Committee approves changes to disability retirement rules, raising earnings limit and eliminating some overpayment debts

The Joint Standing Committee on Labor on Feb. 10 voted unanimously to pass LD 21 69, a bill that restructures the state’s disability retirement rules for Maine Public Employees Retirement System (MainePERS) members and participating local district teachers.

MainePERS testimony and committee debate centered on three changes: consolidating two different earnings‑limit formulas into a single formula, setting a new minimum earnings limitation of $35,500 (indexed to inflation beginning in 2026), and repealing certain Social Security offset language. The committee adopted an amendment by Representative Valley Geiger to change statutory language so the MainePERS chief executive officer "shall" (not "may") waive benefit reductions when the excess compensation has stopped and a reduction would cause hardship.

Why it matters: MainePERS presenters said the bill is ‘‘entirely member favorable’’ and would eliminate certain overpayment debts now carried by seven disability retirees, with existing debts ranging from about $1,000 to $45,000. By raising the threshold for "substantially gainful activity" to $35,500, the bill increases the amount beneficiaries may earn before their benefits are reduced, which proponents said encourages attempts to return to work without immediate financial penalty.

MainePERS representative Bill Brown described the bill as focused on improving outcomes for members, saying, "what this bill does is it eliminates the accrual of over earnings limitations debts." Director Mara McGowan explained how waiver decisions would work in practice, saying staff would generally waive an overpayment when the excess earnings are not expected to recur and the member is no longer working in that position.

Committee members asked about operational details: whether waivers would be time‑limited, how the changes apply to the PLD (participating local district) plans, whether benefits are taxable (MainePERS said they are considered taxable income), and how MainePERS conducts continuing‑eligibility reviews (the first review is scheduled no earlier than two years after approval). MainePERS confirmed it does not anticipate an unfunded actuarial liability for these amendments and that the changes are structured to avoid creating additional long‑term costs.

The vote and next steps: Representative Geiger moved the amendment to make the CEO waiver mandatory when the statutory conditions are met; Representative Rader seconded. The committee voted unanimously to pass LD 21 69 as amended. The committee’s recommendation will be transmitted through the legislature’s normal process to the House and Senate for further consideration.

Provenance: The committee first discussed LD 21 69 during the work session introduction and analyst brief (LD 21 69 presentation) and concluded with the work session vote to pass as amended.