Report Title:

Public Employee Health Benefits

 

Description:

Creates an employer-union trust fund as a single public employees health benefits delivery system administered by a board of directors and held outside the state treasury.

 

HOUSE OF REPRESENTATIVES

H.B. NO.

1680

TWENTY-FIRST LEGISLATURE, 2001

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO PUBLIC EMPLOYEE HEALTH BENEFITS.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"CHAPTER

HAWAII EMPLOYER-UNION HEALTH BENEFITS TRUST FUND

PART I. DEFINITIONS

§ -1 Definitions. As used in this chapter:

"Board" or "board of directors" means the board of directors of the Hawaii employer-union health benefits trust established in section -18.

"Carrier" means a voluntary association, corporation, partnership, or organization engaged in providing, paying for, arranging for, or reimbursing the cost of health or long-term care services under group insurance contracts or medical, hospital, or dental services agreements.

"Contributions" means money payments made to the fund by the State or the several counties or an employee-beneficiary or qualified-beneficiary.

"Dependent-beneficiary" means:

(1) An employee-beneficiary's spouse;

(2) Any unmarried child deemed eligible by the board, including a legally adopted child, stepchild, foster child, or recognized natural child who lives with the employee-beneficiary; and

(3) Any unmarried child regardless of age who is incapable of self-support because of a mental or physical incapacity which existed prior to the unmarried child's reaching the age of nineteen years.

"Employee" means an employee or officer of the State, county government, or legislature:

(1) Including:

(A) An elective officer or a person who has served as a member of the legislature for at least ten years;

(B) A per diem employee;

(C) An officer or employee under an authorized leave of absence;

(D) An employee of the Hawaii national guard although paid from federal funds;

(E) A retired member of the employees' retirement system, the county pension system, or the police, firefighters, or bandsmen pension system of the State or county;

(F) A salaried and full-time member of a board, commission, or agency appointed by the governor or the mayor of a county; and

(G) A person employed by contract for a period not exceeding one year, where the director of human resources development, personnel services, or civil service has certified that the service is essential or needed in the public interest and that, because of circumstances surrounding its fulfillment, personnel to perform the service cannot be obtained through normal civil service recruitment procedures;

and

(2) Excluding:

(A) A designated beneficiary of a retired member of the employees' retirement system, the county pension system, or the police, firefighters, or bandsmen pension system of the State or county;

(B) Except as allowed under paragraph (1)(G), a person employed temporarily on a fee or contract basis; and

(C) A person employed for less than three months and whose employment is less than one-half of a full-time equivalent position.

"Employee-beneficiary" means an employee, the beneficiary of an employee who is killed in the performance of the employee's duty, an employee who retired prior to 1961, or the beneficiary of a retired member of the employees' retirement system, a county pension system, or a police, firefighters, or bandsmen pension system of the State or county, upon the death of the retired member and, which beneficiary, if a child is unmarried and under the age of nineteen, or if a surviving spouse, does not remarry; provided that the employee, the employee's beneficiary, or the beneficiary of the deceased retired member is deemed eligible by the board to receive health benefits plan or a long-term care benefits plan.

"Fund" means the Hawaii employer-union health benefits trust fund established in section -2.

"Health benefits plan" means:

(1) A group insurance contract or service agreement that may include medical, hospital, surgical, prescribed drugs, vision, and dental services, in which a carrier agrees to provide, pay for, arrange for, or reimburse the cost of medical, hospital, surgical, prescribed drugs, vision, or dental services as determined by the board; or

(B) A similar schedule of benefits established by the board and provided through the fund on a self-insured basis.

"Long-term care benefits plan" means:

(1) A group insurance contract or service agreement in which a carrier agrees to provide, pay for, arrange for, or reimburse the cost of long-term care benefits as determined by the board; or

(2) A similar schedule of benefits established by the board and provided through the fund on a self-insured basis.

"Periodic charge" means the periodic payment by the board to a carrier for any health benefits, or long-term care benefits plan.

"Qualified-beneficiary" means, for purposes of the long-term care benefits plan, a former employee or an employee who is not eligible for benefits due to a reduction in work hours including the employee's spouse or a divorced spouse of an employee or retiree; provided that the qualified beneficiary was enrolled in the plan prior to loss of benefits.

"Trustee" means a trustee of the board of trustees of the Hawaii employer-union health benefits trust fund established in section -13.

PART II. TRUST FUND

§ -2 The Hawaii employer-union health benefits trust fund; establishment. There is established outside the state treasury, a trust fund to be known as the "Hawaii employer-union health benefits trust fund." The fund shall consist of contributions, interest, income, dividends, refunds, rate credits, and other returns. The fund shall be under the control of the board and placed under the department of budget and finance for administrative purposes.

