EmployerWebinar 2016 - KPERS · Employer Webinar 2016. Active Member Death Benefit. Paid to the...

WebinarEmployer 2016

STATE #2

Employer Webinar 20163Discussion Topics

Discussion Topics

WelcomeMembership

DisabilityDeath Benefits

Optional Group Life Insurance (OGLI)Withdrawal

KPERS MembershipKPERS-covered Position Membership GroupsVestingKPERS 1, 2 & 3Employer ContributionsTotality of EmploymentDual Employment

Employer Webinar 20165Membership

KPERS Covered Position

• The position requires at least 1,000 hours per year.

• The position is covered by Social Security.

• Continuously or consistently employed.

• The position is not temporary.

• The position is not seasonal.

A part-time position is a covered position as long as the position meets the above requirements.


KPERS Membership Groups


Vesting

KPERS members vest with five years of service. A total of 18 quarters (4.5 years) rounds to five years.

Vested Members• Receive a lifetime monthly benefit.• Continue to accrue interest on account balance, even after leaving

employment.

Non-Vested Members who leave employment • Must withdraw after five years (unless employee is working in a non-

covered position with the same employer).• KPERS 2 members will lose their plan status if they return outside the

grace period (will return as a KPERS 3 member).


Grace Period/Membership

• 30 days from end date to return to another KPERS-covered position

• If returns after 30 days, enroll as KPERS 3 member

• Break in service: end date and new start date


Employee Contributions & Interest

• KPERS 1 and KPERS 2 employees contribute 6%.

• The employee’s contributions are pretax.

• KPERS 1 and KPERS 2 employees will be credited interest each June 30 for the balance in account on the previous Dec 31.o If membership is before July 1, 1993, the employee receives

8% interest. o If membership is July 1, 1993, or after, the employee receives

4% interest.


KPERS 3 “Cash Balance” Plan

• Defined benefit plan with some elements of a defined contribution plan.

• Tends to share risk between the employer and employee.

• “Contribution Account” and “Retirement Credits”o are kept separateo grow over time


KPERS 3 Contribution Accountand Interest

• Employee contributes 6%.

• Contributions deposited into the employee’s “Contribution Account.”

• 1% paid at the end of each quarter for balance in account at end of previous quarter (4% annually).

Example: $10,000 each quarter

Contribution Account

Account Balance (3/31/16) 600.00

Q2 Employee Contributions 600.00

Q2 Interest (1%) 6.00

Q2 Extra Interest -

Account Balance (6/30/16) 1,206.00


KPERS 3 Retirement Credits

How They Work

• Credits earned quarterly based on length of service.

• Represented as dollars instead of years of service.

• Build in value over time and only available at retirement.

• Not connected in any way to the employer contribution rate.


KPERS 3 Retirement Credits Grow

Based on compensation and years of service.

Less than 5 3%5 – 11 4%12 - 23 5%

24 or more 6%

Years of Service % of compensation


KPERS 3 Retirement Credits & Interest

1% interest paid at the end of each quarter for balance in account at end of previous quarter

Retirement Credits (available only at retirement)

Retirement Credit Value (3/31/16) 300.00

Q2 Service Credits 300.00

Q2 Interest (1%) 3.00

Q2 Extra Interest -

Retirement Credit Value (6/30/16) 603.00


Employer Contributions

• Not deposited into the member’s account

• Go into the KPERS trust fund to help pay for

o Disability benefitso Death benefitso Future retirement

benefits


Totality of Employment

• KPERS-covered position• Paid for working extra jobs with the same employer• Deduct KPERS contributions from all compensation

• Does not add additional years of service credit

EXAMPLE• Works in covered position for KS Dept of X.• Also works extra jobs for KS Dept of X.• Deduct contribution from all

compensation from KS Dept of X.

EXCEPTIONView what is subject to KPERS in the Employer Manual section of kpers.org, under “Helpful Resources.”


Dual Employment

• Employee works for two or more KPERS employers and all positions are KPERS-covered positions.

• Each employer enrolls the employee in KPERS, but the second employer enrolls the employee as a dual employee.

• Both employers remit employee and employer contributions.

