FOR IMMEDIATE RELEASE

February 22, 2008

Contact:     NHRS 603-410-3500

                  Email:  info@nhrs.org

 

 

Medical Subsidy Program

 

Medical Subsidy under Current Law

for Teachers and Political Subdivision Employees

 

1. What is a medical subsidy?

A medical subsidy is a monthly payment made by the New Hampshire Retirement System (NHRS) directly to a qualified retiree’s former employer to offset the cost of post-retirement medical insurance.

 

2.  Which teachers and political subdivision employees are qualified retirees?

Under current law, to be a qualified retiree, a teacher or political subdivision (such as a school district, county, town, or other units of local government) employee must have accumulated at least 20 years of creditable service as a Group I teacher or political subdivision employee and commence receiving a pension on or before July 1, 2008 under Service, Early Service, Vested Deferred, or Ordinary Disability Retirement. If the qualified retiree has at least 20 but less than 30 years of such creditable service, eligibility for the medical subsidy begins at age 60 or date of retirement, whichever is later. If the qualified retiree has at least 30 years of creditable service, eligibility for the medical subsidy begins at age 55 or date of retirement, whichever is later.

 

Note: Each year of teacher job-sharing is counted as one-half of a year of creditable service toward eligibility for the medical subsidy.

 

Active State of NH (Group I) employees are not eligible for the medical subsidy upon retirement; but may be eligible for state retiree health insurance under RSA 21-I:30.

 

3. Does all service credit count towards the medical subsidy?

Service completed as a contributing member of NHRS and nonqualified service purchased by the member are counted as creditable service in determining eligibility for the medical subsidy. However, creditable service resulting from prior military service, out-of-state service, and most service credit purchases made after 8/10/03 are not recognized for purposes of qualifying for the medical subsidy.

 

4. What are the current medical subsidy rates?
 For the period July 1, 2007 through June 30, 2008, the medical subsidy rates are as follows:

 

Individuals Not Entitled to Medicare Benefits

Subsidy for 1 Person = $375.56

Subsidy for 2 Persons = $751.12

 

Individuals Entitled to Medicare Benefits

Subsidy for 1 Person = $236.84

Subsidy for 2 Persons = $473.68

 

5. Are a retiree’s spouse and certifiably dependent children with a disability eligible for the medical subsidy?

Yes, if the retiree is a qualified retiree (See question #2 above).

 

6. Does the medical subsidy rate increase?

Under current law, the medical subsidy rates increase by 8% as of July 1st of each year.

 

7. Is this a guaranteed benefit?

No. The medical subsidy is a separately funded benefit, not a part of the defined benefit pension fund. Continued funding for the subsidy is uncertain. Therefore, the medical subsidy may not be available to qualified retirees in the future. Future funding and funding methods are being considered as part of House Bill (HB) 1645. 

 

Pending Legislation Affecting the Medical Subsidy

 

9.  What currently pending legislation would affect the medical subsidy?

House Bill 1643 (HB 1643) would extend the latest pension benefit commencement date of July 1, 2008 for qualified teachers and political subdivision employees.

 

House Bill 1645 (HB 1645) would affect the future funding and funding methods for the medical subsidy.

 

10. How would HB 1643 affect medical subsidy eligibility for teachers and political subdivision employees?

If passed into law by the NH Legislature and the Governor, HB 1643 would extend, for teachers and political subdivision employees, the July 1, 2008 pension benefit commencement deadline under current law to July 1, 2011. In other words, if HB 1643 is enacted into law, in order to be a qualified retiree, a teacher or political subdivision (such as a school district, county, town, or other units of local government) employee must:

a.      Have accumulated at least 20 years of creditable service as a Group I teacher or political subdivision employee as of July 1, 2008; AND

b.      Be eligible to retire on or before July 1, 2008 AND

c.      Retire on or before July 1, 2011.

 

If the qualified retiree has at least 20 years but less than 30 years of such creditable service as of July 1, 2008, eligibility for the medical subsidy begins at age 60 or date of retirement, whichever is later. If the qualified retiree has at least 30 years of creditable service as of July 1, 2008, eligibility for the medical subsidy begins at age 55 or date of retirement, whichever is later.

 

HB 1643 carries an additional cost that would be borne by the employers of all members.

 

10. Is the annual 8% subsidy rate increase guaranteed?

No. Under HB 1645 the last 8% increase to the medical subsidy rates would occur as of July 1, 2008.  After July 1, 2008, the medical subsidy rates could be increased only by the passage of appropriate legislation. 

 

11. Should a decision to retire be based on eligibility for the medical subsidy?

Medical subsidy eligibility is only one of several factors to consider when planning for retirement. Members should also take into consideration such things as current job satisfaction, personal interests, health, potential pension income, financial preparation, amount of Social Security benefits and the general economic outlook. No single factor should be determinative when deciding whether or not to retire.

 

12.  What is the “Omnibus Bill”?

HB 1645 is sometimes called the “Omnibus Bill” because it contains a series of proposed revisions to the laws that govern the New Hampshire Retirement System. In relation to the medical subsidy, the bill aims to provide funding through the employer contribution rate for the group of retirees who currently meet or will meet medical subsidy eligibility requirements. The bill also proposes to form a study commission to consider a new post-retirement health care model for those members who do not meet current eligibility requirements relating to the medical subsidy.