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art.002/1

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2013 -- H5127

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ARTICLE 2

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RELATING TO MEDICARE EXCHANGE PROGRAM FOR MEDICARE ELIGIBLE

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RETIREES

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     SECTION 1. Sections 36-12-1 and 36-12-4 of the General Laws in Chapter 36-12

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entitled "Insurance Benefits" are hereby amended to read as follows:

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     36-12-1. Definitions. -- The following words, as used in sections 36-12-1 -- 36-12-14,

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shall have the following meanings:

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      (1) "Employer", means the state of Rhode Island.

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      (2) "Employee", means all persons who are classified employees as the term "classified

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employee" is defined under section 36-3-3, and all persons in the unclassified and non-classified

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service of the state; provided, however, that the following shall not be included as "employees"

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under sections 36-12-1 -- 36-12-14:

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      (i) Part-time personnel whose work week is less than twenty (20) hours a week and

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limited period and seasonal personnel;

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      (ii) Members of the general assembly, its clerks, doorkeepers, and pages.

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      (3) "Dependents" means an employee's spouse, domestic partner and unmarried children

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under nineteen (19) years of age. Domestic partners shall certify by affidavit to the benefits

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director of the division of personnel that the (i) partners are at least eighteen (18) years of age and

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are mentally competent to contract, (ii) partners are not married to anyone, (iii) partners are not

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related by blood to a degree which would prohibit marriage in the state of Rhode Island, (iv)

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partners reside together and have resided together for at least one year, (v) partners are financially

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interdependent as evidenced by at least two (2) of the following: (A) domestic partnership

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agreement or relationship contract; (B) joint mortgage or joint ownership of primary residence,

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(C) two (2) of: (I) joint ownership of motor vehicle; (II) joint checking account; (III) joint credit

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account; (IV) joint lease; and/or (D) the domestic partner has been designated as a beneficiary for

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the employee's will, retirement contract or life insurance. Misrepresentation of information in the

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affidavit will result in an obligation to repay the benefits received, and a civil fine not to exceed

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one thousand dollars ($1000) enforceable by the attorney general and payable to the general fund.

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The employee will notify the benefits director of the division of personnel by completion of a

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form prescribed by the benefits director when the domestic partnership ends.

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      (4) "Retired employee", means all persons retired from the active service of the state,

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who, immediately prior to retirement, were employees of the state as determined by the

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retirement board under section 36-8-1, and also all retired teachers who have elected to come

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under the employees' retirement system of the state of Rhode Island.

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     (5) "State retiree", means all persons retired from the active service of the state who,

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immediately prior to retirement, were employees of the state as determined by the retirement

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board under section 36-8-1.

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     (6) "Teacher retiree", means all retired teachers who have elected to come under the

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employees' retirement system of the state of Rhode Island.

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      (5)(7) "Long-term health care insurance", means any insurance policy or rider

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advertised, marketed, offered, or designed to provide coverage for not less than twelve (12)

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consecutive months for each covered person on an expense incurred, indemnity, prepaid, or other

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basis for one or more necessary or medically necessary diagnostic, preventive, therapeutic,

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rehabilitative, maintenance, or personal care services, provided in a setting other than an acute

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care unit of a hospital. The term includes: group and individual policies or riders whether issued

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by insurers, fraternal benefit societies, nonprofit health, hospital, and medical service

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corporations; prepaid health plans, health maintenance organizations; or any similar organization.

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Long-term health care insurance shall not include: any insurance policy which is offered

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primarily to provide basic medicare supplement coverage; basic hospital expense coverage; basic

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medical-surgical expense coverage; hospital confinement indemnity coverage; major medical

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expense coverage; disability income protection coverage; accident only coverage; specified

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disease or specified accident coverage; or limited benefit health coverage. This list of excluded

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coverages is illustrative and is not intended to be all inclusive.

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      (6)(8) "Non-Medicare-eligible retiree "Retiree health care insurance", means the health

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benefit employees who retire from active service of the state (subsequent to July 1, 1989), who

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immediately prior to retirement were employees of the state as determined by the retirement

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board pursuant to section 36-8-1, shall be entitled to receive, until attaining Medicare eligibility.

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which This health care insurance shall be equal to semi-private hospital care, surgical/medical

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care and major medical with a one hundred seventy-five dollar ($175) calendar year deductible.

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Employees who retire prior to age sixty-five (65) shall, upon the attainment of Medicare

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eligibility, receive hospital care, surgical/medical services, rights and benefits which, when taken

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together with their federal Medicare program benefits (public law 89-97), 42 U.S.C. section 1305

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et seq., shall be comparable to those provided for retirees prior to that age. The aforementioned

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program will be provided on a shared basis in accordance with section 36-12-4.

