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Chapter 0039 - 572R - H Ver of HB2089
House Engrossed
ASRS; premium payment
State of Arizona
House of Representatives
Fifty-seventh Legislature
Second Regular Session
2026
CHAPTER 39
HOUSE BILL 2089
AN
ACT
Amending section 38-783, Arizona
Revised Statutes; relating to the Arizona state retirement system.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 38-783, Arizona Revised
Statutes, is amended to read:
START_STATUTE
38-783.
Retired members; dependents; health insurance; premium payment;
separate account; definitions
A. Subject to subsections G, H and I of this
section, the board shall pay from ASRS assets part of the single coverage
premium of any health and accident insurance for each retired member,
contingent annuitant or member with a disability of ASRS if the member elects
to participate in the coverage provided by ASRS or section 38-651.01 or
elects to participate in a health and accident insurance program provided or
administered by an employer or paid for, in whole or in part, by an employer to
an insurer. A contingent annuitant must be receiving a monthly
retirement benefit from ASRS in order to obtain any premium payment provided by
this section.� The board shall pay:
1. Up to $150 per month for a member of ASRS who is
not eligible for medicare if the retired member or member with a disability has
ten or more years of credited service.
2. Up to $100 per month for each member of ASRS who
is eligible for medicare if the retired member or member with a disability has
ten or more years of credited service.
B. Subject to subsections G, H and I of this
section, the board shall pay from ASRS assets part of the family coverage
premium of any health and accident insurance for a retired member, contingent
annuitant or member with a disability of ASRS who elects family coverage and
who otherwise qualifies for payment pursuant to subsection A of this section.�
If a member of ASRS and the member's spouse are both either retired or have
disabilities under ASRS and apply for family coverage, the member who elects
family coverage is entitled to receive the payments under this section as if
they were both applying under a single coverage premium unless the payment
under this section for family coverage is greater.� Payment under this
subsection is in the following amounts:
1. Up to $260 per month if the member of ASRS and
one or more dependents are not eligible for medicare.
2. Up to $170 per month if the member of ASRS and
one or more dependents are eligible for medicare.
3. Up to $215 per month if either:
(a) The member of ASRS is not eligible for medicare
and one or more dependents are eligible for medicare.
(b) The member of ASRS is eligible for medicare and
one or more dependents are not eligible for medicare.
C. In addition each retired member, contingent
annuitant or member with a disability of ASRS with less than ten years of
credited service and a dependent of such a retired member, contingent annuitant
or member with a disability who elects to participate in the coverage provided
by ASRS or section 38-651.01 or who elects to participate in a health and
accident insurance program provided or administered by an employer or paid for,
in whole or in part, by an employer to an insurer is entitled to receive a proportion
of the full benefit prescribed by subsection A or B of this section according
to the following schedule:
1. 9.0 to 9.9 years of credited service, ninety
percent.
2. 8.0 to 8.9 years of credited service, eighty
percent.
3. 7.0 to 7.9 years of credited service, seventy
percent.
4. 6.0 to 6.9 years of credited service, sixty
percent.
5. 5.0 to 5.9 years of credited service, fifty
percent.
6. Those with less than five years of credited
service do not qualify for the benefit.
D. The board shall not pay more than the amount
prescribed in this section for a member of ASRS.
E. Notwithstanding subsections A, B and C of this
section, for a member who retires on or after August 2, 2012, the board shall
not make a payment under this section to a retired member, contingent annuitant
or member with a disability who is enrolled in an employer's active employee
group health and accident insurance program either as the insured or as a
dependent, except that if the retired member, contingent annuitant or member
with a disability is enrolled as a dependent and the premium paid to the employer's
active employee group health and accident insurance program is not subsidized
by the employer, the retired member, contingent annuitant or member with a
disability is entitled to receive the amount provided in subsection A of this
section.
