SB-1017, As Passed House, December 14, 2006

SUBSTITUTE FOR

SENATE BILL NO. 1017

     A bill to amend 1980 PA 300, entitled

"The public school employees retirement act of 1979,"

by amending sections 75, 85, and 91 (MCL 38.1375, 38.1385, and

38.1391), section 75 as amended by 1989 PA 194, section 85 as

amended by 2002 PA 94, and section 91 as amended by 2004 PA 117.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 75. (1) A member who left or leaves service as a public

school employee;  for purposes of maternity or paternity or child

rearing, and returns to service as a public school employee, or a

person performing out of system public education service who leaves

that service for purposes of maternity, paternity, or child rearing

and who subsequently becomes a member of this retirement system,

without other intervening employment of more than 20 hours per week

for each week for which service credit is claimed, may purchase

service credit for the time period or periods during which the

person was separated from service as a public school employee or

during which the person was separated from performing out of system

public education service because of maternity or paternity or child

rearing, upon request and payment to the retirement system of the

actuarial cost. The total service credited under this section shall

not exceed 5 years. A member requesting purchase of service credit

under this section shall certify to the board the purpose for which

the member took leave and was separated from service as a public

school employee.  who left or leaves out-of-system public education

service; or a member of the state employees' retirement system

under section 13 of the state employees' retirement act, 1943 PA

240, MCL 38.13, who left or leaves service as a state employee for

purposes of parental leave who subsequently becomes a member of

this retirement system without other intervening employment of more

than 20 hours per week for each week for which service credit was

claimed may purchase service credit for the time period or periods

during which the person was separated from service because of

parental leave if the member satisfies the requirements of this

section. The member shall submit an application as described in

subsection (5) and shall pay the actuarial cost to the retirement

system. The total service credited under this section shall not

exceed 5 years. A member requesting purchase of service credit

under this section shall certify to the retirement system the

purpose for which the member took leave or was separated from

service as a public school employee; a person performing out-of-

system public education service; or a member of the state

employees' retirement system under section 13 of the state

employees' retirement act, 1943 PA 240, MCL 38.13.

     (2) Service credit purchased under this section may not be

used to satisfy the minimum of 10 years of service credit required

to receive a retirement allowance under this act.

     (3) If a member who made payment under this section dies and a

retirement allowance beneficiary has not been designated, or if the

member leaves reporting unit service before his or her retirement

becomes effective, the payment made by the member shall be refunded

upon request to the member or to the member's refund beneficiary.

     (4) A member who reduces hours of employment with a reporting

unit for purposes of  maternity, paternity, or child rearing

parental leave or a person who reduces hours of out of system

public education service for purposes of  maternity, paternity, or

child rearing  parental leave and who subsequently becomes a member

of this retirement system may purchase service credit for those

hours by which employment was reduced if all other requirements of

this section are met.

     (5) A member requesting purchase of service credit under this

section shall submit an application as prescribed by the retirement

system in which the member shall certify the time period claimed

for parental leave and the purpose of the parental leave. If the

request for purchase of service credit under this section is a

result of leave taken to care for the member's child by birth or

adoption, then the member also shall submit a certified copy of a

birth certificate or adoption document from the appropriate court

of jurisdiction.

     (6) Parental leave is creditable under this act until the

child, by birth or adoption, attains age 18 or is married,

whichever occurs first.

     (7) As used in this section, "parental leave" means either of

the following:

     (a) The presence of the member in the active participation or

supervision in the day-to-day, ongoing care or maintenance of his

or her child by birth or adoption, for which the member reduced or

eliminated the number of hours worked for the state, in out-of-

system public education service, or for the reporting unit in a

normal work time period.

     (b) A member's pregnancy that occurred while a member, whether

brought to full term or not, childbirth, and recuperation, for

which the member reduced or eliminated the number of hours worked

for the state, in out-of-system public education service, or for

the reporting unit in a normal work time period.

