News and other information is also provided to retirees through the Division's retiree newsletters,
the PensionNews and Health Reporter. To view the most recent editions, visit our newsletter page.

February 2008

TO: State Health Benefits Program Retirees

FROM: New Jersey State Health Benefits Program (SHBP)

SUBJECT: Follow up to Announcement of New SHBP Medical Plans

This is a follow up to our recent mailing concerning new plans which will take effect on April 1, 2008. Enclosed is a Guide to Choosing a SHBP Health Plan to provide you with valuable information about the new plans being offered. A Plan Comparison Summary is also enclosed and provides a means for you to compare the benefits of the plans available to you under the SHBP.

While the Guide and Summary provide detailed information about the plans, it should be noted that for this transition if treatment for an illness or injury was provided during the last three months of 2007 (assuming you did not reach the deductible in 2007) or the first three months of 2008 in either NJ PLUS or the Traditional Plan, the eligible charges that were applied toward the annual deductibles may be counted toward meeting the out-of-network deductible under NJ DIRECT for 2008. In addition, the annual and lifetime accumulations as well as the 2008 out-of-pocket balances from NJ PLUS and the Traditional Plan will carry forward into NJ DIRECT.

YOU DO NOT NEED to take any action since you will be automatically transferred to the new plan offerings as outlined below:

• If you are enrolled in the Traditional Plan you will be automatically transferred to NJ DIRECT10 (state retirees who attained 25 years of service or retired on a disability after July 1, 2007 will be automatically transferred to NJ DIRECT15).
  
  
• If you are enrolled in NJ PLUS you will be automatically transferred to NJ DIRECT15.
  
  
• If you are enrolled in Aetna HMO or CIGNA HealthCare you will remain enrolled in that plan.
  
  
• Three HMO plans: AmeriHealth, Health Net, and Oxford Health Plans are terminating. If you are enrolled in one of these HMOs, you will be automatically transferred to NJ DIRECT15.

SHBP Retired Change of Status Applications are available for retirees who wish to choose a different plan than the one they would be automatically assigned. Please download an application from the SHBP Web site: www.state.nj.us/treasury/pensions/shbp.htm. You will need to print the application on legal size paper. If you would like to request that we send you an application, please call our Office of Client Services at (609) 292-7524. Applications submitted before Friday, February 22, 2008 will have an effective date of April 1, 2008. Applications received after that date may have a later effective date, i.e. May 1, 2008.

REMINDER: You do not need to take any action to be automatically enrolled in a new plan. In addition, you will continue to have the opportunity to change plans through the year if you are dissatisfied with the automatic enrollment.

Printable Version of this letter (PDF size 56K, requires Acrobat Reader)

February 2008

TO: State Health Benefits Program Retirees

FROM: New Jersey State Health Benefits Program (SHBP)

SUBJECT: Follow up to Announcement of New SHBP Medical Plans

This is a follow up to our recent mailing concerning new plans which will take effect on April 1, 2008. Enclosed is a Guide to Choosing a SHBP Health Plan and a rate chart which lists rates for all of the plans which are available to you. To determine the monthly amount you will be required to pay, simply locate the plan of your choice and the coverage level (i.e. member/spouse) for that plan. A Plan Comparison Summary is also enclosed and provides a means for you to compare the benefits of the plans available to you under the SHBP.

While the Guide and Summary provide detailed information about the plans, it should be noted that for this transition if treatment for an illness or injury was provided during the last three months of 2007 (assuming you did not reach the deductible in 2007) or the first three months of 2008 in either NJ PLUS or the Traditional Plan, the eligible charges that were applied toward the annual deductibles may be counted toward meeting the out-of-network deductible under NJ DIRECT for 2008. In addition, the annual and lifetime accumulations as well as the 2008 out-of-pocket balances from NJ PLUS and the Traditional Plan will carry forward into NJ DIRECT.

YOU DO NOT NEED to take any action since you will be automatically transferred to the new plan offerings as outlined below:

• If you are enrolled in the Traditional Plan you will be automatically transferred to NJ DIRECT10 (state retirees who attained 25 years of service or retired on a disability after July 1, 2007 will be automatically transferred to NJ DIRECT15).
  
  
• If you are enrolled in NJ PLUS you will be automatically transferred to NJ DIRECT15.
  
  
• If you are enrolled in Aetna HMO or CIGNA HealthCare you will remain enrolled in that plan.
  
  
• Three HMO plans: AmeriHealth, Health Net, and Oxford Health Plans are terminating. If you are enrolled in one of these HMOs, you will be automatically transferred to NJ DIRECT15.

