CR 17-031 Rule Text

Fiscal Estimate and Economic Impact Analysis   4

Text of Rule   5-8

Department of Administration s. 227.137 Report   None

Energy Impact Report   None

Legislative Council Staff Clearinghouse Report   9-10

Response to Legislative Council Staff Recommendations   11

List of Persons Who Appeared or Registered at the Public Hearing   11

Summary of Public Comments   11

Modifications to the Rule as Originally Proposed as a Result of Public Comments   11

Modifications to the Analysis Accompanying the Proposed Rule   11

Modifications to the Fiscal Estimate   11

Board Authorization for Promulgation   11

Effective Date   11

The scope statement for this rule, SS 025-17, was approved by the Governor on March 6, 2017, published in Register No. 735A2, on March 13, 2017, and approved by ETF Secretary Robert Conlin on March 23, 2017.

Agency Person to be Contacted for Questions

Please direct any questions about the proposed rule to David Nispel, General Counsel, Department of Employee Trust Funds, P.O. Box 7931, Madison WI 53707. Telephone: [phone]. E-mail address: [e-mail].

Statement Explaining Need for Rule

This rule-making is needed to close the Long-Term Disability Insurance program (LTDI) to new claims and re-open the Wis. Stat. §40.63 Disability Annuity Program (40.63) to all eligible employees effective January 1, 2018. This is part of the department’s effort to streamline, simplify and modernize the disability programs offered to Wisconsin Retirement System members.

Analysis Prepared by the Department of Employee Trust Funds

1.   Statutes interpreted:

Sections 40.63, Stats.

2.   Statutory authority:

Sections 40.03 (1) (i), 40.03 (2) (i) and 227.11 (2) (a), Stats.

3.   Explanation of agency authority:

By statute, the ETF Secretary is expressly authorized, with approval by the Employee Trust Funds Board, to promulgate rules that are required for the efficient administration of the fund or of any of the benefit plans established by ch. 40 of the Wisconsin Statutes. Also by statute, the Employee Trust Funds Board may determine that some or all of the disability annuities and death benefits provided from the Wisconsin retirement system shall instead be provided through group insurance plans to be established by the group insurance board either as separate plans or as integral parts of the group life and income continuation insurance plans established under ch. 40 of the Wisconsin Statutes. By this rule, the ETF Board has determined that disability benefits claimed after December 31, 2017, shall no longer be provided through the Long-Term Disability Insurance group insurance plan that was established by the Group Insurance Board.

In addition, each state agency may promulgate rules interpreting the provisions of any statute enforced or administered by the agency if the agency considers it necessary to effectuate the purpose of the statute.

4.   Related statutes or rules:

There are no other related statutes or administrative rules directly related to this rule.

5.   Plain language analysis:

The purpose of this rule is to close the Long-Term Disability Insurance program (LTDI) to new claims and re-open the Wis. Stat. §40.63 Disability Annuity Program (40.63) to all eligible employees effective January 1, 2018. Closing the LTDI program entails moving oversight of the program’s runout from the Group Insurance Board to the Employee Trust Funds Board.

6.   Summary of, and comparison with, existing or proposed federal statutes and regulations:

There are no existing or proposed federal regulations that directly pertain to this proposed rule.

7.   Comparison with rules in adjacent states:

Minnesota State Retirement System. General employees disability benefit is calculated the same as retirement benefits, with no reduction in benefit if under normal retirement age. To qualify for disability benefits, employee must meet the definition of disability and have three years of service; five years if hired on or after June 30, 2010. The disability benefit will end in the month of death unless survivor coverage is selected.

Iowa Personnel System. Regular disability benefits equal the amount of the retirement benefit earned at the time employment was terminated, without reduction for retiring before normal retirement age. To qualify for disability benefits an employee must be vested; have ended all IPERS-covered employment and must be receiving Social Security Disability or Railroad Retirement benefits.

Illinois State Employee Retirement System. Non-occupational disability benefits are 50% of final average compensation or monthly rate of pay, whichever is greater for employees hired before 1/1/2011. Disability benefits are 50% of final average compensation for employees after 12/31/2010. Occupational Disability benefits are 75% of final average compensation or monthly rate of pay, whichever is greater for employees hired before 1/1/2011. Occupational Disability benefits are 75% of final average compensation for employees hired after 12/31/2010. To qualify for non-occupational disability benefits an employee must have 18 months of creditable service, must use all accrued sick days, and must be on a medical leave of absence. To qualify for occupational disability benefits an employee must be a member of SERS, must not be working, and must file a claim for Workers’ Compensation.

Michigan Civil Service Commission. For full-time employees, long-term disability benefits equal 66.6667% of monthly rate of basic earnings. Bonuses, overtime pay and other extra compensation are not included. For less than full-time employees, the gross monthly payment is based on the number of basic hours paid in the prior fiscal year. Employees must wait 14 calendar days from the date of disability.

8.   Summary of factual data and analytical methodologies:

ETF evaluated the programmatic implications of continuing to operate both the LTDI and 40.63 Disability Annuity and concluded that the option most beneficial to ETF and Wisconsin Retirement System members is to close the LTDI program to new claims. In addition, ETF’s disability actuary, Milliman, Inc., analyzed the impact of closing the LTDI program.

9.   Analysis and supporting documents used to determine effect on small business or in preparation of economic impact analysis:

This rule does not have an effect on small businesses because private employers and their employees do not participate in, and are not covered by, the Wisconsin Retirement System. Please see attached economic impact analysis.

10.   Effect on small business:

The rule has no effect on small businesses.

Regulatory Flexibility Analysis:

The proposed rule has no effect on small businesses because only governmental employers and their employees may participate in the benefit programs under ch. 40 of the statutes administered by the Department of Employee Trust Funds.

Fiscal Estimate and Economic Impact Statement:

Please see the attached Fiscal Estimate and Economic Impact Statement.

Text of Proposed Rule

SECTION 1. ETF 50.30 (1) (intro.) is renumbered ETF 50.30 (1), and as renumbered is amended to read: