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REPORT TITLE:
Public Employee Health Benefit


DESCRIPTION:
Creates subordinate union health benefit trust funds under a
single employer-union trust fund as a public employees health
benefit delivery system administered by a board of trustees.
(SD1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2802
THE SENATE                              S.B. NO.           S.D. 1
TWENTIETH LEGISLATURE, 2000                                
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:

 1      SECTION 1.  The legislature finds that the present structure
 
 2 to provide and fund health benefits for public employees and
 
 3 retirees is cumbersome, inflexible, and does not foster
 
 4 cost-efficiency.  Whereas the employee organizations providing
 
 5 health benefits to its members are able to act swiftly in
 
 6 response to changing needs, the Hawaii public employees health
 
 7 fund is mired down by a fixed statutory framework of laws and
 
 8 rules that hamper its ability to be competitive.  Furthermore,
 
 9 the board of trustees overseeing the public employees health fund
 
10 performs in a fiduciary capacity in the sole interest of the
 
11 fund's beneficiaries, without regard to the interests of the
 
12 state and county public employers who must pay the costs.
 
13 Consequently, there is little connection between benefit levels
 
14 and funding requirements, and limited latitude for the public
 
15 employees health fund to design health benefit packages that meet
 
16 the health care needs of employee beneficiaries in a more
 
17 efficient and cost-effective manner.
 
18      The legislature is keenly aware that as a large number of
 
19 "baby boomers" approach retirement, health care costs continue to
 
Page 2                                                     2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 escalate, and as retirees' life expectancies continue to
 
 2 increase, the future financial viability of the current
 
 3 "pay-as-you-go" funding method for the health benefits plan will
 
 4 be further threatened.  The auditor reported that retiree health
 
 5 benefits "pay-as-you-go" costs will more than triple by the year
 
 6 2013 and, together with active employee costs, will approach one
 
 7 billion dollars, which could place a tremendous burden on the
 
 8 State's finances and the taxpaying public.
 
 9      The legislature further finds that public employers and
 
10 employee organizations should work together in partnership to
 
11 determine health care coverage and costs because health benefits
 
12 have not only become a significant component of the total
 
13 compensation package for public employees, but represent a
 
14 significant cost to public employers.  The multiple
 
15 employer-union health trust concept for determining and
 
16 administering health benefits provides a means for achieving such
 
17 a partnership and is a mechanism for linking benefit levels to
 
18 costs.  This concept also provides the necessary flexibility to
 
19 establish appropriate health benefits coverages and is in step
 
20 with the national trend of having employee health benefits based
 
21 on a defined contribution rather than a defined benefit model.
 
22      Based on these findings, the legislature believes that the
 
23 time has come to effectuate changes in the provision of health
 
 
 
Page 3                                                     2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 care benefits for the State's employees, retirees, and
 
 2 beneficiaries.
 
 3      The purpose of this Act is to authorize the establishment of
 
 4 the State of Hawaii multiple employer-union health trust and its
 
 5 related employer-union health trust funds to replace the public
 
 6 employees health fund for determination and administration of
 
 7 State of Hawaii public sector employee and retiree health
 
 8 benefits.
 
 9      SECTION 2.  The Hawaii Revised Statutes is amended by adding
 
10 a new chapter to be appropriately designated and to read as
 
11 follows:
 
12                             "CHAPTER
 
13                          STATE OF HAWAII
 
14               MULTIPLE EMPLOYER-UNION HEALTH TRUST
 
15         -1 Definitions.  As used in this chapter:
 
16      "Carrier" means an association, corporation, company,
 
17 insurer, partnership, or organization engaged in providing,
 
18 paying for, arranging for, or reimbursing the cost of health,
 
19 life, disability, property or casualty benefits under group
 
20 insurance contracts or benefits services agreements.
 
21      "Contributions" means money payments made to the
 
22 employer-union health trust funds by the State, counties,
 
23 employee-beneficiaries, and qualified-beneficiaries.
 
 
 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1      "Dependent-beneficiary" means an employee-beneficiary's
 
 2 spouse and any unmarried child, including an adopted child,
 
 3 stepchild, foster child, or recognized natural child who lives
 
 4 with the employee-beneficiary, deemed eligible by the board to
 
 5 receive health, disability, life or long-term care services of a
 
 6 health, disability, life, or long-term care benefit plan.
 
 7      "Disability benefits plan" means insurance against bodily
 
 8 injury, disablement, or death by accident or accidental means, or
 
 9 the expense thereof, against disablement or expense resulting
 
10 from sickness, and every insurance appertaining thereto.
 
11      "Employee" means an employee or officer of the State or
 
12 county government or the legislature,
 
13      (1)  Including:
 
14           (A)  An elective officer or a person who has served as
 
15                a member of the legislature for at least ten
 
16                years;
 
17           (B)  A per diem employee;
 
18           (C)  An officer or employee under an authorized leave
 
19                of absence;
 
20           (D)  An employee of the Hawaii national guard although
 
21                paid from federal funds;
 
22           (E)  A retired member of the employees' retirement
 
23                system, the county pension system, or the police,
 
 
 
Page 5                                                     2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1                firefighters, or bandsmen pension system of the
 
 2                State or county;
 
 3           (F)  A salaried and full-time member of a board,
 
 4                commission, or agency appointed by the governor or
 
 5                the mayor of a county; and
 
 6           (G)  A person employed by contract for a period not
 
 7                exceeding one year, where the director of human
 
 8                resources development, personnel services, or
 
 9                civil service has certified that the service is
 
10                essential or needed in the public interest and
 
11                that, because of circumstances surrounding its
 
12                fulfillment, personnel to perform the service
 
13                cannot be obtained through civil service
 
14                recruitment procedures,
 
15      (2)  But excluding:
 
16           (A)  A designated dependent-beneficiary of a retired
 
17                member of the employees' retirement system, the
 
18                county pension system, or the police,
 
19                firefighters, or bandsmen pension system of the
 
20                State or county;
 
21           (B)  Except as allowed under paragraph (1)(G), a person
 
22                employed temporarily on a fee or contract basis;
 
23                and
 
 
 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1           (C)  A person employed for three months or less, or
 
 2                whose employment is less than one-half of a
 
 3                full-time equivalent position;
 