SHBP Retired Change of Status Applications are available for retirees who wish to choose a different plan than the one they would be automatically assigned. Please download an application from the SHBP Web site: www.state.nj.us/treasury/pensions/shbp.htm. You will need to print the application on legal size paper. If you would like to request that we send you an application, please call our Office of Client Services at (609) 292-7524. Applications submitted before Friday, February 22, 2008 will have an effective date of April 1, 2008. Applications received after that date may have a later effective date, i.e. May 1, 2008.

REMINDER: You do not need to take any action to be automatically enrolled in a new plan. In addition, you will continue to have the opportunity to change plans through the year if you are dissatisfied with the automatic enrollment.

Printable Version of this letter (PDF size 56K, requires Acrobat Reader)

State of New Jersey — Department of the Treasury
Division of Pensions and Benefits

STATE HEALTH BENEFITS PROGRAM

January 2008

Effective April 1, 2008, the plans available to you under the State Health Benefits Program (SHBP) will change.  New plans will be offered and some plans will terminate.  The information below offers a brief outline of the changes.  Detailed plan descriptions will be provided to retirees through additional mailings later in January.

The SHBP is offering two new Preferred Provider Organizations administered by Horizon Blue Cross Blue Shield of New Jersey — NJ DIRECT10, which replaces the Traditional Plan, and NJ DIRECT15 which replaces NJ PLUS.  NJ DIRECT offers in-network and out-of-network care similar to NJ PLUS.  However, a member is not required to choose a primary care physician and can elect to see any physician that participates without a referral including in-network specialists.  In-network services and hospital admissions are generally covered in full after a copayment.  Out-of-network benefits provide reimbursement for expenses for medical services typically at a percentage of the reasonable and customary allowance after an annual deductible is met.

In addition to NJ DIRECT, the SHBP will offer two Health Maintenance Organizations (HMOs) — Aetna HMO and CIGNA HealthCare — all selected through a competitive bid process.

All plans will now offer physician and hospital networks nationally.

YOU DO NOT NEED to take any action since you will be automatically transferred to the new plan offerings as outlined below:

• If you are enrolled in the Traditional Plan you will be automatically transferred to NJ DIRECT10 (state retirees who attained 25 years of service or retired on a disability after July 1, 2007 will be automatically transferred to NJ DIRECT15).
  
  
• If you are enrolled in NJ PLUS you will be automatically transferred to NJ DIRECT15.
  
  
• If you are enrolled in Aetna HMO or CIGNA HealthCare you will remain enrolled in that plan.
  
  
• Three HMO plans: AmeriHealth, Health Net, and Oxford Health Plans will no longer be available effective March 31, 2008.  If you are enrolled in one of these HMOs, you will be automatically transferred to NJ DIRECT15.

Detailed plan descriptions, rate information for retirees who pay for all, or part of, their SHBP medical plan coverage and additional information will be distributed to you as soon as possible.  Please check the SHBP Web site:  www.state.nj.us/treasury/pensions/shbp.htm for updates — at the SHBP home page click on "SHBP News"  in the right-hand column. 

Revised SHBP Retired Change of Status Application will also be available for retirees who wish to choose a different plan than the one they would be automatically assigned as described above.  Applications submitted before Friday, February 22, 2008 will have an effective date of April 1, 2008.  Applications received after that date may have a later effective date, i.e. May 1, 2008.

REMINDER:  You do not need to take any action to be automatically enrolled in a new plan.  In addition, you will continue to have the opportunity to change plans through the year if you are dissatisfied with the automatic enrollment.

Additional information will be sent to you shortly and will be posted on our Web site as it becomes available.

State of New Jersey
Division of Pensions and Benefits

January 2008

Dear Retiree/Beneficiary:

Since this is the first year that you are receiving a Form 1099-R, we have included this important tax notice with your form. The notice explains how your benefits are taxed at the state level.  It also provides information that may assist you in understanding your Form 1099-R.  We recommend that you retain this tax notice for future reference.

Important New Jersey State Tax Information

New Jersey Residents:

Generally, your benefits are taxable for New Jersey purposes once you have fully recovered in benefits the amount you contributed to the pension plan while working.  The exception is if you will not be able to recover all of your contributions within the first three years of your retirement.  In that case, you must determine the taxable portion of your benefits using the general rule method.  Under this method, you recover your contributions evenly over your lifetime or the combined lifetime of you and your pension beneficiary.  This means that only a small portion of each monthly benefit is considered a return of your contribution and is tax exempt while the balance of your monthly benefit is taxable.

If you must recover your contributions under the general rule method, we recommend that you refer to IRS Publication 575, "Pension and Annuity Income" or consult with a tax advisor.

