PA 75 and 3% Healthcare Contributions Repayment Information

On January 19, 2018, eligible (current and former) staff members received an email from the Michigan Office of Retirement Services (“ORS”) regarding the PA 75 and 3% Healthcare Refund that they have been court ordered to pay eligible persons (“ORS Refund”). If you did not receive an email and you believe you are eligible for the ORS Refund, then you should contact ORS to ensure they have your updated contact information.

The refunds are being processed the same as the original deductions – through the eligible staff members’ employer. Because the deductions occurred during the operations of the old district- Detroit Public Schools (“DPS”), the funds will be refunded through DPS (old district) and not the new district, Detroit Public Schools Community District (“DPSCD”).

DPS received the funds from ORS to process the refunds to eligible staff. The district will process approximately 14,000 refunds to current and former employees. Given the volume of refunds, the district is requesting that you follow the steps outlined in the attached REFUND PROCESS to ensure that you obtain your ORS Refund in a timely and secure manner.

Timing of DPS’ Payout of ORS Refund

Eligible staff members will receive a 3% healthcare refund and interest payments from DPS, and not the successor district: Detroit Public Schools Community District (DPSCD). Because the refund monies were earned as income in the course of employment those who obtain the refund will receive a W-2 from DPS related to this refund in January 2019.

Detroit Public Schools is planning to issue the ORS Refund payments on March 19th to current employees and former employees who have verified their mailing address. Follow the steps outlined in the attached REFUND PROCESS to verify or update your mailing address.

Additional Questions

Included with this document is a list of frequently asked questions and answers prepared by DPSCD. If your question is not answered here, please visit the ORS website or contact ORS directly with specific questions about your refund.

The ORS website is http://www.michigan.gov/orsschools/0,4653,7-206-36609-456119–,00.html.

Additional information specific to the refund will be posted on the DPSCD website, http://detroitk12.org/healthcarerefund.

 

Frequently Asked Questions

Why is there a refund of the 3% employee withholding for healthcare?

The Michigan Supreme Court issued a unanimous opinion upholding the Appeals Court ruling that Public Act 75 of 2010, which was in effect from July 1, 2010 through September 3rd, 2012, was unconstitutional and that the 3% employee withholdings mandated by Act 75 must be returned to public school employees. The amount that was withheld from employees while Act 75 was in effect will be refunded with interest.

What employees are affected by the 3% Healthcare Contributions?

All employees who were reported by their employer to ORS between July 2010 and September 2012, will have their 3% healthcare contributions during that period returned to the reporting unit who originally reported the amounts for refunding.

According to ORS the healthcare refund will only be based on payroll pay dates that fell between 7/1/2010 and 9/3/2012. For Detroit Public Schools the pay date of 9/4/2012, for the work period 8/11/2012 – 8/24/2012 is not included in the refund. The 3% healthcare contributions starting 8/11/2012 were deposited into the appropriate accounts, depending on the member’s election. For additional questions, please contact Michigan Office of Retirement Services.

What about healthcare deductions made between September 4, 2012 and February 1, 2013?

The period for which contribution refunds is due ends on September 3, 2012 because PA 300 of 2012—the law that provided members a healthcare benefit election—took effect on September 4, 2012. For the period between the law’s effective date and its implementation (9/4/2012 – 2/1/2013), healthcare contributions were deposited into the appropriate accounts, depending on the member’s election. For members who elected the Personal Healthcare Fund, contributions were deposited into their 401(k) accounts with Voya Financial® in February 2013. ORS sent a letter dated February 26, 2013 with the estimated amount of the transfer. For those who elected the Premium Subsidy option, contributions were deposited in the Retiree Healthcare Fund, to fund that benefit upon members’ retirement. Please contact ORS with any specific questions regarding these funds.

Is interest included on these contributions?

Yes, interest will be included with the contributions when they are returned. The courts directed the administration to maintain the funds in a capital preservation escrow account, which accrues a very minimal amount of interest. ORS and not DPS will determine the interest amount for each refund, unless otherwise necessary.

When will I get my 3% healthcare refund?

Detroit Public Schools is planning to issue refund checks on March 19, 2018 to current employees and former employees who have verified their mailing address.

I am a current employee, how will I get my refund?

Current employees will be paid through an off-cycle payment using their standard payment method. The payments will be paid through Detroit Public Schools.

I am a former employee, how will I get my refund?

Former employees who are receiving a pension check from the Michigan Office of Retirement Services will receive a check from Detroit Public Schools.

Former employees who are not receiving a pension check will need to verify their home address between February 5 and February 28, 2018 using the following link. If their address is verified, then they will be issued a check on March 19, 2018 to the address indicated.

Former employees who do not verify their address by February 28, 2018, will be required to pick up their check from the Fisher building.

The former employee is now deceased, who gets their refund?

If the estate of the former employee is still open, then the refund will be processed to the estate. If the estate is closed, Michigan Law dictates order of heirs = first, surviving spouse, then children, then parents, then siblings.

I am a former employee, and I want to be paid through Direct Deposit or ALine Card.

All former employees will receive their ORS Refund and interest payment in a check issued by Detroit Public Schools. The district is not able to accommodate requests for direct deposit or ALine cards.