 4      "Employee-beneficiary" means an employee, the
 
 5 dependent-beneficiary of an employee who is killed in the
 
 6 performance of the employee's duty, an employee who retired prior
 
 7 to the establishment of the Hawaii public employees health fund,
 
 8 or the dependent-beneficiary of a retired member of the
 
 9 employees' retirement system, a county pension system, or a
 
10 police, firefighters, or bandsmen pension system of the State or
 
11 county, upon the death of the retired member and, which
 
12 dependent-beneficiary, if a child, does not marry, or if a
 
13 surviving spouse, does not remarry; provided that for the
 
14 purposes of this definition, "family member" means the deceased
 
15 retired member's or employee's spouse and unmarried child under
 
16 the age of nineteen years (including a legally adopted child and
 
17 a stepchild or recognized natural child who lives with the
 
18 deceased retired member or employee in a regular parent-child
 
19 relationship), or unmarried child regardless of age who is
 
20 incapable of self-support because of a mental or physical
 
21 incapacity which existed prior to the unmarried child's reaching
 
22 the age of nineteen years; and provided further that the
 
23 employee, the employee's dependent-beneficiary, or the
 
 
 
Page 7                                                     2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 dependent-beneficiary of the deceased retired member is deemed
 
 2 eligible to receive health or dental services of a health
 
 3 benefits plan or a long-term care benefits plan.
 
 4      "Employer" means the State of Hawaii and all of its
 
 5 political subdivisions, including the Hawaii health systems
 
 6 corporation, and the counties.
 
 7      "Employer-union health trust fund" or "trust fund" means a
 
 8 trust fund described in section    -3.
 
 9      "Family-type plan" means a health benefits plan for three or
 
10 more parties.
 
11      "Health benefits plan" means:
 
12      (1)  A group insurance contract or medical, hospital,
 
13           surgical, prescribed drugs, vision, health, dental,
 
14           life, disability, or long-term care service agreement
 
15           in which a carrier agrees to provide, pay for, arrange
 
16           for, or reimburse the cost of medical, hospital,
 
17           surgical, prescribed drugs, vision, health, dental,
 
18           life, disability, or long-term care benefits as
 
19           determined by the trust fund board; or
 
20      (2)  A similar schedule of benefits established by the trust
 
21           fund board and provided through the trust fund on a
 
22           self-insured basis.
 
23      "Multiple employer-union health trust" or "trust" means the
 
 
 
Page 8                                                     2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 State of Hawaii multiple employer-union health trust described in
 
 2 section    -2.
 
 3      "Part-time, temporary, and seasonal or casual employee"
 
 4 means a person employed for three months or less, or whose
 
 5 employment is less than one-half of a full-time equivalent
 
 6 position.
 
 7      "Periodic charge" means the periodic payment by the board to
 
 8 a carrier for costs of benefits plans.
 
 9      "Property and casualty" insurance means insurance as defined
 
10 under chapter 431.
 
11      "Qualified-beneficiary" means, for purposes of the long-term
 
12 care benefits plan, a former employee or an employee who is not
 
13 eligible for benefits due to a reduction in work hours including
 
14 the employee's spouse or a divorced spouse of an employee or
 
15 retiree provided the person was enrolled in the plan prior to
 
16 loss of benefits.
 
17      "State health trust board" means the board of trustees of
 
18 the State of Hawaii multiple employer-union health trust
 
19 described in section    -2.
 
20      "Trust fund board" means the board of trustees of an
 
21 employer-union health trust fund described in section    -3.
 
22      "Union" means an exclusive representative, as defined under
 
23 section 89-2.
 
 
 
Page 9                                                     2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1      "Voluntary benefits" means insurance and similar benefit
 
 2 plans provided at little or no cost to employers.
 
 3         -2 State of Hawaii multiple employer-union health
 
 4 trust; authority to establish; purpose; composition; powers and
 
 5 duties.(a)  There shall be a health benefits trust to be known
 
 6 as the State of Hawaii multiple employer-union health trust.  The
 
 7 trust shall be governed by a state health trust board of trustees
 
 8 and placed within the department of budget and finance for
 
 9 administrative purposes.
 
10      (b)  The state health trust board shall consist of ten
 
11 members:
 
12      (1)  Five shall be representatives of the public employers,
 
13           two of whom shall be representatives of the State, one
 
14           of whom shall be a representative of the city and
 
15           county of Honolulu, and two of whom shall be
 
16           representatives of each of the neighbor island counties
 
17           of Hawaii, Maui, and Kauai on a rotational basis.  The
 
18           state representatives shall be selected by the governor
 
19           and the county representatives shall be selected by the
 
20           respective mayors; and
 
21      (2)  Five shall be representatives of different unions who
 
22           shall be selected by the respective public sector
 
23           unions.
 
 
 
Page 10                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1      (c)  The public employers, collectively, shall have one
 
 2 vote.  The unions, collectively, shall have one vote.  A quorum
 
 3 shall consist of six members, three of whom shall be employer
 
 4 representatives and three of whom shall be union representatives.
 
 5 In the event of a deadlock, a final decision on the unresolved
 
 6 matter shall be decided by a third party jointly appointed by the
 
 7 president of the senate and speaker of the house of
 
 8 representatives.
 
 9      (d)  Each member of the state health trust board of trustees
 
10 shall have a fiduciary responsibility to act in the best
 
11 interests of the employer, employee-beneficiaries, and
 
12 dependent-beneficiaries, and to maintain the financial integrity
 
13 of the health benefits plan.
 
14      (e)  Notwithstanding chapter 91, the board shall adopt rules
 
15 by which the state health trust board shall operate.
 
16      (f)  Each trustee shall serve without compensation, but the
 
17 trustee may be reimbursed by the employer or union which the
 
18 trustee represents for any necessary expense incurred in behalf
 
19 of the trust.
 
