SB 35: "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, disability, and death benefits; relating to liability of the Public Employees' Retirement System of Alaska; and providing for an effective date."
00 SENATE BILL NO. 35 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, disability, 04 and death benefits; relating to liability of the Public Employees' Retirement System of 05 Alaska; and providing for an effective date." 06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 07 * Section 1. AS 37.10.220(a) is amended to read: 08 (a) The board shall 09 (1) hold regular and special meetings at the call of the chair or of at 10 least five members; meetings are open to the public, and the board shall keep a full 11 record of all its proceedings; 12 (2) after reviewing recommendations from the Department of 13 Revenue, adopt investment policies for each of the funds entrusted to the board;
01 (3) determine the appropriate investment objectives for the defined 02 benefit plans established under the teachers' retirement system under AS 14.25 and the 03 public employees' retirement system under AS 39.35; 04 (4) assist in prescribing the policies for the proper operation of the 05 systems and take other actions necessary to carry out the intent and purpose of the 06 systems in accordance with AS 37.10.210 - 37.10.390; 07 (5) provide a range of investment options and establish the rules by 08 which participants can direct their investments among those options with respect to 09 accounts established under 10 (A) AS 14.25.340 - 14.25.350 (teachers' retirement system 11 defined contribution individual accounts); 12 (B) AS 39.30.150 - 39.30.180 (State of Alaska Supplementary 13 Annuity Plan); 14 (C) AS 39.35.730 - 39.35.750 (public employees' retirement 15 system defined contribution individual accounts); and 16 (D) AS 39.45.010 - 39.45.060 (public employees' deferred 17 compensation program); 18 (6) establish the rate of interest that shall be annually credited to each 19 member's individual contribution account in accordance with AS 14.25.145 and 20 AS 39.35.100 and the rate of interest that shall be annually credited to each member's 21 account in the health reimbursement arrangement plan under AS 39.30.300 - 22 39.30.495; the rate of interest shall be adopted on the basis of the probable effective 23 rate of interest on a long-term basis, and the rate may be changed from time to time; 24 (7) adopt a contribution surcharge as necessary under AS 39.35.160(c); 25 (8) coordinate with the retirement system administrator to have an 26 annual actuarial valuation of each retirement system prepared to determine system 27 assets, accrued liabilities, and funding ratios and to certify to the appropriate 28 budgetary authority of each employer in the system 29 (A) an appropriate contribution rate for normal costs; [AND] 30 (B) an appropriate contribution rate for liquidating any past 31 service liability; in this subparagraph, the appropriate contribution rate for
01 liquidating the past service liability of the defined benefit retirement plan under 02 AS 14.25.009 - 14.25.220 or the past service liability of the defined benefit 03 retirement plan under AS 39.35.095 - 39.35.680 must be determined by a level 04 percent of pay method based on amortization of the past service liability for a 05 closed term of 25 years; 06 (C) an appropriate monthly employer contribution rate 07 under AS 39.35.255(j); and 08 (D) appropriate adjustments, if any, under AS 39.35.160(e) 09 and 39.35.475; 10 (9) review actuarial assumptions prepared and certified by a member 11 of the American Academy of Actuaries and conduct experience analyses of the 12 retirement systems not less than once every four years, except for health cost 13 assumptions, which shall be reviewed annually; the results of all actuarial assumptions 14 prepared under this paragraph shall be reviewed and certified by a second member of 15 the American Academy of Actuaries before presentation to the board; 16 (10) contract for an independent audit of the state's actuary not less 17 than once every four years; 18 (11) contract for an independent audit of the state's performance 19 consultant not less than once every four years; 20 (12) obtain an external performance review to evaluate the investment 21 policies of each fund entrusted to the board and report the results of the review to the 22 appropriate fund fiduciary; 23 (13) by the first day of each regular legislative session, report to the 24 governor, the legislature, and the individual employers participating in the state's 25 retirement systems on the financial condition of the systems in regard to 26 (A) the valuation of trust fund assets and liabilities; 27 (B) current investment policies adopted by the board; 28 (C) a summary of assets held in trust listed by the categories of 29 investment; 30 (D) the income and expenditures for the previous fiscal year; 31 (E) the return projections for the next calendar year;
