If a member of the Arizona State Retirement System (ASRS) has retired and is actively receiving a pension benefit, that individual is not eligible for Long-Term Disability (LTD) coverage upon returning to work in any capacity. Receipt of a retirement benefit constitutes a termination of active membership status for purposes of LTD eligibility.
In addition, when an employer is remitting the Alternate Contribution Rate (ACR) to ASRS on behalf of a retired member who has returned to work, this does not reinstate eligibility for LTD benefits. Payment of the ACR satisfies the employer's statutory obligation to ASRS, but does not restore the employee’s status as an active contributing member for LTD purposes.
However, if a retired ASRS member elects to formally suspend their pension benefit and return to active employment, they may be eligible for LTD benefits, provided all other plan requirements are satisfied. Suspension of the pension effectively reinstates active member status, which is a prerequisite for LTD coverage.
Separately, if a 65+ Membership Waiver Form has been submitted for a new employee with no prior ASRS service, that individual is not eligible for LTD benefits. By executing the waiver, the employee irrevocably declines participation in ASRS and forfeits the right to make retirement contributions for the duration of their employment with your organization. Because LTD eligibility is contingent upon active ASRS membership and contributions, employees who have elected to waive membership are ineligible for LTD coverage for as long as the waiver remains in effect.