F. The board shall establish a separate account that
consists of the benefits provided by this section.� The board shall not use or
divert any part of the corpus or income of the account for any purpose other
than the provision of and the cost of administering the benefits under this
section or the self-insurance program pursuant to section 38-782
unless the liabilities of ASRS to provide the benefits are
satisfied. If the liabilities of ASRS to provide the benefits
described in this section and section 38-782 are satisfied, the board
shall return any amount remaining in the account to the employer.
G. Payment of the benefits provided by this
section is subject to the following conditions:
1. The payment of the benefits is subordinate to the
payment of retirement benefits payable by ASRS.
2. The total of contributions for the benefits and
actual contributions for life insurance protection, if any, shall not exceed
twenty-five percent of the total actual employer and employee
contributions to ASRS, less contributions to fund past service credits, after
the day the account is established.
3. The board shall deposit the benefits provided by
this section in the account.
4. The contributions by the employer to the account
shall be reasonable and ascertainable.
H. A member who elects to receive a retirement
benefit pursuant to section 38-760, subsection B, paragraph 1 may elect
at the time of retirement an optional form of health and accident insurance
premium benefit payment pursuant to this subsection as follows:
1. The optional premium benefit payment shall be an
amount prescribed by subsection A, B or C of this section that is actuarially
reduced to the retiring member for life. The amount of the optional
premium benefit payment shall be the actuarial equivalent of the premium
benefit payment to which the retired member would otherwise be entitled. The
election in a manner prescribed by the board shall name the contingent
annuitant and may be revoked at any time before the retiring member's effective
date of retirement. At any time after benefits have commenced, the
member may name a different contingent annuitant or rescind the election by
written notice to the board as follows:
(a) If the retired member names a different
contingent annuitant, the optional premium benefit payment shall be adjusted to
the actuarial equivalent of the original premium benefit payment based on the
age of the new contingent annuitant.� The adjustment shall include all
postretirement increases or decreases in amounts prescribed by subsection A, B
or C of this section that are authorized by law after the retired member's date
of retirement. Payment of this adjusted premium benefit payment
shall continue under the provisions of the optional premium benefit payment
previously elected by the retired member. A retired member cannot
name a different contingent annuitant if the retired member has at any time
rescinded the optional form of health and accident insurance premium benefit
payment.
(b) If the retired member rescinds the election, the
retired member shall thereafter receive the premium benefit payment that the
retired member would otherwise be entitled to receive if the retired member had
not elected the optional premium benefit payment, including all postretirement
increases or decreases in amounts prescribed by subsection A, B or C of this
section that are authorized by law after the member's date of
retirement. The increased benefit payment shall continue during the
remainder of the retired member's lifetime.� The decision to rescind shall be
irrevocable.
2. If, at the time of the retired member's death:
(a) The retired member was receiving a reduced
premium benefit payment based on an amount prescribed in subsection B or C of
this section and the contingent annuitant is eligible for family health and
accident insurance coverage, the contingent annuitant is entitled to receive a
premium benefit payment based on an amount prescribed in subsection B or C of
this section times the reduction factor applied to the retired member's premium
benefit payment times the joint and survivor option reduction factor elected by
the retired member at the time of retirement pursuant to section 38-760,
subsection B, paragraph 1.
(b) The retired member was receiving a reduced
premium benefit payment based on an amount prescribed in subsection A or C of
this section and the contingent annuitant is eligible for single health and
accident insurance coverage, the contingent annuitant is entitled to receive a
premium benefit payment based on an amount prescribed in subsection A or C of
this section times the reduction factor applied to the retired member's premium
benefit payment times the joint and survivor option reduction factor elected by
the retired member at the time of retirement pursuant to section 38-760,
subsection B, paragraph 1.
(c) The retired member was receiving a reduced
premium benefit payment based on an amount prescribed in subsection B or C of
this section and the contingent annuitant is not eligible for family health and
accident insurance coverage, the contingent annuitant is entitled to receive a
premium benefit payment based on an amount prescribed in subsection A or C of
this section times the reduction factor applied to the retired member's premium
benefit payment times the joint and survivor option reduction factor elected by
the retired member at the time of retirement pursuant to section 38-760,
subsection B, paragraph 1.
