Honorable J. Edward Caldwell
Office of the Comptroller
55 Elm Street
Hartford, CT 06106
Dear Mr. Caldwell:
This office has been asked to respond to two questions concerning life insurance coverage for retirees. Specifically, you have asked (1) whether the letter sent by the Comptroller’s Office to retirees provides adequate notice to such retirees of the reduction in life insurance coverage that occurs upon retirement and (2) what benefit amount would a retiree receive who dies prior to receipt of the aforementioned letter from the Comptroller’s Office. These questions were prompted by the large number of employees who retired under the State’s recent early retirement program.
Life insurance for State employees and retirees is governed by Conn. Gen. Stat. e 5-257. Subsection (d) of e 5-257 provides in part:
The insurance of any employee insured under this section shall cease on termination of employment … subject to any conversion privilege provided in the group life insurance policy or policies. Notwithstanding anything to the contrary in this section, the amounts of life insurance of insured employees retired in accordance with any retirement plan for state employees shall be as follows: … [specific reduced coverage provisions omitted]. In no case shall a retired employee be required to contribute to the cost of any such reduced insurance.
Thus, under the provisions of e5-257, the amount of insurance provided a retiree by the group policy is lower than the amount provided the individual while the individual was employed by the State. However, as allowed by e5-257, the State’s group life insurance policy with Aetna provides a conversion privilege. Under the conversion privilege a retired state employee may elect to convert his group policy to an individual policy and purchase additional insurance coverage up to the amount of insurance coverage the retiree had under the group policy while an employee of the state. The conversion privilege must be exercised within 31 days of retirement, and during that 31 day period, if an employee dies, his beneficiary is entitled to receive the maximum benefit possible as if the maximum conversion privilege had been exercised.
In response to your first question, there is no requirement in the State Personnel Act, state insurance laws, or in the policy that requires the State to provide notice to retirees of the reduction in life insurance coverage. However, the text of e 5-257(d) provides employees with notice that their insurance coverage will be reduced upon retirement. In addition, employees are given a booklet explaining their benefits when they begin employment with the State, and this booklet includes information on reduced coverage upon retirement and of the conversion privilege. However, since employees may not keep such booklets over many years of employment, sending letters to retirees reminding them of the reduced coverage and the conversion privilege is a prudent practice.
As there is no requirement that the letters be sent, there is also no prescribed time frame for sending them. However, for the letters to provide a meaningful reminder of the conversion privilege, they should be sent before the 31 day period expires for exercising the conversion privilege. It is worth noting that the Aetna administration manual provided to State personnel officers indicates that each agency should have forms relating to the conversion privilege. Agencies should be reminded to inform employees of the reduction in coverage and conversion privilege when discussing retirement with employees.
In response to your second question, the coverage amount applicable to an employee who dies is not dependent upon receipt of the letter from the Comptroller’s Office. Rather, it is governed by e 5-257 and the policy. As indicated previously, an employee’s coverage is reduced immediately upon retirement. However, an employee who dies within 31 days of retirement is entitled to a benefit equal to the reduced coverage plus the maximum amount he was eligible to purchase under the conversion privilege. In effect, the policy provides coverage to such employees as if they had exercised the conversion privilege. After 31 days, if an employee has not exercised the privilege, upon death he is entitled to only the reduced amount of coverage.
I trust this is responsive to your request for advice. Please feel free to contact me if you have any further questions.
Very truly yours,
CLARINE NARDI RIDDLE
Shelagh P. McClure
Assistant Attorney General