|
Pension and Health Benefits Review Commission
Vote Results
February 17, 2012
A-373 (Wolfe)
Eliminates remarriage prohibition for PFRS death benefits; provides retirement allowance to certain survivors of PFRS members.
Motion: Recommend against enactment since the bill creates a disparity among the State-administered retirement systems
.
Discussion: As the bill impacts only the PFRS, its enactment would create a disparity among the State-administered retirement systems. Additionally, PERS and TPAF provide an annuity to a surviving spouse upon the accidental death of a member, which terminates upon remarriage and this bill changes the fundamental purpose to provide a means of support for the surviving spouse. Chapter 181, P.L. 2003 eliminated the remarriage prohibition for PFRS and SPRS accidental death benefits, but not for PERS and TPAF, and only as to accidental death to which PFRS and SPRS are exposed.The enactment of this bill would possibly encourage future legislation providing the same change to the other State plans not impacted by this bill. It is estimated that employer pension contributions will increase over $2.4 million per year.
A-378 (Wolfe)
Provides that PFRS definitions of widow, widower and spouse will include domestic partners of all PFRS members.
Motion: Recommend against enactment since the bill will increase local employer cost and State mandate State pay issues need to be addressed.
Discussion: The bill only impacts PFRS and it would make the domestic partnership provisions compulsory for all local employers. For State employees in the pension system and local employees whose employer adopts the pension provisions of the Domestic Partnership Act, pension benefits that were formerly payable exclusively to a surviving spouse can now be provided to a same sex domestic partner. In PFRS, this benefit includes the 50% of final compensation annuity payable to a spouse upon the death of an active or retired member, and the 70% of final compensation annual annuity payable to the surviving spouse upon the accidental death of an active member. A statutory solution to secure this benefit is utilization of the P.L. 2006, c. 103 Civil Union Law. It is estimated that employer pension contributions will increase $8 million per year.
A-409 (McGuckin)
Extends eligibility for certain veterans' benefits to members of reserve components of US Armed Forces and NJ organized militia who serve at least 180 continuous days.
Motion: Recommend against enactment since the bill would result in additional State and local employer pension costs.
Discussion: The Commission does not support this bill since it detracts from the Legislature’s original intent as to who should qualify for veteran preference in this State. The increased veteran population will cause pension costs to significantly increase, as it is estimated that employer pension contributions will increase over $28 million per year. Increases to certain pensions are not advisable, particularly while COLA and other unfunded liability issues are being addressed through the reforms initiated in P.L. 2011, c. 78. Originally, veteran preference in the State was to include all who service in the “theatre of operations” during world wars or major national emergencies.
A-626 (Gove/Rumpf)
Allows PERS ordinary disability retiree to earn up to $3,000 in PERS-covered employment annually before cancellation of disability benefit and reenrollment in PERS.
Motion: Recommend against enactment since the bill liberalizes the intent of a total and permanent disability and does not encourage consistent policy of disability benefits among the State-administered retirement systems.
Discussion: The Commission is concerned with the increasing number of disability claims that result in part from changing court and statutory policy that ease eligibility requirements. The bill only impacts the PERS and its enactment will create a disparity among the State-administered retirement systems, specifically when compared to TPAF, which has similar return to employment laws regarding disability pensions. Additionally, the bill indicates it is applicable only to members who retire with an ordinary disability pension. Accidental disability pensions appear to be excluded. The introduction of future bills extending this bill’s provisions to the other State pension plans can be anticipated. The enactment of recent pension reforms changed the eligibility requirements for PERS membership several times. Prior to the enactment of P.L. 2008, c. 89, PERS membership was predicated on an annual salary of at least $1,500 (Tier 1 and Tier 2 members. Chapter 89, P.L. 2008 increased the minimum annual salary requirement to $7,500 adjusted annually for changes in the CPI (currently $7,800). Full-time status i.e. 35 hours per State, 32 hours per week for locals, is required for TIER 4 and Tier 5 membership in PERS as a result of the enactment of P.L. 2010, c. 1. Also, Tier 4 and 5 PERS members are no long eligible for the ordinary disability pension benefits addressed by this bill. These members are eligible for disability insurance coverage pursuant to Chapter 3, P.L. 2010. Consequently, the $3,000 earnings limit provided for in this bill would only apply to Tier 1 and Tier 2 PERS members.
