ARCHIVED LETTERS TO RETIREES

The following letters to selected groups of retirees are provided for archival purposes only.
Most of the information presented is out of date and/or superceded by later changes.  

For current and more recent letters to retirees visit the "Letters to Retirees" page.

To view the text of an archived letter, click on the link under the "Letter Subject" heading.

State of New Jersey
Division of Pensions and Benefits

February 2011

TO: Medicare Retirees

FROM: Division of Pensions and Benefits

SUBJECT: Reimbursement of 2010 Medicare Part B Premiums

This notice is for retirees who qualify for reimbursement of the full cost of Medicare Part B coverage from the State of New Jersey and paid more than the standard monthly Part B premium during 2010.

Prior to January 1, 2007, the cost of coverage under Medicare Part B was the same for anyone who enrolled when first eligible for coverage. Since January 1, 2007, the cost of coverage under Medicare Part B has been based on an eligible individual's or couple's modified adjusted gross income. Most people paid the standard monthly Part B premium of $96.40 in 2010. Some people have paid a higher premium based on their modified adjusted gross income.

The chart below outlines the 2010 Part B premiums due based on income reported.

Social Security used the income reported two years ago on your federal income tax return to determine your premium (if unavailable, SSA used income from three years ago). For example, the income reported on your 2008 tax return was used to determine your monthly Part B premium in 2010.

If you or your eligible spouse/partner paid more than the standard premium of $96.40 or $110.50 per month for Medicare Part B coverage, you must provide verification for the extra amount you paid in 2010. To do so, forward the following two (2) documents to the Division of Pensions and Benefits no later than March 31, 2011.

1) A copy of the cost-of-living adjustment letter you received from Social Security at the end of 2009 notifying you of your 2010 Medicare Part B premium increase and the income-related premium. If you need a copy of this letter contact your local Social Security office; AND

2) A copy of your 2010 Social Security Form SSA-1099 (or Form RRB-1099 if in the Railroad Retirement System). If you do not receive a Form SSA-1099 you must submit other proof of Medicare Part B premium payment for 2010. Proof of payment may be shown by forwarding copies of quarterly billing statements or cancelled checks.

Send all required documentation to the following address no later than March 31, 2011:

Division of Pensions and Benefits
ATTN: Health Benefits Financial Section
PO Box 295
50 West State St.
Trenton, NJ 08625-0295

If you are eligible for reimbursement of the full Medicare Part B premium, you will receive a check representing the unreimbursed balance you paid in 2010. Reimbursement checks will be issued beginning April 15, 2011.

You must forward the requested information in order to receive a reimbursement check. Failure to forward the requested information will result in total rejection. No 2010 reimbursements will be issued if requested after the March 31, 2011 filing deadline.

If you or your eligible spouse/partner did not pay more than $96.40 per month for Medicare Part B coverage, you are not eligible for an additional reimbursement. Please do not forward any information to the Division of Pensions and Benefits.

No additional reimbursement will be made where the State's reimbursement for Medicare Part B is capped by law or by bargaining agreement. In addition, if you pay a higher Medicare Part B premium due to a late enrollment penalty, you will not be reimbursed for the penalty.

If you have any questions about the Medicare Part B reimbursement, please contact the Division of Pensions and Benefits, Office of Client Services at (609) 292-7524.

For more information about Medicare Part B premiums based on income, visit the Social Security government Web site at www.socialsecurity.gov/ or call Social Security at 1-800-772-1213. TTY users should call 1-800-325-0778.

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State of New Jersey
Division of Pensions and Benefits

January 2011

TO: Retired Members of the State Health Benefits Program (SHBP) or School Employees' Health Benefits Program (SEHBP) and their Covered Dependents

FROM: Division of Pensions and Benefits

SUBJECT: Notice About the Early Retiree Reinsurance Program

Please note that the ERRP mailing is for informational purposes only and required under federal law. No ERRP funds will be paid directly to covered retirees or employees.

NOTICE ABOUT THE EARLY RETIREE REINSURANCE PROGRAM

You are a plan participant, or are being offered the opportunity to enroll as a plan participant, in an employment-based health plan that is certified for participation in the Early Retiree Reinsurance Program. The Early Retiree Reinsurance Program is a Federal program that was established under the Affordable Care Act. Under the Early Retiree Reinsurance Program, the Federal government reimburses a plan sponsor of an employment-based health plan for some of the costs of health care benefits paid on behalf of, or by, early retirees and certain family members of early retirees participating in the employment-based plan. By law, the program expires on January 1, 2014.

