Authorized Agent Training 1 Agenda Retirement Insurance - PowerPoint PPT Presentation

SB 2047 – Reduction of Benefit Multiplier New Hires Effective January 1, 2020 • Reduces the retirement benefit multiplier for new employees • Plans Affected: • Main Defined Benefit Plan • Public Safety Plan • Plans NOT Affected: • Judges Plan • Highway Patrol Plan 29

Defined Benefit Hybrid (DB or Main) Plan Current Retirement Benefit Formula • Final Average Salary (FAS) • Years of Service (YOS) One month of service for each contribution • Benefit Multiplier 2.00% FAS x YOS x 2% = Single Life Monthly Benefit 30

DB Retirement Benefit Formula 2020 Tier - For new hires on or after January 1, 2020 • Final Average Salary (FAS) • Years of Service (YOS) One month of service for each contribution • Benefit Multiplier 1.75% FAS x YOS x 1.75% = Single Life Monthly Benefit 31

DB Retirement Benefit Formula Final Average Salary (FAS) Calculation Method What is FAS? A factor used to determine your monthly retirement benefit (pension) FAS x Years of Service x Multiplier = Monthly Retirement Benefit Currently (until December 31, 2019) The average of your highest 36 salaries during the last 180 months worked Upcoming (after January 1, 2020) The higher of • average of your highest 36 salaries calculated on December 31, 2019 32 • or the average of the three highest 12-month consecutive periods

Reason for change in the FAS calculation method Payroll Cycles Matter Weekly / Bi-weekly Seasonal • Months without earnings • Bi-weekly schedule has two are excluded months/year with three paychecks Salary fluctuation resulting from different pay schedules are smoothed with the upcoming FAS calculation method effective 1/1/2020 33

What’s the impact to new retirees? After December 31, 2019 Members in these NDPERS Retirement Plans: • Defined Benefit (Main) • Public Safety • Judges • Highway Patrol • Ensures greater consistency in benefits being paid to all retirees • Members retiring after December 31, 2019 are “grandfathered” FAS will not be lower than the FAS entitled to as of 12.31.2019 34

Impact to Membership Examples Likely Not Impacted Likely Impacted Members that retire or Members terminating or retiring after terminate employment prior December 31, 2019 but FAS will not be to December 31, 2019 as FAS lower than the FAS entitled to as of is not expected to change December 31, 2019 Members paid monthly or Members who turn in weekly semimonthly as FAS is not timesheets (paid on a weekly or bi- expected to change weekly basis) but FAS will not be lower than the FAS entitled to as of December 31, 2019 Temporary or seasonal members (even if paid monthly or semimonthly) as FAS calculation may be higher 35

Summary – FAS Change • Compares new FAS calculation to FAS calculated under old methodology as of December 31, 2019, whichever is higher • Limits the impact to members retiring in the short-term – “grandfathering” members • Prevents a decrease in the FAS and monthly accrued benefit • Member Self Service (MSS) will allow members to compare retiring now to delayed retirement date FAS – this fall 36

Service Credit and Vesting • You receive one month of service credit for each month NDPERS receives contributions on your behalf. • Vested means you are legally entitled to a monthly benefit from NDPERS. • You become vested the earlier of: • Achieving 36 months of service credit, or • Attaining 65 years of age while employed • This is an ANNUITY. . . You can receive a monthly retirement payment for the rest of your life. 37

Dual Membership ( Combine service credit for vesting and normal retirement) • NDPERS Defined Benefit Retirement Plans: • Defined Benefit Hybrid Plan (Main) • Public Safety Plan • Judges Plan • Highway Patrol Plan • Other Qualifying State-Sponsored Retirement Plans • Teachers Fund for Retirement (TFFR) • Teachers Insurance and Annuity Association (TIAA) (through North Dakota University System only) 38

DB Retirement (hired before Jan 1, 2016) Normal Retirement Early Retirement** Lifetime benefit Lifetime benefit • • Reduced by 6% for each year At the earlier of: or .005 for each month if: Attain Age 65 NOT Age 65 OR OR Achieve Rule of 85 HAVE NOT met Rule of 85 Member’s Age + Service Credit Example: 55 years + 30 years **Must be at least age 55 of service = 85 39

DB Retirement (hired on or after Jan 1, 2016) Normal Retirement Early Retirement** Lifetime benefit Lifetime benefit • • Reduced by 8% for each year At the earlier of: or .667 for each month if: Attain Age 65 NOT Age 65 OR OR Achieve Rule of 90 HAVE NOT met Rule of 90 (with minimum age of 60) Member’s Age + Service Credit **Must be at least age 60 Example: 60 years + 30 years = 90 40

