Life Insurance For Nc Teachers: What's Covered Automatically?

Teachers in North Carolina have access to a range of benefits, including health and life insurance. The Teachers' and State Employees' Retirement System (TSERS) is a defined benefit plan sponsored by the State of North Carolina and governed by the Department of the State Treasurer. Under TSERS, retirement benefits are calculated based on an individual's salary, years of service, and a retirement factor. While it is clear that teachers can access health insurance and life insurance, it is not clear whether life insurance is automatically included in the TSERS package.

Teachers' and State Employees' Retirement System (TSERS)

The Teachers' and State Employees' Retirement System (TSERS) is a defined benefit plan sponsored by the State of North Carolina and governed by the Department of the State Treasurer. It is available to all permanent SHRA or EHRA full-time employees working 30 or more hours per week, who can choose between TSERS or the Optional Retirement Program (ORP).

Employees have 30 calendar days from their date of employment to complete the online retirement enrollment and choose between the two options. If an employee does not complete the online enrollment within 30 calendar days of their hire date/eligibility date, they will automatically be enrolled in TSERS. This action is irrevocable.

TSERS is a pension plan, and the benefit received at retirement is based on a formula that considers the employee's years and months of creditable service, their age, and their "average final compensation." The "average final compensation" is the average salary during the 48 highest-paid consecutive months. The benefit amount is not directly determined by the amount contributed by the employee and the University, on the employee's behalf, or the investment experience of the plan assets.

Retirement benefits in TSERS are fully vested after the employee completes five years of membership service. If an employee leaves State employment before completing five years of creditable service, they may request a refund of their contributions, or leave their contributions in TSERS if they plan on returning to State service in the future.

Upon meeting certain age and service requirements, beneficiaries of a TSERS participant who dies while in active service will receive a single lump-sum payment. The benefit amount is based on the highest 12 consecutive months of salary within the 24-month period preceding death and is no less than $25,000 and no more than $50,000.

In addition to the above, when a TSERS participant retires and begins receiving benefits, they may also be eligible to enroll in the State Health Plan. The cost of this plan is determined by when the participant's employment started with the State.

Death & Survivor Benefits

The Teachers' and State Employees' Retirement System (TSERS) is a defined benefit plan sponsored by the State of North Carolina and governed by the Department of the State Treasurer. The benefits received at retirement are based on a formula that considers an individual's years and months of creditable service, their age, and their "average final compensation," which is the average salary during their 48 highest-paid consecutive months.

In the event of the death of a TSERS participant, the program provides the following benefits and protections for beneficiaries:

• If a participant dies while in active service (or within 180 days of service separation if the contributions have not been withdrawn) after one year of contributing membership service, the beneficiaries will receive a single lump-sum payment. The benefit amount is based on the highest 12 consecutive months of salary within the 24-month period preceding death, with a minimum of $25,000 and a maximum of $50,000.
• Beneficiaries will receive a refund of the employee's contributions, with interest if applicable.
• If the deceased employee had met specific age and/or years of service requirements, a survivor's alternate benefit may be paid as a lifetime monthly annuity instead of a refund of contributions. For this option, the employee must have named only one principal beneficiary for the Refund of Contributions.
• Depending on the participant's chosen retirement payment option, a monthly survivor benefit may be payable to the named beneficiary upon the retiree's death.
• If the participant dies while still in active service and being paid a salary, their beneficiary will receive a lump-sum payment equal to the highest 12 months of salary in a row during the preceding 24 months, but not less than $25,000 and not more than $50,000. This benefit is also paid if death occurs within 180 days of the last day for which the participant was paid a salary.
• If the participant dies while in active service, their beneficiary will receive a refund of contributions and interest. If the participant had 20 or more years of service or was at least 60 years old with at least five years of service at the time of their death, their beneficiary can choose between receiving a refund of contributions plus interest or a life-time benefit.

Additionally, the NCFlex Group Term Life Plan, administered by Voya, offers life insurance coverage. This plan is optional, and the cost is significantly lower than a whole or universal life plan. The insurance pays a benefit to the beneficiary(ies) in the event of death while covered under the policy. Coverage can be selected for oneself, a spouse, or unmarried children under 26 years of age. The monthly premium is based on the employee's age and the coverage amount, ranging from $20,000 to $500,000.

Retirement benefits

The Teachers' and State Employees' Retirement System (TSERS) is a defined benefit plan sponsored by the State of North Carolina and governed by the Department of the State Treasurer. The retirement benefits received under TSERS are based on an individual's years and months of creditable service, age, and "average final compensation," which is calculated as the average salary during the 48 highest-paid consecutive months.

All permanent SHRA or EHRA full-time employees working 30 or more hours per week have the option to choose between TSERS or the Optional Retirement Program (ORP). Employees must contribute 6% of their salary on a pre-tax basis to either program, and this amount cannot be adjusted. Employees have 30 calendar days from their date of employment to complete the online retirement enrollment and choose between the two programs. If an employee does not make a selection within 30 days, they will automatically be enrolled in TSERS, and this choice is irrevocable.