01 (F) one-year, three-year, five-year, and 10-year investment 02 performance for each of the funds entrusted to the board; and 03 (G) other statistical data necessary for a proper understanding 04 of the financial status of the systems; 05 (14) submit quarterly updates of the investment performance reports to 06 the Legislative Budget and Audit Committee; 07 (15) develop an annual operating budget; [AND] 08 (16) administer pension forfeitures required under AS 37.10.310 using 09 the procedures of AS 44.62 (Administrative Procedure Act); and 10 (17) determine the amount of the monthly employer contribution 11 under AS 39.35.255(j). 12 * Sec. 2. AS 37.10.220(b) is amended to read: 13 (b) The board may 14 (1) employ outside investment advisors to review investment policies; 15 (2) enter into an agreement with the fiduciary of another state fund in 16 order to assume the management and investment of those assets; 17 (3) contract for other services necessary to execute the board's powers 18 and duties; 19 (4) enter into confidentiality agreements that would exempt records 20 from AS 40.25.110 and 40.25.120 if the records contain information that could affect 21 the value of investment by the board or that could impair the ability of the board to 22 acquire, maintain, or dispose of investments; 23 (5) adjust the amount of the increase in benefits payable to a peace 24 officer or firefighter who first becomes a member after June 30, 2006, as 25 provided under AS 39.35.475; 26 (6) adjust employee contribution rates under AS 39.35.160(e). 27 * Sec. 3. AS 37.10.390 is amended by adding a new paragraph to read: 28 (5) "peace officer" or "firefighter" has the meaning given in 29 AS 39.35.680. 30 * Sec. 4. AS 39.30.090(a) is amended to read: 31 (a) The Department of Administration may obtain a policy or policies of group
01 insurance covering state employees, persons entitled to coverage under AS 14.25.168, 02 14.25.480, AS 22.25.090, AS 39.35.535, 39.35.537, 39.35.880, or former 03 AS 39.37.145, employees of other participating governmental units, or persons 04 entitled to coverage under AS 23.15.136, subject to the following conditions: 05 (1) a group insurance policy shall provide one or more of the following 06 benefits: life insurance, accidental death and dismemberment insurance, weekly 07 indemnity insurance, hospital expense insurance, surgical expense insurance, dental 08 expense insurance, audiovisual insurance, or other medical care insurance; 09 (2) each eligible employee of the state, the spouse and the unmarried 10 children chiefly dependent on the eligible employee for support, and each eligible 11 employee of another participating governmental unit shall be covered by the group 12 policy, unless exempt under regulations adopted by the commissioner of 13 administration; 14 (3) a governmental unit may participate under a group policy if 15 (A) its governing body adopts a resolution authorizing 16 participation and payment of required premiums; 17 (B) a certified copy of the resolution is filed with the 18 Department of Administration; and 19 (C) the commissioner of administration approves the 20 participation in writing; 21 (4) in procuring a policy of group health or group life insurance as 22 provided under this section or excess loss insurance as provided in AS 39.30.091, the 23 Department of Administration shall comply with the dual choice requirements of 24 AS 21.86.310, and shall obtain the insurance policy from an insurer authorized to 25 transact business in the state under AS 21.09, a hospital or medical service corporation 26 authorized to transact business in this state under AS 21.87, or a health maintenance 27 organization authorized to operate in this state under AS 21.86; an excess loss 28 insurance policy may be obtained from a life or health insurer authorized to transact 29 business in this state under AS 21.09 or from a hospital or medical service corporation 30 authorized to transact business in this state under AS 21.87; 31 (5) the Department of Administration shall make available bid
01 specifications for desired insurance benefits or for administration of benefit claims and 02 payments to (A) all insurance carriers authorized to transact business in this state 03 under AS 21.09 and all hospital or medical service corporations authorized to transact 04 business under AS 21.87 who are qualified to provide the desired benefits; and (B) 05 insurance carriers authorized to transact business in this state under AS 21.09, hospital 06 or medical service corporations authorized to transact business under AS 21.87, and 07 third-party administrators licensed to transact business in this state and qualified to 08 provide administrative services; the specifications shall be made available at least once 09 every five years; the lowest responsible bid submitted by an insurance carrier, hospital 10 or medical service corporation, or third-party administrator with adequate servicing 11 facilities shall govern selection of a carrier, hospital or medical service corporation, or 12 third-party administrator under this section or the selection of an insurance carrier or a 13 hospital or medical service corporation to provide excess loss insurance as provided in 14 AS 39.30.091; 15 (6) if the aggregate of dividends payable under the group insurance 16 policy exceeds the governmental unit's share of the premium, the excess shall be 17 applied by the governmental unit for the sole benefit of the employees; 18 (7) a person receiving benefits under AS 14.25.110, AS 22.25, 19 AS 39.35, or former AS 39.37 may continue the life insurance coverage that was in 20 effect under this section at the time of termination of employment with the state or 21 participating governmental unit; 22 (8) a person electing to have insurance under (7) of this subsection 23 shall pay the cost of this insurance; 24 (9) for each permanent part-time employee electing coverage under 25 this section, the state shall contribute one-half the state contribution rate for permanent 26 full-time state employees, and the permanent part-time employee shall contribute the 27 other one-half; 28 (10) a person receiving benefits under AS 14.25, AS 22.25, AS 39.35, 29 or former AS 39.37 may obtain auditory, visual, and dental insurance for that person 30 and eligible dependents under this section; the level of coverage for persons over 65 31 shall be the same as that available before reaching age 65 except that the benefits