Benefit Options ฀ Single Life ฀ Joint & Survivor 50% ฀ Joint & Survivor 100% ฀ Twenty Year Term Certain ฀ Ten Year Term Certain ฀ Partial Lump Sum Option ฀ Graduated Benefit Option 4 1

EXAMPLE: RETIREMENT BENEFIT Age at Retirement: Member (Female) : 59.9 years Spouse (Male) 67.5 years 42 Disclaimer: This example may not be interpreted as a personal calculation

Disability Benefits in the DB Plan • Disability Retirement • Vested after 6 months • Must separate from employment • Determined by Medical Consultant or Social Security Award • 25% of Final Average Salary (FAS) • $100 per month minimum • Eligibility will be recertified 43

DB Survivor Benefits • Assumption: Member is not receiving a retirement benefit • Lump Sum Payment • Applies to single and non-vested members • Lifetime Payments – Surviving Spouse Only • 50% of Normal Single Life or • 100% Joint & Survivor Payment • If deceased was age 65 or met “Rule” (at normal retirement) 44

Member Account Balance Options at Separation of Employment NOT Vested Vested Leave member account balance with Receive a lifetime annuity (retire as early as NDPERS age 55/60 (based upon hire date)  Withdraw later or attaining “Rule”, or age 65, whichever is  Return to service , accrued service and earlier). account balance are recognized  Member account balance continues to Interest no longer accrues when you receive accrue interest at 7.25% currently retirement benefit. effective Jan 1, 2018 Lump Sum Refund Lump Sum Refund  Federal tax withholding  Federal tax withholding  ND state tax withholding  ND state tax withholding  IRS Penalty for early withdrawal  IRS Penalty for early withdrawal Direct Rollover Direct Rollover  Taxable & non-taxable monies  Taxable & non-taxable monies  Avoid tax & early withdrawal penalties  Avoid tax & early withdrawal penalties Combination rollover/refund Combination rollover/refund 45

Can I Invest MORE in My DB Plan? YES! Purchasing service may: Vest you sooner 1. Increase your lifetime benefit 2. Increase your RHIC benefit 3. Get you to “Rule” sooner 46

Purchase of Service Credit ฀ Previous Employment: – Non-Covered ND Governmental Service – Out-of-State Governmental Service – Refunded NDPERS Service ฀ Federal Service ฀ Legislative Service ฀ Military Service (maximum of 48 months) ฀ Leave of Absence 4 ฀ Generic (maximum of 60 months) 7

Purchase Provisions • Cost of Purchase • Actuarial Calculation • Online (Member Self Service) • Request for Purchase SFN 53718 • Payment Methods • Direct Rollover/Transfer of Pre-Tax Dollars from other retirement plans • Payroll Deductions (pre or post-tax) • Periodic Payments 48

Sick Leave Conversion Final Average Salary (FAS) X 15.26% (Contribution Rate) X Number of Months (hours divided by 173.3) =$Cost If your employer pays out a portion of your sick leave, can you still convert your sick leave balance for service purchase? Yes! 49 Note: sick leave conversion can only occur when a member separates from service.

Deferred Compensation Plan 50

What is Deferred Compensation? FREE MONEY!! Voluntary supplemental retirement plan • Investing Pre-tax dollars to lower your taxable • income Taxed at the time of distribution • Invest with Plan Provider you select • You select how your money is invested • Increase, decrease, suspend contributions at any • time 51

Investing • NDPERS Companion Plan • Quick Enrollment (TIAA) • 9 eligible provider companies • Participate with multiple providers • Change providers or complete partial/full transfer of funds to another PERS 457 provider any time • You select how your money is invested 52

Enrollment • Enroll, suspend, or change contributions any time • Complete SFN 3803 • Online Member Self Service (MSS) • Quick Enrollment • Compete SFN 54362 or select NDPERS Companion Plan online (MSS) • Administered by TIAA • Automatic $25/monthly minimum or your own designated amount 53

Annual Deferral Limits • Minimum • $25 per month • Maximum • The lesser of: • 2019 Annual IRS Limit: $19,000/year or • 100% of Taxable Compensation • “Other 457 plans” • Employer is responsible for tracking annual limits 54

Catch-up Provisions (2 options)  50+ Catch-Up • Additional $6,000 (total of $25,000) • Complete SFN 3803  3-Year Catch-Up • Up to $38,000 yearly • 3 consecutive calendar years  prior to year of “normal” retirement • One time only – NDPERS approved • Complete SFN 51501 and 3803  Cannot be used at the same time 55

Deferred Lump Sum Contributions • Lump Sum Payments: • Unused annual leave • Unused sick leave • Back pay • Subject to FICA before deferral • Cannot exceed annual IRS limits • Severance pay or buyout distributions are not eligible to be deferred 56

