Reform FAQs (For Pension Plus members only)

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Below are the most Frequently Asked Questions (FAQs) about the 2012 Public School Employees Retirement Reform for Pension Plus members only. Pension Plus members are those public school employees who were hired on or after July 1, 2010.

Click on a topic to jump to the section below. Questions may be added or revised.

Topic Sections

10 Most Popular Questions
Understanding the Election Process
Understanding the Graded Premium Subsidy Option
Understanding the Personal Healthcare Fund Option
Understanding the 2 Percent Match
Understanding the Deposit of your Retiree Healthcare Contributions to your 401(k) if you elect PHF

Top 10 Most Popular Questions

  1. What are the election choices?

    Under Public Act 300 of 2012, Michigan Public School Employees Retirement System members who are in the Pension Plus plan and who qualify (see below) have a choice to make regarding their retiree healthcare benefit. You can continue to contribute 3 percent of compensation to the Retiree Healthcare Fund and keep the graded premium subsidy benefit you currently have, or you can choose the Personal Healthcare Fund which can be used to pay healthcare expenses in retirement. If you choose the Personal Healthcare Fund, you will opt-out of the premium subsidy benefit, effective the first pay period beginning after February 1, 2013, and you will be automatically enrolled in a 2 percent employee contribution into your state-sponsored 457 account as of the first pay period beginning after February 1, 2013, earning you a 2 percent employer match into a 401(k) account. You will stop paying the 3 percent contribution to the Retiree Healthcare Fund as of the first pay period beginning after February 1, 2013, and your prior contributions will be deposited into your 401(k) account administered by ING no later than your first pay date after March 1, 2013.

    Your election must be submitted in miAccount while the election window remains open. If you do not make a healthcare election, you will retain the graded premium subsidy benefit.

    Revised December 14, 2012.
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  2. Which option is the best option?

    Everyone's circumstances are different, and what might be the best option for you may not be the best option for your coworker. When reviewing the options, take into consideration where you are in your career, what your future plans are, what other sources of health insurance coverage you may have, and what your retirement savings goals are. ORS recommends that you use the calculators in miAccount to see how each option would affect your finances now and in the future.

    Published October 23, 2012.
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  3. What is the current premium subsidy?

    As a member in the Pension Plus plan you are eligible for a graded premium subsidy benefit based on your career length where you accrue credit toward insurance premiums in retirement, not to exceed the maximum allowable by statute. (The legislation sets the maximum subsidy at 80 percent beginning January 1, 2013; 90 percent for those Medicare eligible and enrolled in the insurances as of that date.) At 10 years of service you qualify for a 30% premium subsidy benefit; you earn an additional 4 percent subsidy for each year of public school service thereafter up to the maximum allowed by statute. For more information see page 9 in the Pension Plus Welcome Guide. If you elect to remain with the graded premium subsidy, you will continue to contribute 3 percent of compensation toward the Retiree Healthcare Fund.

    Published September 4, 2012.
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  4. What is the Personal Healthcare Fund?

    The Personal Healthcare Fund is a portable, tax-deferred fund that you can use for paying healthcare and other expenses in retirement.

    If you elect the Personal Healthcare Fund, you voluntarily opt out of the graded premium subsidy benefit. You will stop contributing 3 percent of compensation to the Retiree Healthcare Fund as of the day before your transition date, and any contributions you have made to that fund will be deposited into a tax-deferred, 401(k) account. In addition, you will be automatically enrolled in a 2 percent employee contribution into a 457 account as of your transition date, earning you a 2 percent employer match into a 401(k) account.

    Published September 4, 2012.
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  5. What is the difference between the Graded Premium Subsidy and the Personal Healthcare Fund?

    The graded premium subsidy is a retiree healthcare benefit based on your career length where you accrue credit toward insurance premiums in retirement, not to exceed the maximum allowable by statute. (The legislation sets the maximum subsidy at 80 percent beginning January 1, 2013; 90 percent for those Medicare eligible and enrolled in the insurances as of that date.) As a Pension Plus member, at 10 years of service you qualify for a 30% premium subsidy benefit; you earn an additional 4 percent subsidy for each year of public school service thereafter up to the maximum allowed by statute. For more information see page 9 in the Pension Plus Welcome Guide. If you elect to remain with the graded premium subsidy, you will continue to contribute 3 percent of compensation toward the Retiree Healthcare Fund.

    The Personal Healthcare Fund is a portable, tax-deferred fund that you can use for paying healthcare and other expenses in retirement. If you elect the Personal Healthcare Fund, you voluntarily opt out of the graded premium subsidy benefit. You will stop contributing 3 percent of compensation to the Retiree Healthcare Fund as of the day before your transition date, and any contributions you have made to that fund will be deposited into a tax-deferred, 401(k) account. In addition, you will be automatically enrolled in a 2 percent employee contribution into a 457 account as of your transition date, earning you a 2 percent employer match into a 401(k) account.