§ -3 Purpose of trust fund. (a) The fund shall be used for the purpose of providing employee-beneficiaries and dependent-beneficiaries with a health benefits plan and a long-term care benefits plan, and to pay administrative and other expenses of the trust fund; provided that the fund, including rate credits or reimbursements from any carrier or self-insured plan or any earning or interest derived therefrom, and any earnings on investments, may be used to stabilize health benefits plan or long-term care benefits plan rates, and, with the approval of the governor and the legislature, fund administrative and other expenses necessary to effectuate these purposes.

(b) To the extent that contributions are provided for group life insurance benefits in sections -4, -5, -6, -7, and -9, the fund may also be used for the purpose of providing group life insurance benefits to employees.

(c) To the extent that contributions are received from employee-beneficiaries and qualified-beneficiaries for long-term care insurance benefits under section -12, the fund may also be used for the purpose of providing long-term care insurance benefits to eligible participants.

(d) The fund may assist the State and the counties to implement and administer cafeteria plans authorized under section 125 of the Internal Revenue Code of 1986, as amended, and under part II of chapter 78.

§ -4 State and county contributions to the fund, active employees. (a) The State through the department of budget and finance and the several counties through their respective departments of finance shall pay to the fund a monthly contribution equal to the amount established under chapter 89C or specified in the applicable public sector collective bargaining agreements, whichever is appropriate, for each of their respective employee-beneficiaries and employee-beneficiaries with dependent-beneficiaries, which shall be used toward the payment of costs of a health benefits plan; provided that the monthly contribution is a specified dollar amount; provided further that the monthly contribution shall not exceed the actual cost of a health benefits plan. If both husband and wife are employee-beneficiaries, the total contribution by the State or the appropriate county shall not exceed the monthly contribution of a family plan for both of them. If, however, the State or any of the several counties establish cafeteria plans in accordance with section 125 of the Internal Revenue Code of 1986, as amended, and part II of chapter 78, the monthly contribution to the fund for those employee-beneficiaries who participate in a cafeteria plan shall be made through the cafeteria plan. In this event, the payments made by the State or the counties shall include the State's and the counties' respective contributions to the fund and the employee-beneficiary's share of the cost of the health benefits plan selected and authorized by the employee-beneficiary through the cafeteria plan.

(b) The State through the department of budget and finance and the several counties through their respective departments of finance shall pay to the fund a monthly contribution equal to the amount established under chapter 89C or specified in the applicable public sector collective bargaining agreement, whichever is applicable, for each of their respective employees, to be used towards the payment of group life insurance benefits for each employee.

(c) Contributions made by the State or the several counties shall not be considered as wages or salary of an employee-beneficiary, and no employee-beneficiary shall have any vested right in or be entitled to receive any part of any contribution made to the fund.

§ -5 State and county contributions to the fund, retired employees. (a) Notwithstanding any law to the contrary, this section shall apply to state and county contributions to the fund for:

(1) The beneficiary of an employee who is killed in the performance of duty;

(2) An employee-beneficiary who retired after June 30, 1984, due to a disability as defined in sections 88-79 and 88-285;

(3) An employee-beneficiary who retired before July 1, 1984;

(4) An employee-beneficiary who:

(A) Was hired before July 1, 1996;

(B) Retired after June 30, 1984; and

(C) Who had ten years or more of credited service, excluding sick leave;

and

(5) An employee-beneficiary who was hired after June 30, 1996, and who retired with twenty-five or more years of credited service, excluding sick leave, except as provided in section -9;

or upon their death their beneficiary except as provided in section -8, including employees who retired prior to 1961 and their beneficiaries.

(b) Effective July 1, 2003, there is established a base monthly contribution for health benefit plans which the State through the department of budget and finance and the several counties through their respective departments of finance shall pay to the fund, up to the following:

(1) $ for employee-beneficiaries enrolled in supplemental medicare self plans;

(2) $ for employee-beneficiaries enrolled in supplemental medicare family plans;

(3) $ for employee-beneficiaries enrolled in non-medicare self plans; or

(4) $ for employee-beneficiaries enrolled in non-medicare family plans;

provided the monthly contribution shall not exceed the actual cost of the health benefits plan or plans; and provided further if both husband and wife are employee-beneficiaries, the total contribution by the State or the appropriate county shall not exceed the monthly contribution of a family supplemental medicare or family non-medicare plan, as appropriate.

The base composite monthly contribution shall be annually adjusted beginning July 1, 2004. The adjusted base composite monthly contribution for each new plan year shall be calculated by adjusting the base composite monthly contribution in effect through the end of the previous plan year by the change in the medical care component of the Honolulu Consumer Price Index (CPI) for all urban consumers. The change in the medical care component of the CPI shall be based on the CPI reported as of December 31st of each calendar year.

