SB543 (2018) Detail

Relative to health care premium payments for certain retired state workers.


SB 543-FN - AS INTRODUCED

 

 

2018 SESSION

18-2981

10/01

 

SENATE BILL 543-FN

 

AN ACT relative to health care premium payments for certain retired state workers.

 

SPONSORS: Sen. Feltes, Dist 15; Sen. Cavanaugh, Dist 16; Sen. Fuller Clark, Dist 21; Sen. Hennessey, Dist 5; Sen. Lasky, Dist 13; Sen. Soucy, Dist 18; Sen. Watters, Dist 4; Sen. Woodburn, Dist 1; Rep. Bove, Rock. 5; Rep. Welch, Rock. 13

 

COMMITTEE: Finance

 

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ANALYSIS

 

This bill changes the eligibility date for the application of the premium contribution percentage for retired state employees and spouses.

 

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

18-2981

10/01

 

STATE OF NEW HAMPSHIRE

 

In the Year of Our Lord Two Thousand Eighteen

 

AN ACT relative to health care premium payments for certain retired state workers.

 

Be it Enacted by the Senate and House of Representatives in General Court convened:

 

1  State Retiree Health Benefits; Premium Contribution.  Amend RSA 21-I:30, XIII(b) to read as follows:

(b)  The commissioner of administrative services shall invoice and collect from retired state employees and/or spouses who are eligible for Medicare Parts A and B due to age or disability 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 10 percent.  Such premium contribution shall only be collected from eligible state retirees and spouses [with a date of birth] for employees whose employment with the state began on or after [January 1, 1949] September 1, 2009.

2  Retirement System; Retired State Employees; Premium Contribution.  Amend RSA 100-A:54, III(b) to read as follows:

(b)  The retirement system shall deduct from the monthly retirement allowance of a retired state employee and/or spouse who are eligible for Medicare Parts A and B due to age or disability 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 10 percent.  Such premium contribution shall only be collected from eligible state retirees and spouses [with a date of birth] for employees whose employment with the state began on or after [January 1, 1949] September 1, 2009.

3  Judicial Retirement Plan; Health Insurance; Premium Contribution.  Amend RSA 100-C:11-a, II to read as follows:

II.  Retired judges and/or spouses who are eligible for Medicare Parts A and B due to age or disability 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, with prior approval by the fiscal committee of the general court, provided the percentage is not lower than 10 percent.  Such premium contribution shall only be collected from eligible retired judges and spouses [with a date of birth] for employees whose employment with the state began on or after [January 1, 1949] September 1, 2009.

4  Effective Date.  This act shall take effect 60 days after its passage.

 

LBAO

18-2981

12/19/17

 

SB 543-FN- FISCAL NOTE

AS INTRODUCED

 

AN ACT relative to health care premium payments for certain retired state workers.

 

FISCAL IMPACT:      [ X ] State              [    ] County               [    ] Local              [    ] None

 

 

 

Estimated Increase / (Decrease)

STATE:

FY 2019

FY 2020

FY 2021

FY 2022

   Appropriation

$0

$0

$0

$0

   Revenue

($687,200)

($1,798,200)

($2,316,700)

($2,851,700)

   Expenditures

$0

$0

$0

$0

Funding Source:

  [    ] General            [    ] Education            [    ] Highway           [ X ] Other - Medicare-Eligible Retiree Premium Contribution

 

METHODOLOGY:

This bill changes premium contribution requirements for retired state employees and/or spouses who are eligible for Medicare Parts A and B due to age or disability, and are therefore eligible for retiree coverage under the State Health Benefit Plan (HBP).  The bill does not affect non-Medicare-Eligible Retirees who qualify for premium-paid coverage under the HBP.

 

Currently, Medicare-Eligible Retirees (subscribers and spouses) with a date of birth (DOB) on or after January 1, 1949, make a premium contribution that is not lower than 10 percent of the total premium attributable to those members.  Medicare-Eligible Retirees with a DOB before January 1, 1949, are exempt from any premium contribution.  The Department of Administrative Services (DAS) reports as of October 2017 (FY 2018), the Medicare-Eligible Retiree population is divided as follows:

 

• DOB on and after January 1, 1949: approximately 2,600 member pay $36.24 each per month

• DOB earlier than January 1, 1949: approximately 7,000 members pay $0 each per month

 

Currently, as more people age into eligibility for the Medicare-Eligible Retiree HBP, the population making a contribution will increase. As the number of members exempt from paying a premium contribution die or withdraw from the plan, the exempt population will become smaller.

 

This bill replaces the Medicare-Eligible Retiree DOB provision with a requirement based on employment with the State.  The new provision requires Medicare-Eligible Retirees whose employment with the State began on or after September 1, 2009, pay the premium contribution of not less than 10 percent of the total premium attributable to those members.  Those Medicare-Eligible Retirees hired prior to September 1, 2009 shall be exempt from any premium contribution.  Therefore, Medicare-Eligible Retirees, the largest group of retirees, will be exempt from paying a premium contribution until 2029.  Beginning in 2029, the Medicare-Eligible Retiree premium contribution revenue will grow slowly, as these retirees hired September 1, 2009 and later age into the Medicare-Eligible Retiree HBP.

