BILL ANALYSIS �
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: AB 410
Jim Beall, Chair HEARING DATE: June 10, 2013
AB 410 (Jones-Sawyer) as amended 6/04/13FISCAL: YES
PUBLIC EMPLOYEES' MEDICAL AND HOSPITAL CARE ACT: RIGHT TO
POST-RETIREMENT HEALTH CARE COVERAGE
HISTORY :
Sponsor: California Professional Firefighters (CPF)
Other legislation: SB 695 (Wiggins), 2008
Died in Senate Appropriations Committee
AB 2132 (Levine), 2006
Vetoed by the Governor
AB 1611 (Levine), 2003
Died in Assembly Appropriations Committee
ASSEMBLY VOTES :
PER & SS 7-0 4/10/13
Appropriations 17-0 5/01/13
Assembly Floor 72-3 5/13/13
SUMMARY :
AB 410 permits a California Public Employees' Retirement
System (CalPERS) retiree to reinstate to active employment
without losing his or her accrued retiree health benefits
earned with the prior employer under the Public Employees'
Medical and Hospital Care Act (PEMHCA), which is administered
by CalPERS, as specified.
BACKGROUND AND ANALYSIS :
1) Existing law :
a) establishes PEMHCA, which provides health care
coverage for state and California State University
employees and retirees who meet specific vesting
requirements, and for employees and retirees of
participating local public employers that contract with
CalPERS for PEMHCA coverage.
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b) requires participants to perform a minimum number of
years of service, typically five, prior to obtaining
eligibility for retiree health coverage or any employer
contribution toward that coverage.
c) specifies that the last employer of record before a
member's retirement from CalPERS is the employer
responsible for paying the employer contribution for the
retiree's health coverage.
d) makes eligibility for enrollment in PEMHCA for most
retirees dependent on retirement within a specified
number of days of permanent separation from a CalPERS
employer (usually 120 days).
e) requires, in most cases, that the retiree enroll in
PEMHCA within 60 days of retirement.
f) provides varying employer contribution levels for
retiree health care depending upon whether the employer
is the state or a local contracting agency and the
employee's years of service with that employer.
g) allows, as a contract option for a local employer,
that the retiree will not be subject to the 120-day rule
if he or she had 20 years of service with the local
employer.
2) This bill :
a) allows a retiree who reinstates to active employment
with a CalPERS employer to subsequently re-retire and
enroll in PEMHCA as a retiree of the prior employer from
which he or she first retired. In such cases, the
retiree would be eligible for the employer contribution
toward retiree health care that he or she had when first
retired.
b) allows the retiree to enroll for retiree health care
coverage under the subsequent employer upon
re-retirement if the employer contribution under the
subsequent employer is higher than that provided by the
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Date: June 04, 2013 Page
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first employer.
c) specifies that the subsequent retirement must occur
within 120 days after separation from employment from
the most recent employer. The 120-day rule would not
apply in cases in which a local contracting employer
contracts for the option to allow coverage regardless of
the length of separation for employees who had 20 years
of service with that local employer.
d) requires that any creditable service acquired with
the subsequent employer after reinstatement will not be
applicable with regard to vesting for the employer
contribution from the prior employer upon re-retirement.
e) requires that the retiree must enroll in PEMHCA
within 60 days of re-retirement.
f) states that these provisions only apply to an
annuitant who, after reinstatement, subsequently retires
on or after January 1, 2014.
FISCAL :
According to the Assembly Appropriations committee, "There
are no significant net costs to this bill."
COMMENTS :
1) Arguments in Support :
The sponsor states:
Under PEMHCA, the last employer of record before an
employee retires is the employer responsible for paying
any earned employer-contribution for that retiree's
health care coverage, regardless of that employee's
tenure or any previously accrued retiree healthcare
contribution.
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Date: June 04, 2013 Page
3
If a retired member reinstates to active employment, the
new employer is considered the last employer of record
for purposes of determining health coverage eligibility.
When that member retires a second time, regardless of
the amount of the employer-paid health care contribution
already earned from service with the employer they
retired from the first time, the retiree is only
eligible for the contribution earned by work with the
second employer.
Given escalating, uncapped health benefit costs, the
threat of losing employer-provided health care coverage
under PEMHCA has created a major disincentive among
retired public employees to return to work in the public
sector. Similarly, current law discourages skilled,
experienced employees who retire as a result of a
job-related injury to rehabilitate from their injury and
go back to work in a less physically demanding job. AB
410 incentivizes a public agency retiree to return to
work because he or she is protected against the risk of
losing his or her earned health care contribution.
Those who have reinstated are not receiving a retirement
allowance and continue to contribute to the assets of
the retirement system, rather than drawing from them.
Other supporters note that AB 410 incentivizes retirees to
return to work because they will be protected from
permanently losing their earned retiree health benefits, and
acknowledge the cost savings to prior employers for
unrequired health care and pension payments during the
reinstatement period.
2) SUPPORT :
California Professional Firefighters, Sponsor
California Association of Professional Scientists (CAPS)
California Fire Chiefs Association (CFCA)
California Public Employees' Retirement System (CalPERS)
Glendale City Employees' Association (GCEA)
Organization of SMUD Employees (OSE)
San Bernardino Public Employees Association (SBPEA)
San Luis Obispo County Employees Association (SLOCEA)
Santa Rosa City Employees Association (SRCEA)
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3) OPPOSITION :
None to date
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