Department of Civil Service

NY01-23
PE01-17

TO: Health Benefits Administrators of State Agencies and Participating Employers
FROM: Employee Benefits Division
SUBJECT: Management/Confidential Group Life Insurance Plan Annual Update
DATE: June 11, 2001

We are preparing the annual update of the Management/Confidential (M/C) Group Life Insurance Plan 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 update and of any changes in their coverage and/or payroll deductions.

Equally important is that you please encourage enrollees to review their beneficiary designation(s), the continued eligibility of dependents (particularly child coverage), and smoker/nonsmoker status.

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

RATE SCHEDULE

The Employee Benefits Division (EBD) is continuing its review of the premium rates for the plan year beginning September 1, 2001. While we anticipate an overall reduction in rates, the actual aggregate percentage amount and distribution has not yet been determined.

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, 2001,
• Any enrollee whose age as of September 1, 2001, 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 2000 update.

SALARY/COMPENSATION USED IN CALCULATIONS

Updated life insurance coverage for enrollees who have chosen a multiple of salary option for their coverage amount is based upon the annual salaries as reported by the Office of the State Comptroller (OSC) on the following payrolls:

• Administration Payroll checks dated July 4, 2001.
• Institution Payroll checks dated July 12, 2001.

Enrollees whose salaries change between the dates above 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 Benefits Administrator showing the new annual salary by September 28, 2001. The Benefits Administrator must forward the request, with a copy of the payroll stub, to the EBD by October 31, 2001.

Participating Employers not on the OSC payroll system will be advised via a separate letter on or about mid-June 2001.

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.

Please Note:

Enrollees requesting to increase or decrease their multiple of salary option must fill out a PS-934, M/C Life Insurance Transaction Form, check the "Change in Coverage" box in item 14, and select one of the options in item 15 that is either greater or less than their current option choice. (The maximum allowable coverage option is 5 times salary or $500,000). Any increase request must include a completed Statement of Health form.

AGE-RELATED REDUCTIONS IN COVERAGE FOR ACTIVE EMPLOYEES

For active employees 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 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 equal to their life insurance coverage but not above $250,000. Individuals who retired prior to September 1, 1992, are covered for AD&D benefits equal to their life insurance coverage but not above $150,000. 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, 2000, 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 M/C Life Insurance Unit. These forms must be submitted to you by September 28, 2001, and received by the M/C Life Insurance Unit by October 31, 2001. Agencies will have to make retroactive adjustments for those forms received by the M/C Life Insurance Unit after July 31, 2001.

PAYROLL DEDUCTION DATES

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

• Institution Payroll checks dated September 6, 2001.
• Administration Payroll checks dated September 12, 2001.

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 upon the life insurance enrollment listing your agency will receive in late August.

EFFECTIVE DATE OF NEW COVERAGE

Changes in the amounts of life insurance coverage will become effective at 12:01 a.m. September 6, 2001, for employees on Institution payrolls and 12:01 a.m. September 13, 2001, for employees on Administration payrolls.

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

Enclosure: Notice to Enrollees

2001 M/C LIFE INSURANCE ANNUAL UPDATE INFORMATION

IMPORTANT NOTICE

The 2001 annual update of the Management /Confidential (M/C) Group Life Insurance Plan is now in progress. This information is to advise you of changes that may affect your coverage. Please review this notice carefully. If you have any questions regarding your enrollment in the plan or if you desire to make changes in your M/C Life Insurance coverage, please contact your Benefits Administrator.

Automatic Changes

The annual update will result in automatic changes for:

• Premium rate change (we anticipate an overall reduction in rates; the actual aggregate percentage amount and distribution has not yet been determined).
• Any enrollee who has reached a higher five year premium age bracket as of September 1, 2001,
• Any enrollee whose age as of September 1, 2001, requires a reduction in coverage,
• Any enrollee covered for a multiple of annual salary whose salary has changed by an amount sufficient to effect the amount of total coverage, and
• Any enrollee with Accident and Sickness coverage who has reached age 40 since the 2000 update.

Changes That Are Not Automatic

You must contact your agency Benefits Administrator promptly if:

• You want to change your beneficiary.
• You and your spouse are both enrolled as employees in the M/C Group Life Insurance Plan, 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 confirmed, coverage will be changed retroactively to comply. You must also review the continued eligibility of your dependent children. Advise your Benefits Administrator if your child is no longer eligible to continue coverage. If you are interested in a separate conversion policy for your child, you may request a "Conversion of Group Life Benefits to an Individual Policy" form from your Benefits Administrator.
• You want to change your status as a smoker. Individuals presently enrolled as "smokers" who have not smoked since September 1, 2000, may now apply for the special nonsmoker premium discount. To be eligible for a rate reduction, you must submit your application to your Benefits Administrator by September 28, 2001.
• You want to either increase or decrease your multiple of salary option. You must fill out a PS-934, M/C Life Insurance Transaction Form, check the "Change in Coverage" box in item 14, select one of the options in item 15 that is either greater or less than your current option choice (maximum 5 times salary or $500,000). Complete the entire form before submitting it through your agency personnel office to the Employee Benefits Division M/C Life Insurance Unit. Any increase requires a Statement of Health form.

Payroll Deductions

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

• Institution Payroll checks dated September 6, 2001.
• Administration Payroll Checks dated September 12, 2001.

Effective Date of New Coverage

Changes in the amount of the life insurance coverage will become effective at 12:01 a.m. September 6, 2001, for employees on the Institution cycle payrolls and 12:01 a.m. September 13, 2001, for employees on the Administration 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 28, 2001.

Reduction in Coverage

All active enrollees age 65 and over will have their benefits reduced by the percentages shown in the chart below. The percentage of reduction is applied to 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.

Percentage of Reduction in Benefits for Active and Retired Enrollees

* Maximum benefit amount

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.

Retirement Systems Deductions

Premium changes for September coverage for retirees receiving pension deductions will occur in their pension checks dated August 31, 2001. New retirees, as they become eligible to have pension deductions, will receive information directly from the M/C Life Insurance Unit at a later date.

For Further Information

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