(c) Effective July 1, 2003, there is established a base monthly contribution of $ for each retired employee enrolled in a group life insurance plan. The base composite monthly contribution shall be annually adjusted beginning July 1, 2003. The adjusted base composite monthly contribution for each new plan year shall be calculated by adjusting the base composite monthly contribution in effect through the end of the previous plan year by the change in the medical care component of the Honolulu Consumer Price Index (CPI) for all urban consumers. The change in the medical care component of the CPI shall be based on the CPI reported as of December 31st of each calendar year.

(d) Contributions made by the State or the several counties shall not be considered as wages or salary of an employee-beneficiary, and no employee-beneficiary shall have any vested right in or be entitled to receive any part of any contribution made to the fund.

§ -6 State and county contributions to the fund; retired employees with fewer than ten years of service. (a) This section shall apply to state and county contributions to the fund for employees specified in section -1(1)(E), except those hired after June 30, 1996 under sections -7 and -9, who retire after June 30, 1984, with fewer than ten years of credited service, excluding sick leave.

(b) The State through the department of budget and finance and the several counties through their respective departments of finance shall pay to the fund a monthly contribution equal to one-half of the base monthly contribution set forth under section -5(a) for retired employee's enrolled in medicare or non-medicare health benefit plans. If both husband and wife are employee-beneficiaries, the total contribution by the State or the appropriate county shall not exceed the monthly contribution of a family plan for both of them.

(c) The State through the department of budget and finance and the several counties through their respective departments of finance shall pay to the fund a base monthly contribution as set forth in section -5(c) for each retired employee enrolled in the fund's group life insurance benefits plan under this section.

(d) Contributions made by the State or the several counties shall not be considered as wages or salary of an employee-beneficiary, and no employee-beneficiary shall have any vested right in or be entitled to receive any part of any contribution made to the fund.

§ -7 State and county contributions to the fund; employees hired after June 30, 1996, and retired with fewer than twenty-five years of service. (a) This section shall apply to state and county contributions to the fund for employees who were hired after June 30, 1996, and who retire with fewer than twenty-five years of credited service, excluding sick leave; provided that this section shall not apply if an employee is hired prior to July 1, 1996, and transfers employment after June 30, 1996, nor to any employee who has at least ten years of credited service and who has suffered a break in service. For purposes of this section, "transfer" means to leave state or county employment and return to state or county employment within ninety calendar days.

(b) For purposes of this section, if an employee leaves state or county employment and returns to state or county employment after June 30, 1996, when the employee retires, the employee's years of service shall be computed in the same manner as set forth in chapter 88.

(c) The State, through the department of budget and finance and the several counties through their respective departments of finance, shall pay to the fund a monthly contribution equal to one-half of the base monthly contribution set forth under section -5(a) for retired employee's enrolled in medicare or non-medicare health benefit plans with ten or more years but fewer than fifteen years of service; and seventy-five per cent of the base monthly contribution set forth under section -5(a) for retired employee's enrolled in medicare or nonmedicare health benefit plans with at least fifteen but fewer than twenty-five years of service. If both husband and wife are employee-beneficiaries, the total contribution by the State or the appropriate county, after an employee's retirement pursuant to this section, shall not exceed the monthly contribution of a family plan for both of them.

(d) The State, through the department of budget and finance and the several counties through their respective departments of finance, shall pay to the fund a monthly contribution equal to the base monthly contribution as set forth in section -5(c) for each retired employee enrolled in the fund's group life insurance benefits plan under this section.

(e) Contributions made by the State or the several counties shall not be considered as wages or salary of an employee-beneficiary, and no employee-beneficiary shall have any vested right in or be entitled to receive any part of any contribution made to the fund.

§ -8 State and county contributions to the fund; employees retiring after December 31, 2002, reduced survivor benefits. This section shall apply to state and county contributions to the fund for employees retiring after December 31, 2001. The State through the department of budget and finance and the several counties through their respective departments of finance shall pay to the fund monthly contributions for the retired employee whether enrolled in a self or family plan as specified in sections -5, -6, -7, and -9, except that one-half of the monthly contributions for the employee-beneficiary or employee-beneficiary with dependent-beneficiaries shall be paid once the employee, as specified in section -1(1)(E), is deceased.

§ -9 State and county contributions to the fund; employees hired after June 30, 2001, and retired. (a) This section shall apply to state and county contributions to the fund for employees who were hired after June 30, 2001, and who retired, except that this section shall not apply if an employee is hired prior to July 1, 2001, and transfers employment after June 30, 2001, nor to any employee who has at least ten years of credited service and who has suffered a break in service. For the purposes of this section, "transfer" means to leave state or county employment and return to state or county employment within ninety calendar days.

