Chapter ETF 60

ETF 60.33(4) (4) The amount of group life insurance coverage for an insured employee of a successor employer shall be based on the aggregate of earnings from both the predecessor and successor employers in the previous calendar year.

ETF 60.33 History History: Cr. Register, February, 1983, No. 326, eff. 3-1-83.

subch. III of ch. ETF 60 Subchapter III — Wisconsin Retirement System Death Benefits

ETF 60.51 ETF 60.51 Cancellation of death benefit and beneficiary annuity applications.

ETF 60.51(1) (1) Any lump sum death benefit or beneficiary annuity application canceled pursuant to this section shall have no force or effect, and any subsequent application shall be treated as a new application. Repayment in full of any sum paid under the application for which cancellation is sought shall be required. The employer may not make this payment on behalf of the recipient of the benefit.

ETF 60.51(2) (2) A request to cancel an application for a lump sum death benefit payment under s. 40.73 (1) or (2), Stats., must be in writing. The request to cancel shall be rejected unless received by the department by the close of regular office hours on the last working day preceding the date specified in s. ETF 10.633 (1) (c).

ETF 60.51(3) (3) A request to cancel an application for a beneficiary annuity under s. 40.73 (3), Stats., must be in writing. The request to cancel the application shall be rejected unless received by the department by the close of regular office hours on the last working day preceding the date specified in s. ETF 10.633 (1) (a).

ETF 60.51 History History: Cr. Register, April, 1983, No. 328, eff. 5-1-83; am. Register, January, 1996, No. 481, eff. 2-1-96.

ETF 60.53 ETF 60.53 Death benefits — automatic distributions.

ETF 60.53(1) (1) 

ETF 60.53(1)(a) (a) A beneficiary of a deceased annuitant who is entitled to a continuation of the annuitant’s monthly annuity under s. 40.73 (2), Stats., may receive the benefit as a monthly annuity by filing a timely application. The application for a monthly annuity must be received by the department no later than the last day of the third full calendar month which begins after the date the department mails or otherwise provides the application to the beneficiary.

ETF 60.53(1)(b) (b) If the department does not receive an application for a continuation of the monthly annuity within the deadline specified in sub. (1) the department shall pay the then present value of the death benefit to the beneficiary as a lump sum. The department may not accept a request to cancel the lump sum payment which is received after the deadline specified in sub. (1) or the deadline specified in s. ETF 60.51 (2), whichever is earlier.

ETF 60.53(1)(c) (c) If the beneficiary submits a waiver of a lump sum benefit under s. 40.74 (2), Stats., and the department receives it on or before the deadline specified in s. ETF 60.51 (2), the department shall defer automatic distribution of the benefit during the waiting period before the waiver effective date. Any new beneficiary who becomes eligible for a continuation of the monthly payments as a result of a waiver shall be granted the period specified in sub. (1) to apply for continuation of the monthly payments.

ETF 60.53 Note Note: This rule (CR 09-057) amends ss. ETF 20.07 (6) and 60.53 (1) (c) to conform to the new effective date for waivers in s. 40.08 (3), Stats., as affected by 2007 Wis. Act 131.

ETF 60.53(2) (2) 

ETF 60.53(2)(a) (a) This subsection applies to death benefits payable from required or additional contribution accumulations that the department had not begun to distribute before the death of the participant or alternate payee.

ETF 60.53(2)(b) (b) The department shall treat a distribution paid as a lump sum under s. 40.25 (2), Stats., as having begun prior to the death of the participant or alternate payee if the date of the check is on or before the date of death. The department shall treat a distribution paid as an annuity or as a lump sum in lieu of an annuity under s. 40.25 (1) or (4), Stats., as having begun prior to the death of the participant or alternate payee if all of the following apply:

ETF 60.53(2)(b)1. 1. The participant or alternate payee is living on the date the department receives the benefit application and on the effective date of the benefit;

ETF 60.53(2)(b)2. 2. The department does not receive the participant’s or alternate payee’s written request to cancel the benefit as provided under s. ETF 20.20 (4) on or before the date of death.

ETF 60.53(2)(c) (c) A beneficiary may elect to receive a death benefit payable under this subsection as a monthly annuity, subject to s. 40.73 (3), Stats., provided the beneficiary applies, and the department receives the application, no later than the close of business on the last working day of September in the calendar year following the year of the participant’s or alternate payee’s death. The annuity effective date may not be later than November 1 of that year.

ETF 60.53(2)(d) (d) A beneficiary may elect to receive the death benefit as a lump sum provided the beneficiary applies, and the department receives the application, no later than the close of business on the last working day of September in the fifth calendar year following the year of the participant’s or alternate payee’s death.

