[atlas:bill]

AN ACT Relating to health insurance; and adding a new section to chapter 41.04 RCW.

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

NEW SECTION. Sec. 1. A new section is added to chapter 41.04 RCW to read as follows:

(1) Unless the context clearly requires otherwise, the definitions in this subsection apply throughout this section.

(a) "Disabled employee" means an individual eligible to receive a disability retirement allowance from the public employees' retirement system.

(b) "Health plan" means a contract, policy, fund, trust, or other program established by a county, municipality, or other political subdivision of the state that provides for all or a part of hospitalization or medical aid for its employees and their dependents under RCW 41.04.180.

(c) "Retired employee" means an individual who is a public employee covered under the public employees' retirement system with not less than five years of service at the date of retirement.

(d) "Supplemental plan" means an individual or group health plan designed primarily as a supplement to reimbursements under federal medicare for the hospital, medical, or surgical expenses of persons eligible for medicare by reason of age.

(2) A county, municipality, or other political subdivision that provides a health plan for its employees shall permit retired and disabled employees and their dependents to continue participation in the plan subject to the exceptions, limitations, and conditions set forth in this section. However, this section does not apply to a county, municipality, or other political subdivision participating in an insurance program administered under chapter 41.05 RCW if retired and disabled employees and their dependents of the participating county, municipality, or other political subdivision are covered under an insurance program administered under chapter 41.05 RCW.

(3) A person who requests continued participation in their employer's health plan may be required to pay for such participation. However, the payment may not exceed the rate, cost, or premium that is calculated for an active employee under the same plan. If the utilization of health plan benefits by those continuing participation in the health plan is attributable to a greater than ten percent increase in the active employee rate or cost for the plan, then the rate or cost for those continuing participation in the health plan shall be adjusted to cover the additional cost in excess of the ten percent increase. However, this subsection does not require an employer who is currently paying for all or part of a health plan for their retired and disabled employees and their dependents from discontinuing those payments.

(4) If a person continuing participation under a health plan becomes eligible for federal medicare, then health plan participation is terminated and the person has the option of participating in a supplemental plan provided by the employer. Payment required of the person shall be modified to reflect cost differences between the health plan and the supplemental plan.

(5) Payments for continued participation in a former employer's health plan may be assigned to the underwriter of the health plan from public pension benefits or may be paid to the former employer, as determined by the former employer, so that an underwriter of the health plan that is an insurance company, health care service contractor, or health maintenance organization is not required to accept individual payments from persons continuing participation in the employer's health plan.

(6) After an initial open enrollment period of not less than ninety days after the effective date of this section, an employer may not be required to permit a person to continue participation in the health plan if the person is responsible for a lapse in coverage under the plan. In addition, an employer may not be required to permit a person to continue participation in the employer's health plan if the employer offered continued participation in a health plan with substantially similar benefits and at substantially the same price as that plan provided for active employees and the person failed to enroll in that plan at the time the person was retired or disabled.

(7) If a person continuing participation in the former employer's health plan has medical coverage through another employer, the medical coverage of the other employer is the primary coverage for purposes of coordination of benefits as provided for in the former employer's health plan.

(8) If a person's continued participation in a health plan was permitted because of the person's relationship to a retired or disabled employee of the employer providing the health plan and the retired or disabled employee dies, then that person is permitted to continue participation in the health plan for a period of not more than six months after the death of the retired or disabled employee. However, the employer providing the health plan may permit continued participation beyond that time period.

(9) An employer may offer one or more health plans different from that provided for active employees and designed to meet the needs of persons requesting continued participation in the employer's health plan. These health plans for continued participation shall be provided at a rate, cost, or premium that does not exceed that provided for active employee health plans. An employer, in designing or offering continued participation in a health plan, may utilize terms or conditions necessary to administer the plan to the extent the terms and conditions do not conflict with this section.

(10) If an employer changes the underwriter of a health plan, the replaced underwriter has no further responsibility or obligation to persons who continued participation in a health plan of the replaced underwriter. However, the employer shall permit those persons to participate in any new health plan.

(11) The benefits granted under this section are not considered a matter of contractual right. Should the legislature, a county, municipality, or other political subdivision of the state revoke or change any benefits granted under this section, an affected person is not entitled to receive the benefits as a matter of contractual right.

(12) This section does not affect any health plan contained in a collective bargaining agreement in existence as of the effective date of this section. However, any plan contained in future collective bargaining agreements shall conform to this section. In addition, this section does not affect any health plan contract or policy in existence as of the effective date of this section. However, any renewal of the contract or policy shall conform to this section.