BILL ANALYSIS Ó
SENATE COMMITTEE ON BUDGET AND FISCAL REVIEW
Senator Mark Leno, Chair
2015 - 2016 Regular
Bill No: AB 124 Hearing Date: June 18,
2015
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|Author: |Committee on Budget |
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|Version: |January 9, 2015 Introduced |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Farra Bracht |
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Subject: Budget Act of 2015.
Summary: This bill is necessary for the enactment of the 2015 budget act
and makes various changes relating to retiree health care and
vacant positions.
Background: The Public Employees' Medical and Hospital Care Act (PEMHCA)
governs the funding and provision of postemployment health care
benefits for eligible retired public employees and their
families. The Board of Administration of the Public Employees'
Retirement System administers PEMHCA. PEMHCA defines "family
member" for these purposes. PEMHCA also authorizes the board to
contract with carriers offering health benefit plans and
prohibits employees, annuitants, and their family members who
are eligible for Medicare 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.
Proposed
Law: This bill would:
1. Clarify the definition of family to specifically exclude
former spouses and former domestic partners.
2. Require a state employee's or state annuitant's employer
to possess and maintain documentation verifying eligibility
of an employee's family members and to verify this
AB 124 (Committee on Budget) Page 2
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information every three years, or annually for children for
whom the state employee or annuitant has assumed a
parent-child relationship.
3. 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 care plan.
4. Revise the entities to which the board is required to
provide notification of approval of proposed benefits and
premium readjustments to exclude the Legislature as a
whole, and instead requires provision of an initial
estimate of the proposed changes in writing to the Joint
Legislative Budget Committee, the chairpersons of the
committee and subcommittees in each house of the
Legislature that consider the Public Employees' Retirement
System's budget and activities, the State Controller, the
Director of Finance, and the Legislative Analyst.
5. Require the board to provide a detailed report to the
Legislature and the Director of Finance annually, on
November 1, regarding the health benefit plans it provides.
6. Establish the Annuitants' Health Care Coverage Fund,
which is continuously appropriated for the purpose of
prefunding health care coverage for annuitants, including
administrative costs.
7. Prohibit the use of state funds in the Annuitants'
Health Care Coverage Fund for the payment of benefits until
the date the funded ratio reaches at least 100 percent, or
July 1, 2046.
8. 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.
9. Repeals state law pertaining to vacant positions that
requires the Controller to abolish state positions that are
vacant for six consecutive months.
Fiscal
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Effect: Uncertain fiscal impacts depending on future bargaining
agreements and other changes to employment rules.
Support: None on file.
Opposed: None on file.
Comments: This trailer bill language provides the necessary statutory
references to enact the 2015-16 budget related to employee
compensation.
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