REPORT TITLE:
PEHF; Benefits Reduction


DESCRIPTION:
Requires PEHF to offer only medical and drug coverage for all
current/future public employees and retirees.  Stops payment of
Medicare B premiums for spouses of current/future retirees.
Makes retirees younger than 65:  (1) with 25 yrs service; (2)
hired after 6/30/96 with (a) less than 10 yrs; (b) 10 but less
than 15 yrs; and (c) 15 but less than 25 yrs service; to pay
specified percentage of monthly premiums.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        1870
HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO THE HAWAII PUBLIC EMPLOYEES HEALTH FUND.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  The legislature finds that health benefits are a
 
 2 significant component of the total compensation package for
 
 3 public employees and a significant cost to public employers.  The
 
 4 large number of baby boomers approaching retirement, increasing
 
 5 health care costs, and retirees' increased life expectancies have
 
 6 raised concerns about the future financial stability of the
 
 7 current pay-as-you-go funding method of the Hawaii public
 
 8 employees health fund.
 
 9      The legislature finds that a rapidly growing challenge to
 
10 state and county government is how to fairly meet the health
 
11 needs of public employees and retirees in a manner that is
 
12 affordable over the long-term and does not detract from the
 
13 ability to provide other government efforts.  To address these
 
14 concerns, in 1995, lawmakers partially redefined public employee
 
15 benefit plans.  Act 217, Session Laws of Hawaii 1995, reduced
 
16 state and county contributions for retiree health benefit
 
17 premiums for employees hired after July 1, 1996, as detailed
 
18 below.  Although Act 217 will somewhat address the health costs
 
19 of future employees, it did not address the ability of the fund
 

 
Page 2                                                     1870
                                     H.B. NO.           
                                                        
                                                        


 1 to pay for the health benefits of retirees and employees hired
 
 2 before July 1, 1996.
 
 3      The health fund currently provides health benefits,
 
 4 including medical, hospital, surgical, prescription drug, vision,
 
 5 dental, and life insurance benefits to eligible active state and
 
 6 county employees, retirees, and their dependents.
 
 7      For employees hired before July 1, 1996, public employers
 
 8 pay the entire monthly health care premium for employees retiring
 
 9 with ten or more years of credited service.  For those with fewer
 
10 than ten years, employers pay half the monthly premium.
 
11      For employees hired after June 30, 1996, and who retire with
 
12 fewer than ten years of service, public employers pay no
 
13 contributions.  For these later hires retiring with between more
 
14 than ten and less than fifteen years of service, employers pay
 
15 half the retired employees' monthly Medicare or non-Medicare
 
16 premium.  Those with more than fifteen and less than twenty-five
 
17 years of service have seventy-five per cent of their premiums
 
18 paid.  Public employers pay the entire premium for those with
 
19 twenty-five or more years of service.
 
20      Retirees enrolled in both the federal Medicare plan and the
 
21 health fund's Medicare Supplement plan or the Medicare Risk plan
 
22 receive a monthly Medicare Part B reimbursement from the health
 

 
 
 
Page 3                                                     1870
                                     H.B. NO.           
                                                        
                                                        


 1 fund.  Spouses participate in these retiree benefits as well.
 
 2      The health fund's cost to provide health benefits for active
 
 3 employees and retirees as well as the post-retirement health
 
 4 benefit liability have increased dramatically by five-fold over
 
 5 the past decade.  The auditor estimates that as of July 1, 1998,
 
 6 the State and counties' accrued unfunded liability for providing
 
 7 future retiree health benefits, under the current plans, is $4.5
 
 8 billion and the most likely estimate of the unfunded liability
 
 9 for the year 2013 is $11.4 billion.
 
10      According to a report by the Segal Company entitled "1996
 
11 Survey of State Employee Health Benefit Plans," of the forty-
 
12 seven states that provide coverage for retirees, only six --
 
13 Connecticut, Hawaii, Massachusetts, New Jersey, New York, and
 
14 Ohio -- paid any portion of their retirees' Medicare Part B
 
15 premiums.  Hawaii pays that premium not only for retirees, but
 
16 also for their spouses at one hundred per cent of the premium
 
17 cost.  Only thirty-two states, or sixty-four per cent, provide
 
18 dental care coverage, less than half (twenty-four states) provide
 
19 some form of vision care coverage, and less than two-thirds
 
20 (thirty-six states) provide group life insurance to their public
 
21 employees.  Hawaii's public employers pay one hundred per cent of
 
22 the health coverage costs of their retirees and their spouses
 

 
 
 
Page 4                                                     1870
                                     H.B. NO.           
                                                        
                                                        


 1 while thirty-nine states, or seventy-eight per cent, pay less
 
 2 than one hundred per cent.  In fact, fourteen states pay nothing
 
 3 at all while sixteen states pay between one and fifty-nine per
 
 4 cent of retirees' health coverage costs.  The national average of
 
 5 public employer contributions is only fifty-three per cent for
 
 6 retirees and their spouses.
 
