HOUSE BILL No. 6345

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.