Bill Text: MI HB5310 | 2009-2010 | 95th Legislature | Introduced

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Bill Title: Retirement; judges; health reimbursement account; establish. Amends title & secs. 105, 106, 111, 214, 214a, 217, 305 & 714 of 1992 PA 234 (MCL 38.2105 et seq.) & adds secs. 214b, 309, 310, 311, 312, 313 & 314.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2010-05-04 - Recommendation Concurred In [HB5310 Detail]

Download: Michigan-2009-HB5310-Introduced.html

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HOUSE BILL No. 5310

 

September 2, 2009, Introduced by Rep. Meadows and referred to the Committee on Health Policy.

 

     A bill to amend 1992 PA 234, entitled

 

"The judges retirement act of 1992,"

 

by amending the title and sections 105, 106, 111, 214, 214a, 217,

 

305, and 714 (MCL 38.2105, 38.2106, 38.2111, 38.2214, 38.2214a,

 

38.2217, 38.2305, and 38.2664), the title and sections 214, 217,

 

305, and 714 as amended by 2002 PA 95, section 105 as amended by

 

2008 PA 514, section 106 as amended by 1995 PA 193, and section

 

214a as added by 1999 PA 215, and by adding sections 214b, 309,

 

310, 311, 312, 313, and 314.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

TITLE

 

     An act to establish a judges retirement system; to provide for

 

the administration and maintenance of the retirement system; to

 

create a retirement board; to prescribe the powers and duties of

 

the retirement board; to establish certain reserves for the

 

retirement system; to establish certain funds; to prescribe the

 

powers and duties of certain state departments and certain state

 

and local officials and employees; to provide for certain

 

disqualifications; to make appropriations; to prescribe penalties

 

and provide remedies; and to repeal acts and parts of acts.

 

     Sec. 105. (1) Beginning January 1, 2002, except as otherwise

 

provided in this subsection, "eligible retirement plan" means 1 or

 

more of the following:

 

     (a) An individual retirement account described in section

 

408(a) of the internal revenue code, 26 USC 408.

 

     (b) An individual retirement annuity described in section

 

408(b) of the internal revenue code, 26 USC 408.

 

     (c) An annuity plan described in section 403(a) of the

 

internal revenue code, 26 USC 403.

 

     (d) A qualified trust described in section 401(a) of the

 

internal revenue code, 26 USC 401.

 

     (e) An annuity contract described in section 403(b) of the

 

internal revenue code, 26 USC 403.

 

     (f) An eligible plan under section 457(b) of the internal

 

revenue code, 26 USC 457, that is maintained by a state, political

 

subdivision of a state, or an agency or instrumentality of a state

 

or political subdivision of a state and that separately accounts

 

for amounts transferred into such eligible plan under section

 

457(b) of the internal revenue code, 26 USC 457, from this

 

retirement system, that accepts the distributee's eligible rollover

 

distribution.

 

     (g) Beginning January 1, 2008, a Roth individual retirement

 

account as described in section 408A of the internal revenue code,

 

26 USC 408A, subject to the rules that apply to rollovers from a

 

traditional individual retirement account to a Roth individual

 

retirement account.

 

     (2) Beginning January 1, 2007, "eligible rollover

 

distribution" means a distribution of all or any portion of the

 

balance to the credit of the distributee. Eligible rollover

 

distribution does not include any of the following:

 

     (a) A distribution made for the life or life expectancy of the

 

distributee or the joint lives or joint life expectancies of the

 

distributee and the distributee's designated beneficiary.

 

     (b) A distribution for a specified period of 10 years or more.

 

     (c) A distribution to the extent that the distribution is

 

required under section 401(a)(9) of the internal revenue code, 26

 

USC 401.

 

     (d) The portion of any distribution that is not includable in

 

federal gross income, except to the extent such portion of the

 

distribution is paid to either of the following:

 

     (i) An individual retirement account or annuity described in

 

section 408(a) or 408(b) of the internal revenue code, 26 USC 408.

 

     (ii) A qualified plan described in section 401(a) of the

 

internal revenue code, 26 USC 401, or an annuity contract described

 

in section 403(b) of the internal revenue code, 26 USC 403, and the

 

plan providers agree to separately account for the amounts paid,

 

including any portion of the distribution that is includable in

 

federal gross income, and the portion of the distribution which is

 

not so includable.