Nonresidents:

If you live outside New Jersey, you are not required to pay New Jersey income tax on the benefits you receive from the retirement system.  However, your benefits may be taxable in your state of residence.  Please check with your home state's tax office to determine if your benefits are subject to state tax.  The Division of Pensions and Benefits does not withhold income tax for other states.

COMMONLY ASKED FORM 1099-R QUESTIONS

Do I report the taxable amount shown in box 2a of the Form 1099-R on my New Jersey tax return?

The amount reported on your Form 1099-R is the federal taxable amount.  You must determine the taxable amount for New Jersey purposes by applying the state tax rules indicated above.  Please refer to your New Jersey Resident Return Booklet for complete instructions.

What information do I need to calculate the taxable amount for New Jersey purposes?

You need your total employee contributions.  You can obtain this amount from your final retirement letter or by calling the Division of Pensions and Benefits at (609) 292-7524.  You can also e-mail us at pensions.nj@treas.state.nj.us

Please note that there are two contribution amounts shown on your retirement letter, your after-tax contributions for federal purposes and your total contributions.  Since you paid state tax on all of your contributions, use total employee contributions to calculate the amount subject to New Jersey income tax.

Is my disability pension subject to New Jersey/Federal Income tax?

According to the New Jersey tax instruction booklet, if you are under age 65 your disability pension is exempt from tax.  If you are 65 or older, your disability pension is treated as an ordinary pension and is considered taxable income.

If you are receiving an Accidental Disability pension, or if you are a survivor receiving Accidental Disability or Accidental Death benefits, the Division of Pensions and Benefits reports your benefit as exempt from federal income tax.  

What does the amount shown in box 5 of the Form 1099-R represent?

This amount represents the portion of your gross distribution that is not subject to federal tax, i.e., the difference between the gross distribution (box 1) and taxable amount (box 2a).  In other words, this amount is considered a return of your previously taxed contributions.  It is not an insurance premium.

Is my benefit check for the month of December included in my gross distribution?

For income tax purposes, income is considered earned as of the date of the check. Since your December benefit was due and payable on January 1, 2008, it is not considered income for tax year 2007 and is not included in the gross distribution for 2007 shown in box 1 of your Form 1099-R.

If you have any questions regarding this information, please contact us.

FOR STATE AND LOCAL GOVERNMENT RETIREES ENROLLED IN THE TRADITIONAL PLAN OR NJ PLUS

FALL 2007

Dear Retiree:

This notice is to advise you of changes to your Retiree SHBP plan which are effective for the 2008 plan year:

Prescription Drug Plan Copayment Change

Effective January 1, 2008, copayments for the Retiree Prescription Drug Plan under NJ PLUS and the Traditional Plan are changing. Retail pharmacy copayments for a 30-day supply will be $9 for generic drugs; $18 for preferred brand name drugs; and $36 for all other brand name prescription drugs. The mail order copayments for up to a 90-day supply will be $9 for generic drugs, $27 for preferred brand name drugs, and $45 for all other brand name prescription drugs. The annual maximum out-of-pocket for prescription drug copayments will be $1,092 per person. Once a person has paid $1,092 in copayments, that person no longer pays any prescription drug copayments for the remainder of that calendar year.

New Retiree SHBP Plans

The SHBP will be introducing new medical plans during the 2008 year.  A Request for Proposal was issued by the SHBP and the procurement process for the new plans is still ongoing.  If it is not imperative that you change your medical plan at this time, you may want to wait so you can review the new plans before making a change.  Additional information about the new plans will be provided to retired group members as it becomes available.

• If you do wish to change your coverage, the Division of Pensions and Benefits must receive a completed SHBP Retired Status Application before November 23, 2007.  The Division cannot guarantee that applications received after November 23, 2007 will be effective January 1, 2008.  The SHBP Retired Status Application is available on our Web site or by contacting the Division of Pensions and Benefits.

CURRENT SHBP PLAN SERVICE AREAS AND MEMBER SERVICES
Service areas and Member Services telephone numbers for all SHBP medical plans are listed below.

Web site: www.state.nj.us/treasury/pensions/shbp.htm
Division of Pensions and Benefits, Office of Client Services: (609) 292-7524

State of New Jersey
Division of Pensions and Benefits

January 2007

Dear Retiree/Beneficiary:

Since this is the first year that you are receiving a Form 1099-R, we have included this important tax notice with your form. The notice explains how your benefits are taxed at the state level.  It also provides information that may assist you in understanding your Form 1099-R.  We recommend that you retain this tax notice for future reference.

