POLICY BULLETIN NO. 2000-02R- REISSUED
(Part 2 of 2, P-11 through P-23)

Section 21.3 - Sick Leave - March 20,2001

[Return to Part 1]

TABLE OF CONTENTS

For Part 1:

• PROGRAM OVERVIEW
• TERM OF PROGRAM
• ROLES AND RESPONSIBILITIES
• ENROLLMENT
• ELIGIBILITY
• EARNING SICK LEAVE UNDER HOP

For Part 2

• M/C AND RRSU EMPLOYEES IN THE IPP
• RE-CREDITING OF SICK LEAVE BALANCES FOR EMPLOYEES IN THE IPP
• LEAVES OF ABSENCE
• LOSS OF ELIGIBILITY
• INSURANCE ISSUES
• TAXABILITY

HOP ACCRUAL RATES ATTACHMENTS [Separate pages here.]

• I A- 40 Hour Workweek, Accrual Rate for Employees Earning 13 days per year-HOP Rate - 10 days per year.
• II A- 40 Hour Workweek, Accrual Rate for Employees Earning 10 days per year-HOP Rate - 7 days per year.
• III A- 40 Hour Workweek, Grant Rate for IPP Participants, Normal Rate - 8 Days per Year - HOP Rate - 5 day per year.
• I B- 37.5 Hour Workweek, Accrual Rate for Employees Earning 13 Days Per Year
  
• II B- 37.5 Hour Workweek, Accrual Rate for Employees Earning 10 Days Per Year
  HOP Rate - 7 Days Per Year
  
• III B - 37.5 Hour Workweek, Grant Rate for IPP Participants, Normal Rate - 8 Days Per Year, HOP Rate - 5 Days Per Year
  

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...which the employee was eligible to participate in HOP, the employee would earn sick leave at the HOP rate for the last time and pay an employee share premium deduction reflecting the HICC for the last time. On January 31 (the last day of the pay period in which the status change became effective), the employee would accrue sick leave at a rate reflecting his status as a Council 82 member and pay an employee share NYSHIP premium deduction reflecting his status as a Council 82 member.

However, in cases where an employee loses eligibility to participate in HOP solely because of voluntary or involuntary cancellation of NYSHIP coverage, the employee will continue to receive the HICC through the last NYSHIP employee share deduction paid. Similarly, so long as the employee remains eligible to earn leave, he/she will accrue at the HOP rate through the date of the last NYSHIP employee share deduction paid.
Therefore, in such cases, employees should be switched to the regular non-HOP sick leave accrual rate effective on the last day of the first pay period in which they are no longer required to have employee share deductions taken from their checks.

For example, in response to a qualifying event a HOP participant voluntarily cancels her coverage effective January 18, 2001. As a result of this voluntary cancellation, she will not be responsible for paying an employee share deduction of any paychecks issued on or after January 17. The last employee share premium that the employee was responsible for paying was deducted from her paycheck issued on January 3. January 3 is also the last day that she will earn leave at the HOP rate. Therefore, her sick leave accrual rate is changed to the regular non-HOP rate effective January 17, the first payday on which she is not responsible for paying an employee share deduction.

Impact of Changes in Percentage on Leave Accrual Rate

The adjustment of HOP sick leave accrual rates and the adjustment of the HICC are also synchronized when HOP participants change their employment percentage, provided they continue to be eligible for NYSHIP (generally at least half time). For example, a CSEA member participating in HOP switches from part-time to full-time status effective January 22. In this case, the employee would pay the employee share health insurance premium reflecting her part-time status in the check issued on January 17. In the check issued on January 31, she would pay an employee share health insurance premium reflecting the increased HICC associated with her new full-time status. She would earn leave at the appropriate part-time rate for HOP participants in the pay period that ends on January 17, and then begin earning at the appropriate full-time rate for HOP participants in the pay period that ends on January 31 (the last day of the pay period in which the...

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... status change took place).

HOP participants whose payroll percentage drops below 50% and who lose NYSHIP coverage are treated as any other employee whose NYSHIP coverage is voluntarily or involuntarily cancelled. They receive the HICC through the date of the last NYSHIP premium deduction and they earn leave credits, if otherwise eligible, at the appropriate HOP rate through the date of the last NYSHIP premium deduction. In such cases, the sick leave accrual rate will have to be adjusted twice:

1. From the HOP rate appropriate to the employee's payroll percentage before the change to less than 50% to the HOP rate appropriate for the new lower payroll percentage. This will be effective as of the last day of the pay period in which the percentage change became effective.
2. From the HOP rate for the new payroll percentage to the non-HOP rate for the new payroll percentage. This will be effective as of the last day of the pay period following the pay period in which the last employee share premium was paid (i.e. two weeks after the last premium payment).

