TSERS DIPNC Benefit Recipient FAQs The FAQs below are for members already receiving a disability benefit through the TSERS Disability Income of North Carolina. Q: What is the Disability Income Plan of North Carolina (DIPNC)? DIPNC is a plan which provides monthly replacement income to you in the form of short-term, preliminary long-term, extended short-term, and long-term disability benefits if you become disabled while you are a permanent employee under TSERS or ORP and you meet certain eligibility requirements. Your employer pays the cost for you to be covered under DIPNC. Q: What happens if I can't return to work when the short-term disability ends? If the Medical Board finds that your disability continues to be temporary, extended short-term disability benefits may be paid to you as a continuation of short-term or preliminary long-term disability benefits for as many as 365 days beyond the short-term period. If the Medical Board finds that your disability is likely to be permanent, you should apply for long-term disability provided you meet all eligibility requirements. Q: Is health coverage provided while I am receiving DIPNC benefits? While you are receiving DIPNC benefits, the employer’s portion of the cost of your State Health Plan coverage is provided at the same level as during active employment if you have at least 5 years of TSERS or ORP membership service. If you have less than 5 years, you may choose to enroll in State Health Plan (SHP) coverage, but you will have to pay the entire cost of your SHP coverage. Q: What are the DIPNC offsets? A “DIPNC offset” is a reduction in the amount of your DIPNC benefit based on the amount of another benefit that you are receiving or that you may be eligible to receive from certain other sources, which are listed below. State law requires the following offsets from your DIPNC benefits: DIPNC short-term and extended short-term disability benefits are reduced: By an amount equal to yourWorkers’ Compensation Benefits if based on any disability incurred during the same period of state employment as the disability for which you are receiving your DIPNC benefit By an amount equal to your Veterans Administration if based on the same disability as your DIPNC benefit By an amount equal to other federal disability benefits or certain North Carolina military benefits if based on the same disability as your DIPNC benefit By excess earnings from any type of public or private employment Exhaustion of leave or lump sum payouts By severance pay as a result of reduction-in-force from the State DIPNC long-term disability benefits are reduced: By an amount equal to your Workers’ Compensation Benefits if based on any disability incurred during the same period of state employment as the disability for which you are receiving your DIPNC benefit By an amount equal to your Veterans Administration disability benefit if based on the same disability as your DIPNC benefit By an amount equal to other federal disability benefits or certain North Carolina military benefits if based on the same disability as your DIPNC benefit By excess monthly earnings from any type of public or private employment Exhaustion of leave or lump sum payouts By severance pay as a result of reduction-in-force from the State By an amount equal to any Social Security (SS) disability or retirement benefits which you are receiving (excluding widow’s/widower’s benefit) or which you are entitled to receive, including age 62 SS retirement benefits For those members with 5 or more years of membership service as of July 31, 2007, your benefit will be offset by a hypothetical SS benefit, regardless of whether you are in receipt of SS benefit after 36 months from the effective date of your long-term disability. NOTE: If you had less than 5 years of TSERS or ORP membership service as of July 31, 2007, after the first 36 months of the long-term disability period, DIPNC benefits will end unless you receive an approval for SS disability benefits within 36 months of the beginning date of your long-term disability benefits. In order to be eligible for extended short-term disability or long-term disability benefits, you must first complete the entire 365 day short-term disability period of time. Example of a Long-Term Disability BenefitWith an Offset Annual Base Salary = $42,000 65% x $42,000 ÷ 12 = $2,275 per month (before offset) -$1,000 per month Social Security Disability Benefit offset = $1,275 per month long-term disability benefit Q. How are disability benefits paid? Your first monthly disability benefit will be mailed to you. Thereafter, we will direct deposit your monthly benefit into your bank account on the 25th day of each month. In December, your benefit will be deposited on the 23rd. If the pay date falls on a Saturday, Sunday or holiday, your deposit will be made on the last workday before the pay date. Direct deposit is fast, automatic and free. Q: What will happen to my DIPNC long-term benefit amount when I receive an increase in my SS benefit? State law requires your DIPNC long-term disability benefit to be offset dollar for dollar by the amount of your gross SS benefit, so when you receive an increase in your SS benefit, your DIPNC long-term disability benefit will be decreased by an equivalent amount. This change is usually made in your January long-term disability benefit. Q: Will I receive an increase in my DIPNC benefit when state employees receive a pay increase? The base rate of compensation on which DIPNC benefits are calculated may be increased by the TSERS Board of Trustees by the percentage across-the-board increase granted to general state employees by the General Assembly. The Retirement Systems Division will notify TSERS employers of the amount and effective date of any increase for short-term disability recipients, and will directly notify extended short-term and long-term disability recipients. Q: Can I work while receiving DIPNC benefits? How much can I earn? If you accept public or private employment while in receipt of DIPNC benefits, you will be limited as to the amount you may earn each month without affecting your DIPNC benefit as follows: While receiving DIPNC short-term and extended short-term benefits On a monthly basis, you may earn up to 50% of the monthly base rate of salary on which your monthly DIPNC benefit is calculated, without affecting your DIPNC benefit. If you earn more than this amount, your DIPNC short-term disability benefit will be reduced dollar-for-dollar by the amount of your excess earnings. While receiving DIPNC long-term benefits On a monthly basis, you may earn up to the difference between the monthly base rate of salary on which your monthly DIPNC long-term disability benefit is calculated and the amount of your monthly DIPNC benefit after any required offsets, without affecting your DIPNC long-term benefit. If you earn more than this amount, your DIPNC benefit will be reduced dollar-for-dollar by the amount of your excess earnings. You should contact the Retirement Systems Division for the monthly amount you are allowed to earn as this amount is subject to change yearly. Q: What happens if I exceed my DIPNC earnable allowance limit? If you exceed your earnable allowance limit, the Retirement Systems Division will calculate the amount of your overpayment and inform you in writing of your overpayment amount and your repayment options to reimburse the Retirement Systems Division. Q: Why do I have to complete a DIPNC Statement of Income (SOI) form every year? State law requires each DIPNC long-term disability benefit recipient to complete and submit a Statement of Income form to report earnings, employment, and/or benefits from other certain sources each year to the Retirement Systems Division. If you do not comply by submitting a SOI form within 120 days of the request, your DIPNC benefit, including health coverage through the SHP may be suspended until the information is provided, and if the requested information is not provided after an additional 180 days, your DIPNC benefit, including health coverage through the SHP may be terminated. Q: Once I have started receiving DIPNC benefits, how often will the Medical Board review my disability account and request a re-examination? The frequency of your re-examinations will be determined by the Medical Board depending on your disabling condition. Q: When will I be notified of my disability re-examination? What happens if I miss my re-examination information submission deadline date? The Retirement Systems Division will send you the re-examination forms and notification 120 days prior to your re-examination date. After 60 days have passed, you will be sent a reminder notice and a final notice will be sent 30 days before your re-examination date which will inform you of the date your disability benefit, including health coverage through the SHP will be suspended if you have not submitted the requested information. Upon suspension, your disability benefit will not be reinstated until you have submitted the requested information and have been re-approved by the Medical Board. If you do not provide the requested information within one year, your DIPNC benefit, including health coverage through the SHP may be terminated. If your DIPNC benefit is suspended and later reinstated, your SHP coverage may be reinstated retroactively. However, as a result, you may experience a lapse in your health coverage which means you may not have health coverage for a month or more. Q: How long will I receive DIPNC long-term disability benefits? Your long-term disability benefits will end: if a licensed physician does not continue to certify your disability when a re-examination is requested by the Medical Board in most cases, if you return to work as a contributing TSERS or ORP member if you did not have 5 years of service as of July 31, 2007 and were denied or did not get approval for Social Security disability benefits, after receiving 36 months of long-term disability payments when you become eligible for an unreduced service retirement benefit (see next question) if you do not provide the annual Statement of Income within 120 days of the request, your DIPNC benefit, including health coverage through the SHP, may be suspended until the information is provided, and if the requested information is not provided after an additional 180 days, your DIPNC benefit including health coverage through the State Health Plan may be terminated. If you do not provide the requested information for re-examination within one year of the request, your DIPNC benefit including health coverage through the State Health Plan may be terminated. at your death Q: What happens when I become eligible for service retirement? While you are receiving DIPNC benefits, if you are a TSERS member, you earn TSERS creditable service for each month you are eligible for and paid a DIPNC benefit. Your TSERS membership service is added to your TSERS creditable service to determine your eligibility date for unreduced service retirement benefits. Approximately 90 to 120 days before you reach the eligibility requirements for an unreduced service retirement benefit, the Retirement System will send you a letter notifying you that you are being converted from long-term disability to service retirement, and explaining what forms you must complete in order to begin receiving your service retirement benefits. Upon submission of your completed service retirement paperwork to the Retirement System, your monthly service retirement benefit will be established, and you will no longer be subject to medical re-examinations, DIPNC offsets or DIPNC earnings limitations. Also, you will no longer have to submit an annual Statement of Income form. However, you will be subject to the return-to-work laws that apply to retirees who are receiving TSERS service retirement benefits (see guidance on Return-to-Work). Q: What payments will my beneficiary(ies) be entitled to receive if I die while in receipt of DIPNC benefits? Death Benefit The death benefit for active TSERS employees is payable to your eligible death benefit beneficiary(ies) living at the time of your death if you die while in receipt of DIPNC benefits. This lump sum payment is equal to the highest 12 months of salary in the 24 months preceding your death or the compensation used in calculating your DIPNC benefits, with a minimum payment amount of $25,000 and a maximum payment of $50,000. If you need to change your beneficiary(ies) for the Death Benefit please log into ORBIT, select "Maintain Beneficiaries" from the main menu, and click "Edit." Return of Contributions A lump sum return of your retirement contributions is also payable to your eligible beneficiary(ies) for the return of contributions living at the time of your death if you die while in receipt of DIPNC benefits. If you need to change your beneficiary(ies) for the Return of Contributions, use the Form 2RC and submit it to the Retirement Systems Division for processing. Survivor’s Alternate Benefit (SAB) Instead of the return of your retirement contributions, the SAB may be payable. If you have just one eligible beneficiary for the return of contributions living at the time of your death, and you die while in receipt of DIPNC benefits after completing 20 years of creditable service (including non-contributory time for DIPNC, but not including credit for unused sick leave) regardless of age, or, if you are a TSERS general employee, reaching age 60 with five years of TSERS membership service [or, if you are a TSERS LEO, reaching age 50 with 15 years of creditable service as an LEO or reaching age 55 with 5 years of creditable service as an LEO], this beneficiary may choose to receive a lifetime monthly SAB. The monthly SAB equals the same amount you would have been entitled to receive under Option 2 had you survived and retired on the first of the month following your death. Since the SAB is payable instead of the return of your contributions, if you need to change your beneficiary for the Return of Contributions (and SAB, if applicable), use the Form 2RC and submit it to the Retirement Systems Division for processing. What taxes are paid on a disability benefit? Federal Income Tax Disability benefits from the Disability Income Plan of North Carolina (DIPNC) are subject to federal income tax. Each year by January 31, we are required to issue a Form W-2 (Wage and Tax Statement) rather than a 1099-R since disability benefits are considered a “Sick Pay Plan” for federal tax purposes. However, the reportable amount does not represent earned income for work performed by you. The Form W-2 shows your total gross amount of the DIPNC benefit for the calendar year, the amount of tax withheld (if any), and other related information. North Carolina Income Tax If you are a North Carolina resident and have maintained five or more years of service as of August 12, 1989, your benefits are not subject to North Carolina income tax. If you do not have five years as of August 12, 1989, the taxable portion of your benefit is subject to North Carolina income tax. We also send copies of your Form W-2 to the Internal Revenue Service and the North Carolina Department of Revenue. Therefore, you should report your benefits on your federal and North Carolina tax returns regardless of whether you owe any income tax. Q: Who can I contact to determine the status of my disability application or if I have other questions about DIPNC benefits? If you have applied for DIPNC short-term or preliminary long-term benefits, please contact your employer for information on the status of when these benefits will begin since they will be paying these benefits. If you have applied for DIPNC extended short-term or long-term benefits, or if you have any other questions about DIPNC benefits, you may contact the Retirement Systems Division at the number and email below. Disclaimer The availability and amount of all benefits you might be eligible to receive is governed by Retirement Systems law. The information provided in these “Frequently Asked Questions” cannot alter, modify or otherwise change the controlling Retirement System law or other governing legal documents in any way, nor can any right accrue to you by reason of any information provided or omission of information provided herein. In the event of a conflict between this information and Retirement Systems law, Retirement Systems law governs.