Important New Jersey State Tax Information

New Jersey Residents:

Generally, your benefits are taxable for New Jersey purposes once you have fully recovered in benefits the amount you contributed to the pension plan while working.  The exception is if you will not be able to recover all of your contributions within the first three years of your retirement.  In that case, you must determine the taxable portion of your benefits using the general rule method.  Under this method, you recover your contributions evenly over your lifetime or the combined lifetime of you and your pension beneficiary.  This means that only a small portion of each monthly benefit is considered a return of your contribution and is tax exempt while the balance of your monthly benefit is taxable.

If you must recover your contributions under the general rule method, we recommend that you refer to IRS Publication 575, "Pension and Annuity Income" or consult with a tax advisor.

Nonresidents:

If you live outside New Jersey, you are not required to pay New Jersey income tax on the benefits you receive from the retirement system.  However, your benefits may be taxable in your state of residence.  Please check with your home state's tax office to determine if your benefits are subject to state tax.  The Division of Pensions and Benefits does not withhold income tax for other states.

COMMONLY ASKED FORM 1099-R QUESTIONS

Do I report the taxable amount shown in box 2a of the Form 1099-R on my New Jersey tax return?

The amount reported on your Form 1099-R is the federal taxable amount.  You must determine the taxable amount for New Jersey purposes by applying the state tax rules indicated above.  Please refer to your New Jersey Resident Return Booklet for complete instructions.

What information do I need to calculate the taxable amount for New Jersey purposes?

You need your total employee contributions.  You can obtain this amount from your final retirement letter or by calling the Division of Pensions and Benefits at (609) 292-7524.  You can also e-mail us at pensions.nj@treas.state.nj.us

Please note that there are two contribution amounts shown on your retirement letter, your after-tax contributions for federal purposes and your total contributions.  Since you paid state tax on all of your contributions, use total employee contributions to calculate the amount subject to New Jersey income tax.

Is my disability pension subject to New Jersey/Federal Income tax?

According to the New Jersey tax instruction booklet, if you are under age 65 your disability pension is exempt from tax.  If you are 65 or older, your disability pension is treated as an ordinary pension and is considered taxable income.

If you are receiving an Accidental Disability pension, or if you are a survivor receiving Accidental Disability or Accidental Death benefits, the Division of Pensions and Benefits reports your benefit as exempt from federal income tax.  

What does the amount shown in box 5 of the Form 1099-R represent?

This amount represents the portion of your gross distribution that is not subject to federal tax, i.e., the difference between the gross distribution (box 1) and taxable amount (box 2a).  In other words, this amount is considered a return of your previously taxed contributions.  It is not an insurance premium.

Is my benefit check for the month of December included in my gross distribution?

For income tax purposes, income is considered earned as of the date of the check.  Since your December benefit was due and payable on January 1, 2007, it is not considered income for tax year 2006 and is not included in the gross distribution for 2006 shown in box 1 of your Form 1099-R.

If you have any questions regarding this information, please contact us.

December 2006

New Jersey State Health Benefits Program
PO Box 299
Trenton, NJ 08625-0299

Dear Retiree:

This notice is to advise you of changes to the Retiree SHBP plans which are effective for the 2007 plan year:

Copayment and Coverage Changes

• Effective January 1, 2007 medical plan copayment amounts for retirees enrolled in NJ PLUS or an HMO Plan (Aetna, AmeriHealth, CIGNA, Health Net, and Oxford) are changing. The copayment for visits to your primary care physician or a specialist will be $10. SHBP Retirees enrolled in these plans should watch for new identification cards to be mailed directly from the medical plans within the next few weeks.
  
  
• Effective January 1, 2007, copayments for the Retiree Prescription Drug Plan under NJ PLUS and the Traditional Plan are changing. Retail pharmacy copayments for a 30-day supply will be $8 for generic drugs; $17 for preferred brand name drugs; and $34 for all other brand name prescription drugs. The mail order copayments for up to a 90-day supply will be $8 for generic drugs, $25 for preferred brand name drugs, and $42 for all other brand name prescription drugs. The annual maximum out-of-pocket for prescription drug copayments will be $1,082 per person. Once a person has paid $1,082 in copayments, that person no longer pays any prescription drug copayments for the remainder of that calendar year.
  
  
• Effective January 1, 2007, coverage for over age children up to age 30 is available under the provisions of Chapter 375, P.L. 2005. Certain conditions apply to eligibility and the covered parent is responsible for the full cost of this coverage. For details see Fact Sheet #74, SHBP Coverage for Children to Age 30, which is available on our Web site or by contacting the Division of Pensions and Benefits.