• If the employee is purchasing service credit by payroll deduction, both employers will remit purchase of service deductions.

• Dual employment does not give the employee extra years of service but does increase reported salary.


Elected Official

• Must work either 1,000 hours or earn at least $5,000 per year.

• Must elect membership within 90 days of taking the oath of office.

o Elect within 14 days, membership is immediate.

o Elect within 15 to 90 days, membership starts at the beginning of the next quarter.

• If elected official is already a KPERS member and the position is a KPERS-covered position, he must contribute to KPERS with the elected position.

• The membership election is irrevocable.

Disability BenefitsDisability Benefit is…

Eligible Employees

Definition of Disability

When Benefits Begin

Reporting Leave of Absence

Completing KPERS-60

Rehabilitative Employment

Maximum Benefit Period

Continuing Benefits

Employer Workshop 201620Disability Benefits

KPERS Disability Benefit Is…

• 180-day waiting period.

• 60% of employee’s current annual rate of compensation.

• Minus workers’ compensation, Social Security or any employer provided disability benefit.

Employer Workshop 201621Disability Benefits

KPERS Disability Benefit Is…

• Minimum monthly benefit is $100.

• Maximum monthly benefit is $5,000.

• Confirmed each year to continue receiving benefits.

Employer Webinar 201622Disability Benefits

Eligible Employees

• Active KPERS members

• Active Board of Regents employees

• Eligible employees of the University of Kansas Hospital Authority

• Legislators

• State officers

• No disability coverage during military leave


Definition of Disability

• Be under the regular care of a physician • Begin while coverage in force • Meet the following definition of disability

Own Occupation• Disabled from own occupation for 24 months

Any Occupation• After benefits have been paid for 24 months, the employee

is unable to perform any occupation


When Benefits Begin

For approved claims, benefits will be the later of:

• The date the employee completes 180 continuous days of total disability.

• The date the employee ceases to draw compensation from his KPERS employer.

• If an employee attempts to return to work for up to 30 working days during the 180-day waiting period and again becomes disabled from the same cause, the waiting period will be extended by the number of days worked.



You should move your employee to a “leave of absence” if the employee is either:

• No longer earning at least 50% of full pay, based on his KPERS-covered position, which is:o Regular pay based on his KPERS-covered positiono Accumulated sick leave payo Accumulated vacation leave payo Any combination of above

• Off the payroll for at least 10 days



Go to the Employer Web Portal• Enter the employee’s end date using “Leave of Absence”

as the reason code.• Complete and send in the KPERS-60 (disability) form.• The employee may continue to receive workers’

compensation or small accumulated payments of sick and annual leave, but KPERS contributions should not be withheld.

• Employee cannot be actively at work.


Completing KPERS-60


Rehabilitative Employment

• Employee must participate in rehabilitative employment if it is determined that it may benefit him.

• Employee’s monthly benefit reduction:

Reduced By Time Period50% First 12 months

75% Second 12 months

• Rehabilitative employment can continue for up to 24 months.


Maximum Benefit Period

Before age 60Whichever comes first:(A) 65th birthday or(B) Retirement date

On or after age 60Shorter of:(A) Period of 5 years or(B) Period until retirement date

Disability Began Max Benefit Period


Continuing BenefitsWhile on Disability

• Employee continues to earn service credit.

• Employee continues to have Basic Life Insurance coverage in the amount of 150 percent of current annual rate.

• If participating in Optional Life Insurance, employee may continue at group rates by completing a KPERS 79-C form.

Death BenefitsBasic Life Insurance

Active-Member Death Benefits

On-the-Job Accidental Death Benefits

Accelerated Death Benefits

Employer Webinar 201633Death Benefits

Basic Group Life Insurance

Who Is Covered?• All active KPERS members

Coverage Amount• 150% of whichever is higher:

o Employee’s current annual rate of salary (Multiply the employee’s hourly rate of pay by the number of hours the position requires each year).

o Employee’s previous 12 months of pay

Complete the KPERS-61 Form (Employer’s Report of Death)


Active Member Death Benefit

Paid to the employee’s beneficiaries:• Basic Group Life Insurance

• Optional Group Life Insurance

• Return of Contributions and Interest


Active Member Death Benefit

Paid to the employee’s beneficiaries:

• Surviving Spouse Option (in lieu of return of contributions)o If the spouse is the sole primary beneficiary, o At time of death, employee must have 10+ years of service

(5+ years for KPERS 3) or be eligible for retirement o If member is not eligible for retirement at time of death, spouse

benefit will begin at the earliest time the employee would have been eligible: For normal or early (reduced benefit) retirement < KPERS 1 & 2 For normal (not reduced benefit) retirement < KPERS 3


On-the-Job Death Benefits

Benefits are payable in this order• Employee’s spouse• If no spouse, to dependent children• If no children, to dependent parents

Benefit Amount• $50,000 lump-sum payment• 50% of employee’s final average salary, (paid monthly)

o Minus workers’ compensationo Minimum payment=$100o Benefit is in lieu of monthly surviving spouse benefit


Accelerated Death Benefits

• Applies to both Basic Group Life Insurance and Optional Group Life Insurance.

• If employee is diagnosed as terminally ill with 24 months or less to live, then the employee can choose to accelerate all or part of the benefit.

• Any remaining coverage stays in effect as long as employee is an active member and continues paying premiums.

Optional Group Life Insurance (OGLI)What is it?

Affiliation

Employee Coverage

Spouse and Child Coverage

Family Status Change

Forms

Continuing Coverage (leaving KPERS-covered employment)

Employer Webinar 201639OGLI

What is it?

Optional Group Life Insurance (OGLI) is additional coverage beyond Basic Life Insurance.

• Coverage for employee, spouse, child

• Employee decides how much

• Employee pays for cost through payroll deduction


For New Employees Now

Employee Up to $25,000in $5,000 increments

Up to $300,000in $5,000 increments

Spouse $10,000 or $25,000 $50,000 or $100,000

Child* $10,000 or $20,000 n/a

InsuredGuaranteed Coverage(without proof of good health)

Anytime Coverage(proof of good health)

*One premium covers all dependent children in family

• Cancel or reduce coverage anytime.• Start or increase coverage during open enrollment (October).• Retirees are not eligible for employee coverage.


For New Employees Jan 2017

Employee Up to $50,000in $5,000 increments


Spouse Up to $25,000 in $5,000 increments


Child* $10,000 or $20,000 n/a

InsuredGuaranteed Coverage(without proof of good health)

Anytime Coverage(proof of good health)

*One premium covers all dependent children in family

• Cancel or reduce coverage anytime.• Start or increase coverage during open enrollment (September).• Retirees are not eligible for employee coverage.


Spouse & Child Coverage

• Employee does not have to be enrolled in OGLI to have spouse coverage.

• Premiums are payroll deducted.

• Employee is the beneficiary of spouse coverage.

• Cannot be insured as both a KPERS-covered employee and a spouse of a KPERS-covered employee.


Family Status Change

May increase coverage within 31 days of a family status change:

• Marriage or Divorce• Change of marital status• Birth of child• Adoption of child

An employee may enroll or increase coverage by $50,000 without proof

of good health.

An employee may enroll or increase

spouse coverage for $10,000 or $25,000.

Within 31 days of marriage, an employee may elect

$10,000 or $25,000 of spouse coverage without proof of

good health.


Conversion Option

When leaving KPERS-covered employment, the employee may convertthe basic and/or optional life insurance coverage.

• Term insurance will convert to a whole life policy• Individual rates are higher than group rates• Builds cash value• Offers level premiums• Pays the face amount of insurance at time of death• Can convert up to full amount without proof of good health• Conversion must take place within 60 days of last day on employer’s

payroll


Portability Option

When leaving KPERS-covered employment, the employee may port his basic and/or optional insurance coverage.

• A term insurance option to continue coverage when leaving employment or retirement.

• At employee’s cost, but no proof of good health.• Premiums increase as you get older.• Must be under age 80 and actively at work the day before leaving

employment (cannot be off work due to sickness or injury).• Coverage reduces to 65% at age 65, all coverage terminates at age 80.• Portability must take place within 60 days of last day on the employer’s

payroll.