(b) For purposes of this section, if an employee leaves state or county employment and returns to state or county employment after the effective date of this Act, then the employee's years of service shall be computed in the same manner as set forth in chapter 88.

(c) The State through the department of budget and finance and the several counties through their respective departments of finance shall pay to the fund a monthly contribution equal to one-half of the the base medicare or non-medicare monthly contribution set forth under section -5(a) for retired employees based on the self plan with ten or more years but fewer than fifteen years of service; and seventy-five per cent of the base medicare or non-medicare monthly contribution set forth under section -5(a) for retired employees based on the self plan with at least fifteen but fewer than twenty-five years of service; and one-hundred per cent of the base medicare or non-medicare monthly contribution set forth under section -5(a) for retired employees based on the self plan with twenty five or more years of service. If both husband and wife are employee-beneficiaries, the total contribution by the State or the appropriate county, after an employee's retirement pursuant to this section, shall not exceed the monthly contribution of two self plans. If the employee-beneficiary and the spouse are state or county retired employees, the total contribution by the State or the appropriate county, after an employee-beneficiary's retirement pursuant to this section, shall not exceed the monthly contribution of two self plans.

(d) The State, through the department of budget and finance and the several counties through their respective departments of finance, shall pay to the fund a monthly contribution equal to the base monthly contribution as set forth in section -5(c)for each retired employee enrolled in the fund's group life insurance benefits plan under this section.

(e) Contributions made by the State or the several counties shall not be considered as wages or salary of an employee-beneficiary, and no employee-beneficiary shall have any vested right in or be entitled to receive any part of any contribution made to the fund.

§ -10 Reimbursement for state contributions. All state agencies having control of special funds shall reimburse the State for contributions made by the State pursuant to sections -4, -5, -6, -7, -8, and -9 on account of the employees in the agencies whose compensation is paid in whole or part from the special funds. All state and county agencies receiving federal funds, which may be expended for the purpose of absorbing the contributions payable by the State to the fund, shall set aside a portion of the federal funds sufficient to reimburse the State for contributions made by the State pursuant to sections -4, -5, -6, -7, -8, and -9 on account of the employees in the agencies whose compensation is paid in whole or part from federal funds.

§ -11 Contributions by an employee-beneficiary for health benefit plans. (a) Each employee-beneficiary shall make a monthly contribution to the fund amounting to the difference between the monthly charge of the health benefits plan selected by the employee-beneficiary and the State's and county's contribution to the fund. Nothing in this section shall prohibit any employee-beneficiary from participating in a cafeteria plan authorized under section 125 of the Internal Revenue Code of 1986, as amended, and part II of chapter 78.

(b) During the period the health benefits plan selected by an employee-beneficiary is in effect, the employee-beneficiary shall authorize, if otherwise allowed by law, the employee-beneficiary's contribution to be withheld and transmitted monthly to the fund by the comptroller, employees' retirement system of the State of Hawaii, or finance officer who disburses the employee-beneficiary's compensation, pension, or retirement pay. If, however, an employee-beneficiary's contribution to the fund is not withheld and transmitted to the fund, the employee-beneficiary shall pay the monthly contribution:

(1) Directly to the fund by the first day of each month, in the case of an employee-beneficiary who normally receives the employee-beneficiary's compensation from the comptroller of the State, or the employees' retirement system of the State of Hawaii; or

(2) In the case of all other employee-beneficiaries, to the respective finance officer from whom the employee-beneficiary normally receives compensation for transmittal to the fund by the first day of each month.

(c) Notwithstanding subsection (a) to the contrary, an employee-beneficiary's monthly contribution to the fund, amounting to the difference between the monthly cost of the health benefits plan selected by the employee-beneficiary and the State's or appropriate county's contribution to the fund, shall be deemed to include the amount which would have been the employee-beneficiary's contribution if the employee-beneficiary had not elected to participate in the cafeteria plan.

§ -12 Contributions by an employee-beneficiary or qualified-beneficiary for long-term care benefits plan. (a) During the period the long-term care benefits plan is in effect, the employee-beneficiary shall authorize, if otherwise allowed by law, the employee-beneficiary's contribution to be withheld and transmitted monthly to the fund by the comptroller or finance officer who disburses the employee-beneficiary's compensation, pension, or retirement pay. If, however, an employee-beneficiary's monthly contribution to the fund is not withheld and transmitted to the fund, the employee-beneficiary shall pay the monthly contribution directly to the board's designated carrier or third-party administrator by the first day of each month.

(b) Qualified-beneficiaries shall pay monthly contributions directly to the board's designated carrier or third-party administrator by the first day of each month.

