"NEW SECTION.  Sec. 1   FINDINGS AND INTENT. (1) The legislature finds that many small employers struggle with the cost of providing employer-sponsored health insurance coverage to their employees, while others are unable to offer employer-sponsored health insurance due to its high cost. Low-wage workers also struggle with the burden of paying their share of the costs of employer-sponsored health insurance, while others turn down their employer's offer of coverage due to its costs.
     (2) The legislature intends, through establishment of a small employer health insurance partnership program, to remove economic barriers to health insurance coverage for low-wage employees of small employers by building on the private sector health benefit plan system and encouraging employer and employee participation in employer-sponsored health benefit plan coverage.

NEW SECTION.  Sec. 2   DEFINITIONS. The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Administrator" means the administrator of the Washington state health care authority, established under chapter 41.05 RCW.
     (2) "Eligible employee" means an individual who:
     (a) Is a resident of the state of Washington;
     (b) Has family income less than two hundred percent of the federal poverty level, as determined annually by the federal department of health and human services; and
     (c) Is employed by a small employer.
     (3) "Health benefit plan" has the same meaning as defined in RCW 48.43.005 or any plan provided by a self-funded multiple employer welfare arrangement as defined in RCW 48.125.010 or by another benefit arrangement defined in the federal employee retirement income security act of 1974, as amended.
     (4) "Program" means the small employer health insurance partnership program established in section 3 of this act.
     (5) "Small employer" has the same meaning as defined in RCW 48.43.005.
     (6) "Subsidy" means payment or reimbursement to an eligible employee toward the purchase of a health benefit plan, and may include a net billing arrangement with insurance carriers or a prospective or retrospective payment for health benefit plan premiums.

NEW SECTION.  Sec. 3   SMALL EMPLOYER HEALTH INSURANCE PARTNERSHIP PROGRAM ESTABLISHED. To the extent funding is appropriated in the operating budget for this purpose, the small employer health insurance partnership program is established. The administrator shall be responsible for the implementation and operation of the small employer health insurance partnership program, directly or by contract. The administrator shall offer premium subsidies to eligible employees under section 4 of this act.

NEW SECTION.  Sec. 4   PREMIUM SUBSIDIES TO ELIGIBLE EMPLOYEES. (1) Beginning January 1, 2007, the administrator shall accept applications from eligible employees, on behalf of themselves, their spouses, and their dependent children, to receive premium subsidies through the small employer health insurance partnership program.
     (2) Premium subsidy payments may be provided to eligible employees if:
     (a) The eligible employee is employed by a small employer;
     (b) The value of the health benefit plan offered by the small employer is at least equivalent to that of the basic health plan benefit offered under chapter 70.47 RCW. The office of the insurance commissioner under Title 48 RCW shall certify those small employer health benefit plans that, by reason of cost or benefits, can be considered substantially equivalent to the basic health plan benefit; and
     (c) The small employer will pay at least forty percent of the monthly premium cost for health benefit plan coverage of the eligible employee.
     (3) The amount of an eligible employee's premium subsidy shall be determined by applying the sliding scale subsidy schedule developed for subsidized basic health plan enrollees under RCW 70.47.060 to the employee's premium obligation for his or her employer's health benefit plan. However, in no case shall the amount of an eligible employee's monthly premium subsidy exceed the amount he or she would have received as a basic health plan enrollee.
     (4) After an eligible individual has enrolled in the program, the program shall issue subsidies in an amount determined pursuant to subsection (3) of this section to either the eligible employee or to the carrier designated by the eligible employee.
     (5) An eligible employee must agree to provide verification of continued enrollment in his or her small employer's health benefit plan on a semiannual basis or to notify the administrator whenever his or her enrollment status changes, whichever is earlier. Verification or notification may be made directly by the employee, or through his or her employer or the carrier providing the small employer health benefit plan. When necessary, the administrator has the authority to perform retrospective audits on premium subsidy accounts. The administrator may suspend or terminate an employee's participation in the program and seek repayment of any subsidy amounts paid due to the omission or misrepresentation of an applicant or enrolled employee. The administrator shall adopt rules to define the appropriate application of these sanctions and the processes to implement the sanctions provided in this subsection, within available resources.