Under the Early Retiree Reinsurance Program, your plan sponsor may choose to use any reimbursements it receives from this program to reduce or offset increases in plan participants’ premium contributions, co-payments, deductibles, co-insurance, or other out-of-pocket costs. If the plan sponsor chooses to use the Early Retiree Reinsurance Program reimbursements in this way, you, as a plan participant, may experience changes that may be advantageous to you, in your health plan coverage terms and conditions, for so long as the reimbursements under this program are available and this plan sponsor chooses to use the reimbursements for this purpose. A plan sponsor may also use the Early Retiree Reinsurance Program reimbursements to reduce or offset increases in its own costs for maintaining your health benefits coverage, which may increase the likelihood that it will continue to offer health benefits coverage to its retirees and employees and their families.

You are responsible for providing a copy of this notice to your family members who are participants in this plan.

#      #       #

Printable version of the ERRP Required Notice for Plan Participants Adobe PDF (12K)

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State of New Jersey
Division of Pensions and Benefits

January 2011

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" Adobe PDF (132K) 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 information from the Final Retirement Letter you received following your retirement. Please note that there are two contribution amounts shown on your Final 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.

You can also find your total employee contributions online through the Member Benefits Online System (MBOS) for retirees (listed in “Retired Account Information”)  Go to: www.state.nj.us/treasury/pensions/mbosregister.shtml to log on or register for MBOS.  You can also call the Division of Pensions and Benefits at (609) 292-7524, or e-mail us at: pensions.nj@treas.state.nj.us

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, 2011, it is not considered income for tax year 2010 and is not included in the gross distribution for 2010 shown in box 1 of your Form 1099-R.

Where can I get more information?

See Fact Sheet #12, Taxation of Retirement Benefits, Adobe PDF (45K) for additional information. This fact sheet along with Tax Withholding Charts and a sample Form 1099-R are available on the Division’s Web site at: www.state.nj.us/treasury/pensions 

If you have general questions regarding the information provided above, please contact our Office of Client Services at (609) 292-7524, or e-mail the Division at: pensions.nj@treas.state.nj.us

Please note that the Division of Pensions and Benefits cannot give tax advice.  For detailed tax assistance please contact the Internal Revenue Service at 1-800-TAX-1040, the New Jersey Division of Taxation at 1-800-323-4400, or consult with a qualified tax professional.

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State of New Jersey
Division of Pensions and Benefits

June 2010

TO: Retirees Enrolled in the State Health Benefits Program and/or School Employees’ Health Benefits Program

FROM: Division of Pensions and Benefits

SUBJECT: Multiple Coverage

According to our records, you have duplicate coverage under the State Health Benefits Program (SHBP) and/or School Employees’ Health Benefits Program (SEHBP). This letter explains actions that you must take in order to comply with new provisions of New Jersey State Law.

Chapter 2, PL 2010, signed into law by Governor Christie and effective May 21st prohibits multiple coverage under the SHBP or SEHBP. This means that:

• A retiree (or employee) cannot be eligible for coverage as both a subscriber and a dependent under the SHBP and/or SEHBP.

For example: A retiree with SHBP coverage due to his prior employment with a municipality also has coverage as his wife’s dependent under SEHBP coverage from her employment with a board of education. The husband may cover the wife as his dependent provided she waives her coverage with the board of education; or, the wife may cover the husband as her dependent if he waives his retiree coverage; or, they may both choose single coverage.

• A retiree also cannot have coverage as a retiree and as an active employee under the SHBP/SEHBP.

For example: A retiree has SEHBP coverage due to his prior employment as a teacher. The retiree returned to employment with a municipality and has SHBP coverage due to that employment. The individual must either waive his retired SEHBP coverage or waive his active employee SHBP coverage.

• In addition, dependent children are not eligible for coverage under both SHBP/SEHBP covered parents.

IMMEDIATE ACTION IS REQUIRED

In order to comply with the law and retain your current and future eligibility for SHBP or SEHBP retiree coverage, you must either waive your coverage as a subscriber (retiree) OR terminate your other coverage as an employee or dependent.

