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Engrossed Version Senate Bill 129 History

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Key: Green = existing Code. Red = new code to be enacted
ENGROSSED

COMMITTEE SUBSTITUTE

FOR

Senate Bill No. 129

(By Senators Tomblin, Mr. President, and Caruth,

By Request of the Executive)

____________

[Originating in the Committee on Finance;

reported February 26, 2007.]

____________


A BILL to amend and reenact §5-16-25 of the Code of West Virginia, 1931, as amended; and to amend and reenact §5-16D-1 and §5- 16D-6; all relating generally to the Public Employees Insurance Agency; and the allocation by the Public Employees Insurance Agency Finance Board of employer contributions to the West Virginia Retiree Health Benefit Trust Fund.

Be it enacted by the Legislature of West Virginia:
That §5-16-25 of the Code of West Virginia, 1931, as amended, be amended and reenacted; and that §5-16D-1 and §5-16D-6 of said code be amended and reenacted, all to read as follows:
ARTICLE 16. WEST VIRGINIA PUBLIC EMPLOYEES INSURANCE ACT.
§5-16-25. Reserve fund.

Upon the effective date of this section, the finance board shall establish and maintain a reserve fund for the purposes of offsetting unanticipated claim losses in any fiscal year. Beginning with the fiscal year two thousand two plan and for each succeeding fiscal year plan, the finance board shall transfer ten percent of the projected total plan costs for that year into the reserve fund, which is to be certified by the actuary and included in the final, approved financial plan submitted to the Governor and Legislature in accordance with the provisions of this article. Any moneys saved in a plan year shall be transferred into the reserve fund. At the close of any fiscal year in which the balance in the reserve fund exceeds the recommended reserve amount by fifteen percent, the executive director shall transfer that amount to the fund established in section fourteen-a, article two, chapter five-a of this code for appropriation by the Legislature West Virginia Retiree Health Benefit Trust Fund created in section two, article sixteen-d of this chapter.
ARTICLE 16D. West Virginia Retirement Health Benefit Trust Fund.
§5-16D-1. Definitions.

