0266-sb 0415

This bill provides for the payment by the retirement system of the cost of group health insurance for eligible retired political subdivision employees and integrates the payment obligation for eligible retired teachers. The additional benefits shall be funded from the special account for current retired political subdivision employees until 2004.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

Be it Enacted by the Senate and House of Representatives in General Court convened:

266:1 Credit for Out-of-state Service; Eligibility for Medical Benefits. Amend RSA 100-A:4-b, III to read as follows:

III. In no case shall out-of-state service purchased as creditable service in the New Hampshire retirement system under the provisions of this section be deemed to be creditable state service for the purposes of eligibility for medical benefits after retirement under the provisions of RSA 21-I:30 or RSA [~~100-A:53-a~~] 100-A:52-a.

266:2 New Section; Payment by Retirement System; Teachers and Political Subdivision Employees. Amend RSA 100-A by inserting after section 52 the following new section:

100-A:52-a Payment by Retirement System; Group I Teachers and Political Subdivision Employees.

I. The New Hampshire retirement system shall pay the cost for permanent group hospitalization, hospital medical care, surgical care, and other medical and surgical benefits, in the employer-sponsored plan provided for active employees of a retiree's former employer, subject to the provisions of this section, for the following persons:

(a) Any person, who has at least 20 years of creditable service as a group I member if age 60 or older, or at least 30 years of creditable service as a group I member if age 55-59, retired on or before July 1, 2004 as a group I teacher member or political subdivision employee member of the New Hampshire retirement system on service or ordinary disability retirement, provided that such person shall be entitled to retirement on the basis of group I creditable service, or any person retired on or before July 1, 2004, as a group I member whose service retirement benefit is based upon the provisions of RSA 100-A:19-c and who has a minimum of 20 years of creditable service as a group I member.

(b) Any person who has completed no less than 20 years of group I creditable service, but who for reasons other than retirement or death ceased to be a group I teacher member or political subdivision employee member prior to attaining the age of 60, and who, as of July 1, 2004, receives a vested deferred retirement allowance and who subsequently attains the age of 60.

(c) Any person who has completed no less than 20 years of group I creditable service and who retired as a group I teacher member or political subdivision employee member prior to age 60, and who subsequently attains the age of 60, or any person who has completed no less than 30 years of group I creditable service and who retired as a group I teacher member or political subdivision employee member prior to age 55, and who subsequently attains the age of 55.

(d) The surviving spouse of a deceased retired group I teacher member or political subdivision employee member who met the qualifications of subparagraphs (a), (b) or (c), or of a deceased member who died while in service as a group I teacher member or political subdivision employee member, provided that such surviving spouse was covered as the member's spouse in the employer-sponsored plan before the member's death and is entitled to a monthly allowance under RSA 100-A:8, 100-A:9, or 100-A:13.

(e) Any certifiably dependent child with a disability living in the household and being cared for by the qualified retired member, the member's spouse, or the qualified surviving spouse.

(f) The surviving spouse and children of a deceased teacher or group I political subdivision employee member who dies as the natural and proximate result of injuries suffered while in the performance of duty, provided that:

(1) Any such child shall be qualified under this subparagraph only if under 18 years of age, or under 23 years of age if attending school on a full-time basis; and

(2) Such surviving spouse shall cease to be qualified upon the remarriage of the surviving spouse; and

(3) No surviving spouse or child shall be qualified or continue to be qualified under this subparagraph while receiving or eligible to receive medical insurance or health care benefits from any employer's sponsored plan.

(g) Any group I teacher member or political subdivision employee member retired on or before July 1, 2004 on disability retirement as the natural and proximate result of injuries suffered while in the performance of duty.

II. However, for the fiscal year beginning July 1, 2000, the maximum amount payable by the retirement system under this subdivision on account of each person qualified under paragraph I who is not entitled to medicare benefits, and on account of each person qualified under paragraph I who is entitled to medicare benefits, shall be the same as the amount provided in RSA 100-A:52, II for group II retirees. As of July 1, 2000 and on each July 1 thereafter, the maximum amount payable by the retirement system as provided in this paragraph shall be increased by 8 percent, compounded on previous increases.