Member Handbooks

• Member handbooks for the Traditional Plan, NJ PLUS, and the HMO Plans (Aetna, AmeriHealth, CIGNA, Health Net, and Oxford) are being revised for the 2007 plan year and will be available for viewing as of January 1, 2007 on the SHBP Web site: www.state.nj.us/treasury/pensions/shbp.htm.

Service Area Expansions

• Effective October 1, 2006, Aetna HMO expanded their service areas outside of the State of New Jersey. Expanded service areas are listed in the chart below. For specific service area information in partially covered states or to locate an Aetna Primary Care Physician where you live, contact Aetna at 1-800-309-2386 (retirees on Medicare call 1-800-345-4432) or visit: www.aetna.com
  
  
• Effective January 1, 2007, NJ PLUS in-network benefits will be available to members who reside in Delaware. To locate a Delaware NJ PLUS Primary Care Provider, contact NJ PLUS at 1-800-414-SHBP (7427).
  
  
• Effective January 1, 2007, CIGNA HMO will offer expanded service areas outside of the State of New Jersey. Expanded service areas are listed in the chart below. For specific service area information in partially covered states or to locate a CIGNA Primary Care Physician where you live, contact CIGNA at 1-800-244-6224 or visit: www.cigna.com/health
  
  
• Service areas and Member Services telephone numbers for all SHBP medical plans are listed in the chart below.

• If you wish to make a change to your coverage, you must submit a completed SHBP Retired Status Application (PDF - Size 39K) to the Division of Pensions and Benefits.

Web site: www.state.nj.us/treasury/pensions/shbp.htm
Division of Pensions and Benefits, Office of Client Services: (609) 292-7524

Printable version of this letter — PDF file, size 50K — Requires Acrobat Reader which is available free from Adobe.

April 2006

The federal Health Insurance Portability and Accountability Act (HIPAA) requires group health plans to establish extensive privacy policies and procedures to safeguard personal information relating to its members’ physical and/or mental health.

In compliance with HIPAA, the State Health Benefits Program (SHBP) has produced a Notice of Privacy Practices that describes how medical information about you may be used and disclosed and how you can get access to your own personal health information. The Notice of Privacy Practices is included as an appendix in all current SHBP member handbooks (the SHBP Summary Program Description, NJ PLUS and Traditional Plan Member Handbooks, Employee Prescription Drug Plan Member Handbook, Employee Dental Plans Member Handbook, and Retiree Dental Expense Plan Member Handbook).

You may also view the Notice of Privacy Practices on the Division of Pensions and Benefits’ Web site at:
www.state.nj.us/treasury/pensions/shbp.htm

To request a printed copy of the SHBP Notice of Privacy Practices, contact the Division’s Office of Client Services at (609) 292-7524, or send e-mail to:pensions.nj@treas.state.nj.us   Be sure to include your name and mailing address in your request.

State of New Jersey
Division of Pensions and Benefits
January 2006

Dear Retiree/Beneficiary:

Since this is the first year that you are receiving a Form 1099-R, we have included this important tax notice with your form. The notice explains how your benefits are taxed at the state level.  It also provides information that may assist you in understanding your Form 1099-R.  We recommend that you retain this tax notice for future reference.

Important New Jersey State Tax Information

New Jersey Residents:

Generally, your benefits are taxable for New Jersey purposes once you have fully recovered in benefits the amount you contributed to the pension plan while working.  The exception is if you will not be able to recover all of your contributions within the first three years of your retirement. In that case, you must determine the taxable portion of your benefits using the general rule method.  Under this method, you recover your contributions evenly over your lifetime or the combined lifetime of you and your pension beneficiary.  This means that only a small portion of each monthly benefit is considered a return of your contribution and is tax exempt while the balance of your monthly benefit is taxable.

If you must recover your contributions under the general rule method, we recommend that you refer to IRS Publication 575, "Pension and Annuity Income" or consult with a tax advisor.

Nonresidents:

If you live outside New Jersey, you are not required to pay New Jersey income tax on the benefits you receive from the retirement system.  However, your benefits may be taxable in your state of residence.  Please check with your home state's tax office to determine if your benefits are subject to state tax.  The Division of Pensions and Benefits does not withhold income tax for other states.

COMMONLY ASKED FORM 1099-R QUESTIONS

Do I report the taxable amount shown in box 2a of the Form 1099-R on my New Jersey tax return?

The amount reported on your Form 1099-R is the federal taxable amount.  You must determine the taxable amount for New Jersey purposes by applying the state tax rules indicated above.  Please refer to your New Jersey Resident Return Booklet for complete instructions.

