August 16, 2006, Introduced by Reps. Elsenheimer, Jones, Schuitmaker, David Law, Nofs, Rocca, Pearce, Newell, Bieda and Lipsey and referred to the Committee on Judiciary.
A bill to amend 1992 PA 234, entitled
"The judges retirement act of 1992,"
(MCL 38.2101 to 38.2670) by adding section 719a.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 719a. (1) As used in this section:
(a) "Effective date" means December 31, 2006.
(b) "Health benefits" means hospital, medical-surgical, and
sick care benefits for a retirant and his or her spouse.
(c) "Health benefits plan" means the plan authorized by the
retirement board and the department that provides hospital,
medical-surgical, and sick care benefits for a retirant and his or
her spouse.
(d) "Local health benefits plan" means a plan authorized by an
entity, other than the state of Michigan, the retirement board, and
the department, that provides hospital, medical-surgical, and sick
care benefits for a member or qualified participant as a fringe
benefit of his or her employment.
(2) An individual who is a member or qualified participant on
the effective date may make an irrevocable election on a form
provided by the retirement system by no later than March 1, 2007 to
be eligible to participate in the health benefits plan.
(3) An individual who becomes a qualified participant after
the effective date shall have 60 days after becoming a qualified
participant to make an irrevocable election on a form provided by
the retirement system to be eligible to participate in the health
benefits plan.
(4) When an individual becomes a qualified participant after
the effective date, the entity that authorized the local health
benefits plan shall certify to the retirement system within 30 days
whether the qualified participant is eligible to participate in the
local health benefits plan. An individual who becomes a qualified
participant after the effective date and who is not eligible to
participate in a local health benefits plan shall participate in
the health benefits plan and pay the contributions required in
subsection (9) without the need to make any election.
(5) After the effective date, if the entity that authorized
the local health benefits plan certifies to the retirement system
that the local health benefits plan has been terminated after an
individual became a member or qualified participant, the member or
the qualified participant shall have 60 days after such
certification to make an irrevocable election on a form provided by
the retirement system to be eligible to participate in the health
benefits plan. The member or qualified participant shall pay to the
retirement system, within 30 days after making his or her election,
the amount that the member or the qualified participant would have
paid, plus the interest that the retirement system would have
earned, had he or she elected to participate in the health benefits
plan as provided in subsection (2) or subsection (3), as
appropriate. In addition, the member or qualified participant shall
remain a member or qualified participant and make the contributions
required by this section for a minimum of 12 months following his
or her irrevocable election under this subsection to be eligible to
participate in the health benefits plan.
(6) A retirant and his or her spouse shall receive the health
benefits provided in the health benefits plan if the retirant meets
all of the following requirements:
(a) The retirant is at least 60 years of age.
(b) The retirant contributed to the retirement system the
amount required by subsection (9) for at least 30 months.
(c) The retirant made the election required in subsection (2),
(3), or (5) or participates in the health benefits plan as required
by subsection (4).
(7) If, on the effective date, a member or qualified
participant who is currently serving in his or her final term under
the age limitation provisions of section 19 of article VI of the
state constitution of 1963 makes the election in subsection (2), he
or she shall pay any remaining amount of the required contribution
in a lump sum prior to the member or qualified participant or his
or her spouse receiving any health benefits from the health
benefits plan.
(8) The retirement system shall deposit the contributions made
by members and qualified participants into a separate account which
shall only be used as provided in this section.
(9) The contribution rate for calendar years 2007, 2008, and
2009 shall be 5.2% of the member's or qualified participant's total
salary, except that, if the member or qualified participant retires
within 3 months after the effective date, the rate shall be 7.2% of
his or her salary. The rate beginning in 2010 shall not be less
than 2% or more than 6% of his or her total salary. The actual
percentage shall be determined annually by the retirement system
based upon an annual actuarial health valuation of the amount
needed by the retirement system to pay for the cost of the health
benefits plan. If the actuarial health valuation establishes that,
in order for the retirement system to properly pay for 90% of the
cost of the health benefits plan, the required contribution rate
would be higher than 6%, the retirement system may modify the
health benefits plan among other possible alternatives. If no
alternative is developed that will keep the health benefits plan
solvent without increasing the contribution rate higher than 6%,
the retirement system shall terminate the plan. At the discretion
of the retirement board, any unused contributions, without
interest, shall be refunded to those members, qualified
participants, and retirants who made contributions or their spouses
if the member, qualified participant, or retirant is deceased.
(10) The contributions made by members and qualified
participants shall be on an after-tax basis. If the department
receives notification from the United States internal revenue
service that the contributions may be on a pretax basis, the
department shall institute that change.
(11) The retirement system shall pay out of the contributions
received under subsection (9) 26% of the cost of the health
benefits plan for a retirant who has 12 years of service credit and
an additional 8% of the cost for each year over 12 years up to a
maximum of 90% of the cost. A retirant who previously made the
election to participate in the health benefits plan and his or her
spouse shall pay to the retirement system, in the manner determined
by the system, the remaining portion of the cost of the health
benefits plan not paid by the retirement system out of the
contributions received under subsection (9).
(12) If an individual who made contributions to pay for the
health benefits plan ceases to be a member or qualified participant
before obtaining 12 years of service credit, the individual shall
receive a refund of all of his or her contributions without payment
of interest.