RULE CHANGES
2006

The Division of Pensions and Benefits posts proposed rules, new rules, amended rules, and readoptions of existing rules on this Web site to inform members, retirants, employers and other interested parties.

Proposed rules are first published in the New Jersey Register, a bi-weekly publication prepared by the Office of Administrative Law. The Division then posts, on this site, summaries of the proposed rules. After adoption, a rule becomes part of the New Jersey Administrative Code.

If you would like to learn more regarding a proposed rule, the numbers in the parentheses before the proposed rule refer to the volume and page number in which the entire proposal is found in the Register. N.J.A.C. refers to the New Jersey Administrative Code, and the numbers identify the title and specific chapter citations.

View the New Jersey Register and New Jersey Administrative Code online.

Proposed changes are either in bold print or are underlined. Deletions are bracketed [so].

Public Notices

Notice of Extension of Comment Periods for Proposed Amendments 17:9-3.5 and 5.6, Multiple Coverage as an Employee, Retired Employee, or Dependent Prohibited; Refunds Rejected; and 17:9-5.3, Local Employer Payment of Dependent Charges

Proposed Rules

Proposed Amendment: N.J.A.C. 17:9-5.3 (State Health Benefits Program — Local Employer Payment of Dependent Charges)

Proposed Amendment: N.J.A.C. 17:9-3.5 and 5.6 (State Health Benefits Commission — Multiple Coverage as an Employee, Retired Employee, or Dependent Prohibited; Refunds Rejected)

Proposed Amendment: N.J.A.C. 17:4-6.1 (Police and Firemen's Retirement System)

Proposed Amendment: N.J.A.C. 17:5-5.1 (State Police Retirement System)

Proposed Amendment: N.J.A.C. 17:2-6.1 (Public Employees' Retirement System)

Proposed Readoption with Amendments N.J.A.C. 17:8 (Supplemental Annuity Collective Trust of NJ)

Adoptions

Adopted Amendments:  N.J.A.C. 17:1-13.2, 13.6 and 13.7 UNREIMBURSED MEDICAL SPENDING ACCOUNT CLAIMS FOR PAYMENT FROM PLAN ACCOUNTS - FORFEITURE OF ACCOUNT BALANCES (Tax$ave); Cite as 37 N.J.R. 3631(a) - Adoped February 21, 2006

Readoption with Amendments: N.J.A.C. 17:4 POLICE AND FIREMEN'S RETIREMENT SYSTEM (PFRS); Cite as 37 N.J.R. 4521(a) - Adopted: March 7, 2006 - Readoption: April 13, 2006

Readoption with Amendments: N.J.A.C. 17:5 STATE POLICE RETIREMENT SYSTEM (SPRS); Cite as 38 N.J.R. 1173 - Adopted: June 2, 2006 - Readoption: July 3, 2006

Adopted Amendments: N.J.A.C. 17:9-6.1 and 6.3  STATE HEALTH BENEFITS PROGRAM (SHBP); Cite as 38 N.J.R. 469(a) - Adopted: July 14, 2006

Adopted Amendment: N.J.A.C. 17:3-1.8 SUSPENSION OF RETIREMENT CHECKS — TEACHERS' PENSION AND ANNUITY FUND (TPAF); Cite as 38 N.J.R. 1555(a) - Adopted August 15, 2006

Readoption with Amendments N.J.A.C. 17:7 ALTERNATE BENEFIT PROGRAM (ABP); Cite as 38 N.J.R. 4245(a) - Adopted October 2, 2006

Adopted Amendment N.J.A.C. 17:4-6.1 RETIREMENT APPLICATIONS — POLICE AND FIREMEN'S RETIREMENT SYSTEM ( PFRS); Cite as 39 N.J.R. 237(b) - Adopted December 1, 2006

Adopted Amendment N.J.A.C. 17:5-5.1 RETIREMENT APPLICATIONS — STATE POLICE RETIREMENT SYSTEM (SPRS); Cite as 39 N.J.R. 238(a) - Adopted December 1, 2006

Adopted Amendment N.J.A.C. 17:2-6.1 RETIREMENT APPLICATIONS — PUBLIC EMPLOYEES' RETIREMENT SYSTEM (PERS); Cite as 39 N.J.R. 237(a) - Adopted December 1, 2006

PROPOSED RULES

TREASURY - GENERAL
DIVISION OF PENSIONS AND BENEFITS
STATE HEALTH BENEFITS PROGRAM

LOCAL EMPLOYER PAYMENT OF DEPENDENT CHARGES

Proposed Amendment N.J.A.C. 17:9-5.3

Authorized By: State Health Benefits Commission, Frederick J. Beaver, Secretary

Authority: N.J.S.A. 52:14-17.27

Calendar Reference: See Summary below for explanation of exception to calendar requirement.

Proposal Number: PRN 2006-359

Submit comments by January 5, 2007, to:

Susanne Culliton
Assistant Director
Division of Pensions and Benefits
PO Box 295
Trenton, New Jersey 08625

The agency proposal follows:

Summary

On January 4, 1973, the State Health Benefits Commission (Commission) adopted N.J.A.C. 17:9-5.3, Local employer payment of dependent charges. Subsection (a) details the statutory requirement that a local employer must pay the cost of coverage for an eligible employee, but may pay any portion of the cost of coverage for the employee’s eligible dependents; see N.J.S.A. 52:14-17.40. Subsection (b) mandates that a local employer opting to pay any portion of the cost of dependent coverage pay the same proportion of the cost of such dependent coverage for all local employees. It is proposed that subsection (b) be deleted. Subsection (b) has proven problematic for local employers. Local employers that negotiate dependent coverage premium sharing with unions representing local employees may only implement a negotiated arrangement if it applies to all local employees. The proposed deletion of subsection (b) would remove the uniformity requirement thereby permitting local employers the latitude to implement separate dependent coverage premium sharing arrangements with each union representing local employees.

The proposed deletion of subsection (b) results in subsections (c), (d) and (e) being recodified as subsections (b), (c) and (d). In the recodified subsection (b), “However” is proposed to be deleted for grammatical reasons. In the recodified subsections (b) and (c), “affected” is proposed to be added before “employees.” In the recodified subsection (d), “affected” is proposed to be added before “employee.” “Affected” is being added in each of these subsections to clarify that all employees may not be subject to the same dependent coverage premium arrangement. In the recodified subsection (c), the phrase “the payment of all or a part of” has been added before the phrase “the dependent premium charges” to clarify that the local employer may assume responsibility for the payment of all or part of the dependent premium charges. 

A 60-day comment period is provided for this notice of proposal and, therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this notice is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

Social Impact

The proposed amendment provides local employers electing to pay a portion of the cost for dependent coverage with the option of negotiating alternative dependent cost sharing arrangements with each union representing local employees. No longer will a local employer electing to pay a portion of the cost for dependent coverage be obligated to extend the highest dependent cost contribution negotiated with one union to all unions. The proposed amendment will permit the portion of the cost for dependent coverage to be paid by a local employer electing to pay a portion of the cost for dependent coverage to be a matter for each union to negotiate separately with the local employer. Attendant cost savings would accrue to the local taxpayers’ benefit.

Economic Impact

As noted, the proposed amendment eliminates the prohibition against local employers electing to pay a portion of the cost for dependent coverage negotiating alternative dependent cost sharing arrangements with each union representing local employees. The proposed amendment could result in some local employees contributing more toward the cost of dependent coverage, depending upon the dependent cost sharing arrangement negotiated between their union and the local employer. The proposed amendment could also result in some local employers, which elect to pay a portion of the cost for dependent coverage , paying less since they would no longer be obligated to extend the highest dependent cost contribution negotiated with one union to all unions. The proposed amendment will not impact the State Health Benefits Program since the premium collected from local employers for dependent coverage will remain unchanged.

Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 52:14-17.27 governs the subject of this rulemaking, and there is no Federal requirement or standard that affects the subject of this rulemaking. 

Jobs Impact Statement

The operation of the proposed amendment will not result in the generation or loss of jobs. 

The Division of Pensions and Benefits invites any interested parties to submit any data or studies concerning the jobs impact of the proposed amendment with their written comments.

Agriculture Industry Impact

The proposed amendment will not have any impact on the agriculture industry.

Regulatory Flexibility Statement

The rules of the State Health Benefits Commission only affect public employers, public employees and public retirees and their respective dependents. Thus, the proposed amendment does not impose any reporting, recordkeeping or other compliance requirements upon small businesses, as defined under the Regulatory Flexibility Act, N.J.S.A. 52:14B-1 et seq. Therefore, a regulatory flexibility analysis is not required. 

Smart Growth Impact

The proposed amendment will not have any impact on the achievement of smart growth and implementation of the State Development and Redevelopment Plan.

Full text of the proposal follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):

17:9-5.3 Local employer payment of dependent charges

(a) (No change.)

[(b) Any employer who elects to pay any portion of the cost for dependent coverage shall pay the same proportion of the cost of such dependent coverage for all employees covered in the program.]

[(c)] (b) [However, when] When a local employer submits a resolution provided by the State Health Benefits Commission to change the amount paid toward the cost of dependent coverage, all affected employees must be resolicited with respect to coverage for themselves and their dependents.

[(d)] (c) The employer shall give all affected employees an opportunity for completing[,] and forwarding a new enrollment form within 60 days following the employer’s assumption of the payment of all or a part of the dependent premium charges.

[(e)] (d) Any affected employee who fails to complete and forward the required form within the time limits, which have been prescribed, may effect such change of enrollment only during the annual enrollment period.

TREASURY - GENERAL
DIVISION OF PENSIONS AND BENEFITS
STATE HEALTH BENEFITS COMMISSION

MULTIPLE COVERAGE AS AN EMPLOYEE, RETIRED EMPLOYEE,
OR DEPENDENT PROHIBITED; REFUNDS REJECTED

Proposed Amendments: N.J.A.C. 17:9-3.5 and 5.6

Authorized By:   State Health Benefits Commission, Frederick J. Beaver, Secretary

Authority: N.J.S.A. 52:14-17.27

Calendar Reference: See Summary below for explanation of exception to calendar requirement

Proposal Number: PRN 2006-356

Submit comments by January 5, 2007 to:

Susanne Culliton
Assistant Director
Division of Pensions and Benefits
PO Box 295
Trenton, New Jersey 08625

The agency proposal follows:

Summary

N.J.S.A. 52:14-17.29 provides the State Health Benefits Commission (Commission) with the authority to limit benefits to “avoid inequity, unnecessary utilization, duplication of services or benefits otherwise available.”  The Commission proposes to amend N.J.A.C. 17:9-3.5, Multiple coverage; employee and spouse, by clarifying in both the heading and rule that multiple coverage in the State Health Benefits Program (SHBP) as an employee, retired employee or dependent is prohibited after the effective date of the adoption of these proposed amendments.

Health benefits costs represent a significant portion of a public employer’s annual budget. With health care costs rising much faster than general inflation, tremendous pressure is being placed on employer-sponsored health plans to better manage the limited funds available for providing employer/retiree health benefits coverage. With ever increasing costs to taxpayers to pay for health care coverage for public employees, the Commission believes it is no longer reasonable to provide additional coverage to public employees, or their dependents, who may qualify for enrollment more than once through multiple SHBP contracts.  Every SHBP participant should only be entitled to coverage under one SHBP contract at a time.  Each dollar spent to provide this redundant coverage is a dollar lost to other public programs. The State Auditor has twice cited the unnecessary expense associated with dual coverage in its audits of the SHBP. 

The proposed prohibition of multiple coverage in the SHBP is consistent with the provisions found in all negotiated State employee contracts; however, since many State employees are married to employees of local public employers, the SHBP is unable to implement these provisions unless they are applied uniformly across all SHBP contracts. In addition, local government law already prohibits duplicate coverage under N.J.S.A. 40A:10-18 and 40A:10-19, which specifically exclude employees of municipalities from coverage if they have coverage elsewhere.  N.J.S.A. 18A:16-14 has a similar provision for Boards of Education.  Finally, N.J.S.A. 52:14-17.28 and 29 mandate a uniform level of basic benefits for all members of the SHBP.

N.J.A.C. 17:9-3.5 Multiple coverage; employee and spouse

The Commission proposes amending the heading of this section from “Multiple coverage; employee and spouse” to “Multiple coverage as an employee, retired employee or dependent prohibited. ” This amendment clarifies that all multiple coverage in the SHBP is prohibited.

Existing subsections (a) and (b) are proposed to be deleted. The first sentence of subsection (a) provides that an employee who is the spouse or eligible domestic partner of another employee participating in the Traditional Plan may forego coverage as an employee and be enrolled as a dependent. This sentence is proposed to be deleted because the proposed new section heading and proposed new subsection (a) prohibit all multiple coverage. The second sentence of subsection (a) provides for a refund from the Division to an employee opting to forego coverage as an employee to be covered as a dependent in the instance where the local employer does not contribute toward the cost of dependent coverage. This sentence is proposed to be deleted because it has no applicability; no local employer requires an employee to pay the full cost of dependent coverage. The third sentence of subsection (a) provides that when both spouses or eligible partners are covered as employees, only one may enroll their children. This prohibition is part of the proposed new subsection (g). Subsection (b) provides for a refund in the case of an employee of a local employer who is paying the full cost of dependent coverage for a spouse who is a State employee. Subsection (b) is proposed to be deleted because, as noted, no local employer requires an employee to pay the full cost of dependent coverage.

Proposed new subsection (a) provides that multiple coverage in the SHBP as an employee, retired employee or dependent is prohibited starting on the effective date of the adoption of these amendments and that a SHBP member may be enrolled only once. Examples of multiple coverage include: husbands and wives (or domestic partners) who are both public employees and who enroll each other (and any other dependents) under their respective SHBP contracts;  retired individuals who return to public employment in a position covered by a different New Jersey public retirement system and who qualify for SHBP coverage as both an employee and a retiree; and employees, including elected officials, who qualify for additional SHBP coverage as a result of concurrent employment with multiple public employers.  In the case of divorce and remarriage involving dependent children, SHBP staff has found instances of the same dependent child being covered under several SHBP contracts if the parents and stepparents are public employees. This multiple enrollment provides little or no benefit to the employee or dependent.  Often, participants with coverage under multiple SHBP contracts have selected duplicate coverage within the same health plan.  Although no additional benefit is available if an individual is enrolled more than once in the same plan, employers are charged for this redundant coverage.