What information do I need to calculate the taxable amount for New Jersey purposes?

You need your total employee contributions.  You can obtain this amount from your final retirement letter or by calling the Division of Pensions and Benefits at (609) 292-7524.  You can also e-mail us at pensions.nj@treas.state.nj.us

Please note that there are two contribution amounts shown on your retirement letter, your after-tax contributions for federal purposes and your total contributions.  Since you paid state tax on all of your contributions, use total employee contributions to calculate the amount subject to New Jersey income tax.

Is my disability pension subject to New Jersey/Federal Income tax?

According to the New Jersey tax instruction booklet, if you are under age 65 your disability pension is exempt from tax.  If you are 65 or older, your disability pension is treated as an ordinary pension and is considered taxable income.

If you are receiving an Accidental Disability pension, or if you are a survivor receiving Accidental Disability or Accidental Death benefits, the Division of Pensions and Benefits reports your benefit as exempt from federal income tax.  

What does the amount shown in box 5 of the Form 1099-R represent?

This amount represents the portion of your gross distribution that is not subject to federal tax, i.e., the difference between the gross distribution (box 1) and taxable amount (box 2a).  In other words, this amount is considered a return of your previously taxed contributions.  It is not an insurance premium.

Is my benefit check for the month of December included in my gross distribution?

For income tax purposes, income is considered earned as of the date of the check.  Since your December benefit was due and payable on January 1, 2006, it is not considered income for tax year 2005 and is not included in the gross distribution for 2005 shown in box 1 of your Form 1099-R.

If you have any questions regarding this information, please contact us.

State of New Jersey
Division of Pensions and Benefits
September 2005

Dear Retired Dental Enrollee:

Effective January 1, 2006, rates for the Retiree Dental Expense Plan of the State Health Benefits Program (SHBP) will be changing. The new rates are listed below:

If you would like to make any changes to your dental coverage, you may obtain a SHBP Retired Status Application from our Web site at: www.state.nj.us/treasury/pensions/shbp.htm

If you have any further questions, please call the Division of Pensions and Benefits - Office of Client Services at
(609) 292-7524.

State of New Jersey
Division of Pensions and Benefits
January 2005

Dear Retiree/Beneficiary:

Since this is the first year that you are receiving a 1099-R form, we have included this important tax notice with your form. The notice explains how your benefits are taxed at the state level.  It also provides information that may assist you in understanding your 1099-R form.  We recommend that you retain this tax notice for future reference.

Important New Jersey State Tax Information

New Jersey Residents:

Generally, your benefits are taxable for New Jersey purposes once you have fully recovered in benefits the amount you contributed to the pension plan while working.  The exception is if you will not be able to recover all of your contributions within the first three years of your retirement.  In that case, you must determine the taxable portion of your benefits using the general rule method.  Under this method, you recover your contributions evenly over your lifetime or the combined lifetime of you and your pension beneficiary.  This means that only a small portion of each monthly benefit is considered a return of your contribution and is tax exempt while the balance of your monthly benefit is taxable.

If you must recover your contributions under the general rule method, we recommend that you refer to IRS Publication 575, "Pension and Annuity Income" or consult with a tax advisor.

Nonresidents:

If you live outside New Jersey, you are not required to pay New Jersey income tax on the benefits you receive from the retirement system.  However, your benefits may be taxable in your state of residence.  Please check with your home state's tax office to determine if your benefits are subject to state tax.  The Division of Pensions and Benefits does not withhold income tax for other states.

COMMONLY ASKED 1099-R QUESTIONS

Do I report the taxable amount shown in box 2a of the 1099-R form on my New Jersey tax return?

The amount reported on your 1099-R form is the federal taxable amount.  You must determine the taxable amount for New Jersey purposes by applying the state tax rules indicated above.  Please refer to your New Jersey Resident Return Booklet for complete instructions.

What information do I need to calculate the taxable amount for New Jersey purposes?

You need your total employee contributions.  You can obtain this amount from your final retirement letter or by calling the Division of Pensions and Benefits at (609) 292-7524.  You can also e-mail us at pensions.nj@treas.state.nj.us

Please note that there are two contribution amounts shown on your retirement letter, your after-tax contributions for federal purposes and your total contributions.  Since you paid state tax on all of your contributions, use total employee contributions to calculate the amount subject to New Jersey income tax.

Is my disability pension subject to New Jersey/Federal Income tax?

According to the New Jersey tax instruction booklet, if you are under age 65 your disability pension is exempt from tax.  If you are 65 or older, your disability pension is treated as an ordinary pension and is considered taxable income.

