Senate Bill No. 120
(By Senators Hunter, Minard, Love, Prezioso and Unger)
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[Introduced January 17, 2007; referred to the Committee on
Pensions; and then to the Committee on Finance.]
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A BILL to amend and reenact §5-16-5 of the Code of West Virginia,
1931, as amended, relating to preventing the Public Employees
Insurance Agency from raising retired employees' premiums
more than five percent above premium rates in effect on the
first day of January, two thousand seven, until the
Legislature enacts a cost of living adjustment for retired
employees receiving annuities from public retirement plans
administered by the Consolidated Public Retirement Board.
Be it enacted by the Legislature of West Virginia:
That §5-16-5 of the Code of West Virginia, 1931, as amended,
be amended and reenacted to read as follows:
ARTICLE 16. WEST VIRGINIA PUBLIC EMPLOYEES INSURANCE ACT.
§5-16-5. Purpose, powers and duties of the finance board; initial
financial plan; financial plan for following year; and
annual financial plans.
(a) The purpose of the finance board created by this article
is to bring fiscal stability to the Public Employees Insurance Agency through development of annual financial plans and long-range
plans designed to meet the agency's estimated total financial
requirements, taking into account all revenues projected to be made
available to the agency and apportioning necessary costs equitably
among participating employers, employees and retired employees and
providers of health care services.
(b) The finance board shall retain the services of an
impartial, professional actuary, with demonstrated experience in
analysis of large group health insurance plans, to estimate the
total financial requirements of the Public Employees Insurance
Agency for each fiscal year and to review and render written
professional opinions as to financial plans proposed by the finance
board. The actuary shall also assist in the development of
alternative financing options and perform any other services
requested by the finance board or the director. All reasonable
fees and expenses for actuarial services shall be paid by the
Public Employees Insurance Agency. Any financial plan or
modifications to a financial plan approved or proposed by the
finance board pursuant to this section shall be submitted to and
reviewed by the actuary and may not be finally approved and
submitted to the Governor and to the Legislature without the
actuary's written professional opinion that the plan may be
reasonably expected to generate sufficient revenues to meet all
estimated program and administrative costs of the agency, including
incurred but unreported claims, for the fiscal year for which the
plan is proposed. The actuary's opinion on the financial plan for each fiscal year shall allow for no more than thirty days of
accounts payable to be carried over into the next fiscal year. The
actuary's opinion for any fiscal year shall not include a
requirement for establishment of a reserve fund.
(c) All financial plans required by this section shall
establish:
(1) Maximum levels of reimbursement which the Public Employees
Insurance Agency makes to categories of health care providers;
(2) Any necessary cost containment measures for implementation
by the director;
(3) The levels of premium costs to participating employers;
and
(4) The types and levels of cost to participating employees
and retired employees:
Provided, That retired employees' premiums
may not be raised more than five percent above premium rates in
effect on the first day of January, two thousand seven, until such
time as the Legislature enacts a cost-of-living adjustment for
retired employees receiving annuities from public retirement plans
administered by the Consolidated Retirement Board.
The financial plans may provide for different levels of costs
based on the insureds' ability to pay. The finance board may
establish different levels of costs to retired employees based upon
length of employment with a participating employer, ability to pay
or other relevant factors. The financial plans may also include
optional alternative benefit plans with alternative types and
levels of cost. The finance board may develop policies which encourage the use of West Virginia health care providers.
In addition, the finance board may allocate a portion of the
premium costs charged to participating employers to subsidize the
cost of coverage for participating retired employees, on such terms
as the finance board determines are equitable and financially
responsible.
(d) (1) The finance board shall prepare an annual financial
plan for each fiscal year during which the finance board remains in
existence. The finance board chairman shall request the actuary to
estimate the total financial requirements of the Public Employees
Insurance Agency for the fiscal year.
(2) The finance board shall prepare a proposed financial plan
designed to generate revenues sufficient to meet all estimated
program and administrative costs of the Public Employees Insurance
Agency for the fiscal year. The proposed financial plan shall
allow for no more than thirty days of accounts payable to be
carried over into the next fiscal year. Before final adoption of
the proposed financial plan, the finance board shall request the
actuary to review the plan and to render a written professional
opinion stating whether the plan will generate sufficient revenues
to meet all estimated program and administrative costs of the
Public Employees Insurance Agency for the fiscal year. The
actuary's report shall explain the basis of its opinion. If the
actuary concludes that the proposed financial plan will not
generate sufficient revenues to meet all anticipated costs, then
the finance board shall make necessary modifications to the proposed plan to ensure that all actuarially determined financial
requirements of the agency will be met.
(3) Upon obtaining the actuary's opinion, the finance board
shall conduct one or more public hearings in each congressional
district to receive public comment on the proposed financial plan,
shall review the comments and shall finalize and approve the
financial plan.
