as introduced - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to retirement; providing a health care 1.3 reimbursement plan for certain state retirement plan 1.4 participants; proposing coding for new law as 1.5 Minnesota Statutes, chapter 352G. 1.6 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.7 ARTICLE 1 1.8 HEALTH CARE REIMBURSEMENT PLAN 1.9 Section 1. [352G.01] [DEFINITIONS.] 1.10 Subdivision 1. [TERMS.] Unless the language or context 1.11 clearly indicates that a different meaning is intended, the 1.12 terms defined in this section, for the purposes of this chapter, 1.13 have the meanings given them. 1.14 Subd. 2. [INCLUDED PARTICIPANTS.] "Included participants" 1.15 means persons contributing to a retirement plan under chapter 1.16 3A, 352, 352B, 352D, or 490 on or after July 1, 2000. 1.17 Subd. 3. [ELIGIBLE RETIRED EMPLOYEE.] "Eligible retired 1.18 employee" means a former employee who is drawing monthly 1.19 retirement benefits under chapter 3A, 352, 352B, 352D, or 490, 1.20 and who has at least fifteen years of allowable service and was 1.21 eligible to draw retirement benefits at the time of separation 1.22 from state service. 1.23 Subd. 4. [DISABLED EMPLOYEE.] "Disabled employee" means an 1.24 employee who has been determined disabled under chapter 3A, 352, 1.25 352B, 352D, or 490. 2.1 Subd. 5. [INELIGIBLE TERMINATED EMPLOYEE.] "Ineligible 2.2 terminated employee" means a former state employee who is not 2.3 eligible for benefits from the health care reimbursement plan. 2.4 Subd. 6. [ACCUMULATED CONTRIBUTIONS.] "Accumulated 2.5 contributions" means the total deductions made from the salary 2.6 of an employee into the health care reimbursement plan. 2.7 Subd. 7. [HEALTH CARE REIMBURSEMENT FUND.] The "health 2.8 care reimbursement fund" includes the total accumulated 2.9 contributions and employer contributions made by or on behalf of 2.10 all included participants and any investment return attributable 2.11 to the contributions. 2.12 Subd. 8. [ALLOWABLE SERVICE.] "Allowable service" means 2.13 allowable service under chapter 3A, 352, 352B, 352D, or 490 2.14 except any allowable service reinstated by repaying a refund on 2.15 or after July 1, 2000. 2.16 Subd. 9. [SALARY.] "Salary" means wages, or other periodic 2.17 compensation paid to an employee before deductions for deferred 2.18 compensation, supplemental retirement plans, or other voluntary 2.19 salary reduction programs. Lump sum sick leave payments, 2.20 severance payments, lump sum annual leave payments and overtime 2.21 payments made at the time of separation from state service, 2.22 payments in lieu of any employee-paid group insurance coverage, 2.23 including the difference between single and family rates that 2.24 may be paid to an employee with single coverage, and payments 2.25 made as an employer-paid fringe benefit, workers' compensation 2.26 payments, employer contributions to a deferred compensation or 2.27 tax sheltered annuity program, and amounts contributed under a 2.28 benevolent vacation and sick leave donation program are not 2.29 salary. 2.30 Subd. 10. [DESIGNATED BENEFICIARY.] "Designated 2.31 beneficiary" means the designated beneficiary established by the 2.32 included participants or eligible retired employees under the 2.33 retirement plan under chapter 3A, 352, 352B, 352D, or 490. 2.34 Subd. 11. [EXECUTIVE DIRECTOR.] "Executive director" means 2.35 the executive director of the Minnesota state retirement system 2.36 under section 352.03, subdivision 5. 3.1 Subd. 12. [BOARD.] "Board" means the board of directors of 3.2 the Minnesota state retirement system established under section 3.3 352.03. 3.4 Subd. 13. [EMPLOYEE.] "Employee" means a person 3.5 contributing to a retirement plan under chapter 3A, 352, 352B, 3.6 352D, or 490. 3.7 Sec. 2. [352G.02] [HEALTH CARE REIMBURSEMENT PLAN.] 3.8 Subdivision 1. [ESTABLISHMENT.] There is established the 3.9 health care reimbursement plan for state employees covered under 3.10 chapter 3A, 352, 352B, 352D, or 490. This plan must meet 3.11 qualification requirements under the Internal Revenue Code, 3.12 section 401(h), to ensure that both contributions and benefit 3.13 payments are tax free. 3.14 Subd. 2. [STATE EMPLOYEES COVERED.] Every state employee 3.15 contributing to a plan under chapter 3A, 352, 352B, 352D, or 490 3.16 on or after July 1, 2000, is covered by the health care 3.17 reimbursement plan. Acceptance of state employment or 3.18 continuance in state service in which contributions are made 3.19 under chapter 3A, 352, 352B, 352D, or 490 is deemed consent to 3.20 have deductions made from salary for deposit to the credit of 3.21 the account of the state employee in the health care 3.22 reimbursement plan. 3.23 Sec. 3. [352G.03] [COVERAGE TERMINATION.] 