SENATE BILL REPORT

SB 5151

BYSenators McDermott, Newhouse, Warnke, Saling, Hayner, Moore, Deccio and Bauer

Revising public employee insurance laws.

Senate Committee on Ways & Means

Senate Hearing Date(s):

Senate Staff:Charles Langen (786-7715)

AS OF FEBRUARY 16, 1987

BACKGROUND:

The State Employees' Insurance Board (SEIB) is composed of ten members:  the Governor or Governor's representative, the Director, Department of Personnel (DOP) who is Trustee, an administrative officer in higher education, two higher education faculty members, two public employee representatives, one retiree, a member of the Senate and a member of the House of Representatives.  The higher education administrative officer, faculty representatives, public employee representatives and the retiree are each appointed by the Governor and serve staggered terms.  The board elects its chair and vice-chair.

The board provides health care, dental, life, liability, accidental death and dismemberment and disability insurance coverage for public employees by contracting with carriers through a bid process at least every five years.  The board provides a uniform health care plan without cost for all state employees and their families, but an employee may opt to have coverage under a panel or health maintenance organization (HMO) plan.  If the premium for the panel plan exceeds the authorized premium amount the employee member may be required to contribute the difference in the premium rate.  Political subdivisions, other than school districts, may petition for coverage to the board.  Retirees may obtain the same coverage as active employees if they pay the specific premium rate for the coverage desired.

SUMMARY:

The SEIB is renamed the Public Employees Insurance Board (PEIB) and the board membership is revised as follows:  four members representing the executive branch consisting of agency directors, presidents of four-year institutions of higher education and community colleges, and school district representatives; four members representing employee unions and associations, including retirees; and four public members who are knowledgeable about the provision and management of employee benefits.  All members are to be appointed by the Governor and are to serve staggered terms.  The Governor shall appoint the chair from among the public members.  The Board will elect the vice-chair who shall not serve successive terms.

The contracts for insurance coverage shall be rebid at least every four years commencing December 1, 1987.

The employee who is a member of either the uniform plan or a panel plan will be required to pay the difference between the premium rate authorized by the Legislature and the premium rate actually paid by the Board.

PEIB shall maintain various statistical data required by an actuary to provide reports or information required by the Board or others.

PEIB may self-fund, self-insure, or enter into other methods of providing the insurance coverage, other than property or casualty.  The Board may also contract for payment of claims or other administrative services including the purchase of reinsurance for programs under its jurisdiction.  If the Board does self-fund or self-insure, it shall maintain adequate reserves.  Group disability coverage shall provide conversion rights and shall conform to insurance laws.  Savings incurred as a result of self-funding or self-insuring shall not be used to improve benefits unless legislative authorization is obtained.  Complete and adequate accounting of a self-funding or self- insuring program shall be accomplished and an annual report containing actuarial and financial information, certified by an actuary, shall be submitted to the Governor and the Legislature.  Members of PEIB are held to be in a fiduciary relationship to the employees covered by any self-funded or self-insured program.

School districts are brought under the jurisdiction of PEIB.

The State Actuary shall conduct the survey of employed benefits as required under the salary survey.

An appropriation is made to DOP to assist PEIB in the conversion to a self-funded or self-insured program.

Appropriation:    $75,000 from the public employees'insurance fund to DOP.

Fiscal Note:      requested

Effective Date:The bill contains an emergency clause and takes effect immediately.