You asked for a summary of the insurance benefits offered to Wisconsin state employees.

SUMMARY

Wisconsin provides state employees with several insurance benefits, including group health, life, and dental insurance. The benefits are administered by the Department of Employee Trust Funds (ETF). Eligible state employees are also automatically enrolled, upon employment, in the Wisconsin Retirement System (WRS), which is a defined benefit plan, meaning that retirees are guaranteed a specified level of payments based on their final average salary, years of service, and job classification. The retirement plan is meant to supplement Social Security benefits and personal savings during retirement.

The health, life, and dental insurance benefits are offered to all eligible state employees. Eligible employees include state employees who are eligible to participate in WRS. Some benefits, such as health insurance, are available after one month of employment; some, such as life insurance, are available only after six months of employment. Several of the health plans include dental and vision coverage.

HEALTH INSURANCE

All state agencies, the state legislature, and the executive branch must participate in the state's health insurance program and provide health insurance coverage to employees. Public employers (i. e. , towns, local governments, municipalities, and their local agencies) may choose to participate.

Several health insurance plans are available to employees. The state contributes a certain amount towards the premium, depending on the plan the employee chooses. Employees may obtain coverage within one month after they start working, but the state contribution is not effective until six months after the employee begins participating in WRS.

Those eligible for health insurance include:

1. state employees participating in WRS;

2. elected state officials and members or employees of the legislature;

3. employees of the University of Wisconsin System, including visiting faculty and graduate assistants;

4. state retirees, their surviving spouses, and dependents;

5. former employees with 20 years of state service;

6. local government employees participating in WRS whose employer elected to participate;

7. local government retirees and employees who terminate employment after age 55 (age 50 for protected employees) and have 20 years of creditable service (ETF Group Health Insurance Fact Sheet, available at http: //etf. wi. gov/publications/et8902. pdf).

Employees may choose between health maintenance organizations (HMO plans), preferred provider plans, and fee-for-service health providers for coverage (State of Wisconsin Employee Benefits website, available at http: //dhs. wisconsin. gov/jobopps/BENEFITS. HTM). Active employees can choose between 16 insurers and two fee-for-service plans (ETF Group Health Insurance Fact Sheet). The fee-for-service plans are the Standard Plan (a preferred provider plan) and the State Maintenance

Plan (SMP). Basically, employees have a choice between single or family coverage, and share the premium contribution with the employer based on a tiering structure. (For example, single tier I participants pay a $ 31 premium while family tier I participants pay $ 78 per month. For more information, see the ETF Group Health Ins. Fact Sheet, the Group Health Insurance Plans & Provision Handbook, attached, and Wisc. Stat. Ann. § 40. 51. )

Employees have the option of continuing health coverage when their coverage ends. They may extend coverage for up to 36 months, provided they pay the full premium.

In 2008, there were 69,691 active Wisconsin state employees with health insurance, 97. 6% of whom were enrolled in HMO plans. There were also 21,913 state retirees with health insurance in 2008, 65. 5% of whom were enrolled in HMOs (ETF Group Health Ins. Fact Sheet).

Long-Term Care Insurance

Employees may choose long-term care insurance coverage, which covers short-term and long-term home health care, assisted living, community-based care, and nursing home care. The plan is available only to state employees and annuitants, including their spouse, parents, and spouse's parents. Employees pay the full premium.

Epic Catastrophic Insurance

Employees may also choose epic catastrophic insurance coverage, which covers excess medical, accidental death and dismemberment, and dental coverage. They are responsible for the entire premium.

Employee Reimbursement Accounts Program

Employees may choose to participate in this program, which allows them to pay eligible medical and dependent care expenses from pre-tax income (as opposed to post-tax). Further, premiums for state group health, catastrophic, and life insurance (excluding spouse and dependent life insurance coverage) may be treated as pre-tax deductions under this program. (For more extensive information on this program, see Group Health Insurance Plans & Provisions Handbook at C-32. )

Worker's Compensation

All employees are covered by the state's Worker's Compensation Law beginning on the first day of employment. It covers both mental and physical harm from accidents and occupational diseases.

