Topic:
MUNICIPAL OFFICIALS/EMPLOYEES; RETIREMENT AND PENSION SYSTEMS;
Location:
MUNICIPAL OFFICIALS AND EMPLOYEES;
Scope:
Connecticut laws/regulations;

OLR Research Report


January 18, 2001

 

2001-R-0072

MERF AND MEHIP

By: Lynn Marx, Research Attorney

You asked what the town of Union must do to participate in the Municipal Employees Retirement Fund (MERF). You also asked whether there was a state sponsored group health insurance plan available for Union employees.

SUMMARY

MERF is a municipally funded, state-run retirement system for municipal employees. The town of Union could, with the approval of its voters, participate in MERF.

The Municipal Employees Health Insurance Program (MEHIP) is a group health insurance program sponsored by the Office of the Comptroller. Individual public employees cannot participate in MEHIP unless the group in which they are employed enrolls in MEHIP.

MERF

In general, municipalities can participate in MERF by having their legislative bodies pass a resolution and by having the issue approved by a majority of the voters voting in a referendum (CGS 7-427). Municipalities can choose to have all or just some of their departments participate in the fund. The state retirement commission must provide, at the expense of the requesting municipality, an estimate of the cost of participation to any municipality contemplating participation in the fund.

A participating municipality must pay for the cost of its employees' future pensions based on the employees' service before the municipality joined the fund (CGS 7-441). This amount is reduced by any money transferred to MERF from other retirement funds on account of such employees. The retirement commission determines this unfunded liability based on actuarial principles. The municipality also must pay for any increase in pensions attributable to amendments to the laws governing MERF to the extent that the increase is based on service before the amendment's effective date. The municipality must make annual payments as determined by the retirement commission to meet these two liabilities. The municipality has up to 30 years to pay the unfunded costs of pensions for employees brought into MERF. It has up to 20 years to pay for the costs of amendments to the retirement laws. The municipality must also pay, on a going forward basis, the costs of future pensions (including disability benefits) for employees' service after the municipality joins MERF and the municipality's share of the commission's cost for administering MERF.

Participating municipalities must provide to the commission information regarding their employees, including their length of service and pay (CGS 7-448). Municipalities must also provide information regarding such changes as new hires, resignations, and changes in pay. If the municipality does not supply information within 30 days of the commission's request, it is subject to a fine of $100 per day for each subsequent day.

MEHIP

In 1996, the Connecticut Legislature passed a law empowering the Comptroller to create a health care program for municipal employees (PA 96-234). MEHIP has been available for employees of state municipal groups since April 1, 1998. According to Jill Ferraiolo, Legislative Liaison, Office of the Comptroller, MEHIP plans offer the same basic medical benefit coverage as plans offered to state employees.

Municipalities' participation in MEHIP is voluntary. If a group of employees in a municipality is represented by a union, both the union and the employer must agree to participate in MEHIP. No group of employees can be refused entry into the plan by reason of past or future health care costs or claim experience (CGS 5-295(i)).

MEHIP allows participating employees to select from one of three health plans: Anthem Blue Cross and Blue Shield, ConnectiCare, and Physicians Health Services. MEHIP is administered by Marsh Advantage America. Marsh Advantage America is responsible for MEHIP sales, marketing, enrollment, billing, and all customer service issues. The Marsh Advantage America sales executive for MEHIP is Barbara A. Bayram, (860) 723-5751. Currently 27 groups, including the Union Board of Education, participate in MEHIP.

LM:ts