SB-1017, As Passed Senate, September 12, 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.