Chapter ETF 60

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.

ETF 60.60(7)(c)2. 2. Recover and refund to the company the premiums which were disbursed from the conversion account. Premiums may be recovered by deduction from the insured’s Wisconsin retirement system annuity check, by payment directly by the insured, or otherwise, as the department may determine.

ETF 60.60(7)(c)3. 3. If the insured dies before the premiums are recovered, direct the company to reduce the insured’s death benefit from the life insurance program by the amount of premiums disbursed.

ETF 60.60(8) (8) Benefits from the conversion account.

ETF 60.60(8)(a) (a) The moneys credited to the conversion account may only be used to provide health or long-term care insurance premiums or death benefits. The insured may not receive the balance in the conversion account as a living benefit or in any form which would be included in the insured’s gross income under applicable provisions 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(8)(b) (b) Debits to the conversion account shall cease with the premium payment for the coverage month which is the earliest of any of the following:

ETF 60.60(8)(b)1. 1. The last month for which premiums can be fully or partially paid from the balance remaining in the conversion account.

ETF 60.60(8)(b)2. 2. The month in which the insured dies.

ETF 60.60(8)(b)3. 3. The month in which insurance terminates due to an employer’s withdrawal from the health or long-term care insurance program.

ETF 60.60(8)(b)4. 4. The month in which health or long-term care insurance terminates due to cancellation by the insured.

ETF 60.60(8)(b)5. 5. The second month which begins after the month in which the department receives the insured’s written request to discontinue premium payments from the conversion account.

ETF 60.60(8)(c) (c) The balance remaining in the account after premium payments cease is payable as a death benefit to the insured’s beneficiaries as determined under s. 40.02 (8), Stats. However, if payments ceased pursuant to par. (b) 4. or 5., balances of $25 or less shall revert to the reserve held by the company for the policyholder and may not be paid as death benefits.

ETF 60.60(8)(d) (d) An insured surviving spouse or dependent child may not continue payment of premiums from the conversion account after the death of the insured but may elect, if otherwise eligible, to continue coverage as provided in s. ETF 40.01.

ETF 60.60(9) (9) Changes and adjustments.

ETF 60.60(9)(a) (a) The department shall notify the company of annual changes in premium, health insurance and long-term care insurance plans made available, and other program changes at least 90 days in advance of the effective date of the change. The company shall make the required adjustments in remittances from all affected accounts.

ETF 60.60(9)(b) (b) The insured may discontinue premium payments from the conversion account, resume payments which were previously discontinued or change the allocation of conversion account payments from one type of insurance to another, by filing a written request with the department. The request shall be effective in the third month which begins after the department receives the request.

ETF 60.60(9)(c) (c) The department shall notify the company of an insured’s change in coverage type, carrier, family status, allocation of premiums, or other relevant data. Changes reported to the company by the fifth day of a month shall be reflected in the premium remittance for the following coverage month.

ETF 60.60(9)(d) (d) If the insured reports a change of status which affects premium amounts previously paid from the conversion account, the company shall adjust the conversion account balance in cooperation with the department and the affected insurance carrier. However if all funds in the conversion account have been disbursed and the account has been closed at the time the company is notified, the department shall make the adjustments. All premium adjustments are subject to s. 40.08 (10), Stats., and applicable contractual limitations on refund of premiums.

ETF 60.60 History History: Cr. Register, December, 1994, No. 468, eff. 1-1-95; CR 09-057: am. (2) (h) and (8) (a) Register May 2010 No. 653, eff. 6-1-10; EmR0938: emerg. am. (8) (d), eff. 1-1-10; CR 10-004: am. (8) (d) Register July 2010 No. 655, eff. 8-1-10; CR 14-055: am. (5) (c), (f) Register May 2015 No. 713, eff. 6-1-15; CR 19-126: am. (8) (d) Register May 2021 No. 785, eff. 6-1-21.