LIFE INSURANCE

The state offers group term life insurance coverage in an amount up to five times an employee's annual salary. Coverage is effective after six months of participating in WRS. The state contributes approximately 20% of the premium. An employee may also secure coverage of up to $ 20,000 for his or her spouse and up to $ 10,000 for each dependent.

THE WISCONSIN RETIREMENT SYSTEM

Plan Goal

The goal of the WRS is to provide career employees at the plan's normal retirement age (minimum age is 55) with sufficient income to supplement Social Security benefits and personal savings and sustain their standard of living during retirement.

Eligible Employees

Eligible state employees are automatically enrolled in the WRS retirement plan, according to an Informational Paper by the Wisconsin Legislative Fiscal Bureau (available at http: //www. legis. state. wi. us/lfb/Informationalpapers/79_wisconsin%20retirement%20system_az. pdf). The state employer is required to contribute approximately 5% of the vested employee's earnings on behalf of the employee. While participation in WRS is optional for most public employers, Wisconsin statutes require participation by:

1. the state;

2. all counties (except Milwaukee);

3. all second-, third-, and fourth-class cities (mandatory for police officers and paid firefighters, if coverage was mandatory under the former Wisconsin Retirement Fund (WRF) before March 31, 1978);

4. all villages with a population of 5,000 or more (mandatory for past, present, and future police officers and firefighters, if the WRF included them);

5. all school districts (mandatory for teaching personnel; optional for non-teaching personnel);

6. any newly created school districts (mandatory for non-teaching personnel under certain circumstances); and

7. any other government entity that assumed the functions of another previously participating WRS employer through consolidation or merger must continue WRS coverage for the employees affected by the merger (Wisconsin Legislative Fiscal Bureau Paper at 9; see also Wisc. Stat. Ann. § 40. 21).

Once a public employer elects to participate, all eligible employees must be enrolled. Basically, an eligible employee is “one who is expected to be employed for at least one-third of what is considered full-time employment for at least one year” (see Wisc. Stat. Ann. § 40. 22 (extensive description of eligible and non-eligible employees); see also Wisconsin Legislative Fiscal Bureau Paper at 8 - 9). For state employees, “eligible employees include any full- or part-time permanent and project positions where the employee either worked 600 hours in the immediately preceding 12-month period or is expected to work” at least 600 hours (Id. )

Benefits

The WRS is primarily a defined benefit plan. Upon retirement, benefits are payable based on a formula that takes into account the participant's (1) length of service, (2) final average salary, and (3) employment classification. These factors “define the employee's basic retirement benefit” (Wisconsin Legislative Fiscal Bureau Paper at 48). Employers are ultimately responsible for ensuring that adequate funding is available to pay the benefits.

The state offers two retirement options for this plan: (1) the formula benefit option and (2) the money purchase option. The formula benefit option “will result in a higher annuity payment for employees that remain in WRS-covered employment right up to retirement. ” The money purchase option provides a higher annuity payment “for persons that ended WRS-covered employment many years before applying for a retirement benefit. ” Wisconsin law requires the retiree to receive the annuity benefits of whichever option (the formula or money purchase) provides the greater benefits at the time of retirement (Wisconsin Legislative Fiscal Bureau Paper at 51; see also Wisc. Stat. Ann. § 40. 23).

As of 2008, there were 263,381 active employees participating in WRS. Of those, 27% were employed by the state and the rest by municipalities, according to the 2008 Wisconsin Department of Employee Trust Funds Retirement System Fact Sheet (available at http: //etf. wi. gov/publications/et8901. pdf). There were 142,906 annuitants (retirees, people on disability, and beneficiaries) and 141,002 inactive employees with deferred benefits available.

Formula For Determining Retirement Benefits

The formula for determining the benefit a retiree receives is: years of service times final average monthly earnings times formula factor(s) times actuarial reduction factor for early retirement (if applicable). The final average monthly earnings is determined by the total of the highest of three years of earnings divided by total service (decimal equivalent) divided by 12. (For a more extensive explanation, please see the Retirement System Fact Sheet and the ETF Benefit Handbook, attached. )

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