PART III. BOARD OF TRUSTEES

§ -13 Composition of board of trustees; establishment. There is established the board of trustees of the Hawaii employer-union health benefits trust fund. The board of trustees shall be composed of ten trustees to be appointed by the governor, without regard to section 26-34, as follows:

(1) Five trustees, one of whom shall represent retirees, appointed from a list of nominees submitted by exclusive employee representative organizations to represent public employees; and

(2) Five trustees to represent the public employer, including the director of human resources development, or a designated representative, and the director of finance, or a designated representative, and one representative of the counties on a rotational basis.

(b) The trustees shall elect a chair, a vice-chair, and a secretary-treasurer from among its members.

§ -14 Terms of trustees; vacancies. (a) Except for the director of finance, the director of human resources development, and the trustee or trustees representing the counties on a rotational basis, the term of office of each trustee shall be four years; provided that the trustee may be reappointed for one additional consecutive four-year term. The director of finance and the director of human resources development shall serve during the directors' terms of office as directors. The trustee representing the counties on a rotational basis shall be limited to a term of four years.

(b) Each term shall commence on January 1 and expire on December 31. The governor may reduce the terms of those initially appointed so as to provide, as nearly as can be, for the expiration of an equal number of terms at intervals of one year.

(c) A vacancy on the board of trustees shall be filled by appointment of the governor. The person appointed to fill a vacancy shall serve for the remainder of the term of the person's predecessor.

(d) If by the end of the trustee's term a trustee is not reappointed or the trustee's successor is not appointed, the trustee shall serve until the trustee's successor is appointed.

§ -15 Compensation and expenses of a trustee. Each trustee shall serve without compensation, but may be reimbursed from the fund for any necessary expenses made in behalf of the fund.

§ -16 Legal advisor. The attorney general shall serve as legal advisor to the board of trustees of the Hawaii employer-union health benefits trust fund.

§ -17 Power and duties of the board of trustees. The board of trustees shall:

(1) Act in an advisory capacity to the Hawaii employer-union health benefits trust fund;

(2) Select the members of the board of directors;

(3) Have the authority to remove any member or members of the board of directors, including all of them, who do not perform their duties to the expectations of the board of trustees or for any legitimate reason; provided that no member of the board of directors shall be removed without a majority vote of the full board of trustees agreeing to removal.

PART IV. BOARD OF DIRECTORS

§ -18 Board of directors; establishment. (a) There is established the board of directors of the Hawaii employer-union health benefits trust fund. The board shall be composed of three directors to be appointed by the board of trustees, without regard to section 26-34, as follows:

(1) One member shall have substantial experience and knowledge in the field of health care;

(2) One member shall have substantial experience and knowledge of the health care insurance industry or have a comprehensive understanding of actuarial principles; and

(3) One member shall have legal experience or have substantial knowledge and experience with the Employee Retirement Income Security Act of 1974, as amended.

(b) The board of trustees shall select one of the board of directors to serve as chair of the board of directors.

§ -19 Terms of directors; vacancies. (a) The term of each director shall be for four years; provided that a director may be appointed for one consecutive additional four-year term.

(b) Any vacancy on the board of directors shall be filled by appointment by the board of trustees. The person appointed to fill a vacancy shall serve for the remainder of the term of the person's predecessor.

(c) If by the end of the trustee's term a trustee is not reappointed or the trustee's successor is not appointed, the trustee shall serve until the trustee's successor is appointed.

§ -20 Compensation; bonus. (a) Each director shall be compensated a base rate of $ per year for services rendered.

(b) Each director may also qualify for a bonus in addition to the annual base rate, depending on the performance of the fund. The bonus shall be based on the following:

(1) Percentage of savings accrued by employers, employee-beneficiaries, and qualified-beneficiaries from contributions to each health benefits plan and long-term care benefits plan. This amount shall be calculated by comparing the average monthly cost of contributions by employers, employee-beneficiaries, and qualified-beneficiaries to the Hawaii employer-union health benefits trust fund or the Hawaii public employees health fund during each fiscal year, in comparison to the average monthly cost of contributions made during the previous fiscal year;

(2) Percentage of savings accrued from administrative and investment expenses of the trust. This amount shall be calculated by comparing how much is spent for administrative and investment expenses of the Hawaii employer-union health benefits trust fund or the Hawaii public employees health fund during each fiscal year, and in comparison to the amount expended for administrative and investment expenses during the previous fiscal year;

(3) Percentage of growth of the reserves of the Hawaii employer-union health benefits trust fund. This amount shall be calculated on an annual basis.

(c) The bonus for each director shall be the sum of the following:

(1) The percentage of savings accrued from fund contributions under subsection (b)(1) multiplied by      ;

(2) The percentage of savings accrued from administrative and investment expenses under subsection (b)(2) multiplied by ; and

(3) The percentage of growth of the fund reserves under subsection (b)(3) multiplied by .

§ -21 Legal advisor. The attorney general shall serve as legal advisor to the board of directors of the Hawaii employer-union health benefits trust fund.