01 payable shall be supplemental to any benefits provided under the federal old age, 02 survivors, and disability insurance program; a person electing to have insurance under 03 this paragraph shall pay the cost of the insurance; the commissioner of administration 04 shall adopt regulations implementing this paragraph; 05 (11) a person receiving benefits under AS 14.25, AS 22.25, AS 39.35, 06 or former AS 39.37 may obtain long-term care insurance for that person and eligible 07 dependents under this section; a person who elects insurance under this paragraph 08 shall pay the cost of the insurance premium; the commissioner of administration shall 09 adopt regulations to implement this paragraph; 10 (12) each licensee holding a current operating agreement for a vending 11 facility under AS 23.15.010 - 23.15.210 shall be covered by the group policy that 12 applies to governmental units other than the state. 13 * Sec. 5. AS 39.30.097(a) is amended to read: 14 (a) The commissioner of administration is authorized to prefund medical 15 benefits provided by AS 14.25.168, AS 22.25.090, [AND] AS 39.35.535, and 16 39.35.537 by establishing an irrevocable trust that is exempt from federal income tax 17 under 26 U.S.C. 115 and subject to the applicable financial reporting, disclosure, and 18 actuarial requirements of the Governmental Accounting Standards Board. 19 * Sec. 6. AS 39.30.097(b) is amended to read: 20 (b) The commissioner of administration is authorized to prefund medical 21 benefits provided by AS 14.25.480, AS 39.30.300, AS 39.35.537, and 39.35.880 22 [AS 39.35.880] by establishing an irrevocable trust that is exempt from federal income 23 tax under 26 U.S.C. 115 and subject to the applicable financial reporting, disclosure, 24 and actuarial requirements of the Governmental Accounting Standards Board. 25 * Sec. 7. AS 39.30.300 is amended to read: 26 Sec. 39.30.300. State of Alaska Teachers' and Public Employees' Retiree 27 Health Reimbursement Arrangement Plan established. The State of Alaska 28 Teachers' and Public Employees' Retiree Health Reimbursement Arrangement Plan is 29 established for teachers who first become members of the defined contribution plan of 30 the teachers' retirement system under AS 14.25.310 - 14.25.590 on or after July 1, 31 2006, and employees of the state, political subdivisions of the state, and public
01 organizations of the state who first become members [OF THE DEFINED 02 CONTRIBUTION PLAN] of the Public Employees' Retirement System of Alaska 03 (AS 39.35) [PUBLIC EMPLOYEES' RETIREMENT SYSTEM UNDER 04 AS 39.35.700 - 39.35.990] on or after July 1, 2006. 05 * Sec. 8. AS 39.30.380 is amended to read: 06 Sec. 39.30.380. Termination of employment. A person who terminates 07 employment before meeting the eligibility requirements of AS 14.25.470, 08 AS 39.35.537, or 39.35.870 [OR AS 39.35.870] loses any right to the contributions 09 made on behalf of the person to the teachers' and public employees' retiree health 10 reimbursement arrangement trust fund. If a person returns to employment with a 11 participating employer by December 31 of the year in which the person reaches 65 12 years of age, the person's account balance shall be restored in the amount recorded on 13 the date of termination from the trust, adjusted for inflation at the rate of the Consumer 14 Price Index for Anchorage, Alaska. The earlier period of employment with a 15 participating employer shall be credited toward eligibility for medical benefits. 16 * Sec. 9. AS 39.30.390 is amended to read: 17 Sec. 39.30.390. Eligibility and reimbursement. Persons who meet the 18 eligibility requirements of AS 14.25.470, AS 39.35.537, or 39.35.870 [AND 19 AS 39.35.870] are eligible for reimbursements from the individual account established 20 for a member under the plan, except members do not have to retire directly from the 21 system. A person who is the dependent child of an eligible member is eligible for 22 reimbursements if the eligible member and surviving spouse have both died so long as 23 the person meets the definition of dependent child. 24 * Sec. 10. AS 39.30.400(a) is amended to read: 25 (a) The administrator may deduct the cost of monthly premiums from the 26 individual account for retiree major medical insurance on behalf of an eligible person 27 who elected retiree major medical insurance under AS 14.25.480, AS 39.35.537, or 28 39.35.880 [OR AS 39.35.880]. 29 * Sec. 11. AS 39.30.495(5) is amended to read: 30 (5) "eligible person" means a person who meets the eligibility 31 requirements of AS 14.25.470, AS 39.35.537, or 39.35.870 [OR AS 39.35.870];