 

     (3) "Executive secretary" means the executive secretary of the

 

retirement system as provided in section 205.

 

     (4) Except as otherwise provided in this subsection, "final

 

compensation" means the annual rate of compensation for the

 

calendar year of retirement. For a member who retires on January 1,

 

final compensation means the annual rate of compensation for the

 

calendar year immediately preceding the date of retirement. Final

 

compensation does not include an amount that exceeds the maximum

 

salary set forth for that particular member or vested former member

 

in the revised judicature act, if applicable. For a member who is a

 

judge and who performs judicial duties for a limited period or a

 

specific assignment as authorized by the supreme court pursuant to

 

section 23 of article VI of the state constitution of 1963, final

 

compensation means the annual rate of compensation the member was

 

being paid at the termination of his or her tenure in office as an

 

elected judge.

 

     (5) "Former elected official" means a member who held a state

 

elective office before membership in this retirement system, the

 

former judges retirement system, or the former probate judges

 

retirement system.

 

     (6) "Former judges retirement system" means the state of

 

Michigan judges' retirement system created by former 1951 PA 198.

 

     (7) "Former probate judges retirement system" means the state

 

of Michigan probate judges retirement system created by former 1954

 

PA 165.

 

     (8) "Funding account" means the funding account created

 

pursuant to the public employee retirement health care funding act

 

for the deposit of funds and payment of medical expenses.

 

     (9) "Health reimbursement account" means an employer-sponsored

 

individual account within the irrevocable trust administered by the

 

trustees that allows an HRA member and his or her employer to save

 

money for reimbursement of medical expenses that will be incurred

 

on behalf of the HRA member or his or her health reimbursement

 

account dependents after the HRA member becomes a former member or

 

former qualified participant.

 

     (10) "Health reimbursement account dependent" means an HRA

 

member's spouse or a surviving spouse and any individual who is

 

considered the HRA member's dependent under section 152 of the

 

internal revenue code, 26 USC 152, determined without regard to

 

section 152(b)(1) or (2) or (d)(1)(b) of the internal revenue code,

 

26 USC 152.

 

     (11) "HRA effective date" means the date specified by the

 

retirement board which shall be no later than 1 year following the

 

effective date of the amendatory act that added this subsection and

 

no sooner than the date that the department certifies that the

 

administrative and operational components for the health

 

reimbursement accounts have been completed.

 

     (12) "HRA member" means a member or qualified participant who

 

is required to make mandatory contributions to his or her health

 

reimbursement account. An HRA member shall not include any plan 1

 

member or any plan 2 member under this act.

 

     Sec. 106. (1) "Interest" means the rate or rates of interest

 

per annum, compounded annually, as determined by the retirement

 

board.

 

     (2) "Internal revenue code" means the United States internal

 

revenue code of 1986.

 

     (3) "Judge" means a duly elected or appointed justice of the

 

supreme court, judge of the court of appeals, judge of the circuit

 

court, judge of the district court, judge of the probate court, or

 

judge of the recorder's court of the city of Detroit.

 

     (4) "Mandatory contributions" means required contributions

 

made under this act by HRA members. The department shall administer

 

contributions made to the health reimbursement account so that they

 

may be characterized in the manner that the department determines

 

is most favorable under the internal revenue code, 26 USC 1 to

 

1789. Mandatory contributions may also include any other amounts

 

established by the employer which may be treated as picked up by

 

the employer to the fullest extent permitted under the internal

 

revenue code.

 

     (5) (4) "Medical adviser" means the medical adviser of the

 

retirement system as provided in section 205.

 

     (6) "Medical expenses" means expenses incurred by an HRA

 

member or his or her health reimbursement account dependents that

 

satisfy all of the following conditions:

 

     (a) The expenses are medical care expenses that would

 

otherwise qualify for a deduction under section 213 of the internal

 

revenue code, 26 USC 213, without regard to the income threshold in

 

section 213(a) of the internal revenue code, 26 USC 213(a).

 

     (b) The expenses have not been and will not be reimbursed by

 

any other source.