If you have coverage as a subscriber (retiree) and as a dependent (covered by your spouse/partner), you must do one of the following:

1. Waive your retiree coverage by completing a Retired Change of Status Application waiving both your medical and prescription drug coverage¹ (Sections 1, 2, and 3) and submitting the application to the Division of Pensions and Benefits for processing. OR

2. Terminate your coverage as a dependent by having your spouse/partner complete either a Retired Change of Status Application, if your spouse/partner is retired, or a Health Benefits Program Application², if your spouse/partner is actively employed. Your spouse/partner should complete the form in its entirety and not include your name in Section 4.

If you have duplicate coverage as a retiree and as an active employee, you must do one of the following:

1. Waive your retiree coverage by completing a Retired Change of Status Application waiving both your medical and prescription drug coverage¹ (Sections 1, 2, and 3) and submitting the application to the Division of Pensions and Benefits for processing. OR

2. Waive your active employee coverage by completing a Health Benefits Program Application².

In addition, if you cover dependent children and they have multiple SHBP/SEHBP coverage, you and your spouse/partner must choose which parent will retain coverage for the children under the SHBP or SEHBP. Waiving your coverage will terminate the coverage of any dependents you cover.

If you waive coverage, you are permitted to reinstate coverage immediately if you lose your other coverage by completing and submitting the appropriate health benefit application.

Applications are available on the Division’s Web site at: www.state.nj.us/treasury/pensions/hb-forms.shtml

Once you submit the application terminating your coverage, you should not use the ID card for the medical or prescription drug plan to be terminated.  Coverage will be terminated once your application is processed by the Division of Pensions and Benefits but in no instance later than September 1, 2010.

¹ If you have duplicate dental coverage you must also waive or terminate that coverage.

² Active employees must submit their application to their employers.

Retiree Letter in Printable Format Adobe PDF (30K)

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State of New Jersey
Division of Pensions and Benefits

February 2, 2010

TO: Medicare Retirees

FROM: Division of Pensions and Benefits

SUBJECT: Reimbursement of 2009 Medicare Part B Premiums

This notice is in reference to those retirees who qualify for reimbursement for the full cost of Medicare Part B coverage and paid more than the standard monthly Part B premium during 2009.

Prior to January 1, 2007, the cost of coverage under Medicare Part B was the same for anyone who enrolled when first eligible for coverage. Since January 1, 2007, the cost of coverage under Medicare Part B has been based on an eligible individual’s or couple’s modified adjusted gross income. Most people paid the standard monthly Part B premium of $96.40 in 2009. Some people have paid a higher premium based on their modified adjusted gross income.

The chart below outlines the Part B 2009 premiums due based on income reported.

Social Security used the income reported two years ago on your IRS income tax return to determine your premium (if unavailable, SSA used income from three years ago). For example, the income reported on your 2007 tax return was used to determine your monthly Part B premium in 2009.

If you or your eligible spouse/partner paid more than $96.40 per month for Medicare Part B coverage, you must remit verification of the extra amount paid to the Division of Pensions and Benefits no later than March 31, 2010. To do so, please forward the following two (2) documents:

1) A copy of the cost of living adjustment letter you received from Social Security at the end of CY 2008 notifying you of your 2009 Medicare Part B premium increase and the income-related premium. If you need a copy of this letter contact your local Social Security office.

2) A copy of your 2009 Social Security form SSA-1099 (or RRB-1099 if in the Railroad Retirement System). If you do not receive an SSA-1099 you must submit other proof of Medicare Part B premium payment for CY 2009. Proof of payment may be shown by forwarding copies of quarterly billing or cancelled checks to the following address no later than March 31, 2010:

Division of Pensions and Benefits
ATTN: Health Benefits Financial Section
PO Box 295
50 West State St.
Trenton, NJ 08625-0295

If you are eligible for reimbursement of the full Medicare Part B premium, you will receive a check representing the unreimbursed balance you paid in 2009. Reimbursement checks will be issued beginning April 15, 2010.

Failure to forward the requested information will result in total rejection. No CY 2009 reimbursements will be issued if requested after the March 31, 2010 filing deadline.

If you or your eligible spouse/partner did not pay more than $96.40 per month for Medicare Part B coverage, you are not eligible for an additional reimbursement. Please do not forward any information to the Division of Pensions and Benefits.

No additional reimbursement will be made where the State’s reimbursement for Medicare Part B is capped by law or by bargaining agreement. In addition, if you pay a higher Medicare Part B premium due to a late enrollment penalty, you will not be reimbursed for the penalty.

If you have any questions about the Medicare Part B reimbursement, please contact the Division of Pensions and Benefits’ Office of Client Services at (609) 292-7524.

