P.L. 2011 chapter 78: How does the new pensions and health benefits law affect you?

Health Benefits

New employees hired on or after June 28, 2011

Q:  I am a new employee in September 2011.  I will be part of a bargaining unit that has a current negotiated agreement in effect that started prior to the effective date of the law.  When do I start premium sharing for my health benefits under the new law?

A: P.L. 2011 chapter 78 will not affect you until the expiration of your local’s collective bargaining agreement. When the contract expires, you will start to pay based on the law at the tier 1 level.

Q:  I am a new employee in September 2011.  I will be part of a bargaining unit that is working under an expired collective bargaining agreement.  At what level do I start to premium share on for my health benefits under the new law?

A: You will immediately begin to pay based on the law at the tier 4 level.

Q:  I am a new employee in September 2011.  I will be part of a bargaining unit that is under a collective bargaining agreement that took effect after June 28, 2011.  At what level do I start to premium share on for my health benefits under the new law?

A: You will immediately begin to pay based on the law at the tier 4 level.

Q:  I am a veteran teacher, but I’m taking a job in a new district this fall.  Am I considered a “new employee” under this law?

A:  A teacher who leaves one district and starts in another district is considered a new employee to that district.  If you come into a bargaining unit that is not already premium sharing under P.L. 2011 chapter 78, then you will will begin premium sharing under the law with the rest of the bargaining unit.  If the bargaining unit has already started to premium share under P.L. 2011 chapter 78, then you will start to premium share immediately at the tier 4 level.

Employees hired on or before June 27, 2011

Q:  I am a returning employee in a district and am part of a bargaining unit that has a current collective bargaining agreement that began prior to June 28, 2011.  When do I start to premium share  for my health benefits under the new law?

A: P.L. 2011 chapter 78 will not affect you until the expiration of your local’s current collective bargaining agreement. When the contract expires, you will start to pay based on the law at the tier 1 level.

Q:  I am a returning employee in a district and am part of a bargaining unit that is under an expired collective bargaining agreement.  At what level do I start to premium share on for my health benefits under the new law?

A: You will immediately begin to pay based on the law at the tier 1 level.

Q:  I am a returning employee in a district and am part of a bargaining unit that is under collective bargaining agreement that took effect after June 28, 2011.  At what level do I start to premium share for my health benefits under the new law?

A: You will immediately begin to pay based on the law at the tier 1 level.

All members

Q:  Is my district required to set up a “125 plan” to allow employees to pay for any premium sharing with before tax money?

A:  Yes.  The law requires that a district set up a “125 plan” in your district before the premium sharing of P.L. 2011 chapter 78 can be implemented in your district.

Q:  Is my district required to set up a “flexible spending account” to allow employees to pay for unreimbursed medical expenses?

A:  Yes.  The law requires that a district set up a ““flexible spending account” in your district.

Q:  My district participates in the School Employees’ Health Benefits Program.  I know my salary and coverage level determines the percentage of premium that I pay.  What premiums would be included in that calculation?

A:  Your medical (SEHBP) and prescription (SEHBP or non-SEHBP) would be included in the calculation.  Dental, optical and any other health benefit would be excluded.

Q:  My district does not participate in the School Employees’ Health Benefits Program and has ALL private insurance.  I know my salary and coverage level determines the percentage of premium that I pay.  What premiums would be included in that calculation?

A:  Your medical, prescription, dental, optical and any other health benefit would be included in the calculation.

Q:  The charts that are being used for determining the percentage of premium that I pay only have parent /child and not parent/children.  Is there a difference?

A:  No.  The same percentage chart will be used for parent/child and parent/children.

Q: On what salary will my district use in calculating the percentage of premium that I will pay under P.L. 2011 chapter 78?

A:  In most instances, it will be the salary that is reported to the Division of Pensions and Benefits.  For most members, this would be base salary plus any longevity.  It would not include money earned from stipend positions.

Q: I have heard that there may be changes to the plans offered under the School Employees’ Health Benefits Program.  Can you tell me what those new plans will look like?

A:  The law creates a committee to study and possibly make changes to the program.  It is our understanding that the committee is being formed and plans to have its changes in place for the School Employees’ Health Benefits Program open enrollment period during the month of October 2011.

Q:  I read that P.L. 2011 limits the hospitals that public employees could use.  Is this true?

A:  No.  The section of P.L. 2011 chapter 78 that would have put limitations on hospitals that public employees could use was repealed with P.L. 2011 chapter 79.

Post-retirement medical benefits

Q:  The law grandfathers premium free health benefits in retirement for anyone with 20 or more years in the pension system as of the effective date of the legislation.  Can you explain this?

A:  For active members with 20 or more years of creditable service as of June 28, 2011, they will receive post-retirement medical benefits premium free upon retirement and 25 years of creditable service.  For active members with fewer than 20 years of creditable service as of that date, they will receive post-retirement medical benefits upon retirement and 25 years of creditable service, but will be required to pay a portion of the premium, based on the law.

Q:  If I am finishing my 20th year in June 2011, will I be grandfathered for premium free post-retirement medical benefits?

A:  Yes.  The Division of Pensions will be calculating service as of the end of the school year (6/30/2011).

Q.  I have fewer than 20 years of service, but am eligible to purchase service that will put me at or over 20 years.  Can I do so now and avoid paying a share of the premium in retirement?

A.  The Division of Pensions has stated that they will accept a completed Application to Purchase Service Credit received prior to the effective date to put members at 20 or above the 20-year threshold.

Pensions

Q:  When does the increase in pension contribution take effect?

A:  The state has told local employers to begin collecting and additional 1% of salary in pension contributions beginning in October, meaning members will be paying 6.5% of salary.  An additional 1% increase will be phased in incrementally over a 7 year period beginning in July 2012, until members are paying 7.5%.

Q:  I am currently employed and have an active pension account.  Do I have to wait until age 65 to retire?

A:  P.L. 2011 chapter 78 does not make any changes to your normal age of retirement or pension formula, which is determined by your date of enrollment.

Q:  I am currently employed and have an active pension account.  Can I still retire early with 25 years of pension credit?

A:  Yes, you can still apply for early retirement with 25 years of service credit.

Q:  I am a veteran.  Have any veteran benefits changed?

A:  No

Q:  Will I receive a Cost of Living Adjustment (COLA) in retirement?

A:   P.L. 2011 chapter 78 eliminates all future Cost of Living Adjustments (COLAs).  NJEA is filing a lawsuit challenging this aspect of the new law.

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