N.J. Stat. § 43:15A-42.1
Premiums for such group insurance coverage shall be paid from a special fund, hereby created, called the "Public Employees Group Disability Insurance Premium Fund." The State Treasurer shall estimate annually the amount which shall be required for premiums for such benefits for the ensuing fiscal year and shall certify such amounts which shall be applied against the total employer contributions due for the members of the retirement system whose members are covered, depositing such amounts in the premium fund.
During the period such group insurance policy or policies are in effect with respect to members of the retirement system, the State Treasurer shall in no way commingle moneys in this fund with any retirement system.
The effective date of coverage for such a benefit shall be the first day of the month which immediately follows the date when such evidence is determined to be satisfactory.
Such evidence of insurability shall not be required of any person enrolling in the retirement system upon transfer from another retirement system, if such retirement system provided a benefit of a similar nature and the transferring person was covered by such a benefit at the time of the transfer. If such transferring person was not covered by such a benefit at the time of the transfer, the person may be allowed the benefit under the group policy or policies; however, any such person shall furnish satisfactory evidence of insurability if he had been unable or failed to give such evidence as a member of the retirement system from which the person transferred.
Any person who must furnish satisfactory evidence of insurability, and who ceases to be enrolled in the retirement system without such evidence having been given, shall continue to be subject to the same requirement if the person subsequently becomes a member.
The member shall be considered totally disabled if the member is unable to perform each duty of the member's occupation and is under the regular care of a physician. After the 12 months following the commencement of such disability benefit payments, the member shall be unable to engage in any gainful occupation for which the member is reasonably fitted by education, training or experience. Total disability shall not be considered to exist if the member is gainfully employed. Following an agreement with the insurance company and the policyholder, the member may continue to receive disability benefits for a limited time while performing some type of work. During the period of rehabilitation, the monthly benefit shall be the regular payment less 80% of the member's earnings from such rehabilitative position.
Disability benefit insurance provisions of the group policy or policies shall not cover disability resulting from or contributed to by pregnancy, act of war, intentionally self-inflicted injury, or attempted suicide whether or not sane. For purposes of such disability benefit coverage, the member shall not be considered to be disabled while the member is imprisoned or while outside the United States, its territories or possessions, or Canada.
If the member has recovered from the disability for which the member had received benefits and again becomes totally disabled while insured, the later disability shall be regarded as a continuation of the prior one unless the member has returned to full-time covered employment for at least six months. If the later absence is due to an unrelated cause and the member had returned to full-time work, it shall be considered a new disability. The disability benefit insurance cannot be converted to an individual policy.
No person shall be covered by the disability benefit provision of the group policy or policies except upon the completion of one year of full-time continuous employment in a position eligible for participation in a retirement system designated in subsection a. of this section.
The periodic benefit by which the monthly disability benefit may be reduced shall include salary or wages, retirement benefits or benefits from any source for which the State or other public employer has paid any part of the cost or made payroll deductions, Social Security disability or other benefits, including dependents' benefits, and benefits paid by Social Security at the option of the participant before the age of 65, but not including any increase in Social Security benefits enacted after the disability benefit under such group policy or policies has commenced, and any other periodic benefits provided by law except on account of military service.
When a member begins to receive a disability benefit under such group policy or policies, the insurance company shall pay an amount equal to the employee contribution which would have been required of the member and deducted from the member's base salary in order to meet the member's obligation for the purchase of the member's individual retirement annuity. Such amount shall be paid by the insurance company without reduction by any other periodic benefit which the member is eligible to receive. Such amount shall be paid by the insurance company to the insurer or insurers for the member's retirement annuity.
No employer obligations shall be paid when the member is on a leave of absence without pay or when the member no longer is enrolled in the retirement system designated in subsection a. of this section.
N.J.S. § 43:15A-42.1