20      (g)  The state health trust board shall:
 
21      (1)  Oversee all aspects of administering the health
 
22           benefits plan, including the transition period;
 
23      (2)  Specify and adopt minimum administrative and benefits
 
 
 
Page 11                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1           plan standards applicable to employer-union health
 
 2           trust funds under this chapter;
 
 3      (3)  Have the authority and power to require the
 
 4           employer-union health trust funds to comply with this
 
 5           chapter and any rules adopted thereunder.  If any
 
 6           employer-union health trust fund fails to comply with
 
 7           any of the provisions of this chapter or any rule
 
 8           adopted thereunder, the state health trust board may:
 
 9           (A)  Fine the employer-union health trust fund $1,000 a
 
10                day for each day of noncompliance; provided that
 
11                the fine shall not be paid from any employer or
 
12                employee contributions, or any interest or
 
13                earnings therefrom, or any rate credits or
 
14                reimbursements; and
 
15           (B)  Immediately prohibit the employer-union health
 
16                trust fund from providing health benefits under
 
17                this chapter.  The prohibition process shall be
 
18                specified in rules of the state health trust
 
19                board;
 
20      (4)  Establish and adopt eligibility criteria not
 
21           inconsistent with this chapter to determine which
 
22           employee, dependent, or person may qualify as an
 
23           employee-beneficiary, dependent-beneficiary, or
 
 
 
Page 12                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1           qualified-beneficiary, respectively;
 
 2      (5)  Establish conditions under which employee-beneficiaries
 
 3           may enroll and transfer enrollment from one
 
 4           employer-union health trust fund to another, subject to
 
 5           the following conditions:
 
 6           (A)  Employees designated to an appropriate bargaining
 
 7                unit, as defined under section 89-2, shall only be
 
 8                eligible to enroll pursuant to section    -3;
 
 9           (B)  Excluded employees, as identified under chapter
 
10                89C, and retirees may enroll in any of the
 
11                employer-union health trust funds established
 
12                pursuant to    -3 and shall not be required to pay
 
13                associate membership dues, administrative fees, or
 
14                any other fees as a condition of participating in
 
15                an employer-union health trust fund.  Such
 
16                employees shall receive benefits and be assessed
 
17                employee contribution amounts that are identical
 
18                to those provided to other employees participating
 
19                in the employer-union health trust fund; and
 
20           (C)  Transfers of enrollments between employer-union
 
21                health trust funds may be allowed no sooner than
 
22                on an annual basis and in conjunction with an open
 
23                enrollment period declared by the state health
 
 
 
Page 13                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1                trust board for:
 
 2                (i)  Excluded employees, unless there is a change
 
 3                     in the excluded employees' collective
 
 4                     bargaining unit designations; and
 
 5               (ii)  Retirees;
 
 6      (6)  Designate at least one of the employer-union health
 
 7           trust funds to offer voluntary medical, hospital, and
 
 8           surgical benefits to part-time, temporary, and seasonal
 
 9           or casual employees at no cost to employers.  If more
 
10           than one fund offers the aforementioned benefits,
 
11           regardless of the number of trust funds, the benefits
 
12           shall be provided at no direct cost to employers.  The
 
13           designated trust fund or funds may also offer voluntary
 
14           health, life, disability, property, casualty, and
 
15           long-term care benefits to part-time, temporary, and
 
16           seasonal or casual employees at no direct cost to
 
17           employers.  The state health trust board shall
 
18           determine the benefits plans' participation and
 
19           eligibility requirements for part-time, temporary, and
 
20           seasonal or casual employees; and
 
21      (7)  Require reports, such as any and all reports which, in
 
22           general, are required under section 501(c)(9) of the
 
23           Internal Revenue Code of 1986, as amended, and other
 
 
 
Page 14                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1           necessary information from the employer-union health
 
 2           trust funds, as determined by the state health trust
 
 3           board.
 
 4      (h)  The state health trust board may:
 
 5      (1)  Require any department, agency, or employee of the
 
 6           State and counties to furnish information to the
 
 7           employer-union health trust funds, such as employees'
 
 8           eligibility status, bargaining unit changes, and dates
 
 9           of status changes, to carry out the purposes of this
 
10           chapter.
 
11      (2)  Appoint an administrator and staff necessary to carry
 
12           out this chapter, who shall be exempt from chapters 76
 
13           and 77.
 
14      (3)  Assist the employer in implementing and administering
 
15           cafeteria plans authorized under section 125 of the
 
16           Internal Revenue Code of 1986, as amended.
 
17      (i)  The state health trust board shall oversee all aspects
 
18 of administering the special trust fund to accumulate reserves
 
19 toward cost of providing benefits for retirees in the future,
 
20 subject to section    -8.
 
21         -2.1  State of Hawaii multiple employer-union health
 
22 trust; supplemental plan to federal medicare.  Notwithstanding
 
23 any other provision of this chapter, the state health trust board
 
 
 
Page 15                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 shall require the employer-union health trust funds to establish
 
 2 and maintain a health benefits plan which takes into account
 
 3 benefits available to an employee-beneficiary and spouse under
 
 4 the federal medicare plan, subject to the following conditions:
 
 5      (1)  There shall be no duplication of benefits payable under
 
 6           federal medicare and the plan shall be supplemental to
 
 7           the federal medicare plan;
 
 8      (2)  The state health trust board shall establish a
 
 9           contribution for medical insurance coverage under
 
10           federal medicare Part B, to be paid in such manner as
 
11           the employer-union health trust fund boards specify, in
 
12           the case of an employee-beneficiary who is a retired
 
13           employee, and spouse while the employee-beneficiary is
 
14           living, including members of the old pension system and
 
15           after death the employee-beneficiary's spouse provided
 
16           the spouse qualifies as an employee-beneficiary,
 
17           subject to resolution under section   -2(c) in event of
 
18           a deadlock; provided further that the State and
 
19           counties, through their respective departments of
 
20           finance, shall reimburse the appropriate funds for any
 
21           contributions made for their respective
 
22           employee-beneficiaries under this paragraph;
 
23      (3)  Notwithstanding any other law to the contrary, all
 
 
 
Page 16                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1           employee-beneficiaries or dependent-beneficiaries who
 
 2           are eligible to enroll in the federal medicare Part B
 
 3           medical insurance plan shall enroll in that federal
 
 4           plan as a requirement to receive the contributions and
 
 5           to participate in the health benefits plans described
 
 6           in this chapter.  This paragraph shall also pertain to
 
 7           retired employees and their spouses and the surviving
 
 8           spouses of deceased retirees and employees killed in
 
 9           the performance of duty; and
 
10      (4)  The state health trust board shall determine which
 
11           employee-beneficiaries and dependent-beneficiaries, who
 
12           are not enrolled in the federal medicare part B medical
 
13           insurance plan, may participate in such other plans as
 
14           are set forth in section    -3.2(d).
 
15         -3 Employer-union health trust funds; authority to
 
16 establish.(a)  Each union, in an agreement negotiated in
 
17 accordance with chapter 89, and consistent with this chapter, may
 
18 establish an employer-union health trust fund; provided that
 
19 employer contribution amounts are negotiated for active employees
 
20 only, in terms of a specific dollar amount per self-only,
 
21 two-party and family-type enrollee, and that employer
 
22 contribution amounts for retirees shall be as specified under
 
23 this chapter.  Two or more unions may collectively agree to form
 
 
 
Page 17                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 one employer-union health trust fund.
 
