Bill Text: MI HB5954 | 2009-2010 | 95th Legislature | Introduced

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Bill Title: Retirement; state employees; vesting cap for defined benefits plan; modify, establish retirement on or before October 1, 2010, and provide for employment after retirement. Amends secs. 20, 20d, 55, 65, 67a, 68 & 68c of 1943 PA 240 (MCL 38.20 et seq.) & adds secs. 19j, 20i, 35 & 68d.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2010-03-16 - Printed Bill Filed 03/12/2010 [HB5954 Detail]

Download: Michigan-2009-HB5954-Introduced.html

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HOUSE BILL No. 5954

 

March 11, 2010, Introduced by Rep. Moss and referred to the Committee on Oversight and Investigations.

 

     A bill to amend 1943 PA 240, entitled

 

"State employees' retirement act,"

 

by amending sections 20, 20d, 55, 65, 67a, 68, and 68c (MCL 38.20,

 

38.20d, 38.55, 38.65, 38.67a, 38.68, and 38.68c), sections 20 and

 

20d as amended by 2002 PA 93, section 55 as amended by 2004 PA 33,

 

sections 65 and 68 as added by 1996 PA 487, section 67a as amended

 

by 2004 PA 109, and section 68c as added by 2007 PA 95, and by

 

adding sections 19j, 20i, 35, and 68d.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 19j. (1) Notwithstanding section 19, a member may retire

 

and receive a retirement allowance computed under this section if

 

the member meets all of the following requirements:

 

     (a) On the last day of the month preceding the effective date

 

of his or her retirement as stated in subdivision (g), the member's

 

age and length of credited service meets the requirements in

 

section 19 for a retirement allowance that is not subject to

 

reduction pursuant to section 19(2).

 

     (b) The member occupies a position in the classified state

 

civil service, has classified civil service status, or is an

 

individual not described in subsection (2)(b).

 

     (c) The member is not eligible for a supplemental early

 

retirement under section 46 as a covered employee defined in

 

section 45, or if the member is eligible for a supplemental early

 

retirement under section 46 as a covered employee defined in

 

section 45, the member meets the requirements of subsection (6).

 

     (d) The member is not a conservation officer as described in

 

section 48, or if the member is a conservation officer as described

 

in section 48, the member meets the requirements of subsection (6).

 

     (e) The member occupies a position subject to the same state

 

health plan preferred provider organization for employees first

 

hired on or after April 1, 2010.

 

     (f) The member was employed by this state or the legislature

 

for the 6-month period ending on April 15, 2010. A member who is on

 

layoff status from state employment is considered to have met the

 

employment requirement of this subdivision.

 

     (g) The member executes and files a written application with

 

the retirement board, on or after April 15, 2010, but not later

 

than May 15, 2010, stating a date on or after July 1, 2010, but not

 

later than October 1, 2010, on which he or she desires to retire. A

 

member may withdraw a written application on or before May 31,

 

2010. A written application submitted by a member and not withdrawn

 

on or before May 31, 2010 is irrevocable.

 

     (2) Notwithstanding section 19, a member may retire and

 

receive a retirement allowance computed under this section if the

 

member meets all of the following requirements:

 

     (a) On the last day of the month preceding the effective date

 

of his or her retirement, the member's age and length of credited

 

service meets the requirements in section 19 for a retirement

 

allowance that is not subject to reduction pursuant to section

 

19(2).

 

     (b) The member is an employee of the legislative branch of

 

state government without classified civil service status, is an

 

employee of the judicial branch of state government, or is an

 

unclassified state employee not within the classified state civil

 

service.

 

     (c) The member is not eligible for a supplemental early

 

retirement under section 46 as a covered employee defined in

 

section 45, or if the member is eligible for a supplemental early

 

retirement under section 46 as a covered employee defined in

 

section 45, the member meets the requirements of subsection (6).

 

     (d) The member is not a conservation officer as described in

 

section 48, or if the member is a conservation officer as described

 

in section 48, the member meets the requirements of subsection (6).

 

     (e) The member was employed by this state for the 6-month

 

period ending on April 15, 2010. A member who is on layoff status

 

from state employment is considered to have met the employment

 

requirement of this subdivision.

 

     (f) The member executes and files a written application with

 

the retirement board, on or after April 15, 2010, but not later

 

than May 15, 2010, stating a date on or after July 1, 2010, but not

 

later than October 1, 2010, on which he or she desires to retire. A

 

member may withdraw a written application on or before May 31,

 

2010. A written application submitted by a member and not withdrawn

 

on or before May 31, 2010 is irrevocable.

 

     (3) Notwithstanding any other provision of this act, a member

 

electing to retire under this section agrees that any amount that

 

he or she would otherwise be entitled to be received in a lump sum

 

at retirement on account of accumulated annual leave, sick leave,

 

and other deferred leave hours shall be paid in 60 consecutive

 

equal monthly installments beginning on or after October 1, 2010.

 

Payments received under this subsection may not be used to purchase

 

service credit under this act. These payments for accumulated

 

annual leave, sick leave, and other deferred leave hours are to be

 

paid from funds appropriated to the appointing authority and not

 

from funds of the retirement system. These payments shall be

 

considered taxable income under the income tax act of 1967, 1967 PA

 

281, MCL 206.1 to 206.532. This subsection does not apply to banked

 

leave time.

 

     (4) The director of a principal department of the executive

 

branch of state government may request that the effective date of

 

retirement under subsection (1) or (2) of a member employed by that

 

department be extended to a date not later than April 1, 2011. To

 

make a request under this subsection, the director shall submit a

 

written request and the written concurrence of the member to the

 

director of the office of the state employer and the state budget

 

director on or before June 15, 2010. Upon receipt of the written

 

request and concurrence, the director of the office of the state

 

employer and the state budget director may extend the effective

 

date of retirement of a member otherwise eligible to retire under

 

subsection (1) or (2) to a date not later than April 1, 2011. Upon

 

written approval of the senate majority leader for a member who is

 

an employee of the senate, the speaker of the house of

 

representatives for a member who is an employee of the house of

 

representatives, the senate majority leader and the speaker of the

 

house of representatives for a member who is an employee of the

 

office of the auditor general, director or chair of the legislative

 

retirement system for a member who is an employee of the

 

legislative retirement system, or the chair and alternate chair of

 

the legislative council for a member who is an employee of an

 

agency under the jurisdiction of the legislative council, and upon

 

written concurrence of the member, the effective date of retirement

 

for that member under subsection (2) may be extended to a date not

 

later than April 1, 2011. Upon written approval of the chief

 

justice for a member who is an employee of the judicial branch,

 

including, but not limited to, members described in section 44a,

 

and upon written concurrence of the member, the effective date of

 

retirement for that member under subsection (2) may be extended to

 

a date not later than April 1, 2011. The individual or individuals

 

who approve the extension of an effective date of retirement for a

 

member who is an employee of the legislature, supreme court, or

 

court of appeals shall submit written notification to the office of

 

retirement services of all extensions approved on or before June

 

15, 2010.

 

     (5) Upon his or her retirement as provided in this section, a

 

member who did not make an election under section 50 to terminate

 

membership in Tier 1 and become a qualified participant in Tier 2

 

shall receive a retirement allowance equal to the member's number

 

of years and fraction of a year of credited service multiplied by

 

1.6% of his or her final average compensation. Except for the

 

calculation provided in this subsection, the member's retirement

 

allowance is subject to section 20.

 

     (6) A member who is a conservation officer as described in

 

section 48 or a member who is eligible for a supplemental early

 

retirement under section 46 as a covered employee defined in

 

section 45 may make the election and be eligible for a retirement

 

allowance under this section if the member meets the eligibility

 

requirements of this section. A member who meets the eligibility

 

requirements and makes an election under this section shall receive

 

a retirement allowance calculated under this section and shall not

 

be eligible for any supplemental benefit that he or she may have

 

been eligible for had he or she retired under sections 45 to 48.

 

     (7) Any additional costs to the retirement system as a result

 

of the retirement allowance calculations under subsection (5) shall

 

be amortized over a 5-year period.

 

     Sec. 20. (1) Upon Except as otherwise provided in section 20l,

 

upon his or her retirement, as provided for in section 19, 19a,

 

19b, 19c, or 19d, a member shall receive a retirement allowance

 

equal to the member's number of years and fraction of a year of

 

credited service multiplied by 1-1/2% of his or her final average

 

compensation. The member's retirement allowance is subject to

 

subsection (3). Upon his or her retirement, the member may elect an

 

option provided for in section 31(1).

 

     (2) Pursuant to rules promulgated by the retirement board, a

 

member who retires before becoming 65 years of age may elect to

 

have his or her regular retirement allowance equated on an

 

actuarial basis to provide an increased retirement allowance

 

payable up to his or her attainment of 65 years of age and a

 

reduced retirement allowance payable after his or her attainment of

 

65 years of age. His or her increased retirement allowance payable

 

up to age 65 shall approximately equal the sum of his or her

 

reduced retirement allowance payable after age 65 and his or her

 

estimated social security primary insurance amount. In addition,

 

upon retirement the member may elect an option provided for in

 

section 31(1).

