Department of Civil Service

NY96-38
PE96-16

TO: Health Benefits Administrators of State Agencies and Participating Employers
FROM: Employee Benefits Division
SUBJECT: Management/Confidential Life Insurance Program Annual Update
DATE: July 18, 1996

We are preparing the annual update of the Management/Confidential Life Insurance Program enrollment records. While parts of the update process are automatic, others require your action. It is important that you inform your enrollees of the annual updates and of any changes in their coverage and payroll deduction.

Enrollees also should review their smoker/nonsmoker status, beneficiary designations and the continued eligibility of dependents.

A sample notice is enclosed to give to employees and post on bulletin boards.

RATE SCHEDULE

Metropolitan has submitted their rate recommendation to be effective September 1, 1996. Although the Employee Benefits Division (EBD) has not yet completed their review, we anticipate a rate reduction.

AUTOMATIC CHANGES

The annual update will automatically produce a change in payroll deductions for:

• Any enrollee who has reached a higher five-year premium age bracket as of September 1, 1996.
• Any enrollee whose age as of September 1, 1996, requires a reduction in coverage.
• Any enrollee covered at a multiple of annual salary whose salary has changed by an amount sufficient to affect the total amount of coverage, and
• Any enrollee with Accident and Sickness coverage who reached age 40 after the 1995 update.

AGE-RELATED REDUCTIONS IN COVERAGE FOR ACTIVES

For active employees insured for a multiple of salary,

At age 65-69, the coverage available will be 65% of the coverage available to the enrollee if the enrollee were under 65;

At age 70-74, the coverage available will be 45% of the coverage available to the enrollee if the enrollee were under 65;

At age 75-79, the coverage available will be 30% of the coverage available to the enrollee if the enrollee were under 65;

At age 80 and over, the coverage available will be 20% of the coverage available to the enrollee if the enrollee were under 65.

However, in no case will the coverage be reduced below $15,000.

AGE-RELATED REDUCTIONS IN COVERAGE FOR RETIREES

For Retired enrollees who are insured for a multiple of salary,

At age 65-69, the coverage available will be 65% of the coverage available to the enrollee if the enrollee were under age 65 (but not less than $15,000).

At age 70 and over, the coverage will be reduced to $15,000.

ACCIDENTAL DEATH AND DISMEMBERMENT COVERAGE

All active employees, regardless of age and those retirees under age 70 who retired after September 1, 1992, will be covered for Accidental Death and Dismemberment (AD&D) benefits on the first $250,000 of life insurance coverage. Individuals who retired prior to September 1, 1992, are covered for AD&D benefits on the first $150,000 of life insurance coverage until age 70. Retired enrollees, at age 70 and over are not eligible for AD&D.

SMOKER/NONSMOKER CHANGES

Individuals previously enrolled as "smokers" who have not smoked since September 1, 1995, may now apply for the special nonsmoker premium discount. To apply for nonsmoker status, enrollees must complete a PS-934, "Management/Confidential Group Life Insurance Transaction" form, check "Other" in block 14 and complete the entire application form before submitting it through their agency personnel office to the EBD Accounting Unit. The forms must be submitted to you by September 30 and received by the EBD by October 31. Agencies will have to make retroactive adjustments for those forms received by the EBD after July 31.

SALARY/COMPENSATION USED IN CALCULATIONS

Updated life insurance coverage of enrollees who have elected multiples of salary is based upon annual salaries as reported by the Office of the State Comptroller (OSC) on payroll dated as follows:

Administration Payroll checks dated July 24, 1996.
Institution Payroll checks dated July 18, 1996.

Enrollees whose salaries change between the above dates and September 1, may request an adjustment in coverage to reflect the salary change. The enrollee must submit a copy of the payroll stub to the Health Benefits Administrator (HBA) showing the new annual salary by September 30. The HBA must forward the request, with a copy of the payroll stub, to the EBD by October 31.

Participating Employers not on the OSC payroll system should refer to our June 26, 1996 letter.