3.24 Coverage of any person under the health care reimbursement 3.25 plan ends when the person ceases to be a state employee or is no 3.26 longer covered by a pension plan under chapter 3A, 352, 352B, 3.27 352D, or 490. 3.28 Sec. 4. [352G.04] [APPEALS PROCEDURE.] 3.29 If someone wishes to appeal a decision made by the 3.30 executive director, the appeal procedure established under 3.31 section 352.031 must be followed. 3.32 Sec. 5. [352G.05] [STATE EMPLOYEES HEALTH CARE 3.33 REIMBURSEMENT FUND, CONTRIBUTIONS BY EMPLOYEE AND EMPLOYER.] 3.34 Subdivision 1. [FUND CREATED.] There is created a special 3.35 fund to be known as the state employees health care 3.36 reimbursement fund. Employee contributions, employer 4.1 contributions, investment returns, and any other amounts 4.2 authorized by law shall be deposited in this account. 4.3 Subd. 2. [EMPLOYEE CONTRIBUTIONS.] The employee 4.4 contribution to the fund must be equal to .5 percent of salary. 4.5 These contributions must be made by deduction from salary as 4.6 provided in section 352.04, subdivision 4. 4.7 Subd. 3. [EMPLOYER CONTRIBUTIONS.] The employer 4.8 contribution to the fund must be equal to .5 percent of salary. 4.9 These contributions shall be made under section 352.04, 4.10 subdivisions 5 and 6. 4.11 Subd. 4. [OMITTED SALARY DEDUCTIONS.] If a department 4.12 fails to take deductions from an employee's salary as provided 4.13 in this section, the collection of omitted deduction must be 4.14 made in accordance with section 352.04, subdivision 8, 4.15 paragraphs (a), (b), and (c). 4.16 Subd. 5. [ERRONEOUS DEDUCTIONS; CANCELED 4.17 WARRANTS.] Deductions taken from the salary of an employee for 4.18 the health care reimbursement fund in error must, upon discovery 4.19 and verification by the department making the deduction, be 4.20 refunded to the employee in accordance with section 352.04, 4.21 subdivision 9. 4.22 Subd. 6. [FUND DISBURSEMENT RESTRICTED.] The health care 4.23 reimbursement fund must be disbursed only for the purposes 4.24 provided by law. The expenses of the health care reimbursement 4.25 plan and any benefits provided by law must be paid from the 4.26 health care reimbursement fund. Refunds under section 352G.10, 4.27 subdivisions 1 and 2, must be paid from the contributions prior 4.28 to being invested in the health care reimbursement fund. 4.29 Sec. 6. [352G.06] [STATE TREASURER TO BE TREASURER OF THE 4.30 HEALTH CARE REIMBURSEMENT FUND.] 4.31 The state treasurer and the treasurer's successor is ex 4.32 officio treasurer of the health care reimbursement fund. The 4.33 general bond to the state shall cover all liability for actions 4.34 as treasurer of these funds. Funds of the system received by 4.35 the treasurer must be set aside in the state treasury and 4.36 credited to the health care reimbursement fund. The treasurer 5.1 and the treasurer's successor shall deliver to the executive 5.2 director copies of all payroll abstracts of the state together 5.3 with the commissioner of finance's warrants covering the 5.4 deductions made on these payroll abstracts for the health care 5.5 reimbursement fund. The executive director shall have a list 5.6 made of the commissioner of finance's warrants. These warrants 5.7 must then be deposited with the state's treasurer or the 5.8 treasurer's successor to be credited to the health care 5.9 reimbursement fund. The treasurer shall pay out of this fund 5.10 only on warrants issued by the commissioner of finance, upon 5.11 abstracts signed by the director, or by the finance officer 5.12 designated by the director during the disability or the absence 5.13 of the director. Abstracts for investments may be signed by the 5.14 executive director of the state board of investment. 5.15 Sec. 7. [352G.07] [INVESTMENT BOARD TO INVEST FUNDS.] 5.16 The director shall, from time to time, certify to the state 5.17 board of investment any portions of the health care 5.18 reimbursement fund that in the judgment of the director are not 5.19 required for immediate use. The state board of investment shall 5.20 invest and reinvest sums so transferred, or certified, in 5.21 securities that are duly authorized legal investments under 5.22 section 11A.24. Amounts invested in the health care 5.23 reimbursement fund must be accounted for separately from the 5.24 retirement funds invested by the investment board. 5.25 Sec. 8. [352G.08] [HEALTH CARE REIMBURSEMENT PLAN 5.26 BENEFITS.] 