A-694 (Ramos)
Provides for continuation of health insurance coverage in group and SHBP health plans for unlimited period of time for certain former employees and their dependents.
Motion: Recommend against enactment since it will increase State and local SHBP costs and it continues the questionable practice of mandating health benefit coverage.
Discussion: The bill allows the State Health Benefits Commission to assess the former employee an additional premium not to exceed 102% of active coverage for the extended coverage period provided by the bill. As such, the premiums paid by the employees electing the coverage many not absorb the entire higher coverage costs associated with this bill. Consequently, employers participating in the SHBP will partially subsidize the resulting increased costs through increased required premiums. The SHBP will experience adverse selection since only those employees who need the extended coverage will elect to do so, compounding the negative financial impact to the participating SHBP employers. It is estimated that the additional SHBP costs will over $10 million per year In addition, the bill continues the questionable practice of mandating health benefit coverage.
Pension and Health Benefits Review Commission
Vote Results
April 20, 2012
S-1122 (Beck)/A-2118(O’Scanlon)
Allows SPRS members to purchase SPRS credit for prior military service.
Motion: Recommend against enactment.
.
Discussion: This bill is unclear as to what the additional pension accrual will be for the service credit allowed to be purchased. The SPRS is unique in that to get full accrual toward a SPRS pension the time must be served exclusively as a State Trooper. Under current pension law, a SPRS member may purchase or transfer service established in any other State-administered retirement system, but the additional pension benefit increase to be derived from such non-State police service is limited to 1 percent of final compensation for each year. For a SPRS member to qualify to retire on a service retirement of 50 percent of final compensation upon attaining twenty years of service, the entire twenty years must be served as a State Trooper. Other creditable service would increase the annual pension by one percent for each year of such other creditable service. It is unclear in this bill whether the service allowed to be purchased will be permitted to meet the service thresholds required for certain retirements in the SPRS (i.e. 20 years for a service retirement or 25 years for a special 65 percent of final compensation pension) or will it be limited to the additional 1 percent provision.
S-292 (Pennacchio)
Requires immediate resumed qualification as dependent covered person under certain health benefits plans after active military duty under certain circumstances.
Motion: Recommend to enact with the condition that eligibility rules are consistent with the SHBP/SEHBP.
Discussion: Since the SHBP/SEHBP currently provides coverage to a participant’s dependents up until age 26 regardless of the dependent’s marital, student or financial status, the enactment of this bill would have little impact on the plans. The provisions of this bill seem to infer that health benefit coverage under a plan would be extended to a dependent child beyond the age of 18 only if the dependent was a student. However, student status is not a prerequisite for dependent coverage in the SHBP/SEHBP. Beginning with the plan year 2012, and pursuant to recently enacted federal health care reform, the SHBP/SEHBP is required to cover the dependents of a plan participant up until December 31 of the year the dependent turns 26, regardless of their marital, student or financial status. Prior to this federally required mandate, pursuant to State statute, dependent child coverage under the SHBP/SEHBP was provided to an employee's unmarried children under the age of 23 years who lived with the employee in a regular parent-child relationship, regardless if the child was a student or not. The State law has been pre-empted by the federal mandate.
S-1253 (Vitale)/A-1665(Johnson/Vainieri Huttle)
Revises statutory mental health coverage requirements and requires all health insurers and SHBP to cover treatment for alcoholism and other substance-use disorders under same terms and conditions as for other diseases or illnesses.
Motion: Recommend against enactment.