Proposed new subsection (b) provides for an open enrollment period for employees, retired employees or dependents who had multiple coverage in the SHBP prior to the effective date of the adoption of these amendments to elect which SHBP coverage to continue. In the event no election is made, SHBP coverage from which the member is enrolled as an employee shall continue and all other SHBP coverage shall terminate. In the event the member not making an election is enrolled at more than one location or retirement system as an employee, the the SHBP coverage that will continue is that in which the member has been enrolled for the longer period of time. 

Proposed new subsection (c) precludes enrollment in the SHBP for an individual who is already enrolled in the SHBP in one capacity and subsequently establishes eligibility to be enrolled in the SHBP in another capacity. In such instance, enrollment is not permitted until the earlier SHBP coverage is terminated.

Proposed new subsections (d) and (e) afford an employee or retiree eligible to participate in the SHBP through more than one employment up to 60 days to enroll for other eligible coverage upon termination of existing SHBP coverage. These sections establish the procedure for reinstating the SHBP coverage in a seamless fashion should the initial coverage terminate. Subsection (d) requires that an employee whose SHBP coverage has ended and who is eligible for other SHBP coverage must apply to the Division for such other SHBP coverage within 60 days. In the event the employee fails to do so, the employee must wait until the next open enrollment period to do so with SHBP coverage being effective January 1 of the following year. Subsection (e) requires a retired employee terminating SHBP coverage to apply for other SHBP coverage to do so within 60 days of the termination date in order for SHBP coverage to commence without interruption. If the retired employee fails to do so, there shall be a two-month waiting period following the Division’s receipt of the application with coverage starting the first of the month following the two-month waiting period.

The Commission is aware of the concern participants may have regarding loss of health coverage and the need to safeguard this valuable benefit.  Health care claim costs can be catastrophic for individuals without health coverage, and participants with an opportunity to be covered under the SHBP through more than one employment or through their spouse’s public employment do not want to run the risk of being without coverage, even for a short period of time.

Existing subsection (c) is proposed to be recodified as subsection (f). Paragraph (f)1 is proposed to be deleted and paragraph (f)2 is proposed to be amended to clarify that where both spouses or eligible domestic partners are employees each may elect single coverage in a participating health plan provided that neither is covered as a dependent by the other. In addition, “maintenance organization” is proposed to be replaced with “plan” in two instances to clarify that all participating health plans, not just participating health maintenance organizations plans are subject to this subsection. 

Proposed new subsection (g) provides that a dependent child eligible for coverage through more than one parent, stepparent, domestic partner or guardian can only be covered once and that if no coverage election is made within 60 days of eligibility, or within 60 days of the effective date of the adoption of these amendments, the plan covering the employee whose birthday falls earlier in the year shall cover the dependent child. In the event both employees have the same birthday, subsection (g) provides that the plan of the employee enrolled the longer period shall cover the dependent child. In the event a court order mandates coverage of a dependent by a specific employee, subsection (g) provides that the court order shall govern.

N.J.A.C. 17:9-5.6 Refunds rejected

The Commission proposes amending this section by eliminating the reference to a refund pursuant to N.J.A.C. 17:9-3.5 and by eliminating examples of what multiple coverages are permitted. 

As the Division has provided a 60-day comment period on this notice of proposal, this notice is excepted from the rulemaking calendar pursuant to N.J.A.C. 1:30-3.3(a)5. 

Social Impact

The proposed amendments affect any employee, retiree or dependent currently receiving multiple coverage by requiring them to select which coverage they want to continue.  In the future, employees, retirees and dependents eligible for multiple coverage would not be permitted to enroll for more than one coverage. For those in an HMO or NJ PLUS, where everything except a small co-payment is covered, this would be a small disadvantage. There would be no impact for those covered twice by the Traditional Plan because the Traditional Plan has never permitted coordination of benefits.

The taxpaying public is positively affected by the proposed amendments in that public monies used to fund a participant’s health benefits under more than one SHBP coverage would be saved.

Economic Impact

The proposed amendments will have a positive economic impact on participating SHBP local employers by no longer requiring a local employer to make premium payments for coverage if an employee or dependent of an employee is already covered in the SHBP. 

The Commission self-funds all SHBP health plans.  The elimination of multiple coverage does not eliminate coverage of the member’s health claims. The elimination of multiple coverage will however achieve some savings through reduction in administrative costs associated with multiple coverage.

The Commission’s actuary has estimated $15,000,000 in coordination of benefits savings as a result of the elimination of multiple coverage. Additionally, the Commission’s actuary has estimated that the SHBP should save $3,000,000 annually by eliminating or reducing administrative expenses associated with providing coverage under multiple contracts. 

Federal Standards Statement

The Federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), 42 U.S.C. §§201 et seq., contains provisions that require all group health plans to offer a special enrollment period to employees and dependents who do not enroll in the plan when initially eligible because they have other coverage, and who subsequently lose that coverage.  While HIPAA requires that plans allow for seamless coverage if application is made within 30 days of loss of coverage, the proposed amendments allow for coverage if application to the SHBP is made within 60 days of loss of the first SHBP coverage. The proposed amendments meet these applicable Federal standards. There are no other Federal standards applicable to the subject matter of the proposed amendments.

Jobs Impact

The operation of the proposed amendments will not result in the generation or loss of jobs. The Division of Pensions and Benefits invites any interested parties to submit any data or studies concerning the jobs impact of the proposed amendments with their written comments.

Agriculture Industry Impact

The proposed amendments will not have any impact on the agriculture industry.

Regulatory Flexibility Statement

The rules governing the SHBP only affect public employers, employees and their dependents. Thus, the proposed amendments do not impose reporting, recordkeeping or other compliance requirements upon small businesses, as defined under the Regulatory Flexibility Act, N.J.S.A. 52:14B-11 et seq. Therefore, a regulatory flexibility analysis is not required.   

Smart Growth Impact

The proposed amendments will not have any impact on the achievement of smart growth and implementation of the State Development and Redevelopment Plan.

Full text of the proposal follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):

17:9-3.5 Multiple coverage [; employee and spouse] as an employee, retired employee or dependent prohibited

 [(a) For Traditional Plan coverage, an employee who is the spouse of another employee may elect to forego coverage as an employee and to be enrolled for coverage as a dependent, in which event no coverage shall be provided for such spouse as an employee while covered as a dependent.  The employee of an employer other than the State, who has enrolled such spouse, and who is required to pay the full cost of dependent coverage, may receive a refund from the Division of Pensions and Benefits equivalent in amount to the employer's cost for single coverage pursuant to N.J.S.A. 52:14-17.31.  When both husband and wife are covered as employees, only one may enroll their children as dependents.

(b) A similar refund shall be authorized in the case of an employee of a local participating employer who is paying the full cost of dependent coverage for a spouse who is an employee of the State and eligible for coverage.]

(a) Effective the effective date of this rule, multiple State Health Benefits Program (SHBP) coverage as an employee, retired employee or dependent shall be prohibited.  A SHBP member may be enrolled only once. 

(b) Employees, retired employees or dependents who had multiple coverage in the SHBP prior to the effective date of this rule shall be provided with an open enrollment period to elect which SHBP coverage to continue.  If no election is made during this period, the SHBP coverage from which the member is enrolled as an employee shall continue, while all other SHBP coverage shall terminate.  Should a member be enrolled from more than one location or retirement system as an employee, then the SHBP coverage that the member has been enrolled in for the longer period of time shall continue.  

(c) The enrollment eligibility for SHBP coverage for an employee, retired employee or dependent who is enrolled in the SHBP and subsequently establishes eligibility to be enrolled as an employee, dependent or retiree in the SHBP from one or more other positions, employments, or retirement systems shall be deferred from that subsequent position, employment or retirement system until such time as the earlier SHBP coverage is terminated.  If a retired employee becomes eligible for active SHBP coverage, the retired employee may either defer the retired coverage and enroll in the active SHBP coverage for the period of eligibility or remain in the retired SHBP coverage and defer the active SHBP coverage.

(d).  An employee whose SHBP coverage has ended and who is eligible for other SHBP coverage must, within 60 days of the coverage termination date, apply to the Division of Pensions and Benefits so that the subsequent SHBP coverage may commence without interruption.  If the employee does not notify the Division within 60 days of the SHBP coverage termination date, the employee must wait until the next open enrollment period for SHBP coverage to be effective January 1 of the following year.  The individual would have to complete a new enrollment application to begin SHBP coverage again.

(e) A retired employee who has terminated retired SHBP coverage to accept other SHBP coverage, must, within 60 days of the other SHBP coverage termination date, apply to the Division of Pensions and Benefits so that the retired SHBP coverage may commence without interruption. If the retired employee does not notify the Division within 60 days of the other SHBP coverage termination date, there shall be a minimum waiting period of two full months upon the Division’s receipt of a completed application.  Coverage would begin as of the first day of the month following the two-month waiting period.

 [(c)] (f) If spouses or eligible domestic partners are both eligible for coverage under the program as employees[:

1. Each may elect coverage as an employee and for their qualified dependents, including the spouse or eligible domestic partner, under the Traditional Plan or NJ PLUS, but only one may elect coverage for the employee and for their qualified dependents, including the spouse or eligible domestic partner, in a participating health maintenance organization; and

2. Each] each may elect single coverage in any participating health [maintenance organization] plan, provided that the employee is not covered under a participating health [maintenance organization] plan as a dependent of a spouse or eligible domestic partner.

(g) If a dependent child is eligible for coverage under the SHBP through more than one parent, stepparent, domestic partner or guardian, then only one parent, stepparent, domestic partner or guardian may enroll the child for coverage.  The parents must elect which coverage to enroll the child in within 60 days of the date the child becomes eligible for additional coverage or within 60 days of the effective date of this rule, whichever is later.  If no election is made, than the birthday rule shall apply, in which the plan covering the parent whose birthday falls earlier in the year shall cover the dependent child.  For example, if the father's birthday is May 14 and the mother's birthday is May 23, the father's plan would cover the couple's dependent children because the father’s birthday falls earlier in the year.  If both parents have the same birthday, the children would be covered by the parent who has been enrolled for coverage for the longer period of time.  If a court order exists, requiring that the children be covered by a specific parent, the court order would be used instead of the birthday rule when determining the dependent children’s coverage.

17:9-5.6 Refunds rejected

Any request for refund not specified in N.J.A.C. [17:9-3.5 and] 17:9-5.5 shall be denied. [For example, a member and spouse or eligible domestic partner may be employed in the same or in different locations, each location participating in the State Health Benefits Program and both having family coverage, or both having member and spouse or eligible domestic partner coverage; in spite of the apparent duplication of coverage, neither of the covered employees would be eligible for a refund. Or, the spouse or domestic partner carries only single employee coverage under the State program while the member is covered by a plan in private industry where the employer pays for employee and dependent coverage; no refund would be payable since both would have to have been in public employment covered by the SHBP. Or, if one spouse or eligible domestic partner applies for Medicare reimbursement for the member and spouse or eligible domestic partner, the other shall not receive duplicate reimbursement.]

TREASURY - GENERAL
DIVISION OF PENSIONS AND BENEFITS
POLICE AND FIREMEN'S RETIREMENT SYSTEM

Proposed Amendment:  N.J.A.C. 17:4-6.1

The agency proposal follows:

Summary

The Police and Firemens Retirement System (PFRS) proposes to amend N.J.A.C. 17:4-6.1(d) due to concerns expressed regarding the requirements relating to medical reports required in support of applications for disability retirements. The subsection requires that an application for disability retirement be supported by two medical reports, one from the members personal or attending physician and the other in the form of either hospital records supporting the disability or a report from a second physician. The subsection does not distinguish between a physical disability retirement application and a mental health disability retirement application. The subsection is proposed to be amended to distinguish between medical reports required in support of a physical disability retirement application and medical reports required in support of a mental health disability retirement application. It is proposed that subsection (d) be restructured as two paragraphs, the first addressing medical reports required in support of a physical disability retirement application and the second addressing medical reports required in support of a mental health disability retirement application.

The Public Employees Retirement System and the State Police Retirement System have proposed that their corresponding rules be amended in this same manner. The Division of Pensions and Benefits is required to administer the State-administered retirement systems in a manner that is uniform, to the extent possible, across the retirement systems.

N.J.A.C. 17:4-6.1(d)1, relating to medical reports required in support of a physical disability retirement application, reflects the rules present requirements, that is, the submission of two medical reports, one from the members personal or attending physician and the other in the form of either hospital records supporting the disability or a report from a second physician. Pararaph (d)1 is amended to clarify that it only applies to physical disability retirement applications. Proposed new paragraph (d)2, relating to medical reports required in support of a mental health disability application, states that the two medical reports required in support of a mental health disability retirement application are one from the members personal or attending psychiatrist or psychologist and the other in the form of either hospital records supporting the disability or a report from another psychiatrist or psychologist or from a physician or licensed clinical social worker.

A 60-day comment period is provided and, therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

Social Impact

The proposed amendment would have a beneficial effect on members filing applications for mental health disability retirements. The proposed amendment states which medical professionals may submit medical reports in support of a members mental health disability retirement application. This is expected to result in fewer rejected mental health disability applications and the expedited approval of qualifying mental health disability applications.   

Economic Impact

The proposed amendment will have a positive economic impact on members filing applications for mental health disability retirements. Accepting a second report from a members personal or attending physician or licensed clinical social worker allows those members receiving treatment from a physician or a licensed clinical social worker to avoid the costs associated with securing the second medical report from a second psychiatrist or psychologist. In addition, the proposed amendment is expected to expedite the processing of applications for mental health disability applications, which in turn will result in the earlier receipt of disability retirement benefits by members whose applications are approved. 

The Division of Pensions and Benefits will continue to monitor the impact of the proposed amendment.  The Division is not aware of any provisions in the proposed amendment that would impose any hardship or costs on PFRS members or on the public in general.

Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 43:16A-13(7) governs the subject of this rulemaking, and there is no Federal requirement or standard that affects the subject of this rulemaking.

