Amended in Assembly March 21, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 1346

Introduced by Assembly Member Pan

February 22, 2013

An act to amend Section begin delete 22880 of the Government Code, relating to public employees. end delete begin insert 22877 of the Government Code, relating to the Rural Health Care Equity Program. end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 1346, as amended, Pan. begin delete Public Employees’ Medical and Hospital Care Act. end delete begin insert Rural Health Care Equity Program. end insert

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Existing law, until July 3, 2010, or earlier upon a specified finding, established the Rural Health Care Equity Program for the purpose of funding the subsidization and reimbursement of premium costs, deductibles, coinsurance, and other out-of-pocket health care expenses paid by employees of State Bargaining Unit 5 living in rural areas, as defined. Existing law provided for funding and reimbursement provisions for purposes of the program. Existing law provided that the program would be operative only to the extent that funding was provided in the annual Budget Act or another statute and solely for the benefit of employees of State Bargaining Unit 5.

end insert begin insert

The bill would reestablish the Rural Health Care Equity Program until January 1, 2015, or to an earlier date upon a specified finding, and would extend the benefits to all employees and annuitants living in rural areas. This bill would provide that the program would be operative only to the extent that funding is provided in the annual Budget Act.

end insert begin delete

The Public Employees’ Medical and Hospital Care Act (PEMHCA), which is administered by the Board of Administration of the Public Employees’ Retirement System (PERS), authorizes the board to contract for health benefit plans for employees and annuitants, as defined. Contributions and premiums paid under PEMHCA are deposited in the Public Employees’ Health Care Fund and the Public Employees’ Contingency Reserve Fund, which are continuously appropriated funds.

end delete begin delete

This bill would make nonsubstantive changes to a provision of the Public Employees’ Medical and Hospital Care Act.

end delete

Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

end insert

begin insert Section 22877 of the end insert begin insert Government Code end insert begin insert is
amended to read: end insert

22877.  

(a) As used in this section, the following definitions
shall apply:

(1) “Coinsurance” means the provision of a health benefit plan
design that requires the health benefit plan and state employee begin insert or
annuitant end insert to share the cost of hospital or medical expenses at a
specified ratio.

(2) “Deductible” means the annual amount of out-of-pocket
medical expenses that a state employee begin insert or annuitant end insert must pay
before the health benefit plan begins paying for expenses.

(3) “Program” means the Rural Health Care Equity Program.

(4) “Rural area” means an area in which there is no
board-approved health maintenance organization plan available
for enrollment by state employees begin insert or annuitants end insert residing in the
area.

(b) (1) The Rural Health Care Equity Program is hereby
established for the purpose of funding the subsidization and
reimbursement of premium costs, deductibles, coinsurance, and
other out-of-pocket health care expenses paid by eligible employees
begin insert or annuitants end insert living in rural areas that would otherwise be covered
if the state employee begin insert or annuitant end insert was enrolled in a board-approved
health maintenance organization plan. The program shall be
administered by the Department of begin delete Personnel Administration end delete
begin insert Human Resources end insert or by a third-party administrator approved by
the Department of begin delete Personnel Administration end delete begin insert Human Resources end insert in
a manner consistent with all applicable state and federal laws. The
board shall determine the rural area for each subsequent fiscal
year, at the same time that premiums for health maintenance
organization plans are approved.

(2) Separate accounts shall be maintained within the program
for all of the following:

(A) Employees, as defined in subdivision (c) of Section 3513.

(B) Excluded employees, as defined in subdivision (b) of Section
3527.

begin insert

(C) State annuitants.

end insert

(c) Moneys in the program shall be allocated to the respective
accounts as follows:

(1) The contribution provided by the state with respect to each
employee, as defined in subdivision (c) of Section 3513, who lives
in a rural area and is otherwise eligible, shall be an amount
determined through the collective bargaining process.

(2) The contribution provided by the state with respect to each
excluded employee, as defined in subdivision (b) of Section 3527,
who lives in a rural area and is otherwise eligible, shall be an
amount equal to, but not to exceed, the amount contributed pursuant
to paragraph (1).

begin insert

(3) The contribution provided by the state with respect to each
state annuitant who lives in a rural area, is not a Medicare
participant, resides in California, and is otherwise eligible, shall
be an amount not to exceed five hundred dollars ($500).

end insert begin insert

(4) The contribution provided by the state with respect to each
annuitant who lives in a rural area, resides in California,
participates in a supplemental Medicare health benefit plan, and
is otherwise eligible, shall be an amount equal to the Medicare
Part B premiums incurred by the annuitant, not to exceed
seventy-five dollars ($75) per month. The program may not
reimburse for penalty amounts.

end insert begin delete

(3)

end delete

begin insert (5) end insert  If an eligible employee enters or leaves service with the state
during a fiscal year, contributions for the employee shall be made
on a pro rata basis. A similar computation shall be used for anyone
entering or leaving the bargaining unit, including a person who
enters State Bargaining Unit 5 by promotion during a fiscal year.

(d) Each fund of the State Treasury, other than the General
Fund, shall reimburse the General Fund for any sums allocated
pursuant to subdivision (c) for employees whose compensation is
paid from that fund. That reimbursement shall be accomplished
using the following methodology:

(1) On or before December 1 of each year, the Department of
begin delete Personnel Administration end delete begin insert Human Resources end insert shall provide a list
of active state employees who participated in the program during
the previous fiscal year to each employing department.