Discussion: The SHBP/SEHBP already provides coverage for the conditions addressed by this bill. Benefits include treatment for both mental health and alcohol/ substance abuse provided by an eligible behavioral health provider and include —in-patient, partial hospital, residential, intensive out-patient, and group treatment.
Historically, coverage under the SHBP for both biologically and non-biologically based mental illness were at one time limited by annual and lifetime dollar limits ($10,000 annual limit and $20,000 lifetime limit under the old Traditional Indemnity Plan, and a $15,000 annual limit and $50,000 lifetime limit under NJ PLUS). The enactment of P.L. 1999, c.441 mandated the SHBP to cover biologically based mental illness as it does for all other illnesses. Coverage for non--biologically based illness was however still subject to the annual and lifetime caps. However, as a result of health benefit reforms and plan design changes to the SHBP/SEHBP, these limits no longer apply.
Some non-biologically based mental illness and substance abuse coverage under the SHBP/SEHBP may limit the number of doctor visits or inpatient stays to a specified number per year, but the Division believes the current level of coverage provides plan participants with adequate coverage. Consequently, this bill’s provisions in Sections 19 and 21 eliminating any visitation and dollar limits pertaining to coverage for non-biologically based mental illness and substance abuse coverage would create only a moderate increase in plan costs. Consultants to the SHBP/SEHBP have advised the enactment of this bill would increase annual employer SHBP/SEHBP costs by less than 0.1 percent ($3.4M annually).
The health benefit mandates imposed by this bill would usurp the authority of the SHBP and the SEHBP Plan Design Committees. These committees were created with the enactment of P.L. 2011, c.78 (Pension and Health Benefit Reform) and were provided with the responsibility for plan design.
S-498 (Bucco)
Requires insurers and SHBP to provide coverage for expenses incurred in screening for ovarian cancer.
Motion: Recommend against enactment.
Discussion: The Commission does not support the enactment of this bill since it would increase annual employer SHBP/SEHBP costs. The SHBP/SEHBP already covers pelvic examinations, ultrasounds, and blood testing for cancer markers for women with symptoms of ovarian cancer. The plans also cover additional diagnostic procedures, including surgery, if indicated by the initial testing. In short, the SHBP/SEHBP already provides a full range of coverage in cases where a woman is symptomatic. The State plans also cover diagnostic testing in asymptomatic women at high risk for ovarian cancer based on genetics and family history. The health plans also cover an annual pelvic exam regardless of whether a woman is symptomatic or asymptomatic.
S-547 (Gill)
Extends certain benefits to veterans of Operation Allied Force in Kosovo.
Motion: Recommend against enactment.
Discussion: The Commission does not oppose this bill from a policy perspective. Its enactment will, however, increase State and local employer pension costs.
Pension and Health Benefits Review Commission
Vote Results
May 18, 2012
S-1819 (Thompson)
Provides for distributions from ABP during transition to retirement programs for faculty at institutions of higher education.
Motion: Recommend to enact.
.
Discussion: The Commission supports this bill in order to legitimize an unauthorized retirement program, termed Transition to Retirement Programs, currently being conducted by the State’s public colleges and universities.
Tax counsel to the State-administered pension plans has advised that current statutory and regulatory provisions that comprise the ABP retirement plan document would not allow for Transition to Retirement Programs. Failure of a qualified plan, such as the ABP, to be administered in accordance with its terms is an operational failure that can threaten the tax-qualified status of a plan. The adoption of the retroactive amendments is one way to correct that qualification failure. The other way to correct that failure would be to administer the plan in accordance with its terms both retroactively and prospectively – this would mean that many participants in the Programs would not be entitled to a benefit payment and many would have to repay benefits already distributed to them.
S-1714 (Bucco)
Allows certain members of PFRS to serve until age 70 upon approval by municipal governing body.
Motion: Recommend against enactment.
Discussion: Both municipal and PFRS law prohibits individuals over the age of 35 from being hired as police officers and enrolling as members of the PFRS. PFRS law also requires members to retire upon turning age 65.