ETF 60.53(2)(e) (e)

ETF 60.53(2)(e)1. 1. A beneficiary who was the spouse of the deceased participant at the time of death may defer application for the death benefit until the latest of the following dates:

ETF 60.53(2)(e)1.a. a. For an application for a monthly annuity, the application date specified in par. (c);

ETF 60.53(2)(e)1.b. b. For an application for a lump sum, the application date specified in par. (d);

ETF 60.53(2)(e)1.c. c. For an application for any optional form of payment, the last working day of the year before the year in which the participant would have attained the age provided in section 401 (a) (9) of the Internal Revenue Code. The department may not accept an application for a monthly annuity under this subdivision if the department receives the application after the application date specified in par. (c), unless the beneficiary files a beneficiary designation that the department receives by that date or by September 30, 1999, whichever is later.

ETF 60.53(2)(e)2. 2. This paragraph does not apply to spouses of deceased alternate payees.

ETF 60.53(2)(f) (f) During the calendar year before the year that the participant would have attained the age provided in section 401 (a) (9) of the Internal Revenue Code, a beneficiary who was the spouse of the participant at the time of death and who has filed a beneficiary designation if required under par. (e) 1. c., may apply for a death benefit with a deferred effective date which may not be later than January 1 of the year in which the participant would have attained the age provided in section 401 (a) (9) of the Internal Revenue Code.

ETF 60.53(2)(g) (g) Unless the account is considered abandoned as provided in s. 40.08 (8) (a) 2. or 2m., Stats., the department shall distribute the death benefit as a lump sum unless it has received an application for the death benefit within the applicable deadline specified in par. (d) or (e). If the application was due under par. (d) or (e) 1. b., the department shall make the distribution on or before the last working day of the fifth calendar year following the year of the death of the participant or alternate payee. If the application was due under par. (e) 1. c., the department shall make the distribution effective January 1 of the year in which the participant would have attained the age provided in section 401 (a) (9) of the Internal Revenue Code. Beneficiaries may not cancel distributions made under this paragraph.

ETF 60.53(2)(h) (h) The department may not accept a waiver of a benefit under s. 40.74 (2), Stats., for a benefit payable under this subsection if the effective date of the waiver is on or after the application deadline specified in par. (d). If a beneficiary becomes eligible for a benefit under this subsection as a result of a waiver, the department shall base the new beneficiary’s deadlines to apply for the benefit on the participant’s or alternate payee’s date of death.

ETF 60.53(2)(i) (i) Except as provided in s. 40.23 (4) (e) 4., Stats., if a beneficiary becomes eligible for a death benefit under this subsection as a result of the death of a beneficiary, the department shall base the new beneficiary’s deadlines to apply for the benefit on the participant’s or alternate payee’s date of death.

ETF 60.53 History History: Cr. Register, December, 1996, No. 492, eff. 1-1-97; renum. (1) to (3) to (1) (a) to (c), cr. (2), Register, May, 1997, No. 497, eff. 6-1-97; correction in (2) (b) (intro.) made under s. 13.93 (2m) (b) 7., Stats., Register, July, 1999, No. 523; CR 09-057: am. (1) (c) Register May 2010 No. 653, eff. 6-1-10; CR 23-023: am. (2) (e) 1. c., (f), (g) Register May 2024 No. 821, eff. 6-1-24.

ETF 60.60 ETF 60.60 Conversion of life insurance coverage to pay premiums for health and long-term care insurance.

ETF 60.60(1) (1) Purpose. The purpose of this section is to interpret s. 40.72 (4r), Stats., and to establish procedures to implement this statute.

ETF 60.60(2) (2) Definitions. In this section:

ETF 60.60(2)(a) (a) “Company” means the insurer under contract with the State of Wisconsin group insurance board to provide the life insurance program under s. 40.72 (1), Stats., and to administer the conversion accounts under s. 40.72 (4r), Stats.

ETF 60.60(2)(b) (b) “Conversion” means the voluntary exchange of employer-provided group term life insurance under s. 40.72, Stats., for employer-provided health insurance or long-term care insurance, or both, administered under subch. IV of ch. 40, Stats.

ETF 60.60(2)(c) (c) “Conversion account” means the account established by the company to record the balance after conversion available to pay the health or long-term care insurance premiums of the insured who has elected conversion.

ETF 60.60(2)(d) (d) “Conversion effective date” means the first day of the first month for which the premium for health or long-term care insurance is fully or partially paid from the conversion account. The conversion effective date is determined as provided in sub. (4) (a) 3.