    Published September 4, 2012.
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  6. If I elect to remain with the premium subsidy, continue making my 3 percent contributions and then die, what happens to my 3% healthcare contributions?

    Depending on the circumstances of your death, your beneficiary may be eligible for a refund of all, or a portion of your contributions. Let's look at different scenarios:

    1. If you die before becoming eligible for the healthcare subsidy, your beneficiary could apply to receive a refund of all of your 3 percent contributions, as long as your beneficiary is not eligible for a premium subsidy (due to a duty or nonduty death).

    2. If you retire with a Straight Life option, receive the health insurance subsidy for a period of time, and then die, the retiree health insurance premium subsidy payments would cease because your survivors would not be eligible for any health insurance benefits under the Straight Life option. If the total value of the retiree health insurance premium subsidy paid up to the date of your death is less than the total value of your 3% contributions, your beneficiary could apply for a refund of the remaining contributions.

    3. If you retire with a Survivor Option, receive the retiree health insurance premium subsidy payment for you and your eligible dependents, and then die after a period of time, your eligible dependents would continue to receive the retiree health insurance premium subsidy and be covered by the survivor option.

    Any refunds of the 3% healthcare contribution would be issued to your beneficiary in equal monthly installments over a 60 month (5 year) period as a supplemental retirement allowance

    Published October 17, 2012.
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  7. If I elect to remain with the premium subsidy, retire when I reach eligibility, then decide that I don't want or need the health insurance, can I get my 3% contribution back?

    By electing to stay with the premium subsidy and continue making the healthcare contribution until you reach eligibility and retire, you can guarantee your access to subsidized healthcare coverage in retirement. If, for whatever reason, you decide to dis-enroll in the subsidized healthcare coverage, you can always re-enroll knowing that the benefit you paid into, is waiting for you. Refunds of the 3% healthcare contribution are only issued if a member elects the Personal Healthcare Fund (Option B) or if a member elects the premium subsidy but doesn't reach eligibility, or dies before the total value of the subsidy paid equals the total value of the 3% contributions the member made. For more details see FAQ 6 (above).

    Published October 29, 2012.
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  8. If I stay with the premium subsidy and continue making the 3 percent healthcare contributions and then leave my job, what happens?

    As a Pension Plus member, you qualify for a graded premium subsidy benefit if you are at least 60 years of age and have at least 10 years of service. The amount of your subsidy will be determined by your years of service. See page 9 in the Pension Plus Welcome Guide. If you leave public school employment before you are age eligible but have at least 10 years of service, you may apply for your graded premium subsidy benefit when you reach age 60. If you leave public school employment before you reach 10 years of service, you may contact ORS to request a refund of your 3 percent contributions when you reach age 60. The refund would be issued in equal installments over a 60 month (5 year) period as a supplemental retirement allowance.

    Published September 4, 2012.
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  9. What if I don't make a choice?

    If you do not submit your retiree healthcare election in miAccount before the election window closes, the default provision of the legislation goes into effect: you will continue the 3 percent contribution to the Retiree Healthcare Fund and retain the graded premium subsidy benefit.

    Revised October 29, 2012.
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  10. I'm on layoff. Do I need to make an election?

    If you are on layoff status but you earned service credit in the 12 months ending September 3, 2012, you need to make an election by the deadline noted above. Check with your employer to see if you are considered an “active” employee or not.  If so, your employer would have reported you to ORS as an “active” employee and you will have an election opportunity waiting for you when you log into MiAccount. You need to make your election in miAccount while the election window remains open.

    If your employer considers a person on “layoff” status as not an employee, then you would not have an election opportunity available to you in miAccount.

    Revised October 29, 2012.
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FAQs by topic

Understanding the Election Process

  1. What is the election choice?

    Under Public Act (2012), Michigan Public School Employees Retirement System members who are in the Pension Plus plan and who qualify (see below) have a choice to make regarding their retiree healthcare benefit. You can continue to contribute 3 percent of compensation to the Retiree Healthcare Fund and keep the graded premium subsidy benefit you currently have, or you can choose the Personal Healthcare Fund which can be used to pay healthcare expenses in retirement.

    Any changes to your healthcare benefit would be effective as of your transition date, which is defined as the first day of the pay period that begins on or after February 1, 2013.

    If you choose the Personal Healthcare Fund, you will opt-out of the premium subsidy benefit, as of your transition date, and you will be automatically enrolled in a 2 percent employee contribution into your state-sponsored 457 account as of your transition date, earning you a 2 percent employer match into a 401(k) account. You will stop paying the 3 percent contribution to the Retiree Healthcare Fund as of the day before your transition date, and your prior contributions will be deposited into your 401(k) account administered by ING. See Understanding the Deposit of Your Retiree Healthcare Contributions to your 401(k) question 2 (below) for details on how the funds will be deposited into your 401(k) account.

