HB 395: "An Act relating to participation of certain peace officers and firefighters in the defined benefit and defined contribution plans of the Public Employees' Retirement System of Alaska; relating to eligibility of peace officers and firefighters for medical benefits; and providing for an effective date."
00 HOUSE BILL NO. 395 01 "An Act relating to participation of certain peace officers and firefighters in the defined 02 benefit and defined contribution plans of the Public Employees' Retirement System of 03 Alaska; relating to eligibility of peace officers and firefighters for medical benefits; and 04 providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. AS 37.10.220(a) is amended to read: 07 (a) The board shall 08 (1) hold regular and special meetings at the call of the chair or of at 09 least five members; meetings are open to the public, and the board shall keep a full 10 record of all its proceedings; 11 (2) after reviewing recommendations from the Department of 12 Revenue, adopt investment policies for each of the funds entrusted to the board; 13 (3) determine the appropriate investment objectives for the defined 14 benefit plans established under the teachers' retirement system under AS 14.25 and the
01 public employees' retirement system under AS 39.35; 02 (4) assist in prescribing the policies for the proper operation of the 03 systems and take other actions necessary to carry out the intent and purpose of the 04 systems in accordance with AS 37.10.210 - 37.10.390; 05 (5) provide a range of investment options and establish the rules by 06 which participants can direct their investments among those options with respect to 07 accounts established under 08 (A) AS 14.25.340 - 14.25.350 (teachers' retirement system 09 defined contribution individual accounts); 10 (B) AS 39.30.150 - 39.30.180 (State of Alaska Supplementary 11 Annuity Plan); 12 (C) AS 39.35.730 - 39.35.750 (public employees' retirement 13 system defined contribution individual accounts); and 14 (D) AS 39.45.010 - 39.45.060 (public employees' deferred 15 compensation program); 16 (6) establish the rate of interest that shall be annually credited to each 17 member's individual contribution account in accordance with AS 14.25.145 and 18 AS 39.35.100 and the rate of interest that shall be annually credited to each member's 19 account in the health reimbursement arrangement plan under AS 39.30.300 - 20 39.30.495; the rate of interest shall be adopted on the basis of the probable effective 21 rate of interest on a long-term basis, and the rate may be changed from time to time; 22 (7) adopt a contribution surcharge as necessary under AS 39.35.160(c); 23 (8) coordinate with the retirement system administrator to have an 24 annual actuarial valuation of each retirement system prepared to determine system 25 assets, accrued liabilities, and funding ratios and to certify to the appropriate 26 budgetary authority of each employer in the system 27 (A) an appropriate contribution rate for normal costs; and 28 (B) an appropriate contribution rate for liquidating any past 29 service liability; in this subparagraph, the appropriate contribution rate for 30 liquidating the past service liability of the defined benefit retirement plan under 31 AS 14.25.009 - 14.25.220 or the past service liability of the defined benefit
01 retirement plan under AS 39.35.095 - 39.35.680 must be determined by a level 02 percent of pay method based on amortization of the past service liability for a 03 closed term of 25 years; 04 (9) review actuarial assumptions prepared and certified by a member 05 of the American Academy of Actuaries and conduct experience analyses of the 06 retirement systems not less than once every four years, except for health cost 07 assumptions, which shall be reviewed annually; the results of all actuarial assumptions 08 prepared under this paragraph shall be reviewed and certified by a second member of 09 the American Academy of Actuaries before presentation to the board; 10 (10) contract for an independent audit of the state's actuary not less 11 than once every four years; 12 (11) contract for an independent audit of the state's performance 13 consultant not less than once every four years; 14 (12) obtain an external performance review to evaluate the investment 15 policies of each fund entrusted to the board and report the results of the review to the 16 appropriate fund fiduciary; 17 (13) by the first day of each regular legislative session, report to the 18 governor, the legislature, and the individual employers participating in the state's 19 retirement systems on the financial condition of the systems in regard to 20 (A) the valuation of trust fund assets and liabilities; 21 (B) current investment policies adopted by the board; 22 (C) a summary of assets held in trust listed by the categories of 23 investment; 24 (D) the income and expenditures for the previous fiscal year; 25 (E) the return projections for the next calendar year; 26 (F) one-year, three-year, five-year, and 10-year investment 27 performance for each of the funds entrusted to the board; and 28 (G) other statistical data necessary for a proper understanding 29 of the financial status of the systems; 30 (14) submit quarterly updates of the investment performance reports to 31 the Legislative Budget and Audit Committee;
