Brief Summary of Bill

Specifies that school district optional benefits may not compete with any basic or optional benefits offered through the School Employees' Benefits Board.
Grants school districts express authority to offer employee-paid, voluntary benefits to school employees that are paid by employees through a payroll deduction, and provides examples of those benefits.
Includes intent language and a legislative finding that supplemental fixed payment insurance plans offer financial protection and do not conflict or compete with basic medical or disability plans.

Background:

School Employees' Benefits Board/Offerings and Participation.

The School Employees' Benefits Board (SEBB) of the Washington State Health Care Authority (HCA) designs and approves insurance benefit plans for school employees and establishes criteria for participation in insurance benefit plans. Among other duties, the SEBB:

develops school employee benefit plans that include comprehensive, evidence-based health care benefits for school employees;
authorizes premium contributions for a school employee and the employee's dependents in a manner that encourages the use of cost-efficient health care systems; and
determines the terms and conditions of school employee and dependent eligibility criteria, enrollment policies, and scope of coverage.

School districts must offer all benefits offered by the SEBB. School employees must choose participation in one of the health care benefit plans developed by the SEBB. Individual school employees eligible for benefits may be permitted to waive coverage under terms and conditions established by the SEBB.

Optional Benefits Provided by School Districts.

School districts may provide employer contributions for optional benefit plans and basic benefits. School districts may provide optional benefits to employees, but those offered benefits must be outside the SEBB's authority.

Optional benefits provided by school districts may include direct agreements, a defined term meaning written agreements between qualifying practices and patients, and may include employee beneficiary accounts that can be liquidated by the employee upon termination of employment. Optional benefit plans may be offered by a district only if:

each full-time employee, regardless of the number of dependents receiving basic coverage, receives the same additional employer contribution for other coverage or optional benefits; and
for part-time employees, participation in optional benefit plans must be governed by the same eligibility criteria and/or proration of employer contributions used for allocations for basic benefits.

Any optional benefits offered by a school district are considered an enhancement to the state's statutory definition of basic education.

Annually on December 1, school district optional benefits must be reported to the SEBB and the HCA. The SEBB must review the optional benefits offered by districts and determine if those benefits conflict with the SEBB's plans offering authority. If the SEBB determines that there is no conflict, the SEBB must evaluate whether to seek additional benefit offerings authority from the Legislature.

Summary of Bill:

Provisions governing the optional benefits that school districts may offer to employees are modified. Optional benefits offered by a school district, rather than being required to be outside the SEBB's authority, must instead not compete with any basic or optional benefits offered through the SEBB. School districts are granted express authority to offer employee-paid, voluntary benefits to school employees that are paid by employees through a payroll deduction. Examples of these benefits include:

personal lines homeowners insurance;
private passenger automobile insurance; and
accident only, specified disease, and other fixed-payment benefit insurance.

The SEBB must review the optional benefits offered by districts and determine if those benefits conflict with the SEBB's benefit plan offerings, rather than the SEBB's plan offering authority. If the SEBB determines that there is no conflict, it must evaluate whether to seek additional benefit offerings authority from the Legislature.

Provisions delineating optional benefits are modified to specify that optional benefits may include a benefit plan that provides reimbursement for medical expenses in accordance with specified requirements, and voluntary employees' beneficiary association accounts.

A statement of legislative findings is also provided. The Legislature finds that supplemental fixed payment insurance plans, including accident only and specified disease plans, offer financial protection and do not conflict nor compete with basic medical or disability plans.

EFFECT OF SENATE AMENDMENT(S):

The Senate amendment:

removes all provisions of the underlying bill, including intent provisions;
specifies that school district optional benefits must not compete with any form of the basic or optional benefits offered in the School Employees' Benefits Board (SEBB) program or under the authority of the Health Care Authority (HCA) in a specific salary reduction plan;
specifies that school districts and the applicable carrier must work with the HCA to either modify and remove competing components of the district-based benefit or end the benefit that is in competition with offered benefits of the HCA or the SEBB;
delineates optional benefits that may be offered by a school district if the benefits are not offered by the SEBB, and authorizes the SEBB to study and, subject to availability of specific funding, offer the same delineated benefits (as employee-paid, voluntary benefits) to school employees;
makes the authority of school districts to offer qualifying basic and optional benefits to school employees permanent;
directs the HCA, in consultation with the SEBB, to review optional benefits provided by school districts and determine if the optional benefits are in competition with benefits offered by the HCA or the SEBB;
establishes requirements if a district-offered benefit is determined to be in competition with benefits offered by the HCA or the SEBB; and
provides that certain insurance offerings are not considered a health plan with respect to optional benefits offered by school districts.

Staff Summary of Public Testimony:

(In support) The Legislature is in the process of establishing and implementing the SEBB. As the Legislature learns more about these efforts, there will be opportunities for improvements. This bill will allow school districts that want to offer optional benefits outside of what the SEBB offers to do so.

Providers have been offering voluntary employees' benefits since 1984, and the benefits options have been adopted by more than 290 school districts. The program is not broken and needs to continue to operate as it has for more than 30 years. The clarifications in this bill will allow the program to operate without interruption.

This bill relates to optional benefits for school district employees that provide financial benefits, but do not pay medical costs. The optional benefit programs are deducted through payroll and are easily administered. The SEBB legislation from last year should be clarified.

In 2017 when the SEBB was created, the state wanted all school districts to be in the SEBB and to offer benefits exclusively through the SEBB. The challenge of today is that the SEBB does not offer certain plans, such as home and automobile insurance, that are offered by the Public Employees benefits Board. Agency interpretations regarding the SEBB have changed, and a legislative fix is required. This bill clarifies that if the SEBB doesn't offer the benefits, districts can continue to offer benefits that they have historically offered.

The authority of school districts to offer optional employee-paid benefits should be preserved, and this bill offers clarity and limited flexibility that is needed for those practices to continue. Optional benefits are very important for school district employees, including for cancer care related benefits.

The employee-paid, optional offerings of districts should be allowed to continue. Some stakeholders were shocked by interpretations of the HCA and the SEBB that would make it difficult for school employee policy holders to renew their benefit plans. This bill offers appropriate clarity so that districts can continue offering those benefits.

(Opposed) None.

(Other) The SEBB is putting a lot of pressure on the local levy capacity of school districts. The bill includes ambiguity regarding employer-paid optional benefits. Employee-paid benefits are fine, but districts should be able to charge a small administrative fee and it should be clear that districts do not have benefit-related liability. The bill should be amended to limit districts' exposure to optional benefits paid by the employer.