    Your election must be submitted in miAccount while the election window remains open. If you do not make a healthcare election, you will retain the graded premium subsidy benefit.

    Revised February 21, 2013.
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  2. Which option is the best option?

    Everyone's circumstances are different, and what might be the best option for you may not be the best option for your coworker. When reviewing the options, take into consideration where you are in your career, what your future plans are, what other sources of health insurance coverage you may have, and what your retirement savings goals are. ORS recommends that you use the calculators in miAccount to see how each option would affect your finances now and in the future.

    Published October 23, 2012.
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  3. How do I know if I need to make an election?

    You need to make your election if you first became a member of the Michigan Public School Employee Retirement System on or after July 1, 2010, and earned any service credit in the twelve months ending September 3, 2012, and are considered a current employee of the school or if you were on an approved professional services or military leave of absence on September 3, 2012.

    Your election must be submitted in miAccount while the election window remains open.

    Revised October 29, 2012.
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  4. I'm on a leave of absence. How does this affect me?

    If you are a public school employee on a professional services or military leave of absence on September 3, 2012, you need to submit your retiree healthcare election in miAccount while the election window remains open.

    If you are on any other type of leave of absence as of September 3, 2012, but you earned service credit in the 12 months ending September 3, 2012, you need to make your election by the deadline noted above.

    If you are on any other type of leave of absence as of September 3, 2012, and you did not earn any service credit in the 12 months ending September 3, 2012, you do not qualify to make any election. If and when you return to public school employment, you will retain the graded premium subsidy benefit and will continue to make the 3 percent healthcare contributions.

    Revised October 29, 2012.
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  5. I'm on layoff. Do I need to make an election?

    If you are on layoff status but you earned service credit in the 12 months ending September 3, 2012, you need to make an election by the deadline noted above. Check with your employer to see if you are considered an “active” employee or not.  If so, your employer would have reported you to ORS as an “active” employee and you will have an election opportunity waiting for you when you log into MiAccount. You need to make your elections in miAccount while the election window remains open.

    If your employer considers a person on “layoff” status as not an employee, then you would not have an election opportunity available to you in miAccount.

    Revised October 29, 2012.
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  6. How long do I have before I must decide?

    You must submit your election in miAccount while the election window remains open.

    Revised October 29, 2012.
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  7. If I change my mind can I change my election?

    Yes. You can change your election by selecting the Change Your Election button in miAccount. Changes to your election are permissible as long as the election window remains open.

    Whatever option you have selected as of the window closing will be considered your election. After the window closes, your election cannot be rescinded or changed.

    Revised October 29, 2012.
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  8. What if I miss the deadline?

    You must submit your election in miAccount while the election window remains open.

    Revised October 29, 2012.
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  9. What if I don't make a choice?

    If you do not submit your retiree healthcare election in miAccount the default provision of the legislation goes into effect: you will continue the 3 percent contribution to the Retiree Healthcare Fund and retain the graded premium subsidy benefit.

    Revised October 29, 2012.
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  10. I want the default option. Why should I bother making my election?

    These are important decisions that will affect your future financial security. By making your election, you'll be able to print out a confirmation of your choice that you can keep for your records. Plus, ORS will be sending a series of reminder communications to public school employees who have not made their election. If you make your election, you won't receive these reminders.

    Published September 4, 2012.
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  11. How can I get help making my decision?

    While ORS staff is not in a position to offer retirement financial advice, we have provided several tools in miAccount to help you figure out which retiree healthcare option is best for you. Please review the tools on the Reform Tools page when deciding.

    Be sure to review the short, recorded seminar available anytime on the Reform Tools page or sign up for one of the many reform seminars and webinars hosted by ORS. Click here to learn more.

    Published September 4, 2012.
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  12. I don't have internet access. Can I make my election through the mail?

    No, your election must be made online in miAccount. Your human resources office can help you make your election online, or you can log into miAccount using computers and internet access provided by your local library.

    Published September 4, 2012.
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  13. I didn't get a letter. What do I do?

    Letters were sent to all active public school members in the Pension Plus plan who are eligible to make an election (see eligibility criteria explained above). If you do not meet these criteria, you would not have received a letter. If you do meet these criteria and did not receive a letter, odds are your contact information is not up-to-date with your employer, who provides ORS with member contact information. Notify your employer of your correct mailing address AND log into miAccount to update your contact information there as well. But you don't need a letter to make your election. Everything you need can be found in miAccount. You can also continue reviewing these FAQs and the legislative summary for additional information. If you need assistance, use the ORS Message Board for secure, email assistance or call our customer service center at 517-322-5103 or toll-free at 800-381-5111, Monday-Friday, 8:30 a.m. – 5:00 p.m.

    Revised October 29, 2012.
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  14. Can I drive down to Lansing to get help making my election?