 2      (b)  A union not electing to establish an employer-union
 
 3 health trust fund shall enter into an agreement with another
 
 4 union that has established an employer-union health trust fund
 
 5 under subsection (a); provided that:
 
 6      (1)  The non-establishing union relinquishes its right to
 
 7           negotiate terms of the agreement to the establishing
 
 8           union; provided that the non-establishing union may
 
 9           reserve its right to negotiate employer contribution
 
10           amounts toward the costs of benefits plans; and
 
11      (2)  The non-establishing union shall not establish an
 
12           employer-union health trust fund until the agreement
 
13           with the establishing union expires.
 
14         -3.1  Purpose of employer-union health trust funds.(a)
 
15 Employer-union health trust funds shall be established for the
 
16 purpose of providing or making available to all employee-
 
17 beneficiaries and dependent-beneficiaries health, life,
 
18 disability, and long-term care benefits, and voluntary life,
 
19 disability, property, and casualty benefits.  Any moneys,
 
20 including rate credits or reimbursements from any carrier or
 
21 self-insured plan or any earnings or interest derived therefrom,
 
22 shall be used to fund future health benefits expenses, stabilize
 
23 health, life, disability, or long-term care benefits plan rates,
 
 
 
Page 18                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 and fund other necessary expenses, as approved by the trust fund
 
 2 board.
 
 3      (b)  Each employer-union health trust fund shall be
 
 4 responsible for providing benefits established under
 
 5 section   -3.2 to employees who retired as members of its union.
 
 6 If an employee retired as a member of a union that has executed
 
 7 an agreement with another union pursuant to section    -3(b), the
 
 8 employee who retired as a member of a non-establishing union that
 
 9 has executed an agreement with another union pursuant to
 
10 section   -3(b) shall be provided with the same benefits
 
11 generally available to retired employees of the establishing
 
12 union.  This subsection shall not be construed to in any way
 
13 limit a retired employee's right to enroll or cancel the retired
 
14 employee's participation in any health benefits plan offered by
 
15 any employer-union health trust fund established pursuant to this
 
16 chapter.
 
17      (c)  The trust funds may assist the State and the counties
 
18 to implement and administer cafeteria plans authorized under
 
19 section 125 of the Internal Revenue Code of 1986, as amended.
 
20         -3.2  Employer-union health trust funds; composition;
 
21 administration; powers and duties; compensation; and expenses of
 
22 a trustee.(a)  The appointment, terms, and removal of the board
 
23 of trustees of each employer-union health trust fund shall be
 
 
 
Page 19                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 specified in the agreement negotiated by the public sector
 
 2 employer and the union of the affected bargaining unit, in
 
 3 accordance with chapter 89.
 
 4      (b)  Each trustee shall:
 
 5      (1)  Have a fiduciary responsibility to act in the best
 
 6           interests of the employer, employee-beneficiaries, and
 
 7           dependent-beneficiaries, and to maintain the financial
 
 8           integrity of the trust fund; and
 
 9      (2)  Serve without compensation; provided that a trustee may
 
10           be reimbursed from the appropriate fund for any
 
11           necessary expense incurred in behalf of the fund.
 
12      (c)  Notwithstanding chapter 103D, the trust fund board
 
13 shall:
 
14      (1)  Administer and carry out the purposes of the fund,
 
15           which include:
 
16           (A)  Maintaining accurate and adequate records and
 
17                accounts of all financial transactions of the
 
18                trust fund; and
 
19           (B)  Providing for an annual audit of the trust fund by
 
20                an independent certified public accountant within
 
21                sixty days of the close of each plan year, a copy
 
22                of which shall be provided to the state health
 
23                trust board within thirty days of its receipt;
 
 
 
Page 20                                                    2802
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 1      (2)  Obtain a fidelity bond of a reasonable amount to cover
 
 2           all moneys handled by the trust fund;
 
 3      (3)  Determine the benefits plans, which shall be exempted
 
 4           from the mandated benefits requirements of chapters 431
 
 5           and 432, except as provided otherwise in
 
 6           section   -3.2(c)(4).  The benefits plans may provide,
 
 7           pay for, arrange for, or reimburse the cost of
 
 8           disability, long-term care, hospitalization, surgery,
 
 9           medical, dental treatment and care, prescribed drugs,
 
10           medicines, prosthetic appliances, hospital in-patient
 
11           and out-patient service benefits, vision treatment and
 
12           care, and other health care and voluntary benefits;  
 
13      (4)  Determine the benefits of a long-term care benefits
 
14           plan for employee-beneficiaries, their spouses or
 
15           reciprocal beneficiaries, and qualified beneficiaries.
 
16           The plan shall comply with the provisions of article
 
17           10A, part V, of chapter 431, upon initial plan
 
18           implementation only.  Notwithstanding any law to the
 
19           contrary, such benefits shall be available only to
 
20           employee-beneficiaries, their spouses, and qualified
 
21           beneficiaries who enroll between the ages of twenty and
 
22           eighty-five; and
 
23      (5)  Provide any and all reports which, in general, are
 
 
 
Page 21                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1           required under section 501(c)(9) of the Internal
 
 2           Revenue Code of 1986, as amended, and other reports or
 
 3           information requested by the state health trust board. 
 
 4      (d)  Notwithstanding chapter 103D, the trust fund board may:
 
 5      (1)  Contract with carriers to provide benefits or
 
 6           third-party administrators to administer self-insured
 
 7           benefits.  Notwithstanding any law to the contrary,
 
 8           selection of a carrier or third-party administrator for
 
 9           any benefits plan shall be based on specifications and
 
10           considerations determined by the board.  In that
 
11           process, the trust fund board may:
 
12           (A)  Prepare specifications;
 
13           (B)  Accept proposals from interested parties in
 
14                response to specifications;
 
15           (C)  Evaluate proposals;
 
16           (D)  Give prime consideration to the applicant
 
17                maintaining employment payroll in the State of
 
18                Hawaii offering the lowest net cost and highest
 
19                quality of services; and
 
20           (E)  Negotiate or use other competitive procedures, as
 
21                the trust fund board deems appropriate in its
 
22                discretion, to select a carrier or a third-party
 
23                administrator;
 
 
 
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                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1      (2)  Collect, receive, deposit, withdraw, and invest money
 
 2           on behalf of the trust fund; and
 
 3      (3)  Make payments of periodic charges and pay reasonable
 
 4           expenses incurred to carry out the purposes of the
 
 5           trust fund.
 