Jobs Impact

The operation of the proposed amendment will not result in the generation or loss of jobs. The Division of Pensions and Benefits invites any interested parties to submit any data or studies concerning the jobs impact of the proposed amendment with their written comments.

Agriculture Industry Impact

The proposed amendment will not have any impact on the agriculture industry.

Regulatory Flexibility Statement

The rules of the Police and Firemens Retirement System only affect public employers, public employees and their dependents and beneficiaries.  Thus, the proposed amendment does not impose any reporting, recordkeeping or other compliance requirements upon small businesses, as defined under the Regulatory Flexibility Act, N.J.S.A. 52:14B-1 et seq.  Therefore, a regulatory flexibility analysis is not required.

Smart Growth Impact

The proposed amendment will not have any impact on the achievement of smart growth and implementation of the State Development and Redevelopment Plan.

Full text of the proposal follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):

17:4-6.1 Applications

(a)-(c) (No change.)

(d) In addition to the requirements in (a) through (c) above [, an]:

1.  An application for a physical disability retirement must be supported by at least two medical reports, one by the members personal or attending physician and the other in the form of either hospital records supporting the disability or a report from a second physician[.]; and

2. An application for a mental health medical disability retirement must be supported by at least two medical reports, one by the members personal or attending psychiatrist or psychologist and the other in the form of either hospital records supporting the disability or a report from a second psychiatrist or psychologist or from the members personal or attending physician or licensed clinical social worker.

(e) (No change.)

TREASURY - GENERAL
DIVISION OF PENSIONS AND BENEFITS
STATE POLICE RETIREMENT SYSTEM

Proposed Amendment:  N.J.A.C. 17:5-5.1

The agency proposal follows:

Summary

The State Police Retirement System (SPRS) proposes to amend N.J.A.C. 17:5-5.1(d) due to concerns expressed regarding the requirements relating to medical reports required in support of applications for disability retirements. The subsection requires that an application for disability retirement be supported by two medical reports, one from the members personal or attending physician and the other in the form of either hospital records supporting the disability or a report from a second physician. The subsection does not distinguish between a physical disability retirement application and a mental health disability retirement application. The subsection is proposed to be amended to distinguish between medical reports required in support of a physical disability retirement application and medical reports required in support of a mental health disability retirement application. It is proposed that subsection (d) be restructured as two paragraphs, the first addressing medical reports required in support of a physical disability retirement application and the second addressing medical reports required in support of a mental health disability retirement application.

The Public Employees Retirement System and the Police and Firemens Retirement System have proposed that their corresponding rules be amended in this same manner. The Division of Pensions and Benefits is required to administer the State-administered retirement systems in a manner that is uniform, to the extent possible, across retirement systems.

N.J.A.C. 17:5-5.1(d)1, relating to medical reports required in support of a physical disability retirement application, reflects the rules present requirements, that is, the submission of two medical reports, one from the members personal or attending physician and the other in the form of either hospital records supporting the disability or a report from a second physician. Paragraph (d)1 is amended to clarify that it only applies to physical disability retirement applications. Proposed new paragraph (d)2, relating to medical reports required in support of a mental health disability application, states that the two medical reports required in support of a mental health disability retirement application are one from the members personal or attending psychiatrist or psychologist and the other in the form of either hospital records supporting the disability or a report from another psychiatrist or psychologist or from a physician or licensed clinical social worker.

A 60-day comment period is provided and, therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

Social Impact

The proposed amendment would have a beneficial effect on members filing applications for mental health disability retirements. The proposed amendment states which medical professionals may submit medical reports in support of a members mental health disability retirement application. This is expected to result in fewer rejected mental health disability applications and the expedited approval of qualifying mental health disability applications.    

Economic Impact

The proposed amendment will have a positive economic impact on members filing applications for mental health disability retirements. Accepting a second report from a members personal or attending physician or licensed clinical social worker allows those members receiving treatment from a physician or a licensed clinical social worker to avoid the costs associated with securing the second medical report from a second psychiatrist or psychologist. In addition, the proposed amendment is expected to expedite the processing of applications for mental health disability applications, which in turn will result in the earlier receipt of disability retirement benefits by members whose applications are approved.

The Division of Pensions and Benefits will continue to monitor the impact of the proposed amendment.  The Division is not aware of any provisions in the proposed amendment that would impose any hardship or costs on SPRS members or on the public in general.

Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 53:5A-30(h) governs the subject of this rulemaking, and there is no Federal requirement or standard that affects the subject of this rulemaking.

Jobs Impact

The operation of the proposed amendment will not result in the generation or loss of jobs.

The Division of Pensions and Benefits invites any interested parties to submit any data or studies concerning the jobs impact of the proposed amendment with their written comments.

Agriculture Industry Impact

The proposed amendment will not have any impact on the agriculture industry.

Regulatory Flexibility Statement

The proposed amendment only affects members of the SPRS, their dependents and beneficiaries. Thus, the proposed amendment does not impose any reporting, recordkeeping or other compliance requirements upon small businesses, as defined under the Regulatory Flexibility Act, N.J.S.A. 52:14B-1 et seq.  Therefore, a regulatory flexibility analysis is not required.

Smart Growth Impact

The proposed amendment will not have any impact on the achievement of smart growth and implementation of the State Development and Redevelopment Plan.

Full text of the proposal follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):

17:5-5.1 Applications

(a)-(c) (No change.)

(d) In addition to the requirements in (a) through (c) above:

1. [an] An application for a physical disability retirement must be supported by at least two medical reports, one by the members personal or attending physician and the other may be either hospital records supporting the disability or a report from a second physician[.] ; and

2. An application for a mental health medical disability retirement must be supported by at least two medical reports, one by the members personal or attending psychiatrist or psychologist and the other in the form of either hospital records supporting the disability or a report from a second psychiatrist or psychologist or from the members personal or attending physician or licensed clinical social worker.

TREASURY - GENERAL
DIVISION OF PENSIONS AND BENEFITS
PUBLIC EMPLOYEES RETIREMENT SYSTEM

Proposed Amendment: N.J.A.C. 17:2-6.1

Proposal Number: PRN 2006 -226

The agency proposal follows:

Summary

The Public Employees Retirement System (PERS) proposes amending N.J.A.C. 17:2-6.1(e) due to concerns expressed regarding the requirements relating to medical reports required in support of applications for disability retirements. The subsection requires that an application for disability retirement be supported by two medical reports, one by the members personal or attending physician and the other either hospital records supporting the disability or a report from a second physician. The subsection does not distinguish between a physical disability retirement application and a mental health disability retirement application. The subsection is proposed to be amended to distinguish between medical reports required in support of a physical disability retirement application and medical reports required in support of a mental health disability retirement application.

The Police and Firemens Retirement System and the State Police Retirement System are also proposing that their corresponding rules be amended in this same manner in a future rulemaking. The Division of Pensions and Benefits is required to administer the State-administered retirement systems in a manner that is uniform, to the extent possible, across the retirement systems.

Proposal N.J.A.C. 17:2-6.1(e)1, relating to medical reports required in support of a physical disability retirement application, reflects the rules present requirements, that is, the submission of two medical reports, one from the members personal or attending physician and the other in the form of either hospital records supporting the disability or a report from a second physician. Paragraph (e)1 is amended to clarify that it only applies to physical disability retirements. Proposed new paragraph (e)2, relating to medical reports required in support of a mental health disability application, states that the two medical reports required in support of a mental health disability retirement application are one from the members personal or attending psychiatrist or psychologist and the other in the form of either hospital records supporting the disability or a report from another psychiatrist or psychologist or from a physician or licensed clinical social worker.

A 60-day comment period is provided and, therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, this proposal is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

Social Impact

The proposed amendment would have a beneficial effect on members filing applications for mental health disability retirements. The proposed amendment states which medical professionals may submit medical reports in support of a members mental health disability retirement application. This is expected to result in fewer rejected mental health disability applications and the expedited approval of qualifying mental health disability applications.

Economic Impact

The proposed amendment will have a positive economic impact on members filing applications for mental health disability retirements. Accepting a second report from a members personal or attending physician or licensed clinical social worker allows those members receiving treatment from a physician or a licensed clinical social worker to avoid the costs associated with securing the second medical report from a second psychiatrist or psychologist. In addition, the proposed amendment is expected to expedite the processing of applications for mental health disability applications, which in turn will result in the earlier receipt of disability retirement benefits by members whose applications are approved.

The Division of Pensions and Benefits will continue to monitor the impact of the proposed amendment.  The Division is not aware of any provisions in the proposed amendment that would impose any hardship or costs on PERS members or on the public in general.

Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 43:15A-17 governs the subject of this rulemaking, and there is no Federal requirement or standard that affects the subject of this rulemaking.

Jobs Impact

The operation of the proposed amendment will not result in the generation or loss of jobs.

The Division of Pensions and Benefits invites any interested parties to submit any data or studies concerning the jobs impact of the proposed amendment with their written comments.

Agriculture Industry Impact

The proposed amendment will not have any impact on the agriculture industry.

Regulatory Flexibility Statement

The rules of the Public Employees' Retirement System only affect public employers, public employees and their dependents and beneficiaries.  Thus, the proposed amendment does not impose any reporting, recordkeeping or other compliance requirements upon small businesses, as defined under the Regulatory Flexibility Act, N.J.S.A. 52:14B-1 et seq.  Therefore, a regulatory flexibility analysis is not required.

Smart Growth Impact

The proposed amendment will not have any impact on the achievement of smart growth and implementation of the State Development and Redevelopment Plan.

Full text of the proposed amendment follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):

N.J.A.C. 17:2-6.1 Applications

(a)-(d) (No change.)

(e) In addition to the foregoing requirements[, a members]:

1. An application for a physical disability retirement must be supported by at least two medical reports, one by the members personal or attending physician and the other may be either hospital records supporting the disability or a report from a second physician[.]; and

2. An application for a mental health medical disability retirement must be supported by at least two medical reports, one by the members personal or attending psychiatrist or psychologist and the other in the form of either hospital records supporting the disability or a report from a second psychiatrist or psychologist or from the members personal or attending physician or licensed clinical social worker.

(f)-(g) (No change.)

TREASURY - GENERAL
DIVISION OF PENSIONS AND BENEFITS
SUPPLEMENTAL ANNUITY COLLECTIVE TRUST PROGRAM

Proposed Readoption with Amendments: N.J.A.C. 17:8

The agency proposal follows:

Summary

The Counsel of the Supplemental Annuity Collective Trust (SACT) is responsible for promulgating and reviewing the administrative rules within N.J.A.C. 17:8. When the Counsel becomes aware of a change in the laws or a court decision that possibly could affect SACT, the administrative rules are reviewed and, if changes therein are mandated, steps are taken to propose changes to those rules to conform to the new statute or court decision. Additionally, the rules are periodically reviewed by the Division of Pensions and Benefits (Division), and SACT's staff to ascertain if the rules are necessary and/or cost efficient.

Accordingly, the Council proposes to readopt the current rules within N.J.A.C. 17:8, which expire on April 10, 2006, and to extend the expiration date for such rules to October 7, 2006, pursuant to N.J.S.A. 52: 14B-5.1c. The rules proposed for readoption with amendments reflect the requirements for administration, enrollment, contributions and transfers, retirement, termination and transfers and qualified voluntary employee contributions within N.J.S.A. 52: 18A-107 through 124, the statutory authority that guides the administration of SACT.

SACT is a defined contribution plan available to active members of several State administered retirement systems to provide specific benefits to supplement the guaranteed benefits which are provided by their State administered retirement systems. Members contribute through payroll deductions. Contributions are voluntary and may be suspended at the beginning of any quarter. Members are always fully vested for the accumulated units in their respective accounts.

Upon retirement, a member is paid a single cash payment or may elect various forms of monthly annuities or reduced annuity payments with a beneficiary provision based upon the value of the member's account. Upon the death of a member, the designated beneficiary may elect to receive a lump sum equal to the account value or as an annuity under any of the settlement options which a retiree could elect under SACT. Upon termination of employment and withdrawal from a State administered retirement system, the member must also withdraw his or her account under SACT as a lump sum settlement.

Members, retirees and survivors of members and retirees rely on the efficient operation of SACT to administer their accounts and to provide the information they need regarding their accounts. They rely on the presence and predictability of the rules that guide the administration of their accounts. The protections and guarantees that these rules afford members and retirees mandate their continued existence.

Pursuant to Executive Order No. 66 (1978), Chapter 8 was readopted effective April 10, 2001. Following is a discussion of the amendments proposed.

Subchapter 2. Enrollment, Contributions and Transfers

At N.J.A.C. 17:8-2.4, Contributions; limitations, subsection (a) is proposed to be amended to delete "from one percent to 10 percent" and to add "a percentage" before "of base salary" to clarify that contributions are no longer limited to 10 percent of base salary. Subsection (a) is also proposed to be amended to add "and Benefits" following "Division of Pensions" to clarify the Division in question is the Division of Pensions and Benefits. In addition, subsection (a) is proposed to be amended to add "contributions plus required deductions may not exceed base salary" to clarify that required deductions must be taken into account and that in no event can contributions plus required deductions exceed the participant's base salary. Required deductions include deductions for Federal income tax, FICA, New Jersey income tax, Medicare, pension contributions, unemployment insurance, temporary disability, dental coverage, and/or health benefit coverage. Finally, subsection (a) is proposed to be amended to clarify that a participant's contributions cannot exceed the maximum contribution amount permitted by 26 U.S.C. s.403(b) in any calendar year, $15,000 in 2006. Subsection (c) is proposed to be amended to change "employee" to "participant" for consistency throughout the chapter. Subsection (c) is also proposed to be amended to add "plus required deductions" to clarify that the participant's contributions plus required deductions cannot exceed the participant's base salary. Finally, subsection (c) is proposed to be amended to clarify that a participant's contributions cannot exceed the maximum contribution amount permitted by 26 U.S.C. s.403(b) in any calendar year.

N.J.A.C. 17: 8-2.5, Salary reductions; limitations, subsection (a), is proposed to be amended to delete "from one percent to 10 percent" to clarify that contributions are no longer limited to 10 percent of base salary. In addition, subsection (a) is proposed to be amended to advise that a participant's contributions cannot exceed the maximum contribution amount permitted by 26 U.S.C. s.403(b) in any calendar year.