 

The loss of HBP premium revenue beginning in FY 2019 will require action to meet estimated plan expenses, including one or more of the following:

  • Funding from the General Fund;

• Funding from Self-Funded Agencies such as DOT, Safety, Liquor, and Lottery;

• An increase in the non-Medicare eligible population's premium contribution. (This population of approximately 2,800 subscribers and spouses will make a premium contribution of 20%  in calendar year 2018 or $210.29 per month, per subscriber/spouse);

• Changes in HBP design, so that fewer services and products are covered, and/or higher co-pays and deductibles are required;

• Implementation of a defined contribution plan.  A defined contribution plan (DC) will cap state expenditures for the HBP to an amount allocated for this purpose in the budget.

 

DAS assumed the following to estimate the impact of this bill in FY 2019-FY 2022:

• 4% annual net increase in the projected number of Medicare-Eligible Retirees;

• 3% annual decrease in the exempt Medicare-Eligible Retirees due to death;

• 7.5% estimated annual health trend applied to the monthly Medicare Plan premium.

 

DAS assumes this legislation will not be effective until January 1, 2019 because the federal Centers for Medicare and Medicaid (CMS) does not permit changes to health benefit plans that supplement Medicare coverage until the beginning of the next benefit year. The State HBP runs on a calendar year, and therefore the change must be made on or after January 1, 2019.  

 

DAS calculated the premium contribution revenue loss by projecting the total population of Medicare-Eligible Retirees less the projected population of exempt Medicare-Eligible Retirees based upon a DOB on or before December 31, 1948 and resulting in the projected population of Medicare-Eligible Retirees who will pay a premium contribution with a date of birth on or after January 1, 1949.

 

 

Number of Medicare-Eligible Retirees Projected Paying 10% Premium Contribution (Current Law)

FY 2019

FY 2020*

FY 2021*

FY 2022*

1A

Projected number of Medicare- Eligible Retirees, assumes a 4% annual increase (excluding self-payers who pay 10%)

9,929

10,320

10,730

11,160

1B

Projected number of Medicare- Eligible Retirees who are exempt (retirees with a DOB on or before 12/31/48), based on enrollment as of 12/31/16 with a projected decrease of 3% per year.

7,202

6,990

6,790

6,590

1C

Projected number of Medicare- Eligible Retirees to pay a contribution with a DOB of 1/1/49 or later

2,727

3,330

3,940

4,570

*rounded to the nearest tenth for FY 2020, FY 2021 and FY 2022

 

DAS projected lost premium contribution revenue by estimating the budget rate and the premium for Medicare-Eligible Retirees, estimating the net 10% premium contribution, and then multiplying that number times the number of Medicare-Eligible Retirees who would pay the premium contribution based on a DOB on or after January 1, 1949.

 

 

Estimated Lost Medicare-Eligible Retiree Premium Contribution Revenue

FY 2019

Total PC Revenue

1/1/19 to 6/30/19

FY 2020

Total PC Revenue

FY 2021

Total PC Revenue

FY 2022

Total PC Revenue

2A

Estimated Budget Rate for Medicare-Eligible Plan with an estimated 7.5% annual increase (rounded to nearest dollar)

$421

$453

$487

$523

2B

x 10% Premium Contribution (PC) (rounded to nearest dollar)

$42

$45

$49

$52

2C

Medicare-Eligible Retirees to pay the contribution for one month of PC revenue

(1C x 2B)

$114,534

$149,850

$193,060

$237,640

2D

Months

x 6

months

x 12 months

x 12

months

x 12 months

2E

Projected Medicare-Eligible Retiree PC Revenue (rounded to nearest hundred)

$687,200

$1,798,200

$2,316,700

$2,851,700

 

DAS estimated the projected increases in General Fund and non-General Fund revenues to offset the decrease in premium contribution revenue, assuming no changes are made to the services covered by the HBP.

 

 

FY 2019

1/1/19 to 6/30/19

FY 2020

FY 2021

FY 2022

Increase in General Fund Revenue

$440,700

$1,161,000

$1,499,400

$1,847,100

Increase in non-General Fund Revenue

$246,500

$637,200

$817,300

$1,004,600

Total PC Revenue Decrease

($687,200)

($1,798,200)

($2,316,700)

($2,851,700)

Total Estimated Budget Impact

$0

$0

$0

$0

 

 

AGENCIES CONTACTED:

Department of Administrative Services

 

Links

SB543 at GenCourtMobile

Action Dates

Date Body Type
Feb. 6, 2018 Senate Hearing
March 15, 2018 Senate Floor Vote

Bill Text Revisions

SB543 Revision: 2883 Date: Jan. 9, 2018, 8:57 a.m.

Docket


March 15, 2018: Inexpedient to Legislate, RC 14Y-10N, MA === BILL KILLED ===; 03/15/2018; SJ 8


March 15, 2018: Committee Report: Inexpedient to Legislate, 03/15/2018; SC 12A


Feb. 6, 2018: Hearing: 02/06/2018, Room 103, SH, 02:05 pm; SC 6


Jan. 3, 2018: Introduced 01/03/2018 and Referred to Finance; SJ 2