01 (15) develop an annual operating budget; [AND] 02 (16) administer pension forfeitures required under AS 37.10.310 using 03 the procedures of AS 44.62 (Administrative Procedure Act); and 04 (17) determine the amount of the monthly employer contribution 05 under AS 39.35.257. 06 * Sec. 2. AS 37.10.220(b) is amended to read: 07 (b) The board may 08 (1) employ outside investment advisors to review investment policies; 09 (2) enter into an agreement with the fiduciary of another state fund in 10 order to assume the management and investment of those assets; 11 (3) contract for other services necessary to execute the board's powers 12 and duties; 13 (4) enter into confidentiality agreements that would exempt records 14 from AS 40.25.110 and 40.25.120 if the records contain information that could affect 15 the value of investment by the board or that could impair the ability of the board to 16 acquire, maintain, or dispose of investments; 17 (5) adjust the amount of the increase in benefits payable to a peace 18 officer or firefighter who first becomes a member after June 30, 2006, as 19 provided under AS 39.35.475; 20 (6) adjust employee contribution rates under AS 39.35.160(e). 21 * Sec. 3. AS 37.10.390 is amended by adding a new paragraph to read: 22 (5) "peace officer" or "firefighter" has the meaning given in 23 AS 39.35.680. 24 * Sec. 4. AS 39.30.090(a) is amended to read: 25 (a) The Department of Administration may obtain a policy or policies of group 26 insurance covering state employees, persons entitled to coverage under AS 14.25.168, 27 14.25.480, AS 22.25.090, AS 39.35.535, 39.35.537, 39.35.880, or former 28 AS 39.37.145, employees of other participating governmental units, or persons 29 entitled to coverage under AS 23.15.136, subject to the following conditions: 30 (1) a group insurance policy shall provide one or more of the following 31 benefits: life insurance, accidental death and dismemberment insurance, weekly
01 indemnity insurance, hospital expense insurance, surgical expense insurance, dental 02 expense insurance, audiovisual insurance, or other medical care insurance; 03 (2) each eligible employee of the state, the spouse and the unmarried 04 children chiefly dependent on the eligible employee for support, and each eligible 05 employee of another participating governmental unit shall be covered by the group 06 policy, unless exempt under regulations adopted by the commissioner of 07 administration; 08 (3) a governmental unit may participate under a group policy if 09 (A) its governing body adopts a resolution authorizing 10 participation and payment of required premiums; 11 (B) a certified copy of the resolution is filed with the 12 Department of Administration; and 13 (C) the commissioner of administration approves the 14 participation in writing; 15 (4) in procuring a policy of group health or group life insurance as 16 provided under this section or excess loss insurance as provided in AS 39.30.091, the 17 Department of Administration shall comply with the dual choice requirements of 18 AS 21.86.310, and shall obtain the insurance policy from an insurer authorized to 19 transact business in the state under AS 21.09, a hospital or medical service corporation 20 authorized to transact business in this state under AS 21.87, or a health maintenance 21 organization authorized to operate in this state under AS 21.86; an excess loss 22 insurance policy may be obtained from a life or health insurer authorized to transact 23 business in this state under AS 21.09 or from a hospital or medical service corporation 24 authorized to transact business in this state under AS 21.87; 25 (5) the Department of Administration shall make available bid 26 specifications for desired insurance benefits or for administration of benefit claims and 27 payments to (A) all insurance carriers authorized to transact business in this state 28 under AS 21.09 and all hospital or medical service corporations authorized to transact 29 business under AS 21.87 who are qualified to provide the desired benefits; and (B) 30 insurance carriers authorized to transact business in this state under AS 21.09, hospital 31 or medical service corporations authorized to transact business under AS 21.87, and
