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Pensions and Benefits
LETTERS TO RETIREES

This page contains letters that the Division of Pensions and Benefits has recently sent to selected groups of retirees.
The letters are provided for archival purposes only; therefore, some information may be out of date and/or superceded by later changes.  

News and benefit information is also provided to retirees through the Division's retiree newsletters. Visit the newsletters page.

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

LETTER SUBJECT DATE
2014
Special Open Enrollment for Retiree Dental Plan Ends October 31, 2014 September 2014
Reimbursement of 2013 Medicare Part D Premiums for Retirees whose Medicare Part B Reimbursement is Capped at $46.10 - Medicare Eligible Retirees in the SHBP or SEHBP February 2014
Reimbursement of 2013 Medicare Part B and Part D Premiums for Retirees who were Subject to additional Income Related Premiums in 2013 - Medicare Eligible Retirees in the SHBP or SEHBP February 2014
Form 1099-R Letter - 2014 January 2014
2013
Reimbursement of 2012 Medicare Part D Premiums for Retirees whose Medicare Part B Reimbursement is Capped at $46.10 - Medicare Eligible Retirees in the SHBP or SEHBP February 2013
Reimbursement of 2012 Medicare Part B and Part D Premiums for Retirees who were Subject to additional Income Related Premiums in 2012 - Medicare Eligible Retirees in the SHBP or SEHBP February 2013
Form 1099-R Letter - 2013 January 2013
2012
Medicare Part A and B Postcard - 2012 December 2012
Reimbursement of 2011 Medicare Part B Premiums - Medicare Eligible Retirees in the SHBP or SEHBP February 2012
Form 1099-R Letter - 2012 January 2012

For letters that were distributed prior to the dates shown above, please see the "Archived Letters to Retirees" page.


State of New Jersey
Division of Pensions and Benefits

September 2014

TO: Eligible Retired Participants of the State Health Benefits Program and School Employees' Health Benefits Program

FROM: New Jersey Division of Pensions and Benefits

SUBJECT: Special Open Enrollment for Retriee Dental Plan Ends October 31, 2014

Beginning in January 2015, the State Health Benefits Program (SHBP) and School Employees’ Health Benefits Program (SEHBP) will offer retirees two options for their dental care. In addition to the currently offered Retiree Dental Expense Plan (DEP), administered by Aetna, retirees will have an option to enroll in one of five new Dental Plan Organizations (DPOs), administered by Aetna, Cigna, Healthplex, Horizon, and MetLife. The deadline for enrollment in a new DPO is October 31, 2014.

The DEP is a traditional indemnity plan that allows you the freedom to obtain services from any licensed dentist, but at a higher monthly premium, cost-sharing, and out-of-pocket maximum. It has been the only plan offered to retirees by the SHBP/SEHBP since 2005.

You will now have the option of enrolling in a DPO, a company that contracts with a network of providers for dental services. With a DPO, you must choose a Primary Care Dentist and use dental specialists participating with that DPO in order for services to be covered. In exchange, DPO plans will offer members more cost savings.

This special open enrollment period is available to all retirees currently eligible to enroll in an SHBP or SEHBP medical plan. Those eligible retirees who missed their original opportunity to enroll in a retiree dental plan will be able to enroll in any of the plans, but only during this special open enrollment period. Those eligible retirees who have waived coverage for another employer plan also will be permitted to enroll now, or they may continue to waive coverage.

If you currently are enrolled in the Retiree Dental Expense Plan you will be allowed to continue with the DEP or to change to one of the new DPOs. If you wish to stay in the DEP, you are not required to take any action at this time. Your coverage will continue without interruption. If you want to enroll in a new DPO, however, you should review the attached FAQ and Web site information to make a decision and submit your application by October 31st.

If you decide to enroll but have not been covered in a dental plan for the last 12 months, you will be eligible for Tier 1 benefits. (See the attached FAQ for an explanation of benefits available in each tier). After 12 months of continuous coverage, you will be moved to Tier 2 and, after another 12 months, to Tier 3. If you submit proof that you have been enrolled in another dental plan for at least the last 12 months, you will be put into Tier 3 automatically, which provides the highest level of coverage.