§ -22 Administration of the fund. The board of directors shall administer and carry out the purpose of the fund. The board of directors shall provide quality health and other benefit plans at a cost affordable to both the public employers and the public employees.

§ -23 Determine health benefits plan; contract with carriers; benefit plan eligibility. (a) The board shall determine the health benefits plan or plans, which shall be excepted from the minimum group requirements of chapter 431.

(b) The board may contract for health benefits plans or provide health benefits through a non-insured schedule of benefits.

(c) The board shall determine the requirements for eligibility under the health benefits plans.

§ -24 Determination of benefits under the group life benefit program or group life insurance program. The board may provide benefits under a group life benefit program or group life insurance program to employees.

§ -25 Determination of long-term care benefits plan; contract with carrier or third-party administrator. (a) The board may determine the benefits of a long-term care benefits plan for employee-beneficiaries, or their spouses, as well as their parents and grandparents, and in-law parents and grandparents, and qualified-beneficiaries. The plan shall comply with article 10H of chapter 431.

(b) Notwithstanding any law to the contrary, the benefits shall be available only to employee-beneficiaries, or their spouses, as well as their parents and grandparents, and in-law parents and grandparents, and qualified-beneficiaries who enroll between the ages of twenty and eighty-five. Eligible persons must comply with the plan's age, enrollment, medical underwriting, and contribution requirements.

(c) The board may contract with a carrier to provide fully-insured benefits or a third-party administrator to administer self-insured benefits.

§ -26 Health benefits for part-time, temporary, and seasonal or casual employees; provision of. (a) The board may offer medical, hospital, and surgical benefits plans to part-time, temporary, and seasonal or casual employees at no cost to the employers. A part-time, temporary, and seasonal or casual employee means a person employed for less than three months or whose employment is less than one-half of a full-time equivalent position. The board may determine eligibility for part-time, temporary, and seasonal or casual employees by rules exempted from chapter 91 as provided in section -33.

(b) The board shall determine the medical, hospital, and surgical benefits plan, which shall be excepted from the minimum group requirements of article 10A of chapter 431. The medical, hospital, and surgical benefits plan shall provide, pay for, arrange for, or reimburse the cost of hospitalization, surgery, medical, and may include prescribed hospital in-patient and out-patient service and medical benefits.

(c) The board may contract for the health benefit plans. Each part-time, temporary, and seasonal or casual employee enrolled for health benefits shall pay monthly contributions directly to the board's designated carrier. The monthly contributions may include the carrier's administrative costs.

§ -27 Selection of a carrier or third-party administrator for a health benefits, group life insurance, or long-term care benefits plan. Procurement of a carrier or third-party administrator for any benefit plan shall be exempted from chapter 103D.

§ -28 Determine eligibility of employee, dependent, or person. The board shall establish and adopt eligibility requirements to determine which employee, dependent, or person may qualify as an employee-beneficiary, dependent-beneficiary, or qualified-beneficiary, respectively; provided that a retired member of the employees' retirement system, a county pension system, or a police, firefighters, and bandsmen pension system of the State or county, or the retired member's dependent shall be eligible to qualify as an employee-beneficiary or dependent-beneficiary, whether or not the retired member was actively employed by the State or county at the time of the retired member's retirement and whether or not the employee retired before or after 1961. Employees who retired prior to 1961 shall be treated as if they were members of the fund during their period of employment with the State or county and receive the same benefits as other members. Only an employee-beneficiary or dependent or person satisfying the eligibility requirements may qualify as an employee-beneficiary, dependent-beneficiary, or qualified-beneficiary.

§ -29 Information and enrollment. (a) The board shall make available to each employee-beneficiary summary information on approved benefit plans. The information plans shall be distributed to each employee-beneficiary at the same time and in the same manner.

(b) The board shall establish conditions for benefit plan enrollments.

§ -30 Supplemental plan to federal Medicare. Any other provision of this chapter notwithstanding, the board shall establish a health benefit plan which takes into account benefits available to an employee-beneficiary and spouse under the federal Medicare plan, subject to the following conditions:

(1) There shall be no duplication of benefits payable under federal Medicare, but the plan so established by the board, when it is determined to be secondary to the federal Medicare plan, will supplement the federal Medicare plan such that when this plan is combined with federal Medicare, and any other plan to which this plan is subordinate under the coordination of benefit rules as determined by the National Association of Insurance Commissioners, the combination of this plan and all other plans will approximate the benefits payable to a similarly situated beneficiary not eligible for the federal Medicare plan;

