REPORT TITLE:
Public Employee LTC Ins


DESCRIPTION:
Makes long-term care benefit plans for public employees funded
entirely by contributions by the Public Employees Health Fund.
Makes long-term care insurance offered by the Health Fund
mandatory for employees with ten or more years of service, and
voluntary for employees with nine years of service or less.
Allows employees with ten or more years of service to opt out of
mandatory long-term care insurance.  Authorizes the Health Fund
to contract with the Hawaii Employers' Mutual Insurance Company
to provide long-term care insurance. (HB1679 HD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        1679
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO PUBLIC EMPLOYEES LONG-TERM CARE BENEFITS PLAN.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  Section 87-3, Hawaii Revised Statutes, is
 
 2 amended as follows:
 
 3      1.  By amending subsection (a) to read:
 
 4      "(a)  The fund shall be used for the purpose of providing
 
 5 employee-beneficiaries and dependent-beneficiaries with a health
 
 6 benefits plan and a long-term care benefits plan; provided that
 
 7 the long-term care benefits plan shall be funded entirely by
 
 8 contributions by the fund, and that the fund, including rate
 
 9 credits or reimbursements from any carrier or self-insured plan
 
10 or any earning or interest derived therefrom, may be used to
 
11 stabilize health benefits plan or long-term care benefits plan
 
12 rates, to the extent that contributions are received from the
 
13 fund for the long-term care benefits plan, and with approval of
 
14 the legislature through appropriation of funds for other expenses
 
15 necessary to effectuate these purposes.  Notwithstanding any law
 
16 to the contrary, any rate credit or reimbursement from any
 
17 carrier or self-insured plan in excess of funds used to stabilize
 
18 health benefits plan [or long-term care benefits plan] costs, and
 
19 for other expenses authorized by the legislature or any earning
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 or interest derived therefrom shall be returned to the State or
 
 2 the county for deposit into the appropriate general fund if the
 
 3 moneys are returned from:
 
 4      (1)  A plan that provides health benefits to retirees or the
 
 5           surviving spouses of deceased retirees or employees
 
 6           killed in the performance of their duty whose coverage
 
 7           is financed in whole or in part by the State or by the
 
 8           county; or
 
 9      (2)  A plan that provides health benefits to employees;
 
10           provided that the amount returned to the general fund
 
11           shall be only that portion financed by the State or by
 
12           the county on behalf of the employee."
 
13      2.  By amending subsection (c) to read:
 
14      "(c)  To the extent that contributions are received from
 
15 employee-beneficiaries and qualified-beneficiaries for long-term
 
16 care insurance benefits under section 87-23.6, the fund shall
 
17 also be used for the purpose of providing long-term care
 
18 insurance benefits to eligible participants[.]; provided that the
 
19 long-term care benefits plan shall be funded entirely by
 
20 contributions by the fund."
 
21      SECTION 2.  Section 87-4, Hawaii Revised Statutes, is
 
22 amended by amending subsection (a) to read as follows:
 

 
 
 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      "(a)  The State through the department of budget and finance
 
 2 and the several counties through their respective departments of
 
 3 finance shall pay to the fund a monthly contribution equal to the
 
 4 amount established under chapter 89C or specified in the
 
 5 applicable public sector collective bargaining agreement,
 
 6 whichever is appropriate, for each of their respective employee-
 
 7 beneficiaries and employee-beneficiaries with dependent-
 
 8 beneficiaries, [which] that shall be used toward the payment of
 
 9 costs of a health benefits plan[;] and that shall be used toward
 
10 the payment of costs of a long-term care benefits plan; provided
 
11 that the monthly contribution shall not exceed the actual cost of
 
12 a health benefits plan.  If both husband and wife are employee-
 
13 beneficiaries, the total contribution by the State or the
 
14 appropriate county shall not exceed the monthly contribution of a
 
15 family plan for both of them.  If, however, the State or any of
 
16 the several counties establish cafeteria plans in accordance with
 
17 section 125 of the Internal Revenue Code of 1986, as amended, and
 
18 part II of chapter 78, the monthly contribution to the fund for
 
19 those employee-beneficiaries who participate in a cafeteria plan
 
20 shall be made through the cafeteria plan.  In this event, the
 
21 payments made by the State or the counties shall include the
 
22 State's and the counties' respective contributions to the fund
 
23 and the employee-beneficiary's share of the cost of the health
 

 
Page 4                                                     1679
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 benefits plan selected and authorized by the employee-beneficiary
 
 2 through the cafeteria plan."
 
 3      SECTION 3.  Section 87-4.5, Hawaii Revised Statutes, is
 
 4 amended by amending subsection (a) to read as follows:
 
 5      "(a)  This section shall apply to state and county
 
 6 contributions to the fund for employees specified in section
 
 7 87-1(5)(A)(v), except those hired after June 30, 1996, under
 
 8 section 87-4.6, who retire after June 30, 1984, with fewer than
 
 9 ten years of credited service, excluding sick leave.  Monthly
 
10 contributions made under this section shall be used toward the
 
11 payment of costs of a long-term care benefits plan, the costs of
 
12 which shall be funded entirely by contributions by the fund."
 