5.27 Subdivision 1. [AGE AND SERVICE REQUIREMENTS.] After 5.28 separation from state service, an employee who has attained the 5.29 age of at least 60, who has at least 15 years of allowable 5.30 service, and is immediately eligible for retirement or 5.31 disability benefits or an employee who qualifies for the rule of 5.32 90 regardless of age is entitled upon application to benefits 5.33 from the health care reimbursement plan as long as the employee 5.34 has not accepted a refund under section 352G.10, subdivisions 1 5.35 and 2, or has repaid all refunds to the health care 5.36 reimbursement plan under section 352G.10, subdivision 4. 6.1 Benefits are not payable to an eligible disabled employee who is 6.2 no longer collecting disability or retirement benefits. 6.3 Subd. 2. [BENEFIT SCHEDULE.] Those meeting the eligibility 6.4 requirements in subdivision 1 will be entitled to the following 6.5 monthly benefits: 6.6 Retirement Date Monthly Benefits 6.7 July 1, 2000 - June 30, 2002 $55 6.8 July 1, 2002 - June 30, 2003 $64 6.9 July 1, 2003 - June 30, 2004 $73 6.10 July 1, 2004 - June 30, 2005 $82 6.11 July 1, 2005 - June 30, 2006 $92 6.12 July 1, 2006 - June 30, 2007 $102 6.13 July 1, 2007 - June 30, 2008 $113 6.14 July 1, 2008 - June 30, 2009 $123 6.15 July 1, 2009 - June 30, 2010 $134 6.16 July 1, 2010 - June 30, 2011 $146 6.17 July 1, 2011 - and after $158 6.18 Subd. 3. [PAYMENTS.] The first monthly payment will begin 6.19 on July 1, 2002, and will be based on the schedule above. No 6.20 monthly payments will be made prior to July 1, 2002. Payments 6.21 will be paid directly to the eligible retired employee, but only 6.22 upon providing documentation that the money is used to offset 6.23 health insurance premiums or any other health expenses to meet 6.24 the requirements under the Internal Revenue Code, section 401(h). 6.25 At the discretion of the executive director, payments may be 6.26 added to the monthly retirement checks received by the eligible 6.27 retired employee. 6.28 Subd. 4. [TERMINATION OF BENEFITS.] Monthly benefits will 6.29 terminate upon the death of the member, and will not continue to 6.30 a survivor or designated beneficiary. 6.31 Sec. 9. [352G.09] [ANNUAL INCREASES, CALCULATION OF HEALTH 6.32 INSURANCE PLAN INFLATION ADJUSTMENT.] 6.33 (a) Annually, following June 30, the Minnesota state 6.34 retirement system shall use the procedures in paragraph (b) to 6.35 determine whether an inflation adjustment is payable and to 6.36 determine the amount of the adjustment. 7.1 (b) If the medical inflation index increases from June 30 7.2 of the preceding year to June 30 of the current year, the 7.3 Minnesota state retirement system shall certify the percentage 7.4 increase. The amount certified is the lesser of the medical 7.5 inflation index or five percent. The board, at its discretion, 7.6 can decrease the adjustment in any year in order to maintain the 7.7 financial integrity of the health insurance plan which includes 7.8 avoiding projected unfunded liability. The board will seek 7.9 advise from an approved actuary in determining if the inflation 7.10 adjustment should be lowered. 7.11 (c) If an increase is payable, it will be made the 7.12 following January 1. An eligible retired employee who has been 7.13 receiving health insurance reimbursement benefits for at least 7.14 12 months as of the current June 30 is eligible to receive a 7.15 full insurance plan inflation adjustment. An eligible retired 7.16 employee who has been receiving a health insurance benefit for 7.17 at least one full month, but less than 12 full months as of the 7.18 current June 30 is eligible to receive a partial inflation 7.19 adjustment as follows: 7.20 Month Retired Fraction of the Increase 7.21 July 11/12 7.22 August 10/12 7.23 September 9/12 7.24 October 8/12 7.25 November 7/12 7.26 December 6/12 7.27 January 5/12 7.28 February 4/12 7.29 March 3/12 7.30 April 2/12 7.31 May 1/12 7.32 Sec. 10. [352G.10] [REFUND OF EMPLOYEE CONTRIBUTIONS.] 7.33 Subdivision 1. [REFUND.] An ineligible terminated 7.34 employee, an eligible retired employee who has not yet begun 7.35 collecting benefits, or an employee who moves to a state 7.36 position no longer covered by chapter 3A, 352, 352B, 352D, or 8.1 490 may apply for a refund provided in subdivision 2. 8.2 Application for a refund may be made after the termination of 8.3 state service if the applicant has not again become a state 8.4 employee required to be covered by the system. 