New NC law changes retirement benefits and State Health Plan coverage
House Bill 1126 makes changes to state and local government retirement systems, veterans' service credits and maternity coverage for State Health Plan dependents.
RALEIGH, N.C. — A new North Carolina law changes state and local government retirement programs and expands maternity benefits for dependents covered by the State Health Plan.
Gov. Josh Stein signed House Bill 1126 on July 7. The measure became Session Law 2026-50 on July 8.
The legislation makes a series of administrative and technical changes to the Teachers' and State Employees' Retirement System and the Local Governmental Employees' Retirement System.
One provision allows members who buy back previously withdrawn service credit to also restore eligible armed service retirement credit. That provision takes effect Jan. 1, 2027.
The law also exempts certain retirement system death benefits from offsets used to recover overpayments and changes how some pension-spiking restoration payments are treated when a retiree returns to work and later retires again.
For firefighters and rescue squad workers, required submissions to the state pension fund will move to an electronic process.
The legislation allows administrators to temporarily block withdrawals from a law enforcement officer's Supplemental Income Retirement Plan account for up to 60 days while determining whether a felony-related benefit forfeiture provision applies.
House Bill 1126 also changes the State Health Plan. Dependents covered by the plan will become eligible for maternity benefits. Under prior state law, dependents were not eligible for those benefits.
The State Treasurer will also be allowed to make the State Health Plan the primary insurer in some cases involving members who also have Medicare when the administrative cost of coordinating benefits exceeds the benefit of doing so.
Another provision permits the State Treasurer to designate private attorneys to represent certain retirement systems. Stein said the law strengthens benefits for employees and retirees but criticized the private counsel provision.
"By authorizing the State Treasurer to hire private outside counsel instead of lawyers in the Department of Justice, this bill will raise costs for taxpayers," Stein said when announcing his action on the bill.
The law also directs a study of the Local Government Budget and Fiscal Control Act. An interim report is due to legislative committee chairs by Jan. 31, 2027, with a final report due Oct. 1, 2027.
Most provisions took effect when the measure became law, although several sections have separate effective dates.
Editor's note: This article was drafted with the assistance of artificial intelligence and was reviewed and fact-checked by a member of the NC Political News editorial team before publication.
