Department of Civil Service

PA99-05

TO: Participating Agency Health Benefits Administrators
FROM: Employee Benefits Division
SUBJECT: Reinstatement of New York State Health Insurance Program (NYSHIP) coverage for individuals who lose coverage for nonpayment of premiums during leave without pay (LWOP) or vestee status and who are subsequently granted a retroactive retirement by the New Y
DATE: April 1, 1998

This memorandum is to inform you of an optional procedure an agency may adopt in order to offer retiree health insurance to persons granted a retroactive disability retirement who would not otherwise be eligible for coverage due to cancellation of coverage prior to retirement.

Background:

Section 73.1(e) of the President's Regulations states that a retiree is "a person who has become enrolled in the plan as an employee and whose coverage is being continued after his withdrawal from the active service of the employer under the eligibility privileges of the plan This has always been interpreted to mean that an employee must be enrolled in NYSHIP on the date of retirement so that coverage can be continued. Informational materials and procedures manuals all clearly state this as a requirement, and it has been strictly enforced.

Occasionally, an employee is ill or injured, goes on LWOP and because the individual cannot afford the full share premium, health insurance is canceled. The employee files for disability retirement, but for a number of possible reasons, the decision by the Retirement System is delayed. If the retirement is granted, it is then retroactive, sometimes to the beginning of the LWOP or sometimes to a later date, depending on when the application was filed. In either case, the fact of retirement is not known until after the employee's coverage has been terminated. Had the retirement been granted earlier by the Retirement System, the employee either would not have had to pay full share premium or would have had to do so for only a brief period until the retirement was granted.

Since 1993, in the case of work-related disability retirements, the State, upon request, has granted administrative exceptions to its former employees on a case-by-case basis
and permitted individuals to reestablish eligibility for retiree coverage. In July 1997, a formal policy (PM-I 02) was adopted providing separate rules for reinstatement for persons receiving service connected or ordinary disability retirements. The rationale for this was as follows:

1. When an employee has been injured in the service of the State, it is appropriate for the State to take steps to see that an employee injured in its behalf does not lose an important benefit because of circumstances beyond his or her control which place the employee in a position where program requirements cannot be met. The circumstances surrounding the coordination of Workers' Compensation, LWOP, and the requirements of the Retirement System create situations in which some enrollees do not receive pension payments in the normal timeframe and cannot maintain coverage. PM-102 allows employees in such situations to be "made whole" as far as health benefits are concerned, and confirms our past practice.

2. In ordinary disability situations, however, there is no connection between the State and the person's disability or situation, so there is no State obligation to the employee in relation to the circumstances arising from the disability. The process of disability retirement, however, can be much longer than that of a service retirement and may last several months during which the employee may have no income. PM-102 recognizes the hardships experienced by such individuals and allows them to regain health insurance eligibility that may have been lost due to circumstances beyond their control.

It has been decided that we will extend the provisions of PM-102 to Participating Agencies on an elective basis. The policy is set forth below:

Policy:

Serevice Connected Disability Retirement:

When an employee receives a retroactive, service connected disability retirement, and health insurance has been canceled due to nonpayment during a period of LWOP necessitated by the service connected disability, the employee will be granted the opportunity to reenroll in NYSHIP if all other eligibility requirements are met. The employee may choose:

• Continuous coverage from the time of the cancellation by paying all missed full share and retiree payments through the current date, or
• Retiree coverage beginning with the retirement date by paying for all missed retiree payments, or
• Retiree coverage beginning on a current basis.

The enrollee must apply for health insurance within 60 days of the granting of the retirement. This policy will also extend to employees who are separated from service due to service connected disability and whose health insurance is canceled for nonpayment during vestee status.

Ordinary Disability Retirement:

When a person receives a nonservice connected (ordinary) disability retirement and health insurance has been canceled due to nonpayment during a period of LWOP necessitated by the nonservice connected disability, the employee will be granted the opportunity to reenroll in NYSHIP (if all other eligibilily requirements are met) provided that the employee pays all LWOP and/or vestee premiums owed until the date of the disability retirement and all retroactive retiree premiums in a lump sum or through any repayment plan acceptable to the employer. The enrollee must apply for health insurance within 60 days of the granting of the retirement.

Regular Retirement:

No retroactive reinstatement in NYSHIP is permitted when a separated employee who was canceled for nonpayment prior to separation is granted a service (regular) retirement.

Note: An individual, who, on the effective date of his/her retirement, was covered in NYSHIP as the spouse of another employee (either State or PA), may obtain retiree coverage in his or her own right on a current basis without regard to the 60 day application period in this policy if otherwise eligible.

What to do if your agency wishes to adopt this policy:

1. The agency must extend the policy to cover all eligible employees covered by the New York State Health Insurance Program, and send a letter to the Participating Agency Operations Unit stating that the provisions of the policy will be available to all employees covered by the New York State Health Insurance Program. This letter will be filed in the agency's folder.

2. Use this guideline to determine when a disability retirement is service connected: For ordinary disability retirements to be considered service connected, acceptable proof of a work-related disability will be a photocopy of the employee's or employer's copy of the Workers' Compensation Notice of Decision certifying compensability, and a letter from the employer stating that to the best of their knowledge the retirement stemmed from the work-related condition. In the case of an accidental disability retirement, a copy of the Notice of Determination from the Retirement System will suffice.

3. Forward copies of all requests for reinstatement under the provisions of this policy and the following documents:

• Ordinary Disability Retirements which are service connected: submit a completed PS-503.1 and copies of the Retirement System's notice of determination* and the Workers' Compensation Notice of Decision.
• Accidental Disability Retirements: submit a completed PS-503.1 and a copy of the Retirement System notice of determination.*
• Ordinary Disability Retirements which are not service connected: submit a completed PS-503.1 and the Retirement System notice of determination.*

* The Retirement System notice of determination may not contain the effective date of the Retirement. If the effective date of the retirement is contained in a Retirement System letter separate from the Notice of Determination, a copy of that letter must also accompany the request.

What happens If your agency does not adopt this policy?

Your agency continues to restrict NYSHIP retiree coverage to employees enrolled in NYSHIP at the time of retirement for all types of retirements.

Assistance:

Agency questions concerning the policy section of this bulletin should be addressed to the Program Services Unit at 518-457-5754 (Albany area) or 1-800-833-4344 then press 1-6-7-2 to speak to a representative.

Agency letters adopting this policy and applications for the benefit should be sent to the PA Operations Unit. Contact the PA Operations Unit at 518-485-6619, 457-5847 or 485-1186 for questions concerning these procedures.