Remember: To enroll or change plans, you must complete an application and submit it prior to 10/31/14. Applications, rate charts and plan summaries can be found on our Web site at www.nj.gov/treasury/pensions/hb-retired.shtml. Links to the dental plan Web sites also are provided so that you may search for participating dentists.

Please take note: If you are not currently enrolled in the DEP and do not act now, you will not be allowed to enroll at a later date, unless you have waived coverage for another employer plan. Once enrolled in any dental plan for 12 months, retirees will be permitted to switch plans, regardless of time of year.

ADDITIONAL INFORMATION

Enclosed with this letter is a list of Frequently Asked Questions regarding the new dental plans. If you have additional questions, contact the Division of Pensions and Benefits, Office of Client Services at (609) 292-7524, or send e-mail to: pensions.nj@treas.nj.gov
Thank you for your cooperation.

Enclosure: Frequently Asked Questions

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State of New Jersey
Division of Pensions and Benefits

February 2014

TO: Medicare Retirees

FROM: Division of Pensions and Benefits

SUBJECT: Reimbursement of 2013 Medicare Part D Premiums for Retirees whose Medicare Part B Reimbursement is Capped at $46.10

This notice is for participating retirees whose reimbursement for the cost of Medicare Part B coverage is capped by law or by bargaining agreement at $46.10 but may have paid an income related monthly adjustment for SHBP/SEHBP Medicare Part D coverage during 2013.

The cost of coverage under Medicare Part D is based on an eligible individual's or couple's modified adjusted gross income. Some individuals may have paid a higher Medicare Part D premium based on their modified adjusted gross income.

The chart below outlines the 2013 Part D premiums due based on income reported.

2012 Medicare Part D
Monthly Premium
Your Yearly Income
If You File an Individual Tax Return with Income of: If You File a Joint Tax Return with Income of: If You Are Married but You File a Separate Tax Return From Your Spouse and Your Yearly Income is:
$0.00 $85,000 or less $170,000 or less Under $85,000 or less
$11.60 $85,001-$107,000 $170,001-$214,000 N/A
$29.90 $107,001-$160,000 $214,001-$320,000 N/A
$48.10 $160,001-$214,000 $320,001-$428,000 $85,001-$129,000
$66.40 Above $214,000 Above $428,000 Above $129,000

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 2011 tax return was used to determine your monthly Part B and Part D premiums in 2013.

If you or your eligible spouse/partner paid an additional premium for Medicare Part D coverage, you must provide verification for the extra amount you paid in 2013. To do so, forward the following two (2) documents to the Division of Pensions and Benefits no later than April 1, 2014.

1) A copy of the cost-of-living adjustment letter you received from Social Security at the end of 2012 notifying you of your 2013 Medicare Part D 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 2013 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 D premium payment for 2013. 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 April 1, 2014:

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 Medicare Part D premiums, you will receive a check representing the unreimbursed balance you paid in 2013. Reimbursement checks will be issued beginning April 30, 2014.

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 2013 reimbursements will be issued if requested after the April 1, 2014 filing deadline.

If you or your eligible spouse/partner are reimbursed for Medicare Part D from any other source or did not pay an additional premium for Part D coverage, you are not eligible for any additional reimbursements. Please do not forward any information to the Division of Pensions and Benefits.

In addition, if you pay a higher Medicare Part D premium due to a late enrollment penalty, you will not be reimbursed for the penalty.

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

For more information about Medicare Part Dpremiums based on income, visit the Social Security Administration's 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

February 2014

TO: Medicare Retirees

FROM: Division of Pensions and Benefits

SUBJECT: Reimbursement of 2013 Medicare Part B and Part D Premiums for Retirees who were Subject to additional Income Related Premiums in 2013

This notice is for retirees who qualify for reimbursement of the full cost of Medicare Part B and SHBP/SEHBP Part D coverage from the State of New Jersey and paid more than the standard monthly Part B and Part D premium during 2013.

