Bill Text: CA SB98 | 2015-2016 | Regular Session | Chaptered
Bill Title: State government.
Sponsorship: Unknown
Status: (Passed) 2015-06-24 - Chaptered by Secretary of State. Chapter 28, Statutes of 2015. [SB98 Detail]
Download: California-2015-SB98-Chaptered.html
BILL NUMBER: SB 98 CHAPTERED
BILL TEXT
CHAPTER 28
FILED WITH SECRETARY OF STATE JUNE 24, 2015
APPROVED BY GOVERNOR JUNE 24, 2015
PASSED THE SENATE JUNE 19, 2015
PASSED THE ASSEMBLY JUNE 19, 2015
AMENDED IN ASSEMBLY JUNE 16, 2015
INTRODUCED BY Committee on Budget and Fiscal Review
JANUARY 9, 2015
An act to amend Sections 22775, 22781, 22844, 22865, 22866, and
22940 of, to add Section 22843.1 to, and to repeal Section 12439 of,
the Government Code, relating to state government, and making an
appropriation therefor, to take effect immediately, bill related to
the budget.
LEGISLATIVE COUNSEL'S DIGEST
SB 98, Committee on Budget and Fiscal Review. State government.
(1) The Public Employees' Medical and Hospital Care Act (PEMHCA),
which is administered by the Board of Administration of the Public
Employees' Retirement System, governs the funding and provision of
postemployment health care benefits for eligible retired public
employees and their families. PEMHCA defines "family member" for
these purposes. PEMHCA authorizes the board to contract with carriers
offering health benefit plans and prohibits employees, annuitants,
and their family members who are eligible for Medicare, as specified,
from enrolling in a basic health benefit plan. PEMHCA requires the
board to make certain notifications and reports to the Legislature in
connection with health benefit plans offered pursuant to its
provisions.
This bill would clarify the definition of family for the purposes
of PEMHCA by specifically excluding former spouses and former
domestic partners. The bill would require the employing office, as
specified, of a state employee or state annuitant, pursuant to
standards established by the Department of Human Resources, to
possess documentation verifying eligibility of an employee's family
member prior to the enrollment of a family member in a health benefit
plan and to verify continued eligibility pursuant to a specified
schedule. The bill would prohibit the board from granting further
exceptions to the rule against enrolling employees, annuitants, and
their family members who are eligible for Medicare, as specified, in
a basic health benefit plan. The bill would revise the entities to
which the board is required to provide notification of approval of
proposed benefit and premium readjustments to exclude the Legislature
as a whole and to instead require provision of an initial estimate
of proposed changes in writing to the Joint Legislative Budget
Committee, the chairpersons of the committees and subcommittees in
each house of the Legislature that consider the Public Employees'
Retirement System's budget and activities, the Controller, the
Director of Finance, and the Legislative Analyst. The bill would
specify the latest date that this notification may take place. The
bill would require the board to provide a specified, detailed report
to the Legislature and the Director of Finance annually, on November
1, regarding the health benefit plans it provides.
(2) PEMHCA establishes the Annuitants' Health Care Coverage Fund,
which is continuously appropriated for the purpose of prefunding of
health care coverage for annuitants, including administrative costs.
PEMHCA defines "prefunding" for these purposes.
This bill would prohibit the use of certain state funds in the
Annuitants' Health Care Coverage Fund for the payment of benefits
until the earlier of 2 specified dates. The bill would revise the
definition of prefunding to include employee as well as employer
payments and to provide that payments may fund the actuarially
determined normal costs of postemployment health care benefits. By
providing a new funding source for a continuously appropriated fund,
this bill would make an appropriation.
(3) Existing law prescribes the duties of the Controller, which
generally regard supervision of the fiscal concerns of the state.
Existing law requires the Controller to abolish a state position that
is vacant for 6 consecutive monthly pay periods on the following
July 1, and permits the Director of Finance to authorize
reestablishment of a position abolished pursuant to this authority
under certain conditions. Among other things, existing law requires
the Controller to reestablish a position abolished pursuant to this
authority if the director of the department in which that position
existed prior to abolishment makes a certification by August 15, as
specified.
This bill would repeal the provisions pertaining to vacant
positions described above.
This bill would declare that it is to take effect immediately as a
bill providing for appropriations related to the Budget Bill.