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     (9) "Medicare-eligible retiree health care insurance", means the health benefit employees

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who retire from active service of the state (subsequent to July 1, 1989), who immediately prior to

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retirement were employees of the state as determined by the retirement board pursuant to section

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36-8-1, shall have access to when eligible for Medicare. This health care insurance shall include

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plans providing hospital care, surgical/medical services, rights and benefits which, when taken

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together with their federal Medicare program benefits, 42 U.S.C. section 1305 et seq., shall be

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comparable to those provided for retirees prior to the attainment of Medicare eligibility.

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     (10) "Health reimbursement arrangement", or "HRA" means an account that:

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     (i) Is paid for and funded solely by state contributions;

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     (ii) Reimburses a Medicare-eligible state retiree for medical care expenses as defined in

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section 213(d) of the Internal Revenue Code of 1986, as amended, which includes

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reimbursements for health care insurance premiums;

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     (iii) Provides reimbursements up to a maximum dollar amount for a coverage period; and

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     (iv) Provides that any unused portion of the maximum dollar amount at the end of a

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coverage period is carried forward to increase the maximum reimbursement amount in

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subsequent coverage periods.

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     36-12-4. Coverage of retired employees Coverage of Non-Medicare-eligible retired

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employees. -- (a) Non-Medicare-eligible retired Retired employees who retire retired on or before

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September 30, 2008. - Any retired employee who retired on or before September 30, 2008 shall

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be entitled, until attaining Medicare eligibility, to be covered under sections 36-12-1 -- 36-12-5

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for himself and herself and, if he or she so desires, his or her non-Medicare-eligible dependents,

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upon agreeing to pay the total cost of his or her contract at the group rate for active state

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employees. Payments of any non-Medicare-eligible retired employee for coverage shall be

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deducted from his or her retirement allowance and remitted from time to time in payment for such

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contract. In addition, any retired employee who retired on or before September 30, 2008 shall be

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permitted to purchase coverage for his or her non-Medicare-eligible dependents upon agreeing to

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pay the additional cost of the contract at the group rate for active state employees. Payment for

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coverage for these dependents shall be deducted from his or her retirement allowances and

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remitted as required in payment for the contract.

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     (b) Non-Medicare-eligible State state employees retirees who retire retired subsequent to

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July 1, 1989, and on or before September 30, 2008. Non-Medicare-eligible state retirees State

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employees who retire retired subsequent to July 1, 1989, and on or before September 30, 2008,

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from active service of the state, and who were employees of the state as determined by the

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retirement board under section36-8-1, shall be entitled to receive for himself or herself non-

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Medicare-eligible a retiree health care insurance benefit as described in section36-12-1 in

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accordance with the following formula:

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     Years of Age State's Employee's

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      Service at Retirement Share Share

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      10-15 60 50% 50%

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      16-22 60 70% 30%

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      23-27 60 80% 20%

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      28+ -- 90% 10%

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      28+ 60 100% 0%

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      35+ any 100% 0%

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     If the retired employee is receiving a subsidy on September 30, 2008, the state will

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continue to pay the same subsidy share until the retiree attains age sixty-five (65).

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     Until December 31, 2013, when When the state retiree reaches that age which will

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qualify him or her for Medicare supplement, the formula shall be:

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     Years of Service State's Contribution Employees' Share

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      10 – 15 50% 50%

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      16 – 19 70% 30%

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      20 – 27 90% 10%

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      28+ 100% 0%

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     (c) Non-Medicare-eligible retired Retired employees who retire on or after October 1,

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2008. Any retired employee who retires on or after October 1, 2008 shall be entitled, until

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attaining Medicare eligibility, to be covered under sections 36-12-1 – 36-12-5 for himself and

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herself and, if he or she so desires, his or her non-Medicare-eligible dependents, upon agreeing to

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pay the total cost of the contract in the plan in which he or she enrolls. Payments of any non-

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Medicare-eligible retired employee for coverage shall be deducted from his or her retirement

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allowance and remitted from time to time in payment for such contract. Any retired employee

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who retires on or after October 1, 2008, shall be permitted to purchase coverage for his or her

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non-Medicare-eligible dependents upon agreeing to pay the additional cost of the contract at the

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group rate for the plan in which the dependent is enrolled. Payment for coverage for these

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dependents shall be deducted from the retired employee's retirement allowances and remitted as

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required in payment for the contract. The Director of Administration shall develop and present to

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the chairpersons of the House Finance Committee and the Senate Finance Committee by May 23,

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2008 a retiree health plan option or options to be offered to retirees eligible for state-sponsored

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medical coverage who are under age sixty-five (65) or are not eligible for Medicare. This plan

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will have a reduced benefit level and will have an actuarially based premium cost not greater than

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the premium cost of the plan offered to the active state employee population. This new plan

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option will be available to employees retiring after September 30, 2008, and their non-Medicare-

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eligible dependents.