The cost of coverage under Medicare Part B is based on an eligible individual's or couple's modified adjusted gross income. Most Medicare eligible individuals pay the standard monthly Part B premium of $104.90 in 2013; however, some individuals paid higher Medicare Part B and Part D premiums based on their modified adjusted gross income.

The chart below outlines the 2013 Part B and/or Part D premiums due based on income reported.

Monthly Medicare Premiums Your Yearly Income
2012 Part B
Monthly Premium
2012 Part D
Monthly Premium
If You File an Individual Tax Return with Income of: If You File a Joint Tax Return with Income of: If You Are Married but You File a Separate Tax Return From Your Spouse and Your Yearly Income is:
$104.90 $0.00 $85,000 or less $170,000 or less Under $85,000 or less
$146.90 $11.60 $85,001-$107,000 $170,001-$214,000 N/A
$209.80 $29.90 $107,001-$160,000 $214,001-$320,000 N/A
$272.70 $48.10 $160,001-$214,000 $320,001-$428,000 $85,001-$129,000
$335.70 $66.40 Above $214,000 Above $428,000 Above $129,000

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 2011 tax return was used to determine your monthly Part B and Part D premiums in 2013.

If you or your eligible spouse/partner paid more than your standard premium of $104.90 per month for Medicare Part B coverage or an additional premium for Part D coverage, you must provide verification for the extra amount you paid in 2013. To do so, forward the following two (2) documents to the Division of Pensions and Benefits no later than April 1, 2014.

1) A copy of the cost-of-living adjustment letter you received from Social Security at the end of 2012 notifying you of your 2013 Medicare Part B and Part D premium increases and the income-related premiums. If you need a copy of this letter contact your local Social Security office; AND

2) A copy of your 2013 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 and Part D premium payments for 2013. 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 April 1, 2014:

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 and/or Part D premium, you will receive a check representing the unreimbursed balance you paid in 2013. Reimbursement checks will be issued beginning April 30, 2014.

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 2013 reimbursements will be issued if requested after the April 1, 2014 filing deadline.

If you or your eligible spouse/partner are reimbursed for Medicare Part B from any other source or did not pay more than $99.90 per month for Medicare Part B coverage or an additional premium for Part D 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 or Part d reimbursement, please contact the Division of Pensions and Benefits, Office of Client Services at (609) 292-7524.

For more information about Medicare Part B and Part D premiums based on income, visit the Social Security Administration's 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 2014

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 Incomeor 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 logon or register for MBOS. You can also call the Division of Pensions and Benefits at (609) 292-7524, or e-mail 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, 2014, it is not considered income for tax year 2013 and is not included in the gross distribution for 2013 shown in box 1 of your Form 1099-R.

Where can I get more information?

See Fact Sheet #12, Taxation of Retirement Benefits, 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.

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

February 2013

TO: Medicare Retirees

FROM: Division of Pensions and Benefits

SUBJECT: Reimbursement of 2012 Medicare Part D Premiums for Retirees whose Medicare Part B Reimbursement is Capped at $46.10

This notice is for participating retirees whose reimbursement for the cost of Medicare Part B coverage is capped by law or by bargaining agreement at $46.10 but may have paid an income related monthly adjustment for SHBP/SEHBP Medicare Part D coverage during 2012.

The cost of coverage under Medicare Part D is based on an eligible individual's or couple's modified adjusted gross income. Some individuals may have paid a higher Medicare Part D premium based on their modified adjusted gross income.

The chart below outlines the 2012 Part D premiums due based on income reported.

2012 Medicare Part D
Monthly Premium
Your Yearly Income
If You File an Individual Tax Return with Income of: If You File a Joint Tax Return with Income of: If You Are Married but You File a Separate Tax Return From Your Spouse and Your Yearly Income is:
$0.00 $85,000 or less $170,000 or less Under $85,000 or less
$11.60 $85,001-$107,000 $170,001-$214,000 N/A
$29.90 $107,001-$160,000 $214,001-$320,000 N/A
$48.10 $160,001-$214,000 $320,001-$428,000 $85,001-$129,000
$66.40 Above $214,000 Above $428,000 Above $129,000

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 2010 tax return was used to determine your monthly Part B and Part D premiums in 2012.