01 * Sec. 12. AS 39.35.095 is amended to read: 02 Sec. 39.35.095. Applicability of AS 39.35.095 - 39.35.680. The 03 [FOLLOWING] provisions of AS 39.35.095 - 39.35.680 [THIS CHAPTER] apply 04 only to members 05 (1) first hired before July 1, 2006; or 06 (2) who are peace officers or firefighters and 07 (A) former members of the defined contribution retirement 08 plan under AS 39.35.700 - 39.35.990; or 09 (B) first hired after June 30, 2006, and have not been 10 members of the defined contribution retirement plan under AS 39.35.700 - 11 39.35.990 [: AS 39.35.095 - 39.35.680]. 12 * Sec. 13. AS 39.35.160(a) is amended to read: 13 (a) Subject to (e) of this section, beginning [BEGINNING] January 1, 1987, 14 each peace officer or firefighter shall contribute to the plan an amount equal to seven 15 and one-half percent of the peace officer's or firefighter's compensation. Except as 16 provided in (d) and (e) of this section, beginning January 1, 1987, each other 17 employee shall contribute to the plan an amount equal to six and three-quarters percent 18 of the employee's compensation. [THE CONTRIBUTIONS SHALL BE DEDUCTED 19 BY THE EMPLOYER AT THE END OF EACH PAYROLL PERIOD. THE 20 CONTRIBUTIONS SHALL BE DEDUCTED FROM EMPLOYEE 21 COMPENSATION BEFORE COMPUTATION OF APPLICABLE FEDERAL 22 TAXES, AND THE CONTRIBUTIONS SHALL BE TREATED AS EMPLOYER 23 CONTRIBUTIONS UNDER 26 U.S.C. 414(h)(2). A MEMBER MAY NOT HAVE 24 THE OPTION OF MAKING THE PAYROLL DEDUCTION DIRECTLY INSTEAD 25 OF HAVING THE CONTRIBUTION PICKED UP BY THE EMPLOYER.] 26 * Sec. 14. AS 39.35.160 is amended by adding new subsections to read: 27 (e) A peace officer or firefighter who first participates in the plan after 28 June 30, 2006, shall contribute to the plan an amount equal to eight percent of the 29 employee's compensation. The board may, from time to time, adjust the employee 30 contribution under this subsection to an amount that, 31 (1) if decreased, is not less than eight percent of the employee's
01 compensation; and 02 (2) if increased, is not more than 12 percent of the employee's 03 compensation. 04 (f) Contributions under (a) and (e) of this section shall be deducted by the 05 employer at the end of each payroll period. The contributions shall be deducted from 06 employee compensation before computation of applicable federal taxes, and the 07 contributions shall be treated as employer contributions under 26 U.S.C. 414(h)(2). A 08 member may not have the option of making the payroll deduction directly instead of 09 having the contribution picked up by the employer. 10 * Sec. 15. AS 39.35.255(a) is amended to read: 11 (a) Each employer, except as provided in (h) and (j) of this section, shall 12 contribute to the system every payroll period an amount calculated by applying a rate 13 of 22 percent of the greater of the total of all base salaries 14 (1) paid by the employer to employees, other than peace officers or 15 firefighters who first became members of the plan after June 30, 2006, who are 16 active members of the system, including any adjustments to contributions required by 17 AS 39.35.520; or 18 (2) paid by the employer to employees, other than peace officers or 19 firefighters who first became members of the plan after June 30, 2006, who were 20 active members of the system during the corresponding payroll period for the fiscal 21 year ending 22 (A) June 30, 2008; or 23 (B) June 30, 2012, if that total is less than the total under (A) of 24 this paragraph, and the employer is a municipality in which the population 25 decreased by more than 25 percent between 2000 and 2010, according to the 26 decennial census conducted by the United States Bureau of the Census. 27 * Sec. 16. AS 39.35.255(d) is amended to read: 28 (d) Notwithstanding (a) and (j) of this section, the annual employer 29 contribution rate may not be less than the rate sufficient to allow payment of the 30 employer normal cost and the employer contributions required under AS 39.30.370 31 and AS 39.35.750.
01 * Sec. 17. AS 39.35.255(e) is amended to read: 02 (e) An employer of a retired member rehired under AS 39.35.150 shall include 03 that member's base salary when calculating the contribution amount established in (a) 04 or (j) of this section. 05 * Sec. 18. AS 39.35.255 is amended by adding new subsections to read: 06 (j) An employer that employs a peace officer or firefighter who first 07 participates in the plan after June 30, 2006, shall contribute to the system every payroll 08 period an amount equal to the greater of 09 (1) a per capita amount that is calculated by applying a rate, 10 determined by the board, of not less than 12 percent of the total monthly compensation 11 the employer pays to all peace officers and firefighters who first became members of 12 the plan after June 30, 2006; and 13 (2) a per capita amount, determined by the board, that is equal to the 14 amount calculated under (a) of this section expressed on a per capita basis. 15 (k) The board may, from time to time, increase the percentage rate determined 16 under (j)(1) of this section; however, that increase must be based on a concurrent 17 increase, if any, in the employee contribution rate under AS 39.35.160(e). 18 * Sec. 19. AS 39.35.282 is amended to read: 19 Sec. 39.35.282. Contributions for medical benefits. Contributions made by 20 an employer under AS 39.35.255 and 39.35.280 must [SHALL] be separately 21 computed for benefits provided by AS 39.35.535 and 39.35.537. The contributions 22 computed for benefits provided by AS 39.35.535 must [AND SHALL] be deposited 23 in the Alaska retiree health care trust established under AS 39.30.097(a), and the 24 contributions computed for benefits provided by AS 39.35.537 must be deposited 25 in the teachers' and public employees' retiree health reimbursement arrangement 26 plan trust fund established under AS 39.30.340. 27 * Sec. 20. AS 39.35.370(a) is amended to read: 28 (a) Subject to AS 39.35.450, a terminated employee who first became a 29 member before July 1, 2006, is eligible for a normal retirement benefit 30 (1) at age 60 with at least five years of credited service; 31 (2) with at least 20 years of credited service as a peace officer or