Appropriation: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 12439 of the Government Code is repealed.
SEC. 2. Section 22775 of the Government Code is amended to read:
22775. "Family member" means an employee's or annuitant's spouse
or domestic partner and any child, including an adopted child, a
stepchild, or recognized natural child. The board shall, by
regulation, prescribe age limits and other conditions and limitations
pertaining to children. "Family member" does not include a former
spouse or former domestic partner of an employee or annuitant.
SEC. 3. Section 22781 of the Government Code is amended to read:
22781. "Prefunding" means the making of periodic payments by an
employer or employee to partially or completely fund or amortize the
actuarially determined normal costs or unfunded actuarial obligation
of the employer for postemployment health care benefits provided to
annuitants and their family members.
SEC. 4. Section 22843.1 is added to the Government Code, to read:
22843.1. (a) Pursuant to standards established by the Department
of Human Resources, the employing office of a state employee or state
annuitant shall possess documentation verifying eligibility of an
employee's or annuitant's family member prior to the enrollment of a
family member in a health benefit plan. The employing office shall
maintain the verifying documentation in the employee or annuitant's
official personnel or member file.
(b) The employing office of the state employee or state annuitant
shall obtain verifying documentation to substantiate the continued
eligibility of family members as follows:
(1) At least once every three years for the following family
members:
(A) Spouses.
(B) Domestic partners.
(C) Children and stepchildren.
(D) Domestic partner children.
(2) At least once annually for other children for whom the state
employee or state annuitant has assumed a parent-child relationship.
(c) For purposes of this section, the Public Employees' Retirement
System is the employing office of a state annuitant.
SEC. 5. Section 22844 of the Government Code is amended to read:
22844. (a) Employees, annuitants, and family members who become
eligible to enroll on or after January 1, 1985, in Part A and Part B
of Medicare shall not be enrolled in a basic health benefit plan. If
the employee, annuitant, or family member is enrolled in Part A and
Part B of Medicare, he or she may enroll in a Medicare health benefit
plan.
(b) Employees, annuitants, and family members enrolled in a
prescription drug plan under Part D of Medicare shall not be enrolled
in a board-approved health benefit plan. This subdivision does not
apply to an individual enrolled in a board-approved or offered health
benefit plan that provides a prescription drug plan or qualified
prescription drug coverage under Part D of Medicare as part of its
benefit design.
(c) This section does not apply to employees and family members
that are specifically excluded from enrollment in a Medicare health
benefit plan by federal law or federal regulation.
(d) The board shall not grant any further exemptions to this
section after July 1, 2015.
SEC. 6. Section 22865 of the Government Code is amended to read:
22865. Not later than 30 days prior to the approval of benefits
and premium readjustments authorized under Section 22864, the board
shall provide an initial estimate of proposed changes and costs in
writing to the Joint Legislative Budget Committee, the chairpersons
of the committees and subcommittees in each house of the Legislature
that consider the Public Employees' Retirement System's budget and
activities, the State Controller, the Trustees of the California
State University, the Department of Human Resources, the Director of
Finance, and the Legislative Analyst.
SEC. 7. Section 22866 of the Government Code is amended to read:
22866. (a) The board shall report to the Legislature and the
Director of Finance annually, on November 1, regarding the health
benefits program. The report shall include, but not be limited to the
following:
(1) General overview of the health benefits program, including,
but not limited to, the following:
(A) Description of health plans and benefits provided, including
essential and nonessential benefits as required by state and federal
law, member expected out-of-pocket expenses, and actuarial value by
metal tier as defined by the federal Patient Protection and
Affordable Care Act (Public Law 111-148), as amended by the federal
Health Care and Education Reconciliation Act of 2010 (Public Law
111-152).
(B) Geographic coverage.
(C) Historic enrollment information by basic and Medicare plans,
by state and contract agencies, by active and retired membership, and
by subscriber and dependent tier.
(D) Historic expenditures by basic and Medicare plans, by state
and contract agencies, by active and retired membership, and by
subscriber and dependent tier.
(2) Reconciliation of premium increases or decreases from the
prior plan year, and the reasons for those changes.
(A) Description of benefit design and benefit changes, including
prescription drug coverage, by plan. The description shall detail
whether benefit changes were required by statutory mandate, federal
law, or an exercise of the board's discretion, the costs or savings
of the benefit change, and the impact of how the changes fit into a
broader strategy.