 6         -4 Employer contributions to employer-union health
 
 7 trust funds, in general.(a)  Subject to section    -3, the
 
 8 State, through the department of budget and finance, and the
 
 9 several counties through their respective departments of finance,
 
10 shall pay to the appropriate trust fund, a monthly contribution
 
11 equal to the amount established under this chapter or chapter
 
12 89C, or specified in the applicable public sector collective
 
13 bargaining agreements for employee-beneficiaries, whichever is
 
14 appropriate, for each of their respective employee-beneficiaries
 
15 and employee-beneficiaries with dependent-beneficiaries, which
 
16 shall be used toward the payment of costs of the health benefits
 
17 plans.  If, however, the State or any of the several counties
 
18 establish cafeteria plans in accordance with section 125 of the
 
19 Internal Revenue Code of 1986, as amended, the monthly
 
20 contribution to the trust funds for those employee-beneficiaries
 
21 who participate in a cafeteria plan shall be made through the
 
22 cafeteria plan.  In this event, the payments made by the State or
 
23 the counties shall include the State's and the counties'
 
 
 
Page 23                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 respective contributions to the trust fund and the
 
 2 employee-beneficiary's share of the cost of the health benefits
 
 3 plan selected and authorized by the employee-beneficiary through
 
 4 the cafeteria plan.
 
 5      (b)  The State, through the department of budget and
 
 6 finance, and the several counties through their respective
 
 7 departments of finance, shall transfer the amount of their
 
 8 respective employee-beneficiaries' employer contributions to the
 
 9 appropriate trust fund on or before the first day of each month.
 
10      (c)  Contributions made by the employers shall not be
 
11 considered wages or salary of an employee-beneficiary, and no
 
12 employee-beneficiary shall have any vested right in or be
 
13 entitled to receive any part of any contribution made to any
 
14 trust fund.
 
15         -4.1  Employer contributions and benefits for employees
 
16 hired on or before June 30, 1996, and retired on or after July 1,
 
17 1984, with less than ten years of service.(a)  This section
 
18 shall apply to employer contributions to the trust funds for
 
19 retired members of the employees' retirement system, the county
 
20 pension system, or the police, firefighters, or bandsmen pension
 
21 system of the state or county who were hired on or before
 
22 June 30, 1996, and retired on or after July 1, 1984, with less
 
23 than ten years of credited service, excluding sick leave.
 
 
 
Page 24                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1      (b)  The State, through the department of budget and
 
 2 finance, and the several counties, through their respective
 
 3 departments of finance, shall pay to the appropriate trust fund a
 
 4 monthly contribution equal to:
 
 5      (1)  One-half of the retired employee's monthly supplemental
 
 6           medicare plan premium or non-medicare plan premium for
 
 7           the following:
 
 8           (A)  Hospital, medical, and surgical benefits of a
 
 9                health benefits plan for each of their respective
 
10                employee-beneficiaries or their respective
 
11                employee-beneficiaries and their
 
12                dependent-beneficiaries enrolled under this
 
13                section;
 
14           (B)  Prescription drug benefits of a health benefits
 
15                plan for each of their respective
 
16                employee-beneficiaries or their respective
 
17                employee-beneficiaries and their
 
18                dependent-beneficiaries enrolled under this
 
19                section;
 
20           (C)  Vision care benefits of a health benefits plan for
 
21                each of their respective employee-beneficiaries or
 
22                their respective employee-beneficiaries and their
 
23                dependent-beneficiaries enrolled under this
 
 
 
Page 25                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1                section; and
 
 2           (D)  Adult dental benefits of a health benefits plan
 
 3                for each of their respective
 
 4                employee-beneficiaries or their respective
 
 5                employee-beneficiaries and their spouses enrolled
 
 6                under this section.
 
 7           If both husband and wife are employee-beneficiaries,
 
 8           the total contribution for both of them by the State or
 
 9           the appropriate county shall not exceed the monthly
 
10           contribution of an available two-party or family-type
 
11           plan;
 
12      (2)  The total monthly premium for each child who has not
 
13           attained the age of nineteen of all employee-
 
14           beneficiaries who are enrolled in the trust fund's
 
15           dental plan for children under this section; and
 
16      (3)  The total monthly premium for each retired employee
 
17           enrolled in the trust fund's group life insurance
 
18           benefits plan under this section.
 
19      (c)  For purposes of this section, the retired employee's
 
20 monthly supplemental medicare plan and non-medicare plan premiums
 
21 for the hospital, medical, and surgical plan, the prescription
 
22 drug plan, the vision care plan, and the adult dental plan shall
 
23 be established annually by the State health trust board and shall
 
 
 
Page 26                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 be equal to the retired employee's supplemental medicare plan and
 
 2 non-medicare plan premiums for the hospital, medical, and
 
 3 surgical plan, the prescription drug plan, the vision care plan,
 
 4 and the adult dental plan contracted by the trust fund with the
 
 5 largest enrollments as of July 1 of the prior plan year.
 
 6      (d)  The State, through the department of budget and
 
 7 finance, and the several counties, through their respective
 
 8 departments of finance, shall transfer the amount of their
 
 9 respective employee-beneficiaries' employer contributions to the
 
10 appropriate trust fund on or before the first day of each month.
 
11      (e)  Contributions made by the employers shall not be
 
12 considered wages or salary of an employee-beneficiary, and no
 
13 employee-beneficiary shall have any vested right in or be
 
14 entitled to receive any part of any contribution made to any
 
15 trust fund. 
 
16         -4.2  Employer contributions and benefits for employees
 
17 who retired on or before June 30, 1984, with less than ten years
 
18 of service, and employees hired on or before June 30, 1996, who
 
19 retired with ten or more years of service.(a)  This section
 
20 shall apply to employer contributions to the trust funds for
 
21 retired members of the employees' retirement system, the county
 
22 pension system, or the police, firefighters, or bandsmen pension
 
23 system of the state or county who retired on or before June 30,
 
 
 
Page 27                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 1984, with less than ten years of service and employees hired on
 
 2 or before June 30, 1996, who retired with ten or more years of
 
 3 service; provided that this section shall not apply to any
 
 4 employee covered by section    -4.1, nor to any employee who has
 
 5 at least ten years of credited service and who has a break in
 
 6 service.  For purposes of this section, an employee shall not be
 
 7 considered to have had a break in service if the employee leaves
 
 8 state or county employment and returns to state or county
 
 9 employment within ninety calendar days.
 