 

     (c) The expenses must have been incurred after the HRA member

 

becomes a former member or former qualified participant or after

 

the death of an HRA member.

 

     (d) The individual properly and timely substantiates the

 

expenses in a manner established by the retirement system.

 

     (7) (5) "Member" means a judge or state official who is

 

included in the membership of the retirement system as provided in

 

section 401.

 

     (8) (6) "Membership service" means service performed as a

 

member under this act or under the former judges retirement system

 

or former probate judges retirement system.

 

     Sec. 111. (1) "Vested former member" means a member who is

 

entitled to a deferred vested service retirement allowance under

 

section 502.

 

     (2) "Voluntary contributions" means voluntary amounts

 

contributed by an HRA member into a health reimbursement account.

 

To the extent required by applicable law, voluntary employee

 

contributions shall not be made through a salary reduction election

 

under a cafeteria plan pursuant to section 125 of the internal

 

revenue code, 26 USC 125.

 

     Sec. 214. (1) The reserve for health benefits is created. The

 

Except as provided in this section, the retirement system shall

 

deposit into the reserve for health benefits the member

 

contributions for health benefits required by section 305(1)(a),

 

amounts transferred pursuant to section 217(1), and accumulated

 

earnings on these amounts and contributions. The retirement system

 

shall disburse from the reserve for health benefits the premiums

 

for hospital and medical-surgical and sick care benefits as

 

required by sections 509 and 719 before making any disbursement

 

from the funding account.

 

     (2) On and after the date of the amendatory act that added

 

this subsection, the retirement system shall deposit into the

 

funding account the member contributions for health benefits

 

required by section 305(1)(a), amounts transferred pursuant to

 

section 217(1), and qualified participant contributions required by

 

section 714(6).

 

     Sec. 214a. (1) Following the date of the determination

 

described in subsection (11) and following the date of the election

 

made under subsection (4), the retirement system shall provide

 

postretirement medical benefits for eligible judges and their

 

health benefit dependents and postdeath medical benefits for health

 

benefit dependents who survive a deceased contributor. Medical

 

benefits shall be provided from a separate account established

 

under the retirement system pursuant to section 401(h) of the

 

United States internal revenue code, 26 USC 401.

 

     (2) A separate account, designated as the "medical benefit

 

account", shall be maintained within the reserve for health

 

benefits. The assets of the retirement system in excess of the

 

amounts then credited to the medical benefit account shall not be

 

used for providing medical benefits under this section. Except as

 

otherwise provided in this section, the assets of the retirement

 

system attributable to amounts then credited to the medical benefit

 

account shall not be used or diverted for any purpose other than

 

providing medical benefits.

 

     (3) A separate account, designated as the "medical benefit

 

administrative account", shall be maintained within the reserve for

 

health benefits. Administrative costs of maintaining the medical

 

benefit account shall be paid out of the medical benefit

 

administrative account. Eligible judges making contributions to the

 

medical benefit account consent as a condition of participation

 

that transfers may be made from the subaccounts of each contributor

 

to the medical benefit administrative account equal to no more than

 

25% of the earnings of funds on account in their respective

 

subaccounts.

 

     (4) Upon becoming a member of Tier 1 or a qualified

 

participant in Tier 2, and at such other times as the department

 

shall permit, an eligible judge may elect to become a contributor

 

and make contributions to the medical benefit account in an amount

 

not to exceed the maximum contribution then permitted under

 

subsection (5). Each eligible judge who is a member of Tier 1 or a

 

qualified participant in Tier 2 may elect to make contributions to

 

the medical benefit account during an election period of not less

 

than 90 days as determined by the retirement system. Within the

 

medical benefit account, the department shall maintain a subaccount

 

for each contributor that reflects all contributions made by or for

 

that contributor, adjusted for investment experience and payment of

 

medical benefits. The employer of the contributor shall pick up the

 

contributor's contributions in whole or in part and may require

 

that its contributions be derived from a reduction in the

 

contributor's cash salary. If the contributor's contributions are

 

picked up by the employer on a salary-reduction basis, the

 

contributor's election shall be irrevocable to the extent required

 

by section 401(h) of the United States internal revenue code, 26

 

USC 401. Contributions picked up under this subsection on a salary-

 

reduction basis are not included as gross taxable income of the

 

contributor. The value of medical benefits provided from a

 

contributor's subaccount shall not be included in the income of the

 

retired contributor or the contributor's health benefit dependents.

