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Employers

Employer Bulletin

Local ICI Employers
Vol. 22, Local D
February 11, 2005

New Supplemental Income Continuation Insurance (ICI) Open Enrollment Period Begins February 21, 2005; Update on ICI Premiums for Local Employers

The Department of Employee Trust Funds (ETF) recently announced an increase of the maximum monthly Income Continuation Insurance (ICI) benefit levels through creation of Supplemental ICI coverage (Employer Bulletin, Vol. 22, Local B dated 1/14/2005). The new option, effective April 1, 2005, provides for coverage based on annual Wisconsin Retirement System (WRS) earnings between $64,000 and $120,000.

This bulletin contains:

Supplemental ICI Provisions

Currently, the ICI program covers 75% of an individual’s annual WRS earnings up to $64,000. The new supplemental ICI coverage allows for coverage up to annual WRS earnings of $120,000 with the employee paying the entire premium for coverage beyond the $64,000 threshold. Individuals with annual WRS earnings greater than $120,000 who enroll in supplemental ICI coverage are limited to a benefit based on earnings of $120,000.

Note: The Local ICI plan defines “earnings” as the total earnings paid to the employee during the previous calendar year as reported to the WRS.

Who is eligible for Supplemental ICI Coverage?

Employees who meet/met the eligibility requirements for ICI coverage per the Local plan and whose annual WRS earnings exceed $64,000. Eligible employees electing supplemental coverage must insure their entire salary above $64,000 up to a maximum of $120,000. There is no partial supplemental coverage. Enrollment in the supplemental coverage is voluntary.

When to apply:

Employees with ICI coverage and earnings exceeding $64,000 (as determined during the recent annual adjustment period) may apply during initial open enrollment (see below).

Employees newly eligible for ICI coverage with projected earnings exceeding $64,000 may apply for Supplemental ICI at the same time they apply for ICI coverage.

Employees with ICI coverage and earnings exceeding $64,000 who fail to enroll during the initial open enrollment period may enroll in Supplemental ICI coverage only on an annual basis (concurrent with the annual adjustment period. These employees may not apply for Supplemental ICI coverage by furnishing medical evidence of insurability (EOI).

Employees without ICI coverage whose earnings exceed $64,000 may apply for both ICI and supplemental ICI coverage by furnishing medical evidence of insurability.

Who pays the premium?

The employee pays the entire premium for supplemental ICI coverage; there is no employer share. Employers cannot contribute any portion of the supplemental ICI premium.

How does supplemental coverage affect the potential benefit level?

Employees with supplemental ICI coverage are eligible for a maximum benefit of $7,500 per month (75% of maximum monthly earnings of $10,000).

Employees with annual earnings greater than $64,000 who are not enrolled in supplemental ICI coverage are limited to a maximum benefit of $4,000 per month.

Supplemental ICI Initial Open Enrollment

The initial open enrollment period for supplemental ICI coverage runs from February 21 through March 11, 2005. Supplemental ICI coverage for employees enrolling during this open enrollment is effective April 1, 2005. Attached to this bulletin is a sample letter employers may adapt and use to notify those employees with annual WRS earnings greater than $64,000 whose ICI coverage is effective on or before April 1, 2005. Employers should notify these employees of the supplemental ICI coverage and ask interested employees to contact the appropriate human resources or payroll/benefits personnel for an application.

Eligible employees on leaves of absence during the initial open enrollment period have 30 days from their return to work to apply for supplemental ICI coverage. Employees currently receiving ICI benefits may enroll when they return to work and are no longer receiving ICI benefits.

Who may apply during the initial open enrollment?

The initial open enrollment opportunity for supplemental ICI coverage applies only to employees with annual WRS earnings exceeding $64,000 who are currently participating in ICI with a standard ICI coverage effective date on or before April 1, 2005.

How to apply:

ETF recently revised the ICI enrollment application to accommodate supplemental ICI coverage. There is now a separate enrollment application for local government employees (Income Continuation Insurance Application [ET-2366]).

Eligible employees wishing to enroll in supplemental ICI coverage must complete the ‘Employee’ section of the appropriate application and return the application to the employer by close of business on March 11, 2005.

Employers will:

  1. Validate that the employee is eligible for the Supplemental ICI coverage.
  2. Complete the ‘Employer’ section of the application and forward the top copy of the application to ETF. Each application will be audited and problem applications reviewed with the employer or returned.
  3. Retain the Employer Copy for verification purposes.
  4. Give the Employee Copy to the employee.

Note: Please utilize the newly revised applications Income Continuation Insurance Application (ET-2366, 01/2005), to enroll employees in both ICI and supplemental ICI coverage. Newly eligible employees, as well as those employees already enrolled in ICI and electing supplemental coverage during the open enrollment period, must complete the revised versions of the application. Destroy/discard all Income Continuation Insurance Applications (ET-2307, rev. 10/1999 or earlier) and begin using the revised forms effective the date of this bulletin. As of February 21, 2005, applications received with a revision date prior to 01/2005 will be returned to the employer; the employee must then complete the appropriate application.

Employers received instructions for ordering the revised ICI applications in a recent Employer Bulletin (Vol. 22, Local B dated January 14, 2005). If you have not yet ordered revised applications, complete the form attached to the above bulletin and mail, fax, or e-mail the form to Broadspire, the ICI third-party administrator. (Contact information is listed on the form).

Premium Payment and Reporting

ETF revised the Monthly Premium Report Group Income Continuation Insurance (ET-1629) to accommodate the new supplemental ICI coverage. The revised report is attached along with reporting instructions. Copy the report for future reporting and place a copy into chapter 5 of the Income Continuation Insurance Administration Manual (Local Government Employers), ET-1145. This form is also available on ETF’s Internet site at: http://etf.wi.gov. (See Subchapter 105 for alternative methods of obtaining copies of ICI forms.)

Update on Annual ICI Premiums for Local Employers

Local employers offering ICI must annually update payroll records and calculate new monthly ICI premiums effective March 1, 2005. The new premium rates are based on your insured employees’ 2004 average monthly earnings and their selected elimination period. An employee’s average monthly earnings are defined as the total 2004 WRS earnings rounded to the next higher thousand and divided by 12.

The updated premiums must be reported on your March 2005 Income Continuation Report (ET-1629), due at ETF on or before Monday, February 21, 2005. Please write “Annual Review and Update Completed” on the bottom of your March 2005 report to indicate that you have completed this process. This adjustment will not reflect the new Supplemental ICI coverage.

Note: If you submitted your March 2005 ICI report without making the premium adjustment, please make the necessary adjustments based on 2004 earnings on your April 2005 premium report due March 21, 2005. You will also need to make a correcting entry for the March report.

Use the following instructions to complete your review of ICI premiums. You may also refer to Subchapter 403 of the Wisconsin Public Employers Income Continuation Insurance Administration Manual (ET-1145, rev. 12/2004).

  1. Determine each insured employee’s WRS earnings for 2004. For newly hired employees or those who have had an interruption in earnings of three consecutive months or more, the WRS earnings for 12 months will be an estimate.
  2. Verify that you are reporting employees by the correct elimination period.
  3. Use the guidelines listed in chapter 4 of the Wisconsin Public Employers ICI Administration Manual (ET-1145, rev. 12/2004) to calculate the amount of the monthly premium for each employee and the employer contribution. The premium rates are unchanged from last year and are attached to this Bulletin.
  4. The resulting total premiums will be the amount paid and reported beginning February 21, 2005 (for March 2005 coverage) and ending January 20, 2006 (for February 2006 coverage).

Note: When an employee has a permanent change in the percentage of appointment, such as a change from part-time to full-time employment, premiums must be adjusted at the time the change occurs. If an adjustment was not made at the time the change in appointment occurred, payment of the additional premiums—or refund of the overpaid premiums—should be made from the month of the change to the end of the calendar year on the report due February 21, 2005.

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