HB 1592-FN - AS INTRODUCED
2016 SESSION
\t16-2202
\t10/09
HOUSE BILL\t1592-FN
AN ACT\trelative to the health care premium contribution for retired state employees who are over 65 years of age, relative to funding of retiree health benefits, and making an appropriation to the department of administrative services.
SPONSORS:\tRep. Kurk, Hills. 2; Rep. Weyler, Rock. 13; Sen. Little, Dist 8
COMMITTEE:\tSpecial Committee on Public Employee Pension Plans
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ANALYSIS
\tThis bill requires premium contribution amounts for retiree health benefits for retired state employees who have attained the age of 65 on or after July 1, 2016. The bill also makes appropriation to the department of administrative services for a health care consultant to design a long-term retiree health care funding plan.
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Explanation:\tMatter added to current law appears in bold italics.
\t\tMatter removed from current law appears [in brackets and struckthrough.]
\t\tMatter which is either (a) all new or (b) repealed and reenacted appears in regular type.
\t16-2202
\t10/09
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Sixteen
AN ACT\trelative to the health care premium contribution for retired state employees who are over 65 years of age, relative to funding of retiree health benefits, and making an appropriation to the department of administrative services.
Be it Enacted by the Senate and House of Representatives in General Court convened:
\t1 State Retiree Health Premium Benefits; Additional Authority for Commissioner of Administrative Services.
\t\tI. The general court intends that the commissioner of administrative services utilize $1,100,000 for the fiscal year ending June 30, 2017 for the purpose of funding state retiree health insurance premium benefits. The source of funds shall be as follows: $609,700 from the employee and retiree benefit risk management fund; $36,500 from the liquor fund; $212,000 from the highway fund; $24,800 from turnpike funds; $17,700 from the fish and game fund; $7,500 from the lottery funds under RSA 284:21-j; $12,900 from the administrative office of the courts; $28,400 from the community college system; and $88,200 from other funds.
\t\tII. To the extent the surplus in the employee and retiree benefit risk management fund is insufficient to fund the $609,700 in paragraph I, the commissioner of administrative services shall assess on state agencies additional amounts necessary to fund the shortfall in proportion to the number of retirees receiving health benefits from said fund. In order to fund said assessment, state agencies shall identify and transfer excess appropriations in any personnel or benefit class line to the department of administrative services account 01-14-14-143510-2903 retirees health insurance. In the event insufficient funds exist in any personnel or benefit class line to fund such assessment, state agencies shall identify and transfer excess appropriations from any other class line to said account with prior approval of the fiscal committee of the general court and the governor and council.
\t2 Department of Administrative Services; State Employees Group Insurance; Retiree Medical Benefits. Amend RSA 21-I:30, II to read as follows:
\t\tII. The state shall pay a premium or partial premium for each Medicare-eligible retired employee, as defined in paragraphs VI and VII of this section, and his or her spouse for their lifetimes, toward group hospitalization, hospital medical care, surgical care and other medical benefits plan or a self-funded alternative within the limits of the funds appropriated at each legislative session and providing any change in plan is approved by the fiscal committee of the general court prior to its adoption. A retired employee who has attained the age of 65 on or after July 1, 2016, shall pay the percentage of premium contribution determined under paragraph XIII. Retired employees who are eligible for Medicare may voluntarily cease participation in plan benefits at any time and may reenroll without restriction.
\t3 Department of Administrative Services; State Employees Group Insurance; Retiree Medical Benefits; Premium Contribution. Amend RSA 21-I:30, XIII to read as follows:
\t\tXIII.(a) The commissioner of administrative services shall invoice and collect from retired state employees and/or each applicable spouse who are not Medicare eligible and receiving medical and surgical benefits provided under this section, who do not receive a retirement allowance as defined in RSA 100-A:1, XXII, a premium contribution amount based on a percentage of the total monthly premium attributable to the applicable retiree and/or spouse, as determined by the commissioner of administrative services, with prior approval by the fiscal committee of the general court, provided the percentage is not lower than 12.5 percent.
\t\t\t(b) The commissioner of administrative services shall invoice and collect from
retired state employees who have attained the age of 65 on or after July 1, 2016 and/or each applicable spouse who has attained the age of 65 on or after July 1, 2016 receiving medical and surgical benefits provided under this section, who do not receive a retirement allowance as defined in RSA 100-A:1, XXII, a premium contribution amount equal to the percentage of the total monthly premium attributable to the applicable retiree and/or spouse, as determined by the commissioner of administrative services under subparagraph (a).
\t\t\t(c) The commissioner of administrative services is also authorized to invoice and collect from such other participants contribution amounts as specified by law.
\t\t\t(d) Collected amounts shall be deposited in the employee and retiree benefit risk management fund. Failure to remit payment of the contribution amount in full within 30 days of billing shall be grounds for terminating benefits, effective from the beginning of the billing period. Reenrollment shall be dependent upon payment of any outstanding contribution or other amounts within 6 months of the termination date. If a participant fails to remit payment in full for participation within 30 days of billing, on the 30th day the participant shall be notified by certified mail, return receipt requested, that he or she shall remit payment to the department within 10 business days of receiving the letter or his or her benefits shall be terminated effective upon the 10th business day after receipt of the letter and that reenrollment shall be dependent upon payment of any outstanding contribution or other amount within 6 months of the termination date.