 

     (5) The benefits to be provided from the medical benefit

 

account, together with life insurance, if any, provided under the

 

retirement system, are intended to be subordinate to retirement

 

benefits under the retirement system. Accordingly, contributions in

 

calendar years after 1999 credited to a contributor's subaccount,

 

together with contributions, if any, that may be made to provide

 

life insurance for the contributor under the retirement system,

 

shall not exceed an aggregate amount equal to 1/3 of the

 

contributions, including employee contributions, made for those

 

years to provide a retirement allowance for the contributor under

 

Tier 1 or Tier 2 of the retirement system. For purposes of applying

 

a limitation established by this subsection, the retirement system

 

may rely on an actuarial certification prepared by the actuary,

 

demonstrating compliance, and reasonable actuarial assumptions

 

selected by the actuary shall apply for purposes of determining the

 

aggregate contributions for retirement allowances to be determined

 

under this subsection. The retirement system shall determine the

 

method, timing, and limits applicable to all contributors. In no

 

case shall a determination made by the retirement system exceed the

 

maximum provided by this subsection.

 

     (6) All payments or reimbursements of medical benefits shall

 

be charged against the balance of the retired contributor's

 

subaccount. Payments or reimbursements shall not be made after the

 

subaccount has been exhausted. Medical benefits to be provided from

 

the medical benefit account shall consist of any of the following

 

as applicable:

 

     (a) Payment of premiums for the retired contributor and the

 

contributor's health benefit dependents under the state health

 

plan, the state dental plan, and the state vision plan if the

 

contributor and dependents are enrolled in any of those plans.

 

     (b) Payment or reimbursement of premiums or other charges for

 

coverage of the retired contributor and the contributor's health

 

benefit dependents under any group health plan within the meaning

 

of section 5000(b)(1) of the United States internal revenue code,

 

26 USC 5000.

 

     (c) Payment or reimbursement of premiums or other charges to

 

obtain health insurance coverage within the meaning of section

 

9832(b)(1) of the United States internal revenue code, 26 USC 9832,

 

for the retired contributor and the contributor's health benefit

 

dependents.

 

     (d) Payment or reimbursement of expenses paid or incurred for

 

the medical care, as defined in section 213(d)(1) of the United

 

States internal revenue code, 26 USC 213, of the retired

 

contributor and the contributor's health benefit dependents.

 

     Payment or reimbursement of premiums, charges, and expenses

 

shall be made only upon presentation of proper documentary evidence

 

of amounts, dates of coverage or service, recipient of coverage or

 

service, and such other information as the department shall

 

require.

 

     (7) While a contributor or retired contributor remains alive,

 

the department shall comply with the contributor's written

 

directions in regard to the type of medical benefits to be provided

 

under this subsection and the allocation of the medical benefits

 

among the retired contributor and the contributor's health benefit

 

dependents if the directions comply with this subsection and the

 

requirements of the department in regard to the form and content of

 

the written directions. The department shall also afford each

 

contributor the opportunity to give written directions in regard to

 

the allocation of medical benefits to and among some or all of the

 

contributor's surviving health benefit dependents following the

 

contributor's death as designated on a beneficiary form developed

 

by the retirement system. Upon death of the contributor and while

 

funds remain in the contributor's subaccount, the department shall

 

observe the written directions in allocating medical benefits among

 

the contributor's surviving health benefit dependents, while giving

 

the dependents or their legal representatives a reasonable

 

opportunity to select the type of medical benefits to be provided.

 

In the absence of valid written directions from the contributor in

 

regard to the allocation of medical benefits following the

 

contributor's death, the department shall allocate funds remaining

 

in the contributor's subaccount to provide medical benefits to the

 

contributor's surviving health benefit dependents, until all funds

 

have been expended.

 

     (8) If there is a balance remaining in the subaccount of a

 

contributor or retired contributor following the deaths of the

 

contributor and all of the contributor's health benefit dependents,

 

then that balance shall be forfeited and distributed to the medical

 

benefit administrative account.