(B) Discussion of risk.
(C) Description of medical trend changes in aggregate service
categories for each plan. The aggregate service categories used shall
include the standard categories of information collected by the
board, consisting of the following: inpatient, emergency room,
ambulatory surgery, office, ambulatory radiology, ambulatory lab,
mental health and substance abuse, other professional, prescriptions,
and all other service categories.
(D) Reconciliation of past year premiums against actual
enrollments, revenues, and accounts receivables.
(3) Overall member health as reflected by data on chronic
conditions.
(4) The impact of federal subsidies or contributions to the health
care of members, including Medicare Part A, Part B, Part C, or Part
D, low-income subsidies, or other federal program.
(5) The cost of benefits beyond Medicare contained in the board's
Medicare supplemental plans.
(6) A description of plan quality performance and member
satisfaction, including, but not limited to, the following:
(A) The Healthcare Effectiveness Data and Information Set,
referred to as HEDIS.
(B) The Medicare star rating for Medicare supplemental plans.
(C) The degree of satisfaction of members and annuitants with the
health benefit plans and with the quality of the care provided, to
the extent the board surveys participants.
(D) The level of accessibility to preferred providers for rural
members who do not have access to health maintenance organizations.
(E) Other applicable quality measurements collected by the board
as part of the board's health plan contracts.
(7) A description of risk assessment and risk mitigation policy
related to the board's self-funded and flex-funded plan offerings,
including, but not limited to the following:
(A) Reserve levels and their adequacy to mitigate plan risk.
(B) The expected change in reserve levels and the factors leading
to this change.
(C) Policies to reduce excess reserves or rebuild inadequate
reserves.
(D) Decisions to lower premiums with excess reserves.
(E) The use of reinsurance and other alternatives to maintaining
reserves.
(8) Description and reconciliation of administrative expenditures,
including, but not limited to, the following:
(A) Organization and staffing levels, including salaries, wages,
and benefits.
(B) Operating expenses and equipment expenditure items, including,
but not limited to, internal and external consulting and
intradepartmental transfers.
(C) Funding sources.
(D) Investment strategies, historic investment performance, and
expected investment returns of the Public Employees' Contingency
Reserve Fund and the Public Employees' Health Care Fund.
(9) Changes in strategic direction and major policy initiatives.
(b) A report submitted pursuant to subdivision (a) shall be
provided in compliance with Section 9795.
SEC. 8. Section 22940 of the Government Code is amended to read:
22940. (a) There is in the State Treasury the Annuitants' Health
Care Coverage Fund that is a trust fund and a retirement fund, within
the meaning of Section 17 of Article XVI of the California
Constitution. Subject to the limitation provided in subdivision (b),
notwithstanding Section 13340, all moneys in the fund are
continuously appropriated without regard to fiscal years to the board
for expenditure for the prefunding of health care coverage for
annuitants pursuant to this part, including administrative costs. The
board has sole and exclusive control and power over the
administration and investment of the Annuitants' Health Care Coverage
Fund and shall make investments pursuant to Part 3 (commencing with
Section 20000).
(b) (1) Moneys accumulated in the designated state subaccounts of
the fund, or a successor fund, that are derived from investment
income shall not be used to pay benefits for state annuitants and
dependents until the earlier of:
(A) With regard to a particular designated state subaccount, the
date the funded ratio of the designated state subaccount reaches at
least 100 percent as determined in that employer's postemployment
benefits actuarial valuation and then only for the purpose of paying
benefits for state annuitants and dependents associated with that
subaccount.
(B) July 1, 2046.
(2) For purposes of this subdivision, "designated state subaccount"
means a separate account maintained within the fund to identify
prefunding contributions and assets attributable to a specified state
collective bargaining unit or other state entity for the purpose of
providing benefits to state annuitants and dependents associated with
a specified collective bargaining unit or other state entity.
(3) This subdivision shall not be construed as prohibiting an
alternative funding strategy agreed to in a written memorandum of
understanding.
SEC. 9. This act is a bill providing for appropriations related to
the Budget Bill within the meaning of subdivision (e) of Section 12
of Article IV of the California Constitution, has been identified as
related to the budget in the Budget Bill, and shall take effect
immediately.