 

     (3) If a retirant dies before receiving payment of his or her

 

retirement allowance in an aggregate amount equal to the retirant's

 

accumulated contributions credited to the retirant in the

 

employees' savings fund at the time of his or her retirement, the

 

difference between his or her accumulated contributions and the

 

amount of retirement allowance received by him or her shall be paid

 

to the person or persons that he or she nominated by written

 

designation executed and filed with the retirement board. If the

 

person or persons do not survive the retirant, then the difference,

 

if any, shall be paid to the retirant's legal representative or

 

estate. Benefits shall not be paid under this subsection on account

 

of the death of the retirant if he or she elected an option

 

provided for in section 31(1).

 

     (4) If a member has 10 or more years of credited service, or

 

has 5 or more years of credited service as an elected officer or in

 

a position in the executive branch or the legislative branch

 

excepted or exempt from the classified state civil service as

 

provided in section 5 of article XI of the state constitution of

 

1963, and is separated from the service of the state for a reason

 

other than retirement or death, he or she shall remain a member

 

during the period of absence from the state service for the

 

exclusive purpose of receiving a retirement allowance provided for

 

in this section. If a former employee of the state accident fund

 

who had 5 or more years of service as an employee of the state

 

accident fund returns to employment with the state before receiving

 

a retirement allowance under this act, the employee shall be

 

required to accumulate 10 or more years of credited service before

 

receiving a retirement allowance under this act. If a former

 

employee of the Michigan biologic products institute who is

 

eligible to and has elected to purchase additional credited service

 

pursuant to section 17l(2) returns to employment with the state

 

before receiving a retirement allowance under this act, the

 

employee shall be required to accumulate 10 or more years of

 

credited service, without regard to the additional credited service

 

purchased pursuant to section 17l(2) but including any credited

 

service authorized under section 16, before receiving a retirement

 

allowance under this act. If the member withdraws all or part of

 

his or her accumulated contributions, he or she ceases to be a

 

member. Upon becoming 60 years of age or older, the member may

 

retire upon his or her written application to the retirement board

 

as provided in section 19(1). If a member elects an option as

 

provided under section 31(4), but dies before the effective date of

 

his or her retirement, the option elected by the member shall be

 

carried out, and the beneficiary of the member is entitled to all

 

advantages due under that option.

 

     (5) A person who is a member after January 1, 1981, who has at

 

least 5 years of credited service, and whose employment with the

 

department formerly known as the department of mental health is

 

terminated by reason of reduction in force related to

 

deinstitutionalization that may or may not result in facility

 

closure, shall remain a member during the period of absence from

 

the state service for the exclusive purpose of receiving a service

 

retirement allowance as provided in this subsection. As used in

 

this subsection, "deinstitutionalization" means planned reduction

 

of state center or hospital beds through placement of individuals

 

from the hospital or facility, or through limiting admissions to

 

centers and hospitals, or both. If a member withdraws all or part

 

of the member's accumulated contributions, the member ceases to be

 

a member. Upon becoming 60 years of age or older, the member may

 

retire upon written application to the retirement board. The

 

application shall specify a date on which the member desires to

 

retire. Upon retirement, the member shall receive a retirement

 

allowance equal to the number of years and fraction of a year of

 

credited state service multiplied by 1-1/2% of the member's final

 

average compensation. Upon retirement, the member may elect an

 

option provided in section 31(1). If the member elects an option

 

provided for in section 31(4), but dies before the effective date

 

of retirement, the option elected by the member shall be carried

 

out, and a beneficiary of the member is entitled to all advantages

 

due under the option.

 

     (6) A retirant or the beneficiary of a retirant who retired

 

before July 1, 1974 shall have his or her retirement allowance

 

recalculated based on the retirant's number of years and fraction

 

of a year of credited service multiplied by 1.5% of his or her

 

final average compensation. The retirant or beneficiary is eligible

 

to receive the recalculated retirement allowance beginning October

 

1, 1987, but is not eligible to receive the adjusted amount

 

attributable to any month beginning before October 1, 1987. The

 

recalculated retirement allowance provided by this subsection shall

 

be paid by January 1, 1988 and shall be the basis on which future

 

adjustments to the allowance, including the supplement provided by

 

section 20h, are calculated. The retirement allowance of a retirant

 

who dies before January 1, 1988, and who did not nominate a

 

retirement allowance beneficiary pursuant to section 31, shall not

 

be recalculated pursuant to this subsection.

 

     (7) Each retirement allowance payable under this act shall

 

date from the first of the month following the month in which the

 

applicant satisfies the age and service or other requirements for

 

receiving the retirement allowance and terminates state service. A

 

full month's retirement allowance is payable for the month in which

 

a retirement allowance ceases.