\t4 New Hampshire Retirement System; Deductions; Retiree Medical Benefits. Amend RSA 100-A:54, III to read as follows:
\t\tIII.(a) The retirement system shall deduct from the monthly retirement allowance of retired state employees and/or each applicable spouse who are not Medicare eligible and receiving medical and surgical benefits provided pursuant to RSA 21-I:30, a premium contribution amount based on a percentage of the total monthly premium attributable to the applicable retiree and/or spouse, as determined by the commissioner of administrative services, with prior approval by the fiscal committee of the general court provided the percentage is not lower than 12.5 percent.
\t\t\t(b) The retirement system shall deduct from the monthly retirement allowance of a retired state employee who has attained the age of 65 on or after July 1, 2016 and/or each applicable spouse who has attained the age of 65 on or after July 1, 2016 receiving medical and surgical benefits provided pursuant to RSA 21-I:30, the premium contribution amount based on a percentage of the total monthly premium attributable to the applicable retiree and/or spouse, as determined by the commissioner of administrative services under RSA 21-I:30, XIII.
\t\t\t(c) The department of administrative services shall provide information as to the total monthly premium cost for each participant to the retirement system for purposes of calculating this deduction. Deducted amounts, which shall be in addition to and notwithstanding any amounts payable by the retirement system pursuant to RSA 100-A:52, RSA 100-A:52-a, and RSA 100-A:52-b, shall be deposited in the employee and retiree benefit risk management fund. In the event the retiree’s monthly allowance is insufficient to cover the certified contribution amount, the retirement system shall so notify the department of administrative services, which shall invoice and collect from the retiree and/or each applicable spouse the remaining contribution amount. Failure to remit payment of the contribution amount in full within 30 days of billing shall be grounds for terminating benefits, effective from the beginning of the billing period. Reenrollment shall be dependent upon payment of any outstanding contribution or other amounts within 6 months of the termination date. The department of administrative services shall provide notice of the termination of benefits as provided in RSA 21-I:30, XIII.
\t5 Judicial Retirement Plan; Deductions; Retiree Health Insurance. Amend RSA 100-C:11-a to read as follows:
\t100-C:11-a Retiree and Spouse Health Insurance Premium Contribution.
\t\tI. Retired judges and their applicable spouses who are not Medicare eligible and receiving medical and surgical benefits shall be responsible for payment of a premium contribution amount based on a percentage of the total monthly premium attributable to the applicable retiree and/or spouse, as determined by the commissioner of administrative services, with prior approval by the fiscal committee of the general court, provided the percentage is not lower than 12.5 percent.
\t\tII. Retired judges and their applicable spouses who have attained the age of 65 on or after July 1, 2016 and are receiving medical and surgical benefits shall be responsible for payment of the premium contribution amount based on a percentage of the total monthly premium attributable to the applicable retiree and/or spouse, as determined by the commissioner of administrative services under RSA 21-I:30, XIII.
\t\tIII. The department of administrative services shall provide information as to the total monthly premium cost for each participant to the judicial retirement plan for purposes of calculating this deduction. The judicial retirement plan shall deduct the payment required under this section from the retiree’s monthly retirement allowance. Deducted amounts shall be remitted to the administrative office of the courts within 14 days along with a statement identifying from whom the deduction was made, and shall be used to pay for plan retiree and spouse health care expenses and any administrative costs related thereto.
\t6 Appropriation; Department of Administrative Services; Risk Management; Overtime. In addition to any other sums appropriated, the sum of $20,000 for the biennium ending June 30, 2016 is hereby appropriated to the department of administrative service for the purpose of overtime charged to the risk management accounting unit, class 18. The source of funds shall be the employee and retiree benefit risk management fund under RSA 21-I:30-e.
\t7 Health Care Consultant Contract; Benefit Plan; Appropriation.
\t\tI. The commissioner of administrative services is hereby authorized to contract with a health care consultant for the purpose of a design for a long-term, means-tested funding plan for state retiree health benefits, and to provide training for state retirees on the new benefit plan and its funding.
\t\tII. Pursuant to the evaluation and design provided by the health care consultant under paragraph I, the commissioner of administrative services shall implement a new means-tested benefit plan for the funding of state retiree health care benefits not later than January 1, 2017. Such plan shall include state payment of a stipend into a separate account for each state retiree and/or applicable spouse receiving medical and surgical benefits under RSA 21-I:30 and provide each such retiree or spouse with a choice of health care insurance options.
\t\tIII. The sum of up to $300,000 is hereby appropriated to the commissioner of the department of administrative services for the purpose of payment for the cost of the contract with the health care consultant under paragraph I. The source of funds for the appropriation shall be the employee and retiree benefit risk management fund under RSA 21-I:30-e.
