised contributions for existing retirement plans, and introduction of the Tier IV Plan in SERS. As a result, creation of new Retiree Health Fund deduction codes was delayed, and some employees hired on or after July 1, 2017 may have been assigned a Retiree Health Fund deduction code that is not aligned with the requirements of the SEBAC 2017 Agreement.

This memorandum outlines the process that will be used to assign the correct Retiree Health Fund deduction code for new hires and provides guidance on identifying which Retiree Health Fund contribution code should be used for those rehired on or after July 1, 2017. It also announces new functionality within CORE-CT to monitor each employee'
s contribution history. This process will automatically enroll eligible employees (new hires and rehires) for Retiree Health Fund contributions and automatically terminate the deduction as each employee meets the required contribution duration.

I. Employees Subject to Contribution Requirement Generally

The SEBAC 2011 Agreement required all healthcare-eligible employees to contribute to the Retiree Health Fund for 10 years or until retirement, whichever first occurred. The SEBAC 2017 Agreement extended the duration of those contributions to 15 years for new employees hired on or after July 1, 2017.

Retiree Health Fund contributions are required for any employee whose position entitles him or her to State-paid healthcare coverage. The following employees are exempt:

1. Those working part-time, less than 0.5 Full-time equivalent (FTE), temporary or seasonal employees);

 

2. Adjunct faculty in higher education who are intermittently eligible for State-paid healthcare coverage;

 

3. Any employee who is 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 a spouse's policy).

II. Identification of Employees Subject to 15-Year Contribution Requirement

New healthcare-eligible employees first hired on or after July 1, 2017 are subject to the 15-year contribution requirement. For employees rehired on or after July 1, 2017, application of the 15-year versus the 10-year contribution requirement will depend upon the nature of the employee'
s prior service. Someone whose prior state service was limited to a position that was not eligible for participation in a State of Connecticut retirement plan will be treated as a new employee subject to Retiree Health Fund contributions for 15 years. Included in this group would be previously employed student workers, graduate or university assistants, etc., as well as those with J-1 or H-1 visas.

A healthcare-eligible employee rehired after July 1, 2017, with prior state service in a position that was eligible for participation in a State of Connecticut retirement program is required to make Retiree Health Fund contributions for 10 years. This rule applies even if the employee had a permanent break in service or received a refund of his or her retirement plan contributions upon separation from service. Employees who received a refund of prior OPEB contributions should be given the opportunity to repay refunded amounts within 60 days of rehire so that they can get credit for prior service for purposes of retiree health eligibility.

III. Revision of Deduction Codes for those Hired after July 1, 2017

The OSC Payroll Division has identified new employees with a date of hire on or after July 1, 2017 has begun the process of changing the deduction codes for this group as follows: OPEB (or OPE2) deductions will be changed to OPE15; OTRS (or OTR2) deduction codes will be replaced by OTR15. No change is contemplated for the employer deduction codes.

Agencies are being asked to review prior service details for those rehired on or after July 1, 2017 to determine whether the employee is subject to the 10- or 15-year requirement. If an agency finds that an employee has been assigned an incorrect deduction code it should close the incorrect code, update the employee's record with the proper deduction Code, and notify the Division's Employee Benefits Unit of the change by sending an email to osc.opeb@ct.gov  with the subject line: "SEBAC2017".

IV. Auto-Enrollment and Removal of Deduction End Dates for all Employees

CORE-CT has implemented a process to automatically enroll new employees and rehires for Retiree Health Fund contributions based upon eligibility for health benefits and participation in a retirement plan. If an agency determines that an employee has been incorrectly enrolled for Retiree Health Fund contributions, please notify this Division'
s Employee Benefits Unit by sending an email to osc.opeb@ct.gov  with the subject line: "Auto Enroll".

The team at CORE-CT will remove the end dates for Retiree Health Fund deductions for all employees. The only end dates that will be retained are those associated with make-up or correction contributions under the ADJOPE code. Once the removal of end dates for Retiree Health Fund deductions occurs, agencies should not reinstate them.

Going forward CORE-CT will monitor each employee's contribution history and close the deduction automatically after 120 months of contributions for those subject to the 10-year requirement or 180 months of contributions for those subject to the 15-year requirement. This will eliminate the need for agencies to adjust deduction end dates when an employee returns to work after unpaid leave.

V. CONCLUSION

Agency Payroll and Human Resources personnel with questions should e-mail Margaret.Haering@ct.gov  or telephone her at 860-702-3486.

Very truly yours,

THOMAS C. WOODRUFF, Ph.D.
Division Director

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