 

     (8) An employee of the state accident fund who has 5 or more

 

but less than 10 years of credited service as of the effective date

 

of the transfer authorized by section 701a of the worker's

 

disability compensation act of 1969, 1969 PA 317, MCL 418.701a, and

 

who is permitted to receive a retirement allowance under subsection

 

(4) is eligible for health care benefits under section 20d on the

 

date of his or her retirement to the same extent as a member with

 

10 years of credited service who vested on the same date.

 

     (9) An employee of the Michigan biologic products institute

 

who has 5 or more but less than 10 years of credited service as of

 

the effective date of the conveyance authorized by the Michigan

 

biologic products institute transfer act and who is permitted to

 

receive a retirement allowance under subsection (4) is eligible for

 

health care benefits under section 20d on the date of his or her

 

retirement to the same extent as a member with 10 years of credited

 

service who vested on the same date.

 

     Sec. 20d. (1) On and after July 1, 1974, hospitalization and

 

medical coverage insurance premium payable by any retirant or his

 

or her beneficiary and his or her dependents under any group health

 

plan authorized by the Michigan civil service commission and the

 

department of technology, management, and budget shall be paid by

 

the retirement board from the health insurance reserve fund created

 

in section 11. The amount payable shall be in the same proportion

 

of premium payable by the state of Michigan for the classified

 

employees occupying positions in the state civil service who

 

commenced employment with the state before April 1, 2010. The

 

hospitalization and medical insurance premium payable shall be paid

 

from appropriations made for this purpose to the health insurance

 

reserve fund sufficient to cover the premium payment needed to be

 

made.

 

     (2) Effective January 1, 1988, 90% of the premium payable by a

 

retirant or the retirant's beneficiary and his or her dependents

 

for dental coverage or vision coverage, or both, under any group

 

plan authorized by the Michigan civil service commission and the

 

department of management and budget shall be paid by the retirement

 

board from the health insurance reserve fund created in section 11.

 

The dental coverage and vision coverage insurance premium payable

 

by any retirant who retired on or before October 1, 2010 or whose

 

effective date of retirement has been extended under section

 

19j(4), or his or her beneficiary and his or her dependents under

 

any group health plan authorized by the civil service commission

 

and the department of technology, management, and budget, shall be

 

paid by the retirement board from the health insurance reserve fund

 

created in section 11. The amount payable shall be in the same

 

proportion of premium payable by this state for the classified

 

employees occupying positions in the state civil service, who

 

commenced state employment before April 1, 2010. The dental or

 

vision insurance premium payable shall be paid from appropriations

 

made for this purpose to the health insurance reserve fund

 

sufficient to cover the premium payment needed to be made.

 

     (3) Any retirant or his or her beneficiary and his or her

 

dependents excluded from state subsidized insurance premiums may

 

participate in the dental coverage or vision coverage provided by

 

this section in the manner prescribed by the retirement system at

 

his or her own cost.

 

     (4) (3) The department of technology, management, and budget

 

shall calculate for each fiscal year any cost savings that have

 

accrued to this state as a result of the implementation of 1996 PA

 

487 over the costs that would have been incurred by this state to

 

fund premiums payable pursuant to section 68 had 1996 PA 487 not

 

been implemented. The total amount of the cost savings, if any,

 

shall be allocated to the health advance funding subaccount created

 

under section 11(9).

 

     (5) (4) On and after March 31, 1997, the retirement system

 

shall also pay health insurance premiums described in this section

 

in the manner prescribed in section 68.

 

     (6) (5) For purposes of this section, "retirant" includes a

 

person who retires under section 306 or 410 of the Michigan

 

military act, 1967 PA 150, MCL 32.706 and 32.810.

 

     Sec. 20i. (1) A member who first reaches 30 years of earned

 

service credit on or after October 1, 2010 shall have no more than

 

30 years of earned service credit included in the calculation of a

 

retirement allowance upon retirement.

 

     (2) A member who has more than 30 years of earned service

 

credit as of October 1, 2010 shall have no more than the years of

 

earned service credit accrued as of October 1, 2010 included in the

 

calculation of a retirement allowance upon retirement.

 

     (3) Beginning on October 1, 2010, any member described in

 

subsection (1) or (2) shall cease accruing earned service credit in

 

Tier 1 for purposes of calculating a retirement allowance and shall

 

become a qualified participant in Tier 2 under section 55. The

 

retirement system shall determine the method and time frame for the

 

transition of participation between Tier 1 and Tier 2.

 

     (4) This section does not apply to a member whose effective

 

date of retirement has been extended under section 19j(4).

 

     (5) For purposes of this section, "earned service credit" does

 

not include any service credit that is purchased under this act.

 

     Sec. 35. (1) Beginning October 1, 2010 and ending on the date

 

the Tier 1 member accrues 30 years of earned service credit, each

 

Tier 1 member shall contribute an amount equal to 3% of his or her

 

compensation to the employees' savings fund.

