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H0416.......................................by COMMERCE AND HUMAN RESOURCES ADMINISTRATION DEPARTMENT - GROUP INSURANCE - Amends existing law to revise the statutes governing state employee active and retired health care service coverage; to provide that, effective July 1, 2008, active and retiree coverage will be separately rated; and to provide that retiree health care service will not be available to state personnel beginning service or employment on or after July 1, 2008. 01/24 House intro - 1st rdg - to printing 01/25 Rpt prt - to Com/HuRes
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]] Fifty-ninth Legislature Second Regular Session - 2008IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 416 BY COMMERCE AND HUMAN RESOURCES COMMITTEE 1 AN ACT 2 RELATING TO THE DEPARTMENT OF ADMINISTRATION AND GROUP INSURANCE; AMENDING 3 SECTION 67-5761, IDAHO CODE, TO REVISE POWERS AND DUTIES OF THE DIRECTOR 4 OF THE DEPARTMENT OF ADMINISTRATION REGARDING GROUP INSURANCE; AMENDING 5 SECTION 67-5765, IDAHO CODE, TO PROVIDE CORRECT STATUTORY CITATIONS; 6 AMENDING SECTION 67-5767, IDAHO CODE, TO PROVIDE CORRECT TERMINOLOGY; 7 AMENDING SECTION 67-5768, IDAHO CODE, TO PROVIDE CORRECT STATUTORY CITA- 8 TIONS AND TO MAKE A TECHNICAL CORRECTION; AMENDING SECTION 67-5769, IDAHO 9 CODE, TO PROVIDE THAT THE DIRECTOR OF THE DEPARTMENT OF ADMINISTRATION 10 SHALL ALLOCATE THE APPORTIONED SHARE OF THE REASONABLE COSTS OF ADMINIS- 11 TRATION TO EACH PARTICIPATING STATE UNIT IN THE SAME PROPORTION THAT THE 12 AMOUNT OF EMPLOYEES BEARS TO THE TOTAL NUMBER OF EMPLOYEES EXCLUDING TEM- 13 PORARY OR PART-TIME EMPLOYEES AND TO MAKE A TECHNICAL CORRECTION; AMENDING 14 SECTION 67-5770, IDAHO CODE, TO PROVIDE CORRECT STATUTORY CITATIONS AND TO 15 MAKE TECHNICAL CORRECTIONS; AMENDING SECTION 67-5771, IDAHO CODE, TO PRO- 16 VIDE FOR THE CREATION OF THE GROUP INSURANCE FUND, TO PROVIDE FOR CORRECT 17 STATUTORY CITATIONS AND TO PROVIDE CORRECT TERMINOLOGY; AND AMENDING SEC- 18 TION 67-5772, IDAHO CODE, TO DELETE REFERENCE TO RULES. 19 Be It Enacted by the Legislature of the State of Idaho: 20 SECTION 1. That Section 67-5761, Idaho Code, be, and the same is hereby 21 amended to read as follows: 22 67-5761. POWERS AND DUTIES -- GROUP INSURANCE. (1) The director of the 23 department of administration shall have the authority to: 24 (a) Establish an advisory committee to be comprised of program partici- 25 pants. The advisory committee may include employee representatives. The 26 directorshallmay consult with the advisory committee in the performance 27 of those duties as enumerated in subsection (2) of this section. 28 (b)Fix and promulgate rules for determiningDetermine eligibilityof29 requirements for personnel, including retired personnel, for participation 30 in any group plans. 31 (c) Determine the nature and extent of needs for group life insurance, 32 group annuities, group disability insurance, and group health care service 33 coverages with respect to personnel, including elected or appointed offi- 34 cers and employees, of all offices, departments, divisions, boards, com- 35 missions, institutions, agencies and operations of the government of the 36 state of Idaho,and retired personnel,the premiums or prepayments for 37 which are payable in whole or in part from funds of the state and for 38 retired state personnel. "Disability" insurance includes all personal 39 accident, health, hospital, surgical, and medical coverages, and "health 40 care service" includes all services rendered for maintenance of good 41 health and diagnosis, relief, or treatment of any injury, ailment, or 42 bodily condition. 43 (d) Determine the types, terms, conditions, and amounts of group insur- 2 1 ance, group annuities, or group coverage by health care service organiza- 2 tions, as the case may be, required by such needs. 3 (e) Negotiate and contract for, and have placed or continued in effect 4 all such insurance and coverages as may reasonably be obtainable from 5 insurers and health care service organizations, as the case may be, duly 6 authorized to transact such business in this state. The director may nego- 7 tiate deductibles to any group plan or coverage. Alternatively, the direc- 8 tor may self-insure any insurance or coverage and may contract with any 9 insurance company or third party administrator duly authorized to transact 10 business in this state or administer such plan. 11 (f) Prepare or otherwise obtain and make available to all personnel 12 affected thereby, printed information concerning all such group plans cur- 13 rently in effect,together with the rules governingeligibility require- 14 ments, payment of premium or prepayment where applicable, claims proce- 15 dures, and other matters designed to facilitate utilization and adminis- 16 tration of such plans. 