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Retirement System And Health Plan Legislation Requested By State Treasurer Heads To Governor

House Bill 1055 rolled through the legislature this week, passing each of its Senate committee hearings and chamber floor debates with only technical corrections added as amendments. The bill, titled Retirement Complexity Reduction Act of 2018, was sent to the Governor’s desk on Friday and would do the following:

  1. Rewrite 37 service purchase provisions in the Teachers and State Employees’ Retirement System (TSERS) and limit the service purchases to five years.
  2. Close three of the seven current benefit payment options to members who retire on or after January 1, 2019: Social Security Leveling, Modified Joint & Survivor – 100%, and Modified Joint & Survivor – 50%.
  3. Clarify the provision requiring chief financial officers of participating employers to transmit a copy of pension spiking "watch reports" to chief executive officers and governing boards.

Dale Folwell, the North Carolina State Treasurer, attended the Senate Pensions and Retirement and Aging committee to speak on behalf of this bill and HB1056, stating the department’s support of the bills. The provisions in H1055 would be effective when it becomes law. To view the latest bill summary, click here.

House Bill 1056 passed quickly through the Senate on Wednesday and then gained final House approval Thursday afternoon and has been sent to the
Governor for his consideration.

H1056 is called the FAIR Act of 2018, which stands for Financial Accountability, Integrity, and Recovery Act.

Sen. Andy Wells (R-Catawba) described the bill to the Senate Rules Committee as “some cleanup in the house” in regard to how the TSERS money was spent in the past and how it will be spent moving forward. He stated that the legislation includes “recovering money that people in the health plan received that they shouldn’t have received” is a way for the State Treasurer’s Office to reobtain funds that were unlawfully spent. He also stated that the bill is one of five agency bills requested by the State Treasurer’s Office.

HB1056 would implement the following provisions:

  1. Amend the State Health Plan (SHP) to add a new section pertaining to employing units cooperating in the collection of amounts owed to the Plan. It requires any overpayment or erroneous payment of benefits or other amount to, or premiums or claims paid on behalf of, any Plan member to be repaid by the Plan member to the Plan.
  2. Amend the SHP when a Plan member recovers any amounts from a liable third party to which the Plan is entitled to provide that if prior to the Plan exercising its right for recovery, a Plan member uses or disposes of the recovered amounts, the Plan may pursue alternative judicial remedies, including a judgment and lien against real property. Provides that when the State Health Plan prevails in a civil action against a provider to collect an overpayment, the Plan may attach or garnish the provider's credit card receipts or other third-party payments in payment of the amount owed in the manner provided.
  3. Provides that the priority of any lien held by the SHP is superior to all nongovernmental liens and rights.
  4. Amends TSERS to prevent any member whose retirement benefits have been forfeited from subsequently purchasing or repurchasing either forfeited benefits or any creditable membership service associated with the forfeited benefits.
  5. Prohibits the use of service rendered while participating in the University or Community College Optional Retirement Program (ORP) toward determining benefit eligibility for TSERS.
  6. Prohibits employing units from entering into settlement agreements with an employee or former employee unless the employing unit has received written authorization from the Plan's Executive Administrator.
  7. Amends TSERS to provide that the retirement allowance of a member with an average final compensation (AFC) of more than $100,000, indexed, is not subject to the contribution-based benefit cap (CBBC) if the compensation was earned from multiple simultaneous employers, unless an employer's share of the AFC exceeds $100,000. When these conditions are met, an employer is not required to make contributions unless the employer's share of the AFC exceeds $100,000.
  8. Amends the Disability Income Plan for short-term disability benefits to require that a participant who becomes disabled and no longer able to perform his or her occupation, may receive a benefit if all of five conditions are met. (see page three of the link).

This bill would be effective when it becomes law.

Jacqueline Wyatt | NCASA