If you are receiving an Accidental Disability pension, or if you are a survivor receiving Accidental Disability or Accidental Death benefits, the Division of Pensions and Benefits reports your benefit as exempt from federal income tax.  

What does the amount shown in box 5 of the 1099-R form represent?

This amount represents the portion of your gross distribution that is not subject to federal tax, i.e., the difference between the gross distribution (box 1) and taxable amount (box 2a).  In other words, this amount is considered a return of your previously taxed contributions.  It is not an insurance premium.

Is my benefit check for the month of December included in my gross distribution?

For income tax purposes, income is considered earned as of the date of the check.  Since your December benefit was due and payable on January 1, 2005, it is not considered income for tax year 2004 and is not included in the gross distribution for 2004 shown in box 1 of your 1099-R form.

If you have any questions regarding the above information, please contact us.

November 2004

Our records indicate that you are enrolled in a State Health Benefits Program (SHBP) medical plan and participate in the NJREA-MetLife Dental Program.

In September you should have received a letter from the NJEA informing you of the termination of the NJREA's MetLife Dental Program as of February 28, 2005, and an upcoming opportunity to enroll in the new SHBP Retiree Dental Expense Plan.  The initial enrollment period for the new SHBP Retiree Dental Expense Plan extends from
October 1, 2004 through March 31, 2005, with effective dates of coverage commencing January 1, 2005 through
May 1, 2005.

The Division of Pensions and Benefits mailed enrollment materials pertaining to the new SHBP Retiree Dental Expense Plan to all eligible retirees at the beginning of October.  

Since the NJREA-MetLife Dental Program remains in effect until February 28, 2004, all applications for enrollment in the new SHBP Retiree Dental Expense Plan submitted by members currently enrolled in the MetLife program that are received between October 1, 2004 and February 1, 2005 will be processed for an effective date of coverage as of March 1, 2005.  Applications received after February 1, 2005 will be processed for an effective date as shown in the chart below.

NJREA-MetLife enrollees who wish to change to the SHBP Retiree Dental Expense Plan must enroll during the initial enrollment period by submitting an application (enclosed) to the Division of Pensions and Benefits.  If you have already mailed an application for enrollment in the SHBP Retiree Dental Expense Plan to the Division of Pensions and Benefits, you do not need to do anything else at this time. Your application will be processed for an effective date of March 1, 2005. (Note: Please do not call the Division of Pensions and Benefits to verify the receipt of a previously mailed application. The volume of applications being received prevents us from verifying the status of any individual enrollment at this time.)

For More Information

If you have questions regarding eligibility and/or enrollment in the SHBP Retiree Dental Expense Plan, you may contact the Division of Pensions and Benefits Office of Client Services at (609) 292-7524, or e-mail us.

For benefit information about the Retiree Dental Expense Plan, see Fact Sheet #73, Retiree Dental Expense Plan, which is available from the Division of Pensions and Benefits. The fact sheet, a page of Frequently Asked Questions, and an Enrollment Application is also be found on our Web site. Or visit the State Retiree Dental Expense Plan. 

September 2004

The State Health Benefits Commission has established a dental plan for retirees eligible for State Health benefits Program (SHBP) coverage. The Retiree Dental Expense Plan will be implemented January 1, 2005 and will be administered by Aetna Dental.

You may join the Retiree Dental Expense Plan during this initial six-month offering period which extends from October 1, 2004 through March 31, 2005. If you decline enrollment during this initial offering period, you cannot enroll at a future date (exception - see Waiver of Dental Coverage below).

ELIGIBILITY

The Retiree Dental Expense Plan is available to the following retirees:

• Any retiree, including survivors, enrolled in a medical plan in the Retired Group of the SHBP.
  
• Any retiree, including survivors, eligible for enrollment in the SHBP but who elected to waive their medical coverage because of other SHBP coverage or coverage provided from another public employer.

Waiver of Dental Coverage - You may defer your one-time opportunity to enroll in the Retiree Dental Expense Plan if you have other group dental coverage through a public employer (federal, state, county, or municipal government; authority; local board of education; or state or county college/university) as either a dependent of a spouse or same-sex domestic partner through your own employment. You must request enrollment in the Retiree Dental Expense Plan within 60 days from the loss of the other public employer dental coverage by contacting the Division of Pensions and Benefits. Proof of the other dental coverage termination must be submitted with the SHBP enrollment application in the form of a HIPPA Certification of Coverage or a letter from the public employer.

If you are currently enrolled for dental coverage, under the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), you must make a decision during this special open enrollment to either enroll in the Retiree Dental Expense Plan or continue your COBRA dental benefits.  You will not be given another opportunity to enroll in the Retiree Dental Expense Plan when your COBRA benefits end. 