N.J.A.C. 17: 8-2.8, Lump-sum contribution; limitation, subsection (a) is proposed to be amended to delete "10 percent of base salary" in the second sentence to clarify that contributions are no longer limited to 10 percent of base salary. In addition, subsection (a) is proposed to be amended to clarify that a participant's contributions cannot exceed the maximum contribution amount permitted by 26 U.S.C. s.403(b) in any "calendar year," not "fiscal year."

As the Division has provided a 60-day comment period on this notice of proposal, this notice is excepted from the rulemaking calendar requirements, pursuant to N.J.A.C. 1:30-3.3(a)5.

Social Impact

The rules proposed for readoption with amendments benefit SACT members, retirees and survivors of members and retirees. Members, retirees and survivors of members and retirees rely on the efficient operation of SACT to provide them with monthly retirement benefits, with proper crediting of contributions and earnings, with death benefits and with the information they need regarding their individual accounts. Members, retirees and survivors of members and retirees rely upon the presence and predictability of the rules that guide the administration of their benefits and the stability of SACT. The protections and guarantees that these rules afford members, retirees and survivors of members and retirees mandate their continued existence.

The taxpaying public is affected by these rules in the sense that public moneys are used to administer these benefits, and they, too, benefit from the proper and efficient administration of SACT.

Economic Impact

The rules proposed for readoption with amendments will not impose any adverse economic effects on the public; they will continue existing, long-standing, regulatory requirements. The rules proposed for readoption with amendments do not impose any additional recordkeeping or other requirements, and will serve to preserve the efficient administration and operation of SACT.

Most of the current rules set forth in N.J.A.C. 17:8 have proven effective over time in the proper administration of the SACT. Without the rules, the efficient operation of SACT could not be ensured.

Participation in SACT is an economic benefit to its members and a means of securing, through a voluntary investment program, retirement income separate from, and in addition to, the State administered retirement systems. Contributions are invested in the stock market. SACT consists of two separate plans, the Regular Plan and the Tax Sheltered Plan (IRC Section 403(B)). Under the Regular Plan, contributions are taken from salary that has been subject to Federal income tax. When funds are withdrawn at retirement or separation, the contributions are not subject to Federal income tax, but the earnings on those contributions are taxable. Under the Tax Sheltered Plan, a salary reduction agreement is entered into with the employer, so that the salary the employer reports to the Internal Revenue Service is reduced by the amount of contributions. When the funds are withdrawn at retirement or separation, the contributions and earnings are subject to Federal taxation as ordinary income. The New Jersey Gross Income Tax and Social Security do not afford similar tax-sheltered benefits and those taxes must be paid on gross salary during participation in SACT.

Only actively contributing members of one of the State-administered retirement systems are eligible to participate in the Regular Plan. Eligibility for the Tax Sheltered Plan also requires membership in a State administered retirement system and employment by a public educational institution. Elected officials are ineligible for the Tax Sheltered Plan.

Removing the 10% of base salary contribution limitation permits participants in the Regular Plan and the Tax Sheltered Plan to contribute up to their base salary, less required deductions. Contributions must be in whole percentages. The Regular Plan also permits lump sum contributions of $50.00 or more in the third month of any calendar quarter. No Regular Plan or Tax Sheltered Plan participant can contribute in excess of the amount permitted by 26 U.S.C. s.403(b) in any calendar year. Generally, the Regular Plan or Tax Sheltered Plan account may only be paid out when active membership in the State retirement system ceases due to withdrawal, death or retirement.

Federal Standards Statement

The rules proposed for readoption with amendments meet the applicable Federal standards, i.e. 26 U.S.C. s.403(b). There are no other Federal standards applicable to the subject matter of these rules.

Jobs Impact

The operation of the rules proposed for readoption with amendments will not result in the generation or loss of jobs.

The Division invites any interested parties to submit any data or studies concerning the jobs impact of the rules proposed for readoption with amendments with their written comments.

Agriculture Industry Impact

The rules proposed for readoption with amendments will not have any impact on the agriculture industry.

Regulatory Flexibility Statement

The rules of the SACT only affect SACT members and retirees and survivors of SACT members and retirees. Thus, the rules proposed for readoption with amendments do not impose any reporting, recordkeeping or other compliance requirements upon small businesses, as defined under the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq. Therefore, a regulatory flexibility analysis is not required.

Smart Growth Impact

The rules proposed for readoption with amendments will not have any impact on the achievement of smart growth and implementation of the State Development and Redevelopment Plan.

Full text of the rules proposed for readoption may be found in the New Jersey Administrative Code at N.J.A.C. 17:8.

Full text of the proposed amendments follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):

17:8-2.4 Contributions; limitations

(a) Participants may contribute [from one percent to 10 percent] a percentage of base salary through payroll deductions on certification from the Division of Pensions and Benefits; no fractional percentages are permitted and contributions plus required deductions may not exceed base salary. No participant may contribute an amount in excess of the maximum contribution amount permitted by 26 U.S.C. s.403(b) in any calendar year.

(b) (No change.)

(c) In the event [an employee] a participant is eligible to participate in both the regular supplemental annuity plan and the tax-sheltered annuity plan, the combined contributions plus required deductions may not exceed [10 percent of] the participant's base salary. No participant may contribute an amount in excess of the maximum contribution amount permitted by 26 U.S.C. s.403(b) in any calendar year.

17: 8-2.5 Salary reductions; limitations

(a)The rate of salary reduction shall be stated as a percentage of base salary [from one percent to 10 percent]; no fractional percentages are permitted. No participant may contribute an amount in excess of the maximum contribution amount permitted by 26 U.S.C. s.403(b) in any calendar year.

(b) (No change.)

17: 8-2.8 Lump-sum contribution; limitation

(a) Participants who are contributing through payroll deductions to the regular supplemental annuity collective plan, not the tax-sheltered annuity plan, may make lump sum contributions in the third month of any calendar quarter in whole dollar amounts of $50.00 or more. No participant may contribute in excess of [10 percent of base salary] the maximum contribution amount permitted by 26 U.S.C. s.403(b) by lump sum and payroll deductions combined in any [fiscal] calendar year.

(b) (No change.)

ADOPTIONS

TREASURY - GENERAL
DIVISION OF PENSIONS AND BENEFITS
GENERAL ADMINISTRATION

UNREIMBURSED MEDICAL SPENDING ACCOUNT CLAIMS FOR PAYMENT FROM PLAN ACCOUNTS
FORFEITURE OF ACCOUNT BALANCES

Adopted Amendments:  N.J.A.C. 17:1-13.2, 13.6 and 13.7

Cite as 37 N.J.R. 3631(a)

Adopted: January 17, 2006

Effective Date: February 21, 2006

Summary of Public Comment and Agency Response:

Federal Standards Statement

The plan is intended to comply in all respects with the provisions of § 125 of the Internal Revenue Code, 26 U.S.C. § 125.  The adopted amendments are as a result of and meet the standards of changes to Property Treasury Reg. §§ 1.125-1 and 1.125-2, which permit a cafeteria plan to allow for a 2 ½ month grace period after the end of the calendar year to use money set aside in a flexible spending account.  N.J.S.A. 52:18A-96 et seq., governs the subject of any other amendment and there are no other Federal requirements or standards that affect the subject of this rulemaking.

Full text of the adoption follows:

17:1-13.2 Unreimbursed medical spending account

(a) Each employee may elect to reduce his or her salary, through regular payroll deductions, by a specified dollar amount to create an unreimbursed medical spending account (UMSA) to provide for the direct payment or reimbursement by the State, or its plan administrator, of any or all medical and dental expenses not reimbursed, or only partially reimbursed, under the employee's health benefit plan or any other benefit plan, and considered by the Internal Revenue Service (IRS) to be a tax deductible medical expense. Also eligible for reimbursement are certain expenses for medical care, that is, costs for diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body, that the IRS determines may be reimbursed by an UMSA even though these expenses are not deductible for the purpose of itemizing medical expenses for Federal taxes.

1. Examples of eligible tax deductible medical expenses are orthodontia, surgery (excluding cosmetic surgery), and the deductible portion of medical and dental expenses under the employee's health benefits plan, as well as coinsurance amounts.

2.-3. (No change.)

17:1-13.6 Claims for payment from plan accounts

(a) (No change.)

(b) In each plan year, the total payments from a plan account shall not exceed the total salary reduction amount elected by the employee for that account for that plan year.

(c) Participation in each plan account will terminate on December 31 of each year. The employee, however, may continue to submit claims for expenses incurred in that plan year through March 31 of the following year.

(d) To qualify for reimbursement from an employee's plan account, an eligible expense must be incurred during the plan year for which the employee's election was made, or during the 2 ½ month period immediately following the end of the calendar year, from January 1 through March 15. Expenses incurred before an employee becomes eligible to participate in the plan, for periods that an employee is not contributing to the plan, or after the employee's termination date are not eligible for reimbursement through the employee's plan account.

17:1-13.7 Forfeiture of account balances

In the event that the amount elected by an employee to fund a plan account in a given plan year exceeds the employee's total eligible claims for expenses incurred in that plan year, including the 2 ½ month grace period immediately following the end of the calendar year (as submitted no later than March 31 of the following calendar year), and eligible for payment from the plan account, the balance in the plan account shall be forfeited to the State.

TREASURY—GENERAL
DIVISION OF PENSIONS AND BENEFITS
POLICE AND FIREMEN'S RETIREMENT SYSTEM

Readoption with Amendments: N.J.A.C. 17:4

Cite as 37 N.J.R. 4521(a).

Adopted: March 7, 2006

Readoption: April 13, 2006

Effective Date: March 10, 2006.

The comment period for this proposal closed on February 3, 2006. The following individuals timely submitted written comments: Thomas P. Canzanella, President, Professional Firefighters Association of New Jersey, and William G. Dressel, Jr., Executive Director, New Jersey State League of Municipalities.

The timely submitted comments and the responses are summarized below:

COMMENT: Mr. Canzanella states that it is the Professional Firefighters Association of New Jersey's (PFANJ) position that N.J.A.C. 17:4-1.4, Election of active member-trustee, should be amended to require the voter to sign the outside of the .return ballot envelope as a security and verification measure.

RESPONSE: This section had once required the voter to sign the outside of the return ballot envelope. This section was amended by the Board to delete this requirement because of the large number of voters who were being disenfranchised by their inadvertent failure to sign the outside of the return ballot envelope. Absent documented irregularities with signed ballots, the Board will not act to reimpose a requirement that has, in the past, resulted in otherwise acceptable ballots being rejected.

COMMENT: Mr. Canzanella states that it is the PFANJ's position that NJ.A.C. 17:4-1.4, Election of active member-trustee, should be amended to provide that all identifying serial numbers and codes for telephonic or internet voting purposes should be restricted to the inside of the election packet envelope.

RESPONSE: To date, no allegation has been received that any identifying number or code utilized for telephonic or internet voting purposes has been compromised. The Board, however, has requested the Division to investigate how election packet envelopes are being processed by the contracted vendor. If it is determined that the manner in which election package envelopes are being processed has the potential of compromising the election process, the election packet envelope shall be reformatted. The Board does not at this time view this issue as a matter that requires an amendment to this section.

COMMENT: Mr. Canzanella advises that it is PFANJ's position that N.J.A.C. 17:4-1.4, Election of active member-trustee, should be amended to provide that packages containing .ballots that are mailed to the employer for appropriate distribution to employees be accompanied by a "verification of receipt and certification" that such packages were distributed to employees in a manner that is consistent with a process that cannot be called into question. If an employer fails to execute a verification of receipt and certification, the ballots of employees received from that location should be disqualified.

RESPONSE: N.J.A.C. 17:4-1.4(e)4 requires the certifying officer of each location to sign a notice acknowledging the receipt and distribution of election packets to all eligible employees. At present, in. instances where a certifying officer of a location with 50 or more employees fails to sign and return the notice to the contracted vendor, the contracted vendor follows up with the certifying officer to ascertain the status of the election packets. In addition, in the event an employee from any location contacts the contracted vendor or the Division regarding not having received an election packet, the certifying officer of the location is contacted to ascertain the status of the distribution of election packets.

This section does not disqualify ballots received from employees of a location whose certifying officer fails to sign the required notice. The Board's position is that a certifying office's failure in this regard is insufficient ground to disenfranchise all of the employees of that location.

COMMENT: Mr. Dressel, on behalf of the New Jersey League of Municipalities (League) states that, while the Summary section of the proposed readoption with amendments states that the amendment to N.J.A.C. 17:4-1.5(b) is being proposed to amend the duties of certifying officers, there is no further comment addressing how the duties of certifying officers are being amended. Mr. Dressel advises that the League has concern about what additional duties may be passed on to certifying officers without properly identifying the proposed amendments.

RESPONSE: The Summary section states that NJ.A.C. 17:4-1.5(b) is being amended to clarify that the duties of a certifying officer include providing requested documentation in a timely manner. Prior to amendment, NJ.A.C. 17:4-1.5(b) stated: "The certifying officer shall be responsible for the duties described by N.J.S.A. 43:16A-32." As amended N.J.A.C. 17:4-1.5(b) states: "The certifying officer shall be responsible for the duties described by NJ.S.A. 43:16A-32, including providing documentation requested by the Board or the Division of Pensions and Benefits in a timely manner."

N.J.S.A. 43:16A-32 mandates that the certifying officer transmit to the Board such information as the Board shall, from time to time, require. The amendment to N.J.A.C. 17:4-1.5(b) clarifies that certifying officers must transmit information requested by the Board or the Division in a timely manner. This amendment will help ensure the efficient administration and operation of the Retirement System. There are no additional duties being passed on to certifying officers through the proposed amendments.

COMMENT: Mr. Canzariella states that, while the PFANJ agrees that the implementation of "Senior Officer Pay" in the last several years leading to the 25th and first year of eligibility for retirement raises legitimate concerns relative to unfunded liability, the PFANJ requests the Board to consider amending N.J.A.C. 17:4-4.1, Creditable compensation to address the matter of "Senior Officer Pay" as a salary step or increment to be earned no later than the 20th year of service.