If you or your eligible spouse/partner paid an additional premium for Medicare Part D coverage, you must provide verification for the extra amount you paid in 2012. To do so, forward the following two (2) documents to the Division of Pensions and Benefits no later than April 1, 2013.

1) A copy of the cost-of-living adjustment letter you received from Social Security at the end of 2011 notifying you of your 2012 Medicare Part D 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 2012 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 D premium payment for 2012. 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 April 1, 2013:

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 Medicare Part D premiums, you will receive a check representing the unreimbursed balance you paid in 2012. Reimbursement checks will be issued beginning April 30, 2013.

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 2012 reimbursements will be issued if requested after the April 1, 2013 filing deadline.

If you or your eligible spouse/partner are reimbursed for Medicare Part D from any other source or did not pay an additional premium for Part D coverage, you are not eligible for any additional reimbursements. Please do not forward any information to the Division of Pensions and Benefits.

In addition, if you pay a higher Medicare Part D premium due to a late enrollment penalty, you will not be reimbursed for the penalty.

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

For more information about Medicare Part Dpremiums based on income, visit the Social Security Administration's 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

February 2013

TO: Medicare Retirees

FROM: Division of Pensions and Benefits

SUBJECT: Reimbursement of 2012 Medicare Part B and Part D Premiums for Retirees who were Subject to additional Income Related Premiums in 2012

This notice is for retirees who qualify for reimbursement of the full cost of Medicare Part B and SHBP/SEHBP Part D coverage from the State of New Jersey and paid more than the standard monthly Part B and Part D premium during 2012.

The cost of coverage under Medicare Part B is based on an eligible individual's or couple's modified adjusted gross income. Most Medicare eligible individuals pay the standard monthly Part B premium of $99.90 in 2012; however, some individuals paid higher Medicare Part B and Part D premiums based on their modified adjusted gross income.

The chart below outlines the 2012 Part B and/or Part D premiums due based on income reported.

Monthly Medicare Premiums Your Yearly Income
2012 Part B
Monthly Premium
2012 Part D
Monthly Premium
If You File an Individual Tax Return with Income of: If You File a Joint Tax Return with Income of: If You Are Married but You File a Separate Tax Return From Your Spouse and Your Yearly Income is:
$99.90 $0.00 $85,000 or less $170,000 or less Under $85,000 or less
$161.50 $11.60 $85,001-$107,000 $170,001-$214,000 N/A
$230.70 $29.90 $107,001-$160,000 $214,001-$320,000 N/A
$299.90 $48.10 $160,001-$214,000 $320,001-$428,000 $85,001-$129,000
$369.10 $66.40 Above $214,000 Above $428,000 Above $129,000

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 2010 tax return was used to determine your monthly Part B and Part D premiums in 2012.

If you or your eligible spouse/partner paid more than your standard premium of $99.90 per month for Medicare Part B coverage or an additional premium for Part D coverage, you must provide verification for the extra amount you paid in 2012. To do so, forward the following two (2) documents to the Division of Pensions and Benefits no later than April 1, 2013.

1) A copy of the cost-of-living adjustment letter you received from Social Security at the end of 2011 notifying you of your 2012 Medicare Part B and Part D premium increases and the income-related premiums. If you need a copy of this letter contact your local Social Security office; AND

2) A copy of your 2012 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 and Part D premium payments for 2012. 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 April 1, 2013:

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 and/or Part D premium, you will receive a check representing the unreimbursed balance you paid in 2012. Reimbursement checks will be issued beginning April 30, 2013.

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 2012 reimbursements will be issued if requested after the April 1, 2013 filing deadline.

If you or your eligible spouse/partner are reimbursed for Medicare Part B from any other source or did not pay more than $99.90 per month for Medicare Part B coverage or an additional premium for Part D 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 or Part d reimbursement, please contact the Division of Pensions and Benefits, Office of Client Services at (609) 292-7524.