The following applies to M/C and RRSU employees in the IPP:

M/C and RRSU employees covered by the IPP who elect to enroll in HOP will participate in one of two "tiers" based on their status at time of enrollment. Full-time employees (including VRWS participants) will exchange three full-time days (22.5 or 24 hours) for a credit of up to $300. All part-time employees will exchange 1.5 full time days (11.25 or 12 hours) for a credit of up to $150, regardless of their actual payroll percentage. An employee's exchange will be "frozen" for the duration of the calendar year of HOP participation based on status at time of enrollment for that year. Changes in employment percentage after enrollment will have no effect on the rate of forfeiture or the amount of the health insurance contribution credit available.

The required forfeiture will be assessed in two equal parts on each of the employee's IPP...

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... grant dates during a given year of participation. For example, a full-time employee (who was full-time at enrollment) will receive 2.5 days instead of 4 IPP grant days on each of his two grant dates during the calendar year. A part-time employee in a position with a 40 hour workweek (who was part-time at enrollment) will earn 6 hours less than he normally would on each of his two grant dates during the calendar year for an annual forfeiture of 12 hours.

An employee in the IPP who moves between full-time and part-time after enrolling in HOP will continue to forfeit sick leave based on status at time of enrollment. For grant dates following the change in payroll percentage, the employee will receive sick leave grant days based on the new payroll percentage minus the forfeiture rate based on status at time of enrollment. For example, a full-time IPP participant on a 40 hour workweek who normally earns 32 hours on each IPP grant date elects to enroll in HOP. The employee forfeits 1.5 days (12 hours on his first grant date, earning 20 hours instead of 32. The employee then drops to half-time and is half-time on his second grant date. As a half-time employee, he would have been credited with 16 hours on his second grant date had he not enrolled in HOP. However since he was full-time when he enrolled in HOP, he continues to forfeit 12 hours on his second grant date. On his second grant date he is credited with 4 hours of sick leave (16 hours - 12 hours = 4 hours).

Employees who move between a 37 ½ and 40 hour basic workweek continue to receive the health insurance contribution credit without adjustment provided their payroll percentage remains the same. However, their HOP sick leave grant rate changes to reflect the new basic workweek just as it does now when the basic workweek changes for non-participants.

HOP accrual rates for IPP participants are provided as an attachment to this bulletin. HOP accrual rates apply to IPP grant dates that fall during the period January 1, 2001 through December 31, 2001.

Re-crediting of Sick Leave Balances for Employees in the IPP

IPP participants in HOP who lose HOP eligibility will be re-credited with excess sick leave forfeited in proportion to number of pay periods they will not receive the health...

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... insurance contribution credit.

Employees who leave the HOP program will fall into one of three categories:

1. a participating employee who has already forfeited the full amount of leave required
2. a participating employee who has forfeited a portion of the leave required
3. a participating employee who has forfeited no sick leave.

The duration of HOP for IPP participants is 26 biweekly pay periods. The rate at which sick leave will converted to the health insurance contribution credit can be determined by dividing the total number of hours that the employee is required to forfeit by 26 (the number of pay periods in the program). Given the two-tiered nature of participation in HOP for IPP participants and the fact that some schedules are based on a 40 hour week while others are based on a 37.5 hour week, there will be four possible amounts of sick leave that participants will be required to forfeit:

1. 24 hours (3 eight hour days).
2. 22.5 hours (3 seven and one-half hour days).
3. 12 hours (1.5 eight hour days).
4. 11.25 hours (1.5 seven and one half hour days).

Depending upon the status and work schedule of the participant in question, there will be four possible rates at which forfeited sick leave will be converted into the Health Insurance Contribution Credit:

.92 hour of sick leave for each biweekly pay period of credit received
(24 hours divided by 26 biweekly pay periods).

.87 hour of sick leave for each biweekly pay period of credit received
(22.5 hours divided by 26 biweekly pay periods).

.46 hour of sick leave for each biweekly pay period of credit received
(12 hours divided by 26 biweekly pay periods).

.43 hour of sick leave for each biweekly period of credit received...

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...(11.25 hours divided by 26 biweekly pay periods).

These conversion factors are the basis for the re-crediting process. The re-crediting process will involve three main steps:

STEP 1
Determine the number of hours that the employee has forfeited at the time that he or she leaves the program. This is based on the number of grant dates that have occurred and the employee's rate of forfeiture.