For more information about Medicare Part B premiums based on income, visit the Social Security government Web site at www.socialsecurity.gov/ or call Social Security at 1-800-772-1213. TTY users should call 1-800-325-0778.

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State of New Jersey
Division of Pensions and Benefits

January 2010

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" Adobe PDF (132K) 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 information from the Final Retirement Letter you received following your retirement. Please note that there are two contribution amounts shown on your Final 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.

You can also find your total employee contributions online through the Member Benefits Online System (MBOS) for retirees (listed in “Retired Account Information”)  Go to: www.state.nj.us/treasury/pensions/mbosregister.shtml to log on or register for MBOS.  You can also call the Division of Pensions and Benefits at (609) 292-7524, or e-mail us at: pensions.nj@treas.state.nj.us

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, 2010, it is not considered income for tax year 2009 and is not included in the gross distribution for 2009 shown in box 1 of your Form 1099-R.

Where can I get more information?

See Fact Sheet #12, Taxation of Retirement Benefits, Adobe PDF (45K) for additional information. This fact sheet along with Tax Withholding Charts and a sample Form 1099-R are available on the Division’s Web site at: www.state.nj.us/treasury/pensions 

If you have general questions regarding the information provided above, please contact our Office of Client Services at (609) 292-7524, or e-mail the Division at: pensions.nj@treas.state.nj.us

Please note that the Division of Pensions and Benefits cannot give tax advice.  For detailed tax assistance please contact the Internal Revenue Service at 1-800-TAX-1040, the New Jersey Division of Taxation at 1-800-323-4400, or consult with a qualified tax professional.

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February 2, 2009

TO: Medicare Retirees

FROM: Division of Pensions and Benefits

SUBJECT: Reimbursement of 2008 Medicare Part B Premiums

This notice is in reference to those retirees who qualify for reimbursement for the full cost of Medicare Part B coverage and paid more than the standard monthly Part B premium during 2008.

Prior to January 1, 2007, the cost of coverage under Medicare Part B was the same for anyone who enrolled when first eligible for coverage. Since January 1, 2007, the cost of coverage under Medicare Part B has been based on an eligible individual’s or couple’s modified adjusted gross income. Most people paid the standard monthly Part B premium of $96.40 in 2008. Some people have paid a higher premium based on their modified adjusted gross income.

The chart below outlines the premiums due based on income reported.

Social Security used the income reported two years ago on your IRS income tax return to determine your premium (if unavailable, SSA used income from three years ago).  For example, the income reported on your 2006 tax return was used to determine your monthly Part B premium in 2008.

If you or your eligible spouse/partner paid more than $96.40 per month for Medicare Part B coverage, you must remit verification of the extra amount paid to the Division of Pensions and Benefits no later than March 31, 2009. To do so, please forward the following two (2) documents:

1) A copy of the cost of living adjustment letter you received from Social Security at the end of CY 2007 notifying you of your 2008 Medicare Part B premium increase and the income-related premium. If you need a copy of this letter contact your local Social Security office.

2) A copy of your 2008 Social Security form SSA-1099 (or RRB-1099 if in the Railroad Retirement System). If you do not receive an SSA-1099 you must submit other proof of Medicare Part B premium payment for CY 2008. Proof of payment may be shown by forwarding copies of quarterly billing or cancelled checks  to the following address no later than March 31, 2009:

If you are eligible for reimbursement of the full Medicare Part B premium, you will receive a check representing the unreimbursed balance you paid in 2008. Reimbursement checks will be issued beginning April 15, 2009.

Failure to forward the requested information will result in total rejection. No CY2008 reimbursements will be issued if requested after the March 31, 2009 filing deadline.

If you or your eligible spouse/partner did not pay more than $96.40 per month for Medicare Part B coverage, you are not eligible for an additional reimbursement. Please do not forward any information to the Division of Pensions and Benefits.

No additional reimbursement will be made where the State’s reimbursement for Medicare Part B is capped by law or by bargaining agreement. In addition, if you pay a higher Medicare Part B premium due to a late enrollment penalty, you will not be reimbursed for the penalty.

If you have any questions about the Medicare Part B reimbursement, please contact the Division of Pensions and Benefits’ Office of Client Services at (609) 292-7524.

For more information about Medicare Part B premiums based on income, visit the Social Security government Web site at www.socialsecurity.gov/ or call Social Security at 1-800-772-1213. TTY users should call 1-800-325-0778.