    Before you spend your time and money driving to Lansing, consider that ORS has given you everything you need to make your election on-line, saving you time and money; the legislative summary, a short, recorded seminar, and FAQs are waiting for you in miAccount.

    If you need additional assistance, use our Message Board for secure, online email assistance or call our customer service center at 517-322-5103 or toll-free at 800-381-5111, Monday-Friday, 8:30 a.m. – 5:00 p.m.

    If you do decide to drive to Lansing, know the following service limitations:
    -- The ORS Walk-In Center is available M-F, from 8:30 a.m. until 5:00 p.m.
    -- ORS cannot tell you which choice to make.
    -- ORS cannot make or print copies of documents for you.
    -- ORS cannot notarize documents.
    -- ORS will have a very limited number of computers available for you to use to make your election.
    -- You must have a valid email address to register in miAccount so that you can make your elections online; ORS cannot set up an email address for you. Know your email address and register for miAccount before visiting ORS.

    Revised October 29, 2012.
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  15. The Court of Appeals struck down the 3 percent healthcare contribution. Do I still need to make an election?

    Yes. The state is reviewing the recent decision of the Michigan Court of Appeals regarding the 3% public school employee contribution to the Retiree Health Care. While the state is determining the next course of action, ORS is instructing Michigan public school employers to continue withholding the 3 percent contribution.

    It is unlikely that the issue will be resolved before the statutory deadline for choosing your retirement healthcare plan (January 9, 2013). ORS must implement SB 1040 (2012) as written. If you do not make a retiree healthcare election by 5:00 p.m., Friday, October 26, 2012, you will retain the graded premium subsidy benefit where you accrue credit towards insurance premiums in retirement, and you will continue to contribute 3 percent toward retiree health care. If you elect the Personal Healthcare Fund, you will stop paying the 3 percent contribution to the Retiree Healthcare Fund as of the day before your transition date and your prior contributions will be deposited into your 401(k) account administered by ING. See Understanding the Deposit of Your Retiree Healthcare Contributions to your 401(k) question 2 (below) for details on how the funds will be deposited into your 401(k) account.

    Revised February 21, 2013.
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  16. There's a restraining order against the reform legislation. Do I still need to make an election?

    On November 29, 2012, the court ruled that the public school reform was constitutional except for the length of the election window, which under PA 300 of 2012, closed on October 26th, 2012. On December 14, 2012, Governor Snyder signed into law Public Act 359 of 2012 which extends the election window until 5:00 pm, EST, Wednesday, January 9, 2013. Click here to learn more.

    Members are encouraged to log into miAccount to learn more about their choices for their retirement healthcare and their retirement plan and to make their elections in miAccount before the window closes on January 9, 2013.

    Revised December 14, 2012.
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Understanding the Graded Premium Subsidy Option

  1. What is the current premium subsidy?

    As a member in the Pension Plus plan you are eligible for a graded premium subsidy benefit based on your career length where you accrue credit toward insurance premiums in retirement, not to exceed the maximum allowable by statute. (The legislation sets the maximum subsidy at 80 percent beginning January 1, 2013; 90 percent for those Medicare eligible and enrolled in the insurances as of that date.) At 10 years of service you qualify for a 30% premium subsidy benefit; you earn an additional 4 percent subsidy for each year of public school service thereafter up to the maximum allowed by statute. For more information see page 9 in the Pension Plus Welcome Guide.

    If you elect to remain with the graded premium subsidy, you will continue to contribute 3 percent of compensation toward the Retiree Healthcare Fund.

    Published September 4, 2012.
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  2. Why would I want to stay with the graded premium subsidy benefit?

    The graded premium subsidy benefit is a good choice for some people, depending on their career and retirement plans, health and longevity expectations, and other personal factors.

    Published September 4, 2012.
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  3. If I stay with the graded premium subsidy and continue making the 3 percent healthcare contributions and then leave my job, what happens?

    As a Pension Plus member, you qualify for a graded premium subsidy benefit if you are at least 60 years of age and have at least 10 years of service. The amount of your subsidy will be determined by your years of service. See page 9 in the Pension Plus Welcome Guide.

    If you leave public school employment before you are age eligible but have at least 10 years of service, you may apply for your graded premium subsidy benefit when you reach age 60.

    If you leave public school employment before you reach 10 years of service, you may contact ORS to request a refund of your 3 percent contributions when you reach age 60. The refund would be issued in equal installments over a 60 month (5 year) period as a supplemental retirement allowance.

    Published September 4, 2012.
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  4. If I stay with the graded premium subsidy benefit and continue making the 3 percent healthcare contributions, leave my job and then come back, what happens?

    If you make the election to stay with the graded premium subsidy benefit, leave school employment and then later return to school employment, you will retain your election choice, in this example the graded premium subsidy benefit, and you will continue to contribute 3% to the Retiree Healthcare Fund and earn years of service credit toward insurance eligibility, provided you did not request a refund of your contributions.

