In this, part III of our series Back to School for Educators and Staff: Your NHRS Pension Benefits Guide- A Four-Part Series, we uncover the lesser-known benefits of NHRS. In addition to pension benefits, either from electing service or disability retirement, NHRS members are entitled to two other less well known, but valuable benefits: Medical Subsidy Benefits (Insurance Continuation) and Pre Retirement Death Benefits.
I. PRE- RETIREMENT DEATH BENEFITS
Death benefits may be available to eligible beneficiaries of NHRS members who die prior to retirement while they are in service. Similar to the categories of Disability Benefits we described in part II of this series, there are two types of death benefits: Ordinary and Accidental.
Ordinary death benefit (non-job-related)
- If the member had at least 10 years of service, or was eligible for service retirement at the time of death, and the member spouse is the only designated beneficiary, then the surviving spouse may choose to receive either an annual pension until death equal to 50% of the member’s service retirement pension, or a lump sum payment, equal to the member’s annual compensation, plus a refund of the member’s accumulated contributions.
- If the member did not have at least 10 years of service and was not eligible for service retirement, then the member’s designated beneficiary would receive a lump sum payment equal to the member’s annual compensation, and a refund of the member’s accumulated contributions.
Accidental death benefit (job related)
- A refund of the member’s accumulated contributions payable to the member’s designated beneficiaries in addition to the accidental death benefit.
- In accordance with the accidental death benefit, if the member was married at the time of death, then the surviving spouse of the Group I Member will receive an annual pension until death equal to 50% of the member’s average final compensation.
- If the member leaves no surviving spouse, or if the surviving spouse dies, then the annual pension will be payable to the member’s children under age 18.
- After that it reverts to the member’s dependent mother or father for life, or absent any surviving family members, to the member’s designated beneficiaries who will receive a lump sum payment equal to the member’s base salary plus accrued benefits not paid at the time of death.
PRE-SELECTION OF BENEFICIARIES FOR THIS BENEFIT
Pre-selection allows an eligible member to elect a maximum survivorship option for their beneficiaries in the event of the member’s death while eligible to receive a monthly pension benefit, and before filing an application for service retirement.
The maximum survivorship option provides a lifetime pension equal to the amount the member would have received under the joint and 100% survivor’s option, calculated as if service or early retirement had occurred on the day before the member’s date of death.
If a member dies while a pre-selection is in effect, and if the beneficiary named on the pre-selection before service retirement form is the same as the beneficiary named under the designation of death beneficiaries pre-retirement form, then the member’s designated beneficiaries may choose to receive either the survivorship option or the lump sum payment under the ordinary death benefit or accidental death benefit, whichever applies.
TRAP FOR THE UNWARY
Pre-selection is not an automatic benefit.
- Eligible members must submit a pre-selection form before service retirement to NHRS in order to activate this benefit.
- All beneficiary designation forms must be completed and signed in the presence of a notary public or justice of the peace, who must notarize the document.
- If a designation form is not notarized, benefits might not be payable according to a member’s wishes, but in accordance with applicable New Hampshire law.
- No one will send you a reminder or tell you this in advance.
II. MEDICAL SUBSIDY BENEFITS
NHRS provides a medical insurance subsidy to qualified, retired members. The medical subsidy is a payment made by NHRS to the retired member’s former employer toward the cost of health insurance for a qualified retiree, his/her qualified spouse, and his/her certifiably dependent children with a disability who are living in the household, and being cared for by the retiree. These benefits are also available under specific conditions to qualified beneficiaries of members who die while in service and may be eligible for the medical subsidy.
Different provisions for the medical subsidy apply to Group 1 and Group 2 (police and fire) members, and eligibility for medical subsidy for Group 1 (employee and teacher) members are limited.
THE BAD NEWS
The medical insurance subsidy is only available for employees who retired before July 1, 2009, and therefore would be inapplicable to anybody who hadn’t yet retired.
THE GOOD NEWS
A Retired employee is eligible to continue their benefits for health insurance through the district as if they were a continuing employee, by paying their own premiums. This may not seem like much of a benefit considering the high cost of a school health insurance plan, but it can be a very important and valuable benefit for those with a serious medical condition as it ensures the ability to stay on what is typically a premium coverage plan and prevents the employee or their family member from having to elect COBRA continuation coverage, which is typically limited to 18 months. The employee (and their family or spouse as they choose) can stay on the school plan almost as if they were still an employee.
What’s more, retired employees over the age of 65 may be eligible to convert their insurance plan to a Medicare supplemental plan. Retired employees can do this while continuing to cover non-retired family members (under the age of 65) on the regular school plan. Again, the employee is responsible for the payment of the health insurance premiums, but this can be an important benefit, depending on your circumstances.
III. A WORD ABOUT SOCIAL SECURITY
NHRS retirees can apply for and receive BOTH social security and NHRS pension benefits without any reduction or offset. It’s important to take this into consideration when planning for retirement.
Workers’ compensation benefits are not treated in the same way. If an employee is receiving both workers’ compensation benefits and NHRS ADR or workers’ compensation benefits and social security disability (SSDI) they may be subject to a reduction or offset of the pension from NHRS and/or SSDI. For this reason, there may be advantages to settling your workers’ compensation claim in these circumstances.
However, no one in the NHRS system should enter into a lump sum settlement of their workers’ compensation claim without careful consideration of and coordination with their other contracts and benefits in mind. There are ways to combine benefits that can make a powerful difference in an employee’s security and income, but this requires careful review of the relevant union agreements, laws, policies, and contracts. See part IV of this series to learn what you need to consider when you are retiring from your NHRS career due to a disabling work injury or illness.
Medicare
Social Security provides employees with Medicare coverage at age 65 under normal circumstances. However, if an employee must retire early because of a disability (whether it’s work related or not work related), that employee becomes eligible for Medicare two years after they become eligible for Social Security disability benefits. This is not a topic that we’re going to cover in any great detail, but it should be part of every employee’s retirement and disability planning.
EXTRA CREDIT
Just like NHRS, the Social Security Administration has a really useful set of tools on its website that allow you to calculate what your benefits would be under various circumstances, and at various ages. I highly recommend that you look at this as part of your planning and do so well in advance of your retirement age.