DA Memo - June 3, 2005
- Death and Disability Rate Increase and Plan Design Changes
- Surviving Spouse Benefit Option Change
- Optional Group Life Insurance Affiliation Change
- Working After Retirement Change for Nurses at State Institutions
(1) Death and Disability Rate Increase and Plan Design Changes
Death and Disability Employer Contribution Rate Increase
2005 legislation has increased employer death and disability contributions to 0.8 percent of payroll effective July 1, 2005, and 1.0 percent of payroll effective July 1, 2006. You should receive a contribution rate schedule soon, if you have not already. Please be sure to sign and return the schedule to KPERS. School districts and individual state agencies do not receive rate letters.
Death and Disability Plan Design Changes
In addition to contribution rate increases, KPERS is redesigning the disability plan in an effort to contain costs and provide a more solid financial future for the death and disability fund. It has always been our goal to create a plan that is affordable for employers and still protects employees and their income. This new plan design reduces some benefits, while it enhances others. The plan also expands the role of rehabilitation and allows some incidental income.
The new plan design will apply to employees disabled on or after January 1, 2006. Current disability recipients and those who become disabled between now and December 31, 2005, will stay with the current plan design.
As we make these changes together, KPERS staff is committed to providing the necessary education and administrative tools. We will send you more details about the transition to the new plan design as we make implementation plans for January 1, 2006.
Immediate Disability Benefit Change
While other disability plan changes begin January 1, 2006, one change takes affect immediately concerning age and benefit duration limits. These new eligibility limits improve our compliance with the federal Age Discrimination in Employment Act (ADEA).
- Employees who become disabled before age 60 can continue to receive disability benefits until they retire or reach age 65, whichever comes first.
- Employees who become disabled at or after age 60 can continue to receive disability benefits for five years or until they retire, whichever comes first.
A new benefit plan summary that reflects this change is available as an electronic file or in paper copies. You do not need to distribute this updated summary to all current employees. However, please be sure you have the new summary for new employees covered by the disability benefit.
What You Need to Do
1. Sign and return your employer contribution rate schedule.2. Continue facilitating and communicating current benefits through December 31, 2005.
3. Watch for additional disability plan design change implementation instructions in the coming months.
4. Request the updated benefit plan summary (electronic or paper) as needed for new employees by contacting the InfoLine:
- kpers@kpers.org
- (888) 275-5737
- (785) 296-6166
(2) Surviving Spouse Benefit Option Change
This year, the Legislature reduced the service credit requirement from 15 years to ten years for the surviving spouse benefit option.
When a member dies, his or her spouse can choose a continuing monthly benefit, instead of receiving returned contributions and interest. The member must have designated the spouse as sole primary beneficiary for retirement benefits.
Situation #1
If the member was eligible to retire, the spouse begins receiving a monthly benefit immediately. He or she cannot wait until a later date to apply for this benefit.
Members are eligible to retire at age 55 with ten years of service, age 62 with ten years of service, age 65 with one year of service, and any age when age and years of serviced added together equal 85 (85 points).
Situation #2
If the member was not yet eligible to retire but had ten years of service, the spouse begins receiving a monthly benefit when the member would have
reached age 55.
Members can name contingent beneficiaries or separate beneficiaries for life insurance without affecting this benefit option.
(3) Optional Group Life Insurance Affiliation Change
Employers can now affiliate for optional group life insurance on January 1 or July 1 of any year.
If your employer is not affiliated for optional group life insurance, and you would like information about providing this benefit for employees, please contact Cheryl Koch at ckoch@kpers.org, (785) 296-1019 or (888) 275-5737.
(4) Working After Retirement Change for Nurse at State Institutions
The Legislature lifted KPERS’ $15,000 annual earnings limit for retired nurses who return to work with their previous employer at certain State institutions. This exemption begins July 1, 2005, and ends June 30, 2008. Each hiring employer will make KPERS contributions at the actuarial rate. We will directly contact any State institutions affected by this change.
All employees must wait 30 days after retirement to go back to work for any Retirement System employer. To determine the 30-day waiting period, count the day after the employee’s retirement date as day one.