STEP 2
Determine the number of sick leave hours that have been converted to the health insurance contribution credit (HICC) during the course of the employee's participation. Calculate this by choosing the appropriate factor from the table above and multiply this factor by the number of biweekly premiums for which the employee received the HICC.

NOTE: As stated earlier, in cases where an employee loses HOP eligibility due to a change in employment status the HICC is not reflected in the premium deducted from the check issued on the last day of the pay period in which the status change became effective. Therefore, since the HICC is not applied toward that deduction, it should not be included in this calculation. In cases where an employee loses HOP eligibility solely due to cancellation of NYSHIP coverage the HICC is applied up through the last employee share deduction paid before coverage ends. (See discussion on pp. 10-11.) Therefore, these employee share deductions must be included in your calculation of how many sick leave hours have been converted to HICC.

STEP 3
Subtract the number of hours converted (STEP 2) from the number of sick leave hours forfeited (STEP1). This is the number of forfeited hours that have not yet been converted to health insurance contribution credit. If the number is greater than zero, round to the nearest quarter-hour and re-credit this amount of time to the employee's sick leave balance.

Examples...

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1. A participating full-time employee in the IPP (40 hour week, February and August IPP grant dates) on the administrative payroll cycle resigns effective at the close of business on September 12, 2001.

The employee is re-credited as follows:

STEP 1. As both annual grant dates have passed at the time the employee loses eligibility, he has forfeited the full 24 hours required under the program.

STEP 2. The employee has been issued 19 paychecks reflecting the health insurance contribution credit. Therefore, the employee will have paid 19 premiums reflecting the credit during calendar year 2001. Multiply 19 by the conversion factor (.92) appropriate to full-time status and a 40 hour week. The result is 17.48. This is the number of sick leave hours that have been converted into health insurance contribution credit.

STEP 3. Subtract the number of converted hours yielded by STEP 2 from the number of forfeited hours determined in STEP 1.

24 minus.17.48 equals 6.52

The employee is re-credited with 6.50 hours of sick leave.

2. A participating full-time employee (37.5 hour week, March and September IPP grant dates) on the administrative payroll cycle submits his resignation effective at the close of business on May 11, 2001. He forfeited 11.25 hours of sick leave on his March grant date and received the health insurance contribution credit for 10 biweekly pay periods during active employment.

The employee is re-credited as follows:

STEP 1. As only one annual grant date has passed as of May 11, the employee has forfeited only half of the leave that he is required to under...

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... the program. In this case, 11.25 hours of sick leave have been forfeited.

STEP 2. The employee has been issued 10 paychecks reflecting the health insurance contribution credit. Therefore, the employee will have paid 10 premiums reflecting the credit during calendar year 2001. Multiply 10 by the conversion factor (.87) appropriate to full-time status and a 37.5-hour week. The result is 8.70. This is the number of sick leave hours that have been converted into the health insurance contribution credit.

STEP 3. Subtract the number of converted hours yielded by STEP 2 from the number of forfeited hours determined in STEP 1.

11.25 minus 8.70 equals 2.55

The employee is re-credited with 2.50 hours of sick leave.

3. A participating employee is on leave without pay on his May IPP grant date and continues in leave without pay status until his resignation, effective at the close of business on June 7. The employee does not have his sick leave balance re-credited, as he was not eligible to accrue sick leave on his May IPP grant date when he was on leave without pay and he never returned to pay status.

Limitations

All other provisions concerning the crediting and use of sick leave for IPP participants remain unchanged.

LEAVES OF ABSENCE

Employees who enroll in HOP have elected a reduced accrual rate for the calendar year in exchange for a health insurance contribution credit. That reduced HOP accrual rate applies whenever the employee is eligible to earn leave credits. HOP participants continue to receive the health insurance contribution credit during periods when they are...

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... ineligible to earn leave credits, so long as they otherwise continue to be eligible to participate in HOP.

Current provisions concerning eligibility to earn leave credits continue unchanged. For example, employees continue to be required to be in pay status for 7 out of 10 days in a biweekly payroll period in order to earn biweekly leave credits. Employees continue to receive the health insurance contribution credit in biweekly pay periods in which they do not meet the eligibility requirements to earn leave credits.

Employees who go on sick leave at half pay during a period of HOP participation do not earn sick leave. They continue to receive the health insurance contribution credit against the employee share of health insurance premiums deducted from biweekly pay checks despite the fact that no sick leave is forfeited during a period of sick leave at half- pay.

