BILL ANALYSIS
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: SB 628
Lou Correa, Chair Hearing date: January 11, 2010
SB 628 (Ashburn) as amended 1/07/10 FISCAL: YES
PEMHCA: PROPOSED LOWER TIER OF EMPLOYER CONTRIBUTIONS FOR
EMPLOYEES HIRED AFTER JANUARY 1, 2010
HISTORY :
Sponsor: Placer County Board of Supervisors
Shasta County Board of Supervisors
Prior legislation: none
SUMMARY :
Would allow governmental agencies that participate in the
Public Employees Medical and Hospital Care Act (PEMHCA) to
negotiate a lower tier of employer health care contributions
for employees hired after January 1, 2010, if agreed to in a
Memorandum of Understanding (MOU) with exclusive employee
representatives, provided that the relevant PEMHCA
contracting agencies are also instrumentalities of either the
County of Placer or the County of Shasta.
BACKGROUND ANALYSIS :
1) What is PEMHCA who is covered by the plan, how is PEMHCA
coverage achieved and how is it terminated ?
The committee is advised that the Public Employees Medical
and Hospital Care Act (PEMHCA) is a health plan administered
by the California Public Employees Retirement System (PERS)
that provides health benefits for all active and retired
state employees.
Local governmental entities such as cities, counties, school
districts and special districts can also opt to participate
in PEMHCA. Upon choosing to provide health benefits under
PEMHCA for their employees and retirees, participating local
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governmental entities enter into a contract with the PERS
Board of Administration. These "contracting agencies" then
pay the health benefit premiums to PERS in the manner
specified in existing PEMHCA law .
Contracting agencies can terminate their PEMHCA contract with
PERS in the time and manner prescribed in existing PEMHCA
law , should they choose to do so.
2) Are PEMHCA coverage and monthly health benefit premiums
different for active and retired employees ?
A basic feature of PEMHCA is that all participating members,
active and retired employees of state or contracting
agencies, are covered by the same benefit structure and have
the same monthly premiums .
3) What type of health plans are offered under PEMHCA ?
Participants are permitted to choose an HMO, PPO or
fee-for-service health plan offered under PEMHCA. All of the
PEMHCA-offered health plans provide the same basic coverage
with some variation between plans, but often significantly
different monthly cost. Any monthly cost that exceeds the
employer contribution is paid for by the participant .
4) Can PEMHCA participants switch health plans ?
There is an annual "open enrollment" period in the fall
during which PEMHCA participants can change their health plan
from one offered plan to another.
5) How is the employer contribution towards monthly PEMHCA
health benefit premiums determined under existing law ?
a) The employer PEMHCA contribution for represented
and non-represented active local agency
employees .
The employer PEMHCA contribution for represented active
local employees is determined in collective bargaining.
All represented employees in a local agency within the
same bargaining unit must receive the same employer
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PEMHCA contribution under existing law .
The employer PEMHCA contribution for non-represented
active local employees (managers and supervisors) is
determined by the employer. All non-represented
employees in a local agency must receive the same
employer PEMHCA contribution under existing law .
b) The employer PEMHCA contribution for retirees of local
contracting agencies .
There are two irrevocable contract options that the local
contracting agencies can utilize at the time they first
enter into a contractual relationship with the PERS Board
to provide PEMHCA benefits to their employees and
retirees, as follows:
1) the employer can choose to provide equal
employer PEMHCA contributions
for active and retired employees, or
2) the employer can choose to provide a minimum
employer PEMHCA contribution of $1 per month per
retiree, but existing law then requires that the
employer PEMHCA contribution increase by 5% each year
until, in the 20th year of retirement, the employer
PEMHCA contribution for the retired employees is
equal to that made for active employees.
ANALYSIS :
1) This bill would, for relevant PEMHCA contracting agencies
that are also instrumentalities of either the County of
Placer or the County of Shasta:
a) allow PEMHCA local agencies to negotiate a lower
tier of employer health care contributions for
employees hired after January 1, 2010, if agreed to in an
MOU with exclusive employee representatives,
b) provide that the employer cannot take the issue of
employer PEMHCA contributions to impasse in labor
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negotiations, and
c) provide that employees hired before the effective
date of an MOU that provides a new, lower tier of employer
PEHMCA contributions for new hires shall retain that status
after they retire and not be eligible for inclusion in a
lower tier of employer contributions.
COMMENTS :
1) Arguments in support
In their letter of support, the sponsor states:
"Current law limits public agencies that contract with
CalPERS for health insurance under the Public
Employees Medical Care and Hospital Act (PEMCHA), to a
limited number of options to pay for employee and retiree
health insurance premium contribution. This means that
contracting agencies such as Placer and Shasta counties
have very little flexibility to set benefits for county
employees.
SB 628 will enhance contracting agencies' ability to
provide two-tiered benefits systems through CalPERS. The
costs associated with CalPERS establishing two-tiered
systems for contracting agencies would be born by those
contracting agencies.
This measure is an appropriate and needed authority for
CalPERS contracting agencies to address their ongoing
benefit needs."
1)Arguments in opposition
In their letter of opposition, the California Association of
Professional Scientists (CAPS) states:
"As we understand it, the sponsors of the bill would
like to change existing law to allow for counties to be
able to provide a two-tiered health benefits system for
county annuitants which they are currently prohibited from
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doing. If a county wants to proceed in this manner, they
should sit own and negotiate it with the affected labor
group in the county and then proceed with the legislation
for that particular county, if needed."
Opponents also note that a two-tiered health system creates
an unfair work environment by providing disparate
compensation for employees who do the same work. In
addition, since new employees generally start at the lower
end of the pay scale, they are least likely to afford the
full cost of health care benefits.
3) OPPOSITION :
California Association of Professional Scientists (CAPS)
California Professional Firefighters (CPF)
California Labor Federation (CLF)
California School Employees Association, AFL-CIO
Orange County Employees' Association (OCEA)
Peace Officers Research Association of California
(PORAC)
Professional Engineers in California Government (PECG)
Retired Public Employees' Association (RPEA)
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