(2) The State through the department of budget and finance and the several counties through their respective departments of finance shall pay to the fund a monthly contribution of $45.50 or the federal Medicare plan rate, whichever is less for voluntary medical insurance coverage under federal Medicare for each employee-beneficiary who is a retired employee, and spouse while the employee-beneficiary is living, including members of the old pension system and after death the employee-beneficiary's spouse if the spouse qualifies as an employee-beneficiary;

(3) The benefits available under the plan, when taken together with the benefits available under the federal Medicare plan or any other coverage or plan to which this plan is subordinate under the coordination of benefit rules as determined by the National Association of Insurance Commissioners, the combination of this plan and all other plans will approximate the benefits that would be payable to a similarly situated beneficiary not eligible for the federal Medicare plan;

(4) Notwithstanding any law to the contrary, all employee-beneficiaries or dependent-beneficiaries who are eligible to enroll in the federal Medicare Part B medical insurance plan shall enroll in that federal plan as a requirement to receive the contributions and to participate in the employee benefit plans described in this chapter. This paragraph shall pertain to retired employees and their spouses and the surviving spouses of deceased retirees and employees killed in the performance of duty; and

(5) The board shall determine which employee-beneficiaries and dependent-beneficiaries, who are not enrolled in the federal Medicare Part B medical insurance plan, may participate in such other plans as are set forth in section -23.

§ -31 Other powers. In addition to the power to administer the fund, the board may:

(1) Collect, receive, deposit, and withdraw money on behalf of the fund;

(2) Invest funds in the same manner specified in section 88-119(1)(a), (1)(b), (1)(c), (2), (3), (4), (5), (6), and (7);

(3) Hold, purchase, sell, assign, transfer, or dispose of any securities and investments in which the fund shall have been invested, as well as the proceeds of the investments and any monies belonging to the fund;

(4) Appoint and at pleasure dismiss staff. Such staff shall be exempt from chapters 76 and 89, and shall serve under and at the pleasure of the board; and

(5) Make payments of periodic charges and pay for reasonable expenses incurred to:

(A) Perform financial audits of the fund and claims audits of its insurance carriers; or

(B) Carry out the purposes of the fund;

(6) Without the necessity of complying with the requirements of chapter 103D, retain auditors, actuaries, investment firms and managers, benefit plan consultants, or other professional advisors to carry out the purposes of this chapter;

(7) Establish health benefit plan and long-term care benefit plan rates that include administrative and other expenses necessary to effectuate the purposes of the fund; or

(8) Require any department, agency, or employee of the State and county to furnish information to the board to carry out the purposes of this chapter.

§ -32 Other duties. The board shall:

(1) Authorize charges and payments from the fund only upon vouchers countersigned by the chairperson and such other person as may be designated by the board;

(2) Maintain accurate records and accounts of all financial transactions of the fund that shall be audited annually and summarized in an annual report to the governor and legislature;

(3) Maintain suitable and adequate records and provide information requested by the State and county employers as necessary to carry out the purpose of the fund; and

(4) Procure fiduciary liability insurance and error and omissions coverage for all trustees and a fidelity bond of a reasonable amount for the chairperson and any other person authorized to handle money of the fund.

§ -33 Rules; policies and standards. (a) Whenever the board is required to or finds it necessary to prescribe rules for the purposes of this chapter, the rules shall be prescribed, without regard to chapter 91. The procedures for rulemaking shall be as set forth in rules, which shall minimally provide for:

(1) Consultation on proposed rules with employers and affected employee organizations;

(2) Adoption of rules at open meetings that permit the attendance of any interested person;

(3) Approval of rules by the governor; and

(4) Filing of rules with the lieutenant governor.

(b) The board may also issue policies, standards, and procedures consistent with its rules.

§ -34 Meetings; notice; quorum; voting power; records and minutes. (a) The chairperson may call a meeting of the board at any time by giving at least seven days' written notice of the time and place of the meeting to all other directors. Any director may call a meeting of the board by giving at least ten days' written notice of the time and place to the other directors. A meeting of the board may be called at any time without notice if all directors agree.

(b) A quorum shall consist of three directors.

(c) Each director shall have one vote. Any action taken shall be by a simple majority.

(d) The board shall keep records and minutes of all meetings of the board."

SECTION 2. Chapter 87, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§87- Preferred provider organization plans; drug benefit plans. The board shall:

(1) Enter into contracts for and offer preferred provider plans for medical benefits for employees ineligible for medicare; and

(2) Enter into contracts for drug benefit plans with premiums based on inclusion of a closed formulary for federally approved health maintenance organization plans and a copayment plus a differential for nonpreferred brand name drugs based on an open formulary for service benefit plans."