    Published September 4, 2012.
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  5. If I stay with the graded premium subsidy and then become disabled, what happens?

    If you stay with the graded premium subsidy, the benefits for duty and non-duty disability do not change. The state will pay the maximum health insurance premium subsidy allowed by statute for an approved duty or non-duty disability. Learn more about the current disability benefits offered to Pension Plus members.

    Published September 4, 2012.
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  6. If I stay in the graded premium subsidy and then die, what happens?

    The death benefits under the graded premium subsidy benefit do not change. Whether and what benefits are payable to your survivors depends, in part, on if your death occurs while you are active, deferred, or retired. Learn more about the current death benefits offered to Pension Plus members.

    Published September 4, 2012.
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  7. If I stay with the graded premium subsidy and then go on Medicare when I reach 65, can my spouse and dependents stay in the plan?

    Yes, and you'll stay in the plan, too. When you become eligible for Medicare, your state subsidy percentage remains the same. The amount you pay each month will be recalculated to reflect your new Medicare Advantage premium amount. Medicare will become your primary insurance provider, and your spouse and eligible dependents would still covered under the provider you identify for them. Go to http://www.michigan.gov/documents/R072C_128095_7.pdf to see the current rates, providers and coverage details negotiated for public school retirees and their dependents.

    Published September 4, 2012.
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  8. My spouse and I are both public school employees. If I elect to remain with the Graded Premium Subsidy and my spouse elects the Personal Healthcare Fund, then when we both retire, could I choose to cover my spouse as a dependent under my insurance?

    The law currently allows spouses to be covered under a retiree's insurance. If you'd like your spouse to continue to be covered after your death, be sure to choose a Survivor Option at retirement (as opposed to a Straight Life calculation). Learn more at www.michigan.gov/orsschools/0,4653,7-206-36504_36507_37362---,00.html.

    Revised October 5, 2012.
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  9. If I elect to remain with the premium subsidy, continue making my 3 percent contributions and then die, what happens to my 3% healthcare contributions?

    Depending on the circumstances of your death, your beneficiary may be eligible for a refund of all, or a portion of your contributions. Let's look at different scenarios:

    1. If you die before becoming eligible for the healthcare subsidy, your beneficiary could apply to receive a refund of all of your 3 percent contributions, as long as your beneficiary is not eligible for a premium subsidy (due to a duty or nonduty death).

    2. If you retire with a Straight Life option, receive the health insurance subsidy for a period of time, and then die, the retiree health insurance premium subsidy payments would cease because your survivors would not be eligible for any health insurance benefits under the Straight Life option. If the total value of the retiree health insurance premium subsidy paid up to the date of your death is less than the total value of your 3% contributions, your beneficiary could apply for a refund of the remaining contributions.

    3. If you retire with a Survivor Option, receive the retiree health insurance premium subsidy payment for you and your eligible dependents, and then die after a period of time, your eligible dependents would continue to receive the retiree health insurance premium subsidy and be covered by the survivor option.

    Any refunds of the 3% healthcare contribution would be issued to your beneficiary in equal monthly installments over a 60 month (5 year) period as a supplemental retirement allowance

    Published October 17, 2012.
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  10. If I elect to remain with the premium subsidy, retire when I reach eligibility, then decide that I don't want or need the health insurance, can I get my 3% contribution back?

    By electing to stay with the premium subsidy and continue making the healthcare contribution until you reach eligibility and retire, you can guarantee your access to subsidized healthcare coverage in retirement. If, for whatever reason, you decide to dis-enroll in the subsidized healthcare coverage, you can always re-enroll knowing that the benefit you paid into, is waiting for you. Refunds of the 3% healthcare contribution are only issued if a member elects the Personal Healthcare Fund (Option B) or if a member elects the premium subsidy but doesn't reach eligibility, or dies before the total value of the subsidy paid equals the total value of the 3% contributions the member made. For more details see FAQ 9 (above).

    Published October 17, 2012.
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  11. Suppose my spouse and I both decide to stay with the premium subsidy. When we retire, my spouse would be covered under my insurance. Can we get a refund on my spouse's 3% contribution then?

    If both you and your spouse elected to stay with the premium subsidy, you can request a refund of your spouse's 3% contributions after his/her death.

    If you had selected a Survivor Option at retirement and you died first, your spouse would be covered as a survivor. If and when your spouse dies, if there are no other eligible dependents, your spouse's survivors can request a refund of your spouse's 3% contributions.