 

     (9) As used in this section:

 

     (a) "Contributor" means an eligible judge who has elected to

 

make contributions to the medical benefit account created under

 

this section.

 

     (b) "Eligible judge" means a judge of the circuit court, the

 

district court, or the probate court.

 

     (c) "Former member" means an individual who was a member and

 

who terminates employment upon which his or her membership is based

 

for any reason.

 

     (d) "Retired contributor" means a contributor who becomes a

 

former qualified participant and attains the benefit commencement

 

age, or who becomes a former member who either attains age 60 or

 

meets the membership requirements for a retirement allowance under

 

section 501(1).

 

     (10) Contributions shall not be picked up by this state

 

pursuant to this section until the department receives notification

 

from the United States internal revenue service that such

 

contributions will not be included as gross income of the

 

contributor.

 

     (11) This section does not apply until the department receives

 

notification from the United States internal revenue service that

 

the establishment of the medical benefit account under this section

 

does not cause the retirement system to be disqualified for tax

 

purposes.

 

     (12) A judge eligible to establish and maintain a medical

 

benefit account under this section may instead establish and

 

maintain a health reimbursement account.

 

     Sec. 214b. (1) Health reimbursement accounts shall be

 

established and maintained within the irrevocable trust established

 

pursuant to the public employee retirement health care funding act.

 

The health reimbursement accounts shall receive and hold the funds

 

collected under section 309. All health reimbursement accounts

 

shall be established in a manner that complies with all relevant

 

statutory provisions, regulatory provisions, and internal revenue

 

service rulings governing health reimbursement arrangements.

 

Deposits to health reimbursement accounts shall include employer

 

contributions and other permitted contributions, the deposit of

 

which is authorized by this act.

 

     (2) The retirement board is authorized to establish an

 

administrative and investment fee structure to be charged against

 

the health reimbursement accounts to defray the costs of

 

administering the health reimbursement accounts.

 

     (3) To the extent such activity will not result in immediate

 

taxation of the contributions to the health reimbursement accounts

 

of the HRA member under state and federal law, vested contributions

 

to a health reimbursement account and any investment income may be

 

distributed to a deceased HRA member's beneficiaries or estate if a

 

balance of funds exists in the deceased HRA member's health

 

reimbursement account and all medical expenses have been paid for

 

the deceased HRA member and all of his or her health reimbursement

 

account dependents.

 

     (4) Except as otherwise provided in this section, any assets

 

remaining in any individual health reimbursement account after all

 

payments for costs of eligible medical expenses for the individual

 

HRA member and his or her health reimbursement account dependents

 

have been paid shall be distributed to the funding account.

 

     Sec. 217. (1) A court fee fund is created in the state

 

treasury. The state treasurer shall deposit into the court fee fund

 

all money received from the executive secretary pursuant to section

 

304(4). The state treasurer shall, if funds remain in the court fee

 

fund after the transfer described in subsection (3), transmit a

 

portion of the money in the court fee fund, not exceeding

 

$2,200,000.00 in any fiscal year, to the court equity fund created

 

by section 151b of the revised judicature act of 1961, 1961 PA 236,

 

MCL 600.151b. If the court fee fund exceeds $2,200,000.00 in any

 

fiscal year and $2,200,000.00 is transmitted to the court equity

 

fund, an amount may be appropriated from the court fee fund for

 

operational expenses of trial courts. Operational expenses may

 

include the payment of salaries of trial court judges other than

 

judges of the district court. Any money remaining in the court fee

 

fund at the end of the fiscal year shall remain in the court fee

 

fund and shall not revert to the general fund. Amounts in the court

 

fee fund may be used for the appropriation authorized under section

 

315.

 

     (2) Notwithstanding any other provision of this act, if the

 

retirement board establishes an arrangement and fund described in

 

section 6 of the public employee retirement benefit preservation

 

protection act, 2002 PA 100, MCL 38.1686, the benefits that are

 

required to be paid from that fund shall, to the extent permitted

 

by applicable law, be paid from a portion of the money in the court

 

fee fund and any earnings on those amounts or other eligible funds.

 

The retirement board shall determine the amount of the employer

 

contributions or other eligible funds that shall be allocated to

 

that fund and deposit that amount in that fund.