\t8 New Paragraph; Legislative Budget Assistant; Fiscal Committee; Retiree Health Advisory Council. Amend RSA 14:30-a by inserting after paragraph VI the following new paragraph:
\t\tVII. The committee shall establish a retiree health advisory council as a subcommittee to the committee. The advisory council shall convene public meetings as needed to review options under consideration for changes to the retiree health plan if additional changes are needed after the new retiree health benefits plan is established. The advisory council shall also receive testimony from retirees and other interested members of the public.
\t9 Effective Date. This act shall take effect upon its passage.
\t\t\t\t\t\t\t\t\t\t\t16-2202
\t\t\t\t\t\t\t\t\t\t\t12/4/15
HB 1592-FN- FISCAL NOTE
AN ACT\trelative to the health care premium contribution for retired state employees who are over 65 years of age, relative to funding of retiree health benefits and making an appropriation to the department of administrative services.
FISCAL IMPACT:
The Department of Administrative Services, New Hampshire Retirement System, and Judicial Branch state this bill, as introduced, will increase state expenditures by an indeterminable amount in FY 2016 and FY 2017, and will increase state restricted revenue by $162,896 in FY 2017, $482,800 in FY 2018, $796,816 in FY 2019, and $1,110,832 in FY 2020.There will be no fiscal impact to county and local expenditures and revenue.
This bill appropriates $20,000 for the fiscal year ending June 30, 2016, and $300,000 effective upon passage of this bill, in state restricted funds from the employee and retiree benefit risk management fund under RSA 21-I:30-e, to the Department of Administrative Services for the purposes of this act.
METHODOLOGY:
The Department of Administrative Services states this bill requires retired state employees and judges who have attained the age of 65 on or after July 1, 2016, to pay the premium contribution rate of 17.5 percent pursuant to the changes included in this bill relative to RSA 21-I:30 and RSA 100-C:11-a. The Department states the general court intends the Department to utilize $1,100,000, for the fiscal year ending June 30, 2016, to pay for state retiree health insurance premium benefits. The table below specifies the source of funds that shall be used:
Source of Funds | |
Employee Retiree Benefit Risk Management Fund | $609,700 |
Liquor Fund | $36,500 |
Highway Fund | $212,000 |
Turnpike Fund | $24,800 |
Fish and Game | $17,700 |
Lottery Funds (RSA 284:21-j | $7,500 |
General Funds for the Administrative Office of the Courts | $12,900 |
General Funds for the Community College System | $28,400 |
Other Funds | $88,200 |
Total | $1,037,700* |
*Note: There is a $62,300 discrepancy between the source of funds identified in the bill and the $1,100,000 the general court intends the Department of Administrative Services utilize. | |
This bill authorizes the Department to assess the necessary amounts on state agencies in proportion to the number of retirees receiving health benefits from the aforementioned funds in the event the employee and retiree risk management fund is insufficient to cover the $609,700 from the Employee Retiree Benefit Risk Management Fund. The Department of Administrative Services states this bill appropriates $20,000 in FY 2016 for overtime charges to the risk management unit. Additionally, this bill appropriates $300,000 to the Department to contract with a health care consultant to design a long-term, means-tested funding plan for state retiree health benefits effective upon passage of this bill. The Department must implement a new means-tested benefit plan for the funding of state retiree health care benefits not later than January 1, 2017. The Department estimates that requiring over 65 retirees to pay premium contributions will increase state revenue by the following amounts:
Projected Revenue Increase for Over 65 at 17.5% | |||||||
| A | B | C | Estimated Totals | |||
Time Period | Estimated Number of Retirees Turning 65 | 17.5% of Over 65 Monthly Contribution | Number of Months of Revenue Collection | FY 2017 | FY 2018 | FY 2019 | FY 2020 |
7/1/16 - 6/30/17 | 415 | $65.42 | Assumes 6 months in the FY the retiree turns 65. For each FY after, assumes 12 months. | $162,896 | $325,792 | $325,792 | $325,792 |
7/1/17 - 6/30/18 | 400 |
| $157,008 | $314,016 | $314,016 | ||
7/1/18 - 6/30/19 | 400 |
|
| $157,008 | $314,016 | ||
7/1/19 - 6/30/20 | 400 |
|
|
| $157,008 | ||
|
|
| Total Revenue Increase per Fiscal Year | $162,896 | $482,800 | $796,816 | $1,110,832 |
Note: With the current Retiree Over 65 Health Plan, the average retiree pays the Centers for Medicare & Medicaid Services a Medicare Part B premium each month of $104.90 in 2015 (Annual is $1,259). $104.90+65.42 (17.5% of $373.81) = $170.32 per month is the estimated amount every over 65 retiree will pay each month. | |||||||
The New Hampshire Retirement System states this bill requires it to deduct the health insurance premium contribution from the monthly retirement allowance of a retired state employee over the age of 65 who retires on or after July 1, 2016. The Retirement System estimates it will cost approximately $2,300 to modify the pension database software Pension Gold to accommodate the new requirement.
The Judicial Branch states that aside from the $12,900 the Department of Administrative Services is authorized to utilize from the general fund appropriation to the Judicial Branch, there will be no fiscal impact to its operations.