 

     (2) The retirement system shall determine a method of

 

deducting the contributions provided for in this section from the

 

compensation of each member for each payroll and each payroll

 

period.

 

     (3) This state shall pick up the member contributions required

 

by subsection (1) for all compensation earned after October 1,

 

2010. Contributions picked up shall be treated as employer

 

contributions in determining tax treatment under the internal

 

revenue code. This state shall pay these member contributions from

 

the same source of funds that is used in paying compensation to the

 

member. This state may pick up these contributions by a reduction

 

in the cash salary of the member.

 

     (4) This section does not apply to a member whose effective

 

date of retirement has been extended under section 19j(4).

 

     Sec. 55. (1) "Plan document" means the document that contains

 

the provisions and procedures of Tier 2 in conformity with this act

 

and the internal revenue code.

 

     (2) "Qualified participant" means an individual who is a

 

participant of Tier 2 and who meets 1 of the following

 

requirements:

 

     (a) An individual who is first employed and entered upon the

 

payroll of his or her employer on or after March 31, 1997, and who

 

before March 31, 1997 would have been eligible to be a member of

 

Tier 1.

 

     (b) An individual who elects to terminate membership in Tier 1

 

and who elects to participate in Tier 2 in the manner prescribed in

 

section 50.

 

     (c) An individual who has reached the maximum amount of years

 

of earned service credit for purposes of calculation of a

 

retirement allowance pursuant to section 20i. Notwithstanding any

 

other provision of this act, an individual described in this

 

subsection shall not be treated as a qualified participant for

 

purposes of sections 67a and 68.

 

     (3) "Refund beneficiary" means an individual nominated by a

 

qualified participant or a former qualified participant under

 

section 66 to receive a distribution of the participant's

 

accumulated balance in the manner prescribed in section 67.

 

     (4) "State treasurer" means the treasurer of this state.

 

     (5) Except as otherwise provided in this subsection, "year of

 

service" means each period during which a qualified participant is

 

employed by the employer and is credited with 2,080 hours of

 

service. The Tier 2 plan administrator and the plan document may

 

provide for a lesser number of annual hours and a maximum number of

 

hours per pay period for any classification of employees, provided

 

that no participant shall receive credit for more than 1 year of

 

service for any 12-month period of employment. Beginning January 1,

 

2003, full service credit shall also be given to a participant for

 

furlough hours, for required 1-day layoffs, for required and

 

designated temporary layoffs, for a year in which a participant

 

temporarily leaves employment to enter active military duty and

 

then dies during that active military duty, and for participation

 

in the banked leave time program. In the event a terminated

 

participant is reemployed, such individual shall retain credit for

 

all full and partial years of service completed prior to such

 

reemployment, for purposes of determining his or her vesting

 

percentage in any employer contributions made pursuant to section

 

63(2) and (3) after his or her reemployment.

 

     Sec. 65. A qualified participant who was a member, deferred

 

member, or former nonvested member of Tier 1 who makes an election

 

to participate in Tier 2 pursuant to section 50, or was a member

 

who has reached the maximum amount of years of earned service

 

credit for purposes of calculation of a retirement allowance

 

pursuant to section 20i, shall be credited with the years of

 

service accrued under Tier 1 on the effective date of participation

 

in Tier 2 for the purpose of meeting the vesting requirements for

 

benefits under section 64.

 

     Sec. 67a. (1) Except as otherwise provided in section 33, a

 

qualified participant who becomes totally incapacitated for duty

 

because of a personal injury or disease shall be retired if all of

 

the following apply:

 

     (a) Within 1 year after the qualified participant becomes

 

totally incapacitated or at a later date if the later date is

 

approved by the retirement board, the qualified participant, the

 

qualified participant's personal representative or guardian, his or

 

her department head, or the state personnel director files an

 

application on behalf of the member with the retirement board.

 

     (b) The retirement board finds that the qualified

 

participant's personal injury or disease is the natural and

 

proximate result of the qualified participant's performance of

 

duty.

 

     (c) A medical advisor conducts a medical examination of the

 

qualified participant and certifies in writing that the qualified

 

participant is mentally or physically totally incapacitated for

 

further performance of duty, that the total incapacitation is

 

probably permanent, and that the qualified participant should be

 

retired.

 

     (d) The retirement board concurs in the recommendation of the

 

medical advisor.

 

     (2) If the retirement board grants the application of the

 

qualified participant under subsection (1), the qualified

 

participant shall be granted a supplemental benefit equivalent to

 

the amount provided in section 23 as if the former qualified

 

participant had retired under section 21, which supplemental

 

benefit shall be offset by the value of the distribution of his or

 

her accumulated balance as determined by the retirement system upon

 

becoming a former qualified participant pursuant to section 67.