RESPONSE: The Board is considering the issue of "Senior Officer Pay." The Board has requested the Division to look into the issue of "Senior Officer Pay" in consultation with the State contracted actuary. As correctly noted by PFANJ, the Board's concern is that "Senior Officer Pay" not create or generate an unfunded system liability. Whether or not the Board ultimately acts to amend N.J.A.C. 17:4-4.1 to permit some form of "Senior Officer Pay" is contingent upon the Division's ultimate findings and the Board's acceptance of those findings.

COMMENT: Mr. Canzanella advises that it is PFANJ's position that NJ.A.C. 17:4-4.1, Creditable compensation, should be amended to provide that the only action that will be taken by the Board with respect to a creditable salary infraction that has resulted in a retiree receiving a higher than justified pension will be the prospective downward adjustment of the retiree's pension benefit, that is, no effort will be made to recapture the overpayments made to the retiree as a result of the creditable salary infraction.

RESPONSE: While the Board in its discretion has consistently acted not to require the retiree to repay overpayments made as a result of a creditable salary infraction, the Board does not see the benefit of amending NJ.A.C. 17:4-4.1 to mandate that a retiree shall in no instance have to repay overpayments made as a result of a creditable salary infraction. The Board must retain the discretion to mandate that a retiree repay overpayments made as a result of a creditable salary infraction should the facts warrant. The Board will continue to consider each creditable salary infraction on its own merits.

COMMENT: On behalf of the League, Mr. Dressel states that the Board routinely allows extra compensation to be included in the base salary upon which members are permitted to retire and receive pension benefits for the duration of their retirement. Mr. Dressel advises that this artificial inflating of the base salary is contrary to N.J.A.C. 17:4-4.1, Creditable compensation. Mr. Dressel advises that it is the League's position that this section should be enforced.

RESPONSE: N.J.A.C. 17:4-4.1 provides that the compensation creditable for the calculation of retirement benefits shall be limited to base salary and shall not include extra compensation. The Board's readoption with amendments does not amend this section. The Board concurs with the League's position that this section must be enforced. The Board invites the League and any interested party to advise the Board of any instance or suspected instance where extra compensation has been used in the calculation of a member's retirement benefits.

COMMENT: On behalf of the League Mr. Dressel states that NJ.A.C. 17:4-4.8, Service and salary credit: awards of back pay, as amended, specifically N.J.A.C. 17:4-4.8(d), provides the Board with additional authority when looking at negotiated or settlement awards particularly concerning the increase in extra compensation at or prior to retirement. Mr. Dressel advises that the League supports this amendment and encourages the Board to enforce the provisions of this section.

RESPONSE: The Board shares the League's concern with awards and settlements being structured in such a way as to provide the member with a substantial increase in creditable salary at or near retirement. The Board will continue to administer the Retirement System in a manner consistent with the administrative rules within N.J.A.C. 17:4.

COMMENT: Mr. Dressel advises that the League supports the amendments to N.J.A.C. 17:4-6.3, Effective dates, changes. Mr. Dressel states that some members are electing a retirement date and then after the date of retirement, remaining .on the payroll by receiving full pay for their accrued sick and vacation time. This constitutes double payment and a violation. Mr. Dressel states that the proposed amendment clarifies the violation and provides the Board with the authority to correct the problem. The League requests that the Board act to fully enforce this rule.

RESPONSE: The Board shares the League's concern with retired members remaining on the payroll after retirement by receiving full pay for their accrued sick and vacation time. The Board will continue to administer the Retirement System in a manner consistent with the administrative rules within N.J.A.C. 17:4.

Federal Standards Statement

A Federal standards analysis is not required because NJ.S.A. 43:16A­13(7) governs the subject of this rulemaking, and' there is no Federal requirement or standard that affects the subject of this rulemaking.

Full text of the readopted rules can be found in the New Jersey Administrative Code at N.J.A.C. 17:4.

Full text of the adopted amendments follows:

17:4-1.5 Certifying officer (employer)

(a) (No change.)

(b) The certifying officer shall be responsible for the duties described by NJ.S.A. 43:16A-32, including providing documentation requested by the Board or the Division of Pensions and Benefits in a timely manner.

(c) (No change.)

(d) Upon the request of the Board, the certifying officer shall be required to sign a statement, verifying that any information reported is accurate to the best of the officer's knowledge, and conforms with the statutes and rules governing the Retirement System.

17:4-1.6 Records

(a) The minutes of the Board are a matter of public record and may be inspected during regular business hours in the Office of the Board secretary.

(b) The mailing addresses of all active members and retired members are considered to be a part of the member's confidential files and shall not be released for any purpose.

(c) The designations of beneficiaries of all active members and retired members are considered to be a part of the member's confidential f1les and shall only be released with a signed release by the active member or retired member or after the active member's or retired member's death.

(d) All medical testimony obtained in connection with an application for disability retirement shall be restricted for the confidential use of the Board of Trustees. The Division shall release a copy of the examining physician's medical report to the member, the member's attorney or any person authorized by the member in writing to receive a copy of such report. A copy of the Board appointed physician's medical report cannot be released until after the Board's initial determination. In no event shall the report be released to any individual not authorized in writing to receive the report.

(e) The annual report of the Retirement System's actuary shall not be released until it has been approved by the Board of Trustees.

(f) Original documents, if available, shall only be viewed by appointment at the Division of Pensions and Benefits by contacting the Client Services section at (609) 292-7524.

17:4-1.8 Suspension of pension checks

(a) The disbursement of pension checks shall be suspended under the following circumstances and such suspensions shall continue during the period in default:

1.-2. (No change.)

3. If a retirant or beneficiary becomes mentally or physically incompetent. The disbursement of pension checks in this instance shall be suspended until a proper legal representative has been appointed; or

4. If a retirant does not complete a policy assignment of group life insurance as requested by the Board of Trustees.

SUBCHAPTER 2.   ENROLLMENT

17:4-2.1 Eligible positions

(a) All public employees actively employed in positions meeting the statutory definition "police officer" or "firefighter" found at N.J.S.A. 43:16A-1(2)(a) and (b) shall be members of the Police and Firemen's Retirement System of New Jersey.

(b) The following words and terms, as used in this subchapter and in NJ.S.A. 43:16A-1 et seq., shall have the following meanings:

1.-3. (No change.)

4. "Director" means the Director of the Division of Pensions and Benefits (Division) in the Department of the Treasury.

5.-14. (No change.)

(c) Determinations by the Director and the Board of Trustees whether an employee of a law enforcement unit or firefighting unit is an administrative employee with the meaning of the definitions of "police officer" or "firefighter" under the law and these rules shall be on a case-by-case basis. An employee may perform some administrative functions without being an administrative employee. In determining whether an employee is an administrative employee, the Director and the Board of Trustees shall consider the following factors:

1.-3. (No change.)

(d) Determinations by the Director and the Board of Trustees whether an employee of a law enforcement unit or firefighting unit is a supervisory employee within the meaning of the definitions of "police officer" or "firefighter" under the law and these rules shall be on a case-by-case basis. An employee may perform some supervisory functions without being a supervisor. In determining whether an employee is a supervisory employee, the Director and the Board of Trustees shall consider the following factors:

1.-4. (No change.)

(e) (No change.)

(f) If an employee of a "law enforcement" or "firefighting unit" holds

a position which has not been deemed eligible for inclusion in the Police and Firemen's Retirement System pursuant to P.L. 1989, c. 204 (N.J.S.A. 43:16A-1.2), and the employee or employer contends the duties of the position meet the definitions of police officer or firefighter as found in N.J.S.A. 43:16A-1 et seq., the employee or employer may submit a written request indicating why the position meets the above definitions. The appropriate documentation must accompany the request.

(g) The Director shall review the position and documentation to determine whether the duties and responsibilities of the position meet the definition of "police officer" or "firefighter." The Director shall then make a recommendation to the Board as to whether the position qualifies for inclusion in the Retirement System.

(h)-(k) (No change.)

(l) To determine the eligibility for fire positions for employers with an established firefighting unit that have not adopted the provisions of Title 11A of the New Jersey Statutes (non-civil service) for membership in the PFRS, the Board requires the following items:

1. A description of the physical and mental requirements for the position;

2. A description of the training requirements including, but not limited to, the Fire Fighter's I certification issued by the Division of Fire Safety, Department of Community Affairs;

3. A table of organization for the firefighting unit, which includes names and positions;

4. A list of employees currently in the position, with present pension status and job title;

5. Proof of compliance with the provisions of N.J.S.A. 4OA:14-81.1 and a copy of the resolution or ordinance which established the position;

6. Statutory reference, which provides the firefighting unit with the authority for the control and extinguishment of fires; and

7. An official job description which outlines the duties and responsibilities of the position.

(m) To determine the eligibility for fire positions for employers with an established firefighting unit that have adopted the provisions of Title 11A of the New Jersey Statutes (civil service), the Board requires the following items:

1. A description of the physical and mental requirements for the position;

2. A description of the training requirements including, but not limited to, the Fire Fighter's I certification issued by the Division of Fire Safety, Department of Community Affairs;

3. A table of organization for the firefighting unit, which includes names and positions;

4. A list of employees currently in the position, with present pension status and job title;

5. Statutory reference, which provides the firefighting unit with the authority for the control and extinguishment of fires; and

6. An official job description which outlines the duties and responsibilities 6f the position.

(n) To determine the eligibility for police positions for employers with an established law enforcement unit that have not adopted the provisions of Title 11A of the New Jersey Statutes (non-civil service), the Board requires the following items:

1. Statutory reference which provides the law enforcement unit with the authority of detecting crime and enforcing the general criminal laws;

2. Statutory reference authorizing carrying a firearm in the performance of duty;

3. Statutory. reference to the police training. requirement or Police Commission Training (PCT); and

4. Statutory reference that the holder of the position has police powers.

17:4-2.3 Medical requirements

The employer must furnish evidence of good health sufficient to satisfy the Board of Trustees. If the Division or the Board has a question regarding the evidence of good health provided, the Division or Board may request that the applicant be examined by an independent physician designated to conduct such an examination for the Retirement System.

17:4-2.5 Age requirements

(a)-(e) (No change.)

(f) An applicant is permitted to reduce their actual age in order to meet the maximum age requirement of 35 years for the position of municipal police officer if, in accordance with N.J.S.A. 4OA:14-127.1, they have previous service as a former State trooper, sheriff's officer or deputy, or county or municipal police officer. Prior experience in Federal law enforcement agencies or in law enforcement agencies of other states that would meet the requirements of police officer in New Jersey would also qualify for the purpose of reducing the candidate's age for the position of a municipal police officer. "Age reductions" may also, be granted for persons seeking employment as municipal police officers who have prior service with the Delaware River Port Authority Police, Amtrak or South Eastern Pennsylvania Transportation Authority (SEPTA) police departments. No person may be appointed over the age of 45 except for those who were previously involuntarily terminated from their former law enforcement officer employment.

(g) Individuals seeking employment with a municipality in an eligible PFRS title who are over age 35 on the closing date of the examination with a Civil Service employer or over age 35 on the date of hire with a non-Civil Service employer, even after "reductions in age" have been taken into account, cannot establish membership in any State-administered retirement system. Since enrollment in the PFRS is a condition of employment (N.J.S.A. 43:16A-3(1)), these individuals cannot be hired.

(h) Municipal statutes provide that in some situations volunteer and exempt fire fighters in municipalities may be appointed to full-time fire fighter positions if they are not over 40 years of age at the time of their appointments. This proper appointment of someone who is past their 35th birthday to a municipal fire department does not negate the eligibility requirement that someone not be past their 35th birthday to be enrolled in the PFRS. Therefore, any appointees under this provision are required to enroll in the Public Employees' Retirement System.

17:4-2.6 Enrollment date

(a)-(d) (No change.)

(e) An employee cannot receive or purchase credit in the Retirement System for the initial pay period or month of employment if that employment began after the seventh day of the pay period or after the 16th day of the month.

17:4-3.4 Survivor benefits

(a) Eligible survivors shall become entitled to benefits on the first day of the month following the member's death. The pension payment shall begin on the first of the month following the survivor's eligibility for benefits date. Survivor benefits shall terminate as of the last day of the month in which the survivor no longer qualifies for such benefits.

(b) In the instance of an active member who dies in the performance of duty (accidental death), eligible survivors shall be entitled to benefits on the first day of the month following the member's death. The pension payment shall begin on the first of the month following the survivor's eligibility for benefits date. Survivor benefits shall terminate as of the last day of the month in which the survivor no longer qualifies for such benefits.

17:4-3.5 Beneficiary designation; pension contributions

(a) Only a primary and a contingent designation of beneficiary may be made by the member for the payment of the active member's accumulated pension contributions.

(b) A retiree cannot designate a primary or a contingent beneficiary for the receipt of the retiree's accumulated pension contributions in the event of the retiree's death.

17:4-4.3 Continuance of membership; transfer

Once an employee establishes membership in the Retirement System, the member is eligible to continue such membership should the member be temporarily employed in a position covered by the Retirement System.

17 :4-4.4 Loan tolerance

Interest will be calculated on a periodic basis on the unpaid loan balance. If scheduled payments are not paid timely, interest .will be accrued and added to the remaining outstanding loan balance. If, at the end of the loan schedule, there is a balance of less than $50.00, it will be written off. If the balance is equal to or greater than $50.00, the member will be assessed.

17 :4-4.8 Service and salary credit: awards of back pay

(a) A member shall receive service credit toward retirement for any month or biweekly pay period for which a full normal deduction is received by the Retirement System.

(b)-(c) (No change.)

(d) If the award or settlement is structured in such a way as to provide the member with a substantial increase of creditable salary at or near the end of the member's service, or a substantial increase in retirement benefits, the award or settlement shall be reviewed. by the Board of Trustees. If the Board determines that the pension benefit was part of the negotiations for the award or settlement, or if the award or settlement includes extra compensation as defined by N.J.A.C. 17:4-4.1, the Board shall determine the compensation to be used to calculate the retirement allowance and the member shall have the pension contributions for the salaries found not to be creditable refunded without interest.

(e) (No change.)

17 :4-4.9 Eligibility for loan

Only active contributing members of the Retirement System may exercise the privilege of obtaining a loan. The member's total outstanding loan balance shall not exceed the lesser of either 50 percent of the accumulated deductions posted to the member's account or $50,000. The loan is subject to 26 D.S.C. §72(P).