Continuing Spouse Coverage

• Spouse coverage can only be ported if the employee also ports his own insurance.

• Spouse coverage may be converted to a whole life policy regardless of whether the employee converts his own insurance.

• Child coverage does not continue.

Applying to WithdrawVested Employee KPERS 1 & 2

Non-Vested Employee KPERS 1 & 2

KPERS 3

Withdrawing Contributions

Continuing Insurance

Employer Webinar 201650Withdrawal

Vested Employee KPERS 1 & 2

• Vested with five years of service credit.

• If vested, the member is guaranteed a lifetime monthly retirement benefit if he leaves his contributions and interest in his account.

• The vested benefit is often more valuable than the amount of actual contributions.

• Member can apply for retirement benefits when eligible.

• Account will continue to earn interest.

• Member can withdraw at any time if he changes his mind.


Non-Vested Employee KPERS 1 & 2

• Not guaranteed a retirement benefit.

• May leave contributions and interest with the Retirement System for five years from last day on payroll.

• Account will continue to accrue interest for five years.

• After five years, member forfeits his service.

• If member returns to KPERS-covered employment outside the grace period, he will be a KPERS 3 member.


KPERS 3

Vested • The vesting requirement is five years (4.50 rounds to 5).• Withdrawn member will continue to accrue interest until eligible to retire.• When eligible to retire, member can receive a benefit based on his

contribution account and retirement credits.

Non-Vested• Member forfeits his retirement credits.• If member has not withdrawn his contribution account and returns to

KPERS-covered employment within five years, his retirement credits will be restored.

• Interest is paid for two plan years only.


Withdrawing ContributionsKPERS 1, 2 & 3

• A member can apply to withdraw his contributions 31 days after employment ends.o Must complete and submit KPERS-13 (App for Withdrawal) to

KPERSo Approximately 4 weeks to process a KPERS-13

• If a member withdraws, he gives up all Retirement System rights, benefits and service.

• KPERS will send 1099 tax form to member the following January for income tax return.


Sometimes Employee Can’t Withdraw

• If a non-vested member moves from a covered position to a non-covered position (same employer). The IRS does not consider this a “distributable event.”o Contributions continue to earn interest while the member is in

the non-covered position at your employer.

• If a member goes on a leave of absence.

• If a member goes on military leave.

• If there’s a legal dispute with employer.


Options for Withdrawing

Roll over contributions into an eligible retirement plan, deferring taxes until later

• 457(b) deferred compensation plan• 403(b) taxed deferred annuity• 401(k) plan• Traditional IRA

Have contributions and interest paid directly

• KPERS will withhold 20% for federal income tax• The IRS may assess an additional 10% penalty for withdrawing if the

employee is under the age of 59 ½


Continuation of Insurance

Can choose to keep basic and/or optional life insurance and:

• Convert life insurance into an individual whole-life policy, or

• Port life insurance into a term life policy

Secure UploadMethod to Send Documentsto KPERS

Example

Employer Webinar 201658Secure Upload

Method to Send Documents

KPERS can no longer accept scanned forms and documents through regular email.

• KPERS Secure Upload is a method for submitting forms and documents electronically.

• Upload up to five forms/documents at once.

• A confirmation is sent within one business day.

Employer Webinar 201659Secure Upload

How to Send to KPERS

Call KPERS at 1-888-275-5737to get set up

Employer Webinar 201660

KPERS Contact Information

Reporting & OGLI Everything Else

Email: [email protected] Email: [email protected]

Toll-free: 1-866-980-0955 Toll-free: 1-888-275-5737

Topeka: 1-785-296-5278 Topeka: 1-785-296-6166

mailto:[email protected]

mailto:[email protected]


Presentations for Employers and Members

• Basic Presentation• KPERS 3 Plan (new employees)• Pre-Retirement• Designated Agent Training• School In-Service• Benefit Fairs


Educational Representatives

Dianna BerryTopeka Office

Alan SchulerEastern Kansas

Mel AbbottCentral Kansas

Ardith DunnWestern Kansas

Andrea DavenportTopeka Office

Cathy RaffertyTopeka Office

Becky LinquistTopeka Office

EmployersThanks for all you do for KPERS members.

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