DA Memo - April 9, 2003

New Optional Insurance Rates and Procedures

As you may be aware, the Retirement System has contracted with Minnesota Life as its new insurance carrier for basic group life and optional life insurance, effective July 1, 2003. Along with the new carrier, KPERS will implement new rates and procedures. The new Optional Life premium rate table will be in effect July 1, 2003.

New procedures are:

(1) Age Brackets. Effective July 1, 2003, the rules in assigning members to a particular age bracket will be changed. Age bracket assignments will be determined by the member's age as of January 1 of that year. For example, a member whose date of birth is July 18, 1958, was age 44 on January 1, 2003. Therefore the age bracket to use is "40-44," although the member will be age 45 later this year. The member's premium would not change to the age 45-49 bracket until January 1, 2004.

(2) Payroll Deduction Timing. Current Procedure - The employer deducts premiums from the payroll one month in advance of the effective coverage date, because insurance is prepaid. The employer then submits the optional insurance monthly report by the 10th of the coverage month.

New Procedure - The employer will deduct premiums in the same month of the optional life insurance coverage. For example, the premiums for July coverage should be deducted in July and remitted within three days of the payroll date. The monthly optional life insurance report should be sent to KPERS by end the month. For example, the July optional life insurance payroll report should be submitted to KPERS by July 31.

KPERS staff is incorporating these changes in a revised Optional Reporting Manual and will distribute it to all agencies in the near future.