 

     (3) The state treasurer shall, if funds remain in the court

 

fee fund after the transfer described in subsection (2), transmit a

 

portion of the money in the court fee fund and any earnings on

 

those amounts to the reserve for health benefits created by section

 

214 funding account to pay expected health care costs for the

 

subsequent fiscal year that are not covered as a result of employee

 

contributions under sections 305(1) and 714(6), and to pay, in an

 

amount not to exceed $100,000.00 in each fiscal year, any health

 

care costs not paid from the reserve for health benefits since

 

fiscal year 1996-1997.

 

     (4) This section applies unless the department receives

 

notification from the United States internal revenue service that

 

this section will cause the retirement system to be disqualified

 

for tax purposes under the internal revenue code.

 

     Sec. 305. (1) Each member, upon taking office and so long as

 

he or she remains in office, shall make contributions to the

 

retirement system according to the applicable plan member

 

classification as follows:

 

     (a) A plan 1 member or a plan 2 member shall contribute 5% of

 

the member's compensation. From this contribution, the retirement

 

system shall deposit an amount equal to 2.0% of the member's

 

compensation into the reserve for health benefits for hospital and

 

medical-surgical and sick care benefits as provided in section 509

 

funding account.

 

     (b) A plan 3a member, a plan 3b member, or a plan 5 member

 

shall contribute 3.5% of the member's compensation.

 

     (c) A plan 3c member, a plan 4 member, a plan 6 member, or a

 

plan 7 member shall contribute 7% of the member's compensation.

 

However, a plan 6 member shall not contribute more than $980.00

 

annually.

 

     (2) The retirement board shall determine the manner in which

 

member contributions are paid. Except as otherwise provided in this

 

section, the retirement system shall credit member contributions

 

when received to the reserve for member contributions.

 

     (3) Upon written notice from the executive secretary to the

 

state court administrator, the state treasurer shall withhold

 

payment of the amount due from the salary standardization payment

 

payable to a county or district control unit for member

 

contributions that are not received by the retirement system within

 

60 days after the due date.

 

     Sec. 309. (1) If an HRA member has an amount of salary reduced

 

for contribution to the health reimbursement account, the deduction

 

together with any other contributions under this section shall

 

promptly be credited to that HRA member's health reimbursement

 

account. To the extent permitted by applicable law, any mandatory

 

contribution shall be treated as a salary increase that has been

 

forgone by the employee and as stated in the revised judicature act

 

of 1961, 1961 PA 236, MCL 600.101 to 600.9947.

 

     (2) Beginning on the HRA effective date, a member or qualified

 

participant shall make a mandatory contribution equal to 2% of the

 

member's or qualified participant's compensation to his or her

 

health reimbursement account. This subsection does not apply to a

 

member or qualified participant who is first hired prior to the

 

effective date of the amendatory act that added this section and

 

who is covered by a local health benefit plan for retirees.

 

     (3) An HRA member may also make voluntary contributions to the

 

health reimbursement account in a whole percentage ranging from 1%

 

to 5% of the compensation paid to the HRA member, subject to any

 

limit provided under state or federal law.

 

     (4) The employer of an HRA member may contribute an additional

 

amount to the HRA member's health reimbursement account as

 

determined by the employer.

 

     (5) This section shall not apply to plan 1 members or plan 2

 

members.

 

     Sec. 310. (1) A member or qualified participant is 100% vested

 

in mandatory and voluntary contributions made to his or her health

 

reimbursement account.

 

     (2) A member or qualified participant is vested in employer

 

contributions made to his or her health reimbursement account

 

according to the following schedule:

 

     (a) Fifty percent vested after earning 2 years of service

 

under this act.

 

     (b) Seventy-five percent vested after earning 3 years of

 

service under this act.

 

     (c) One hundred percent vested after earning 4 years or more

 

of service under this act.

 

     (3) An HRA member shall have contractual rights to

 

reimbursement of medical expenses under this act to the extent

 

funds exist in his or her health reimbursement account.

 

     Sec. 311. (1) The retirement board shall establish a

 

separately written plan document which shall govern the terms and

 

conditions of the reimbursement of medical expenses from the health

 

reimbursement accounts in a manner that complies with all

 

applicable statutory provisions, regulatory provisions, and

 

internal revenue service rulings governing health reimbursement

 

arrangements.