    If you elected a Straight Life option at retirement, and died first, your spouse could request a refund if the total value of the retiree health insurance premium subsidy paid up to the date of your death is less than the total value of your 3% contributions. Under the Straight Life option, your spouse would not be covered under your insurance, but, assuming your spouse met eligibility requirements, he/she would be covered under his/her own benefits. If and when your spouse dies, if there are no other eligible dependents, your spouse's survivors could request a refund if the total value of the retiree health insurance premium subsidy paid up to the date of your spouse's death is less than the total value of your spouse's 3% contributions.

    Published November 9, 2012.
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Understanding the Personal Healthcare Fund Option

  1. What is the Personal Healthcare Fund?

    The Personal Healthcare Fund is a portable, tax-deferred fund that you can use for paying healthcare and other expenses in retirement.

    If you elect the Personal Healthcare Fund, you voluntarily opt out of the graded premium subsidy benefit. You will stop contributing 3 percent of compensation to the Retiree Healthcare Fund as of the day before your transition date, and any contributions you have made to that fund will be deposited into a tax-deferred, 401(k) account. In addition, you will be automatically enrolled in a 2 percent employee contribution into a 457 account as of your transition date, earning you a 2 percent employer match into a 401(k) account.

    Published September 4, 2012.
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  2. Why would I want to elect the Personal Healthcare Fund?

    The Personal Healthcare Fund is a good choice for some people, depending on their career and retirement plans, health and longevity expectations, and other personal factors.

    Published September 4, 2012.
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  3. Are there vesting requirements for the Personal Healthcare Fund?

    Yes. You are immediately vested in your contributions and related earnings to your healthcare savings in your 457 account. You are 50 percent in your employer's matching contributions after the equivalent of 2 years of full time service, 75 percent after 3 years of service, and 100 percent after 4 years of service. Vesting for the employer contributions begin with your first day of work.

    Revised September 26, 2012.
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  4. If I elect the Personal Healthcare Fund and then lose my job after February 1, 2013, what happens?

    Depending on your years of service at the time you leave public school employment (see vesting requirements above), you would receive the employer matching contributions that have been made to your 401(k) account thus far, along with related earnings. You remain fully vested in your own personal contributions and earnings. Learn more at http://www.mipensionplus.org/publicschools/leaving_employment.html.

    Revised December 14, 2012.
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  5. If I elect the Personal Healthcare Fund, leave my job and then come back, what happens?

    If you elect the Personal Healthcare Fund, leave and later return to public school employment, you would resume the 2 percent contribution and employer match into a Personal Healthcare Fund. You would also continue to earn years of service toward the vesting requirements for future employer match and earnings, noted above. However, you would not be able to recoup any employer match and earnings you may have lost if and when you left before meeting vesting requirements.

    Published September 4, 2012.
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  6. >If I elect the Personal Healthcare Fund and then become disabled, do I get any insurance coverage?

    If you elect the Personal Healthcare Fund and then become disabled for any reason, you would not be eligible for any employer funded health insurance premium subsidy.

    Published September 4, 2012.
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  7. If I elect the Personal Healthcare Fund and then die, do my dependents get any insurance coverage?

    If you elect the Personal Healthcare Fund and then die because of an injury or illness resulting from your job activities (a duty-related death), the state will pay the maximum health premium allowed by statute for your spouse and health benefit dependents. Your spouse's insurance subsidy may continue until his or her death; your health benefit dependents' insurance subsidy may continue until their eligibility ends (through marriage, age, or other event).

    Upon eligibility for the duty-death benefit, the 2 percent employer matching contributions and related earnings in your 401(k) account will be forfeited and the state will pay for the subsidy payments. Your beneficiaries would receive your 2 percent contributions and related earnings in your 457 account.

    If you elect the Personal Healthcare Fund and suffer a nonduty-related death, your health benefit dependents would not be eligible to participate in any employer funded insurances. If you met vesting requirements at the time of your death (see vesting requirements above), your beneficiaries would receive the employer matching contributions and related earnings in your 401(k) account. Your beneficiaries would receive your 2 percent contributions and related earnings in your 457 account.

    Published September 4, 2012.
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  8. My spouse and I are both public school employees. If I elect the Personal Healthcare Fund and my spouse elects to remain with the premium subsidy, then can my spouse cover me under his/her premium subsidy insurance when he/she retires?

    The law currently allows spouses to be covered under a retiree's insurance, so yes, your spouse can include you as a dependent on the insurance. If your spouse would like to ensure that your insurances continue after his/her death, your spouse must be sure to choose a Survivor Option at retirement (as opposed to a Straight Life calculation). Learn more at www.michigan.gov/orsschools/0,4653,7-206-36504_36507_37362---,00.html.

    Revised October 5, 2012.
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  9. My spouse and I are both public school employees. If I elect the Personal Healthcare Fund and my spouse elects to remain with the premium subsidy and if my spouse names me as 50% survivor to his/her pension, will I be eligible for his/her insurance subsidy when they die, or will I only get a 50% subsidy?