17 (g) Administer all such group plans on behalf of the insured, including 18 but not limited to: 19 (i) Enrollment and reporting to the insurer or health care service 20 organization of individuals eligible for coverage and covered under 21 particular policies or contracts, and termination of such enrollment 22 upon termination of eligibility; 23 (ii) Collection or payment of premiums or prepayments for such cov- 24 erage, policies and contracts and accounting for the same; 25 (iii) Establishment of reasonable procedures for handling claims 26 arising under such coverage, policies and contracts, and rendering 27 assistance to claimants, as may be required in the presentation and 28 consideration of claims; 29 (iv) Effectuation of changes in such coverage, policies and con- 30 tracts and renewal or termination thereof; 31 (v) Making and settlement of claims. 32 (2) Nothing herein shall be deemed to prohibit any such coverage, policy 33 or contract providing coverage also for dependents of personnel under terms 34 and conditions formulated and negotiated by the director. 35 (3) The director shall formulate and negotiate a plan of health care ser- 36 vice coverage, except as provided in subsection (4) of this section, which 37 includes eligible retired personnel and dependents.eligible for a retirement38benefit through the Idaho public employee retirement system which benefit39equals or exceeds the retiree medical insurance premium in effect for that40retiree at the date of retirement. Coverage for retired personnel shall paral-41lel the coverage provided to active state employees to the extent necessary,42and shall include a medicare credit for retirees who are covered by medicare.43Any44 (a) For that period up to and including June 30, 2008, active and retiree 45 coverage shall be rated jointly and any increased cost on the health care 46 plan for active employees as a result of suchcoverage costsjoint rating 47 shall be paid for by the state and by active state employees in equal 48 shares. 49 (b) For that period beginning on July 1, 2008, retiree coverage shall be 50 separately rated and any increase in the cost of such retiree coverage 51 beginning July 1, 2008, as a result of such separate rating shall be paid 52 for by retirees, provided however, that the state shall pay one hundred 53 fifty-five dollars ($155) per eligible retiree per month toward such cov- 54 erage. 55 Retired personnel shall be responsible for paying their own premiums for any 3 1 plan of health care serviceinsurancecoverage provided pursuant to this sec- 2 tion. Nothing contained herein and nNo coverage, policy or contract which pro- 3 vides coverage or benefits for personnel, dependents of personnel, or retired 4 personnel shall create any vested right or benefit for the retired personnel 5 in retiree group insurance coverages. 6 (4) Personnel, including elected or appointed officers and employees, of 7 all offices, departments, divisions, boards, commissions, agencies and opera- 8 tions of the government of the state of Idaho, starting service or employment 9 on or after July 1, 2008, shall not be provided or be eligible for any retiree 10 health care service coverage. 11 SECTION 2. That Section 67-5765, Idaho Code, be, and the same is hereby 12 amended to read as follows: 13 67-5765. GOVERNMENT RETIREMENT PROGRAM OR GROUP INSURANCE PLANS IN EXIS- 14 TENCE UNAFFECTED. The provisions ofthis actsections 67-5760 through 67-5772, 15 Idaho Code, shall not affect the validity of any retirement program or con- 16 tract of group insurance or arrangement for prepayment plan coverage previ- 17 ously entered into by any governmental body, or by any school, college, uni- 18 versity, hospital or other institutions operated by any of the municipalities, 19 counties, or other political subdivisions of the state and supported in whole 20 or part by public funds. 21 SECTION 3. That Section 67-5767, Idaho Code, be, and the same is hereby 22 amended to read as follows: 23 67-5767. DIRECTOR MAY PROVIDE SERVICE TO SCHOOL DISTRICTS AND OTHER 24 POLITICAL SUBDIVISIONS. (1) Under terms and procedures mutually agreed upon by 25 contract, the director of the department of administration may render the same 26 services with respect to personnel of any school district or other political 27 subdivision of the state of Idaho. The cost of any group insurance, group 28 annuity or health care service coverage so provided and of administration 29 thereof shall be borne by the school district or political subdivision. 30 (2) Governmental entity for the purpose of this section means any organi- 31 zation composed of units of government of Idaho or organizations funded only 32 by government or government employee contributions or organizations who dis- 33 charge governmental responsibilities that would otherwise be performed by gov- 34 ernment. All government entities are deemed to be political subdivisions for 35 the purpose of thisactsection. 36 SECTION 4. That Section 67-5768, Idaho Code, be, and the same is hereby 37 amended to read as follows: 38 67-5768. NOMINAL POLICYHOLDER -- NO OBLIGATION TO STATE. (1) In policies 39 and contracts procured by the director of the department of administration 40 underthis actsections 67-5760 through 67-5772, Idaho Code, and covering 41 personnel of any state office, department, division, board, commission, insti- 42 tution, agency and operation, the director of the department of administration 43 shall be designated as the nominal policyholder or contract holder. 