ETF 60.60(2)(e) (e) “Health insurance” means insurance which is provided under s. 40.51, Stats.

ETF 60.60(2)(f) (f) “Insured” means a person who has made, or who is eligible to make, the election provided in s. 40.72 (4r), Stats., and this section.

ETF 60.60(2)(g) (g) “Life insurance” means insurance which is provided under s. 40.72 (1), Stats., and which has been reduced to a final amount as provided in s. 40.72 (2) and (3), Stats.

ETF 60.60(2)(h) (h) “Long-term care insurance” means insurance which is provided under s. 40.55, Stats., and which qualifies as an accident and health plan under section 106 of the internal revenue code.

ETF 60.60 Note Note: This rule (CR 09-057) amends ss. ETF 60.60 (2) (h) and 60.60 (8) to conform to the definition of “internal revenue code” in s. 40.02 (39m), Stats., added by 2007 Wis. Act 131 by deleting the former reference to s. 71.01 (6), Stats. Section ETF 10.01 (intro.) already provides that definitions in s. 40.02, Stats., apply throughout all ETF chapters.

ETF 60.60(2)(i) (i) “Policyholder” means the state of Wisconsin group insurance board.

ETF 60.60(2)(j) (j) “Present value of life insurance” means the sum which, if invested on the conversion effective date, would provide a death benefit equal to the face amount of the insured’s life insurance coverage on the date of death of the insured, based on actuarial assumptions about future mortality rates and interest rates recommended by the company and approved by the department under sub. (5) (a).

ETF 60.60(3) (3) Election process.

ETF 60.60(3)(a) (a) An insured may elect to convert the present value of his or her life insurance to pay premiums for health or long-term care insurance, or both, by filing the form prescribed by the department provided that on the conversion effective date all of the following apply:

ETF 60.60(3)(a)1. 1. The insured meets the requirements of s. 40.72 (4), Stats., to continue life insurance coverage after termination of employment.

ETF 60.60(3)(a)2. 2. The insured has life insurance and either health insurance or long-term care insurance, or both, as defined in sub. (2).

ETF 60.60(3)(a)3. 3. The face amount of the insured’s life insurance has been reduced to its final amount as provided in s. 40.72 (2) and (3), Stats.

ETF 60.60 Note Note: Under present law, this will occur at age 70 if the insured is a participating employee with life insurance coverage, at age 66 if the insured is a retired employee of the state or of a participating employer which elected to provide post-retirement life insurance coverage at the 50% level, or otherwise at age 67.

ETF 60.60(3)(a)4. 4. The insured is no longer required to pay life insurance premiums pursuant to s. 40.05 (6) (b), Stats.

ETF 60.60(3)(a)5. 5. The insured’s credits, if any, in the accumulated unused sick leave account established under s. 40.05 (4), Stats., are less than the insured’s current monthly health insurance premium. This subdivision does not apply to elections to convert life insurance to pay long-term care insurance premiums.

ETF 60.60(3)(b) (b) The election form shall include all of the following:

ETF 60.60(3)(b)1. 1. Estimates of the face amount and the present value of the insured’s life insurance prepared by the department and based on the earliest possible conversion effective date at the time of preparation.

ETF 60.60(3)(b)2. 2. The insured’s designation of a health insurance plan or long-term care insurance plan, or both, for which premiums are to be paid from the conversion account.

ETF 60.60(3)(b)3. 3. The insured’s waiver of all benefits under the Wisconsin public employers group life insurance program based on the life insurance that is converted, in exchange for the benefits provided in this section.

ETF 60.60(3)(b)4. 4. The signature of the insured or of the insured’s representative as provided in par. (c).

ETF 60.60(3)(c) (c) A person holding the insured’s durable power of attorney may sign in lieu of the insured under the provisions of s. ETF 10.75 if so authorized by the terms of the power of attorney. If a guardian or conservator of the insured’s estate has been appointed, the guardian or conservator shall sign in lieu of the insured. The election is deemed not to have a long-term effect on the insured’s rights and benefits, for purposes of s. 40.08 (9m), Stats., and express court approval of the terms of the election is not required.

ETF 60.60(3)(d) (d) The entire face amount of insured’s life insurance up to $50,000 shall be included in the conversion. Insurance over $50,000 may not be converted, and shall remain in force subject to the provisions of statute and contract.

ETF 60.60(3)(e) (e) As provided in s. 40.08 (1), Stats., the life insurance benefits provided under s. 40.72, Stats., and this section are not assignable and are not subject to execution, levy, attachment, garnishment, or other legal process. The Department may not honor or otherwise enforce any order which conflicts with s. 40.08 (1), Stats., specifically including but not limited to an order to convert or refrain from converting life insurance coverage, to satisfy claims of creditors other than the department, to apply for, obtain or retain a benefit or entitlement, and any order the department determines to be in violation of s. 40.08 (1), Stats.

