2015 -- S 0372

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LC001060

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2015

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A N   A C T

RELATING TO INSURANCE -- MEDICARE EXCHANGE PROGRAM FOR MEDICARE-

ELIGIBLE RETIREES

     Introduced By: Senators Ciccone, Lombardi, Archambault, DiPalma, and DaPonte

     Date Introduced: February 25, 2015

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

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

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

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

have the following meanings:

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

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

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

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

under §§ 36-12-1 -- 36-12-14:

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

limited period and seasonal personnel;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

employees' retirement system of the state of Rhode Island.

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

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

board under § 36-8-1.

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

employees ' retirement system of the state of Rhode Island.

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

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

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

one or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative,

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

hospital. The term includes: group and individual policies or riders whether issued by insurers,

fraternal benefit societies, nonprofit health, hospital, and medical service corporations; prepaid

health plans, health maintenance organizations; or any similar organization. Long-term health

care insurance shall not include: any insurance policy which is offered primarily to provide basic

medicare supplement coverage; basic hospital expense coverage; basic medical-surgical expense

coverage; hospital confinement indemnity coverage; major medical expense coverage; disability

income protection coverage; accident only coverage; specified disease or specified accident

coverage; or limited benefit health coverage. This list of excluded coverages is illustrative and is

not intended to be all inclusive.

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

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

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

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

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

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

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

together with their federal Medicare program benefits (Pub. L. 89-97), 42 U.S.C. § 1305 et seq.,

shall be comparable to those provided for retirees prior to that age. The aforementioned program

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

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

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

retirement were employees of the state as determined by the retirement board pursuant to § 36-8-

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

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

with their federal Medicare program benefits, 42 U.S.C. § 1305 et seq., shall be comparable to

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

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

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

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

§ 213(d) of the Internal Revenue Code of 1986, as amended, which includes reimbursements for

health care insurance premiums;

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

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

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

subsequent coverage periods.

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

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

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

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

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

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

Payments of any non-Medicare-eligible retired employee for coverage shall be deducted from his

or her retirement allowance and remitted from time to time in payment for such contract. In

addition, any retired employee who retired on or before September 30, 2008 shall be permitted to

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

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

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

required in payment for the contract.

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

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

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

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

retirement board under section 36-8-1, shall be entitled to receive for himself or herself non-

Medicare-eligible a retiree health care insurance benefit as described in section 36-12-1 in

accordance with the following formula:

Years of Service Age at Retirement State's Share Employee's Share

10-15 60 50% 50%

16-22 60 70% 30%

23-27 60 80% 20%

28+ -- 90% 10%

28+ 60 100% 0%

35+ any 100% 0%

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

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

December 31, 2013, when When the state retiree reaches that age which will qualify him or her

for Medicare supplement, the formula shall be:

Years of Service State's Share Employee's Share

10 - 15 50% 50%

16 - 19 70% 30%

20 - 27 90% 10%

8+ 100% 0%

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

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

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

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

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

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

remitted from time to time in payment for such contract. Any retired employee who retires on or

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after October 1, 2008, shall be permitted to purchase coverage for his or her non-Medicare-

eligible dependents upon agreeing to pay the additional cost of the contract at the group rate for

the plan in which the dependent is enrolled. Payment for coverage for dependents shall be

deducted from the retired employee's retirement allowances and remitted as required in payment

for the contract. The Director of Administration shall develop and present to the chairpersons of

the House Finance Committee and the Senate Finance Committee by May 23, 2008 a retiree

health plan option or options to be offered to retirees eligible for state-sponsored medical

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

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

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

will be available to employees retiring after September 30, 2008, and their dependents.

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

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

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

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

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

herself a non-Medicare-eligible retiree health care insurance benefit as described in § 36-12-1.

The state will subsidize 80% of the cost of the health insurance plan for individual coverage in

which the retired state retiree employee is enrolled in. Payments for coverage shall be deducted

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

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

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

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

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

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

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

health insurance plan.

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

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

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

reached the age of sixty-five (65).

     SECTION 2. Section 36-12-4.1 of the General Laws in Chapter 36-12 entitled "Insurance

Benefits" is hereby repealed.

     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

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

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

health care insurance through the state-sponsored program. (b) The funds contained in the HRA

may be utilized for any eligible medical care expenses as defined in § 213(d) of the Internal

Revenue Code of 1986, as amended, which includes reimbursements for health care insurance

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

maximize consumer choice and options with respect to the individual policies available to

Medicare-eligible retirees. (d) The maximum state contribution to each Medicare-eligible state

retiree's HRA account will be equal to the lowest-cost Medicare supplemental plan that is filed

with the Office of the Health Insurance Commissioner of Rhode Island, that is available through

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

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

by age as specified by the rates set forth in the Medicare supplemental plan filing. (e) For

Medicare-eligible state retirees who retired before September 30, 2008, effective January 1, 2014,

the state of Rhode Island will credit an amount to each retiree's HRA account on a monthly basis.

The amount of such credit shall be calculated based on the retiree's years of service, as a

percentage of the maximum state contribution set forth in (d) above, and in accordance with the

following formula:

     Years of Service State's Employee's Share Contribution 10 - 15 50% 50% 16 - 19 70%

30% 20 - 27 90% 10% 28+ 100% 0%

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

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

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

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

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

eligible state retirees under the state-sponsored program.

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

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

     SECTION 3. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO INSURANCE -- MEDICARE EXCHANGE PROGRAM FOR MEDICARE-

ELIGIBLE RETIREES

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     This act would revert back from the most recent changes in the general laws concerning

the process by which the state pays for medical coverage for Medicare eligible state and teacher

retirees.

     This act would take effect upon passage.

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