44 (2) No policy or contract shall create, or be deemed to constitute, any 45 financial obligation on the part of the state of Idaho beyond the obligation,46 to contribute for or upon current premiums or prepayments thereof. 47 (3) Except as hereinafter provided, information obtained from any 48 employee, dependent or retiree insured underthis actsections 67-5760 through 49 67-5772, Idaho Code, shall be subject to disclosure according to chapter 3, 4 1 title 9, Idaho Code; provided however, that if the affected employee, depend- 2 ent or retiree waives in writing the right to hold such information confiden- 3 tial, said information may be disclosed. 4 SECTION 5. That Section 67-5769, Idaho Code, be, and the same is hereby 5 amended to read as follows: 6 67-5769. INTER-DEPARTMENTAL TRANSACTIONS -- ADMINISTRATIVE CONTRIBUTION 7 -- AMOUNTS -- LIMITS -- REFUNDS -- APPROPRIATION. (1) The director of the 8 department of administration shall charge each office, department, division, 9 board, commission, institution, agency and operation, personnel of which is 10 currently covered under one (1) or more group plans administered by the direc- 11 tor, and receive payment in advance for its properly apportioned share of the 12 cost thereof. To the amount otherwise so found due for payment of premiums and 13 prepayments for coverages, the director shall add a separately stated adminis- 14 trative contribution of such percentage, rate, or proportionate amount as may 15 reasonably be required to pay the costs of maintaining the office of group 16 insurance, including personnel costs, operating expenditures, and expenditures 17 for capital outlay items. The director shall allocate the apportioned share of 18 the reasonable costs ofadministering this actadministration to each partici- 19 pating state unit in the same proportion that the amount of employees of the 20 unit, excluding temporary or part time, bears to the total number of employ- 21 ees, excluding temporary or part time, of all combined units covered.by this22act.23 (2) As to a particular office, department, division, board, commission, 24 institution, agency or operation, such charges and payments shall not exceed 25 the sum of (a) appropriated funds currently available for the purpose, and (b) 26 amounts currently deducted from the salaries and other compensation of covered 27 personnel specifically for the insurance or coverage. On or before the first 28 day of August of each year, the director shall furnish each department with an 29 estimate of the cost of insurance or coverage for the upcoming fiscal year. 30 (3) Refunds on premiums or prepayments, profit sharing, experience sav- 31 ings and refunds and other contract returns received by the director on 32 account of group policies and group contracts shall be retained by the direc- 33 tor and used for application upon future premiums and prepayments as equitably 34 apportioned by the director. 35 (4) Moneys received by the director under this section shall be deposited 36 to the credit of the group insurance account in the agency asset fund, and are 37 hereby continually appropriated for the uses for which charged and received, 38 or as stated in subsection (3) of this section. Pending such use, such surplus 39 moneys shall be invested by the state treasurer in the same manner as provided 40 for under section 67-1210, Idaho Code, with respect to other idle moneys in 41 the state treasury. All interest or other yield on such investments shall be 42 credited to the respective group insurance account. 43 SECTION 6. That Section 67-5770, Idaho Code, be, and the same is hereby 44 amended to read as follows: 45 67-5770. RETIREMENT SYSTEM NOT AFFECTED. Nothing inthis actsections 46 67-5760 through 67-5772, Idaho Code, shall apply to or affect the public 47 employee retirement system of Idaho as established under chapter 13, title 59, 48 Idaho Code, thepolicemen'spoliceman's retirement fund as established under 49 chapter 15, title 50, Idaho Code, thefiremen'sfirefighters' retirement fund 50 as established under chapter 14, title 72, Idaho Code, the judges' retirement 51 fund as established under chapter 20, title 1, Idaho Code, or the retirement 5 1 system of the department of employment as established under chapter 13, title 2 72, Idaho Code, as heretofore or hereafter amended or supplemented. 3 Provided, however, for the purpose of standardizing retirement benefits 4 for all county employees, any county not participating in the public employee 5 retirement system of Idaho on July 1, 1977, shall apply for membership in said 6 system no later than July 1, 1978, in accordance with the provisions of sec- 7 tion 59-130921, Idaho Code. Any existing retirement program,shall be termi- 8 nated prior to the date of entry into the public employee retirement system of 9 Idaho. 