(2) On or before January 15 of each year, each department that
employed an active state employee identified by the Department
of begin delete Personnel Administration end delete begin insert Human Resources end insert as a participant in
the program shall provide the Department of begin delete Personnel
Administration end delete begin insert Human Resources end insert with a list of the funds used to
pay each employee’s salary, along with the proportion of each
employee’s salary attributable to each fund.

(3) Using the information provided by the employing
departments, the Department of begin delete Personnel Administration end delete begin insert Human
Resources end insert shall compile a list of program payments attributable
to each fund. On or before February 15 of each year, the
Department of begin delete Personnel Administration end delete begin insert Human Resources end insert shall
transmit this list to the Department of Finance.

(4) The Department of Finance shall certify to the Controller
the amount to be transferred from the unencumbered balance of
each fund to the General Fund.

(5) The Controller shall transfer to the General Fund from the
unencumbered balance of each impacted fund the amount specified
by the Department of Finance.

(6) To ensure the equitable allocation of costs, the Director of
the Department of begin delete Personnel Administration end delete begin insert Human Resources end insert or
the Director of Finance may require an audit of departmental
reports.

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(e) For any sums allocated pursuant to subdivision (c) for
annuitants, funds, other than the General Fund, shall be charged
a fair share of the contribution provided by the state in accordance
with the provisions of Article 2 (commencing with Section 11270)
of Chapter 3 of Part 1 of Division 3. On or before July 31 of each
year, the Department of Human Resources shall provide the
Department of Finance with the total costs allocated for annuitants
in the previous fiscal year. The reported costs may not include
expenses that have been incurred but not claimed as of July 31.

end insert begin insert

(f) Notwithstanding any other law and subject to the availability
of funds, moneys within the program shall be disbursed for the
benefit of eligible annuitants. The disbursements shall either
reimburse the annuitant, if not a Medicare participant, for some
or all of the deductible incurred by the annuitant or a family
member, not to exceed five hundred dollars ($500) per fiscal year,
or reimburse the annuitant, if a Medicare participant, for Medicare
Part B premiums incurred by the annuitant, not to exceed
seventy-five dollars ($75) per month. The program may not
reimburse for penalty amounts. These reimbursements shall be
provided by the Department of Human Resources. Notwithstanding
any other law, any annuitant who cannot be located within a period
of three months and whose disbursement is returned to the
Controller as unclaimed is ineligible to participate in the program.

end insert begin delete

(e)

end delete

begin insert (g) end insert  Notwithstanding any other law and subject to the availability
of funds, moneys within the program shall be disbursed for the
benefit of eligible employees. The disbursements shall subsidize
the preferred provider plan premiums for the employee by an
amount equal to the difference between the weighted average of
board-approved health maintenance organization premiums and
the lowest board-approved preferred provider plan premium
available under this part, and reimburse the employee for a portion
or all of his or her incurred deductible, coinsurance, and other
out-of-pocket health-related expenses that would otherwise be
covered if the employee and his or her family members were
enrolled in a board-approved health maintenance organization
plan. These subsidies and reimbursements shall be provided as
determined by the Department of begin delete Personnel Administration end delete begin insert Human
Resources end insert , which may include, but is not limited to, a supplemental
insurance plan, a medical reimbursement account, or a medical
spending account plan.

begin delete

(f)

end delete

begin insert (h) end insert  Subject to subdivision begin delete (h), end delete begin insert (j), end insert moneys remaining in an
account of the program at the end of any fiscal year shall remain
in the account for use in subsequent fiscal years, until the account
is terminated. Moneys remaining in a program account upon
termination, after payment of all expenses and claims incurred
prior to the date of termination, shall be deposited in the General
Fund.

begin delete

(g)

end delete

begin insert (i) end insert  The Legislature finds and declares that the program shall be
operated for the exclusive benefit of begin delete employees of State Bargaining
Unit 5. end delete begin insert employees, annuitants, and family members. end insert

begin delete

(h)

end delete

begin insert (j) end insert  This section shall be operative only to the extent that funding
is provided in the annual Budget Act or another begin delete statute and solely
for the benefit of employees of State Bargaining Unit 5. end delete begin insert statute. end insert

begin delete

(i)

end delete

begin insert (k) end insert  This section shall cease to be operative on begin delete July 3, 2010, end delete
begin insert January 1, 2015, end insert or on an earlier date if the board makes a formal
determination that health maintenance organization plans are no
longer the most cost-effective health benefit plans offered by the
board.

begin delete

(j) Notwithstanding any other law, on and after July 1, 2009,
the benefits of the Rural Health Care Equity Program shall be
available only to employees in State Bargaining Unit 5, and shall
not be available to any other employees. Pursuant to subdivision
(f), any moneys that remain in the accounts of the program on July
1, 2009, other than moneys attributable to employees in State
Bargaining Unit 5 on that date, shall be deposited in the General
Fund. Benefits of the Rural Health Care Equity Program shall
cease to be available to employees in State Bargaining Unit 5, on
and after July 3, 2010, and any moneys remaining in the accounts
of the program shall be deposited in the General Fund.

end delete

begin delete

SECTION 1.  

Section 22880 of the Government Code is
amended to read:

22880.  

(a) The contributions of each employee and annuitant
shall be withheld from the monthly salary or retirement allowance
payable to him or her.

(b) The employer contribution required of the state, as provided
by Sections 22881 and 22883, for any month shall be charged to
the same fund used for payment of salaries and wages from which
the employee contribution is deducted.

(c) The employer contribution required of the state on account
of each annuitant shall be payable from the funds appropriated for
that purpose.

end delete