Portability Enhancement Provision 57

What is PEP Must participate in an eligible deferred ฀ compensation plan Allows you to vest in the employer Defined ฀ Benefit Hybrid contributions Not a match but a redistribution of funds ฀ Faster growth of member account balance and ฀ increased “portability” 58

Contribution Allocation with PEP Years Your Investment of in Deferred Service 15.26% Comp of your gross earnings 0-12 1% of gross months pay (does not include overtime) or minimum of $25 13-24 2% months or minimum of $25 10% 11% 8% 9% 7% 7.12% 3.12% 4.12% 5.12% 6.12% 1.14% 25-36 3% Retiree Health months or Insurance Credit minimum (RHIC) Employee Employer of $25 Account Account 37 + 4% months or minimum NDPERS distributes into these accounts 59 of $25

How To Activate PEP ฀ If you are enrolled in an eligible deferred compensation plan, PEP is automatic ฀ If you are not at the maximum, consider increasing your contribution ฀ If you are not enrolled, contact a Deferred Comp provider representative to enroll ฀ Qualifying “Other 457 / 403B” Plan 60

Your Retirement Counselor Retirees are assigned to counselors by last name • A-K Mary Ann Welder • L-Z Marcy Aldinger • COMING SOON!  Daymon Mills 61

NDPERS Home Page 62

PERSLink Member Self Service Online Portal Mobile App  View/update benefit plans & personal profile  Retirement benefit estimates  Service purchase estimates 63

Member Self Service (MSS) Login 64

Benefit Estimates through MSS Step 1 Step 2 65

Step 3: Enter Retirement Date Enter Annual Percent Salary Increase (optional) 66

Step 4: Add Pending Service Purchases 67

Step 5: Results This example may not be interpreted as a personal calculation 68

Questions? 69

BREAK

Member Services Julie Nagel Daymon Mills Peggy Vaagen 71

Benefit Enrollment Specialists Darby Henke Geri Frohlich Kim Humann 72

Health Insurance Plan Sanford Health Plan 73

Eligibility: Permanent Employee • Works at least 20 hours per week for 20 or more weeks per year • Is at least 18 years of age • Holds a position that is regularly funded and not of limited duration • Cannot have dual contract if two spouses both work for state 74

Eligibility: Temporary Employee • Position is not regularly funded • Must be 18 years of age • Must meet ACA definition of “full-time” employee • work at least 30 hours per week or • 130 hours in a month • Refer to https://ndpers.nd.gov/employers/employer- resources/affordable-care-act-aca/ to assist with determining if coverage should be offered 75

Affordability: ACA Requirement • Coverage must be affordable for employees that meet ACA “full-time” employee definition • Cannot require employee to pay more than ACA threshold of household income towards single premium: • For current biennium (2019-2021): • $98.88/month employee share • Employer can choose to pay all or portion of employee share 76

Dependents ฀ Spouse ฀ Children ฀ Until the 1 st of the month following 26 th Birthday 77

Enrollment 31 day enrollment period for new hires ฀ Coverage effective the first of the month following the date of hire ฀ Enroll through MSS or application form ฀ Annual Enrollment Season ฀ Coverage effective January 1 ฀ Enroll through MSS or application form ฀ 2020 Plan Year – October 14-November 1 ฀ Temporary Employee Special Enrollment Season ฀ Coverage effective January 1 ฀ Must complete application form with employer verification in Part F ฀ 78

ACA Special Enrollment – Temporary Employees • Measurement Period to review employees to determine if any meet ACA full-time employee definition and need to be offered coverage • Special window following annual enrollment – notice provided to employers each year • OMB will provide a list of your employees to measure • Special enrollment window: • November 18 through December 6, 2019 • Coverage effective January 1, 2020 79

Special Enrollment Periods ฀ Within 31 days of: ฀ Loss of coverage ฀ Marriage ฀ Birth, adoption of child or legal guardianship ฀ Effective Date: 1 st of month following event except in case of birth ฀ Birth = first of month in which birth occurs 80

Active Health Insurance • Dakota Plan •Basic •Coverage for services received in North Dakota not provided by a PPO provider •Out-of-state services • Preferred Provider Organization (PPO) •Freedom of choice to use any provider in North Dakota • High Deductible Health Plan (HDHP) for permanent State Employees only. • Includes a Health Savings Account (HSA) 81