10 SECTION 7. That Section 67-5771, Idaho Code, be, and the same is hereby 11 amended to read as follows: 12 67-5771. GROUP INSURANCEACCOUNTFUND CREATED -- ADMINISTRATION -- PER- 13 PETUAL APPROPRIATION. There is hereby established in theagency asset fund in14thestate treasury,a special account,the "Group InsuranceAccountFund," 15 which shall be administered exclusively for the purposes ofthis actsections 16 67-5760 through 67-5772, Idaho Code. Thisaccountfund shall consist of all 17 contributions collected pursuant tothis actsections 67-5760 through 67-5772, 18 Idaho Code, and all interest earned upon any moneys in theaccountfund. 19 SECTION 8. That Section 67-5772, Idaho Code, be, and the same is hereby 20 amended to read as follows: 21 67-5772. REMITTANCE OF CONTRIBUTIONS -- COLLECTION OF DELINQUENCIES. (1) 22 Between the first and twentieth day of each month, each employer, or, where 23 the employer's payroll is paid separately by departments, each department of 24 each employer, shall remit to the director of the department of administration 25 all contributions required of it and its employees on the basis of salaries 26 paid by it during the previous month. These remittances shall be accompanied 27 by such reports as required byrules ofthe director of the department of 28 administration. 29 (2) If any employer shall fail or refuse to remit any such contributions 30 within thirty (30) days after the date due, the director of the department of 31 administration may certify to the state treasurer the fact of such failure or 32 refusal and the amount of the delinquent contribution or contributions, 33 together with a request that such amount be set over from funds of the delin- 34 quent employer to the credit of the group insurance fund. A copy of such cer- 35 tification and request shall be furnished the delinquent employer. 36 (3) Within ten (10) days after receipt of such request, the state con- 37 troller shall draw his warrant for payment of such amount out of moneys in the 38 state treasury allocated to the use of such employer during the current fiscal 39 year. If such moneys are not so available, the director of the department of 40 administration shall take any legal steps necessary to collect such amount.
STATEMENT OF PURPOSE
RS 17388C2
This legislation will make changes to the statutes governing state
employee (active and retired) health care service coverage.
- The legislation will clarify that the department of administration
determines eligibility requirements for active and retired personnel.
It will delete reference to rules on eligibility.
- This legislation will delete the requirement for a Medicare credit
and will delete the requirement that retiree coverage shall parallel
active coverage.
- The legislation will provide that until June 30, 2008, active and
retiree coverage shall be jointly rated and the increased cost of
coverage to the active employees as a result of joint rating shall be
paid in equal shares (subsidy) by the state and by active employees.
- This legislation will provide that effective July 1, 2008, active
and retiree coverage will be separately rated and any increase in the
cost of retiree coverage as a result of separate rating shall be paid
by the retiree but that the state will pay $155.00 per eligible
retiree per month toward such coverage.
- This legislation will provide that retiree health care service
coverage will no longer be available for state personnel beginning
service or employment on or after July 1, 2008.
- Upon passage of this legislation, the department of administration
intends to change eligibility requirements as follows:
- A retiree must work for the state until eligible for early
retirement (prior to age 65) and must be retiring directly from state
service to be eligible for retiree health care service coverage.
- Retiree health care service coverage will not be available to any
retiree who is or becomes Medicare eligible.
- The legislation will also provide correct code citations and make
other technical corrections.
FISCAL NOTE
Government Accounting Standards Board (GASB) Statement No. 45 requires
the State to report, beginning in 2008, the accrued and future
liability for non-pension post-employment benefits. The estimated
potential GASB liability would be reduced from $442 million to $81.6
million as a result of the following:
1. Setting the state contribution (subsidy) toward retiree coverage
at $155.00 per eligible retiree per month.
2. Eliminating state retiree coverage for Medicare eligible
retirees.
3. Requiring that personnel must work for the state until eligible
for early retirement and must retire directly from state service
to be eligible for retiree health care service coverage.
Eliminating the plan for state personnel beginning service on or after
July 1, 2008 will slow the growth of the estimated GASB 45 liability
and eventually begin reducing that liability.
CONTACT
Name: Mike Gwartney
Agency: Administration, Dept. of
Phone: 332-1800
STATEMENT OF PURPOSE/FISCAL NOTE H 416