 7      The legislature finds that the State must move more into the
 
 8 mainstream of public employee health benefits compensation for
 
 9 active employees and retirees by limiting certain types of
 
10 benefit coverages to its public employees.  The purpose of this
 
11 Act is to:
 
12      (1)  Stop government subsidies of Medicare Part B premiums
 
13           for retirees' spouses for all current and future
 
14           retirees; 
 
15      (2)  Require retirees who retire before age sixty-five and
 
16           who:
 
17           (A)  Have twenty-five years of service;
 
18           (B)  Were hired after June 30, 1996 and have less than
 
19                ten years of service;
 
20           (C)  Were hired after June 30, 1996 and have ten but
 
21                less than fifteen years of service; and
 
22           (D)  Were hired after June 30, 1996 and have fifteen
 

 
 
 
Page 5                                                     1870
                                     H.B. NO.           
                                                        
                                                        


 1                but less than twenty-five years of service;
 
 2           to pay specified percentages of monthly premiums until
 
 3           they attain the age of sixty-five; and
 
 4      (3)  Limit health benefit coverage for all current and
 
 5           future public employees and retirees to medical and
 
 6           prescription drug coverage.
 
 7      SECTION 2.  Chapter 87, Hawaii Revised Statutes, is amended
 
 8 by adding a new section to be appropriately designated and to
 
 9 read as follows:
 
10      "§87-    Early retirees; employee contributions until age
 
11 sixty-five.  Each employee-beneficiary who has at least twenty-
 
12 five years of service and retires after July 1, 2001, and who, on
 
13 the date of retirement, has not attained the age of sixty-five,
 
14 shall continue to make a monthly contribution to the fund for
 
15 health benefit coverage in an amount equal to        per cent of
 
16 the retiree's monthly premium until the retiree attains the age
 
17 of sixty-five."
 
18      SECTION 2.  Section 87-1, Hawaii Revised Statutes, is
 
19 amended as follows:
 
20      1.  By amending the definition of "carrier" to read:
 
21     "(2)  "Carrier" means a voluntary association, corporation,
 
22           partnership, or organization engaged in providing,
 

 
 
 
Page 6                                                     1870
                                     H.B. NO.           
                                                        
                                                        


 1           paying for, arranging for, or reimbursing the cost of
 
 2           health or long-term care services under group insurance
 
 3           contracts or medical[,] or hospital[, or dental]
 
 4           services agreements;"
 
 5      2.  By amending the definition of "dependent-beneficiary" to
 
 6 read:
 
 7     "(4)  "Dependent-beneficiary" means an employee-beneficiary's
 
 8           spouse and any unmarried child, including an adopted
 
 9           child, stepchild, foster child, or recognized natural
 
10           child who lives with the employee-beneficiary, deemed
 
11           eligible by the board to receive health [or dental]
 
12           services of a health benefits plan;"
 
13      3.  By amending the definition of "employee-beneficiary" to
 
14 read:
 
15     "(6)  "Employee-beneficiary" means an employee, the
 
16           beneficiary of an employee who is killed in the
 
17           performance of the employee's duty, an employee who
 
18           retired prior to the establishment of the fund, or the
 
19           beneficiary of a retired member of the employees'
 
20           retirement system, a county pension system, or a
 
21           police, firefighters, or bandsmen pension system of the
 
22           State or county, upon the death of the retired member
 

 
 
 
Page 7                                                     1870
                                     H.B. NO.           
                                                        
                                                        


 1           and, which beneficiary, if a child, does not marry, or
 
 2           if a surviving spouse, does not remarry; provided that
 
 3           for the purposes of this paragraph, "family member"
 
 4           means the deceased retired member's or employee's
 
 5           spouse and unmarried child under the age of nineteen
 
 6           years (including a legally adopted child and a
 
 7           stepchild or recognized natural child who lives with
 
 8           the deceased retired member or employee in a regular
 
 9           parent-child relationship), or unmarried child
 
10           regardless of age who is incapable of self-support
 
11           because of a mental or physical incapacity which
 
12           existed prior to the unmarried child's reaching the age
 
13           of nineteen years; and provided further that the
 
14           employee, the employee's beneficiary, or the
 
15           beneficiary of the deceased retired member is deemed
 
16           eligible by the board to receive health [or dental]
 