17:4-4.10 Termination; withdrawal

(a) (No change.)

(b) No application shall be approved if:

1. (No change.)

2. The member or employer certifies that employment has not ended or that the member has taken another position subject to coverage;

3. The member has been dismissed or suspended from employment. In this event, such a member will be eligible to withdraw if the member has formally resigned from the position and there is no legal action contemplated or pending and the dismissal has been adjudged final. If the member or employer does not advise the Division that there is an appeal and the withdrawal application is processed, the member must repay the Retirement System the full amount of contributions with interest before the account may be reinstated; or

4. The member has a claim pending for Workers' Compensation benefits, unless the member signs a waiver indicating that the member still wishes to withdraw.

17:4-5.2 Service credited from multiple positions

Not more than one year of service shall be credited for all service in a calendar year. A member is credited with one month of service for one month worked, regardless of how many different employers he or she had in that month.

17:4-5.3 Optional purchases of eligible service

(a) A shared-cost purchase is one in which the member pays only the employee's share and not the employer's share of the purchase. A member may purchase all or a portion of such eligible service. A shared-cost purchase will be calculated on the basis of the actuarial purchase factor established for the member's age at the time of the purchase request times the higher of either the member's current annual base salary or highest fiscal year base salary. The following types of purchases are shared-cost purchases:

1.-2. (No change.) .

3. Continuous temporary service as a police officer or firefighter immediately preceding enrollment. "Special Police" service and time attending the Police Academy or Firefighter training cannot be purchased; .

4.-5. (No change.)

(b)-(c) (No change.)

SUBCHAPTER 6.RETIREMENT

17 :4-6.2 Effective date

A member's retirement allowance shall not become due and payable until 30. days after the date the Board approved the application for retirement or one month after the date of the retirement, whichever is later.

17 :4-6.3 Effective dates; changes

(a)-(d) (No change.).

(e) Should the member continue to receive a salary beyond the effective date of retirement after approval of the retirement by the Board of Trustees, no retirement benefits shall be paid for the period where the member received salary and no salary or service credit shall be provided for the service rendered after the approved, effective date of retirement. This restriction also applies to payments of accrued sick or vacation time that is paid in periodic payments on the employer's regular payroll schedule.

17 :4-6.4 Outstanding loan

(a) A member who has an outstanding loan balance at the time of retirement may repay the loan balance, with accrued interest, as follows:

1. In full before the retirement allowance becomes due and payable as provided in NJ.A.C. 17:4-6.2; or.

2. By deductions from retirement benefit payments of the same monthly amount deducted from the member's compensation immediately preceding retirement until the loan balance, with accrued interest, is repaid as authorized by P.L. 1999, c.132 (NJ.S.A. 43:16A-16.2). If the member does not request repayment in full, repayment is by deductions in the same monthly amount deducted from the member's compensation immediately preceding retirement.

(b) If a retirant dies before the loan balance, with accrued interest, is repaid, the remaining balance is paid first from the group life insurance proceeds, and then from the proceeds of any other benefits payable on

account of the retirant in the form of monthly payments that are due to the beneficiary or estate. If multiple beneficiaries are to receive these benefits, each beneficiary shares in repaying the remaining balance in the same proportion in which they are entitled to the benefits.

17 :4-6.11 Service or special retirement; eligibility

(a) A member becomes eligible for "service" retirement:

1. (No change.)

2. On the first of the month following the attainment of 20 years of service credit in the Retirement System, if the member was enrolled in the Retirement System as of January 18,2000.

(b) (No change.)

17 :4-7.1 Interfund transfers/State-administered retirement systems

(a) The receipt of a public pension or retirement benefit is expressly conditioned upon the rendering of honorable service by a public officer or employee. Therefore, the Board of Trustees of the new State-administered retirement system shall disallow the transfer of all or a portion of prior service of any member ,of the former State-administered retirement system for misconduct occurring during the member's prior public service which renders that prior service, or part thereof, dishonorable.

(b) A member is eligible to transfer the former membership in a State-administered retirement system into the retirement system that covers the new eligible employment, if the member has first ended employment with the former employer, and has not taken another position subject to coverage in the State-administered retirement system of the former account which would have the same effective date. as the membership in the new State-administered retirement system.

(c) The system will transfer membership to any State-administered retirement system as follows:

1. A member, desiring to transfer service credit and contributions from one State-administered retirement system to another, shall file an "Application of Interfund Transfer" and an "Enrollment Application" in place of the customary "Application for Withdrawal," This application will void all possible claims against the former system when approved and the new membership is commenced in the new system.

2. (No change.)

3. A statement reflecting the member's status as of the date of transfer shall be prepared by the Withdrawal Section of the Division and a -copy forwarded to the former account.

4. The member's service credits established in the former system shall be transferred to the new system.

5. The member is not eligible to transfer service credit if any of the following conditions apply:

i. (No change.).

ii. The member has credit in the former system for service earned after the date of enrollment in the new system (concurrent service); or

iii. (No change.)

6. A data sheet shall be created for the member's new account that will indicate an interfund transfer from the member's former retirement system and the service credit transferred into the new membership account.

(d) The reserves accrued in the former system will be valued and compared to the reserves required in the new system.

1. If the reserves accumulated or provided for in the former system are less than those required in the new system, the full reserve will be transferred.

2, If the reserves accumulated or provided for in the former system are more than those required in the new system, only the .amount required to establish the credit will be transferred.

(e) (No change in text.)

(f) A member is subject to all age and medical requirements for enrollment into the Retirement System before an interfund transfer into the Retirement System shall take effect.

17:4-7.2 Intrafund transfers; State-administered retirement systems

(a) Members who leave one public employer and take a position with another public employer covered by the same retirement system are immediately eligible to transfer their membership to their new employers, as long as the following conditions are met:

1. The member has not withdrawn his or her contributions;

2.-3. (No change.)

(b) (No change.)

TREASURY - GENERAL
DIVISION OF PENSIONS AND BENEFITS
STATE POLICE RETIREMENT SYSTEM

Readoption with Amendments: N.J.A.C. 17:5

Cite as 38 N.J.R. 1173

Adopted: June 2, 2006

Readoption: July 3, 2006

Effective Date: June 6, 2006, Readoption/July 3, 2006, Amendments

The timely submitted comments and responses are summarized below:

COMMENT: Sister Sachau states that subsection (b) of N.J.A.C. 17:5-1.4, Certifying officer (employer), should be further amended to require that the certifying officer be clearly identified both in handwritten signature, typewritten name below, title below and a notary public attestation.

RESPONSE: N.J.A.C. 17:5-1.4(b) has been amended to provide that the certifying officer shall also be responsible for all other duties relating to the matters concerning the State Police Retirement System (System) including providing requested documentation in a timely manner. There has never been an issue with respect to the identity and title of the certifying officer for the Division of State Police. There has never been an issue with respect the accuracy of enrollment, retirement and withdrawal documentation certified by the certifying officer for the Division of the State Police. There is no basis for mandating a notary public attestation. Mandating a notary public attestation will needlessly complicate and delay the processing of System enrollments, retirements and withdrawals.

COMMENT: With respect to the amendment to N.J.A.C. 17:5-1.5, Records, Sister Sachau states that subsection (d) should be further amended to provide that medical records in support of a disability retirement are open public records because taxpayer dollars are being spent on the basis of such medical records.

RESPONSE: The disclosure of a members medical records is precluded under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), 42 U.S.C. §§201 et seq. and the Open Public Records Act, N.J.S.A. 47:1A-1 et seq.

COMMENT: Sister Sachau states that paragraph (a)2 of  N.J.A.C. 17:5-3.8, Termination; withdrawal, should be further amended to require that statements be taken from both the employing agency and the employee as to whether an employee has “retired.” Sister Sachau states that taking the word of just one has obviously proven to allow people to lie or to be negligent so that benefits are paid to people who should never get benefits.

RESPONSE: Sister Sachaus comments are based upon a mistaken assumption that N.J.A.C. 17:5-3.8 relates to the payment of retirement benefits. The payment of retirement benefits is the subject of Subchapter 5 of the rules. N.J.A.C 17:5-3.8 concerns a member terminating employment and withdrawing from the System. The amendment to paragraph (a)2 provides that no application for withdrawal from the System shall be approved if either the member or employer, that is the Division of State Police, certifies that employment has not ended or that the member has taken another position subject to coverage. Prior to being amended, this paragraph only provided for the member to so certify.

As noted, the certification in question relates to a members ineligibility to withdraw from the System. Upon withdrawal from the System, the member can only withdraw contributions made by the member to the System. No retirement benefits are paid to a withdrawing member. Permitting the Division of State Police to certify that a member submitting a withdrawal application is not eligible to withdraw, either because employment has not ended or because the member has taken another position subject to coverage, has no impact on the payment of retirement benefits.

COMMENT: Commenting on N.J.A.C. 17:5-4.3, Methods of repayment, Sister Sachau states that she opposes allowing the purchase of service credit for any State employee.

RESPONSE: Paragraph (a) 5 has been added to N.J.A.C. 17:5-4.3 to clarify that service credit can be purchased using direct rollover or transfer of tax-deferred contributions from financial plans that qualify under the terms specified by the Internal Revenue Service.  The purchase of service credit is provided for in the statutes governing the System, specifically N.J.S.A. 53:5A-6, Creditable service; purchase of service credit. Subchapter 4 of the regulations merely implements a statutory directive affording System members the right to purchase service credit.  

Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 53:5A-30h governs the subject of this rulemaking. N.J.A.C. 17:5-3.7, Eligibility for loan, is amended to provide that the loan amount in no event shall exceed $50,000 and to advise members that the loan is subject to 26 U.S.C. §72(p). The adopted $50,000 loan maximum complies with the requirements of 26 U.S.C. §72(p), and there is no other Federal standards or requirements that affect the subject of this rulemaking.

Full text of the readopted rules can be found in the New Jersey Administrative Code at N.J.A.C. 17:5.

Full text of the adopted amendments follows:

SUBCHAPTER 1. ADMINISTRATION

17:5-1.4 Certifying officer (employer)

(a) (No change.)

(b) The prime purpose of the certifying officer will be to certify facts of enrollment, retirement, withdrawal and to implement proper procedures for the reports and transmittal of employee deductions and to act as liaison for all dealings between the Division of State Police and the Retirement System. The certifying officer shall also be responsible for all other duties relating to matters concerning the System including providing requested documentation in a timely manner.

17:5-1.5 Records

(a) The minutes of the Board are a matter of public record and may be inspected during regular business hours in the Office of the Board Secretary.

(b) (No change.)

(c) The designations of beneficiaries of all active and retired members are considered to be part of the members confidential files and shall only be released upon a signed release by the active member or retiree or after the death of the active member or retiree.

(d) All medical testimony obtained in connection with an application for disability retirement shall be restricted for the confidential use of the Board. The Division shall release a copy of the examining physicians medical report to the member, the members attorney or any person authorized by the member in writing to receive a copy of such report. A copy of the Board appointed physicians medical report cannot be released until after the Boards initial determination. In no event shall the report be released to any individual not authorized in writing to receive the report.

(e) The annual report of the Systems actuary shall not be released until it has been approved by the Board.

(f) Original documents, if available, shall only be viewed by appointment at the Division of Pensions and Benefits by contacting the Client Services Section at (609) 292-7524.

17:5-1.7 Suspension of pension checks

(a) The disbursement of pension checks shall be suspended under the following circumstances and the suspension shall continue during the period in default:

1. (No change.)
   
   
2. If a retirant or beneficiary becomes mentally or physically incompetent. The disbursement of pension checks in this instance shall be suspended until a proper legal representative has been appointed; or
   
   
3. If a retirant does not complete a policy assignment of group life insurance as requested by the Board.

SUBCHAPTER 3. MEMBERSHIP

17:5-3.6 Service and salary credit: awards of back pay

(a) A member shall receive service credit toward retirement for any biweekly pay period for which a full normal deduction is received by the Retirement System.

(b)-(c) (No change.)

(d) If the award or settlement is structured in such a way as to provide the member with a substantial increase of creditable salary at or near the end of the members service, or a substantial increase in retirement benefits, the award or settlement shall be reviewed by the Board. If the Board determines that the pension benefit was part of the negotiations for the award or settlement, or if the award or settlement includes extra compensation as defined by N.J.A.C. 17:5-3.1, the Board shall determine the compensation to be used to calculate the retirement allowance and the member shall have pension contributions for the found not to be creditable refunded without interest.

(e) (No change.)

17: 5-3.7 Eligibility for loan

Only active contributing members of the Retirement System may exercise the privilege of obtaining a loan. The members total outstanding loan balance shall not exceed 50 percent of the accumulated deductions posted to the members account or $50,000. The loan is subject to 26 U.S.C. §72(p)

17:5-3.8 Termination; withdrawal

(a) Under the terms of the statutes, a member may withdraw from the RetirementSystem only if the member terminates all employment. No application shall be approved if:

1. (No change.)
   
   
2. The member or employer certifies that employment has not ended or that the member has taken another position subject to coverage;
   
   
3. The member has been dismissed or suspended from employment. In this event, such a member will be eligible to withdraw if the member has formally resigned from the position and there is no legal action contemplated or pending and the dismissal has been adjudged final. If the member or employer does not advise the Division that there is an appeal and the withdrawal application is processed, the member must repay the Retirement System the full amount of contributions with interest before the account may be reinstated; or
   
   
4. The member has a claim pending for Workers Compensation benefits, unless the member signs a waiver indicating that the member still wishes to withdraw.

SUBCHAPTER 4. PURCHASES AND ELIGIBLE SERVICE

17:5-4.3 Methods of repayment

(a) Methods of repayment include the following:

1.-3. (No change.)

4. Extra payroll deductions will include regular interest for the term of the installment; and

5. Direct rollover/trustee-to-trustee transfer of funds: Lump sum payments and partial lump sum payments can include the direct rollover or transfer of tax-deferred contributions from financial plans that qualify under terms specified by the Internal Revenue Service. All payments remitted to the Division must be accompanied by properly completed forms as specified by the Division. Checks remitted to the Division without the required forms shall be returned to the member. A lump sum rollover payment for a purchase cannot exceed the lump sum cost of that purchase. Checks in an amount greater than the lump sum cost of the purchase shall be returned to the member.