     Sec. 85. (1) A retiring member or retiring deferred member who

meets the requirements of section 81 or 81a or a member whom the

retirement board finds to be totally and permanently disabled and

eligible to receive a retirement allowance under section 86 or 87

shall elect to receive his or her retirement allowance under 1 of

the payment options provided in this subsection. The election shall

be in writing and filed with the retirement board at least 15 days

before the effective date of the retirement allowance except as

provided for a disability retirant under section 86 or 87. The

amount of retirement allowance under subdivision (b), (c), or (d)

shall be the actuarial equivalent of the amount of retirement

allowance under subdivision (a). The options are as follows:

     (a) A retirant shall be paid a straight retirement allowance

for life computed pursuant to section 84. An additional retirement

allowance payment shall not be made upon the retirant's death.

     (b) A retirant shall be paid a reduced retirement allowance

for life with the provision that upon the retirant's death, payment

of the reduced retirement allowance is continued throughout the

lifetime of the retirement allowance beneficiary whom the member or

deferred member designates in a writing filed with the retirement

board at the time of election of this option. A member or deferred

member may elect this option and designate a retirement allowance

beneficiary under the conditions set forth in section 82(2) or

89(3).

     (c) A retirant shall be paid a reduced retirement allowance

for life with the provision that upon the retirant's death, payment

of 1/2 of the reduced retirement allowance is continued throughout

the lifetime of the retirement allowance beneficiary whom the

member designated in a writing filed with the retirement board at

the time of election of the option.

     (d) On and after January 1, 2000, a retirant shall be paid a

reduced retirement allowance for life with the provision that upon

the retirant's death, payment of 75% of the reduced retirement

allowance is continued throughout the lifetime of the retirement

allowance beneficiary whom the member designated in a writing filed

with the retirement board at the time of election of the option.

     (2) In addition to the election under subsection (1), a

retirant, other than a disability retirant who is 60 years of age

or less, may elect to coordinate his or her retirement allowance

with an estimated primary social security benefit. The retirant

shall be paid an increased retirement allowance until 62 years of

age and a reduced retirement allowance after 62 years of age. The

increased retirement allowance paid until 62 years of age shall

approximate the sum of the reduced retirement allowance payable

after 62 years of age and the retirant's estimated social security

primary insurance amount. The estimated social security primary

insurance amount shall be determined by the retirement system. The

election under this subsection shall be made at the same time and

in the same manner as required under subsection (1).

     (3) Except as otherwise provided in this section, the election

of a payment option in subsections (1) and (2) shall not be changed

on or after the effective date of the retirement allowance. Except

as provided in  subsection (5) this section, the retirement

allowance beneficiary selected under subsection (1)(b), (c), or (d)

shall not be changed on or after the effective date of the

retirement allowance and shall be either a spouse, brother, sister,

parent, or child, including an adopted child, of the member,

deferred member, retiring member, or retiring deferred member

entitled to make the election under this act. Another retirement

allowance beneficiary shall not be selected. If a member, deferred

member, retiring member, or retiring deferred member is married at

the retirement allowance effective date, an election under

subsection (1), other than an election under subsection (1)(b),

(c), or (d) naming the spouse as retirement allowance beneficiary,

shall not be effective unless the election is signed by the spouse,

except that this requirement may be waived by the board if the

signature of a spouse cannot be obtained because of extenuating

circumstances. For purposes of this subsection, "spouse" means the

person to whom the member, deferred member, retiring member, or

retiring deferred member is married at the retirement allowance

effective date. Payment to a retirement allowance beneficiary shall

start the first day of the month following the retirant's death.

     (4)  If Except as otherwise provided in subsection (8), if

the retirement allowance beneficiary selected under subsection

(1)(b), (c), or (d) predeceases the retirant, the retirant's

benefit shall revert to a straight retirement allowance including

post-retirement adjustments, if any, shall be effective the first

of the month following the death, and shall be paid during the

remainder of the retirant's life. This subsection applies to a

retirant whose effective date of retirement is after June 28, 1976,

but the straight retirement allowance shall not be payable for any

month beginning before the later of the retirement allowance

beneficiary's death or October 31, 1980. This subsection also

applies to a retirant whose effective date of retirement was on or

before June 28, 1976, but the straight retirement allowance shall

not be payable for any month beginning before the later of the

retirement allowance beneficiary's death or January 1, 1986. A

retirant who on January 1, 1986 is receiving a reduced retirement

allowance because the retirant designated a retirement allowance

beneficiary and the retirement allowance beneficiary predeceased

the retirant is eligible to receive the straight retirement

allowance beginning January 1, 1986, but the straight retirement

allowance shall not be payable for any month beginning before

January 1, 1986.