I am a former employee, how do I verify my mailing address?

Former employees will need to log into the Self-Service portal. They will then need to confirm or update the address that is on file. See the directions for REFUND PROCESS.

I already submitted an updated mailing address; do I have to verify my information in PeopleSoft.

We are asking all former employees who are not receiving a pension check from ORS to verify and if necessary update their address through the PeopleSoft Self-Service portal between February 5 and February 28, 2018.

Why are the refunds being paid from Detroit Public Schools?

Since the deductions occurred during the operations of DPS (old district), ORS transferred the funds to the old district. Therefore, the repayments will be made to eligible staff through DPS and not DPSCD.

Will my refund be taxed?

The 3% healthcare deductions were made pre-tax; therefore, the refunds are now considered income and subject to taxes. The interest earned on the refund is not taxable. This tax rate will be applied to only the refund portion and not the interest. The interest will not be taxed.

How will the new tax rates impact my refund?

The 2018 tax rate for married individuals is 0% for earnings less than $11,500. For single individuals the tax rate is 0% for earnings less than $3,700 and then 10% between $3,700 – $13,225.

Do I need to submit a new W-4?

Former Employees – No, the district retained your last W-4 on file. If you would like to update your W-4 you can do this through the Self-Service Portal. The district will not be able to accommodate in paper requests to change W-4s.

Current Employees – No, the district will use your current W-4 on file with DPSCD.

I did not receive an email regarding my refund.

Please contact the Michigan Office of Retirement Services to ensure it has your updated contact information and to get the email resent to you. The district does not have this information and cannot send an email.

Who do I contact if I have a question about my refund?

If you have a question about your ORS Refund amount or the interest, please contact ORS. The district was not involved in the calculation of the refunds or the interest payments and cannot answer any questions. If you have a question about the timeline for refund or a question about verification process, please email the district at healthcare.refund@detroitk12.org.

What happens if the check is not picked up?

The district will hold refund checks for one calendar year, and then return them to the Michigan State Unclaimed Properties Department. After one-year former employees will need to collect their refund checks from the Michigan State Unclaimed Properties Department.

If I have questions who do I contact at Detroit Public Schools Community District?

Send your questions regarding Timing of Refund, Verification Process, or Taxes to healthcare.refund@detroitk12.org and a DPSCD staff member will be in touch.

Where do I get information from the Michigan Office of Retirement Services?

To obtain contact information or get more information you can visit the ORS website.

 

 

Refund Process

Below is the process for how the district will process the refunds to current and former employees.

Current Employees (Including Retirees)

  1. Your refund and interest payment will be processed through an off-cycle payment on March 19, 2018 using your standard payment method. The payment will be made to you from Detroit Public Schools (old District).

Former Employees (Receiving a Pension Check from ORS)

  1. The district received your updated mailing address from ORS. Your refund and interest payment will be issued as a check on March 19, 2018 and mailed to the address we have on file from ORS.
  2. If you wish to update your mailing address, please follow the steps below for Former Employees (Not receiving a Pension Check from ORS) and update your mailing address by February 28, 2018.

Former Employees (Not receiving a Pension Check from ORS)

  1. To ensure secure processing of refunds, the district needs to verify your mailing address before mailing the check.
  2. Former employees will have between February 5 and February 28, 2018 to log into PeopleSoft Self-Service and verify or update their mailing address. Follow the directions at the conclusion of this document under Self-Service Portal Directions to log into the Self-Service Portal.
  3. Former employees who do not verify or update their mailing address by February 28, 2018 must pick up their check in person. Checks will be valid for 90 days.
  4. For security purposes no checks will be mailed to former employees (not receiving a pension check from ORS) who have not verified their mailing address.

Deceased Former Employees

If the estate of the former employee is still open, then the refund will be processed to the estate. If the estate is closed, Michigan Law dictates order of heirs = first, surviving spouse, then children, then parents, then siblings.

  1. Heirs will need to provide documentation that former employee is deceased, and they are the next living heir, based on the order outlined above.
  2. Please contact the district at refund@detroitk12.org to get more specifics on the process.

 

 

Peoplesoft Self-Service Portal Directions

In order to verify or update your home address, you will need to log into Peoplesoft. All former employees not currently receiving a pension are required to verify their home address through Peoplesoft Self-Service by February 28th in order to have their checks mailed to them.

Former Employees Peoplesoft Login

On February 5, former employees will be sent an email to the e-mail address provided by ORS with instructions regarding access to Peoplesoft Self-Service. The user ID and Password needed to log in to PeopleSoft Self-Service will be provided in the e-mail. In order to login, you must use the user name and password from the email.

Please contact the IT Help Desk at (313) 576-0100 if you are unable to login.

 

Verify or Update your Home Address

To Change your home address, from the Peoplesoft HR/Payroll main page,

  1. Log into Peoplesoft Self-Service- https://hcm.detroitk12.org
    1. Click Main Menu
    2. Select Self-Service
    3. Select Personal Information
    4. Select Home and Mailing Address
  2. This will display the Home and Mailing Address
  3. If you wish to change your home address, then select the change icon next to the address you wish to change.
  4. In the page that displays, provide the new address, click Save when finished.
  5. Log out of Peoplesoft.