Retiree Health Fund Contributions Questions & Answers

Revised May 28, 2010

The Office of the State Comptroller recently provided state agencies with information regarding the administration of the mandatory 3% Retiree Health Fund contributions. This mandatory contribution was part of a negotiated agreement between the State of Connecticut and the State Employees Bargaining Agent Coalition (SEBAC) in 2009.

ELIGIBILITY

Who is required to contribute 3% to the Retiree Health Fund?
The following criteria are being used to determine who is required to contribute to the Retiree Health Fund:

Employees eligible for state-paid health insurance benefits who were:
- newly hired on or after July 1, 2009, or
- rehired on or after July 1, 2009 with less than 10 years of service as of the rehire date, or
- on the payroll as of July 1, 2009 with fewer than 5 years of service as of July 1, 2010.
Are employees on Special Payroll, including adjunct faculty, required to contribute 3% to the Retiree Health Fund?
No. Employees whose only current state employment is on Special Payroll, including adjunct faculty, are not required to contribute toward the Retiree Health Fund.
Can I elect to waive my right to retiree health benefits and not contribute the 3%?
No. All employees are required to participate unless they have retiree health insurance through a former employer and provide the required proof.
If my spouse and I work for the state, must we both contribute to the Retiree Health Fund?
Yes, each employee is required to contribute to the Retiree Health Fund.
If I waive my state-paid health benefits through my employment, will I still be required to contribute the 3% to the Retiree Health Fund?
Yes. Waiver of active employee health insurance does not impact your eligibility for retiree health benefits or the requirement to contribute the 3% toward the Retiree Health Fund.

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SERVICE USED IN CALCULATIONS

What service is being used to determine if I meet the 5 years?
Only periods of actual state service during which you were eligible for state-paid health benefits will count toward determining if you meet the 5 years. Service time will be calculated in years and months unless your employment is based on an academic year schedule. Healthcare eligible employees whose employment is based on an academic year schedule will receive a full year's credit for each academic year completed; a half-year's credit for each full semester.

For purposes of this program, neither vesting service nor time purchased for retirement purposes will be counted, except for military service in time of war that occurred after your state hire date and certain service in an organized police department of a municipality within the state.
Does my time as a student worker or graduate assistant count toward the 5 years?
No, time as a student worker or graduate assistant does not count toward service time in determining the 5 years.
Does my time on Special Payroll count toward the 5 years?
No, time on Special Payroll does not count toward service time in determining the 5 years.
Is service time pro-rated based on my percentage of employment?
No, service time will not be pro-rated based on employment percentage?
How do breaks in employment impact the calculation of the 5 years?
Employees receive service credit for all periods in which they are in a state-paid health benefits eligible position regardless of breaks in employment. For example, if an employee worked for three years, left state service for five years and has been reemployed for two years on July 1, 2009, s/he would have 5 years of service and would not contribute 3% toward the Retiree Health Fund.
How long will I be required to make the 3% contribution to the Retiree Health Fund?
The 3% contribution will end when you have reached 10 years of service in a state-paid health benefits position. For example, if you have three years of service as of July 1, 2010, you will contribute 3% for 7 years. Periods of unpaid leave will extend the duration of the 3% contribution for any calendar month in which you do not receive a paycheck, unless you elect to make up the missed contributions prior to retirement.

If you were age 52 or older and actively employed by the state as of April 21, 2009 and will have fewer than 5 years of actual state service on July 1, 2010, your contributions would end earlier if you transition directly into retirement (age 62 or older with 5 or more years of actual state service).
Who will be auditing my employment record to determine if I meet the 5 years, and if not, for how long will I be required to contribute?
Human Resources and Payroll will be auditing approximately 1,200 employment records during April, May and June. A letter will be sent to each employee who does not meet the 5 years. Included in the mailing will be a CO-1300 form on which employees will provide information about their service time and leaves of absence.
I am an adjunct faculty who has completed sufficient state service to qualify for retiree health coverage. Will I be required to contribute 3% to participate?
If your only state employment has been as an adjunct faculty and you have enough semesters of teaching 9 or more credit hours at multiple state agencies, you will be required to pay an amount equal to 3% of your compensation for the full 10-year period (or such lesser time as may be required of those actively employed by the state before July 1, 2009) in order to participate in retiree health benefits.

COMPENSATION INCLUDED IN 3% CONTRIBUTION

What compensation is included in the calculation of the 3% contribution?
The 3% contribution to the Retiree Health Fund is based upon earnings defined as salary in Section 5-154(h) of the Pension Agreement. Generally, salary is any compensation you receive in your paycheck that is used in the calculation of your retirement plan benefit (SERS, ARP).
Is the 3% contribution taken on a pre-tax basis?
Yes. The 3% Retiree Health Fund contribution is deducted from paychecks on a pre-tax basis.
If I have more than one job with the state, will the 3% contribution be taken from each paycheck?
If you have multiple part-time positions, which cumulatively make you eligible for healthcare coverage, the 3% deduction will be based on compensation from all positions. If you have both a full-time position and a part-time position, contributions will be based only on the full-time position.

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REFUNDS

If I leave state service prior to 10 years of service, will my 3% contribution to the Retiree Health Fund be refunded?
Yes, you may request a refund of your 3% contributions if you leave state service prior to completing 10 years of service. To request a refund, you must complete a CO-1301 and return it to the Payroll Department, Unit 2111.
How much money will I receive in my refund?
The refund will equal the amount deducted from your compensation and will be reported as income in the year received. No interest will be payable, except to the extent the state delays repayment of the contributions by a period of more than 60 days after the CO-1301 has been received by the Healthcare Policy & Benefits Services Division.
When will I receive my refund?
The state will make every effort to refund contributions within 21 days following receipt of the CO-1301, except to the extent returns are delayed in accordance with the SEBAC 2009 Agreement. Under the SEBAC 2009 Agreement, the state may withhold refunds until July 2012 and in such case pay 3% per annum interest between the date of separation and July 2012.
What happens if I receive a refund and am later rehired?
If you receive a refund and are later rehired, you will be required to contribute for 10 years starting with the date of your reemployment unless you elect to and commence repayments of the entire refund (either in periodic payments or a lump sum) within 60 days after rehire.
How do I elect to repay the refund?
You must complete a CO-1302 to arrange for the repayment of the 3% contributions. Periodic repayments must commence within 60 days of the rehire date and will be collected over the same number of pay periods in which the deduction was previously taken. A lump sum payment can only be made with post-tax funds.
What do I need to do if I do not want to repay the refund?
If you are declining to repay the refund, you complete a waiver form (CO-1305) acknowledging that you will be forever barred from obtaining credit towards retiree health coverage for that period of prior state service.

ADDITIONAL QUESTIONS

Does the 3% contribution I make now to the Retiree Health Fund reduce the contributions I will pay when I retire?
No. Your 3% contribution to the Retiree Health Fund is being used to offset the cost of future retiree healthcare benefits, which is primarily funded by the state.
In which paycheck will I see my first 3% deduction for the Retiree Health Fund since I will not have 5 years service as of July 1, 2010?
For employees who were on the payroll as of July 1, 2009 who do not have 5 years of service as of July 1, 2010, the first deduction will appear in paychecks dated July 30, 2010.

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