10      (b)  For purposes of this section, if an employee leaves
 
11 state or county employment and returns to state or county
 
12 employment, when the employee retires, the employee's years of
 
13 service shall be computed in the same manner as set forth in
 
14 chapter 88.
 
15      (c)  The State, through the department of budget and
 
16 finance, and the several counties, through their respective
 
17 departments of finance, shall pay to the appropriate trust fund a
 
18 monthly contribution equal to:
 
19      (1)  One hundred per cent of the retired employee's monthly
 
20           supplemental medicare plan or non-medicare plan premium
 
21           for the following:
 
22           (A)  Hospital, medical, and surgical benefits of a
 
23                health benefits plan for each of their respective
 
 
 
Page 28                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1                employee-beneficiaries or their respective
 
 2                employee-beneficiaries and their
 
 3                dependent-beneficiaries enrolled under this
 
 4                section;
 
 5           (B)  Prescription drug benefits of a health benefits
 
 6                plan for each of their respective
 
 7                employee-beneficiaries or their respective
 
 8                employee-beneficiaries and their
 
 9                dependent-beneficiaries enrolled under this
 
10                section;
 
11           (C)  Vision care benefits of a health benefits plan for
 
12                each of their respective employee-beneficiaries or
 
13                their respective employee-beneficiaries and their
 
14                dependent-beneficiaries enrolled under this
 
15                section; and
 
16           (D)  Adult dental benefits of a health benefits plan
 
17                for each of their respective
 
18                employee-beneficiaries or their respective
 
19                employee-beneficiaries and their spouses enrolled
 
20                under this section.
 
21           If both husband and wife are employee-beneficiaries,
 
22           the total contribution for both of them by the State or
 
23           the appropriate county, after an employee's retirement
 
 
 
Page 29                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1           pursuant to this section, shall not exceed the monthly
 
 2           contribution of an available two-party or family-type
 
 3           plan;
 
 4      (2)  The total monthly premium for each child who has not
 
 5           attained the age of nineteen of all
 
 6           employee-beneficiaries who are enrolled in the trust
 
 7           fund's dental plan for children under this section; and
 
 8      (3)  The total monthly premium for each retired employee
 
 9           enrolled in the trust fund's group life insurance
 
10           benefits plan under this section.
 
11      (d)  For purposes of this section, the retired employee's
 
12 monthly supplemental medicare plan and non-medicare plan premiums
 
13 for the hospital, medical, and surgical plan, the prescription
 
14 drug plan, the vision care plan, and the adult dental plan shall
 
15 be established annually by the state health trust board and shall
 
16 be equal to the retired employee's supplemental medicare plan and
 
17 non-medicare plan premiums for the hospital, medical, and
 
18 surgical plan, the prescription drug plan, the vision care plan,
 
19 and the adult dental plan contracted by the trust fund with the
 
20 largest enrollments as of July 1 of the prior plan year.
 
21      (e)  The State, through the department of budget and
 
22 finance, and the several counties, through their respective
 
23 departments of finance, shall transfer the amount of their
 
 
 
Page 30                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 respective employee-beneficiaries' employer contributions to the
 
 2 appropriate trust fund on or before the first day of each month.
 
 3      (f)  Contributions made by the State or the several counties
 
 4 shall not be considered wages or salary of an
 
 5 employee-beneficiary, and no employee-beneficiary shall have any
 
 6 vested right in or be entitled to receive any part of any
 
 7 contribution made to any trust fund.
 
 8         -4.3  Employer contributions and benefits for employees
 
 9 hired on or after July 1, 1996, and retire thereafter.(a)  This
 
10 section shall apply to state and county contributions to the
 
11 trust funds for retired members of the employees' retirement
 
12 system, the county pension system, or the police, firefighters,
 
13 or bandsmen pension system of the state or county who were hired
 
14 on or after July 1, 1996, and retire thereafter; provided that
 
15 this section shall not apply to any employee covered by
 
16 section   -4.1, nor to any employee who has at least ten years of
 
17 credited service and who has a break in service.  For purposes of
 
18 this section, an employee shall not be considered to have had a
 
19 break in service if the employee leaves state or county
 
20 employment and returns to state or county employment within
 
21 ninety calendar days.
 
22      (b)  For purposes of this section, if an employee leaves
 
23 state or county employment and returns to state or county
 
 
 
Page 31                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 employment, when the employee retires, the employee's years of
 
 2 service shall be computed in the same manner as set forth in
 
 3 chapter 88.
 
 4      (c)  The State, through the department of budget and
 
 5 finance, and the several counties, through their respective
 
 6 departments of finance, shall pay to the appropriate trust fund a
 
 7 monthly contribution equal to:
 
 8      (1)  One-half of the retired employee's monthly supplemental
 
 9           medicare plan or non-medicare plan premium for the
 
10           following benefits for retired employees with ten or
 
11           more years but fewer than fifteen years of service;
 
12           seventy-five per cent of the retired employee's monthly
 
13           supplemental medicare plan or non-medicare plan premium
 
14           for the following benefits for retired employees with
 
15           at least fifteen but fewer than twenty-five years of
 
16           service; and one hundred per cent of the retired
 
17           employee's monthly supplemental medicare plan or
 
18           non-medicare plan premium for the following benefits
 
19           for retired employees with twenty-five or more years of
 
20           service:
 
21           (A)  Hospital, medical, and surgical benefits of a
 
22                health benefits plan for each of their respective
 
23                employee-beneficiaries or their respective
 
 
 
Page 32                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1                employee-beneficiaries and their
 
 2                dependent-beneficiaries enrolled under this
 
 3                section;
 
 4           (B)  Prescription drug benefits of a health benefits
 
 5                plan for each of their respective
 
 6                employee-beneficiaries or their respective
 
 7                employee-beneficiaries and their
 
 8                dependent-beneficiaries enrolled under this
 
 9                section;
 
10           (C)  Vision care benefits of a health benefits plan for
 
11                each of their respective employee-beneficiaries or
 
12                their respective employee-beneficiaries and their
 
13                dependent-beneficiaries enrolled under this
 
14                section; and
 
15           (D)  Adult dental benefits of a health benefits plan
 
16                for each of their respective
 
17                employee-beneficiaries or their respective
 
18                employee-beneficiaries and their spouses enrolled
 
19                under this section.
 