For more information about Medicare Part B and Part D premiums based on income, visit the Social Security Administration's 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 2013

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 contributionsSince 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.

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, 2013, it is not considered income for tax year 2012 and is not included in the gross distribution for 2012 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.

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

December 2012

STATE HEALTH BENEFITS PROGRAM | SCHOOL EMPLOYEES’ HEALTH BENEFITS PROGRAM

MEDICARE REQUIREMENT FOR SHBP/SEHBP COVERAGE

A retired member or dependent spouse/partner/child who is eligible for Medicare by reason of age (65 or older) or disability (received SSA Disability benefits for 24 consecutive months) must be enrolled in both Medicare Part A (Hospital) and Part B (Medical), and maintain Medicare Part A and B coverage, to remain eligible for coverage through the SHBP/SEHBP.

If you did not enroll in both Medicare Part A and B when first eligible, or you have allowed your Medicare coverage to lapse, you can enroll during the Medicare General Enrollment Period from January 1 to March 31, 2013, with coverage effective as of July 1, 2013. For more information go to: www.medicare.gov or call Social Security at 1-800-772-1213.

You are required to submit proof of Medicare Part A and B enrollment when you become eligible for Medicare. Acceptable proof includes a photocopy of your Medicare card showing both Part A and B enrollment, or a letter from Medicare indicating the effective dates of both Part A and B coverage.

If you do not submit proof of Medicare Part A and B coverage to the SHBP/SEHBP, you and/or your dependents will be terminated from the SHBP/SEHBP. Coverage can be reinstated — on a prospective basis — upon submission of proof of full Medicare coverage to the SHBP/SEHBP.

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State of New Jersey
Division of Pensions and Benefits

February 2012

TO: Medicare Retirees

FROM: Division of Pensions and Benefits

SUBJECT: Reimbursement of 2011 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 2011.

The cost of coverage under Medicare Part B is based on an eligible individual's or couple's modified adjusted gross income. Most Medicare eligible individuals pay the standard monthly Part B premium of $96.40 in 2011. Other Medicare eligible individuals pay a higher premium based on their modified adjusted gross income.

See also: Medicare Premiums: Rules for Higher-Income Beneficiaries,
from the Social Security Administration - Adobe PDF (400K)

The chart below outlines the 2011 Part B premiums due based on income reported.

Your 2011 Part B
Monthly Premium
Your Yearly Income
  If You File an Individual Tax Return with Income of: If You File a Joint Tax Return with Income of: If You Are Married but You File a Separate Tax Return From Your Spouse and Your Yearly Income is:
$96.40 if you/spouse were receiving a SSA benefit in 2009;
$110.50 if you/spouse were new to SSA in 2010
and had SSA withhold;
$155.40 for all others
$85,000 or less $170,000 or less Under $85,000 or less
$161.50 $85,001-$107,000 $170,001-$214,000 N/A
$230.70 $107,001-$160,000 $214,001-$320,000 N/A
$299.90 $160,001-$214,000 $320,001-$428,000 $85,001-$129,000
$369.10 Above $214,000 Above $428,000 Above $129,000

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 2009 tax return was used to determine your monthly Part B premium in 2011.

If you or your eligible spouse/partner paid more than your standard premium of $96.40, $110.50, or $115.40 per month for Medicare Part B coverage, you must provide verification for the extra amount you paid in 2011. To do so, forward the following two (2) documents to the Division of Pensions and Benefits no later than March 31, 2012.

1) A copy of the cost-of-living adjustment letter you received from Social Security at the end of 2010 notifying you of your 2011 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 2011 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 2011. 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, 2012:

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 2011. Reimbursement checks will be issued beginning April 15, 2012.

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 2011 reimbursements will be issued if requested after the March 31, 2012 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.

Medicare Premiums: Rules for Higher-Income Beneficiaries Adobe PDF (400K)

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State of New Jersey
Division of Pensions and Benefits

January 2012

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 contributionsSince 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.

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, 2012, it is not considered income for tax year 2011 and is not included in the gross distribution for 2011 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.

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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