BILL ANALYSIS
AB 2608
Page 1
Date of Hearing: April 21, 2010
ASSEMBLY COMMITTEE ON PUBLIC EMPLOYEES, RETIREMENT AND SOCIAL
SECURITY
Alberto Torrico, Chair
AB 2608 (Chesbro) - As Introduced: February 19, 2010
SUBJECT : Rural Health Care Equity Program.
SUMMARY : Extends, until January 1, 2012, the Rural Health Care
Equity Program (RHCEP) and extends the benefit provided by that
program to all state employees and retired annuitants living in
rural areas, as specified. Specifically, this bill :
1)Extends the RHCEP until January 1, 2012.
2)Expands the RHCEP benefits to all employees and annuitants
living in rural areas.
3)Deletes the provision relating to the disposition of funds
remaining in the program after the date the program is
terminated.
EXISTING LAW :
1)SB 514 (Chesbro), Chapter 743, Statutes of 1999, established
the RHCEP which is administered by the Department of Personnel
Administration (DPA) to provide subsidies and reimbursements
for health care costs incurred by state employees and
annuitants that live in rural areas of California. A "rural
area" is defined as an area without a CalPERS Board-approved
health maintenance organization (HMO) plan.
2)SB 1168 (Chesbro), Chapter 642, Statutes of 2006, extended the
operation of the RHCEP to January 1, 2012, and specified that
the program is only operative to the extent funding is
provided through the annual budget act or another statute.
3)AB 1389 (Budget Committee), Chapter 751, Statutes of 2008,
eliminated the RHCEP payments to state annuitants.
4)ABX4 12 (Evans), Chapter 12, Statutes of 2009-2010, eliminated
the RHCEP for all active state employees with the exception of
Bargaining Unit (BU) 5 (Highway Patrol) employees who were
allowed to continue to have access to this program, pursuant
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to their active bargaining agreement, until the expiration of
that agreement on July 2, 2010.
FISCAL EFFECT : Unknown.
COMMENTS : According to information provided to the Committee
by CalPERS, the CalPERS Health Benefits Branch, in cooperation
with the State Controller, provides benefit eligibility
information to the DPA. RHCEP benefits are subject to funding
availability and require an appropriation in the annual Budget
Act.
For the state active employees currently eligible for the
program (active BU 5 employees only), the state will contribute
a maximum of $1,500 in subsidies and reimbursements per fiscal
year for each active employee eligible for RHCEP. The subsidy
is equal to the difference between the lowest cost Preferred
Provider Organization (PPO) premium and the weighted-average HMO
premium. Additionally, the state will reimburse for an employee
or dependent's out-of-pocket expenses, such as deductibles and
co-insurance costs.
Active employees may also be eligible for a "secondary"
reimbursement following the September 15th deadline each fiscal
year. Each collective bargaining unit "rolls" any unused funds
into a pool of money at the end of the fiscal year. Employees
who have received the $1,500 maximum may request additional
reimbursement from their bargaining unit's pool of money.
In 2009, RHCEP subsidies were not provided because the lowest
cost CalPERS PPO plan (Anthem Blue Cross PERS Select) offered a
lower premium than the average HMO premium. However, eligible
active employees were able to submit claims for deductible and
co-insurance expenses for that year.
Prior to July 1, 2008, RHCEP was available to eligible retired
annuitants in rural areas. Annuitants not enrolled in Medicare
were eligible for up to $500 in reimbursement for health care
expenses paid under the PPO deductible (for self and
dependents). Eligible annuitants who were enrolled in Medicare
automatically received reimbursement up to $75 for the actual
cost of Medicare Part B premiums. No reimbursement for
dependents' Medicare premiums was available.
According to the author, "The State of California offers its
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employees and retirees a number of health plan options including
at least one low-cost HMO. Unfortunately in some rural areas of
California there are no HMOs available to state employees and
retirees requiring the use of higher cost health care options.
Through the collective bargaining process, the State of
California and its employees and retirees created the Rural
Health Care Equity Program to offset these area's higher health
care costs."
REGISTERED SUPPORT / OPPOSITION :
Support
Service Employees International Union Local 1000 (Sponsor)
California Medical Association
California State Employees Association
Professional Engineers in California Government
Opposition
None on file
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957