ETF 60.60 Note Note: Form ET-2324, ‘‘Election to Convert Life Insurance to Pay Health or Long-Term Care Insurance Premiums,” may be obtained no charge by writing to: Department of Employee Trust Funds, P.O. Box 7931, Madison, WI 53707-7931, or by calling [phone] or toll free at [phone].

ETF 60.60(4) (4) Approval of the election, conversion effective date.

ETF 60.60(4)(a) (a) Upon receipt of the election form the department shall do all of the following:

ETF 60.60(4)(a)1. 1. Verify that the election meets the requirements under sub. (3) and reject any election which does not meet the requirements.

ETF 60.60(4)(a)2. 2. Verify the face amount of the insurance coverage.

ETF 60.60(4)(a)3. 3. Determine the conversion effective date. The conversion effective date shall be the first day of the coverage month which is the later of the following:

ETF 60.60(4)(a)3.a. a. The third month which begins after the department receives the insured’s election to convert life insurance.

ETF 60.60(4)(a)3.b. b. The first month in which the insured meets the requirements in sub. (3) (a).

ETF 60.60(4)(b) (b) If the department determines that the conversion effective date is 5 or more full calendar months after the date the department received the election, the department may reject the election without prejudice. The insured may file a new election at a later time.

ETF 60.60(4)(c) (c) The department shall provide the company with a copy of the approved election form and other necessary information including but not limited to: the insured’s name, social security number, date of birth, verified face amount of life insurance coverage, the conversion effective date, and the type, carrier, and premium amount of the applicable health or long-term care insurance plan.

ETF 60.60(5) (5) Conversion account. The company shall do all of the following:

ETF 60.60(5)(a) (a) Recommend and provide to the department a table of conversion factors by age in years and attained months, based on mortality experience within the life insurance plan and the interest rate established by the company for valuations of the post-retirement insurance program. The company may recommend revisions to the table from time to time. The factors may not be used until approved by the department.

ETF 60.60(5)(b) (b) Compute the present value of the insured’s life insurance by multiplying the verified face amount, up to $50,000, by the conversion factor for the insured’s age in years and attained months on the conversion effective date.

ETF 60.60(5)(c) (c) Establish a conversion account in the insured’s name from the appropriate reserve, as determined by the company and the department, held by the company for the policyholder. The company shall credit the account with the present value computed in par. (b) and debit the account periodically by the premium amount and for the prescribed period certified by the department.

ETF 60.60(5)(d) (d) Notify the insured of the face amount converted and the initial conversion account balance within 20 days of receipt of the approved election form.

ETF 60.60(5)(e) (e) Notify the insured of the conversion account balance annually and when the balance in the conversion account falls below 4 times the monthly premium being debited. If the company does not have current address information it may request the department to mail the notification to the insured’s current address.

ETF 60.60(5)(f) (f) Remit to the department from each conversion account, by the 20th of the month preceding the coverage period, the applicable premiums for health and long-term care insurance.

ETF 60.60(5)(g) (g) Annually report to the policyholder the number of conversion accounts opened and closed, the volume of premiums paid, and the amounts reverting to the reserves as provided in sub. (8) (c).

ETF 60.60(5)(h) (h) Close the conversion account and restore the insured’s life insurance coverage when so directed by the department pursuant to sub. (7) (c).

ETF 60.60(6) (6) Interest on conversion accounts. The conversion accounts may not accrue interest on the unexpended balances.

ETF 60.60(7) (7) Revocation of the conversion election.

ETF 60.60(7)(a) (a) An insured may not revoke an election to convert life insurance under this section unless:

ETF 60.60(7)(a)1. 1. The department receives the insured’s written request to revoke prior to the conversion effective date; or

ETF 60.60(7)(a)2. 2. The present value of the life insurance as computed by the company is less than 90% of the department’s estimate, and the department receives the insured’s written request to revoke within 21 days after the company mails notification of the initial conversion account balance to the insured.

ETF 60.60(7)(b) (b) If the insured dies within 60 days after the conversion effective date, the department shall deem that a timely revocation was received.

ETF 60.60(7)(c) (c) When the department determines that it received a timely revocation, the department shall do all of the following:

ETF 60.60(7)(c)1. 1. Direct the company to increase the insured’s life insurance coverage by the face amount used to compute the present value under sub. (5) (b), less any deduction made pursuant to subd. 3.