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Alternate Benefit Program - Retirement Checklist
Employees are advised to contact their authorized investment carrier(s) at least six months before their intended retirement date for information regarding benefits and options. The member's supervisor should be given written notification of their intent to retire once the retirement date is selected. A copy of the notice should be submitted to the Office of Human Resources.
There is no minimum retirement age under the Alternate Benefit Program (ABP). A member may begin collecting an annuity or take a lump sum distribution, full or partial, at any time after termination of employment. Lump-sum cash distributions to members under the age of 55 are limited to the member's contributions and earnings. The remaining employer contributions and earnings are only available after age 55. Should any amount be withdrawn from an investment carrier upon termination of employment the member will automatically be considered retired. Individuals retiring under ABP are not permitted to re-enroll in any retirement system administered by the State of New Jersey.
A member may elect to receive all or a portion of his/her account in a lump-sum distribution, or as a fixed term or life annuity. The types of payout plans vary from carrier to carrier. All tax deferred returns of contributions and earnings are considered taxable in the year they are received.
Life Insurance Coverage During Retirement
A life insurance benefit is available during retirement to members age 60 or older if they have completed 10 years of participation in ABP at an eligible New Jersey institution of higher education, and were employed during the twelve months immediately preceding the initial receipt of a retirement annuity payment. This life insurance benefit is equal to one-half the annual base salary earned the year prior to retirement. If a member does not qualify for this life insurance benefit, their insurance coverage ceases 31 days after termination of employment. Within 31 days of retirement all members may convert existing group life insurance coverage (less any amount of coverage carried over into retirement) into an individual whole life policy, without medical examination. To do so employees should contact the nearest Prudential Agency and provide the policy #14800.
Health Coverage at Retirement
Employees who are covered by the State Health Benefits Program (SHBP) automatically receive continued coverage for one month beyond their retirement date. They are eligible for retirement coverage provided they take at least the minimal distribution specified by the investment carrier within 60 days of retirement. Continuation beyond the first month requires the completion of an enrollment form. Approximately two weeks before a member's retirement date, the Division of Pensions and Benefits will send an application for enrollment in the State Health Benefits Retirement Program along with a chart showing the cost for each type of coverage. To enroll, the member must complete and return the Retired Status Application and return it to the Division of Pensions and Benefits. If the member is not eligible for full employer-paid coverage, he/she will be asked to send a check with the completed health benefits application to pay for the first three months of retired group coverage. Some investmen carriers will make the necessary premium deductions from the member's monthly annuity payments and remit to the Division of Pensions and Benefits for them. Check with the investment carrier to see if they offer this service.
If the member had dental, prescription or vision care coverage through their employer, federal COBRA guidelines require the employer to offer continued coverage under those plans for up to 18 months after retirement at the retiree's expense. To apply, the retiree must contact the Office of Human Resources for a COBRA application upon termination of employment.
Medicare Coverage at Age 65
Retired group members eligible for Medicare must enroll in Parts A and B of Medicare and attach a photocopy of their Medicare card to the application for SHBP coverage. Upon enrollment in Medicare, the SHBP becomes a secondary provider. If the retiree and their spouse are age 65 at retirement and have not enrolled in both parts of Medicare, they should contact Social Security to apply for full Medicare coverage at this time.
What happens to a spouse's health coverage if the retiree predeceases?
Upon the death of a retiree the surviving spouse will be sent a letter offering continuation of SHBP coverage. Continued health benefits coverage for spouses require premium payments, even if the retiree and their spouse were receiving employer paid health coverage prior to the retiree's death. If an annuity payment will be continuing for the spouse and the monthly annuity payment is large enough to cover the health coverage cost , the spouse may elect to have premiums deducted from this monthly annuity. The spouse may also pay SHBP directly and will be billed quarterly for the premiums.