Additional compensation paid on a permanent basis, such as location pay, geographic differential or special allowance, will be included in the annual salary. However, items such as shift differential, overtime pay and maintenance adjustments may not be considered salary for life insurance purposes.

PAYROLL DEDUCTION DATES

New payroll deductions for most employees on the OSC payroll system will change automatically on the Administration and Institution paychecks dated as follows:

Administration Payroll checks dated September 4, 1996.
Institution Payroll checks dated September 12, 1996.

In the relatively few instances in which deductions cannot be changed automatically, we will instruct employing agencies to make deduction changes and retroactive adjustments on subsequent payrolls. Agencies that prepare their own payrolls must adjust enrollee deductions based on the printout information.

EFFECTIVE DATE OF NEW COVERAGE

Changes in the amounts of life insurance coverage will become effective at 12:01 a.m.
September 5, 1996, for employees on Administration payrolls and 12:01 a.m.
September 12, 1996, for employees on Institution payrolls.

In August, each agency will receive a printout showing the update status for its enrollees and computer-generated statements for distribution. If you have questions please call the Management/Confidential Life Insurance Accounting Unit at (518) 457-5765 or 457-5778.

IMPORTANT NOTICE

The 1996 annual update of the Management/Confidential Life Insurance program is now in progress.

Automatic Changes

The annual update will result in automatic changes for:

• Rate Change, if applicable.
• Any enrollee who has reached a higher five year premium age bracket as of September 1, 1996.
• Any enrollee whose age as of September 1, 1996 requires a reduction in coverage.
• Any enrollee covered in a multiple of annual salary whose salary has changed by an amount sufficient to effect the amount of total coverage.
• Any enrollee with Accident and Sickness coverage who has reached age 40 since the1995 update.

Reduction In Coverage

All active enrollees age 65 and over will have their benefits reduced by certain percentages. The percentage of reduction is applied to the full benefit, (the benefit the employee would receive if he or she were under age 65). There is no reduction if that benefit is $15,000 or less. If coverage is based on a multiple of salary, in no case are benefits reduced below $15,000. The chart below shows the percentage of reduction.

Percentage of Reduction in Benefits for Active and Retired Enrollees

Note: All active enrollees, regardless of age, are covered by Accidental Death and Dismemberment benefits. Retired enrollees are not eligible for Accidental Death and Dismemberment benefits on or after the September 1st coincident with, or the next following, their 70th birthday.

CHANGES NOT AUTOMATIC FOR SMOKER/NON-SMOKER, DEPENDENTS, BENEFICIARY

You must contact your agency Benefits Administrator promptly if:

• You want to change your beneficiary.
• You want to change your status as a smoker. Individuals presently enrolled as "smokers" who have not smoked since September 1, 1995 may now apply for the special non smoker premium discount. To be eligible for a rate reduction, you must submit your application to your Benefits Administrator by September 30, 1996.
• You and your spouse are both enrolled as employees in the Management/Confidential Life Insurance Program, and both are insuring children. Insurance industry practice allows children to be insured as dependents of only one employee under any one group insurance program. If duplicate coverage of dependent children is found, coverage will be changed retroactively to comply.

Payroll Deductions

All required payroll deductions will be made on the Administration and Institution paychecks dated as follows:

Administration Payroll Checks dated September 4, 1996.
Institution Payroll checks dated September 12, 1996.

A request to decrease multiple of salary will be handled as explained above.

Retirement Systems Deductions

Any required deduction changes for retirees already in the pension deduction system will occur for the September premium in the August 31, 1996, pension check. New retirees, if they become eligible to have pension deductions, will receive information at a later date.

Effective Date of New Coverage

Changes in the amount of the life insurance coverage will become effective at 12:01 a.m.

September 5, 1996, for employees on the Administration cycle payrolls and 12:01 a.m.

September 12, 1996, for employees on the Institution cycle payrolls. If you think there is an error in the record of your salary-based coverage, you must report it to your Benefits Administrator by September 30, 1996.

For Further Information

If you have questions concerning this update, please contact your Benefits Administrator.