 

     (2) Following termination of employment, reimbursements of

 

medical expenses shall be made to an HRA member or the health

 

reimbursement account dependents from the HRA member's health

 

reimbursement account, as appropriate, at least quarterly, until

 

the HRA member's health reimbursement account is exhausted.

 

     (3) Notwithstanding anything to the contrary, claims that are

 

incurred before the HRA member became entitled to receive

 

reimbursements under this act are not eligible medical expenses.

 

     Sec. 312. Except for medical expenses to be paid from amounts

 

within a health reimbursement account, nothing in this act shall be

 

construed to define or otherwise grant any right or privilege to

 

health care benefits or other postemployment benefits to any person

 

other than those health care benefits or other postemployment

 

benefits, rights, or privileges previously or already granted to

 

members and qualified participants and their dependents by this

 

act. This act is not intended to assure or deny to any existing or

 

future employee, HRA member, any of their health reimbursement

 

account dependents, or any other person any right of entitlement to

 

any health care benefit or other postemployment benefit or limit or

 

otherwise restrict the ability of this state or any employer to

 

modify or eliminate any existing or future health care benefit or

 

other postemployment benefit.

 

     Sec. 313. If a change or error in any records results in an

 

HRA member or his or her health reimbursement account dependents

 

paying into or receiving more or less than the HRA member or his or

 

her health reimbursement account dependents should have paid or

 

would have been entitled to receive had the records been correct,

 

the retirement board shall correct the error and, as far as

 

practicable, shall adjust the payment to correct for the change or

 

error.

 

     Sec. 314. Except as provided in section 214b(3), distribution

 

from the trusts will not be treated as taxable income to the HRA

 

members or their health reimbursement account dependents by this

 

state or any political subdivision of this state.

 

     Sec. 714. (1) This section is subject to the vesting

 

requirements of section 715.

 

     (2) A qualified participant's employer shall contribute to the

 

qualified participant's account in Tier 2 an amount equal to 4% of

 

the qualified participant's salary.

 

     (3) A qualified participant may periodically elect to

 

contribute up to 3% of his or her salary to his or her Tier 2

 

account. The qualified participant's employer shall make an

 

additional contribution to the qualified participant's Tier 2

 

account in an amount equal to the contribution made by the

 

qualified participant under this subsection.

 

     (4) A qualified participant may make contributions in addition

 

to contributions made under subsection (3) to his or her Tier 2

 

account as permitted by the state treasurer and the internal

 

revenue code. The qualified participant's employer shall not match

 

contributions made by the qualified participant under this

 

subsection.

 

     (5) A qualified participant who makes a written election under

 

section 701a may elect to contribute up to 6% of his or her salary

 

to his or her Tier 2 account. In lieu of employer contributions

 

under subsection (3), the qualified participant's employer shall

 

make an additional contribution to the qualified participant's Tier

 

2 account in an amount equal to the contribution made by the

 

qualified participant under this subsection. This subsection

 

applies for a period as determined by the department that equals

 

the time in which a Tier 1 member was not able to make

 

contributions to the Tier 2 plan because of the temporary

 

restraining order issued in the case of Michigan judges assn v

 

Treasurer of the State of Michigan, case no. 98-DT-72771-CV (Ed

 

Mi).

 

     (6) Beginning January 1, 2002 and ending on the effective date

 

of the amendatory act that added section 309, each qualified

 

participant who is a plan 1 member or a plan 2 member, upon taking

 

office and so long as he or she remains in office, shall contribute

 

2.0% of the qualified participant's compensation to the retirement

 

system. The retirement system shall deposit the contribution under

 

this subsection into the reserve for health benefits for hospital

 

and medical-surgical and sick care benefits as provided in section

 

719.

 

     (7) Beginning on the day after the effective date of the

 

amendatory act that added section 309, each qualified participant

 

who is a plan 1 member or plan 2 member, upon taking office and so

 

long as he or she remains in office, shall contribute 2.0% of the

 

qualified participant's compensation to the funding account.

 

     Enacting section 1. This amendatory act does not take effect

 

unless House Bill No. 4073 of the 95th Legislature is enacted into

 

law.