TREASURY - GENERAL
DIVISION OF PENSIONS AND BENEFITS
STATE HEALTH BENEFITS COMMISSION
STATE HEALTH BENEFITS PROGRAM

RETIRED EMPLOYEE DEFINED
RETIREE COVERAGE; LIMITATION

Adopted Amendments: N.J.A.C. 17:9-6.1 and 6.3  

Proposed: January 17, 2006 at 38 N.J.R. 469(a)

Adopted: July 14, 2006

Effective Date: August 21, 2006.

Federal Standards Statement

A Federal standards analysis is not required because the rulemaking requirements for the State Health Benefits Program are governed by State law, specifically N.J.S.A. 52:14-17.27, and are not subject to any Federal requirements or standards.

Full text of the amendments follow:

17:9-6.1 Retired employee defined

(a) No change.)

(b) The definition of “retired employee” also includes the following classes of retired employees who are eligible for coverage:

1.-3. (No change.)

4. Qualified retired employees of boards of education who receive a retirement benefit from a State or locally administered retirement system and who:

i. (No change.)

ii. Become entitled to and enroll in Parts A and B of the Federal Medicare Program; and

iii Within 60 days of enrollment in Parts A and B of the Federal Medicare Program, elect to join the SHBP under the provisions of P.L. 1993, c. 8 (N.J.S.A. 52:14-17.32h). A retired employee, upon enrollment in the SHBP pursuant to this rule, who qualified for benefits under the provisions of N.J.S.A. 52:14-17.32f, 17.32f1 or 17.32f2 shall be eligible for coverage paid by the State, either directly or through the retirement system or fund;

5.-8. (No change.)

(c)-(k) (No change.)

17:9-6.3 Retiree coverage; limitation

(a)-(e) (No change.)

(f) In the event a retired employee or any dependent of a retired employee enrolls in a Medicare Part D plan, SHBP retiree prescription drug benefits shall immediately terminate for the retired employee and all dependents. However, enrollment in a Medicare Part D plan by a retired employee or any dependent of a retired employee will not affect the continuation of SHBP medical plan benefits for the retired employee and any dependent of the retired employee.

(g) In the event a retired employee or dependent of a retired employee has enrolled in a Medicare Part D plan, the retired employee and dependent(s) will be prospectively enrolled or re-enrolled for SHBP retiree prescription drug benefits provided:

1. The retired employee and dependent(s) have maintained SHBP medical plan coverage; and

2. The retired employee and, if applicable, the retired employees dependent, terminates Medicare Part D plan coverage.

TREASURY - GENERAL
DIVISION OF PENSIONS AND BENEFITS
TEACHERS' PENSION AND ANNUITY FUND
SUSPENSION OF PENSION CHECKS

Adopted Amendment: N.J.A.C. 17:3-1.8

Proposed: April 3, 2006 at 38 N.J.R. 1555(a)

Adopted: August 15, 2006

Effective Date: September 18, 2006.

Summary of Public Comment and Agency Response:

Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 18A:66-56 governs the subject of this rulemaking, and there is no Federal requirement or standard that affects the subject of this rulemaking.

Full text of the adoption follows:

17:3-1.8 Suspension of pension checks

(a) The disbursement of pension checks shall be suspended under the following circumstances and such suspensions shall continue during the period in default:

1.-3. (No change.)

4. If a retirant or beneficiary becomes mentally or physically incompetent. The disbursement of pension checks in this event shall be suspended until a proper legal representative has been appointed; or

5. If a retirant does not complete a policy assignment of group life insurance as requested by the Board.

TREASURY - GENERAL
DIVISION OF PENSIONS AND BENEFITS
ALTERNATE BENEFIT PROGRAM

Readoption with Amendments: N.J.A.C. 17:7

Cite as 38 N.J.R. 4245(a)

Filed: September 11, 2006, without change

Authority: N.J.S.A. 18A:66-172.

Effective Date: September 11, 2006, Readoption

October 2, 2006, Amendments

Expiration Date: September 8, 2011

Summary of Public Comments and Agency Responses:

The comment period for this proposal closed on July 14, 2006. Comments were received from Mr. Brian Volz, Associate Director, Research and Economic Services, New Jersey Education Association.

COMMENT: Mr. Volz states that subsection (a) of N.J.A.C. 17:7-1.11, Contributions; late payment, should be further amended to require institutions participating in the Alternate Benefit Program (ABP) to pay employee and employer contributions to the investment provider within five business from the employee’s pay date. Subsection (a) requires institutions participating in the ABP to pay employer and employee contributions to the investment provider within 30 days after the month in which the employee contributions are withheld, or within 15 days of receipt from the investment provider of the statement of amount owed by the institution, whichever is later, but in no event later than 45 days after the month in which the employee contributions are withheld. Mr. Volz states that P.L. 1999, c.247, requires salary reductions on behalf of an employee participating in a 403(b) tax-sheltered savings program to be transmitted to the investment provider and credited not later than the fifth business day after the date on which the employee is paid for that pay period.

RESPONSE: The law cited by Mr. Volz, P.L. 1999, c.247, amended N.J.S.A. 52:18A-113.1, Contracts by employer to purchase annuities on behalf of employee. This statute relates to how 26 U.S.C. §403(b) contributions are to be administered by the Supplemental Annuity Collective Trust of New Jersey (SACT). SACT is a defined contribution plan available to active members of several State-administered retirement systems. SACT is separate and apart from the ABP. Accordingly, N.J.S.A. 52:18A-113.1 is not applicable to the ABP. Furthermore, subsection (a) of N.J.A.C. 17:7-1.11 relates to mandatory 26 U.S.C. § 401(a) contributions, not voluntary additional 26 U.S.C. §403(b) contributions. Voluntary additional 26 U.S.C. §403(b) contributions are the subject of subsection (b) of N.J.A.C. 17:7-1.11, which requires that voluntary additional 26 U.S.C. §403(b) contributions be transmitted to the investment provider and credited not later than the fifth business day after the date on which the employee is paid for that pay period.

In addition, the Division is without authority to mandate that all institutions participating in the ABP pay employee and employer mandatory 26 U.S.C. §401(a) contributions to the investment provider within five business days from the employee’s pay date. N.J.S.A. 18A:66-174(a), Employee contributions; deductions or reductions of compensation and payments; payment of employer contributions by the state or other unit, grants the University of Medicine and Dentistry of New Jersey, Rutgers, The State University and the New Jersey Institute of Technology the power to determine the frequency and timing of deductions or reductions and payments. While all of these institutions are in compliance with the existing timeframes within N.J.A.C. 17:7-1.11(a) for the payment of employee and employer mandatory 26 U.S.C. §401(a) contributions to investment providers, all are not in compliance with the five business day mandate requested by Mr. Volz.

While the Division has the authority under N.J.S.A. 18A:66-174(a) to determine the frequency and timing of payment of employee and employer mandatory 26 U.S.C. §401(a) contributions by the State and county colleges to the investment provider, the Division sees the five business day mandate requested by Mr. Volz to be problematic for many State and county colleges. While many State and county colleges are paying employer and employee mandatory 26 U.S.C. §401(a) contributions to the investment provider within five business days from the employee’s pay date, other State and county colleges are not, citing too many ABP members and a lack of administrative resources. Mandating that institutions participating in the ABP make payment of employer and employee mandatory 26 U.S.C. §401(a) contributions to investment providers within five business days, when not all participating institutions can conform, is not in the best interest of the ABP.

Federal Standards Statement

Effective January 1, 1995 mandatory contributions under the Program became subject to the provisions of the Internal Revenue Code, 26 U.S.C. §414(h)(2), as amended.  Voluntary additional contributions cannot exceed the employee’s statutory exclusion allowance under 26 U.S.C. §403(b) or the limitations of 26 U.S.C. §415, and the regulations thereunder, IRC §403(b) and IRC §415.  Voluntary tax-deferred contributions must be computed on the participant’s actual salary less mandatory pension contributions.  The proposed readoption with amendments and new rules meets these applicable Federal standards.  There are no other federal standards applicable to the subject matter of this proposal.

Full text of the readopted rules can be found in the New Jersey Administrative Code at N.J.A.C. 17:7.

Full text of the adopted amendments follows:

17:7-1.1 Designated providers

(a) The providers approved by the Division of Pensions and Benefits to offer investment accounts for Alternate Benefit Program participants (investment providers) are designated to provide retirement and annuity contracts to participants of the Alternate Benefit Program.

(b) A designated provider shall provide group life coverage to participants of the Alternate Benefit Program.  

(c) A designated provider shall provide disability insurance coverage to participants of the Alternate Benefit Program.

17:7-1.2 Salary reduction agreements; authorization and termination

(a) The State and participating institutions are authorized to enter into agreements with Alternate Benefit Program participants for mandatory and voluntary salary reductions to the maximum limitations set forth in P.L. 93- 406 (Employment Retirement Income Security Act of 1974 and the Internal Revenue Code of 1954, 26 U.S.C. § 415(c), as amended for such year) of the employee's base salary and the regulations thereunder, in order to purchase from the selected investment providers retirement or annuity contracts which are tax deferred under section 403(b) of the Federal Internal Revenue Code as amended.

(b) The voluntary salary reduction contribution shall be computed on the participant's actual salary earned after adjusting for the participant's mandatory pension contribution in accordance with 26 U.S.C. § 414(h)(2).

(c)-(e) (No change.)  

17:7-1.3 Salary reduction agreements; salary deductions; limitations

(a) Limitations concerning 26 U.S.C. §403(b) salary reduction agreements are:

1. The entry into a salary reduction agreement between an employee and the employing institution shall not be available to any participant during the period of time in which no employer contributions are made on the employee's behalf to any retirement or annuity contract.
   
   
2. If a participant earns less than 50 percent of full salary during a pay period, no salary reductions will be reported to the Division of Pensions and Benefits.
   
3. If a participant earns 50 percent or more of full salary during a pay period, the salary reduction will be calculated on the salary earned.

b) Limitations concerning 26 U.S.C. §414(h) salary deductions are:

1.-2. (No change.)

17:7-1.7 Records

(a) The records of the Alternate Benefit Program are public record, and may be inspected during regular business hours at the Division of Pensions and Benefits under supervision of a representative of the Alternate Benefit Program.  

(b) Medical records of all active and retired participants are confidential and, absent a release signed by the active or retired participant or a court order, shall not be released.

(c) Mailing addresses of all active and retired participants are confidential and, absent a release signed by the active or retired member or a court order, shall not be released.

(d) Designations of beneficiaries of all active and retired participants are considered confidential and, absent a release signed by the active or retired participant, a court order or the death of the active or retired participant, shall not be released.

(e) Original documents, if available, shall only be viewed by appointment at the Division of Pensions and Benefits.

17:7-1.8 Reporting of employee and employer contributions

(a) (No change.)

(b) A participant may have voluntary additional tax-deferred contributions withheld by entering into a salary reduction agreement with the employer. These voluntary additional contributions cannot exceed the employee's statutory exclusion allowance under 26 U.S.C. § 403(b) or the limitations of 26 U.S.C. § 415, and the regulations thereunder. Voluntary tax-deferred contributions should be computed on the participant's actual salary less mandatory pension contribution.

(c)-(f) (No change.)

17:7-1.11 Contributions; late payment

(a) Participating institutions, which shall include the State for locations on State centralized payroll, shall pay employer and employee contributions (deductions and reductions, except for 403(b) salary reductions (26 U.S.C. § 403(b)) to the investment provider underwriting retirement and annuity contracts within 30 days after the month in which the employee contributions are withheld, or within 15 days of receipt from the  investment provider of the statement of amount owed by the institution, whichever is later, but in no event later than 45 days after the month in which the employee contributions are withheld.

(b) All 403(b) (26 U.S.C. § 403(b)) amounts payable on behalf of an employee for a pay period, shall be transmitted to the employee's investment provider and credited not later than the fifth business day after the date on which the employee is paid for that pay period.

(c) (No change.)

(d) The daily rate for interest on the contributions shall be the annual rate divided by 365, rounded to the nearest one-hundredth percent. The interest payable for each participant shall be indicated on the report to the investment provider when the interest is paid.

(e) (No change.)

17:7-1.12 Additional investment products and default investment provider

(a) The Division of Pensions and Benefits may, in its sole discretion, authorize existing Alternate Benefit Program investment providers to add additional investment options to their existing product line for investment by participants. The availability of such new investment options, if any, shall be effective upon the Director's approval. A new investment option may be made available during a plan year if the Division of Pensions and Benefits must replace an investment option which has been eliminated for any reason.

(b) The Division shall notify the designated investment providers of their ability to add additional investment options, permitting the designated investment providers, upon the Director's approval, to prepare a structured proposal of the additional investment options.

(c) The investment provider has a duty to select and offer those investment funds suitable to the needs and goals of the Alternate Benefit Program.

(d) The Division shall designate a default investment provider to accept contributions from eligible participants of the Alternate Benefit Program who fail to select an investment provider.

17:7-1.13 Transfers, direct rollovers

(a) An investment provider shall permit transferability of an accumulated balance under the Alternate Benefit Program or any portion thereof to another investment provider within the Alternate Benefit Program, subject to any applicable Federal laws, and this chapter.

(b) An investment provider shall accept a transfer of a participant's account from other investment providers within the Alternate Benefit Program, subject to any applicable Federal laws and the terms of the Alternate Benefit Program. Transfers between the investment providers shall be treated in the same manner as other contribution payments.

(c) Funds transferred from participant's accounts to other investment providers shall be deposited in accordance with the regulations of the U.S. Securities and Exchange Commission. Transferred funds shall be accompanied by a statement identifying the money type, source of contribution, and tax status for deposit into the investment provider’s 26 U.S.C. §§401(a), 403(b) and non-qualified deferred annuity plan.

(d) Amounts distributed to a participant as a direct rollover from another qualified plan may not be transferred into the participant's Alternate Benefit Program retirement account.

17:7-1.14 Domestic relations orders

[(a)] The participant's investment provider, upon receipt of a certified copy of a domestic relations order as defined in 26 U.S.C. § 414(p), shall determine whether such order is a qualified domestic relations order, and shall notify the participant or retiree and each alternate payee of such determination. Payment of benefits to Alternate Payees cannot begin until the participants retire or withdraw their contributions.