    According to current law, if a member selects the 50%, 75% or 100% Survivor Pension when they retire, their beneficiaries would retain the insurance coverage offered by the state and based on eligibility requirements.

    Published September 4, 2012.
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Understanding the 2 Percent Match

  1. How does the 2 percent matching contribution for the Personal Healthcare Fund work?

    If you elect the Personal Healthcare Fund, you would be eligible for an employer match of up to 2 percent of pay to your state-sponsored tax-deferred savings account, administered by ING. Your contributions would go into a 457 account; your employer contributions would be placed in a 401(k) account.

    Revised September 26, 2012.
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  2. Do I have to contribute to get the 2 percent match?

    If you elect the Personal Healthcare Fund, you will be automatically enrolled for a 2 percent contribution as of your transition date, which would be the first day of the pay period beginning on or after February 1, 2013. You may opt out or change the amount of your contribution. But remember that you won't get the employer match if you don't contribute first. Your employer will match up to a 2 percent contribution, so consider contributing as much as you can to get the maximum employer match.

    Revised December 14, 2012.
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  3. Would the 2 percent be in addition to what I already contribute as a Pension Plus member?

    That depends. You will be automatically enrolled up to a total of 4 percent in order to meet the maximum match amounts for both the Personal Healthcare Fund and the Pension Plus savings component. If you are already contributing 4 percent or more to your Pension Plus savings component, you will not be auto enrolled in any additional contributions.

    Published September 4, 2012.
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  4. Is the 2 percent contribution to the Personal Healthcare Fund matched the same as my Pension Plus contribution?

    No. The 2 percent contribution for the Personal Healthcare Fund would be matched first. Each contributed dollar can only be eligible for one type of employer match, and the order for matching is determined based on the value of the match. Since the contributions to the Personal Healthcare Fund are matched dollar for dollar, they will be matched first. Contributions to the Pension Plus plan are matched fifty cents on the dollar, so they will be matched second. So your first up-to-2 percent of contributions will be applied to your Personal Healthcare Fund; your next up-to-2 percent of contributions will be applied to the savings component of your Pension Plus account (fifty cents on the dollar up to 1 percent of salary). Between your contributions and your employer match, you'd be putting away 7 percent towards your retirement: (2+2+2+1=7).

    Published September 4, 2012.
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  5. When will my contributions come out of my pay?

    The 2 percent contribution and the 2 percent employer match for the Personal Healthcare Fund will start with the first pay period beginning after February 1, 2013.

    Revised December 14, 2012.
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  6. I'm already contributing 5 percent into my 457 account. Do I need to contribute an additional 2 percent to get the employer match?

    No. If you're already contributing 4 percent or more, you don't need to contribute anything more to qualify for the additional 2 percent employer match under the Personal Healthcare Fund. However, to better prepare for a secure retirement, you should consider higher contributions.

    Published September 4, 2012.
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  7. What if I only contribute 1 percent?

    Under the Personal Healthcare Fund, whatever amount you contribute will be matched up to the maximum allowed (2 percent).

    But really, why would you pass up getting the employer match on your salary? That's like leaving money on the table! Most plan participants will want to contribute at least 4 percent to get both the healthcare savings and the retirement plan matching contributions. Retirement-smart employees contribute even more.

    Published September 4, 2012.
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  8. What if I put in, say, $50 a pay period?

    Your contribution has to be expressed in the form of a percent of pay in order to qualify for the employer match.

    Published September 4, 2012.
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  9. Do I choose the investment option for my contributions and the employer matching contributions?

    The 2 percent contribution and employer match will be distributed among the existing investment options you have selected for your Pension Plus account. If you have not selected your investment options, your contributions and match will go into the Target Date Fund appropriate for your time horizon based on your birthdate and an assumed retirement age of 65.

    Contact ING at 800-748-6128 or visit https://stateofmi.voya.com to learn more about investment options for your Personal Healthcare Fund contributions.

    Published September 4, 2012.
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  10. Is the 2 percent match a Health Savings Account (HSA)?

    No. Your contribution and your employer match are not a "Health Savings Account" as recognized by the IRS. According to the IRS, an HSA is a tax-advantaged medical savings account only available to taxpayers who are enrolled in a high-deductible health plan.

    Published September 4, 2012.
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  11. Is the 2 percent match a Flexible Spending Account (FSA)?

    No. Your contribution and your employer match are not a "Flexible Spending Account" (FSA) as recognized by the IRS.

    Published September 4, 2012.
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  12. When can I access the money we (my employer and I) put into my 401(k) or 457 for healthcare?

    The IRS and plan document rules for withdrawals from a 401(k) plan are different from the rules for a 457 plan. Learn more at http://www.mipensionplus.org/publicschools/leaving_employment.html.

    Published September 4, 2012.
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Understanding the Deposit of Your Retiree Healthcare Contributions to your 401(k) if you elect PHF

  1. If I elect the Personal Healthcare Fund, my 3 percent contributions to the Retiree Healthcare Fund will be deposited into a 401(k). How much will that deposit be?