(4) Any financial plan shall be designed to allow thirty days
or less of accounts payable to be carried over into the next fiscal
year. For each fiscal year, the Governor shall provide his or her
estimate of total revenues to the finance board no later than the
fifteenth day of October of the preceding fiscal year:
Provided,
That, for the prospective financial plans required by this section,
the Governor shall estimate the revenues available for each fiscal
year of the plans based on the estimated percentage of growth in
general fund revenues. The finance board shall submit its final,
approved financial plan, after obtaining the necessary actuary's
opinion and conducting one or more public hearings in each
congressional district, to the Governor and to the Legislature no
later than the first day of January preceding the fiscal year. The
financial plan for a fiscal year becomes effective and shall be
implemented by the director on the first day of July of the fiscal
year. In addition to each final, approved financial plan required
under this section, the finance board shall also simultaneously
submit financial statements based on generally accepted accounting
practices (GAAP) and the final, approved plan restated on an accrual basis of accounting, which shall include allowances for
incurred but not reported claims:
Provided, however, That the
financial statements and the accrual-based financial plan
restatement shall not affect the approved financial plan.
(e) The provisions of chapter twenty-nine-a of this code shall
not apply to the preparation, approval and implementation of the
financial plans required by this section.
(f) By the first day of January of each year the finance board
shall submit to the Governor and the Legislature a prospective
financial plan, for a period not to exceed five years, for the
programs provided in this article. Factors that the board shall
consider include, but are not limited to, the trends for the
program and the industry; the medical rate of inflation;
utilization patterns; cost of services; and specific information
such as average age of employee population, active to retiree
ratios, the service delivery system and health status of the
population.
(g) The prospective financial plans shall be based on the
estimated revenues submitted in accordance with subdivision (4),
subsection (d) of this section and shall include an average of the
projected cost-sharing percentages of premiums and an average of
the projected deductibles and copays for the various programs.
Beginning in the plan year which commences on the first day of
July, two thousand two, and in each plan year thereafter, until and
including the plan year which commences on the first day of July,
two thousand six, the prospective plans shall include incremental adjustments toward the ultimate level required in this subsection,
in the aggregate cost-sharing percentages of premium between
employers and employees, including the amounts of any subsidization
of retired employee benefits:
Provided, That for the period
beginning the first day of July, two thousand five, through the
thirty-first day of December, two thousand five, the portion of the
policy surcharge collected from certain fire and casualty insurers
and transferred into the fund in the State Treasury of the Public
Employees Insurance Agency pursuant to the provisions of section
thirty-three, article three, chapter thirty-three of this code
shall be used, in lieu of an increase in costs to active state pool
employees, to subsidize any incremental adjustment in those
employees' portion of the aggregate cost-sharing percentages of
premium between employers and employees. The foregoing does not
prohibit any premium increase occasioned by an employee's increase
in salary:
Provided, however, That for the period beginning the
first day of July, two thousand five, through the thirty-first day
of December, two thousand five, in lieu of an increase in costs to
retired state pool employees, such funds as are necessary to
subsidize any increase in costs to retired state pool employees
shall be transferred from the reserve fund established in section
twenty-five of this article into the fund in the State Treasury of
the Public Employees Insurance Agency. Effective in the plan year
commencing on the first day of July, two thousand six, and in each
plan year thereafter, the aggregate premium cost-sharing
percentages between employers and employees, including the amounts of any subsidization of retired employee benefits, shall be at a
level of eighty percent for the employer and twenty percent for
employees, except for the employers provided in subsection (d),
section eighteen of this article whose premium cost-sharing
percentages shall be governed by that subsection. After the
submission of the initial prospective plan, the board may not
increase costs to the participating employers or change the average
of the premiums, deductibles and copays for employees, except in
the event of a true emergency as provided in this section:
Provided further, That if the board invokes the emergency
provisions, the cost shall be borne between the employers and
employees in proportion to the cost-sharing ratio for that plan
year:
And provided further, That for purposes of this section,
"emergency" means that the most recent projections demonstrate that
plan expenses will exceed plan revenues by more than one percent in
any plan year:
And provided further, That the aggregate premium
cost-sharing percentages between employers and employees,
including the amounts of any subsidization of retired employee
benefits, scheduled to be at a level of twenty percent for
employees by the first day of July two-thousand six may be offset,
in part, by a legislative appropriation for that purpose, prior to
the first day of July two-thousand six.
(h) The finance board shall meet on at least a quarterly basis
to review implementation of its current financial plan in light of
the actual experience of the Public Employees Insurance Agency.
The board shall review actual costs incurred, any revised cost estimates provided by the actuary, expenditures and any other
factors affecting the fiscal stability of the plan and may make any
additional modifications to the plan necessary to ensure that the
total financial requirements of the agency for the current fiscal
year are met. The finance board may not increase the types and
levels of cost to employees during its quarterly review except in
the event of a true emergency.
(i) For any fiscal year in which legislative appropriations
differ from the Governor's estimate of general and special revenues
available to the agency, the finance board shall, within thirty
days after passage of the budget bill, make any modifications to
the plan necessary to ensure that the total financial requirements
of the agency for the current fiscal year are met.
NOTE: The purpose of this bill is to prevent retired
employees' PEIA premiums from being raised more than five percent
above premium rates in effect on January 1, 2007, until the
Legislature enacts a cost-of-living adjustment for retired
employees receiving annuities from public retirement plans
administered by the Consolidated Retirement Board.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.