III. In the case of group I members retired from employment by political subdivisions of the state, the amount payable by the retirement system on account of qualified persons shall be paid over to the employer, insurer, or health care administrator and used to pay for all or part of the medical benefits provided through the former employer for qualified persons. If the cost of the premium for any eligible person under paragraph I shall exceed the maximum under paragraph II, and the employer does not elect to pay the excess cost, the excess cost shall be paid by the retiree or qualified surviving spouse and may be deducted from retirement benefits as provided in RSA 100-A:51. The employer may require, as a condition for coverage, that the retiree or surviving spouse apply for deduction of such excess cost from retirement benefits as provided in RSA 100-A:51.

IV. There shall be no age limit to participate in the employer sponsored medical and health plan provided in paragraph I, and there shall be no physical examination or health statement required for such coverage, provided, however, that if an eligible retired group I teacher member or political subdivision employee member of the retirement system fails to apply for such coverage within the time required by the insurance contract, the insurer may require satisfactory evidence of insurability as a condition for becoming insured.

V. Any group I teacher member retired before January 1, 2000, or other eligible person under paragraph I, who would have been eligible for medical benefits under this section if this section had been in effect on the member's date of retirement, shall have the option of re-joining the medical or health plan sponsored by the retired member's former employer and of receiving benefits under this section, provided that such eligible person shall apply to the employer for such benefits before January 1, 2002. Upon receipt of such application, the former employer shall enroll such retiree or other eligible person in the employer's plan in the same manner and subject to the same conditions as enrollment of a new employee but without any benefit-waiting period which may be applicable to new employees of that employer. Neither an employer nor an employer's group plan or insurer shall be liable for any claims incurred prior to the date of enrollment under this paragraph.

VI. Any group I political subdivision employee member retired before January 1, 2001, or other eligible person under paragraph I, who would have been eligible for medical benefits under this section if this section had been in effect on the member's date of retirement, shall have the option of re-joining the medical or health plan sponsored by the retired member's former employer and of receiving benefits under this section, provided that such eligible person shall apply to the employer for such benefits before January 1, 2003. Upon receipt of such application, the former employer shall enroll such retiree or other eligible person in the employer's plan in the same manner and subject to the same conditions as enrollment of a new employee but without any benefit-waiting period which may be applicable to new employees of that employer. Neither an employer nor an employer's group plan or insurer shall be liable for any claims incurred prior to the date of enrollment under this paragraph.

VII. The retirement system shall notify all group I teacher and political subdivision employee retirees and surviving spouse beneficiaries, who are currently drawing monthly allowances from the retirement system, of their possible right to re-join and active-employee medical insurance or health plan and to receive benefits under this section.

VIII. Any person who is eligible to receive group insurance or other medical benefits under the provisions of this section, but who does not need and who declines such benefits because they would be duplicative of coverage under any employer-sponsored plan, shall nevertheless continue to be eligible and, upon ceasing to be eligible for the other coverage, shall be permitted to receive the benefits allowable under this section without any waiting period.

I. The benefits provided under RSA [~~100-A:53-a~~] 100-A:52-a shall be provided by a 401(h) subtrust of the New Hampshire retirement system. The 401(h) subtrust shall be funded by allocating 25 percent of future group I teacher employer contributions made for group I teachers in accordance with RSA 100-A:16 to the subtrust until such time as the benefits are fully funded. Thereafter the subtrust shall receive only that portion of each year's contribution as is necessary to keep the benefits fully funded.

II. All contributions made to the retirement system to provide medical benefits under RSA [~~100-A:53-a~~] 100-A:52-a shall be maintained in a separate account, the 401(h) subtrust. All funds and accumulated interest shall not be used for or diverted to any purpose other than to provide said medical benefits. Similarly, none of the funds accumulated to provide the retirement benefits set forth in this chapter may be used or diverted to provide medical benefits under RSA [~~100-A:53-a~~] 100-A:52-a. The funds, if any, providing medical benefits under RSA [~~100-A:53-a~~] 100-A:52-a may be invested pursuant to the provisions of RSA 100-A:15.

266:4 New Section; Method of Financing Group I Political Subdivision Employees. Amend RSA 100-A by inserting after section 53-b the following new section:

I. The benefits provided under RSA 100-A:52-a shall be provided by a 401(h) subtrust of the New Hampshire retirement system. The 401(h) subtrust shall be funded by allocating 25 percent of future group I employer contributions made for group I political subdivision employees in accordance with RSA 100-A:16 to the subtrust until such time as the benefits are fully funded. Thereafter the subtrust shall receive only that portion of each year's contribution as is necessary to keep the benefits fully funded.