    When you log in to miAccount, on the Retiree Healthcare Election screen, you'll be able to see the amount of your contributions to the Retiree Healthcare Fund as of July 31, 2012.

    Published September 4, 2012.
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  2. When will my 3 percent contributions be deposited into my 401(k)?

    If you elect the Personal Healthcare Fund, your 3 percent employee contribution to the retiree healthcare fund, which started in July, 2010, ceases as of the day before your transition date, which would be the first day of the pay period that begins on or after February 1, 2013. If you are an active Michigan public school employee who made contributions to the Retiree Healthcare Fund, the amount of the healthcare contributions you made between September 4, 2012 and your transition date, will be paid to your 401(k) account no later than your first pay date after March 1, 2013. The amount of any Retiree Healthcare Fund contributions made before September 4, 2012, are pending a Supreme Court resolution regarding PA 75 of 2010.

    Revised February 21, 2013.
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  3. Can I take the 3 percent contribution as a cash refund instead?

    No, you cannot take a cash refund. If you elect the Personal Healthcare Fund, the value of your 3 percent healthcare contributions will be deposited into your 401(k) account. You may take distributions from your 401(k) account after terminating employment and when you reach age 59 ½, per IRS regulations.

    Published September 4, 2012.
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  4. Can I select which account the 3 percent healthcare contribution gets deposited into?

    The contribution will be distributed among the existing investment options you have selected for your Pension Plus account. If you have not selected your investment options, your contributions and match will go into the Target Date Fund appropriate for your time horizon based on your birthdate and an assumed retirement age of 65.

    Published September 4, 2012.
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  5. Do vesting rules apply to this contribution?

    If you elect the Personal Healthcare Fund you would be 100 percent vested in the amount of the contribution.

    Published September 4, 2012.
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  6. Does taking the contribution mean my healthcare premium won't be paid by the retirement system when I retire?

    Yes. By electing the Personal Healthcare Fund, you will receive two contributions to your 401(k) equal in value to the total amount you contributed to the Retiree Healthcare Fund, but you forfeit your right to any subsidized retiree healthcare insurance premium offered to Michigan public school employees. See question 2 for details on the timing and amount of the deposits to your 401(k).

    Published February 21, 2013.
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  7. Will interest be applied to the 3 percent healthcare contribution deposited to my 401(k)?

    No. The amount of the contribution to your 401(k) will be based on the value of your 3 percent contributions to the Retiree Healthcare Fund only.

    Published September 4, 2012.
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  8. Will my 3 percent healthcare contribution deposit to my 401(k) be taxed?

    The contribution to your 401(k) would be considered an employer contribution and would not be subject to federal, state, or city tax, or FICA. The contributions are subject to income tax when you withdraw the funds.

    Published September 4, 2012.
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  9. Will the 3 percent contribution show up on my W-2 statement at the end of the year? If so, how will it show up?

    The contribution to your 401(k) would be considered an employer contribution and would not show up on your W-2 statement.

    Published September 4, 2012.
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  10. Can I defer the 3 percent contribution into a 401(k) or 457 that is managed by a provider different than ING?

    No.

    Published September 4, 2012.
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  11. If I'm already contributing to my 457 account. Will the same amount be withheld from this contribution?

    No.

    Published September 4, 2012.
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  12. What is the IRS contribution limit for a 401(k)? What should I do if this contribution puts me over the limit?

    The contributions to your 401(k) would be employer contributions so they would not count against the $17,500 individual limit for elective contributions in 2013 set by the IRS. They could, however, count against the overall annual limit on the 415 set by the IRS, which is $51,000 (for 2013).

    Contact ING at 800-748-6128 for advice and assistance if you think your contribution will put you over that limit.

    Published February 21, 2013.
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  13. How do I confirm the contribution is deposited in my 401(k) account?

    You can confirm that the contribution has been deposited to your 401(k) account by logging into your account at https://stateofmi.voya.com or by calling ING at 800-748-6128 between 8:00 a.m. and 8:00 p.m., weekdays.

    Published September 4, 2012.
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  14. Can I apply this retiree healthcare contribution deposit amount to my existing Tax Deferred Payment (TDP) for my service credit purchase?

    No, you cannot apply the deposit of your healthcare contribution to an existing Tax Deferred Payment.

    Published September 4, 2012.
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  15. Can I direct my retiree healthcare contribution deposit into a Flexible Spending Account (FSA)?

    No, you cannot direct your retiree healthcare contribution deposit into a Flexible Spending Account.

    Published September 4, 2012.
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  16. Can I direct my healthcare contribution deposit into a Health Savings Account (HSA)?

    No, you cannot direct your retiree healthcare contribution deposit into a Health Savings Account.

    Published September 4, 2012.
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