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     (d) Non-Medicare-eligible State state employees retirees who retire on or after October 1,

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2008. Employees Non-Medicare-eligible state retirees who retire on or after October 1, 2008

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from active service of the state, and who were employees of the state as determined by the

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retirement board under section 36-8-1, and who have a minimum of twenty (20) years of service,

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and who are a minimum of fifty-nine (59) years of age, shall be entitled to receive for himself or

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herself a non-Medicare-eligible retiree health care insurance benefit as described in section 36-

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12-1. The State state will subsidize 80% of the cost of the health insurance plan for individual

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coverage in which the retired state employee retiree is enrolled in. Payments of any retired

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employee for coverage shall be deducted from his or her retirement allowance and remitted from

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time to time in payment for such contract.

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     (e) Medicare-eligible state retirees who retire on or after October 1, 2008. Until

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December 31, 2013, the state shall subsidize eighty percent (80%) of the cost of the Medicare-

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eligible health insurance plan for individual coverage in which the state retiree is enrolled,

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provided the employee retired on or after October 1, 2008; has a minimum of twenty (20) years of

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service; and is a minimum of fifty-nine (59) years of age. Payments for coverage shall be

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deducted from his or her retirement allowance and remitted from time to time in payment for such

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health insurance plan.

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     (e)(f) Retired employees, including retired teachers, who are non-Medicare-eligible and

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who reach the age of sixty-five (65) shall be allowed to continue to purchase group health care

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insurance benefits in the same manner as those provided to retired employees who have not

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reached the age of sixty-five (65).

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     SECTION 2. Chapter 36-12 of the General Laws entitled "Insurance Benefits" is hereby

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amended by adding thereto the following section:

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     36-12-4.1. Coverage of Medicare-eligible retired employees. -- (a) The director of the

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department of administration shall ensure retired employees access to Medicare-eligible retiree

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health care insurance. Under this program, the state will establish a health reimbursement account

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(HRA) funded by state contributions for each Medicare-eligible state retiree who elects to receive

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health care insurance through the state-sponsored program.

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     (b) The funds contained in the HRA may be utilized for any eligible medical care

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expenses as defined in section 213(d) of the Internal Revenue Code of 1986, as amended, which

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includes reimbursements for health care insurance premiums.

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     (c) The director of the department of administration shall procure services to maximize

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consumer choice and options with respect to the individual policies available to Medicare-eligible

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retirees.

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     (d) The maximum state contribution to each Medicare-eligible state retiree's HRA

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account will be equal to the lowest-cost Medicare supplemental plan that is filed with the Office

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of the Health Insurance Commissioner of Rhode Island, that is available through the state-

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sponsored program, and that meets the provisions of the Medicare-eligible retiree health care

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insurance benefit defined in section 36-12-1(9). The maximum state contribution will vary by age

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as specified by the rates set forth in the Medicare supplemental plan filing.

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      (e) For Medicare-eligible state retirees who retired before September 30, 2008, effective

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January 1, 2014, the state of Rhode Island will credit an amount to each retiree's HRA account on

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a monthly basis. The amount of such credit shall be calculated based on the retiree's years of

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service, as a percentage of the maximum state contribution set forth in (d) above, and in

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accordance with the following formula:

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     Years of Service State's Contribution Employees Share

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      10 – 15 50% 50%

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      16 – 19 70% 30%

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      20 – 27 90% 10%

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      28+ 100% 0%

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     (f) For Medicare-eligible state retirees who retire on or after October 1, 2008, effective

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January 1, 2014, the state of Rhode Island will credit monthly an amount to each retiree's HRA

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account equal to 80% of the maximum state contribution set forth in (d) above, provided the

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retiree has a minimum of twenty (20) years of service and is at least fifty-nine (59) years of age.

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     (g) Medicare-eligible teacher retirees may purchase the individual policies available to

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Medicare-eligible state retirees under the state-sponsored program.

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     SECTION 3. This article shall take effect as of July 1, 2013.