01 third-party administrators licensed to transact business in this state and qualified to 02 provide administrative services; the specifications shall be made available at least once 03 every five years; the lowest responsible bid submitted by an insurance carrier, hospital 04 or medical service corporation, or third-party administrator with adequate servicing 05 facilities shall govern selection of a carrier, hospital or medical service corporation, or 06 third-party administrator under this section or the selection of an insurance carrier or a 07 hospital or medical service corporation to provide excess loss insurance as provided in 08 AS 39.30.091; 09 (6) if the aggregate of dividends payable under the group insurance 10 policy exceeds the governmental unit's share of the premium, the excess shall be 11 applied by the governmental unit for the sole benefit of the employees; 12 (7) a person receiving benefits under AS 14.25.110, AS 22.25, 13 AS 39.35, or former AS 39.37 may continue the life insurance coverage that was in 14 effect under this section at the time of termination of employment with the state or 15 participating governmental unit; 16 (8) a person electing to have insurance under (7) of this subsection 17 shall pay the cost of this insurance; 18 (9) for each permanent part-time employee electing coverage under 19 this section, the state shall contribute one-half the state contribution rate for permanent 20 full-time state employees, and the permanent part-time employee shall contribute the 21 other one-half; 22 (10) a person receiving benefits under AS 14.25, AS 22.25, AS 39.35, 23 or former AS 39.37 may obtain auditory, visual, and dental insurance for that person 24 and eligible dependents under this section; the level of coverage for persons over 65 25 shall be the same as that available before reaching age 65 except that the benefits 26 payable shall be supplemental to any benefits provided under the federal old age, 27 survivors, and disability insurance program; a person electing to have insurance under 28 this paragraph shall pay the cost of the insurance; the commissioner of administration 29 shall adopt regulations implementing this paragraph; 30 (11) a person receiving benefits under AS 14.25, AS 22.25, AS 39.35, 31 or former AS 39.37 may obtain long-term care insurance for that person and eligible
01 dependents under this section; a person who elects insurance under this paragraph 02 shall pay the cost of the insurance premium; the commissioner of administration shall 03 adopt regulations to implement this paragraph; 04 (12) each licensee holding a current operating agreement for a vending 05 facility under AS 23.15.010 - 23.15.210 shall be covered by the group policy that 06 applies to governmental units other than the state. 07 * Sec. 5. AS 39.30.097(a) is amended to read: 08 (a) The commissioner of administration is authorized to prefund medical 09 benefits provided by AS 14.25.168, AS 22.25.090, AS 39.35.535, and 39.35.537 10 [AND AS 39.35.535] by establishing an irrevocable trust that is exempt from federal 11 income tax under 26 U.S.C. 115 and subject to the applicable financial reporting, 12 disclosure, and actuarial requirements of the Governmental Accounting Standards 13 Board. 14 * Sec. 6. AS 39.30.300 is amended to read: 15 Sec. 39.30.300. State of Alaska Teachers' and Public Employees' Retiree 16 Health Reimbursement Arrangement Plan established. The State of Alaska 17 Teachers' and Public Employees' Retiree Health Reimbursement Arrangement Plan is 18 established for teachers who first become members of the defined contribution plan of 19 the teachers' retirement system under AS 14.25.310 - 14.25.590 on or after July 1, 20 2006, and employees of the state, political subdivisions of the state, and public 21 organizations of the state who first become members [OF THE DEFINED 22 CONTRIBUTION PLAN] of the Public Employees' Retirement System of Alaska 23 (AS 39.35) [PUBLIC EMPLOYEES' RETIREMENT SYSTEM UNDER 24 AS 39.35.700 - 39.35.990] on or after July 1, 2006. 25 * Sec. 7. AS 39.30.380 is amended to read: 26 Sec. 39.30.380. Termination of employment. A person who terminates 27 employment before meeting the eligibility requirements of AS 14.25.470, 28 AS 39.35.537, or 39.35.870 [OR AS 39.35.870] loses any right to the contributions 29 made on behalf of the person to the teachers' and public employees' retiree health 30 reimbursement arrangement trust fund. If a person returns to employment with a 31 participating employer by December 31 of the year in which the person reaches 65
01 years of age, the person's account balance shall be restored in the amount recorded on 02 the date of termination from the trust, adjusted for inflation at the rate of the Consumer 03 Price Index for Anchorage, Alaska. The earlier period of employment with a 04 participating employer shall be credited toward eligibility for medical benefits. 05 * Sec. 8. AS 39.30.390 is amended to read: 06 Sec. 39.30.390. Eligibility and reimbursement. Persons who meet the 07 eligibility requirements of AS 14.25.470, AS 39.35.537, or 39.35.870 [AND 08 AS 39.35.870] are eligible for reimbursements from the individual account established 09 for a member under the plan, except members do not have to retire directly from the 10 system. A person who is the dependent child of an eligible member is eligible for 11 reimbursements if the eligible member and surviving spouse have both died so long as 12 the person meets the definition of dependent child. 