HB 116 Frequently Asked Questions
The Division of Retirement and Benefits has received a corrected method for calculating the cost of claiming military service to meet health eligibility requirements under HB 116 from the plan actuary. The Division will be recalculating costs for military service for healthcare eligibility for all members who have requested a cost estimate. The corrections should be in the mail by August 29, 2014. Members who received an initial estimate who have not received a correction by September 8, 2014 should contact the Division’s Member Services Contact Center at (800) 824-2251 outside of Juneau or 465-4460 in Juneau.
House Bill 116 (HB 116) was passed by the Alaska Legislature on April 18, 2014, and signed into law by Governor Parnell on July 11, 2014. This bill provides additional benefits under AS 39.35.340 to peace officers and firefighters who previously served in the military, and are members of the Public Employees’ Retirement System Defined Benefit Plan (PERS DB).
Prior to HB 116, qualifying members could purchase up to 5 years of military service credit only to increase their retirement benefit. However, under HB 116, qualifying members may now also claim up to 5 years of military service in order to qualify for premium free retiree medical benefits. Claimed military service may not be used to satisfy the credited service requirements for normal retirement.
Below are answers to some frequently asked questions regarding HB 116.
- Who is eligible to claim military service for purposes of receiving premium-free retiree medical benefits?
- Be a member of PERS DB
- Occupy a position as a peace officer, chief of police, regional public safety officer, correctional officer, correctional superintendent, firefighter, fire chief or probation officer; and
- Not be receiving, or eligible to receive, a federal retirement benefit for the same military service being claimed.
- How does claiming military service in PERS DB benefit a member?
- How does House Bill 116 provide an additional benefit to qualified members in PERS DB?
- What type of military service can be claimed?
- How much military service can I claim towards my eligibility for premium-free retiree medical benefits?
- I have already claimed military service in PERS DB. Does this claimed service automatically count towards my eligibility for premium free retiree medical benefits?
- How do I pay for claimed military service when used to meet eligibility requirements for premium free retiree medical benefits?
- Can a Peace Officer or Firefighter who previously retired with 20 years of service now claim military service in order to obtain premium free retiree medical benefits?
- Can an employee who has a military retirement (20 years or more) purchase up to 5 years of their military time to get medical coverage?
- Can a qualifying employee claim less than five years of military service? For example, is it possible for the employee to work 22 years and claim three years of military service?
- Will there be an application process for employees who want to claim military service for purposes of obtaining premium free retiree medical benefits?
- How long will it take for the employee to find out how much claimed military service will cost?
- What type of documentation will the employees need to submit to prove they qualify to claim military service?
The employee must:
PERS DB members have been able to claim up to five years of military service in the armed forces of the United States for additional credit towards the calculation of retirement benefits since 1960. The basic formula for calculating retirement benefits is: (average monthly salary) x (a benefit multiplier) x (total years of service). Claiming military service allows a member to receive an increased retirement benefit by increasing the total years of service used in the benefit calculation.
HB 116 allows peace officers and firefighters in PERS DB to use claimed military service to meet the 25 year service requirement necessary to obtain premium-free retiree medical benefits.
The claimed military service must be active duty service in the armed forces of the United States for which the member received an honorable discharge.
(Members called to active duty directly from PERS employment who return to employment within 90 days of discharge receive PERS service credit. This is not considered “claimed military service” but actual PERS membership service.)
Members may claim up to five years of military service for which they have received an honorable discharge. Please note, total military service claimed (to increase a retirement benefit and to qualify for premium free retiree medical benefits) may not exceed five years.
No. The cost to claim military service to meet the 25 year service credit requirement to obtain premium free retiree medical benefits is separate from the cost to claim military service to increase a retirement benefit. You must file a separate request to claim military service for purposes of obtaining premium free retiree medical coverage. Total claimed military service may not exceed five years.
The cost for the claim will be calculated at the time the member retires. Members may pay all or part of the cost prior to appointment to retirement. Any balance due can be paid for in the form of an actuarially determined reduction to the member’s retirement benefit thereby allowing the member to pay the cost over his/her lifetime after retirement.
No. While, the legislation was effective immediately upon signature by the Governor, there is no provision for retroactive application.
No. An employee cannot claim military service for either an increased pension benefits or for premium free retiree medical benefits, if the employee is entitled to receive retirement benefits from the United States government for the same service.
Yes, a member may claim only that amount of military service needed to meet the 25 year eligibility requirement for obtaining premium free retiree medical benefits. However, the maximum number of years that may be claimed is 5.
Yes. Eligible members will apply on form 02-1897, available on the PERS Purchasing Service Credit Web page. Estimates of the cost can be obtained in the year the member is retiring.
Estimates will typically be provided within 10 days of the member requesting the cost estimate. Members may request cost estimates within one year of retirement.
Members must complete an application form and must provide a copy of their DD214 showing the dates of military service being claimed and an honorable discharge.
Disclaimer: The above information is provided in an effort to give affected members a general overview of recently adopted legislation affecting the benefits of certain PERS DB members. This information does not constitute formal pension, legal or tax advice and is not specific to any individual’s circumstances. Members should consult with a pension counselor before making decisions regarding the claiming of military service. In the event of a conflict between the information contained herein and the plan document, the plan document shall control.