FISCAL NOTE
Date Requested: February 11, 2021
Time Requested: 02:37 PM |
| Agency: |
Public Employees Insurance Agency (PEIA) |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1577 |
Introduced |
HB2281 |
|
|---|
| CBD Subject: |
|
|---|
|
FUND(S):
PEIA Basic Insurance
Sources of Revenue:
Special Fund
Legislation creates:
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The purpose of this bill is to allow a modification of the allocation of premiums for employers and employees in the Public Employees Insurance Agency. Currently, the premium revenue for State Fund agencies (State Agencies, Colleges and Universities, and Boards of Education) must be eighty percent paid by employers and twenty percent paid by employees on an aggregate basis. PEIA understands this bill will modify this aspect of the code as follows:
1. Employers will now pay a minimum of eighty percent, with prior year overpayment adjustments permitted for an adjusted minimum of seventy percent,
2. Employees will now pay a maximum of twenty percent and may incorporate benefit adjustments, and
3. The cost sharing percentages will be based on the growth in future projected
plan expenditures with fiscal year 2022 as basis.
This new methodology will provide the PEIA Finance Board more flexibility in creating the annual financial plan. However, the methodology in determining the cost sharing percentages will be subject to assumptions, unlike straight premium calculations. The allowance of the retroactive review of prior year cost percentages will be beneficial in this endeavor.
It is PEIA’s position the new eighty-twenty rule will not have a fiscal impact if implemented as prescribed and all benefit adjustments can be properly and accurately represented in the calculation using actual data. However, the current legislation pertaining to the eighty and twenty percent premium share language was based on a recommendation from a study commissioned by the WV Legislature. At that time the premium share was approximately ninety percent employer and ten percent employee.
As this bill is currently drafted, without language in the bill to set a maximum percentage for the employer share and a minimum percentage applied to the employee share, strict fiscal discipline will be required by State leadership and the PEIA Finance Board to prevent migration back to historic levels. To continue utilization of the plan’s prior year gains from positive financial performance, bill language regarding ‘growth in future projected plan expenditures’ could be revised to ‘necessary increases to maintain the minimum actuarially recommended reserve.’
PEIA also noted this bill includes a change to the Governor’s estimated revenues by including 80 percent of projected growth. This appears to prevent utilization of prior year gains permitted by line 107 of the bill. PEIA invites discussion on how the language of this bill may be revised to better address such issues.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2021
Increase/Decrease
(use"-") |
2022
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 |
Explanation of above estimates (including long-range effect):
Please explain increases and decreases in personal services, current expenses, repairs and alterations, assets, other costs and revenues, including assumptions and data sources and delineation between start-up and ongoing costs. Please also include a long-range schedule of costs and revenues if fiscal impact is expected to vary in future years.
Memorandum
This new methodology will provide the PEIA Finance Board more flexibility in creating the annual financial plan. However, the methodology in determining the cost sharing percentages will be subject to assumptions, unlike straight premium calculations. The allowance of the retroactive review of prior year cost percentages will be beneficial in this endeavor.
It is PEIA’s position the new eighty-twenty rule will not have a fiscal impact if implemented as prescribed and all benefit adjustments can be properly and accurately represented in the calculation using actual data. However, the current legislation pertaining to the eighty and twenty percent premium share language was based on a recommendation from a study commissioned by the WV Legislature. At that time the premium share was approximately ninety percent employer and ten percent employee.
As this bill is currently drafted, without language in the bill to set a maximum percentage for the employer share and a minimum percentage applied to the employee share, strict fiscal discipline will be required by State leadership and the PEIA Finance Board to prevent migration back to historic levels. To continue utilization of the plan’s prior year gains from positive financial performance, bill language regarding ‘growth in future projected plan expenditures’ could be revised to ‘necessary increases to maintain the minimum actuarially recommended reserve.’
PEIA also noted this bill includes a change to the Governor’s estimated revenues by including 80 percent of projected growth. This appears to prevent utilization of prior year gains permitted by line 107 of the bill. PEIA invites discussion on how the language of this bill may be revised to better address such issues.
Person submitting Fiscal Note: Jason Haught
Email Address: jason.a.haught@wv.gov