NEW SECTION.  Sec. 5   ENROLLMENT LIMITS TO REMAIN WITHIN APPROPRIATION. Enrollment in the small employer health insurance partnership program is not an entitlement and shall not result in expenditures that exceed the amount that has been appropriated for the program in the operating budget. If it appears that continued enrollment will result in expenditures exceeding the appropriated level for a particular fiscal year, the administrator may freeze new enrollment in the program and establish a waiting list of eligible employees who shall receive subsidies only when sufficient funds are available.

NEW SECTION.  Sec. 6   COLLABORATION WITH COMMUNITY ORGANIZATIONS. In implementing the small employer health insurance partnership program, the administrator shall work with organizations awarded grants through the community health care collaborative grant program established under Engrossed Second Substitute Senate Bill No. 6459, if enacted. The administrator may use funds appropriated for the small employer health insurance partnership program to enhance a grant otherwise awarded to a community-based organization. The grant enhancement shall be used by the organization specifically to provide a subsidy to eligible employees within the geographic region it serves.

NEW SECTION.  Sec. 7   RULES. The administrator shall adopt all rules necessary for the implementation and operation of the small employer health insurance partnership program. As part of the rule development process, the administrator shall consult with small employers, carriers, employee organizations, and the office of the insurance commissioner under Title 48 RCW to determine an effective and efficient method for the payment of subsidies under this chapter, including methods for electronic funds transfers of the subsidy. All rules shall be adopted in accordance with chapter 34.05 RCW.

NEW SECTION.  Sec. 8   REPORTS TO THE LEGISLATURE. The administrator shall report biennially to the relevant policy and fiscal committees of the legislature on the effectiveness and efficiency of the small employer health insurance partnership program, including the services and benefits covered under the purchased health benefit plans, consumer satisfaction, and other program operational issues.

NEW SECTION.  Sec. 9   SMALL EMPLOYER HEALTH INSURANCE PARTNERSHIP PROGRAM ACCOUNT. The small employer health insurance partnership program account is hereby established in the custody of the state treasurer. Any nongeneral fund--state funds collected for the small employer health insurance partnership program shall be deposited in the small employer health insurance partnership program account. Moneys in the account shall be used exclusively for the purposes of administering the small employer health insurance partnership program, including payments to participating managed health care systems on behalf of small employer health insurance partnership enrollees. Only the administrator of the health care authority or his or her designee may authorize expenditures from the account. The account is subject to allotment procedures under chapter 43.88 RCW, but an appropriation is not required for expenditures.

NEW SECTION.  Sec. 10   STATE CHILDREN'S HEALTH INSURANCE PROGRAM--FEDERAL WAIVER REQUEST. The department of social and health services shall submit a request to the federal department of health and human services by October 1, 2006, for a state children's health insurance program section 1115 demonstration waiver. The waiver request shall seek authorization from the federal government to draw down Washington state's unspent state children's health insurance program allotment to finance basic health plan coverage, as provided in chapter 70.47 RCW, for parents of children enrolled in medical assistance or the state children's health insurance program. The waiver also shall seek authorization from the federal government to utilize the resulting state savings to finance expanded basic health plan enrollment, or subsidies provided to low-wage workers through the small employer health insurance partnership program established in this chapter.

NEW SECTION.  Sec. 11   The joint legislative audit and review committee shall conduct a program and fiscal review of the small employer health insurance partnership program and report their findings and recommendation to the appropriate committees of the legislature no later than December 1, 2009.

NEW SECTION.  Sec. 12   Captions used in this act are not part of the law.

NEW SECTION.  Sec. 13   Sections 1 through 10 and 12 of this act constitute a new chapter in Title 70 RCW."