17:7-2.1 Enrollment eligibility; general provisions

(a) (No change.)

(b) Any eligible person who has been enrolled in the Alternate Benefit Program for at least one year may continue to be enrolled in the program, notwithstanding promotion or transfer to a full time position within the institution not otherwise eligible for the program.   

(c) An Alternate Benefit Program participant shall be immediately vested if the participant owns an annuity contract that contains employee and employer contributions based upon higher education employment or is an active or vested member of a state-administered retirement system in New Jersey or the United States. The retirement contract must be in force and the member entitled to receive benefits at a future date. Employee contributions are remitted to the investment provider upon enrollment in the Alternate Benefit Program.

(d)-(e) (No change.) 

17:7-2.2 Retention of contributions; compulsory enrollment; incomplete enrollment application

(a) No employee or employer contributions shall be authorized by the Division of Pensions and Benefits for payment to any investment provider until completed enrollment applications have been filed.

(b)-(d) (No change.) 

(e) If the employee fails to designate an investment provider, the certifying officer shall be obligated to complete the appropriate application to enroll the employee with the investment provider selected as the default investment provider for the current plan year. In these situations, the employer shall be required to submit both the employee's and employer's contributions to the default investment provider designated for that plan year no later than 45 days after the commencement of payroll deductions.

17:7-2.3 Part-time faculty members

(a) Alternate Benefit Program participants who concurrently work with the same employer in a part-time position, which is covered by another State administered pension plan, shall be ineligible to make Alternate Benefit Program contributions from their concurrent part-time salary.

(b) Any eligible person who has been enrolled in the Alternate Benefit Program for at least one year who is promoted or transferred to a part-time position within the institution will not be eligible for continued participation in the Alternate Benefit Program on the basis of that employment.  Such person must be enrolled into the Public Employees Retirement System if, on the basis of that part-time employment, the person is eligible to participate in that retirement program.

17:7-3.1 Base or contractual salary

(a) (No change.)

(b) If the participant elects to have voluntary additional contributions (elective 26 U.S.C. § 403(b)) made by entering into a salary reduction agreement with the employer, the contribution percentage is applied against the participant's actual salary after taking into account deductions for mandatory contributions.

17:7-3.2 Delayed vested contribution

(a) Mandatory contributions during a participant's first year of employment, including earnings credited thereto, shall be held in delayed vested status with the designated investment provider specified by the participant.  The first year of employment is considered to be the commencement of the 13th month of employment after the participant has received credit in the Alternate Benefit Program for 12 months of service.

(b) A participant who is in delayed vested status shall be ineligible to engage in the following transactions:

1. (No change.)

2. Transfers of account accumulations between Alternate Benefit Program investment providers; and

3. Investments of mandatory contributions with more than one investment provider.

(c) The delayed-vested portion of a terminated participant's account attributable to employer contributions shall be forfeited at the time of termination. Such forfeitures shall be applied to the current or next succeeding employer contribution to the investment provider underwriting the terminated participant's contract. Repurchase account forfeitures, plus or minus any gains or losses from investment by the investment provider, should be reported to the Division of Pensions and Benefits in the Alternate Benefit Program Employer Contribution Report. The reimbursement of a subsequent Alternate Benefit Program Employer Contribution Report shall be reduced by the reported forfeiture amount.

(d) The participating institutions shall be required to notify the designated investment providers when a participant enters delayed vesting and has completed one year of service and is no longer in delayed vested status.

17:7-3.4 Termination; withdrawal of delayed vested contributions

(a) A participant may withdraw the participant's delayed vested contributions held by the investment provider if the participant terminates all employment subject to coverage by the Alternate Benefit Program. If a participant terminates employment while in delayed vested status and withdraws employee contributions, the participant is not considered to be retired and is eligible to participate in the Alternate Benefit Program at a later date.

(b) (No change.)

17:7-3.5 Leave of absence with pay

(a) The mandatory pension contribution for a participant granted a leave of absence with pay shall be calculated on the actual base salary paid, if the participant earns 50 percent or more of full contractual base salary during a pay period. On the monthly Alternate Benefit Program Employer Contribution Report, the full contractual base salary should be included in the Total Base Salary section, and the employer contribution shall be paid on this salary. If a participant earns less than 50 percent of full contractual base salary during a pay period, no deductions should be made, and the member's Alternate Benefit Program status shall be the same as that of a member on leave of absence without pay.

(b) Voluntary tax-deferred contributions (26 U.S.C. §403(b) contributions) for a participant granted a leave of absence with pay shall be calculated on the actual salary paid less the mandatory pension contribution.

(c) In order to give effect to the limitations of 26 U.S.C. § 415(c)(3), an employer may be required to limit a participant's voluntary salary reduction contribution into the participant's 26 U.S.C. §403(b) plan.

(d) When the employer, at the participant's request, approves an extension of the initial leave of absence, and the percentage of base salary to be paid is changed retroactive to the beginning of the initial leave effective date, (a), (b) and (c) above are applicable from the effective date of the initial leave of absence to the end date of the leave of absence, which must be in accordance with N.J.S.A. 18A:66-169h.

17:7-3.6 Military leave, withdrawal

No participant shall be entitled to withdraw amounts contributed by the employer for the period of a military leave of absence without pay unless the participant has resumed active employment and made contributions to an Alternate Benefit Program investment provider for the period of the military leave per N.J.A.C. 17:1-4.36.

17:7-3.8 Hardship withdrawals

(a) Any request for an early withdrawal due to hardship shall be submitted with evidence of the hardship on forms satisfactory to the investment provider(s) and consistent with applicable Federal income tax law. Hardship withdrawals are limited to a participant's 26 U.S.C. §403(b) voluntary contributions. Hardship withdrawals shall be approved only in the event the participant experiences an immediate and heavy financial need. The amount of such withdrawal shall be limited to the amount needed to satisfy the financial need; to the extent such need may not be satisfied from other resources that are reasonably available to the participant, including commercially available loans and loans available under the retirement or annuity contracts purchased under the program.

(b) The investment provider(s) shall determine whether the participant's request for hardship withdrawal satisfies the requirements of this section and any applicable provisions of the Federal Income Tax Code and Regulations. The investment provider(s) shall notify the institutions of those employees who received hardship distributions, so that the salary reduction agreements shall be discontinued. All employee voluntary salary contributions (to any contract or investment provider) shall be suspended for 12 consecutive months. When salary reduction resumes, the affected employee's 26 U.S.C. §402(g) limit shall be reduced by the amount of any elective deferral made in the year the hardship withdrawal was taken.

17:7-3.9 Awards of back pay

(a)-(b) (No change.)

(c) In no case shall the award of back payment be less than the value of the normal pension contributions due. If the amount of the award of back pay is mitigated so that the member does not receive an amount equal to or greater than the value of the normal pension contributions due, then the member is required to remit the normal pension contribution to the employer who shall then submit it to the appropriate investment provider.

(d)-(f) (No change.)

17:7-3.10 In-service withdrawals

Withdrawals from investment accounts funded by either employer or employee mandatory contributions are not permitted in any form prior to the member’s separation from employment with an eligible employer.

(b) Withdrawals from investment accounts funded by employee voluntary contributions pursuant to 26 U.S.C. §403(b) are permitted in any form under the prevailing requirements of 26 U.S.C. §403(b).

17:7-4.3 Death before payment to insurer

If a participant dies before the employee deductions have been paid to the investment provider, the deductions shall be paid in a single sum by the employer to the investment provider.

17:7-4.8 Election to receive cash distribution

An election to receive cash distribution, as set forth in N.J.S.A. 18A:66-175, will include an election to transfer, or rollover, funds upon separation from service to an investment provider or to investment products not offered as part of the Alternate Benefit Program.

TREASURY - GENERAL
DIVISION OF PENSIONS AND BENEFITS
POLICE AND FIREMEN'S RETIREMENT SYSTEM
RETIREMENT APPLICATIONS

Cite as 39 N.J.R. 237(b)

Adopted Amendment:  N.J.A.C. 17:4-6.1

Retirement Applications

Proposed: August 21, 2006 at 38 N.J.R. 3284(a)

Adopted: December 1, 2006 by the Police and Firemen's Retirement System Board of Trustees, Wendy Jamison, Secretary.

Filed: December 8, 2006 as R.2007 d.12, without change.

Authority: N.J.S.A. 43:16A-13(7).

Effective Date: January 16, 2007.

Expiration Date: March 10, 2011.

Summary of Public Comment and Agency Response:

The comment period for this proposal closed on October 20, 2006. Comment was received from Ms. B. Kero.

The timely submitted comment and response are summarized below:

COMMENT: Ms. Kero expressed concern as to whether there is a system in place to periodically check up on those receiving disability retirements to ensure that they continue to qualify to receive a disability retirement. N.J.A.C. 17:4-6.12

RESPONSE: Yes, there is such a system in place. N.J.A.C. 17:4-6.12, Disability retirant; annual medical examinations, provides that all disability retirants may be required to undergo a medical examination each year for at least five years or for good cause thereafter to ensure that those receiving disability retirements continue to qualify as disabled under the rules governing the Police and Firemen's Retirement System.

Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A. 43:16A-13(7) governs the subject of this rulemaking, and there is no Federal requirement or standard that affects the subject of this rulemaking.

Full text of the adoption follows:

17:4-6.1 Applications

(a)-(c) (No change.)

(d) In addition to the requirements in (a) through (c) above:

1. An application for a physical disability retirement must be supported by at least two medical reports, one by the member's personal or attending physician and the other in the form of either hospital records supporting the disability or a report from a second physician; and

2. An application for a mental health medical disability retirement must be supported by at least two medical reports, one by the member's personal or attending psychiatrist or psychologist and the other in the form of either hospital records supporting the disability or a report from a second psychiatrist or psychologist or from the member's personal or attending physician or licensed clinical social worker.

(e) (No change.)

TREASURY - GENERAL
DIVISION OF PENSIONS AND BENEFITS
STATE POLICE RETIREMENT SYSTEM
RETIREMENT APPLICATIONS

Cite as 39 N.J.R. 238(a)

Adopted Amendment:  N.J.A.C. 17:5-5.1

Retirement Applications

Proposed: August 21, 2006 at 38 N.J.R. 3285(a)

Adopted: December 1, 2006 by the State Police Retirement System Board of Trustees, Wendy Jamison, Secretary

Filed: December 8, 2006 as R.2007 d.13, without change.

Authority: N.J.S.A.53:5A-30(h).

Effective Date: January 16, 2007.

Expiration Date: June 6, 2011.

Summary of Public Comment and Agency Response:

The comment period for this proposal closed on October 20, 2006. Comment was received from Ms. B. Kero.

The timely submitted comment and response are summarized below:

COMMENT: Ms. Kero expressed concern as to whether there is a system in place to periodically check up on those receiving disability retirements to ensure that they continue to qualify to receive disability retirements.

RESPONSE: The statute governing the State Police Retirement System, unlike the other statutes governing the various State retirement systems, does not provide for periodic medical examinations for members receiving disability retirements. Accordingly, once a member is approved for a disability retirement, the member is not afforded the opportunity to return to employment.

Federal Standards Statement

A Federal standards analysis is not required because N.J.S.A.53:5A-30(h) governs the subject of this rulemaking, and there is no Federal requirement or standard that affects the subject of this rulemaking.

Full text of the adoption follows:

17:5-5.1 Applications

(a)-(c) (No change.)

(d) In addition to the requirements in (a) through (c) above:

1. An application for a physical disability retirement must be supported by at least two medical reports, one by the member's personal or attending physician and the other may be either hospital records supporting the disability or a report from a second physician; and

2. An application for a mental health medical disability retirement must be supported by at least two medical reports, one by the member's personal or attending psychiatrist or psychologist and the other in the form of either hospital records supporting the disability or a report from a second psychiatrist or psychologist or from the member's personal or attending physician or licensed clinical social worker.

Cite as 39 N.J.R. 237(a)

Adopted Amendment: N.J.A.C. 17:2-6.1

Retirement Applications

Proposed: July 17, 2006 at 38 N.J.R.2997(a).

Adopted: December 1, 2006 by the Public Employees' Retirement System Board of Trustees, Kathleen Coates, Secretary.

Filed: December 8, 2006 as R.2007 d.11, without change. N.J.S.A. 43:15A-17

Authority: N.J.S.A. 43:15A-17.

Effective Date: January 16, 2007.

Expiration Date: January 24, 2010.

Summary of Public Comment and Agency Response:

No comments were received.

Federal Standards Statement

A Federal Standards analysis is not required because N.J.S.A. 43:15A-17 governs the subject of this rulemaking, and there is no Federal requirement or standard that affects the subject of this rulemaking.

Full text of the adoption follows:

17:2-6.1 Applications

(a)-(d) (No change.)

(e) In addition to the foregoing requirements:

1. An application for a physical disability retirement must be supported by at least two medical reports, one by the member's personal or attending physician and the other may be either hospital records supporting the disability or a report from a second physician; and

2. An application for a mental health medical disability retirement must be supported by at least two medical reports, one by the member's personal or attending psychiatrist or psychologist and the other in the form of either hospital records supporting the disability or a report from a second psychiatrist or psychologist or from the member's personal or attending physician or licensed clinical social worker.

(f)-(g) (No change.)

PUBLIC NOTICES

TREASURY - GENERAL
DIVISION OF PENSIONS AND BENEFITS
PROPOSAL SECTION
STATE HEALTH BENEFITS COMMISSION

Notice of Extension of Comment Periods
State Health Benefits Program

Multiple Coverage as an Employee, Retired Employee or Dependent Prohibited; Refunds Rejected
Proposed Amendments: N.J.A.C. 17:9-3.5 and 5.6

Local Employer Payment of Dependent Charges
Proposed Amendment: N.J.A.C. 17:9-5.3

Take notice that the State Health Benefits Commission is extending the public comment periods on the two notices of proposal referenced above, published in the November 6, 2006 New Jersey Register at 38 N.J.R. 4655(a) and 4657(a), respectively. The public comment period is extended for January 5, 2007 to February 12, 2007.

Submit comments by February 12, 2007 to:

Susanne Culliton
Assistant Director
Division of Pensions and Benefits
PO Box 295
Trenton, NJ 08625

Last update: December 3, 2009