 

     (3) If a qualified participant dies as a result of a personal

 

injury or disease arising out of and in the course of his or her

 

employment with this state, or if a former qualified participant

 

who retired under subsection (1) who dies before becoming age 60

 

and within 3 years after the former qualified participant's

 

disability retirement from the same causes from which he or she

 

separated, and such death or illness or injuries resulting in death

 

are found by the retirement board to have been the sole and

 

exclusive result of employment with this state, a supplemental

 

benefit shall be granted equivalent to the amount provided for in

 

section 27 had the former qualified participant been considered

 

retired under section 27, which supplemental benefit shall be

 

offset by the value of the distribution of his or her accumulated

 

balance upon becoming a former qualified participant pursuant to

 

section 67.

 

     (4) A qualified participant, former qualified participant, or

 

beneficiary of a deceased participant, which participant is

 

eligible for a duty disability retirement allowance pursuant to

 

subsection (1), (2), or (3), is eligible for health insurance

 

coverage under section 20d in all respects and under the same terms

 

as would be a retirant and his or her beneficiaries under Tier 1.

 

     (5) Except as otherwise provided in section 33, a qualified

 

participant who becomes totally incapacitated for duty because of a

 

personal injury or disease that is not the natural and proximate

 

result of the qualified participant's performance of duty may be

 

retired if all of the following apply:

 

     (a) Within 1 year after the qualified participant becomes

 

totally incapacitated or at a later date if the later date is

 

approved by the retirement board, the qualified participant, the

 

qualified participant's personal representative or guardian, the

 

qualified participant's department head, or the state personnel

 

director files an application on behalf of the qualified

 

participant with the retirement board.

 

     (b) A medical advisor conducts a medical examination of the

 

qualified participant and certifies in writing that the qualified

 

participant is mentally or physically totally incapacitated for

 

further performance of duty, that the incapacitation is likely to

 

be permanent, and that the qualified participant should be retired.

 

     (c) The qualified participant has been a state employee for at

 

least 10 years.

 

     (6) If the retirement board grants the application of the

 

qualified participant under subsection (5), the qualified

 

participant shall be granted a supplemental benefit equivalent to

 

the amount provided for in section 25 as if the qualified

 

participant had retired under section 24. The supplemental benefit

 

shall be offset by the value of the distribution of his or her

 

accumulated balance as determined by the retirement system upon

 

becoming a former qualified participant pursuant to section 67.

 

     (7) If a qualified participant who has been a state employee

 

for the number of years necessary to vest under Tier 1 dies as a

 

result of causes occurring not in the performance of duty to this

 

state, a supplemental benefit shall be granted equivalent to the

 

amount provided for in section 25 had the former qualified

 

participant been considered retired under section 24, which

 

supplemental benefit shall be offset by the value of the

 

distribution of his or her accumulated balance as determined by the

 

retirement system upon becoming a former qualified participant

 

pursuant to section 67.

 

     (8) A qualified participant, former qualified participant, or

 

beneficiary of a deceased participant, which participant is

 

eligible for a disability retirement allowance pursuant to

 

subsection (4) or (5), is eligible for health insurance coverage

 

under section 20d in all respects and under the same terms as would

 

be a retirant and his or her beneficiaries under Tier 1.

 

     (9) This section does not apply to an individual who has

 

reached the maximum amount of earned service for purposes of

 

calculation of a retirement allowance pursuant to section 20i.

 

     Sec. 68. (1) A former qualified participant may elect health

 

insurance benefits in the manner prescribed in this section if he

 

or she meets both of the following requirements:

 

     (a) The former qualified participant is vested in health

 

benefits under section 64(2).

 

     (b) The former qualified participant meets or exceeds the

 

benefit commencement age employed in the actuarial present value

 

calculation under section 51 and the service requirements that

 

would have applied to that former participant under Tier 1 for

 

receiving health insurance coverage under section 20d, if that

 

former participant was a member of Tier 1.

 

     (2) A former qualified participant who is eligible to elect

 

health insurance coverage under subsection (1) may elect health

 

insurance coverage in a health benefit plan or plans as authorized

 

by section 20d. , or in another plan as provided in subsection (6).

 

A former qualified participant who is eligible to elect health

 

insurance coverage under subsection (1) may also elect health

 

insurance coverage for his or her health benefit dependents, if

 

any. A surviving health benefit dependent of a deceased former

 

qualified participant who is eligible to elect health insurance

 

coverage under subsection (1) may elect health insurance coverage

 

in the manner prescribed in this section.