(Note to NJREA members: The rules which will govern the Retiree Dental Expense Plan will allow a special open enrollment period for eligible retirees who are covered by a group dental plan, for which the Division of Pensions and Benefits deducts premiums from retirement allowances pursuant to N.J.S.A. 43:15A-72, if that plan drops below 1,000 retirees or is terminated.)

ELIGIBLE DEPENDENTS

Eligible dependents are your spouse or same-sex domestic partner¹ and unmarried children under age 23 who are living with and dependent upon you for substantial support or who are not living with you, but you are legally required to support.  The definition of children includes step-children, adopted children, foster children, legal wards, and children of your eligible same-sex domestic partner.

¹ To cover a same-sex domestic partner for dental coverage, the retiree must have been an employee of the State (includes the state colleges and universities, the State Library, Palisades Interstate Park Commission, and the NJ Commerce and Economic Growth Commission) or an employee of a local employer that participates in the SHBP and has adopted a resolution extending health benefits to domestic partners of its employees and retirees.  A list of employers who have done this can be viewed at the Division of Pensions and Benefits Web site at: www.state.nj.us/treasurer/pensions

COSTS

Monthly premiums for the Retiree Dental Expense Plan for calendar year 2005 are shown in the chart below.

If you enroll in the Retiree Dental Expense Plan, the Division of Pensions and Benefits will deduct the monthly premium from your retirement allowance. If the retirement allowance is not sufficient to cover the cost of the premium, or if you, as a surviving spouse, do not receive a retirement allowance from the Division, you will be billed on a monthly basis.

SUMMARY OF DENTAL PLAN BENEFITS

The Retiree Dental Expense Plan is a traditional indemnity, fee-for-service plan.  There is a $50 per person deductible, and a maximum deductible of $150 per family, which must be met before reimbursements are made.  The Retiree Dental Expense Plan reimburses covered services provided by any dental provider licensed to practice at a percentage of reasonable and customary fees.  There is a maximum annual reimbursement of $1,500 per person.

Plan Design

The Retiree Dental Expense Plan has three benefit Tiers (Tier 1, 2, and 3) depending upon whether you had at least 12 months of other group dental coverage just prior to enrollment. If you were not covered for a minimum of 12 months in a group dental program within 60 days of enrolling in the Retiree Dental Expense Plan, you will be enrolled in Tier 1.  Your benefit tier has no impact on your monthly premium payment. 

Tier 1 provides benefits at a lower level of reimbursement than Tier 2 or Tier 3 .  After one year of coverage in Tier 1, you will be automatically moved to Tier 2. After one year of coverage in Tier 2, you will be automatically moved to Tier 3. 

If you enroll in the Retiree Dental Expense Plan within 60 days of leaving another group dental program in which you were enrolled for a minimum of 12 months, you may enroll in the highest reimbursement tier, Tier 3.  Specific information concerning your prior dental plan enrollment must be provided on your enrollment application in order to qualify for Tier 3. 

RETIREE DENTAL EXPENSE PLAN REIMBURSEMENT TIERS

Covered Services

The Retiree Dental Expense Plan covers Preventive Care, Basic Restorative, and Major Restorative services at different levels. The deductible is waived for preventive services.  The Retiree Dental Expense Plan does not reimburse for any orthodontic services. 

Preventive Care consists of diagnostic and preventive services that are intended to maintain oral health and reduce the effects of tooth decay or gum disease that could lead to an increased need for more costly restorative services. They include the following:

• Oral examinations (includes comprehensive, periodic, limited and specialist oral evaluations). You can have two comprehensive evaluation in a calendar year and one emergency or limited evaluation per year;
  
• Horizontal bitewing X-rays limited to two series of four films per calendar year; vertical bitewing X-rays limited to one series of eight films per 12 month interval; complete series X-rays limited to once per 36 months with no more than 18 films;
  
• Prophylaxis (cleaning and polishing) twice in a calendar year; and
  
• Topical application of fluoride for children under 19 twice per calendar year.

Basic Restorative Services include the following:

• Palliative emergency treatment;
  
• Space maintainers;
  
• Simple extractions;
  
• Surgical extractions;
  
• Oral surgery;
  
• Anesthesia services;
  
• Basic restorations (amalgam and resin-based composite restorations);
  
• Endodontics (treatment of diseases of the dental pulp including root canal and associated services); and
  
• Repairs to removable and fixed dentures.

Major Restorative Services include services to restore existing teeth that cannot be restored with an amalgam, acrylic, synthetic porcelain, or re