13 * Sec. 9. AS 39.30.400(a) is amended to read: 14 (a) The administrator may deduct the cost of monthly premiums from the 15 individual account for retiree major medical insurance on behalf of an eligible person 16 who elected retiree major medical insurance under AS 14.25.480, AS 39.35.537, or 17 39.35.880 [OR AS 39.35.880]. 18 * Sec. 10. AS 39.30.495(5) is amended to read: 19 (5) "eligible person" means a person who meets the eligibility 20 requirements of AS 14.25.470, AS 39.35.537, or 39.35.870 [OR AS 39.35.870]; 21 * Sec. 11. AS 39.35.095 is amended to read: 22 Sec. 39.35.095. Applicability of AS 39.35.095 - 39.35.680. The following 23 provisions of this chapter apply only to members first hired before July 1, 2006, and, 24 regardless of the date of hire, members who are peace officers or firefighters: 25 AS 39.35.095 - 39.35.680. 26 * Sec. 12. AS 39.35.160(a) is amended to read: 27 (a) Subject to (e) of this section, beginning [BEGINNING] January 1, 1987, 28 each peace officer or firefighter shall contribute to the plan an amount equal to seven 29 and one-half percent of the peace officer's or firefighter's compensation. Except as 30 provided in (d) and (e) of this section, beginning January 1, 1987, each other 31 employee shall contribute to the plan an amount equal to six and three-quarters percent
01 of the employee's compensation. [THE CONTRIBUTIONS SHALL BE DEDUCTED 02 BY THE EMPLOYER AT THE END OF EACH PAYROLL PERIOD. THE 03 CONTRIBUTIONS SHALL BE DEDUCTED FROM EMPLOYEE 04 COMPENSATION BEFORE COMPUTATION OF APPLICABLE FEDERAL 05 TAXES, AND THE CONTRIBUTIONS SHALL BE TREATED AS EMPLOYER 06 CONTRIBUTIONS UNDER 26 U.S.C. 414(h)(2). A MEMBER MAY NOT HAVE 07 THE OPTION OF MAKING THE PAYROLL DEDUCTION DIRECTLY INSTEAD 08 OF HAVING THE CONTRIBUTION PICKED UP BY THE EMPLOYER.] 09 * Sec. 13. AS 39.35.160 is amended by adding new subsections to read: 10 (e) Except as provided in (a) of this section, a peace officer or firefighter who 11 first participates in the plan after June 30, 2006, shall contribute to the plan an amount 12 equal to eight percent of the employee's compensation. The board may, from time to 13 time, adjust the employee contribution under this subsection to an amount that is 14 (1) not less than eight percent of the employee's compensation; and 15 (2) not more than 10 percent of the employee's compensation. 16 (f) Contributions under (a) and (e) of this section shall be deducted by the 17 employer at the end of each payroll period. The contributions shall be deducted from 18 employee compensation before computation of applicable federal taxes, and the 19 contributions shall be treated as employer contributions under 26 U.S.C. 414(h)(2). A 20 member may not have the option of making the payroll deduction directly instead of 21 having the contribution picked up by the employer. 22 * Sec. 14. AS 39.35.255 is amended by adding a new subsection to read: 23 (i) The requirements of this section are in addition to the requirements under 24 AS 39.35.257. 25 * Sec. 15. AS 39.35 is amended by adding a new section to read: 26 Sec. 39.35.257. Employer contributions for peace officers and firefighters. 27 An employer that employs a peace officer or firefighter who first participates in the 28 plan after June 30, 2006, shall contribute monthly to the plan a per capita amount, 29 determined by the board, that is equal to 30 (1) not less than 12 percent of the total monthly compensation that the 31 employer pays to all peace officers and firefighters combined;
01 (2) not more than 22 percent of the total monthly compensation that 02 the employer pays to all peace officers and firefighters combined. 03 * Sec. 16. AS 39.35.282 is amended to read: 04 Sec. 39.35.282. Contributions for medical benefits. Contributions made by 05 an employer under AS 39.35.255 and 39.35.280 must [SHALL] be separately 06 computed for benefits provided by AS 39.35.535 and 39.35.537. The contributions 07 computed for benefits provided by AS 39.35.535 must [AND SHALL] be deposited 08 in the Alaska retiree health care trust established under AS 39.30.097(a), and the 09 contributions computed for benefits provided by AS 39.35.537 must be deposited 10 in the teachers' and public employees' retiree health reimbursement arrangement 11 plan trust fund established under AS 39.30.340. 12 * Sec. 17. AS 39.35.340(i) is amended to read: 13 (i) Notwithstanding (d) of this section, a member who retires as a peace officer 14 or firefighter may elect to use five or fewer years of credited service granted under this 15 section in computing years of credited service under AS 39.35.535(c) or 39.35.537. 16 When eligibility for credited service for military service has been established and an 17 election under this subsection has been made, an indebtedness in addition to the 18 indebtedness determined under (b) of this section shall be determined for each year of 19 military service used under this subsection, in an amount based on the increase, if any, 20 in the present value of future benefits for that year as determined by the department. 