SECTION 3. Section 87-22.3, Hawaii Revised Statutes, is amended to read as follows:

"§87-22.3 Determination of health benefits plans[.]; audits of employee organization health benefits plans. Pursuant to section 87-4, the board of trustees shall provide health benefits to employee-beneficiaries in the following manner:

(1) For those employee-beneficiaries who are not participating in a health benefits plan of an employee organization (hereafter "nonparticipating employee-beneficiaries"), the board of trustees shall establish health benefits plans and the requirements for eligibility under the health benefits plans. Any rate credit or reimbursement from any carrier derived from employee-beneficiary rate contributions to health benefits plans of nonparticipating employee-beneficiaries or interest derived therefrom may be used to improve the respective health benefits plans of nonparticipating employee-beneficiaries or to reduce the employee-beneficiary's respective share of monthly contributions to a health plan; or

(2) For employee-beneficiaries who participate in the health benefits plan of an employee organization, the board of trustees shall pay a monthly contribution for each employee-beneficiary, in the amount provided in section 87-4(a), or the actual monthly cost of the coverage, whichever is less, towards the purchase of health benefits under the health benefits plan of an employee organization. To ensure the financial integrity and cost effectiveness of any health benefits plan of an employee organization, the board shall annually audit each health benefits plan offered by an employee organization. The costs of the audits shall be borne by the fund."

SECTION 4. Chapter 87, Hawaii Revised Statutes, is repealed.

SECTION 5. Effective July 1, 2003, all positions and employees of the Hawaii public employees health fund who are subject to chapter 76 and 77, Hawaii Revised Statutes, shall be transferred to the Hawaii employer-union health benefits trust. All officers and employees whose functions are transferred by this Act shall be transferred with their functions and shall continue to perform their regular duties upon their transfer, subject to the state personnel laws and this Act.

All civil service positions and incumbents of the Hawaii public employees health fund transferred by this Act shall remain in the civil service and subject to chapter 76, Hawaii Revised Statutes, provided that in the event the civil service administrator position becomes vacant prior to July 1, 2003, its successor shall be appointed pursuant to section 87-28, Hawaii Revised Statutes, as amended in section 2 of this Act. When such positions are vacated on or after July 1, 2003, the positions shall be exempt from civil service and prospective appointments shall be made pursuant to section 1 of this Act.

No officer or employee of the State having tenure shall suffer any loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefit or privilege as a consequence of this Act, and such officer or employee may be transferred or appointed to a civil service position without the necessity of examination; provided that the officer or employee possesses the minimum qualifications for the position to which transferred or appointed; and provided that subsequent changes in status may be made pursuant to the applicable civil service and compensation laws.

In the event that an office or position held by an officer or employee having tenure is abolished, the officer or employee shall not thereby be separated from public employment, but shall remain in the employment of the State with the same pay and classification and shall be transferred to some other office or position for which the officer or employee is eligible under the personnel laws of the State as determined by the head of the department or the governor.

SECTION 6. All appropriations, assets, including funds to be refunded to employees and any funds in benefit plans and cafeteria plans, records, equipment, machines, computer software and hardware, files, supplies, contracts, books, papers, documents, maps, and other personal property heretofore made, used, acquired, or held by the Hawaii public employees health fund shall be transferred to the Hawaii employer-union health benefits trust, effective July 1, 2003.

SECTION 7. The governor shall appoint all members of the board of trustees of the Hawaii employer-union health benefit trust no later than December 29, 2001. Upon appointment, the board of trustees shall appoint all three members of the board of directors no later than July 1, 2002. Upon appointment, the board of directors may develop and issue rules, policies, and procedures, and contract for health benefits plans and group life insurance plans which shall become effective on July 1, 2003. The board of trustees and the administrator of the Hawaii public employees health fund shall give necessary assistance to the members of the Hawaii employer-union health benefits trust during the transition.

SECTION 8. Notwithstanding chapter 103D, Hawaii Revised Statutes, to the contrary, the board of directors of the Hawaii public employees health fund under chapter 87, Hawaii Revised Statutes, is authorized to extend current health benefit and life insurance plan contracts through June 30, 2003.

SECTION 9. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2001-2002 to carry out the purposes of this Act, including the hiring of necessary staff; provided that:

(1) This appropriation shall not lapse at the end of the fiscal year for which the appropriation is made; and

(2) All moneys from the appropriation that are unencumbered as of June 30, 2003, shall lapse as of that date.

The sum appropriated shall be expended by the department of budget and finance for the purposes of this Act.

SECTION 10. Statutory material to be repealed is bracketed. New statutory material is underscored.

SECTION 11. The Act shall take effect upon its approval; provided that:

(1) Section 4 shall take effect on July 1, 2003;

(2) Section 9 shall take effect on July 1, 2001; and

(3) All rules governing the Hawaii public employees health fund under chapter 87, Hawaii Revised Statutes, if not contrary to this Act, shall remain in effect until such time that the Hawaii employer-union health benefits trust adopts new rules.

INTRODUCED BY:

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