Amended in Assembly April 11, 2013

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 begin delete amend Section 22877 of end delete begin insert add Section 22896 to end insert the Government Code, relating to begin delete the Rural Health Care Equity Program end delete begin insert postemployment health benefits end insert .

LEGISLATIVE COUNSEL’S DIGEST

AB 1346, as amended, Pan. begin delete Rural Health Care Equity Program. end delete begin insert Postemployment health benefits: Sacramento Metropolitan Fire Department: employer contributions. end insert

begin insert

Existing law requires the Board of Administration of the Public Employees’ Retirement System to administer the Public Employees’ Medical and Hospital Care Act. Existing law permits a contracting agency to elect to be subject to the act for its employees and annuitants, provided that the contracting agency and each employee or annuitant contribute a portion of the cost of providing the benefit coverage, as specified. Under this formulation, the employer contribution for the contracting agency begins at 10 years of service and reaches 100% of a specified amount when the employee attains 20 years of credited service, with certain exceptions. Existing law provides alternate formulations for specified contracting agencies.

end insert begin insert

This bill would provide an additional exception by requiring the employer contribution for postretirement health benefit coverage for an annuitant of the Sacramento Metropolitan Fire Department who retires on or after the effective date of a memorandum related to employer contributions, to be based on a revised formula in which the employer contribution begins at 5 years of service, instead of 10 and would reach 100% of a specified amount if the annuitant attained 20 years of credited service, with certain exceptions. The bill would require that the Sacramento Metropolitan Fire Department provide to the board a notification of the agreement and any additional information requested by the board that the board deems necessary to implement the section. The bill would except from the formulation described annuitants who have retired for disability or who have retired for service with 20 or more years of service with the Sacramento Metropolitan Fire Department, as specified.

end insert begin delete

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 delete begin delete

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 delete

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

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

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 22896 is added to the end insert begin insert Government Code end insert begin insert ,
to read: end insert

begin insert

begin insert 22896. end insert   

(a)  Notwithstanding Section 22893, the percentage of
employer contribution payable for postretirement health benefits
for an employee of the Sacramento Metropolitan Fire Department
subject to this section shall, except as provided in subdivision (b),
be based on the member’s completed years of credited state service
at retirement as shown in the following table:

 

begin insert Credited Years of Service end insert	begin insert Percentage of Employer Contribution end insert
begin insert 5    end insert	begin insert 25    end insert
begin insert 6    end insert	begin insert 30    end insert
begin insert 7    end insert	begin insert 35    end insert
begin insert 8    end insert	begin insert 40    end insert
begin insert 9    end insert	begin insert 45    end insert
begin insert 10    end insert	begin insert 50    end insert
begin insert 11    end insert	begin insert 55    end insert
begin insert 12    end insert	begin insert 60    end insert
begin insert 13    end insert	begin insert 65    end insert
begin insert 14    end insert	begin insert 70    end insert
begin insert 15    end insert	begin insert 75    end insert
begin insert 16    end insert	begin insert 80    end insert
begin insert 17    end insert	begin insert 85    end insert
begin insert 18    end insert	begin insert 90    end insert
begin insert 19    end insert	begin insert 95    end insert
begin insert 20 or more    end insert	begin insert  100    end insert

 

The application of this subdivision shall be subject to the
following:

(1) The employer contribution with respect to each annuitant
shall be determined pursuant to a memorandum of understanding
approved through a meet and confer process pursuant to the
Meyers-Milias-Brown Act (Chapter 10 (commencing with Section
3500) of Division 4 of Title 1) with any recognized employee
organization. The issue shall not be subject to the impasse
procedures set forth in Article 9 (commencing with Section 3548)
of Chapter 10.7 of Division 4 of Title 1.

(2) The credited service of an annuitant for the purpose of
determining the percentage of employer contributions applicable
under this section shall mean state service as defined in Section
20069, except that at least five years of service shall have been
performed entirely with the Sacramento Metropolitan Fire
Department.

(3) The Sacramento Metropolitan Fire Department shall
provide, in the manner prescribed by the board, a notification of
the agreement adopted pursuant to this section and any additional
information necessary to implement this section.

(4) The Sacramento Metropolitan Fire Department shall certify
to the board, in the case of employees not represented by a
bargaining unit, that there is not an applicable memorandum of
understanding.

(5) This section shall apply only to employees who retire for
service and whose retirement date is on or after the effective date
of the memorandum of understanding entered into as described
in this subdivision. This section is not applicable to any employee
who retired before the effective date of the memorandum of
understanding.

(b) Notwithstanding subdivision (a), the contribution payable
by the Sacramento Metropolitan Fire Department shall be equal
to 100 percent of the amount established pursuant to paragraph
(1) of subdivision (a) on behalf of any annuitant who either:

(1) Retired for disability.

(2) Retired for service with 20 or more years of service credit
entirely with the Sacramento Metropolitan Fire Department,
regardless of the number of days after separation from employment.
The contribution payable by the Sacramento Metropolitan Fire
Department under this paragraph shall be paid only if it is greater
than, and made in lieu of, a contribution payable to the annuitant
by another employer under this part. The board shall establish
application procedures and eligibility criteria to implement this
paragraph.

(c) This section applies only to the Sacramento Metropolitan
Fire Department, or its successor.

end insert

begin delete

SECTION 1.  

Section 22877 of the Government Code is
amended to read:

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 or
annuitant 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 or annuitant 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 or annuitants 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
or annuitants living in rural areas that would otherwise be covered
if the state employee or annuitant was enrolled in a board-approved
health maintenance organization plan. The program shall be
administered by the Department of Human Resources or by a
third-party administrator approved by the Department of Human
Resources 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.

(C) State annuitants.

(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).

(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).

(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.

(5) 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
Human Resources 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 Human Resources as a participant in the program shall provide
the Department of Human Resources 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 Human Resources shall compile
a list of program payments attributable to each fund. On or before
February 15 of each year, the Department of Human Resources
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 Human Resources or the Director of Finance
may require an audit of departmental reports.

(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.

(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.

(g) 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 Human Resources, which may
include, but is not limited to, a supplemental insurance plan, a
medical reimbursement account, or a medical spending account
plan.

(h) Subject to subdivision (j), 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.

(i) The Legislature finds and declares that the program shall be
operated for the exclusive benefit of employees, annuitants, and
family members.

(j) This section shall be operative only to the extent that funding
is provided in the annual Budget Act or another statute.

(k) This section shall cease to be operative on January 1, 2015,
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.

end delete