Historically, the PFRS laws have been amended to provide limited exceptions to the mandatory retirement age provision. The enactment of P.L. 2005, c.81 provided the ability for PFRS members hired prior to January 1, 1987 to remain a member of the system until the member attains age 68 years or 25 years of creditable service, whichever comes first.
The enactment of this legislation will undermine the rationale of allowing age restrictions for public safety officers as again allowed under the Age Discrimination and Employment Act. This bill will allow a public safety officer to work till the age of 70, which, considering the risk factors associated with these positions, may not be in the best interest of both the individual and the public at large.
The introduction of bills that would provide exemptions from either the hiring or mandatory retirement age requirements for PFRS members are not uncommon. The enactment of this bill will encourage the consideration of other bills seeking similar exemptions.
A-168 (Peterson)
Increases statutory mandatory retirement age for Supreme Court Justices, Superior Court Judges, Tax Court Judges, Administrative Law Judges, Workers’ Compensation Judges and County Prosecutors from 70 to 75.
Motion: Recommend to enact upon amendment of Assembly Concurrent Resolution No. 23 of 2012.
Discussion: The enactment of this bill will permit members of the Judicial Retirement system (JRS) to accumulate the required judicial service to become eligible for a significantly higher pension. Members that attain the age of 70 for mandatory retirement without 10 years of judicial service are eligible for a pension that may be as little as 2% of final salary for each year of judicial service. Those members that attain the 10 years of judicial service and are age 70 are eligible to receive a retirement benefit of 75% of final salary. While this in itself may increase State pension costs, these additional costs could be negated by the much broader impact of this bill of allowing the majority judges to work longer and shortening the time over which they will receive a pension.
The Workers’ Compensation Judges Part of PERS, a separate tier of membership within the PERS which provided enhanced pension benefits to Workers’ Compensation Judges, was closed to new members effective July 1, 2007 with the enactment of P.L. 2007, c.92. Effective May 22, 2010, the Prosecutors Part of the PERS, a separate tier of membership within the PERS which provided enhanced pension benefits to county prosecutors, assistant county prosecutors and certain employees in the Division of Criminal Justice, was closed to new members with the enactment of P.L. 2010, c.1. New Workers’ Compensation Judges are now enrolled in the State-administered Defined Contribution Retirement Program while members formerly eligible for the Prosecutors Part of PERS are now eligible for participation in either the DCRP or regular PERS.
The sections of this bill increasing the mandatory retirement age for Supreme Court Justices and Superior Court Judges bill would only take effect if the voters of this State approve a constitutional amendment increasing their mandatory retirement age within two years of the bill’s date of enactment. To date, Assembly Concurrent Resolution No. 23 of 2012 has received no legislative attention. It has been referred to the Assembly Judiciary Committee where it is pending review.
A-1656 (Johnson)
Requires SHBP to provide coverage for expenses incurred in screening for prostate cancer.
Motion: Recommend against enactment.
Discussion: The procedure mandated by this bill is already covered under the SHBP/SEHBP by each of the plans offered within the program, i.e. NJ DIRECT (Horizon Blue Cross Blue Shield of New Jersey), Aetna and Cigna. Network providers in each of these plans offer a full range of services that include well-care and preventive services such as annual physicals, well-baby/well-child care, immunizations, mammograms, annual gynecological examinations, and prostate examinations. Regarding prostate exams, coverage under these plans provide for one routine in-network office visit per year, including a prostate-specific antigen test, for adult male members over the age of 40.
The health benefit mandates imposed by this bill would usurp the authority of the SHBP and the SEHBP Plan Design Committees. These committees were created with the enactment of P.L. 2011, c.78 (Pension and Health Benefit Reform) and were provided with the responsibility for plan design.
This bill continues the questionable practice of mandating health benefit coverage. Such mandates generally tend to continue to place the health insurance industry outside of the "free enterprise" system and drive up the cost of health insurance for both employer provided coverage and individual policies. The continued enactment of health benefit mandate legislation could soon make coverage unaffordable for both.
| 