21 * Sec. 18. AS 39.35.370(a) is amended to read: 22 (a) Subject to AS 39.35.450, a terminated employee who first became a 23 member before July 1, 2006, is eligible for a normal retirement benefit 24 (1) at age 60 with at least five years of credited service; 25 (2) with at least 20 years of credited service as a peace officer or 26 firefighter; or 27 (3) with at least 30 years of credited service for all other employees. 28 * Sec. 19. AS 39.35.370 is amended by adding a new subsection to read: 29 (l) Subject to AS 39.35.450, a terminated employee who first becomes a 30 member after June 30, 2006, is eligible for a normal retirement benefit 31 (1) at age 60 with at least five years of credited service as a peace
01 officer or firefighter; or 02 (2) at age 55 with at least 20 years of credited service as a peace 03 officer or firefighter. 04 * Sec. 20. AS 39.35.381(e) is amended to read: 05 (e) A person who retires under this section is not entitled to disability or death 06 benefits under AS 39.35.400 - 39.35.440, a minimum benefit under AS 39.35.485, or 07 to medical benefits under AS 39.35.535 or 39.35.537. Service earned under this 08 section may not be used for vesting under AS 39.35.095 - 39.35.680. 09 * Sec. 21. AS 39.35.475(a) is amended to read: 10 (a) Subject to (g) of this section, once [ONCE] each year the administrator 11 shall increase benefit payments to eligible disabled members, to persons age 60 or 12 older receiving benefits under this plan in the preceding calendar year, and to persons 13 who have received benefits under this plan for at least five years who are not 14 otherwise eligible for an increase under this section. 15 * Sec. 22. AS 39.35.475(b) is amended to read: 16 (b) Subject to (h) of this section, the [THE] increase in benefit payments 17 applies to total benefit payments except for the cost-of-living allowance under 18 AS 39.35.480. The amount of the increase is a percentage of the current benefit equal 19 to 20 (1) the lesser of 75 percent of the increase in the cost of living in the 21 preceding calendar year or nine percent, for recipients who on July 1 are at least 65 22 years old and for members receiving disability benefits; and 23 (2) the lesser of 50 percent of the increase in the cost of living in the 24 preceding calendar year or six percent, for recipients who on July 1 are at least 60 but 25 less than 65 years old or for recipients who are less than 60 years old on July 1 but 26 who have received benefits from the plan for at least five years. 27 * Sec. 23. AS 39.35.475 is amended by adding new subsections to read: 28 (g) A person who receives a benefit under AS 39.35.370(l) is not eligible to 29 receive an increase in benefits under this section. 30 (h) If the board determines that the plan has an unfunded liability greater than 31 10 percent, the board may reduce the amount of the increase under (b) of this section
01 that is payable to a protective occupation employee who first becomes a member after 02 June 30, 2006. At any time, the board may terminate a reduction made under this 03 subsection. 04 * Sec. 24. AS 39.35.535(a) is amended to read: 05 (a) Except as provided in (d) and (g) of this section, the following persons are 06 entitled to major medical insurance coverage under this section: 07 (1) for employees first hired before July 1, 1986, 08 (A) an employee who is receiving a monthly benefit from the 09 plan and who has elected coverage; 10 (B) the spouse and dependent children of the employee 11 described in (A) of this paragraph; 12 (C) the surviving spouse of a deceased employee who is 13 receiving a monthly benefit from the plan and who has elected coverage; 14 (D) the dependent children of a deceased employee who are 15 dependent on the surviving spouse described in (C) of this paragraph; 16 (2) for members first hired on or after July 1, 1986, 17 (A) an employee who is receiving a monthly benefit from the 18 plan and who has elected coverage for the employee; 19 (B) the spouse of the employee described in (A) of this 20 paragraph if the employee elected coverage for the spouse; 21 (C) the dependent children of the employee described in (A) of 22 this paragraph if the employee elected coverage for the dependent children; 23 (D) the surviving spouse of a deceased employee who is 24 receiving a monthly benefit from the plan and who has elected coverage; 25 (E) the dependent children of a deceased employee who are 26 dependent on the surviving spouse described in (D) of this paragraph if the 27 surviving spouse has elected coverage for the dependent children. 28 * Sec. 25. AS 39.35.535(c) is amended to read: 29 (c) A benefit recipient who became a member before July 1, 2006, or the 30 surviving spouse of the person may elect major medical insurance coverage in 31 accordance with regulations and under the following conditions:
01 (1) a person, other than a disabled member or a disabled member who 02 is appointed to normal retirement, shall [MUST] pay an amount equal to the full 03 monthly group premium for retiree major medical insurance coverage if the person is 04 (A) younger than 60 years of age and has less than 05 (i) 25 years of credited service as a peace officer under 06 AS 39.35.360 and 39.35.370; or 07 (ii) 30 years of credited service under AS 39.35.360 and 08 39.35.370 that is not service as a peace officer; or 09 (B) of any age and has less than 10 years of credited service; 10 (2) a person is not required to make premium payments for retiree 11 major medical coverage if the person 12 (A) is a disabled member; 13 (B) is a disabled member who is appointed to normal 14 retirement; 15 (C) is 60 years of age or older and has at least 10 years of 16 credited service; or 17 (D) has at least 18 (i) 25 years of credited service as a peace officer under 19 AS 39.35.360 and 39.35.370; or 20 (ii) 30 years of credited service under AS 39.35.360 and 21 39.35.370 not as a peace officer. 22 * Sec. 26. AS 39.35.535 is amended by adding a new subsection to read: 23 (g) A benefit recipient who is a peace officer or firefighter and who first 24 becomes a member after June 30, 2006, or a benefit recipient who is the surviving 25 spouse of a person who is a peace officer or firefighter and who first becomes a 26 member after June 30, 2006, may elect medical benefits under AS 39.35.537. 27 * Sec. 27. AS 39.35 is amended by adding a new section to read: 28 Sec. 39.35.537. Medical benefit; eligibility of peace officers or firefighters 29 first hired after June 30, 2006; surviving spouses and dependents. (a) A member 30 who is a peace officer or firefighter hired after June 30, 2006, is entitled to medical 31 benefits under this section. A member who applies for medical benefits under this
01 section shall apply on the forms and in the manner prescribed by the administrator. 02 (b) The member's surviving spouse is eligible to elect medical benefits if the 03 member had retired or was eligible for retirement and medical benefits at the time of 04 the member's death. 05 (c) The medical benefits available to eligible persons are access to the retiree 06 major medical insurance plan and to the health reimbursement arrangement plan under 07 AS 39.30.300. Access to the retiree major medical insurance plan means that an 08 eligible person may not be denied insurance coverage except for failure to pay the 09 required premium. 10 (d) Retiree major medical insurance plan coverage elected by an eligible 11 member under this section covers the eligible member, the spouse of the eligible 12 member, and the dependent children of the eligible member. 13 (e) Retiree major medical insurance plan coverage elected by a surviving 14 spouse of an eligible member under this section covers the surviving spouse and the 15 dependent children of the eligible member who are dependent on the surviving spouse. 16 (f) Participation in the retiree major medical insurance plan is not required in 17 order to participate in the health reimbursement arrangement plan. 18 (g) A person eligible for medical benefits under this section is not required to 19 participate in the health reimbursement arrangement plan in order to participate in the 20 retiree major medical insurance plan. 21 (h) A person who is eligible for medical benefits under this section must make 22 the irrevocable election to participate or not participate in the retiree major medical 23 insurance plan by reaching 70 1/2 years of age, or upon application for retirement and 24 medical benefits, whichever is later. 25 (i) Major medical insurance coverage takes effect on the first day of the month 26 following the date of the administrator's approval of the election and stops when the 27 person who elects coverage dies or fails to make a required premium payment. 28 (j) The coverage for persons 65 years of age or older is the same as that 29 available for persons under 65 years of age. The benefits payable to those persons 65 30 years of age or older supplement any benefits provided under the federal old age, 31 survivors and disability insurance program.