13      SECTION 4.  Section 87-23.5, Hawaii Revised Statutes, is
 
14 amended to read as follows:
 
15      "87-23.5  Determination of long-term care benefits plan;
 
16 contract with carrier or third-party administrator.(a)  The
 
17 board of trustees shall determine the benefits of a long-term
 
18 care benefits plan which shall be funded entirely by
 
19 contributions by the fund, for employee-beneficiaries, their
 
20 spouses or reciprocal beneficiaries, and qualified-beneficiaries.
 
21 The plan shall comply with [the provisions of] article 10A, part
 
22 V, of chapter 431, upon initial plan implementation only.
 

 
 
 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      (b)  Notwithstanding any other law to the contrary, such
 
 2 benefits shall be available only to employee-beneficiaries, their
 
 3 spouses or reciprocal beneficiaries, and qualified-beneficiaries
 
 4 [who enroll between the ages of twenty and eighty-five.], and
 
 5 shall be:
 
 6      (1)  Mandatory for employee-beneficiaries with ten or more
 
 7           years of service; provided that the employee-
 
 8           beneficiary shall have the option to opt out of such
 
 9           benefits;
 
10      (2)  Voluntary for employee-beneficiaries with nine years of
 
11           service or less; and
 
12      (3)  Voluntary for any employee-beneficiary's spouse or
 
13           reciprocal beneficiary, and qualified-beneficiaries.
 
14 Eligible persons must comply with the plan's [age,] years of
 
15 service, enrollment, medical underwriting, and contribution
 
16 requirements.
 
17      (c)  The board may contract with a carrier to provide fully-
 
18 insured benefits or a third-party administrator to administer
 
19 self-insured benefits."
 
20      SECTION 5.  Section 87-23.6, Hawaii Revised Statutes, is
 
21 amended by amending subsection (a) to read as follows:
 
22      "(a)  Participation in the long-term care benefits plan
 
23 shall be funded entirely by contributions by the fund.  During
 

 
Page 6                                                     1679
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 the period the long-term care benefits plan is in effect, the
 
 2 employee-beneficiary shall authorize, if otherwise allowed by
 
 3 law, the employee-beneficiary's contribution to be withheld and
 
 4 transmitted to the fund monthly by the comptroller or finance
 
 5 officer who disburses the employee-beneficiary's compensation,
 
 6 pension, or retirement pay.  If, however, an employee-
 
 7 beneficiary's monthly contribution to the fund is not withheld
 
 8 and transmitted to the fund, the employee-beneficiary shall pay
 
 9 the monthly contribution directly to the board's designated
 
10 carrier or third-party administrator by the first day of each
 
11 month."
 
12      SECTION 6.  Section 87-24, Hawaii Revised Statutes, is
 
13 amended to read as follows:
 
14      "87-24  Selection of a carrier or third-party administrator
 
15 for a health benefits, group life insurance, or long-term care
 
16 benefits plan.  (a)  Notwithstanding chapter 103D, selection of a
 
17 carrier or third-party administrator for any benefit plan shall
 
18 be based on specifications and considerations determined by the
 
19 board of trustees.  In that process, the board of trustees may:
 
20      (1)  Prepare specifications;
 
21      (2)  Submit specifications for proposals by interested
 
22           applicants;
 
23      (3)  Evaluate proposals;
 

 
Page 7                                                     1679
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      (4)  Give prime consideration to the applicant offering the
 
 2           lowest net cost and high quality of services; and
 
 3      (5)  Negotiate or use other competitive procedures, as the
 
 4           board of trustees deems appropriate in its discretion,
 
 5           to select a carrier or a third-party administrator.
 
 6      (b)  The Hawaii employers' mutual insurance company,
 
 7 pursuant to article 14A of chapter 431, may form a subsidiary
 
 8 insurance company to provide a long-term care benefits plan at
 
 9 actuarially sound rates.  The subsidiary company shall operate
 
10 pursuant to section 431:14A-103; provided that section 431:14A-
 
11 103(f) shall not apply to a long-term care benefits plan offered
 
12 pursuant to section 87-23.5."
 
13      SECTION 7.  Section 431:14A-103, Hawaii Revised Statutes, is
 
14 amended by amending subsection (f) to read as follows:
 
15      "(f)  The company is exempt from participation, and shall
 
16 not join, contribute financially to, nor be entitled to the
 
17 protection of, any plan, association, guaranty, insolvency fund,
 
18 [[]or education[]] and training fund authorized or required by
 
19 this chapter.  Notwithstanding the foregoing exemptions,
 
20 beginning January 1, 2008, the company shall participate in the
 
21 property and liability insurance guaranty association, pursuant
 
22 to sections 431:16-101 to 431:16-117; provided that [the]:
 

 
 
 
Page 8                                                     1679
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      (1)  The company shall meet the surplus requirements
 
 2           applicable to all other domestic insurers under chapter
 
 3           431 effective January 1, 2008[.]; and
 
 4      (2)  These exemptions shall not apply to a long-term care
 
 5           benefits plan pursuant to section 87-23.5."
 
 6      SECTION 8.  Statutory material to be repealed is bracketed.
 
 7 New statutory material is underscored.
 
 8      SECTION 9.  This Act shall take effect upon its approval.