LASERS air time purchases allowed by Act 322 affect retirees’ OGB health plan premiums
A new state law allows employees with at least five years of service credit in the Louisiana State Employees’ Retirement System (LASERS) to purchase up to five years of service credit (commonly called air time) in one-year increments that can be used for retirement eligibility. Act 322 of 2011 was signed by the Gov. Bobby Jindal on June 29, 2011, and became effective July 1, 2011.
Introduced as Senate Bill 9, the law was authored by Sen. Butch Gautreaux (D-Morgan City). Gautreaux chairs the Senate Retirement Committee and represents the Senate on the Group Benefits Policy and Planning Board.
Impact on Premiums for OGB Health Coverage
Act 322 also provides that an employee who purchases air time for retirement eligibility and retires earlier than he otherwise would have been eligible to retire must pay the increased employer share of the monthly premium for OGB health coverage until he reaches the age at which he would have attained regular retirement eligibility. The additional premium will be deducted from the retiree’s monthly benefit check and remitted to OGB.
The following rate schedules show the monthly premium contributions that apply to an early retiree who became eligible to retire based on the provisions of Act 322. The highlighted cells indicate categories of coverage for which Act 322 early retirees are required to pay a higher premium contribution than regular retirees. These schedules are based on current OGB health plans and premium rates and will be adjusted as necessary to reflect subsequent changes to health plan offerings and premium rates.
The OGB health plan premium provisions of Act 322 do not apply to:
Employees who have 20 or more years of earned service credit in LASERS; or
Employees with fewer than 15 years participation in an OGB health plan prior to retirement to whom the provisions of the retiree participation schedule apply.
The provisions of Act 322 regarding OGB health plan premiums apply only to an employee who is able to retire early by purchasing air time, but do not apply to an employee who is eligible for regular retirement under LASERS retirement rules – even if he purchases Act 322 air time.
Any employee who has 20 or more years of earned service credit in LASERS is eligible for actuarially reduced retirement at any age, which is considered regular retirement. This means retirees with 20 or more years of earned service credit in LASERS are not subject to the OGB premium provisions of Act 322 because they are not considered Act 322 early retirees. However, a retiree subject to the OGB participation schedule who has fewer than 15 years participation in OGB health plans prior to retirement qualifies for either the 38 percent or 19 percent state contribution level. The employer share of the premium is already reduced to 38 percent or 19 percent based on the OGB retiree participation schedule, so this retiree would already pay an increased employee share.
OGB plan members with questions about the retiree participation schedule or how Act 322 affects retiree health plan premiums are encouraged to call OGB Customer Service (toll-free) at 1-800-272-8451 or 1-800-259-6771 (TDD). Additional information about Act 322 prepared by LASERS that explains the purchase and use of air time for retirement eligibility can be found on the LASERS website