Wisconsin Retirement System (WRS)
Currently, when a member terminates employment and receives an annuity, the member may later return to work with a WRS-participating employer and either terminate the annuity and again become a WRS-participating employee or, instead, continue to receive the annuity, as well as wages. If the member does not terminate the annuity, the member may not be a WRS participating employee and, in the case of state employment, is not eligible for group insurance benefits, and may not use any of his or her employment service as a rehired annuitant for any WRS purposes. If the participant terminates the annuity, the participant returns to participating employee status, is eligible for all group insurance benefits provided to other participating employees, and is able to accumulate additional years of creditable service under the WRS for the additional period of covered employment.
- Rehired Annuitants – Increase Required Minimum Period of Separation from Employment before Returning to Work for a WRS-Participating Employer
Under current law, a WRS participant who has applied to receive a retirement annuity must wait at least 30 days between terminating covered employment with a WRS employer and returning as a participating employee. If the participant does not wait the 30-day period, and is rehired before the expiration of the 30-day period, the participant is not eligible to receive a WRS retirement annuity.
The bill provides that the participant must remain separated from employment with a WRS participating employer for at least 75 days in order to be an eligible rehired annuitant. This provision first applies to a WRS participating employee who terminates on the budget bill’s effective date. [§ 749]
- Rehired Annuitants – Automatic Termination of Annuity upon Returning to Work for a Participating Employer in a Position in which the Member is Expected to Work at Least Two-Thirds of Full-Time Annually
The bill provides that if a WRS annuitant, or a disability annuitant who has attained his or her normal retirement date, is appointed to a position with a WRS-participating employer, in which he or she is expected to work at least two-thirds of full-time, as defined by ETF, annually, the annuity must be terminated and no annuity payment is payable until after the participant again terminates covered employment. The bill also provides that WRS annuitants who enter in a contract with a WRS-participating employer, in which he or she is expected to work at least two-thirds of full-time, as defined by ETF, annually, the annuity must be terminated and no annuity payment is payable until the participant no longer provides services under the contract. [§§ 746-748]
Currently, when a WRS annuitant returns to employment as a WRS-participating employee, the annuity is terminated and the original annuity is reestablished as if the employee never retired. When the rehired annuitant terminates employment, the new annuity is calculated with an off-set for annuity payments already received. The reestablished account calculation can be problematic because the statutory guidelines are inconsistent with other Chapter 40 processes. This can sometimes produce inequitable results, which ETF has attempted to address by administrative rules permitting equity adjustments.
- Re-established and Re-Retirement Calculation Methodology
The bill requires the original annuity to be suspended, rather than terminated. A new account is created for any subsequent period of WRS-participating employment. When the rehired annuitant terminates the period of reemployment and applies for a retirement annuity, the original annuity is unsuspended and a new annuity is calculated under the same guidelines as the original annuity for the subsequent period of employment. This annuity is credited with accumulated amounts from a memorandum account that actuarially provide for the proper benefit amount. The new provisions first apply to any annuitant who returns to WRS-participating employment on or after the effective date of the bill. [§§ 716b, 716d, 716f, 716h, 716j, 733m, 737m, 738d, 738p, 746m, 748b, 748d, 748f, 748h, 748j, 748L, 754m]
- Eligibility for Employees who were first hired by a WRS Employer before July 1, 2011
2011 Wisconsin Act 32 increased the number of hours that an employee must work in order to become a participating employee in the WRS, from one-third of what is considered full-time employment to two-thirds of what is considered full-time employment, as determined by ETF.
Under 2011 Wisconsin Act 32, this change did not apply to those employees who were first hired by a WRS employer before July 1, 2011, regardless of whether or not the employees were participating employees before that date. This provision provides that, to be exempt from Act 32’s two-thirds-time eligibility standard, employees must have been participating employees before July 1, 2011. [§§ 737, 738]
- Disclosure of Member Information to Department of Revenue (DOR)
ETF is permitted, but not required, to disclose member information (including Social Security Numbers) concerning the payment of WRS annuities to DOR for the purposes of administering the payment of state taxes; collecting debts owed to DOR; locating WRS participants, or the assets of WRS participants, who have failed to file tax returns, underreported their taxable income, or who are delinquent debtors; identifying fraudulent tax returns and credit claims; or providing information for tax-related prosecutions. [§ 733]
- Internal Revenue Code Compliance
The WRS is a governmental plan and is a tax-qualified retirement plan under s. 401(a) of the Internal Revenue Code (IRC). Members of tax-qualified plans enjoy many benefits, including that they do not have to pay income tax on contributions until they withdraw money from the plan. Similarly, contributed amounts are permitted to grow tax deferred. However, statutory changes are occasionally necessary to ensure the qualified status of the WRS and to allow for flexibility in the event of future changes to the IRC.
