Date Requested:February 09, 2011
Time Requested:04:04 PM
Agency: Public Employees Insurance Agency (PEIA)
CBD Number: Version: Bill Number: Resolution Number:
2011R2605 Introduced HB3078
CBD Subject: 80/20 REQUIREMENT
FUND(S)
2180
Sources of Revenue
Special Fund
Legislation creates:
Neither Program nor Fund

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

    The purpose of this bill is to repeal the eighty-twenty requirements for payment of twenty per cent of the aggregate premium by active employees, to prevent premium increases unless there is an increase in salary or pensions, and to increase the amount that PEIA can have in their Reserve Fund from fifteen percent to thirty per cent.
    
    Passage of this bill will affect premiums for fiscal years 2013 and 2014 as the financial plan for FY-2012 has already been approved.
    
    The Public Employees Insurance Agency (PEIA) through the years has managed fiscal stability by implementing a fair and equitable aggregate premium cost sharing percentage between employers and employees of 80-20. With repeal of this provision along with the inability to increase premiums on employees and retirees future financial plans will be severely impacted. Potential for insufficient revenue to cover program expenses at current benefit levels would arise. Without benefit reductions or employer premium increases, this could affect the medical community through necessary healthcare provider reimbursement reductions or delays in funding claim payments.
    
    In the absence of salary or pension increases, all required premium increases would be passed on to employers including the State of WV. Benefit reductions would be the remaining alternative including increased deductibles, co-pays and out-of-pocket maximums as well as benefits eliminated from the program.
    
    The contingency for an increase in employee and retiree premium is an increase in the income or pension of the employee or retiree. At the present time state retirees do not receive a cost of living adjustment (COLA). Until such time as their pension would increase the premium will remain frozen at the current rates and be subsidized by active employees, employers and the State of WV at an increasingly higher rate. This would also cause the unfunded OPEB liability to grow at an increasingly higher rate. Further difficulties arise in regards to defining salary increases for active employees as these can occur at a group or individual basis. Assessment per Individual salary increases would be unsupportable.
    
    Anticipated loss of financial plan premium revenue for employees and retirees is as follow:
    
     FY 2013 FY 2014 Total
    PEIA $ 18,000,000 $ 33,000,000 $ 51,000,000
    
    RHBT $ 10,900,000 $ 20,100,000 $ 31,000,000
    
     $ 28,900,000 $ 53,100,000 $ 82,000,000
    
    The amount of $82,000,000 would have to come from the General Revenue Fund in the form of an appropriation, increased premiums to employers, benefit reductions or provider reimbursement reductions.
    

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2011
Increase/Decrease
(use"-")
2012
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0
3. Explanation of above estimates (including long-range effect):
    


Memorandum
Person submitting Fiscal Note:
Chip Myers
Email Address:
clifford.m.myers@wv.gov