01 firefighter; or 02 (3) with at least 30 years of credited service for all other employees. 03 * Sec. 21. AS 39.35.370 is amended by adding a new subsection to read: 04 (l) Subject to AS 39.35.450, a terminated employee who first becomes a 05 member after June 30, 2006, is eligible for a normal retirement benefit 06 (1) at age 60 with at least five years of credited service in the system as 07 a peace officer or firefighter; or 08 (2) at age 55 with at least 20 years of credited service in the system as 09 a peace officer or firefighter. 10 * Sec. 22. AS 39.35.381(e) is amended to read: 11 (e) A person who retires under this section is not entitled to disability or death 12 benefits under AS 39.35.400 - 39.35.440, a minimum benefit under AS 39.35.485, or 13 to medical benefits under AS 39.35.535 or 39.35.537. Service earned under this 14 section may not be used for vesting under AS 39.35.095 - 39.35.680. 15 * Sec. 23. AS 39.35.475(a) is amended to read: 16 (a) Subject to (g) of this section, once [ONCE] each year the administrator 17 shall increase benefit payments to eligible disabled members, to persons age 60 or 18 older receiving benefits under this plan in the preceding calendar year, and to persons 19 who have received benefits under this plan for at least five years who are not 20 otherwise eligible for an increase under this section. 21 * Sec. 24. AS 39.35.475(b) is amended to read: 22 (b) Subject to (h) of this section, the [THE] increase in benefit payments 23 applies to total benefit payments except for the cost-of-living allowance under 24 AS 39.35.480. The amount of the increase is a percentage of the current benefit equal 25 to 26 (1) the lesser of 75 percent of the increase in the cost of living in the 27 preceding calendar year or nine percent, for recipients who on July 1 are at least 65 28 years old and for members receiving disability benefits; and 29 (2) the lesser of 50 percent of the increase in the cost of living in the 30 preceding calendar year or six percent, for recipients who on July 1 are at least 60 but 31 less than 65 years old or for recipients who are less than 60 years old on July 1 but
01 who have received benefits from the plan for at least five years. 02 * Sec. 25. AS 39.35.475 is amended by adding new subsections to read: 03 (g) A person who receives a benefit under AS 39.35.370(l) is eligible to 04 receive an increase in benefits under this section. 05 (h) If the board determines that the portion of the unfunded liability of the plan 06 that is attributable to all peace officers and firefighters who first become members of 07 the plan after June 30, 2006, is greater than 10 percent, the board may reduce the 08 amount of the increase under (b) of this section that is payable to a peace officer or 09 firefighter who first becomes a member after June 30, 2006. At any time, the board 10 may terminate a reduction made under this subsection. 11 * Sec. 26. AS 39.35.535(a) is amended to read: 12 (a) Except as provided in (d) and (g) of this section, the following persons are 13 entitled to major medical insurance coverage under this section: 14 (1) for employees first hired before July 1, 1986, 15 (A) an employee who is receiving a monthly benefit from the 16 plan and who has elected coverage; 17 (B) the spouse and dependent children of the employee 18 described in (A) of this paragraph; 19 (C) the surviving spouse of a deceased employee who is 20 receiving a monthly benefit from the plan and who has elected coverage; 21 (D) the dependent children of a deceased employee who are 22 dependent on the surviving spouse described in (C) of this paragraph; 23 (2) for members first hired on or after July 1, 1986, 24 (A) an employee who is receiving a monthly benefit from the 25 plan and who has elected coverage for the employee; 26 (B) the spouse of the employee described in (A) of this 27 paragraph if the employee elected coverage for the spouse; 28 (C) the dependent children of the employee described in (A) of 29 this paragraph if the employee elected coverage for the dependent children; 30 (D) the surviving spouse of a deceased employee who is 31 receiving a monthly benefit from the plan and who has elected coverage;
01 (E) the dependent children of a deceased employee who are 02 dependent on the surviving spouse described in (D) of this paragraph if the 03 surviving spouse has elected coverage for the dependent children. 04 * Sec. 27. AS 39.35.535(c) is amended to read: 05 (c) A benefit recipient who became a member before July 1, 2006, or the 06 surviving spouse of the member may elect major medical insurance coverage in 07 accordance with regulations and under the following conditions: 08 (1) a person, other than a disabled member or a disabled member who 09 is appointed to normal retirement, shall [MUST] pay an amount equal to the full 10 monthly group premium for retiree major medical insurance coverage if the person is 11 (A) younger than 60 years of age and has less than 12 (i) 25 years of credited service as a peace officer under 13 AS 39.35.360 and 39.35.370; or 14 (ii) 30 years of credited service under AS 39.35.360 and 15 39.35.370 that is not service as a peace officer; or 16 (B) of any age and has less than 10 years of credited service; 17 (2) a person is not required to make premium payments for retiree 18 major medical coverage if the person 19 (A) is a disabled member; 20 (B) is a disabled member who is appointed to normal 21 retirement; 22 (C) is 60 years of age or older and has at least 10 years of 23 credited service; or 24 (D) has at least 25 (i) 25 years of credited service as a peace officer under 26 AS 39.35.360 and 39.35.370; or 27 (ii) 30 years of credited service under AS 39.35.360 and 28 39.35.370 not as a peace officer. 29 * Sec. 28. AS 39.35.535 is amended by adding a new subsection to read: 30 (g) A benefit recipient who is a peace officer or firefighter and who first 31 becomes a member after June 30, 2006, or a surviving spouse who is eligible under