 

     (3) Except as otherwise provided in subsection (6), an An

 

individual who elects health insurance coverage under this section

 

shall become a member of a health insurance coverage group

 

authorized pursuant to section 20d.

 

     (4) For a former qualified participant who is eligible to

 

elect health insurance coverage under subsection (1) and who is

 

vested in those benefits under section 64(2)(a), and for his or her

 

health benefit dependents, this state shall pay a portion of the

 

health insurance premium as calculated under this subsection on a

 

cash disbursement method. An individual described in this

 

subsection who elects health insurance coverage under this section

 

shall pay to the retirement system the remaining portion of the

 

health insurance coverage premium not paid by this state under this

 

subsection. The For a former qualified participant who commenced

 

state employment before April 1, 2010 and for his or her health

 

benefit dependents, the portion of the health insurance coverage

 

premium paid by this state under this subsection shall be equal to

 

the product of 3% and the former qualified participant's years of

 

service, up to 30 years, and but shall not exceed the lesser of 90%

 

of the payments for health insurance coverage or the portion of the

 

health insurance coverage premiums payable by this state for a

 

retirant, his or her beneficiary, and his or her dependents under

 

section 20d. If the individual elects the health insurance coverage

 

provided under section 20d, the state shall transfer its portion of

 

the amount calculated under this subsection to the health insurance

 

reserve fund created by section 11. For a former qualified

 

participant who commenced state employment on or after April 1,

 

2010 and for his or her health benefit dependents, the portion of

 

the health insurance coverage premium paid by this state under this

 

subsection shall be equal to the product of 3% and the former

 

qualified participant's years of service, up to 30 years, but shall

 

not exceed the lesser of the portion of the health insurance

 

coverage premiums payable by this state for a retirant, his or her

 

beneficiary, and his or her dependents under section 20d or the

 

portion of the health insurance coverage premiums payable by this

 

state for a member who occupies a position in the classified state

 

civil service or has classified civil service status commencing

 

state employment on or after April 1, 2010.

 

     (5) For a former qualified participant who is eligible to

 

elect health insurance coverage under subsection (1) and who is

 

vested in those benefits under section 64(2)(b), and for his or her

 

health benefit dependents, this state shall pay a portion of the

 

health insurance premium as calculated under this subsection on a

 

cash disbursement method. An individual described in this

 

subsection who elects health insurance coverage under this section

 

shall pay to the retirement system the remaining portion of the

 

health insurance coverage premium not paid by this state under this

 

subsection. The portion of the health insurance coverage premium

 

paid by this state under this subsection shall be equal to the

 

premium amounts paid on behalf of retirants of Tier 1 for health

 

insurance coverage under section 20d. If the individual elects the

 

health insurance coverage provided under section 20d, the state

 

shall transfer its portion of the amount calculated under this

 

subsection to the health insurance reserve fund created by section

 

11.

 

     (6) A former qualified participant or health benefit dependent

 

who is eligible to elect health insurance coverage under this

 

section and who elects health insurance coverage under a different

 

plan than the plan authorized under section 20d may elect to have

 

an amount up to the amount of the retirement system's share of the

 

monthly health insurance premium subsidy provided in this section

 

paid by the retirement system directly to the other health

 

insurance plan or to a medical savings account established pursuant

 

to section 220 of the internal revenue code, to the extent allowed

 

by law or under the provisions and procedures of Tier 2. Beginning

 

January 1, 2011, any former qualified participant or health benefit

 

dependent who is eligible to elect health insurance coverage under

 

this section and who previously elected coverage under a different

 

plan than the plan authorized under section 20d may either elect

 

coverage under this section or may at his or her own cost

 

participate in coverage under a different plan than the plan

 

authorized under section 20d.

 

     (7) If the department of technology, management, and budget

 

receives notification from the United States internal revenue

 

service that this section or any portion of this section will cause

 

the retirement system to be disqualified for tax purposes under the

 

internal revenue code, then the portion that will cause the

 

disqualification does not apply.

 

     (8) Any former qualified participant who otherwise met the

 

benefit commencement age and service requirements for receiving

 

health insurance coverage under section 20d and his or her health

 

benefit dependents who are excluded from state subsidized dental or

 

vision insurance coverage premiums provided by this section or

 

section 20d may participate in that dental or vision insurance

 

coverage in the manner prescribed by the retirement system at his

 

or her own cost.

 

     (9) As used in this section, "health insurance coverage" means

 

the hospitalization and medical insurance, dental coverage, vision

 

coverage, and any other health care insurance provided in section

 

20d.

 

     (10) This section shall not apply to an individual who has

 

reached the maximum amount of earned service for purposes of

 

calculation of a retirement allowance pursuant to section 20i.