Once vested, employees can retire with an unreduced service retirement benefit if they meet one of the following criteria:

• Reach age 65 and complete five years of creditable service
• Reach age 60 and complete 25 years of creditable service
• Complete 30 years of creditable service, regardless of age

Alternatively, employees can retire early with a reduced retirement benefit if they meet one of the following criteria:

• Reach age 50 and complete 20 years of creditable service
• Reach age 60 and complete five years of creditable service

In addition to retirement income, retiring employees may also be eligible for health coverage under the State Health Plan (Plan) if they have at least five years of TSERS membership service earned as a teacher or state employee. However, members hired on or after January 1, 2021, are not eligible for retiree medical benefits.

The State Health Plan offers different coverage options depending on age and Medicare eligibility. For those under 65, the Plan automatically enrolls retiring members in the health plan they were enrolled in as an active employee, along with any covered dependents. If the retiring member did not have coverage under the Plan as an active employee, they will be automatically enrolled in the Base PPO Plan (70/30) retiree-only coverage.

For those who are 65 or older, Medicare becomes the primary coverage, and the State Health Plan serves as secondary coverage. Retiring members must enroll in Medicare Part B to be effective as of their retirement date. The State Health Plan will automatically enroll these members in either the Humana Group Medicare Advantage (PPO) Base Plan or the Base PPO Plan (70/30), depending on when their retirement paperwork is processed and approved.

It is important to note that the cost of health coverage for retirees varies based on their hire date. For those hired before October 1, 2006, who retire with five or more years of state system membership service, the state will pay all or most of the cost for a Preferred Provider Organization (PPO) plan. For those hired on or after October 1, 2006, certain requirements must be met to receive individual coverage at no cost, with the number of years of retirement service credit determining the percentage of coverage costs paid by the retiree. As previously mentioned, those hired on or after January 1, 2021, are not eligible for retiree health insurance through the state.

Retiree Health Benefits

If you are retiring under the Teachers' and State Employees' Retirement System (TSERS) and are eligible for State Health Plan retiree group coverage, you will be auto-enrolled into a health plan after submitting your online retirement application or Form 6E, Choosing Your Retirement Payment Option. Your coverage will begin on the first day of the month after your effective date of retirement.

If you are under 65 and not Medicare-eligible, you will be automatically enrolled in the health plan you were enrolled in as an active employee, along with any covered dependents. If you did not have coverage in the State Health Plan as an active employee, you will be automatically enrolled in the Base PPO Plan (70/30) retiree-only coverage. You can change your auto-enrollment plan or opt out of coverage up to 30 days after your coverage effective date.

If you are Medicare-eligible and your retirement application is completed 60 days or more before your coverage effective date, you will be automatically enrolled in the Medicare Advantage Base Plan. You will have up to 30 days before your coverage effective date to change plans. If no action is taken, you will remain in your assigned Medicare Advantage Base Plan until the next Open Enrollment, and your non-Medicare-eligible dependents will remain in their current plan.

To be eligible for retiree health coverage under the State Health Plan, you must have at least five years of TSERS membership service earned as a teacher or state employee. Credit for unused sick leave or credit transferred from the Local Governmental Employees' Retirement System (LGERS) does not count toward this requirement.

If you were "first hired" before October 1, 2006, and have five or more years of TSERS membership service, the state will pay for your individual coverage under the Base PPO Plan (70/30) or the Medicare Advantage Base Plan as a TSERS retiree. Individual coverage under other plans is available for an additional fee.

If you were first hired on or after October 1, 2006, the cost of your individual coverage at retirement will depend on your years of creditable service. With 20 or more years of service, you will receive individual coverage at no charge. With 10 to 19 years of service, you will pay 50% of the cost, and with 5 to 9 years, you will pay the full cost. Individual coverage under other plans is available for an additional monthly fee.

Please note that employees hired on or after January 1, 2021, are not eligible for retiree health benefits at retirement.

Group Term Life Insurance

The NCFlex Group Term Life Plan is administered by Voya. This is a term life insurance policy, which means there is no accumulated cash value, however, the cost is much less than a whole or universal life plan. This insurance pays a benefit to the beneficiary(ies) as a result of death while covered under the policy.

You can choose coverage for yourself, your spouse, or your unmarried children under 26. If you are eligible to participate in this plan as an employee and a dependent (spouse or child), you must choose to participate as an employee. The monthly premium for an employee and spouse is based on the employee's age and the coverage amount, which ranges from $20,000 up to $500,000. The monthly premium for a child is a set cost for either $5,000 or $10,000 of coverage, no matter the number of children.

During Open Enrollment, you can increase your election by $20,000 each year, up to the Guaranteed issue amount of $200,000 for employees and $50,000 for spouses – no medical questions asked. Imputed income is calculated when you carry employee-only term life coverage. Changes can be made to this plan when you become newly eligible, experience a Qualifying Life Event, or during Open Enrollment.

Additional features of this benefit include:

• Waiver of premium if you become permanently disabled (under age 60) while covered by the plan.
• Bereavement Support, including Funeral Planning & Will Prep.
• Accelerated Death Benefit.

This plan may be continued when you leave employment. If you are age 70 or older, you may convert the plan to a whole or universal policy. Under age 70, you may port the policy you had as an employee.

Frequently asked questions