Employees who go on LWOP and do not receive a waiver of premium continue to participate in HOP, paying the employee share of the NYSHIP health insurance premium at the reduced rate. Additionally, they pay the employer share of the health insurance premium where required. No portion of the health insurance contribution credit available under HOP can be applied toward the employer share of the health insurance premium. For example, an employee who would normally pay an employee health insurance premium of $200 over the course of the calendar year enrolls in HOP and receives a credit of $200 toward the employee share of her health insurance premium. If she goes on LWOP during the course of her participation, her health insurance contribution credit will remain capped at $200 despite the increased out of pocket expenses associated with her responsibility to pay the employer share of the premium while on LWOP. Employees on LWOP whose NYSHIP coverage is cancelled (either voluntarily or because of failure to make payment of premiums as required) will lose eligibility to participate in HOP for the remainder of the calendar year and return to earning sick leave at their normal rate when they return to the payroll.

Employees who receive a waiver of premium while on LWOP are ineligible to continue participation in HOP.

Employees on STD under the IPP continue to participate in HOP. They receive sick leave on IPP grant dates that fall during a period of STD at the reduced HOP rate.

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Employees on STD continue to receive the health insurance contribution credit. They make direct payment for the employee share of NYSHIP premiums at the reduced HOP rate. If the employee continues on STD beyond the period of HOP participation, the employee returns to being credited with sick leave at the normal rate and paying the normal employee share of NYSHIP premiums.

Employees on LTD under the IPP continue to participate in HOP so long as they are otherwise eligible. If an employee's sick leave grant date falls during a period of LTD, the employee's grant date changes to the date of return to pay status. If the adjusted grant date falls during a period of HOP participation, the employee is credited with sick leave at the reduced HOP rate. Employees on LTD during a period of HOP participation continue to receive the health insurance contribution credit. They are responsible for paying the employee share of NYSHIP premiums at the reduced HOP rate plus the employer's share where required. The health insurance contribution credit cannot be applied against the employer share of the premium.

Employees who separate from State service while on LTD are ineligible to continue participation in the program beyond the date of separation.

Employees who go on Workers' Compensation leave continue to participate in HOP. They continue to receive the health insurance contribution credit during the calendar year of HOP participation. For employees eligible to defer NYSHIP premiums until return to the payroll, only that portion of the employee share premium which is not offset by the health insurance contribution credit, if any, is deferred until the employee returns to the payroll. However, employees eligible to receive supplemental payments while on Workers' Compensation leave will have the health insurance contribution credit applied to any employee share premium deducted from such supplemental payments.

Employees who are eligible to earn leave credits during a period of Workers' Compensation leave do so at the reduced HOP rate.

LOSS OF ELIGIBILITY

Once an employee has enrolled in HOP, any of the following events will cause loss of...

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...eligibility:

• Changing to a pay basis other than annual-salaried.
• Moving to a position in a negotiating unit other than the one the employee was in at time of enrollment (except movement between CSEA Units).
• Voluntary or involuntary cancellation of health insurance coverage in either the Empire Plan or an HMO under NYSHIP.
• A waiver of NYSHIP premiums.
• Separation from service other than layoffs resulting in placement on a preferred list.

Participating employees who separate from service as a result of a layoff, but who are eligible to continue participation in NYSHIP in preferred list status, continue to be eligible for the health insurance contribution credit for the remainder of the calendar year in which they were laid off. For all other employees, separation from service terminates participation in HOP.

Once the program is implemented on January 1 of each year that it is offered, any loss of eligibility before the end of that calendar year will disqualify employees from further participation for the remainder of that calendar year.

Employees who lose eligibility after electing to participate in November, but before the January 1 start date for each calendar year that the program is available, will have their participation for the calendar year in question canceled. They will continue to pay health insurance premiums at the normal (non-participant) rate and continue to earn sick leave at their normal contractually mandated rate.

When an employee who earns sick leave on a biweekly basis loses eligibility to participate in HOP, the employee simply returns to earning sick leave at the normal rate and paying the normal employee share of the NYSHIP premium if still in NYSHIP. In such cases, the sick leave accrual rate and the employee share NYSHIP deduction will change on the last day of the pay period during which the effective date of the event precipitating loss of HOP eligibility falls (see list of events above). Since the employee earned sick leave at the reduced HOP rate during each biweekly pay period in which he/she was eligible to earn sick leave and received a health insurance contribution credit...

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...during each pay period of participation in HOP, at the time his/her participation in the program is terminated the employee will have received the full amount of HICC that he/she is entitled to.

However, employees in the IPP forfeit sick leave on their IPP grant dates. Their forfeiture of sick leave does not coincide with their receipt of the biweekly health insurance contribution credit. For an employee who loses eligibility to participate in HOP, the change in grant rate is effective for grant dates falling after the effective date of the event precipitating loss of HOP eligibility (see list of events on p. 20). IPP participants whose eligibility to participate in HOP ends before they have received an amount of health insurance contribution credit proportional to the amount of sick leave forfeited via the reduced sick leave granted on IPP grant dates will be re-credited with excess sick leave forfeited (see Re-crediting for IPP Participants above).

INSURANCE ISSUES

Under HOP, full-time employees can receive a health insurance contribution credit of $300 or the annual cost of the employee share of their NYSHIP premium, whichever is less. Part-time employees can receive a prorated health insurance contribution credit based on their payroll percentage ($300 x payroll percent) or the annual cost of the employee share of their NYSHIP premium, whichever is less. No employee can receive a credit which exceeds the annual cost of the employee share of their NYSHIP premium.

An employee enrolled in HOP who moves between individual and family coverage under NYSHIP will have his/her health insurance contribution credit adjusted upward or downward as appropriate.

If both spouses are State employees covered under a single family contract, only the contract holder who carries the family coverage can participate in HOP. If both spouses are enrolled contract holders, both may participate in HOP if otherwise eligible.

Employees participating in HOP continue to receive the health insurance contribution credit during periods of leave, including leave without pay. The health insurance contribution credit can be applied only to the employee share of the premium. No portion...

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...of the health insurance contribution credit available under HOP can be applied toward the employer share of the health insurance premium (see Leaves of Absence above).

As discussed earlier, there are several changes in employment status that will affect an employee's participation in HOP. In cases where employees change to a pay basis other than annual-salaried or move between bargaining units (except movement between CSEA units), or separate from State service, their participation in HOP is cancelled. In such cases, the HICC is cancelled effective with the employee share NYSHIP deduction taken from the check issued on the last day of the pay period in which the status change took place.

Employees whose NYSHIP coverage is cancelled (voluntarily or involuntarily) are removed from the HOP program and return to earning sick leave at their normal rate of accrual. This includes cases where a decrease in payroll percentage results in cancellation of NYSHIP coverage. In these cases, the HICC is continued through the last employee share deduction paid before coverage ends. Any such employees who re-enroll in NYSHIP during the calendar year are ineligible to resume HOP participation during that calendar year.

In cases where a change in the payroll percentage of a HOP participant does not result in loss of NYSHIP coverage, and the employee is not an IPP participant, the HICC will be adjusted to reflect the new payroll percentage. The new HICC rate will become effective with the employee share deduction taken from the check issued on the last day of the pay period in which the percentage change took effect. The HICC for IPP participants enrolled in HOP is fixed for the duration of their participation based on status at time of enrollment.

HOP is a separate program from the Health Care Spending Account (HCSAccount) program. An employee may participate in HOP and, if eligible, enroll in the HCSAccount program to have salary withheld to be applied against the cost of qualifying medical expenses. However, if, in the future, employees are permitted to exchange sick leave days for a dollar credit under the HCSAccount program, employees would not be permitted to exchange sick leave days under both HOP and the HCSAccount program.

The Employee Benefits Division of this Department will issue guidelines for agency...

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...Health Benefits Administrators concerning the processing of enrollment and status changes for HOP participants.

TAXABILITY

By electing to participate in HOP, an employee reduces the amount deducted from biweekly paychecks to pay the employee share of NYSHIP premiums. If the employee currently has that amount deducted on a pretax basis, the HOP health insurance contribution credit reduces that pretax deduction. The net effect is that the amount of income the employee pays taxes on increases by the amount of the HOP credit. While employees will realize an over-all savings because of the HOP credit, the amount of that savings will be less than the full amount of the HOP credit for anyone currently paying NYSHIP premiums on a pretax basis. Furthermore, for the year, if an enrollee has elected to participate in the pre-tax premium contribution program, the enrollee may only make changes to health insurance in accordance with pre-tax premium contribution program rules regarding qualifying events, even though the HOP credit eliminates all or part of the health insurance premium deduction.

For example, an employee has a $10 pretax premium withheld from each biweekly paycheck on a pretax basis. This is his only pretax deduction. The amount of income the employee pays tax on is his gross income minus that $10 pretax deduction. The employee enrolls in HOP and receives a health insurance contribution credit of $260 per year ($10 per biweekly pay period). As a result of enrolling in HOP, the employee no longer has that $10 pretax deduction. Therefore, the amount of income the employee pays tax on is his full biweekly gross salary, an increase of $10 per paycheck in his taxable income each pay period.

Employees should be referred to their income tax preparer for questions regarding the tax implications of participation in HOP.

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