As used in this article, the term:
(a) "Actuarial accrued liability" means that portion, as determined by a particular actuarial cost method, of the actuarial present value of fund obligations and administrative expenses which is not provided by future normal costs.
(b) "Actuarial cost method" means a method for determining the actuarial present value of the obligations and administrative expenses of the fund and for developing an actuarially equivalent allocation of the value to time periods, usually in the form of a normal cost and an actuarial accrued liability. Acceptable actuarial methods are the aggregate, attained age, entry age, frozen attained age, frozen entry age and projected unit credit methods.
(c) "Actuarially sound" means that calculated contributions to the fund are sufficient to pay the full actuarial cost of the fund. The full actuarial cost includes both the normal cost of providing for fund obligations as they accrue in the future and the cost of amortizing the unfunded actuarial accrued liability over a period of no more than thirty years.
(d) "Actuarial present value of total projected benefits" means the present value, at the valuation date, of the cost to finance benefits payable in the future, discounted to reflect the expected effects of the time value of money and the probability of payment.
(e) "Actuarial assumptions" means assumptions regarding the occurrence of future events affecting the fund such as mortality, withdrawal, disability, and retirement; changes in compensation and offered post-employment benefits; rates of investment earnings and other asset appreciation or depreciation; procedures used to determine the actuarial value of assets; and other relevant items.
(f) "Actuarial valuation" means the determination, as of a valuation date, of the normal cost, actuarial accrued liability, actuarial value of assets and related actuarial present values for the fund.
(g) "Administrative expenses" means all expenses incurred in the operation of the fund, including all investment expenses.
(h) "Annual required contribution" means the amount employers must contribute in a given year to fully fund the trust, as determined by the actuarial valuation in accordance with requirements of generally accepted accounting principles. This amount shall represent a level of funding that if paid on an ongoing basis is projected to cover the normal cost each year and amortize any unfunded actuarial liabilities of the plan over a period not to exceed thirty years.
(i) "Board" means the Public Employees Insurance Agency Finance Board created in section four, article sixteen of this chapter.
(j) "Cost-sharing multiple employer plan" means a single plan with pooling (cost-sharing) arrangements for the participating employers. All risk, rewards and costs, including benefit costs, are shared and not attributed individually to the employers. A single actuarial valuation covers all plan members and the same contribution rate(s) rate applies for each employer.
(k) "Covered health care expenses" means all actual health care expenses paid by the health plan on behalf of fund beneficiaries. Actual health care expenses include claims payments to providers and premiums paid to intermediary entities and health care providers by the health plan.
(l) "Employer" means any employer as defined by section two, article sixteen of this chapter, which has or will have retired employees in any Public Employees Insurance Agency health plan.
(m) "Employer annual required contribution" means the portion of the annual required contribution which is the responsibility of that particular employer.
(n) "Fund" means the West Virginia Retiree Health Benefit Trust Fund established under this article.
(o) "Fund beneficiaries" means all persons receiving post- employment health care benefits through the health plan.
(p) "Health plan" means the health insurance plan or plans established under article sixteen of this chapter.
(q) "Minimum annual employer premium payment" means the annual amount paid by employers toward retiree premiums which, when combined with the retirees' contributions on their premiums that year, provide sufficient funds to cover all projected retiree covered health care expenses and related administrative costs for that year. The finance board shall develop the minimum annual employer premium payment as part of its financial plan each year as addressed in section five, article sixteen of this chapter.
(r) "Normal cost" means that portion of the actuarial present value of the fund obligations and expenses which is allocated to a valuation year by the actuarial cost method used for the fund.
(s) "Obligations" means the administrative expenses of the fund and the cost of covered health care expenses incurred on behalf of fund beneficiaries.
(t) "Other post-employment benefits" or "retiree post- employment health care benefits" means those benefits as addressed by Governmental Accounting Standards Board Statement No. 43 or any subsequent Governmental Standards Board Statement that may be applicable to the fund.
(u) "Plan for other post-employment benefits" means the fiscal funding plan for retiree post-employment health care benefits as it relates to Governmental Accounting Standards Board Statement No. 43, or any subsequent Governmental Accounting Standards Board Statements that may be applicable to the fund.
(v) "Retiree" means retired employee as defined by section two, article sixteen of this chapter.
(w) "Retirement system" or "system" means the West Virginia Consolidated Public Retirement Board created and established by article ten of this chapter and includes any retirement systems or funds administered or overseen by the Consolidated Public Retirement Board.
(x) "Unfunded actuarial accrued liability" means for any actuarial valuation the excess of the actuarial accrued liability over the actuarial value of the assets of the fund under an actuarial cost method used by the fund for funding purposes.
§5-16D-6. Mandatory employer contributions.
(a) The board shall annually set the total annual required contribution sufficient to maintain the fund in an actuarially sound manner in accordance with generally accepted accounting principles.
(b) The board shall annually allocate to the respective employers the employer's portion of the annual required contribution, which allocated amount is the "employer annual required contribution".
(c) The board may apportion the annual required contribution into various components. These components may include the amortized unfunded actuarial accrued liability, the total normal cost, the employer annual required contribution and the lesser included minimum annual employer premium payment. In the board's annual apportionment of the annual required contribution, any amounts of the minimum annual employer payment apportioned to reduce the amortized unfunded actuarial accrued liability shall not be treated as premium by the board in the finance plan, but rather, shall be treated as contributions to prefund other post-employment benefits.
(d) It shall be the mandatory responsibility of Employers to shall make annual contributions to the fund in, at least, the amount of the minimum annual employer premium payment rates established by the board.
(e) It shall be the responsibility of The Public Employees Insurance Agency to shall bill each employer for the employer annual required contribution and the included minimum annual employer premium payment. It shall be the responsibility of The Public Employees Insurance Agency to shall annually collect the minimum annual employer premium payment. The Public Employees Insurance Agency shall, in addition to the minimum annual employer premium payment, collect any amounts the employer elects to pay toward the employer annual required contribution. Any employer annual required contribution amount not satisfied by the respective employer shall remain the liability of that employer until fully paid.
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