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PA 75 and 3% Healthcare Contributions FAQs
Who will be receiving a refund?
Anyone who was actively employed by a reporting unit of the Michigan Public School Employees’ Retirement System between July 2010 and September 2012. Contributions have been returned to the school(s) that you worked for during this time, and the school will issue the refund.
How much money will be refunded to me?
ORS has notified members of their refund amount by email as of January 22, 2018.
I didn't receive the email from ORS containing my contribution amounts and interest. How can I find out about my amount?
First, check your junk mail or spam folder. If after checking there, if you find you still don’t have the email from ORS, you may use one of the following methods to obtain your amount. Due to a high volume of inquiries, please allow 3-5 business days for us to respond, regardless of the option you use:
- Method 1: If you are registered for miAccount, you may log in and send us a message using the secure Message Board. Use the category “MPSERS 3% Healthcare Refund” and in the message, ask for your amount of contributions and interest.
- Method 2: If you are not registered for miAccount, you can register to send us a secure message. Otherwise, use the Guest Message Board to send a message asking for the amount of your contributions and interest. Use the category “MPSERS 3% Healthcare Refund.” In the message you must also include the following information:
- First & Last Name
- Date of Birth
- City as listed in your address of record with ORS.
When will I receive my refund?
ORS provided information to employers on January 9 and returned the funds to those employers on January 22. This does not mean that the school districts will disburse those funds on that date. They have important responsibilities for the recording and tax reporting of these refunds. Generally, you might expect your refund to come to you 60-90 days after January 22. There are several districts that have closed or dissolved since 2010. The return of those contributions may be later because a different methodology will be used to transfer those contributions.
What information about me did ORS provide to my employer about this refund?
On January 9, 2018, your employer received a data file from ORS through a secure channel used for regular payroll processing. The file provides the following information for each employee reported during the refund period (July 2010 – September 2012):
- Employee name and social security number
- Status (active member, inactive member, retired, or deceased)
- The most recent contact information that ORS has on file (mailing address, email address and phone number)
- Healthcare contributions withheld during that period and interest earned on the contributions
What if I’m retired?
If you worked anytime during July 2010 until September 2012, your 3% healthcare contributions during that period will be returned.
What if I’ve moved/left the school I worked for?
This money will be refunded through your school district. We provided your current mailing address to the schools to assist with the refund process. If your mailing address with ORS is no longer current, you will need to update your address with the school where you worked during July 2010 until September 2012. If you worked for more than one school district during that period, be sure your address is current with each school district.
What if my district/school closed?
Some districts merged into others. If that is the case, the money will be refunded through the merged school district. If your district/school closed, we’re working on the plan to refund your contributions to you.
Do we get interest on these funds?
Yes, interest will be included in the refund you receive. The courts directed the administration to maintain the funds in a capital preservation escrow account, which accrues a very minimal amount of interest.
How did ORS calculate interest on the refund amounts?
To calculate interest, ORS took each member’s healthcare contributions and divided that amount by the total healthcare contributions of all members to determine the proportionate share of the interest, then multiplied that percentage by each member’s contributions to determine each member’s interest earned. Interest was credited only if it resulted in a minimum of a whole penny.
What about state employees?
Court cases regarding state employees have already been resolved. This is only for public school employees who worked during July 2010 until September 2012 and contributed 3% toward retiree healthcare.
Why can’t you send this directly to us instead of sending it to our employers?
There are taxation rules for these payments that can only be implemented by the employers.
How is the money refunded if the contributing member is deceased?
The school districts will issue the refunds. Each district will determine how to distribute the refund in this situation.
How were my taxes handled?
ORS has returned the healthcare contributions that were reported at the time and has no information regarding the tax status of those contributions. Each reporting unit must determine for itself how it handled taxes at the time the contributions were made, and comply with IRS requirements regarding taxation of the refund amounts. You may wish to consult your own tax advisor if you have questions about the taxability of your refund.
Will the 3% refund be considered additional income, and will that cause my pension to be re-calculated?
No. Your Final Average Compensation (FAC) is calculated using gross reportable wages. The 3% healthcare contribution was deducted from gross reportable wages, so that deduction won’t change the FAC calculation at all, regardless of when you retire (or retired).
Can I use my refund to pay off my Tax-Deferred Payment (TDP) agreement?
ORS is required to return the money to the employer(s) for whom you worked between July 2010 and September 2012. They will issue the refund to you. Once you have been refunded the money, you may use it for anything you wish. However, the normal rules still apply for paying off a TDP agreement.
I have retired and have returned to work at a school. Will the refund of healthcare contributions affect my 2018 earnings limit?
No. The refunded contributions and interest that will be issued through the school districts will not count towards your retiree’s earnings limit in 2018. Refunded contributions of this type are not reported to ORS as retiree earnings.
My refund is not 3% of the wages I made between July 2010 and September 2012? Why is that?
It’s true for most people that, when PA 75 was implemented, they contributed 3% of reportable wages for funding healthcare in retirement. However, in 2010, the year PA 75 was implemented, the law allowed an exemption for those people who either made less than $18,000.00 in the prior school fiscal year, or those who began working after July 1, 2010 with a starting salary of less than $18, 000.00. People who qualified for that exemption only contributed 1.5% of reportable wages. During the school year beginning July 1, 2011, all persons contributed 3% of reportable wages for funding healthcare in retirement.
Be assured, the amount of your refund is the amount that you’ve contributed toward funding of healthcare. In some circumstances and because of the exemptions just mentioned, the total may not be a full 3% of wages earned during the period PA 75 was in effect.
What about healthcare contributions made between September 4, 2012 and February 1, 2013, when ORS began implementing the 2012 reform changes based on member elections? How do I know what happened to that money?
The period for which contribution refunds are due ends on September 3, 2012 because PA 300 of 2012—the law that provided members a healthcare benefit election—took effect on September 4, 2012. For the period between the law’s effective date and its implementation (9/4/2012 – 2/1/2013), healthcare contributions were deposited into the appropriate accounts, depending on the member’s election. For members who elected the Personal Healthcare Fund, contributions were deposited into their 401(k) accounts with Voya Financial® in February 2013. ORS sent a letter dated February 26, 2013 with the estimated amount of the transfer. For those who elected the Premium Subsidy option, contributions were deposited in the Retiree Healthcare Fund, to fund that benefit upon members’ retirement.
Updated January 22, 2018