Purpose: These rules implement the voluntary employees benefit association (VEBA) authorized by the 1998 legislature in HB 2371.

Citation of Existing Rules Affected by this Order: New WAC 356-18-075 and 251-22-127.

Statutory Authority for Adoption: RCW 41.06.150.

Under RCW 34.05.350 the agency for good cause finds that immediate adoption, amendment, or repeal of a rule is necessary for the preservation of the public health, safety, or general welfare, and that observing the time requirements of notice and opportunity to comment upon adoption of a permanent rule would be contrary to the public interest.

Reasons for this Finding: The emergency adoption is needed to line the rules up with legislation passed in 1998. Many community colleges have employees who are eligible to retire and would like to take advantage of this benefit.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, amended 0, repealed 0; Federal Rules or Standards: New 0, amended 0, repealed 0; or Recently Enacted State Statutes: New 0, amended 0, repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, amended 0, repealed 0.

Number of Sections Adopted on the Agency's Own Initiative: New 0, amended 0, repealed 0.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 2, amended 0, repealed 0.

Number of Sections Adopted Using Negotiated Rule Making: New 0, amended 0, repealed 0; Pilot Rule Making: New 0, amended 0, repealed 0; or Other Alternative Rule Making: New 2, amended 0, repealed 0.

Effective Date of Rule: Immediately.

June 11, 1998

Dennis Karras

Secretary

WAC 356-18-075  Medical expense plans. (1) The employing agency may provide to eligible employees a medical expense plan that provides for reimbursement of medical expenses. Instead of cash out of sick leave at retirement as provided in WAC 356-18-050, the agency's head or designee may deposit equivalent funds in a medical expense plan for eligible employees. The medical expense plan must meet the requirements of the Internal Revenue Code.

(2) Medical expense plans shall be implemented only after consultation with affected groups of employees.

(a) Medical expense plans for eligible employees in any of the groups listed in (4) of this section who are covered by a collective bargaining agreement shall be implemented only by written agreement with the bargaining unit's exclusive representative.

(b) A separate medical expense plan may be provided for unrepresented employees.

(3) As a condition of participation, the medical expense plan provided shall require that each covered eligible employee sign an agreement with the employer. The agreement shall include the following provisions.

(a) A provision to hold the employer harmless should the United States government find that the employer or the employee is indebted to the United States as a result of:

(i) the employee not paying income taxes due on the equivalent funds placed into the plan, or

(ii) the employer not withholding or deducting a tax, assessment, or other payment on funds placed into the plan as required by federal law.

(b) A provision to require each covered eligible employee to forfeit remuneration for accrued sick leave at retirement if the employee is covered by a medical expense plan and the employee refuses to sign the required agreement.

(4) Each medical expense plan offered by an agency shall apply to all eligible employees in any one of the following groups:

(a) Employees in an agency;

(b) Employees in a major organizational subdivision of an agency;

(c) Employees at a major operating location of an agency;

(d) Classified employees in a bargaining unit established by the Washington personnel resources board; or

(e) Another group of employees defined by an agency head that is not designed to provide an individual-employee choice regarding participation in a medical expense plan.

(5) The following definitions are used for the medical expense plan.

(a) "Eligible employees" means all employees in a designated group in (4) of this section.

(b) "Covered eligible employee" means an eligible employee who is in a group for which the employing agency has established a medical expense plan.

(6) An established medical expense plan shall be applicable to all retirements of covered eligible employees within a calendar year. Such a medical expense plan may be discontinued in any future year, but once discontinued it may not be reinstated for the same group of eligible employees within the same calendar year as it was discontinued.

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NEW SECTION

WAC 251-22-127  Medical expense plans. (1) The employing institution of higher education may provide to eligible employees a medical expense plan that provides for reimbursement of medical expenses. Instead of cash out of sick leave at retirement as provided in WAC 251-22-124, the higher education institution's head or designee may deposit equivalent funds in a medical expense plan for eligible employees. The medical expense plan must meet the requirements of the Internal Revenue Code.

(2) Medical expense plans shall be implemented only after consultation with affected groups of employees.

(a) Medical expense plans for eligible employees in any of the groups listed in (4) of this section who are covered by a collective bargaining agreement shall be implemented only by written agreement with the bargaining unit's exclusive representative.

(b) A separate medical expense plan may be provided for unrepresented employees.

(3) As a condition of participation, the medical expense plan provided shall require that each covered eligible employee sign an agreement with the employer. The agreement shall include the following provisions.

(a) A provision to hold the employer harmless should the United States government find that the employer or the employee is indebted to the United States as a result of:

(i) the employee not paying income taxes due on the equivalent funds placed into the plan, or

(ii) the employer not withholding or deducting a tax, assessment, or other payment on funds placed into the plan as required by federal law.

(b) A provision to require each covered eligible employee to forfeit remuneration for accrued sick leave at retirement if the employee is covered by a medical expense plan and the employee refuses to sign the required agreement.

(4) Each medical expense plan offered by a higher education institution shall apply to all eligible employees in any one of the following groups:

(a) Employees in a higher education institution;

(b) Employees in a major organizational subdivision of a higher education institution;

(c) Employees at a major operating location of a higher education institution;

(d) Classified employees in a bargaining unit established by the Washington personnel resources board; or

(e) Another group of employees defined by an institution head that is not designed to provide an individual-employee choice regarding participation in a medical expense plan.

(5) The following definitions are used for the medical expense plan.

(a) "Eligible employees" means employees in a designated group in (4) of this section.

(b) "Covered eligible employee" means an eligible employee who is in a group for which the employing higher education institution has established a medical expense plan.

(6) An established medical expense plan shall be applicable to all retirements of covered eligible employees within a calendar year. Such a medical expense plan may be discontinued in any future year, but once discontinued it may not be reinstated for the same group of eligible employees within the same calendar year as it was discontinued.

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