01 (k) The medical and optional insurance premiums owed by the person who 02 elects coverage may be deducted from the health reimbursement arrangement. If the 03 amount of the health reimbursement arrangement becomes insufficient to pay the 04 premiums, the person who elects coverage under (a) of this section shall pay the 05 premiums directly. 06 (l) The cost of premiums for retiree major medical insurance coverage under 07 this section for an eligible member or surviving spouse who is 08 (1) not eligible for Medicare is an amount equal to the full monthly 09 group premiums for retiree major medical insurance coverage; 10 (2) eligible for Medicare is the following percentage of the premium 11 amounts established for retirees who are eligible for Medicare: 12 (A) 30 percent if the member had 10 or more, but less than 15, 13 years of service; 14 (B) 25 percent if the member had 15 or more, but less than 20, 15 years of service; 16 (C) 20 percent if the member had 20 or more, but less than 25, 17 years of service; 18 (D) 15 percent if the member had 25 or more, but less than 30, 19 years of service; 20 (E) 10 percent if the member had 30 or more years of service. 21 (m) The eligibility for retiree major medical insurance coverage for an 22 alternate payee under a qualified domestic relations order shall be determined based 23 on the eligibility of the member to elect coverage. The alternate payee shall pay the 24 full monthly premium for retiree major medical insurance coverage. 25 (n) A person who is entitled to retiree major medical insurance coverage under 26 this section shall 27 (1) be informed by the administrator in writing 28 (A) that the health insurance coverage available to retired 29 members may be different from the health insurance coverage provided to 30 employees; 31 (B) of time limits for selecting optional health insurance
01 coverage and whether the election is irrevocable; and 02 (2) indicate in writing on a form provided by the administrator that the 03 person has received the information required by this subsection and whether the 04 person has chosen to receive optional health insurance coverage. 05 (o) The monthly group premiums for retiree major medical insurance coverage 06 under this section are established by the administrator in accordance with 07 AS 39.30.095. Nothing in this chapter guarantees a person who elects coverage under 08 (a) of this section a monthly group premium rate for retiree major medical insurance 09 coverage other than the premium in effect for the month in which the premium is due 10 for coverage for that month. 11 (p) In this section, "health reimbursement arrangement plan" means the plan 12 established in AS 39.30.300. 13 * Sec. 28. AS 39.35.680(4) is amended to read: 14 (4) "average monthly compensation" means the result obtained by 15 dividing the compensation earned by an employee during a considered period by the 16 number of months, including fractional months, for which compensation was earned; 17 an employee must have at least 115 days of credited service in the last payroll year in 18 order for that year to be used as part of the consecutive payroll years; the considered 19 period consists of 20 (A) for employees first hired before July 1, 1996, the three 21 consecutive payroll years during the period of credited service that yield the 22 highest average; 23 (B) for employees first hired on or after July 1, 1996, the five 24 consecutive payroll years during the period of credited service that yield the 25 highest average; 26 (C) if the employee does not have the number of consecutive 27 payroll years required by (A) or (B) of this paragraph, the actual number of 28 months, including fractional months, that the employee worked; 29 (D) for an employee who has made an election under 30 AS 39.35.300(c) or 39.35.310(c), the actual number of months, including 31 fractional months, that the employee worked;
01 (E) for a peace officer or firefighter hired before July 1, 2006 02 [AT ANY TIME], the three consecutive payroll years during the period of 03 credited service that yield the highest average; 04 (F) for a peace officer or firefighter hired after June 30, 05 2006, the five consecutive payroll years during the period of credited 06 service that yield the highest average; 07 * Sec. 29. AS 39.35.680(18) is amended to read: 08 (18) "employer" means 09 (A) the State of Alaska; 10 (B) a political subdivision or public organization of the state 11 that participates in the plan based on a resolution to participate in the plan that 12 was approved by the administrator 13 (i) on or before July 1, 2006; or 14 (ii) for peace officers and firefighters; or 15 (C) a political subdivision or public organization of the state 16 that assumes liability for participation in the plan by another political 17 subdivision or public organization of the state [,] as a result of consolidation 18 or reorganization that occurs 19 (i) at any time, with respect to peace officers or 20 firefighters; 21 (ii) on or after July 1, 2006, with respect to employees 22 who are not peace officers or firefighters [ASSUMES LIABILITY 23 UNDER THE PLAN OF A POLITICAL SUBDIVISION OR PUBLIC 24 ORGANIZATION DESCRIBED IN (B) OF THIS PARAGRAPH]; 25 * Sec. 30. AS 39.35.680(26) is amended to read: 26 (26) "normal retirement" means retirement for a member who is 27 eligible to receive benefits under AS 39.35.370(a) or (l) or under 39.35.385(a) or (f); 28 * Sec. 31. AS 39.35.720 is amended to read: 29 Sec. 39.35.720. Membership. Except as provided in AS 39.35.095, an [AN] 30 employee who becomes a member on or after July 1, 2006, shall participate in the plan 31 set out in AS 39.35.700 - 39.35.990.
