As we enter this new fiscal year without a budget in place, my office is hearing from state employees who are concerned about how things will change for them.The following Q&As were designed to help answer any questions.
Q. Will an employee's health, dental or life insurance be affected?
A. No. Group insurance coverage during a budget situation will not be impacted. If paychecks are delayed, and as long as the employee continues to work and earn a paycheck, insurance premiums will be taken accordingly. The missed payroll deductions will be taken once paychecks are issued.
Q. What will happen to an employee's contributions to any flexible spending accounts (i.e., MCAP, DCAP) during the budget situation?
Ø Employees enrolled in MCAP will not be impacted. ConnectYourCare debit cards will continue to work. If the employee continues to work and earn a paycheck, deductions should be taken accordingly. If MCAP deductions are missed, they must be made up when the budget situation is resolved.
Ø Employees enrolled in DCAP may be impacted as reimbursements are limited to the available account balance contained in their DCAP account. If the employee continues to work and earn a paycheck, and once all payroll deductions are deposited into the DCAP account, reimbursements can be made for eligible expenses up to the available account balance.
Q. What will happen to an employee's Commuter Savings Program benefit?
A. Employees enrolled in the Commuter Savings Program will continue to receive the benefit under this program. Employees will owe any underpaid amount upon their return to payroll.
Workers' Compensation Program
Q. Will an employee's Workers' Compensation benefits be affected?
A. No. In the event of a budget situation, Temporary Total Disability (TTD), Permanent Total Disability (PTD) and survivor death benefit payments under the Workers' Compensation Act will continue through July. Work-related injuries should continue to be reported through the procedures in place today.
Deferred Compensation Program
Q. What will happen to an employee's Deferred Compensation contributions during the budget situation?
A. As long as the employee continues to work and earn a paycheck, payroll deductions for Deferred Compensation should be taken accordingly. Deferred Compensation contributions can only be made through payroll deduction. The employee cannot deposit money directly to his or her fund to catch-up the contributions.
Q. If an individual is currently receiving a distribution from their Deferred Compensation account, will that distribution continue during the budget situation?
A. Yes. Current distributions and changes to distribution amounts will continue to be processed. To make any changes in distribution, call T. Rowe Price at 1-888-457-5770.
Q. Will hardship distributions/loans from an employee's Deferred Compensation account be available during the budget situation?
A. A loan provision is available at any time and allows a participant to have one outstanding loan and borrow a minimum of $1,000 up to a maximum of $50,000 or 50% of their account balance over a five year period. The interest you pay goes back to your account along with the principal amount each month as you repay the loan through Automatic Clearing House (ACH) deductions from your bank. Employees would likely not qualify for a hardship distribution as they will be made whole of any missed payrolls when the budget situation ends.
Q. How do I borrow from my Deferred Compensation account?
A. To apply for a loan from your account over the phone, call T. Rowe Price at 1-888-457-5770 to speak to a Representative. There is a $75 processing fee and you will need to supply bank routing and account information for your checking/savings account numbers to set up the automatic ACH deduction. Participants are allowed one outstanding loan at a time. You may repay the full loan balance amount at any time through the same phone number at T. Rowe Price.
State Employee Compensation
Q. What options exist if certain parties take action to temporarily block pay for state employees?
A. State employees will be paid for their work. If certain parties take action to temporarily block pay for state employees, there may be an opportunity for employees to get bridge loans from local financial institutions. Credit Union 1, for example, has already agreed to offer no-interest loans for qualifying members of the credit union should salary payments for state employees be delayed. To be eligible to receive 0% interest loans from Credit Union 1, participants must have been members on or before May 1, 2015. Employees who have become members of Credit Union 1 since May 1, 2015, can apply for a loan, subject to normal criteria, rates and terms.