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TACCBO Conference June 19 – 22

Reporting forPublic Junior Colleges

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TACCBO Conference June 19 – 22

Tobacco Premium Differential

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Overview of Tobacco User Premium Differential

Mandated by Senate Bill 1664, 82nd Legislature

Tobacco users in the Texas Employees Group Benefits Program (GBP)

Effective January 1, 2012

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Overview of Tobacco User Premium Differential

What are considered tobacco use?Smoking tobacco in the form of a cigarette, pipe, or cigarChewing tobacco or snuff

What are not considered tobacco use?Nicotine chewing gumNicotine patchesElectronic cigarettes

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Tobacco User Premium rates

You must certify as a tobacco user if you or a covered family member uses tobacco.

Tobacco users Monthly fee

Member only $30

Spouse only $30

Child* only $30

Member + spouse $60

Member + child* $60

Spouse + child* $60

Member + spouse + child* (family) $90 * The charge for a child is the same regardless of how many children in the household use

tobacco.

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Reporting to ERS

TEXNET, the State of Texas Financial NetworkThe Amount Type is C [Tobacco User Prem. Differential (Employee)]TEXNET hotline – (800) 531-5441, ext. 3-3010

Amount Type:1 = Insurance (Employee)2 = Insurance (Employer-Active)3 = Insurance (Employer-Retired)4 = Cafeteria Plan (Employee)9 = Insurance (Employer – SKIP)A = Insurance (Active Opt-out)B = Insurance (Retiree Opt-out)C = Tobacco User Prem. Differential (Employee)D = Payroll Health Insurance (Employer)

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Frequently Asked Questions

Is the tobacco user premium differential a pre-tax deduction?

It is a pre-tax deduction for Social Security wages and Federal Income Tax (FIT) withholding.

It is an after tax deduction for Federal Insurance Contributions Act (FICA) wages for retirees.

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Frequently Asked Questions

Does the premium apply to newly hired employees in the 90-day wait for health insurance coverage?

NoEven if the employees certifies themselves as users of tobacco products

during the 90-day wait, the system should not accept a tobacco user premium differential deduction when there is not health line coverage.

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Frequently Asked Questions

Does ERS view Tobacco User Premium Differential as health coverage rather than voluntary coverage?

YesERS views the tobacco user premium differential as part of the health

coverage.ERS considers that the premium differential is not a voluntary coverage.

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Frequently Asked Questions

Does the Tobacco User Premium Differential apply to retirees?

Yes

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Frequently Asked Questions

Should the Tobacco User Premium Differential be included in the “all or nothing” logic that is in place for insurance deductions?

YesIf the employees’ monthly payroll is not sufficient to cover the premium,

employees are required to send the entire premium directly to ERS.

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Frequently Asked Questions

How is the Tobacco User Premium Differential affect COBRA participants?

They will be required to pay the same tobacco user premium as any active employees would pay.

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Frequently Asked Questions

What report will list the Tobacco User Premium Differential by participant?

Available on the ERS FPT serverReport name is mth***.mmddyyyy where *** is the agency number

ExampleIf your agency number is 327 and the reporting month is May 2012, the report name should be mth327.05312012

Download this report into Excel, use the following filters to identify the “tobacco rows” and sum the total amount of Tobacco User Premium Differential Participant Coverage Line Code Column = 1T

Transaction Type Code Column = E

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TACCBO Conference June 19 – 22

1% Payroll Contribution for Group Health Insurance

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Overview of 1% Payroll Contributions

Mandated by HB 1, 82nd Legislature

Sec. 18.09. Payroll Contribution for Group Health Insurance.

Effective September 1, 2011

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Overview of 1% Contribution

What is included in the 1% calculation? Base salary

What are not included in the 1% calculation? Longevity pay Hazardous pay BRP pay Overtime pay Any other payment that is not part of the base pay

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Overview of 1% Contribution

Who are included? All entities who participate in the State of Texas Group Benefits Program (GBP) Active employees who have active insurance should be included to calculate the 1%

contribution

Who are not included? Components within the University of Texas and Texas A&M Systems

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Reporting to ERS

TEXNET, the State of Texas Financial NetworkThe Amount Type is D [Payroll Health Insurance (Employer)]TEXNET hotline – (800) 531-5441, ext. 3-3010

Amount Type:1 = Insurance (Employee)2 = Insurance (Employer-Active)3 = Insurance (Employer-Retired)4 = Cafeteria Plan (Employee)9 = Insurance (Employer – SKIP)A = Insurance (Active Opt-out)B = Insurance (Retiree Opt-out)C = Tobacco User Prem. Differential (Employee)D = Payroll Health Insurance (Employer)

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Frequently Asked Questions

Is this an extra 1% contribution?

No. It is not an additional contribution.

The 1% contribution comes from funding sources other than the insurance appropriation

Transfers made shall be consistent with provisions requiring salaries and benefits to be proportional to the source of funds

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Frequently Asked Questions

Will employees in the 90-day wait be included?

No. Employers are not required to make contribution for a member during their 90-day wait.

However, if an employer pays for the coverage of a member during their 90 day wait; the member should be included.

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Frequently Asked Questions

Will employees who Opt-Out of the GBP be included?

Yes, up to the amount of the employer contribution requirement

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Frequently Asked Questions

Why do higher education institutions need to report the 1% payroll contributions?

Ensure ERS’ compliance with the statute

Provide legislature with the information on the impact of the legislation.

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Frequently Asked Questions

How do you access more information on insurance benefits?

Visit our website at www.ers.state.tx.us

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Contact Information

Carolyn CollinsCarolyn.Collins@ers.state.tx.us(512) 867-7198

Erin WilliamsErin.Williams@ers.state.tx.us(512) 867-7471

Eric CruzEric.Cruz@ers.state.tx.us(512) 867-7484

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Questions?