I. A member who elects to receive a retirement
benefit pursuant to section 38-760, subsection B, paragraph 2 may elect
at the time of retirement an optional form of health and accident insurance
premium benefit payment pursuant to this subsection as follows:
1. The optional premium benefit payment shall be an
amount prescribed by subsection A, B or C of this section that is actuarially
reduced with payments for five, ten or fifteen years that are not dependent on
the continued lifetime of the retired member but whose payments continue for
the retired member's lifetime beyond the five, ten or fifteen year period.� The
election in a manner prescribed by the board shall name one contingent
annuitant to receive the optional premium benefit payment and may be revoked at
any time before the retiring member's effective date of
retirement. At any time after benefits have commenced, the member
may name a different contingent annuitant or rescind the election by written
notice to the board.� If the retired member rescinds the election, the retired
member shall thereafter receive the premium benefit payment that the retired
member would otherwise be entitled to receive if the retired member had not
elected the optional premium benefit payment, including all postretirement
increases or decreases in amounts prescribed by subsection A, B or C of this
section that are authorized by law after the member's date of
retirement. The increased benefit payment shall continue during the
remainder of the retired member's lifetime.� The decision to rescind shall be
irrevocable.
2. If, at the time of
the retired member's death:
(a) The retired
member was receiving a reduced premium benefit payment based on an amount
prescribed in subsection B or C of this section and the contingent annuitant is
eligible for family health and accident insurance coverage, the contingent
annuitant is entitled to receive a premium benefit payment based on an amount
prescribed in subsection B or C of this section times the period certain and
life option reduction factor elected by the retired member at the time of
retirement pursuant to section 38-760, subsection B, paragraph 2.
(b) The retired member was receiving a reduced
premium benefit payment based on an amount prescribed in subsection A or C of
this section and the contingent annuitant is eligible for single health and
accident insurance coverage, the contingent annuitant is entitled to receive a
premium benefit payment based on an amount prescribed in subsection A or C of
this section times the period certain and life option reduction factor elected
by the retired member at the time of retirement pursuant to section 38-760,
subsection B, paragraph 2.
(c) The retired member was receiving a reduced
premium benefit payment based on an amount prescribed in subsection B or C of
this section and the contingent annuitant is not eligible for family health and
accident insurance coverage, the contingent annuitant is entitled to receive a
premium benefit payment based on an amount prescribed in subsection A or C of
this section times the period certain and life option reduction factor elected
by the retired member at the time of retirement pursuant to section 38-760,
subsection B, paragraph 2.
J. If, at the time of retirement, a retiring member
does not elect to receive a reduced premium benefit payment pursuant to
subsection H or I of this section, the retired member's contingent annuitant is
not eligible at any time for the optional premium benefit payment.
K. If a member who is eligible for benefits pursuant
to this section forfeits the member's interest in the account before the
termination of ASRS, an amount equal to the amount of the forfeiture shall be
applied as soon as possible to reduce employer contributions to fund the
benefits provided by this section.
L. A contingent annuitant is not eligible for any
premium benefit payment if the contingent annuitant was not enrolled in an
eligible health and accident insurance plan at the time of the retired member's
death or if the contingent annuitant is not the dependent beneficiary or
insured surviving dependent as provided in section 38-782.
M. For the purposes of this section:
1. "Account" means the separate account
established pursuant to subsection F of this section.
2. "Active
employee group health and accident insurance program" means a group health
and accident insurance program provided by the employer that the member is
enrolled in as an employee of an employer or as the dependent of an employee of
an employer.
2.
3.
"Credited
service" includes prior service.
3.
4.
"Prior
service" means service for this state or a political subdivision of this
state before membership in the defined contribution program administered by
ASRS.
4.
5.
"Subsidized"
means a portion of the total premium is paid by the employer, but does not
necessarily mean a plan in which the employer uses blended rates to determine
the total premium.
END_STATUTE
APPROVED BY THE GOVERNOR APRIL 13, 2026.
FILED IN THE OFFICE OF THE SECRETARY OF STATE APRIL 13, 2026.