20           If both husband and wife are employee-beneficiaries,
 
21           the total contribution for both of them by the State or
 
22           the appropriate county, after an employee's retirement
 
23           pursuant to this section, shall not exceed the monthly
 
 
 
Page 33                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1           contribution of an available two-party or family-type
 
 2           plan;
 
 3      (2)  The total monthly premium for each child who has not
 
 4           attained the age of nineteen of all employee-
 
 5           beneficiaries who are enrolled in the trust fund's
 
 6           dental plan for children under this section; and
 
 7      (3)  The total monthly premium for each retired employee
 
 8           enrolled in the trust fund's group life insurance
 
 9           benefits plan under this section.
 
10      (d)  For purposes of this section, the retired employee's
 
11 monthly supplemental medicare plan and non-medicare plan premiums
 
12 for the hospital, medical, and surgical plan, the prescription
 
13 drug plan, the vision care plan, and the adult dental plan shall
 
14 be established annually by the state health trust board and shall
 
15 be equal to the retired employee's supplemental medicare plan and
 
16 non-medicare plan premiums for the hospital, medical, and
 
17 surgical plan, the prescription drug plan, the vision care plan,
 
18 and the adult dental plan contracted by the trust fund with the
 
19 largest enrollment as of July 1 of the prior plan year.
 
20      (e)  The State, through the department of budget and
 
21 finance, and the several counties, through their respective
 
22 departments of finance, shall transfer the amount of their
 
23 respective employee-beneficiaries' employer contributions to the
 
 
 
Page 34                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 appropriate trust fund on or before the first day of each month.
 
 2      (f)  Contributions made by the State or the several counties
 
 3 shall not be considered wages or salary of an employee-
 
 4 beneficiary, and no employee-beneficiary shall have any vested
 
 5 right in or be entitled to receive any part of any contribution
 
 6 made to any trust fund.
 
 7         -5 Reimbursement for state contributions.(a)  All
 
 8 state and county agencies having control of special funds shall
 
 9 reimburse the State for contributions made by the State pursuant
 
10 to section    -4 on account of the employees in the agencies
 
11 whose compensation is paid in whole or part from the special
 
12 funds.
 
13      (b)  All state and county agencies receiving federal funds,
 
14 which may be expended for the purpose of absorbing the
 
15 contributions payable by the State to the trust funds, shall set
 
16 aside a portion of the federal funds sufficient to reimburse the
 
17 State for contributions made by the State pursuant to
 
18 section   -4 on account of the employees in the agencies whose
 
19 compensation is paid in whole or part from federal funds. 
 
20         -6  Employee-beneficiary contributions for health
 
21 benefits plans.(a)  Each employee-beneficiary shall make a
 
22 monthly contribution to the appropriate trust fund amounting to
 
23 the difference, if any, between the monthly charge of the health
 
 
 
Page 35                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 benefits plan selected by the employee-beneficiary and the
 
 2 State's and county's contribution to the appropriate trust fund.
 
 3      Nothing in this section shall prohibit any eligible
 
 4 employee-beneficiary from participating in a cafeteria plan
 
 5 authorized under section 125 of the Internal Revenue Code of
 
 6 1986, as amended.
 
 7      (b)  During the period the health benefits plan selected by
 
 8 an employee-beneficiary is in effect, the employee-beneficiary
 
 9 shall authorize, if otherwise allowed by law, the
 
10 employee-beneficiary's contribution to be withheld and
 
11 transmitted to the appropriate trust fund monthly by the
 
12 comptroller or finance officer who disburses the employee-
 
13 beneficiary's compensation, pension, or retirement pay.  If,
 
14 however, an employee-beneficiary's contribution to the trust fund
 
15 is not withheld and transmitted to the appropriate trust fund,
 
16 the employee-beneficiary shall pay the monthly contribution:
 
17      (1)  Directly to the trust fund by the first day of each
 
18           month, in the case of an employee-beneficiary who
 
19           normally receives the employee-beneficiary's
 
20           compensation from the comptroller of the State; or
 
21      (2)  In the case of all other employee-beneficiaries, to the
 
22           respective finance officer from whom the
 
23           employee-beneficiary normally receives compensation for
 
 
 
Page 36                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1           transmittal to the appropriate trust fund by the first
 
 2           day of each month.
 
 3      (c)  Notwithstanding subsection (a), an
 
 4 employee-beneficiary's monthly contribution to the appropriate
 
 5 trust fund, amounting to the difference between the monthly cost
 
 6 of the health benefits plan selected by the employee-beneficiary
 
 7 and the State's or appropriate county's contribution to the trust
 
 8 fund, shall be deemed to include the amount which would have been
 
 9 the employee-beneficiary's contribution if the
 
10 employee-beneficiary had not elected to participate in the
 
11 cafeteria plan.
 
12         -7 Employee-beneficiary or qualified-beneficiary
 
13 contributions for long-term care benefits plan.(a)  During the
 
14 period the long-term care benefits plan is in effect, the
 
15 employee-beneficiary shall authorize, if otherwise allowed by
 
16 law, the employee-beneficiary's contribution to be withheld and
 
17 transmitted to the appropriate trust fund monthly by the
 
18 comptroller or finance officer who disburses the
 
19 employee-beneficiary's compensation, pension, or retirement pay.
 
20 If, however, an employee-beneficiary's monthly contribution to
 
21 the trust fund is not withheld and transmitted to the appropriate
 
22 trust fund, the employee-beneficiary shall pay the monthly
 
23 contribution directly to the trust fund's designated carrier or
 
 
 
Page 37                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 third-party administrator by the first day of each month.
 
 2      (b)  Qualified-beneficiaries shall pay monthly contributions
 
 3 directly to the fund's designated carrier or third-party
 
 4 administrator by the first day of each month.
 
 5         -8 Reimbursement for retirant health benefits by the
 
 6 employee's retirement system.  The trust fund may obtain
 
 7 reimbursement from the employees' retirement system for costs
 
 8 incurred by the trust fund in providing health benefits for
 
 9 retirants if the fiscal requirements of section 88-    are met in
 
10 the fiscal year for which the trust fund is seeking
 
11 reimbursement, as provided in section    -9(a).  The trust fund
 
12 may also obtain reimbursement from the employees' retirement
 
13 system for costs incurred by the trust fund in providing health
 
14 benefits for retirees, subject to section    -9(b).
 