Health Savings Account (HSA) • What is a HSA? • HSA helps cover medical expenses until the annual deductible and out-of-pocket maximum are met. The employer will contribute to the HSA for each month an employee participates as follows: • $88.34* per month ER contribution for single • $213.76* per month ER contribution for family • What are the limits? • The IRS establishes annual limits of total contributions (both employee and employer paid) that can be contributed to an HSA per calendar year. For 2019, the limits are: • Single HDHP Coverage: $3,500 • Family HDHP Coverage: $7,000 • Age 55+Catchup: $1,000 • How often are contributions sent? • The employer contributions are sent to the HSA vendor on a delayed schedule. For example, the June coverage month contributions will be posted to your HSA account by the end of July. • The employee contributions are sent to the HSA vendor within 3 business days of the deduction being made from payroll. 82 • Are the employee contributions pre- or post-tax? • Pre-tax payroll deduction is permitted if the employer allows • May be made via SFN 60036 or via MSS • Employee can submit post-tax contributions directly to the HSA vendor

Employer Guide • Available on Website • General information on plan forms & their use 83

Forms •New Hire Kit •Health Insurance Application or Change SFN 60036 •Acknowledgement of or Decline Offer of Health Insurance Coverage SFN 60711 84

Forms ฀ Transfer Form: ฀ Notice of Transfer SFN 53706 ฀ Termination Form: ฀ Continuation of Group Insurance Coverage (COBRA) SFN 14120 85

Forms Qualifying Events: ฀ Health Insurance Application or Change SFN 60036 ฀ Marriage, Birth/Adoption, Loss of Coverage ฀ Supporting Documentation needed: ฀ Birth – if adding eligible grand-child, must provide ฀ birth certificate & Grandchild Eligibility Verification form Adoption – copy of adoption/placement papers ฀ Legal guardianship – copy of papers ฀ Return from USERRA military leave – copy of ฀ DD214 needed. Effective date of coverage is first of month in which discharge occurred. Creditable Coverage from previous insurer to prove ฀ loss of coverage. 86

Employer Based Wellness Program • Commitment Agreement signed by agency head • Wellness Coordinator appointed • Wellness Coordinator attends or reviews summer coordinator workshop • Distribute communication materials to agency employees on a monthly basis and promote the NDPERS Tobacco Cessation Program • Develop & submit Wellness Program (Wellness Discount Application) • Implement Wellness Program during plan year • July 1 through June 30 87

Employer Based Wellness Program • Total of 5 points needed • Communication materials and promotion of NDPERS Tobacco Cessation program & Wellness workshop attendance = 1 point (required) • One Day Program = 1 point • Multi-Day Program = 2 points • Comprehensive Wellness Plan = 4 points 88

Life Insurance Plan Voya Financial 89

Eligibility • Permanent Employee • At least 18 years of age • Work at least 20 hours a week • 20 or more weeks a year • Position is regularly funded & not of limited duration • Spouse • Children • Until the 1 st of the month following 26 th birthday 90

Eligibility: Part-time/Temporary Employee • Position is not regularly funded • Individual must be working at least 20 hours a week for at least 20 weeks each year • Must be 18 years of age • Temporary employees must pay the full premium (no employer payment) 91

Enrollment • Within 31 days after hire date.  No Evidence of Insurability required up to $200,000 guarantee issue  No Evidence of Insurability for the 1 st $50,000 for spouse • Annual Enrollment - subject to approval  Evidence of Insurability required for all levels of coverage greater than an increase in Employee Supplemental of $25,000 up to $200,000 guarantee issue OR for dependent coverage requests  Transfers from one covered employer to another covered employer 92  Not eligible to change coverage levels

Levels of Coverage • Basic = $7,000 (coverage paid by employer) • Employee Supplemental * • Up to $400,000 total • New hire - EOI required for amount above $200,000 • Basic Dependent * • $2,000, $5,000, $7,000 or $10,000 • Spouse Supplemental * • Up to 50% of Employee Supplemental amount • New Hire – EOI required for amount above $50,000 *Premium is based on age and level of coverage. 93

Employer Guide • Available on Website • General information on plan forms & their use 94

Forms •New Hire Kit •Life Insurance Enrollment/Change SFN 53803 •Life Insurance Designation of Beneficiary SFN 53855 •Evidence of Insurability 95

Forms ฀ Notice of Transfer SFN 53706 ฀ Terminating Employees: – Receive a packet from Voya with Portability & Conversion options 96

Dental Insurance Plan Delta Dental 97

Eligibility • Permanent State Employee • At least 18 years of age • Work at least 20 hours a week • 20 or more weeks a year • Position is regularly funded & not of limited duration • Spouse • Children • Until the 1 st of the month following 26 th birthday 98

Enrollment • 31 days from hire date • During Annual Enrollment period for the next year • Loss of coverage in an employer sponsored dental plan • Marriage, Birth, Adoption or Legal Guardianship 99

Premium Information The following premiums are in effect through December 31, 2020: Monthly Premium Employee only $ 38.64 Empl. & spouse $ 74.58 Empl. & child(ren) $ 86.58 Family (employee $123.30 spouse, children) 100