BILL NUMBER: AB 1346 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 11, 2013
AMENDED IN ASSEMBLY MARCH 21, 2013
INTRODUCED BY Assembly Member Pan
FEBRUARY 22, 2013
An act to amend Section 22877 of add
Section 22896 to the Government Code, relating to the
Rural Health Care Equity Program postemployment health
benefits .
LEGISLATIVE COUNSEL'S DIGEST
AB 1346, as amended, Pan. Rural Health Care Equity
Program. Postemployment health benefits: Sacramento
Metropolitan Fire Department: employer contributions.
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.
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.
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.
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.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 22896 is added to the
Government Code , to read:
22896. (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:
Credited Percentage of
Years Employer
of Service Contribution
5 25
6 30
7 35
8 40
9 45
10 50
11 55
12 60
13 65
14 70
15 75
16 80
17 85
18 90
19 95
20 or more 100
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.
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.