15         -9 Insurance commissioner; authority to regulate.  The
 
16 insurance commissioner shall have oversight authority of the
 
17 multiple employer-union health trust, including subordinate
 
18 employer-union health benefits trust funds.  The insurance
 
19 commissioner may adopt rules in accordance with chapter 91 to
 
20 ensure the proper, efficient, and ethical administration,
 
21 including but not limited to acts of nepotism or conflicts of
 
22 interest, of employer-union health trust funds established
 
23 pursuant to this chapter.  The insurance commissioner may invoke
 
 
 
Page 38                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 any action or proceeding in the insurance commissioner's power to
 
 2 obtain compliance from any employer-union health trust fund."
 
 3      SECTION 3.  Chapter 88, Hawaii Revised Statutes, is amended
 
 4 by adding a new section to be appropriately designated and to
 
 5 read as follows:
 
 6      "88-    Reimbursement for retiree health benefits to the
 
 7 public employees health fund.  The employees' retirement system,
 
 8 upon the request of the Hawaii multiple employer-union health
 
 9 trust, shall reimburse the trust for costs incurred in providing
 
10 health benefits to retirees; provided that the following
 
11 requirements are met:
 
12      (1)  The employees' retirement system is fully funded in the
 
13           fiscal year preceding the request by the Hawaii
 
14           multiple employer-union health trust for reimbursement;
 
15      (2)  The moneys needed to reimburse the Hawaii multiple
 
16           employer-union health trust to cover the cost of
 
17           providing health benefits to retirants shall only be
 
18           drawn from the employees' retirement system's
 
19           investment earnings that are in excess of the
 
20           investment yield rate established under section
 
21           88-122(b) for the fiscal year in which the
 
22           reimbursement is requested; and
 
23      (3)  The moneys derived under paragraph (2) are solely for
 
 
 
Page 39                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1           costs incurred in providing health benefits for
 
 2           retirees."
 
 3      SECTION 4.  Chapter 87, Hawaii Revised Statutes, is
 
 4 repealed.
 
 5      SECTION 5.  Effective July 1, 2002, all positions and
 
 6 employees of the Hawaii public employees health fund who are
 
 7 subject to chapter 76 and 77, Hawaii Revised Statutes, shall be
 
 8 transferred to the Hawaii multiple employer-union health trust.
 
 9 All officers and employees whose functions are transferred by
 
10 this Act shall be transferred with their functions and shall
 
11 continue to perform their regular duties upon their transfer,
 
12 subject to the state personnel laws and this Act.
 
13      All civil service positions and incumbents of the Hawaii
 
14 public employees health fund transferred by this Act shall remain
 
15 in the civil service and subject to chapters 76 and 77, Hawaii
 
16 Revised Statutes.
 
17      No officer or employee of the State having tenure shall
 
18 suffer any loss of salary, seniority, prior service credit,
 
19 vacation, sick leave, or other employee benefit or privilege as a
 
20 consequence of this Act, and such officer or employee may be
 
21 transferred or appointed to a civil service position without the
 
22 necessity of examination; provided that the officer or employee
 
23 possesses the minimum qualifications for the position to which
 
 
 
Page 40                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 transferred or appointed; and provided that subsequent changes in
 
 2 status may be made pursuant to the applicable civil service and
 
 3 compensation laws.
 
 4      If an office or position held by an officer or employee
 
 5 having tenure is abolished, the officer or employee shall not
 
 6 thereby be separated from public employment, but shall remain in
 
 7 the employment of the State with the same pay and classification
 
 8 and shall be transferred to some other office or position for
 
 9 which the officer or employee is eligible under the personnel
 
10 laws of the State as determined by the head of the department or
 
11 the governor.
 
12      SECTION 6.  All appropriations, assets, including funds to
 
13 be refunded to employees and any funds in benefit plans and
 
14 cafeteria plans, records, equipment, machines, computer software
 
15 and hardware, files, supplies, contracts, books, papers,
 
16 documents, maps, and other personal property heretofore made,
 
17 used, acquired, or held by the Hawaii public employees health
 
18 fund shall be transferred to the Hawaii multiple employer-union
 
19 health trust, effective July 1, 2002.
 
20      SECTION 7.  The governor shall appoint all members of the
 
21 board of trustees of the Hawaii multiple employer-union health
 
22 trust no later than December 29, 2000.  Upon appointment, the
 
23 board of trustees may develop and issue rules, policies, and
 
 
 
Page 41                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 procedures and contracts for health benefits plans and group life
 
 2 insurance plans which shall become effective on July 1, 2002.
 
 3 The board of trustees and the administrator of the Hawaii public
 
 4 employees health fund shall give necessary assistance to the
 
 5 members of the Hawaii multiple employer-union health trust during
 
 6 the transition.
 
 7      If the civil service administrator position of the health
 
 8 fund becomes vacant prior to July 1, 2002, its successor shall be
 
 9 appointed by the board of trustees of the Hawaii multiple
 
10 employer-union health trust.  When any positions are vacated on
 
11 or after July 1, 2002, the positions shall be exempt from civil
 
12 service and prospective appointments shall be made pursuant to
 
13 section 1 of this Act.
 
14      SECTION 8.  Notwithstanding chapter 103D, Hawaii Revised
 
15 Statutes, the board of trustees of the Hawaii public employees
 
16 health fund under chapter 87, Hawaii Revised Statutes, is
 
17 authorized to extend current health benefit and life insurance
 
18 plan contracts that expire on June 30, 2002.
 
19      SECTION 9.  There is appropriated out of the general
 
20 revenues of the State of Hawaii the sum of $          , or so
 
21 much thereof as may be necessary for fiscal year 2000-2001 to
 
22 carry out the purposes of this Act, including the hiring of
 
23 necessary staff.
 
 
 
Page 42                                                    2802
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1      The sum appropriated shall be expended by the department of
 
 2 budget and finance.
 
 3      SECTION 10.  New statutory material is underscored.
 
 4      SECTION 11.  The Act shall take effect upon approval;
 
 5 provided that section 4 shall take effect on July 1, 2010;
 
 6 provided further that sections 7, 8, and 9 shall take effect on
 
 7 July 1, 2000; and provided further that all rules governing the
 
 8 Hawaii public employees health fund under chapter 87, Hawaii
 
 9 Revised Statutes, if not contrary to this Act, shall remain in
 
10 effect until such time that the Hawaii multiple employer-union
 
11 health trust adopts new rules.