Senate Bill No. 288
(By Senators White and Hunter)
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[Introduced January 26, 2006; referred to the Committee
on Education; and then to the Committee on Finance.]
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A BILL to amend and reenact §5-16-2, §5-16-5 and §5-16-25 of the
Code of West Virginia, 1931, as amended, all relating to
clarifying that county board of education employees who work full
time for more than thirty consecutive days qualify for Public
Employees Insurance Agency coverage; eliminating the 80-20
requirement which requires payment of twenty percent of the
aggregate premium by active employees; and increasing the amount
that Public Employees Insurance Agency can have in its reserve
fund from fifteen percent to twenty percent.
Be it enacted by the Legislature of West Virginia:
That §5-16-2, §5-16-5 and §5-16-25 of the Code of West Virginia,
1931, as amended, be amended and reenacted, all to read as
follows:
ARTICLE 16. WEST VIRGINIA PUBLIC EMPLOYEES INSURANCE ACT.
§5-16-2. Definitions.
The following words and phrases as used in this article, unless a
different meaning is clearly indicated by the context, have the following meanings:
(1) "Agency" means the Public Employees Insurance Agency created
by this article.
(2) "Director" means the Director of the Public Employees
Insurance Agency created by this article.
(3) "Employee" means any person, including elected officers, who
works regularly full time in the service of the state of West
Virginia and, for the purpose of this article only, the term
"employee" also means any person, including elected officers, who
works regularly full time for a period of more than thirty
consecutive days in the service of a county board of education; a
county, city or town in the state; any separate corporation or
instrumentality established by one or more counties, cities or
towns, as permitted by law; any corporation or instrumentality
supported in most part by counties, cities or towns; any public
corporation charged by law with the performance of a governmental
function and whose jurisdiction is coextensive with one or more
counties, cities or towns; any comprehensive community mental
health center or comprehensive mental retardation facility
established, operated or licensed by the Secretary of Health and
Human Resources pursuant to section one, article two-a, chapter
twenty-seven of this code and which is supported in part by
state, county or municipal funds; any person who works regularly
full time in the service of the university of West Virginia board
of trustees or the board of directors of the state college
system; and any person who works regularly full time in the service of a combined city-county health department created
pursuant to article two, chapter sixteen of this code. On and
after the first day of January, one thousand nine hundred ninety-
four, and upon election by a county board of education to allow
elected board members to participate in the Public Employees
Insurance Program pursuant to this article, any person elected to
a county board of education shall be considered to be an
"employee" during the term of office of the elected member:
Provided, That the elected member shall pay the entire cost of
the premium if he or she elects to be covered under this article.
Any matters of doubt as to who is an employee within the meaning
of this article shall be decided by the director.
On or after the first day of July, one thousand nine hundred
ninety-seven, a person shall be considered an "employee" if that
person meets the following criteria:
(i) Participates in a job-sharing arrangement as defined in
section one, article one, chapter eighteen-a of this code;
(ii) Has been designated, in writing, by all other participants
in that job-sharing arrangement as the "employee" for purposes of
this section; and
(iii) Works at least one third of the time required for a full-
time employee.
(4) "Employer" means the State of West Virginia, its boards,
agencies, commissions, departments, institutions or spending
units; a county board of education; a county, city or town in the
state; any separate corporation or instrumentality established by one or more counties, cities or towns, as permitted by law; any
corporation or instrumentality supported in most part by
counties, cities or towns; any public corporation charged by law
with the performance of a governmental function and whose
jurisdiction is coextensive with one or more counties, cities or
towns; any comprehensive community mental health center or
comprehensive mental retardation facility established, operated
or licensed by the Secretary of Health and Human Resources
pursuant to section one, article two-a, chapter twenty-seven of
this code and which is supported in part by state, county or
municipal funds; and a combined city-county health department
created pursuant to article two, chapter sixteen of this code.
Any matters of doubt as to who is an "employer" within the
meaning of this article shall be decided by the director. The
term "employer" does not include within its meaning the National
Guard.
(5) "Finance board" means the Public Employees Insurance Agency
finance board created by this article.
(6) "Person" means any individual, company, association,
organization, corporation or other legal entity, including, but
not limited to, hospital, medical or dental service corporations;
health maintenance organizations or similar organization
providing prepaid health benefits; or individuals entitled to
benefits under the provisions of this article.
(7) "Plan", unless the context indicates otherwise, means the
medical indemnity plan, the managed care plan option or the group life insurance plan offered by the agency.
(8) "Retired employee" means an employee of the state who retired
after the twenty-ninth day of April, one thousand nine hundred
seventy-one, and an employee of the university of West Virginia
board of trustees or the board of directors of the state college
system or a county board of education who retires on or after the
twenty-first day of April, one thousand nine hundred seventy-two,
and all additional eligible employees who retire on or after the
effective date of this article, meet the minimum eligibility
requirements for their respective state retirement system and
whose last employer immediately prior to retirement under the
state retirement system is a participating employer: Provided,
That for the purposes of this article, the employees who are not
covered by a state retirement system shall, in the case of
education employees, meet the minimum eligibility requirements of
the State Teachers Retirement System and in all other cases, meet
the minimum eligibility requirements of the Public Employees
Retirement System.
§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.
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 such 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: 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 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 however, 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.
(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.
§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 twenty 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.
NOTE: The purpose of this bill is to clarify that county board of
education employees who work full time for more than thirty
consecutive days qualify for PEIA coverage; to repeal the 80-20
requirements which requires payment of 20 percent of the
aggregate premium by active employees; and to increase the amount
that PEIA can have in their reserve fund from 15% to 20%
Strike-throughs indicate language that would be stricken from the
present law, and underscoring indicates new language that would
be added.