 

     Sec. 68c. (1) Except as otherwise provided in this subsection

 

section, a retirant who is receiving a retirement allowance under

 

this act and is employed by this state beginning on or after the

 

effective date of this section October 1, 2007 agrees to forfeit

 

his or her right to receive that retirement allowance during this

 

period of state employment. The retirement system shall cease

 

payment of the retirement allowance to a retirant described in this

 

subsection during this period of state employment and shall

 

reinstate payment of the retirement allowance without recalculation

 

when the period of state employment ceases. This subsection does

 

not apply to a retirant who is employed by this state on the day

 

before the effective date of this section September 30, 2007 so

 

long as he or she remains in the position held by the retirant on

 

the day before the effective date of this section September 30,

 

2007. As used in this subsection, "employed by this state" means

 

employed directly by this state as an employee or indirectly by

 

this state through a contractual arrangement with other parties.

 

     (2) A member may retire under this act and not have his or her

 

retirement allowance forfeited under subsection (1), if the member

 

satisfies all of the following:

 

     (a) Had at least 1,040 hours of service credit with the state

 

for each of the 5 years preceding termination.

 

     (b) Terminated state service on or after July 1, 2010.

 

     (c) At the time of termination was at least 60 years of age

 

and met the service requirement to receive a retirement allowance

 

under this act.

 

     (d) Agrees to accept a postretirement option position with the

 

state prior to terminating state service with a work schedule that

 

meets all of the following requirements:

 

     (i) Has a reduction of at least 50% from the hours reportable

 

for retirement in the previous fiscal year.

 

     (ii) Permits no more than 1,040 hours of service credit in a

 

12-month period.

 

     (iii) Commences no later than 2 weeks following termination of

 

state service.

 

     (3) The appointing authority and the state budget director

 

must approve and shall jointly have the sole discretion to

 

determine if, and the extent to which, a postretirement option

 

position under this section will be made available to a terminating

 

member or retirant.

 

     (4) Postretirement option employment shall be for an initial

 

period not to exceed 1 year. At the end of the initial and any

 

subsequent period, the appointing authority and the state budget

 

office jointly have the sole discretion to determine if the offer

 

of a postretirement option position will be renewed, renewed with

 

modifications, or terminated. Postretirement option positions may

 

be renewed for up to 1 year at a time, but not to exceed a total of

 

3 years. A retirant shall not be employed in a postretirement

 

option position, or a combination of postretirement option

 

positions, for a total of more than 3 years.

 

     (5) A retirant will not earn any service credit or be a

 

qualified participant in Tier 2 under this act while employed in a

 

postretirement option position. No change to a retirant's

 

retirement allowance shall be made on account of employment in a

 

postretirement option position.

 

     (6) (2) A hospital, medical-surgical, and sick care benefits

 

plan, dental plan, vision plan, and hearing plan that covers

 

retirants, retirant allowance beneficiaries, former qualified

 

participants, and health benefit dependents under this act shall

 

contain a coordination of benefits provision that provides all of

 

the following:

 

     (a) If the person covered under any of the plans is also

 

eligible for medicare, then the benefits under medicare shall be

 

determined before the health insurance benefits under this act.

 

     (b) If a person covered under any of the plans provided by

 

this act is also covered under another plan that contains a

 

coordination of benefits provision, the benefits shall be

 

coordinated as provided in the coordination of benefits act, 1984

 

PA 64, MCL 550.251 to 550.255.

 

     (c) If the person covered under any of the plans provided by

 

this act is also covered under another plan that does not contain a

 

coordination of benefits provision, the benefits under the other

 

plan shall be determined before the benefits provided pursuant to

 

this act.

 

     (7) If the department of technology, management, and budget

 

receives notification from the United States internal revenue

 

service that this section or any portion of this section will cause

 

the retirement system to be disqualified for tax purposes under the

 

internal revenue code, then the portion that will cause the

 

disqualification does not apply.

 

     Sec. 68d. (1) There is appropriated for the fiscal year ending

 

September 30, 2010, $1,600,000.00 to the office of retirement

 

services in the department of technology, management, and budget

 

for administration of the changes under the amendatory act that

 

added this section.

 

     (2) The appropriation authorized in subsection (1) is a work

 

project appropriation, and any unencumbered or unallotted funds are

 

carried forward into the following fiscal year. The following is in

 

compliance with section 451a(1) of the management and budget act,

 

1984 PA 431, MCL 18.1451a:

 

     (a) The purpose of the project is to administer changes under

 

the amendatory act that added this section.

 

     (b) The work project will be accomplished through a plan

 

utilizing interagency agreements, employees, and contracts.

 

     (c) The total estimated completion cost of the work project is

 

$1,600,000.00.

 

     (d) The estimated completion date for the work project is

 

September 30, 2011.