     (5) A retirant who returns to service pursuant to section 61

and whose retirement allowance beneficiary selected under

subsection (1)(b), (c), or (d) predeceases the member before he or

she again becomes a retirant may again choose a retirement

allowance beneficiary pursuant to subsection (1)(b), (c), or (d).

     (6) If a retirant receiving a reduced retirement allowance

under subsection (1)(b), (c), or (d) is divorced from the spouse

who had been designated as the retirant's retirement allowance

beneficiary under subsection (1)(b), (c), or (d), the election of a

reduced retirement allowance payment option shall be considered

void by the retirement system if the judgment of divorce or award

or order of the court, or an amended judgment of divorce or award

or order of the court, described in the public employee retirement

benefit protection act, 2002 PA 100, MCL 38.1681 to 38.1689, and

dated after June 27, 1991 provides that the election of a reduced

retirement allowance payment option under subsection (1)(b), (c),

or (d) is to be considered void by the retirement system and the

retirant provides a certified copy of the judgment of divorce or

award or order of the court, or an amended judgment of divorce or

award or order of the court, to the retirement system. If the

election of a reduced retirement allowance payment option under

subsection (1)(b), (c), or (d) is considered void by the retirement

system under this subsection, the retirant's retirement allowance

shall revert to a straight retirement allowance, including

postretirement adjustments, if any, subject to an award or order of

the court as described in the public employee retirement benefit

protection act, 2002 PA 100, MCL 38.1681 to 38.1689. The retirement

allowance shall revert to a straight retirement allowance under

this subsection effective the first of the month after the date the

retirement system receives a certified copy of the judgment of

divorce or award or order of the court. This subsection does not

supersede a judgment of divorce or award or order of the court in

effect on June 27, 1991. This subsection does not require the

retirement system to distribute or pay retirement assets on behalf

of a retirant in an amount that exceeds the actuarially determined

amount that would otherwise become payable if a judgment of divorce

had not been rendered.

     (7) If the retirement allowance payments terminate before an

aggregate amount equal to the retirant's accumulated contributions

has been paid, the difference between the retirant's accumulated

contributions and the aggregate amount of retirement allowance

payments made shall be paid to the person designated in a writing

filed with the retirement board on a form provided by the

retirement board. If the designated person does not survive the

retirant or retirement allowance beneficiary, the difference shall

be paid to the deceased recipient's estate or to the legal

representative of the deceased recipient.

(8) A retirant who selected a retirement allowance beneficiary

under subsection (1)(b), (c), or (d) may change his or her

retirement allowance beneficiary if all of the following apply:

     (a) The first retirement allowance beneficiary is a spouse.

     (b) The first retirement allowance beneficiary predeceases the

retirant after the retirement allowance effective date.

     (c) The retirant marries another spouse after the retirement

allowance effective date.

     (d) The retirant files a written request with the retirement

system to name his or her current spouse as a retirement allowance

beneficiary not earlier than 180 days and not later than 1 year

after the marriage of the retirant and the current spouse except

that a retirant whose first retirement allowance beneficiary

predeceases the retirant after the retirement allowance effective

date and before the effective date of the amendatory act that added

this subsection shall have 180 days from the effective date of the

amendatory act that added this subsection to file a written request

with the retirement system.

     (9) A retirant who was not married on his or her retirement

allowance effective date and who did not select a payment option

provided in this section may select an optional form of benefit

payment under subsection (1)(b), (c), or (d) and designate a

retirement allowance beneficiary if all of the following apply:

     (a) The retirant marries after his or her retirement allowance

effective date.

     (b) The retirement allowance beneficiary is the retirant's

spouse.

     (c) The retirement allowance beneficiary is only designated as

the retirement allowance beneficiary for that portion of the

retirant's retirement allowance that is not subject to an eligible

domestic relations order assigning a previous spouse a reduced

benefit under section 4(b) of the eligible domestic relations order

act, 1991 PA 46, MCL 38.1704.