The budget bill contains technical adjustments to Chapter 40 to conform to requirements of the Internal Revenue Code. [§§ 696, 697, 698, 700-704, 707-712, 717, 718, 720-725, 732, 734-736, 739-745, 750-752, 754-758]
- Additional Funding for Actuarial Studies
The bill provides an additional $15,000 GPR in FY 2014 to the Joint Legislative Council’s appropriation to conduct actuarial studies. This is one-time funding, which increases the amount available for studies on FY 2014 to $30,000.
Current law provides that the GIB may not enter into an agreement to modify or expand any group insurance coverage in a manner that conflicts with laws or rules promulgated by ETF or that materially affects the level of premiums or the level of benefits under any group insurance coverage.
- Group Insurance Board (GIB) Discretion to Modify Benefits to Maintain or Reduce Premiums
The bill permits the GIB to modify or expand benefits if the modification or expansion is required by law or would maintain or reduce premium costs for the state or its employees in the current or any future year. [§ 714]
- Wellness Initiatives
The Governor recommends that the GIB expand the current wellness program.
- “Craft Employees” Payment of Health Insurance Premiums
The bill creates a definition for “craft employee” in Chapter 40. Craft employees must pay all of their health insurance premiums, unless otherwise determined by the director. A craft employee is a state employee who is a skilled journeyman craftsman, including the skilled journeyman craftsman’s apprentices and helpers, but does not include employees not in direct line of progression in the craft. [§§ 699, 729]
- Optional High Deductible Plan and Health Savings Account
The GIB must offer to state employees an optional high deductible health insurance plan and health savings account beginning January 1, 2015. The actuary must recommend changes to the program design to make the plan more cost effective. Requires the Office of State Employment Relations (OSER) and ETF to study the feasibility and cost effectiveness of offering health reimbursement accounts compared to health savings accounts. OSER and ETF must present their findings and recommendations to the Governor and the Joint Committee on Finance no later than January 31, 2014. [§ 9112(4L)]
The GIB may collect fees from state agencies to pay all administrative costs relating to health savings accounts. The state must make contributions to employees’ health savings accounts in an amount determined annually by the Director of OSER. [§§ 462, 491, 705, 711, 716, 719, 730, 753]
- State Payment of Health Insurance Premiums
Current law is that the state may not pay more than the average premium costs of the lowest cost health insurance plans.
Under the bill, the state is not permitted to pay more than 88 percent of the average premium costs in each tier. [§ 726]
In addition, if any tier contains no health insurance plans, but is used to establish premiums for employees who work and reside out of state, the amount these employees must pay is based on the premium contribution amount for that tier in the prior year, adjusted by the average percentage change of the premium contribution amount of the other tiers from the prior year. [§ 728]
- Study to Exclude certain Spouses and Domestic Partners from State Employee Health Insurance Coverage
Requires OSER and ETF to jointly study the feasibility of excluding from state employee health insurance coverage a spouse or domestic partner who has health insurance available from his or her employer. The study will also evaluate the creation of a $2,000 incentive payment program for state employees that opt not to take health insurance through the state. The bill provides $75,000 GPR in FY 2014 to conduct an actuarial study of the plan to exclude from state employee health insurance coverage a spouse or domestic partner who has health insurance available from his or her employer and an incentive payment program for state employees that opt not to take health insurance through the state.
OSER and ETF must present their findings, results of the actuarial study, and recommendations to the Governor and the Joint Committee on Finance no later than June 30, 2014. [§ 9112(3q)]
- Health Insurance Data Collection and Analysis – Requirements for Health Care Information Organizations
Under current law, the Department of Health Services (DHS) and ETF may contract with a health care information organization (“data organization” in Chapter 153, Stats.) to request health care claims information from health insurers and insurance plan administrators. The data organization must analyze and publicly report this information with respect to the cost, quality and effectiveness of health care; provide DHS with health care claims information and reports upon request; and maintain a centralized data repository. If DHS and ETF determine that the data organization is not fulfilling certain requirements, DHS must carry out these functions itself.
The bill requires the data organization to take actions including all of the following:
- provide an Internet site to offer health care provider cost and quality data and reports to consumers;
- conduct statewide consumer information campaigns to improve health literacy; and
- provide software to allow providers to validate data prior to its publication on the Internet site. [§§ 346, 1901, 1902]
- Annual Report on Progress of Modernization Efforts
ETF must submit an annual report by July 1 to the DOA Secretary and the Joint Committee on Finance regarding ETF’s progress in modernizing its business processes and integrating its information technology systems. [§ 713]
- Funding for promotion of state employee wellness in the workplace
- Funding for the Modernization of Business Processes and Technology Integration