01 AS 39.35.537(b) may elect medical benefits under AS 39.35.537. 02 * Sec. 29. AS 39.35 is amended by adding a new section to read: 03 Sec. 39.35.537. Medical benefit; eligibility of peace officers or firefighters 04 first hired after June 30, 2006; surviving spouses and dependents. (a) A peace 05 officer or firefighter who became a member of the plan after June 30, 2006, receives a 06 monthly benefit from the plan, and has elected benefits under this section is entitled to 07 medical benefits under this section. A member who applies for medical benefits under 08 this section shall apply on the forms and in the manner prescribed by the 09 administrator. 10 (b) The member's surviving spouse is eligible to elect medical benefits if the 11 member had retired or was eligible for retirement and medical benefits at the time of 12 the member's death. 13 (c) The medical benefits available to eligible persons are access to the retiree 14 major medical insurance plan and access to the health reimbursement arrangement 15 plan under AS 39.30.300. Access to the retiree major medical insurance plan means 16 that an eligible person may not be denied insurance coverage except for failure to pay 17 the required premium. 18 (d) Retiree major medical insurance plan coverage elected by an eligible 19 member under this section covers the eligible member, the spouse of the eligible 20 member, and the dependent children of the eligible member. 21 (e) Retiree major medical insurance plan coverage elected by a surviving 22 spouse of an eligible member under this section covers the surviving spouse and the 23 dependent children of the eligible member who are dependent on the surviving spouse. 24 (f) Participation in the retiree major medical insurance plan is not required in 25 order to participate in the health reimbursement arrangement plan. 26 (g) A person eligible for medical benefits under this section is not required to 27 participate in the health reimbursement arrangement plan in order to participate in the 28 retiree major medical insurance plan. 29 (h) A person who is eligible for medical benefits under this section must make 30 the irrevocable election to participate or not participate in the retiree major medical 31 insurance plan on or before the date the person reaches 70 1/2 years of age or when the
01 person applies for retirement and medical benefits, whichever is later. 02 (i) Major medical insurance coverage takes effect on the first day of the month 03 following the date of the administrator's approval of the election and stops when the 04 person who elects coverage dies or fails to make a required premium payment. 05 (j) The coverage for persons 65 years of age or older is the same as that 06 available for persons under 65 years of age. The benefits payable to those persons 65 07 years of age or older supplement any benefits provided under the federal old age, 08 survivors, and disability insurance program. 09 (k) The medical and optional insurance premiums owed by the person who 10 elects coverage may be deducted from the health reimbursement arrangement. If the 11 amount of the health reimbursement arrangement becomes insufficient to pay the 12 premiums, the person who elects coverage under (a) of this section shall pay the 13 premiums directly. 14 (l) The cost of premiums for retiree major medical insurance coverage under 15 this section for an eligible member or surviving spouse who is 16 (1) not eligible for Medicare is an amount equal to the full monthly 17 group premiums for retiree major medical insurance coverage; 18 (2) eligible for Medicare is the following percentage of the premium 19 amounts established for retirees who are eligible for Medicare: 20 (A) 30 percent if the member had 10 or more, but less than 15, 21 years of service; 22 (B) 25 percent if the member had 15 or more, but less than 20, 23 years of service; 24 (C) 20 percent if the member had 20 or more, but less than 25, 25 years of service; 26 (D) 15 percent if the member had 25 or more, but less than 30, 27 years of service; 28 (E) 10 percent if the member had 30 or more years of service. 29 (m) The eligibility for retiree major medical insurance coverage for an 30 alternate payee under a qualified domestic relations order shall be determined based 31 on the eligibility of the member to elect coverage. The alternate payee shall pay the