II. All contributions made to the retirement system to provide medical benefits under RSA 100-A:52-a shall be maintained in a separate account, the 401(h) subtrust. All funds and accumulated interest shall not be used for or diverted to any purpose other than to provide said medical benefits. Similarly, none of the funds accumulated to provide the retirement benefits set forth in this chapter may be used or diverted to provide medical benefits under RSA 100-A:52-a. The funds, if any, providing medical benefits under RSA 100-A:52-a may be invested pursuant to the provisions of RSA 100-A:15.

I-a. It is the intent of the legislature that future group I teacher members eligible after July 1, 2004 shall be included under the provisions of RSA [~~100-A:53-a~~] 100-A:52-a only if the total cost of such inclusion can be terminally funded from the special account established under RSA 100-A:16, II(h).

266:6 New Paragraph; Application; Funding. Amend RSA 100-A:55 by inserting after paragraph I-a the following new paragraph:

I-b. It is the intent of the legislature that future group I political subdivision employee members eligible after July 1, 2004 shall be included under the provisions of RSA 100-A:52-a only if the total cost of such inclusion can be terminally funded from the special account established under RSA 100-A:16, II(h).

266:7 Transfer; Application of Repeal. Any person who applied for and was eligible to receive the benefit provided by RSA 100-A:53-a prior to the repeal by section 9 of this act shall be considered to have applied under and shall have eligibility transferred to the provisions of RSA 100-A:52-a as inserted by this act. Funds transferred for the purpose of RSA 100-A:53-a prior to its repeal shall be available for the purpose of providing the benefits under the RSA 100-A:52-a as inserted by this act.

I. The sum of $36,384,000 is hereby transferred from the group I employee special account balance existing on June 30, 2000 for the purpose of funding RSA 100-A:52-a and RSA 100-A:53-c as inserted by this act.

II. The sum of $16,781,000 is hereby transferred from the group I teacher special account balance existing on June 30, 2000 for the purpose of funding RSA 100-A:52-a as inserted by this act.

266:9 Repeal. RSA 100-A:53-a, relative to medical benefits payment for teachers, is repealed.

The N.H. Retirement System indicates this bill, as amended by the Senate, will increase state restricted expenditures by an indeterminable amount in FY 2001 and each fiscal year thereafter. There will be no fiscal impact on county and local expenditures or on state, county and local revenues.

The N.H. Retirement System Special Account will decrease by $53,165,000 in FY 2001.

· Employee members and spouses who retire on or before July 1, 2004 at age 60 with at least 20 years of creditable service or at age 55 through 59 with at least 30 years of creditable service on service or ordinary disability retirement.

· Surviving spouses and children of Employee members who die as the natural and proximate result of injuries suffered while in the performance of duty.

· Vested terminated Employee members and spouses who have completed at least 20 years of creditable service and prior to July 1, 2004 receive an allowance and subsequently attain age 60.

· Employee members and spouses who retire after completing at least 20 years of creditable service and who subsequently attain age 60 before July 1, 2004.

The System has estimated the terminal funding as of January 1, 2001 for employee members and beneficiaries, who meet the eligibility requirements proposed by this bill, to be $36,384,000 in FY 2001. The System has estimated the terminal funding as of January 1, 2001 for those Teacher members and beneficiaries who meet the proposed eligibility requirements to be $16,781,000 in FY 2001.

This legislation transfers funds from the Group I Employee and Teacher Special Accounts to the 401(h) sub-trust and the Medical Special Account as is required pursuant to RSA 100-A:53-b. This legislation transfers a sum of $34,759,000 and $14,628,000, respectively. However, the estimated transfers should total $36,384,000 and $16,781,000, respectively in order to terminally fund the benefits provided in this bill.

This legislation states that it is the intent of the legislature to extend these benefits to those members eligible after July 1, 2004 only if the total cost of these benefits can be terminally funded from the respective special accounts.

The System indicates that this bill will increase administrative expenses from the System's administrative account upon passage, however, the increase is indeterminable at this time.

The Special Account balance for Employees and Teachers as of June 30, 1999 was $184,300,000 and $120,900,000, respectively.

The Actuary's letter is on file in the bill jacket in the Senate Clerk's Office.