01 * Sec. 32. AS 39.35.750 is amended by adding a new subsection to read: 02 (f) This section does not apply to contributions made under AS 39.35.257 and 03 does not require an employer who makes a contribution for an employee under 04 AS 39.35.257 to make another contribution for that employee. 05 * Sec. 33. The uncodified law of the State of Alaska is amended by adding a new section to 06 read: 07 RETIREMENT PLAN ELECTION. (a) A peace officer or firefighter who was first 08 hired after June 30, 2006, and before the effective date of this section, and who is a member 09 of the defined contribution retirement plan of the public employees' retirement system under 10 AS 39.35.700 - 39.35.990, may, within 90 days after the effective date of this section, make a 11 one-time election to participate in the defined benefit retirement plan under AS 39.35.095 - 12 39.35.680 and to transfer all contributions that have been made or should be made to the 13 defined contribution retirement plan for service the member completes before the effective 14 date of the member's participation in the defined benefit retirement plan. The transferred 15 contributions shall be used to purchase credited service in the defined benefit retirement plan 16 on an actuarial equivalent basis determined by the Alaska Retirement Management Board 17 established under AS 37.10.210. 18 (b) In this section, "peace officer" or "firefighter" has the meaning given in 19 AS 39.35.680. 20 * Sec. 34. The uncodified law of the State of Alaska is amended by adding a new section to 21 read: 22 RETIREMENT PLAN ELECTION PROCEDURE; REGULATIONS REQUIRED. 23 (a) An election made under sec. 33 of this Act to participate in the defined benefit retirement 24 plan under AS 39.35.095 - 39.35.680 must be made in writing on one or more forms and in 25 the manner prescribed by the administrator. Before accepting an election to participate in the 26 defined benefit retirement plan, the administrator shall provide the employee who plans on 27 making an election to participate in the defined benefit retirement plan with information, 28 including calculations to illustrate the effect of moving the employee's retirement plan from 29 the defined contribution retirement plan to the defined benefit retirement plan as well as other 30 information that informs the employee of potential consequences of the employee's election. 31 (b) An election made under sec. 33 of this Act to participate in the defined benefit
01 retirement plan is irrevocable. On the effective date of the election, an eligible employee who 02 makes the election shall be enrolled as a member of the defined benefit retirement plan, and 03 the employee's participation in the plan shall be governed by the applicable provisions of the 04 defined benefit retirement plan. The employee's enrollment in the defined benefit retirement 05 plan is retroactive to the date of hire. An election made by an eligible employee who is 06 married is not effective unless the election is signed by the employee's spouse. 07 (c) When an eligible employee makes a one-time election under sec. 33 of this Act, 08 the administrator shall cause the total amount of the employee's employee and employer 09 contributions, with investment earnings and losses through the day of the employee's election 10 to participate as a member in the defined benefit retirement plan, to be actuarially calculated 11 and, subject to (d) of this section, transferred to the pension fund in the defined benefit 12 retirement plan. On the effective date of the employee's participation in the defined benefit 13 retirement plan, the employee shall be credited with service in the defined benefit retirement 14 plan that may be purchased under an actuarial equivalent purchase formula as determined by 15 the board. The board shall establish transfer procedures by regulation, but the actual transfer 16 may not occur later than 30 days after the date the administrator receives the employee's 17 completed forms under (a) of this section, unless the major financial markets for securities 18 available for a transfer are seriously disrupted by an unforeseen event that also causes the 19 suspension of trading on any national securities exchange in the country where the securities 20 were issued. In that event, the 30-day period may be extended by a resolution of the board. A 21 transfer is not commissionable or subject to other fees and may be in the form of cash or a 22 security as determined by the board. A security shall be valued on the date of receipt in the 23 employee's account. 24 (d) If the value actuarially calculated under (c) of this section is insufficient to pay for 25 service credit equal to the employee's actual service, the administrator shall allow the 26 employee the option of creating an indebtedness up to the amount needed to eliminate the 27 insufficiency; however, if that value exceeds the amount needed to pay for a service credit 28 equal to the employee's actual service, the administrator shall cause the excess to remain in 29 the employee's retirement plan established under AS 39.35.700 - 39.35.990. An excess under 30 this subsection may not be used to purchase service credit in a retirement plan administered 31 under AS 39.35.
01 (e) The provisions of this section are subject to the requirements of the Internal 02 Revenue Code and the limitations under AS 39.35.115, 39.35.678, 39.35.710(c) and (d), and 03 39.35.895. 04 (f) In this section, 05 (1) "administrator" means the commissioner of administration or the person 06 designated by the commissioner of administration under AS 39.35.003 for a public 07 employees' retirement plan; 08 (2) "board" means the Alaska Retirement Management Board established 09 under AS 37.10.210; 10 (3) "defined benefit retirement plan" means the retirement plan established 11 under AS 39.35.095 - 39.35.680 for a public employee; 12 (4) "defined contribution retirement plan" means the retirement plan 13 established under AS 39.35.700 - 39.35.990 for a public employee; 14 (5) "Internal Revenue Code" has the meaning given in AS 39.35.990. 15 * Sec. 35. The uncodified law of the State of Alaska is amended by adding a new section to 16 read: 17 ADOPTION OF REGULATIONS. The commissioner of administration shall adopt 18 regulations necessary to implement the changes made by this Act. The regulations take effect 19 under AS 44.62 (Administrative Procedure Act), but not before the effective date of the law 20 implemented by the regulation. 21 * Sec. 36. Section 35 of this Act takes effect immediately under AS 01.10.070(c). 22 * Sec. 37. Except as provided in sec. 36 of this Act, this Act takes effect July 1, 2018.