8.5 Subd. 2. [AMOUNT OF REFUND.] The refund payable to a 8.6 person defined in subdivision 1 is an amount equal to employee 8.7 contributions plus interest at a rate of five percent per year 8.8 compounded annually. The amount of the refund is paid from 8.9 contributions paid under section 352G.05 prior to the money 8.10 being invested in the health care reimbursement fund. 8.11 Subd. 3. [TERMINATION OF RIGHTS.] When an ineligible 8.12 terminated employee or an eligible retired employee accepts a 8.13 refund as provided in subdivision 2, all existing service and 8.14 all rights and benefits to which the employee was entitled 8.15 before accepting the refund terminate. Refunds may not be 8.16 repaid. 8.17 Subd. 4. [REPAYMENT OF REFUND.] An included participant 8.18 may repay a refund paid under subdivision 2 by paying the amount 8.19 refunded plus 8.5 percent interest compounded annually. All 8.20 refunds must be paid before termination or within one month 8.21 following termination of state service. 8.22 Sec. 11. [352G.11] [PAYMENTS UPON THE DEATH OF AN INCLUDED 8.23 PARTICIPANT.] 8.24 Upon the death of an included participant or a person not 8.25 yet collecting monthly benefits under this section, the 8.26 designated beneficiary is entitled to a refund of contributions 8.27 plus five percent interest, compounded annually. 8.28 Sec. 12. [352G.12] [PAYMENT UPON THE DEATH OF AN ELIGIBLE 8.29 RETIRED EMPLOYEE.] 8.30 Upon the death of an eligible retired employee who has 8.31 started collecting monthly benefits, the designated beneficiary 8.32 is entitled to a refund of the eligible retired employee's 8.33 contributions plus five percent interest compounded annually 8.34 until the date of termination of state service less the monthly 8.35 benefits that have been paid. 8.36 Sec. 13. [EFFECTIVE DATE.] 9.1 Sections 1 to 12 are effective July 1, 2000. 9.2 ARTICLE 2 9.3 CURRENT RETIREES; RIGHT TO AMEND 9.4 Section 1. [CURRENT RETIREES AND DISABLED EMPLOYEES.] 9.5 Any current retiree or disabled employee receiving monthly 9.6 benefits under Minnesota Statutes, chapter 3A, 352, 352B, 352D, 9.7 or 490, who have 15 or more years of service and are age 60 or 9.8 who qualified for the rule of 90 at the time of termination of 9.9 public employment would be eligible to receive an additional $55 9.10 per month. This additional payment will be added to the retired 9.11 or disabled employees monthly retirement check and will be 9.12 eligible for future post retirement adjustments under Minnesota 9.13 Statutes, section 11A.18, subdivision 9. The present value 9.14 necessary to provide this benefit increase to retired and 9.15 disabled employees must be transferred to the post retirement 9.16 fund under Minnesota Statutes, section 11A.18, subdivision 6, 9.17 from the retirement fund the person is currently receiving the 9.18 benefits. If the retired or disabled employee is receiving 9.19 payments from more than one retirement plan meeting 9.20 qualifications under this subdivision, the required reserves 9.21 will be transferred from the plan with the most service credit. 9.22 Sec. 2. [RETIREES AND DISABLED EMPLOYEES UNDER AGE 60.] 9.23 A retired or disabled employee who has 15 or more years of 9.24 service, but has not yet reached age 60 will be entitled to an 9.25 additional $55 per month upon attainment of age 60. The present 9.26 value necessary to provide the benefit increase to those who 9.27 become eligible later must be transferred to the postretirement 9.28 fund when they reach age 60. 9.29 Sec. 3. [FIRST INCREASE.] 9.30 An eligible or retired eligible employee would first be 9.31 eligible for an increase on January 1, 2003. The required 9.32 reserves to support the payment must be transferred on July 1, 9.33 2001. 9.34 Sec. 4. [UNLIMITED RIGHT TO AMEND.] 9.35 Notwithstanding any other provision of the health benefit 9.36 fund and provisions of the Internal Revenue Code, the provisions 10.1 governing the health care reimbursement plan may be amended at 10.2 any time and in any manner for any reason whatsoever. This 10.3 right to amend includes, but is not limited to, the right to 10.4 reduce or eliminate prospectively or retroactively any or all 10.5 health benefits under the health care reimbursement plan for any 10.6 or all persons who may be members, retirees, and other 10.7 recipients or otherwise may be entitled to health benefits under 10.8 this plan. Benefits may be reduced or eliminated for any or all 10.9 persons including members, retirees, and other recipients even 10.10 if they are then entitled to or are receiving health benefits. 10.11 Sec. 5. [EFFECTIVE DATE.] 10.12 Sections 1 to 4 are effective July 1, 2000.