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State of New Jersey
Division of Pensions and Benefits

January 2009

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" Adobe PDF (132K) 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, 2009, it is not considered income for tax year 2008 and is not included in the gross distribution for 2008 shown in box 1 of your Form 1099-R.

Where can I get more information?

See Fact Sheet #12, Taxation of Retirement Benefits, Adobe PDF (45K) for additional information. This fact sheet along with Tax Withholding Charts and a sample Form 1099-R are available on the Division’s Web site at: www.state.nj.us/treasury/pensions   If you have any questions regarding the above information, please contact our Office of Client Services at (609) 292-7524, or e-mail the Division at: : pensions.nj@treas.state.nj.us

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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 Adobe PDF (45K) 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 Adobe PDF (45K) 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.

The SHBP Retired Change of Status Application Adobe PDF (128K) is 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.

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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 Adobe PDF (45K) 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 Adobe PDF (45K) 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.

The SHBP Retired Change of Status Application Adobe PDF (128K) is 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.

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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. 

A revised SHBP Retired Change of Status Application Adobe PDF (128K) 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.

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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" Adobe PDF (132K) 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.

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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

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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" Adobe PDF (132K) 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.

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

December 2006

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 Adobe PDF (31K), 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 Adobe PDF (128K) 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

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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.

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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" Adobe PDF (132K) 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.

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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.

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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 Form 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 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" Adobe PDF (132K) 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 Form 1099-R 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 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, 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 Form 1099-R.

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

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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 Adobe PDF (39K), 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. 

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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 resin-based composite restoration (filling). Inlays, onlays, and crowns are typical examples of major restorative services. Other major restorative services include:

• Periodontal services - services involving the maintenance, reconstruction, regeneration, and treatment of the supporting structures surrounding teeth, including bone, gum tissue, and root surfaces. Scaling and root planning is limited to one treatment per quadrant every 12 months. Periodontal surgical procedures are limited to one surgery per quadrant every 36 months.
  
• Prosthodontic services - services using removable or fixed dentures (bridges) to replace missing teeth. Replacement of removable devices is covered only after a 5-year period from their installation.

Network Dentists

You may use any licensed dentist and the Retiree Dental Expense Plan will reimburse you for covered services in accordance with the plan design.  If, however, you use dentists who participate in the Plan Network, your costs will generally be lower as these dentists have agreed to accept a lower fee for their services.  You can access a list of participating providers on Aetna's Web site (www.aetna.com/docfind) or contact Aetna Dental at 1-877-238-6200 (select the Aetna member prompt).

HOW TO ENROLL

To enroll, complete and send the enclosed Retiree Dental Expense Plan Enrollment Application to the Division of Pensions and Benefits by March 31, 2005.  If you wish to enroll for the highest level of reimbursement, Tier 3, you must include specific information concerning your prior group dental coverage in Section 4 on the application to enable the SHBP and Aetna Dental to verify this coverage.

If you are enrolling your spouse or same-sex domestic partner who has not previously been covered under an SHBP plan, you must also attach a copy of your marriage certificate or Certificate of Domestic Partnership.

WHEN COVERAGE BEGINS

For SHBP retirees or their survivors electing enrollment during the initial offering of the Retiree Dental Expense Plan, coverage begins on the first of the month following a full month from the date the Division of Pensions and Benefits receives the dental plan enrollment application.

The following chart illustrates the Retiree Dental Expense Plan effective date in relation to the SHBP's receipt of your completed dental plan enrollment application.

* If the monthly premium cannot be deducted from your retirement benefit, you will be billed monthly in advance of the coverage period.

MORE INFORMATION ABOUT THE PLAN

For more information about the plan design or to locate dentists who are part of the Retiree Dental Expense Plan's provider network, contact Aetna Dental at 1-877-238-6200.  You may also access a list of participating providers on Aetna's Web site (www.aetna.com/docfind). For information about enrollment eligibility, contact Aetna Dental at the number above, the Division of Pensions and Benefits Office of Client Services at (609) 292-7524, or view information about the Retiree Dental Expense Plan on our Web site at: www.state.nj.us/treasury/pensions/shbp.htm and click on the State Retiree Dental Expense Plan under Hot Topics.  When you enroll in the Plan you will receive a Retiree Dental Expense Plan Member Handbook that will provide you with complete details.  The handbook will also be posted to our Web site when it becomes available.

Enclosures
State Retiree Dental Expense Plan Application

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