What Happens When an Employer places an Active Member on Leave Without Pay when they have become ineligible for coverage as an Active Member...?
If an Employer places an Active Member on Leave Without Pay when they have become ineligible for coverage as an Active Member, the following will occur when their retirement application due to a disability is approved:
- The State Retirement System will transmit the Active Member on a New Retiree Record to SHBP with a retroactive retirement date (usually consistent with the date the Employer placed the ineligible employee on leave without pay)
- To ensure SHBP’s records are consistent with the State Retirement System’s records, the Active Member’s Retiree coverage with SHBP will also be retroactively approved
- Upon processing the New Retiree Record:
- SHBP will automatically refund the Employer all Employer Contributions and premiums paid during the retroactive retirement period, and
- Place the Retiree (former Active Member) on Direct Pay status and directly bill him/her via ADP’s subcontractor, WageWorks for all retroactive retiree premiums owed to SHBP during the retroactive retirement period.
- Employer is responsible for immediately refunding premiums to the Retiree (former Active Member).
To avoid these issues, SHBP requires Employers terminate Active Members in the SHBP Enrollment Portal who no longer meet the eligibility requirements to maintain SHBP coverage as an eligible employee, so they are immediately placed in a Pending Retirement status while they are awaiting the State Retirement System’s approval of their retirement application due to a disability.
Will the State Retirement System Notify SHBP of its Determination on a Retirement Application Due to a Disability?
Yes, the State Retirement System notifies SHBP by transmitting a New Retiree Record. This record includes important data such as the date retirement begins, years of service as of 1/1/2012, and total years of service. In many cases, SHBP also receives correspondence from the State Retirement System providing a decision on the retirement application.
Employers should immediately notify SHBP of their Active Members who no longer meet the eligibility requirements to maintain coverage as an eligible employee, even if they are waiting for their State Retirement System to approve their retirement application due to a disability.