     (d) The retirant files a written request with the retirement

system to select the optional form of benefit payment under

subsection (1)(b), (c), or (d) and to designate his or her spouse

as the retirement allowance beneficiary, not earlier than 180 days

and not later than 1 year after the retirant's marriage except that

a retirant who marries after the retirement allowance effective

date and before the effective date of the amendatory act that added

this subsection shall have 180 days from the effective date of the

amendatory act that added this subsection to file a written request

with the retirement system.

     (10) The retirement allowance of the retirant who makes an

election under subsection (8) or (9) shall not be greater than the

actuarial equivalent of the retirement allowance as determined by

the retirement board that the retirant would otherwise be entitled

to under subsection (1)(a) and shall become effective the first day

of the month following the filing of the written request with the

retirement system.

     (11) If the retirant dies no later than 12 months after the

effective date of his or her election under subsection (8) or (9),

the retirement allowance for the surviving spouse established under

subsection (8) or (9) shall terminate 12 months after the death of

the retirant.

     Sec. 91. (1)  The  Except as otherwise provided in this

section, the retirement system shall pay the entire monthly premium

or membership or subscription fee for hospital, medical-surgical,

and sick care benefits for the benefit of a retirant or retirement

allowance beneficiary who elects coverage in the plan authorized by

the retirement board and the department. Upon the death of the

retirant, a retirement allowance beneficiary who became a

retirement allowance beneficiary under section 85(8) or (9) is not

a health insurance dependent and is not entitled to health benefits

under this section except as provided in subsection (10).

     (2) The retirement system may pay up to the maximum of the

amount payable under subsection (1) toward the monthly premium for

hospital, medical-surgical, and sick care benefits for the benefit

of a retirant or retirement allowance beneficiary enrolled in a

group health insurance or prepaid service plan not authorized by

the retirement board and the department, if enrolled before June 1,

1975, for whom the retirement system on July 18, 1983 was making a

payment towards his or her monthly premium.

     (3) A retirant or retirement allowance beneficiary receiving

hospital, medical-surgical, and sick care benefits coverage under

subsection (1) or (2), until eligible for medicare, shall have an

amount equal to the cost chargeable to a medicare recipient for

part B of medicare deducted from his or her retirement allowance.

     (4) The retirement system shall pay 90% of the monthly premium

or membership or subscription fee for dental, vision, and hearing

benefits for the benefit of a retirant or retirement allowance

beneficiary who elects coverage in the plan authorized by the

retirement board and the department. Payments shall begin under

this subsection upon approval by the retirement board and the

department of plan coverage and a plan provider.

     (5) The retirement system shall pay up to 90% of the maximum

of the amount payable under subsection (1) toward the monthly

premium or membership or subscription fee for hospital, medical-

surgical, and sick care benefits coverage described in subsections

(1) and (2) for each health insurance dependent of a retirant

receiving benefits under subsection (1) or (2). Payment shall not

exceed 90% of the actual monthly premium or membership or

subscription fee. The retirement system shall pay 90% of the

monthly premium or membership or subscription fee for dental,

vision, and hearing benefits described in subsection (4) for the

benefit of each health insurance dependent of a retirant receiving

benefits under subsection (4). Payment for health benefits coverage

for a health insurance dependent of a retirant shall not be made

after the retirant's death, unless the retirant designated a

retirement allowance beneficiary as provided in section 85 and the

dependent was covered or eligible for coverage as a health

insurance dependent of the retirant on the retirant's date of

death. Payment for health benefits coverage shall not be made for a

health insurance dependent after the later of the retirant's death

or the retirement allowance beneficiary's death. Payment under this

subsection and subsection (6) began October 1, 1985 for health

insurance dependents who on July 10, 1985 were covered by the

hospital, medical-surgical, and sick care benefits plan authorized

by the retirement board and the department. Payment under this

subsection and subsection (6) for other health insurance dependents

shall not begin before January 1, 1986.

     (6) The payment described in subsection (5) shall also be made

for each health insurance dependent of a deceased member or

deceased duty disability retirant if a retirement allowance is

being paid to a retirement allowance beneficiary because of the

death of the member or duty disability retirant as provided in

section 43c(c), 89, or 90. Payment for health benefits coverage for

a health insurance dependent shall not be made after the retirement

allowance beneficiary's death.