01 full monthly premium for retiree major medical insurance coverage. 02 (n) A person who is entitled to retiree major medical insurance coverage under 03 this section shall 04 (1) be informed by the administrator in writing 05 (A) that the health insurance coverage available to retired 06 members may be different from the health insurance coverage provided to 07 employees; 08 (B) of time limits for selecting optional health insurance 09 coverage and whether the election is irrevocable; and 10 (2) indicate in writing on a form provided by the administrator that the 11 person has received the information required by this subsection and whether the 12 person has chosen to receive optional health insurance coverage. 13 (o) The monthly group premiums for retiree major medical insurance coverage 14 under this section are established by the administrator in accordance with 15 AS 39.30.095. Nothing in this chapter guarantees a person who elects coverage under 16 (a) of this section a monthly group premium rate for retiree major medical insurance 17 coverage other than the premium in effect for the month in which the premium is due 18 for coverage for that month. 19 (p) In this section, "health reimbursement arrangement plan" means the plan 20 established in AS 39.30.300. 21 * Sec. 30. AS 39.35.680(4) is amended to read: 22 (4) "average monthly compensation" means the result obtained by 23 dividing the compensation earned by an employee during a considered period by the 24 number of months, including fractional months, for which compensation was earned; 25 an employee must have at least 115 days of credited service in the last payroll year in 26 order for that year to be used as part of the consecutive payroll years; the considered 27 period consists of 28 (A) for employees first hired before July 1, 1996, the three 29 consecutive payroll years during the period of credited service that yield the 30 highest average; 31 (B) for employees first hired on or after July 1, 1996, the five
01 consecutive payroll years during the period of credited service that yield the 02 highest average; 03 (C) if the employee does not have the number of consecutive 04 payroll years required by (A) or (B) of this paragraph, the actual number of 05 months, including fractional months, that the employee worked; 06 (D) for an employee who has made an election under 07 AS 39.35.300(c) or 39.35.310(c), the actual number of months, including 08 fractional months, that the employee worked; 09 (E) for a peace officer or firefighter hired before July 1, 2006 10 [AT ANY TIME], the three consecutive payroll years during the period of 11 credited service that yield the highest average; 12 (F) for a peace officer or firefighter hired after June 30, 13 2006, the five consecutive payroll years during the period of credited 14 service that yield the highest average; 15 * Sec. 31. AS 39.35.680(18) is amended to read: 16 (18) "employer" means 17 (A) the State of Alaska; 18 (B) a political subdivision or public organization of the state 19 that participates in the plan based on a resolution to participate in the plan that 20 was approved by the administrator 21 (i) on or before July 1, 2006; or 22 (ii) for peace officers and firefighters; or 23 (C) a political subdivision or public organization of the state 24 that assumes liability for participation in the plan by another political 25 subdivision or public organization of the state [,] as a result of consolidation 26 or reorganization that occurs 27 (i) at any time, with respect to peace officers or 28 firefighters; 29 (ii) on or after July 1, 2006, with respect to employees 30 who are not peace officers or firefighters [ASSUMES LIABILITY 31 UNDER THE PLAN OF A POLITICAL SUBDIVISION OR PUBLIC
01 ORGANIZATION DESCRIBED IN (B) OF THIS PARAGRAPH]; 02 * Sec. 32. AS 39.35.680(26) is amended to read: 03 (26) "normal retirement" means retirement for a member who is 04 eligible to receive benefits under AS 39.35.370(a) or (l) or [UNDER] 39.35.385(a) or 05 (f); 06 * Sec. 33. AS 39.35.720 is amended to read: 07 Sec. 39.35.720. Membership. Except as provided in AS 39.35.095, an [AN] 08 employee who becomes a member on or after July 1, 2006, shall participate in the plan 09 set out in AS 39.35.700 - 39.35.990. 10 * Sec. 34. AS 39.35.750 is amended by adding a new subsection to read: 11 (f) This section does not apply to contributions made under AS 39.35.255(j) 12 and does not require an employer who makes a contribution for an employee under 13 AS 39.35.255(j) to make another contribution for that employee. 14 * Sec. 35. The uncodified law of the State of Alaska is amended by adding a new section to 15 read: 16 RETIREMENT PLAN ELECTION. (a) A peace officer or firefighter who was first 17 hired after June 30, 2006, and before the effective date of this section, and who is a member 18 of the defined contribution retirement plan of the public employees' retirement system under 19 AS 39.35.700 - 39.35.990, may, within 90 days after the effective date of this section, make a 20 one-time election to participate in the defined benefit retirement plan under AS 39.35.095 - 21 39.35.680 and to transfer all contributions that have been made or should be made to the 22 defined contribution retirement plan for service the member completes before the effective 23 date of the member's participation in the defined benefit retirement plan. The transferred 24 contributions shall be used to purchase credited service in the defined benefit retirement plan 25 on an actuarial equivalent basis determined by the Alaska Retirement Management Board 26 established under AS 37.10.210. 27 (b) In this section, "peace officer" or "firefighter" has the meaning given in 28 AS 39.35.680. 29 * Sec. 36. The uncodified law of the State of Alaska is amended by adding a new section to 30 read: 31 RETIREMENT PLAN ELECTION PROCEDURE. (a) An election made under sec.