     (7) The payments provided by this section shall not be made on

behalf of a retiring section 82 deferred member or health insurance

dependent of a deferred member having less than 21 full years of

attained credited service or the retiring deferred member's

retirement allowance beneficiary, and shall not be made on behalf

of a retirement allowance beneficiary of a deferred member who dies

before retiring. The retirement system shall pay, on behalf of a

retiring section 82 deferred member or health insurance dependent

of a deferred member or a retirement allowance beneficiary of a

deceased deferred member, either of whose allowance is based upon

not less than 21 years of attained credited service, 10% of the

payments provided by this section, increased by 10% for each

attained full year of credited service beyond 21 years, not to

exceed 100%. This subsection applies to any member who attains

deferred status under section 82 after October 31, 1980.

     (8) Any retirant or retirement allowance beneficiary excluded

from payments under this section may participate in the hospital,

medical-surgical, and sick care benefits plan, the dental plan,

vision plan, or hearing plan, or any combination of the plans

described in this section in the manner prescribed by the

retirement system at his or her own cost.

     (9) The hospital, medical-surgical, and sick care benefits

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

retirants, retirement allowance beneficiaries, and health insurance

dependents pursuant to this section shall contain a coordination of

benefits provision that provides all of the following:

     (a) If the person covered under the hospital, medical-

surgical, and sick care benefits plan is also eligible for medicare

or medicaid, or both, then the benefits under medicare or medicaid,

or both, shall be determined before the benefits of the hospital,

medical-surgical, and sick care benefits plan provided pursuant to

this section.

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

this section is also covered under another plan that contains a

coordination of benefits provision, the benefits shall be

coordinated as provided by 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 section 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 of the plan

provided pursuant to this section.

     (10) A surviving spouse selected as a retirement allowance

beneficiary under section 85(8) or (9) may elect the insurance

coverages provided in this section provided that payment for the

elected coverages is the responsibility of the surviving spouse and

is paid in a manner prescribed by the retirement system.

(11)  (10) For purposes of this section:

     (a) "Health insurance dependent" means any of the following:

     (i)  The  Except as provided in subsection (1), the spouse of

the retirant or the surviving spouse to whom the retirant or

deceased member was married at the time of the retirant's or

deceased member's death.

     (ii) An unmarried child, by birth or adoption, of the retirant

or deceased member, until December 31 of the calendar year in which

the child becomes 19 years of age.

     (iii) An unmarried child, by birth or adoption, of the retirant

or deceased member, until December 31 of the calendar year in which

the child becomes 25 years of age, who is enrolled as a full-time

student, and who is or was at the time of the retirant's or

deceased member's death a dependent of the retirant or deceased

member as defined in section 152 of the internal revenue code.

     (iv) An unmarried child, by birth or adoption, of the retirant

or deceased member who is incapable of self-sustaining employment

because of mental or physical disability, and who is or was at the

time of the retirant's or deceased member's death a dependent of

the retirant or deceased member as defined in section 152 of the

internal revenue code.

     (v) The parents of the retirant or deceased member, or the

parents of his or her spouse, who are residing in the household of

the retirant or retirement allowance beneficiary.

     (vi) An unmarried child who is not the child by birth or

adoption of the retirant or deceased member but who otherwise

qualifies to be a health insurance dependent under subparagraph

(ii), (iii), or (iv), if the retirant or deceased member is the legal

guardian of the unmarried child.

     (b) "Medicaid" means benefits under the federal medicaid

program established under title XIX of the social security act,

chapter 531, 49 Stat. 620, 42  U.S.C.  USC 1396 to 1396f, 1396g-1

to 1396r-6, and 1396r-8 to 1396v.

     (c) "Medicare" means benefits under the federal medicare

program established under title XVIII of the social security act,

chapter 531, 49 Stat. 620, 42  U.S.C.  USC 1395 to 1395b, 1395b-2,

1395b-6 to 1395b-7, 1395c to 1395i, 1395i-2 to 1395i-5, 1395j to

1395t, 1395u to 1395w, 1395w-2 to 1395w-4, 1395w-21 to 1395w-28,

1395x to 1395yy, and 1395bbb to 1395ggg.

     Enacting section 1. This amendatory act takes effect January

1, 2009.