01 35 of this Act to participate in the defined benefit retirement plan under AS 39.35.095 - 02 39.35.680 must be made in writing on one or more forms and in the manner prescribed by the 03 administrator. Before accepting an election to participate in the defined benefit retirement 04 plan, the administrator shall provide the employee who plans on making an election to 05 participate in the defined benefit retirement plan with information, including calculations to 06 illustrate the effect of moving the employee's retirement plan from the defined contribution 07 retirement plan to the defined benefit retirement plan as well as other information that informs 08 the employee of potential consequences of the employee's election. 09 (b) An election made under sec. 35 of this Act to participate in the defined benefit 10 retirement plan is irrevocable. On the effective date of the election, an eligible employee who 11 makes the election shall be enrolled as a member of the defined benefit retirement plan, and 12 the employee's participation in the plan shall be governed by the applicable provisions of the 13 defined benefit retirement plan. The employee's enrollment in the defined benefit retirement 14 plan is retroactive to the date of hire. An election made by an eligible employee who is 15 married is not effective unless the election is signed by the employee's spouse. 16 (c) When an eligible employee makes a one-time election under sec. 35 of this Act, 17 the administrator shall cause the total amount of the employee's employee and employer 18 contributions, with investment earnings and losses through the day of the employee's election 19 to participate as a member in the defined benefit retirement plan, to be actuarially calculated 20 and, subject to (e) of this section, transferred to the pension fund in the defined benefit 21 retirement plan. On the effective date of the employee's participation in the defined benefit 22 retirement plan, the employee shall be credited with service in the defined benefit retirement 23 plan that may be purchased under an actuarial equivalent purchase formula as determined by 24 the board. The board shall establish transfer procedures by regulation, but the actual transfer 25 may not occur later than 60 days after the date the administrator receives the employee's 26 completed forms under (a) of this section, unless the major financial markets for securities 27 available for a transfer are seriously disrupted by an unforeseen event that also causes the 28 suspension of trading on any national securities exchange in the country where the securities 29 were issued. In that event, the 60-day period may be extended by a resolution of the board. A 30 transfer is not commissionable or subject to other fees and may be in the form of cash or a 31 security as determined by the board. A security shall be valued on the date of receipt in the
01 employee's account. 02 (d) When making a transfer for an eligible employee under (c) of this section, the 03 administrator shall cause an amount equal to the 04 (1) decrease in the accrued actuarial liability of the occupational death and 05 disability trust in the defined contribution retirement plan resulting from the transfer as of the 06 date of transfer, based on the most recent actuarial valuation of the occupational death and 07 disability trust, to be transferred from the occupational death and disability trust in the defined 08 contribution retirement plan to the pension fund in the defined benefit retirement plan; and 09 (2) increase in the accrued actuarial liability of the health care trust in the 10 defined benefit retirement plan resulting from the transfer as of the date of transfer, based on 11 the actuarial assumptions set out in (g) of this section, to be transferred from the trust 12 established under AS 39.30.097(b) for the prefunding of medical benefits provided by 13 AS 39.35.880 to the trust established under AS 39.30.097(a) for the prefunding of medical 14 benefits provided by AS 39.35.537. 15 (e) If the value actuarially calculated under (c) of this section is insufficient to pay for 16 service credit equal to the employee's actual service, the administrator shall allow the 17 employee the option of purchasing any indebtedness up to the amount needed to eliminate the 18 insufficiency; however, if that value exceeds the amount needed to pay for a service credit 19 equal to the employee's actual service, the administrator shall cause the excess to remain in 20 the employee's retirement plan established under AS 39.35.700 - 39.35.990. An excess under 21 this subsection may not be used to purchase service credit in a retirement plan administered 22 under AS 39.35. 23 (f) The amount of service that can be purchased under (e) of this section is based on 24 the transferred employee's accrued actuarial liability of pension benefits in the defined benefit 25 retirement plan. The actuarial assumptions under this section are based on the actuarial 26 assumptions set out in (g) of this section. 27 (g) Actuarial assumptions must be based on the most recent actuarial valuation of the 28 defined benefit retirement plan, except that the retirement rates are computed at 75 percent of 29 the retirement rates for peace officers and firefighters used in the most recent actuarial 30 valuation of the defined contribution retirement pension fund plus 25 percent of the retirement 31 rates for peace officers and firefighters used in the most recent actuarial valuation of the
01 defined benefit retirement plan. 02 (h) The provisions of this section are subject to the requirements of the Internal 03 Revenue Code and the limitations under AS 39.35.115, 39.35.678, 39.35.710(c) and (d), and 04 39.35.895. 05 (i) In this section, 06 (1) "administrator" means the commissioner of administration or the person 07 designated by the commissioner of administration under AS 39.35.003 for a public 08 employees' retirement plan; 09 (2) "board" means the Alaska Retirement Management Board established 10 under AS 37.10.210; 11 (3) "defined benefit retirement plan" means the retirement plan established 12 under AS 39.35.095 - 39.35.680 for a public employee; 13 (4) "defined contribution retirement plan" means the retirement plan 14 established under AS 39.35.700 - 39.35.990 for a public employee; 15 (5) "Internal Revenue Code" has the meaning given in AS 39.35.990. 16 * Sec. 37. The uncodified law of the State of Alaska is amended by adding a new section to 17 read: 18 ADOPTION OF REGULATIONS. (a) The Alaska Retirement Management Board 19 may adopt regulations necessary to implement secs. 1 - 3 of this Act. Regulations adopted by 20 the Alaska Retirement Management Board under this Act relate to the internal management of 21 a state agency and are not subject to AS 44.62 (Administrative Procedure Act) under 22 AS 37.10.240. 23 (b) The commissioner of administration may adopt regulations necessary to 24 implement secs. 4 - 36 of this Act. Regulations adopted by the commissioner of 25 administration under this Act relate to the internal management of a state agency and are not 26 subject to AS 44.62 (Administrative Procedure Act) under AS 39.30.098 and AS 39.35.005. 27 (c) Regulations adopted under this section may not take effect before the effective 28 date of the law being implemented by the regulation. 29 * Sec. 38. Section 37 of this Act takes effect immediately under AS 01.10.070(c). 30 * Sec. 39. Except as provided in sec. 38 of this Act, this Act takes effect July 1, 2023.