17           services of a health benefits plan or a long-term care
 
18           benefits plan;"
 
19      4.  By amending the definition of "health benefits plan" to
 
20 read:
 
21     "(8)  "Health benefits plan" means (A) a group insurance
 
22           contract or medical, hospital, surgical, or prescribed
 

 
 
 
Page 8                                                     1870
                                     H.B. NO.           
                                                        
                                                        


 1           drugs[, vision, or dental service] agreement in which a
 
 2           carrier agrees to provide, pay for, arrange for, or
 
 3           reimburse the cost of medical, hospital, surgical, or
 
 4           prescribed drugs[, vision, or dental services] as
 
 5           determined by the board; or (B) a similar schedule of
 
 6           benefits established by the board and provided through
 
 7           the fund on a self-insured basis;"
 
 8      SECTION 3.  Section 87-3, Hawaii Revised Statutes, is
 
 9 amended to read as follows:
 
10      "§87-3 Purpose of the fund.(a)  The fund shall be used
 
11 for the purpose of providing employee-beneficiaries and
 
12 dependent-beneficiaries with a health benefits plan and a long-
 
13 term care benefits plan; provided that the fund, including rate
 
14 credits or reimbursements from any carrier or self-insured plan
 
15 or any earning or interest derived therefrom, may be used to
 
16 stabilize health benefits plan or long-term care benefits plan
 
17 rates and with approval of the legislature through appropriation
 
18 of funds for other expenses necessary to effectuate these
 
19 purposes.  Notwithstanding any law to the contrary, any rate
 
20 credit or reimbursement from any carrier or self-insured plan in
 
21 excess of funds used to stabilize health benefits plan or long-
 
22 term care benefits plan costs, and for other expenses authorized
 

 
 
 
Page 9                                                     1870
                                     H.B. NO.           
                                                        
                                                        


 1 by the legislature or any earning or interest derived therefrom
 
 2 shall be returned to the State or the county for deposit into the
 
 3 appropriate general fund if the moneys are returned from:
 
 4      (1)  A plan that provides health benefits to retirees or the
 
 5           surviving spouses of deceased retirees or employees
 
 6           killed in the performance of their duty whose coverage
 
 7           is financed in whole or in part by the State or by the
 
 8           county; or
 
 9      (2)  A plan that provides health benefits to employees;
 
10           provided that the amount returned to the general fund
 
11           shall be only that portion financed by the State or by
 
12           the county on behalf of the employee.
 
13      [(b)  To the extent that contributions are provided for
 
14 group life insurance benefits in sections 87-4 and 87-4.5, the
 
15 fund shall also be used for the purpose of providing group life
 
16 insurance benefits to employees.
 
17      (c)] (b)  To the extent that contributions are received from
 
18 employee-beneficiaries and qualified-beneficiaries for long-term
 
19 care insurance benefits under section 87-23.6, the fund shall
 
20 also be used for the purpose of providing long-term care
 
21 insurance benefits to eligible participants.
 
22      [(d)] (c)  The fund may assist the State and the counties to
 

 
 
 
Page 10                                                    1870
                                     H.B. NO.           
                                                        
                                                        


 1 implement and administer cafeteria plans authorized under section
 
 2 125 of the Internal Revenue Code of 1986, as amended, and under
 
 3 part II of chapter 78."
 
 4      SECTION 4.  Section 87-4, Hawaii Revised Statutes, is
 
 5 amended to read as follows:
 
 6      "§87-4 State and county contributions to the fund.(a)
 
 7 The State through the department of budget and finance and the
 
 8 several counties through their respective departments of finance
 
 9 shall pay to the fund a monthly contribution equal to the amount
 
10 established under chapter 89C or specified in the applicable
 
11 public sector collective bargaining agreement, whichever is
 
12 appropriate, for each of their respective employee-beneficiaries
 
13 and employee-beneficiaries with dependent-beneficiaries, which
 
14 shall be used toward the payment of costs of a health benefits
 
15 plan; provided that the monthly contribution shall not exceed the
 
16 actual cost of a health benefits plan.  If both husband and wife
 
17 are employee-beneficiaries, the total contribution by the State
 
18 or the appropriate county shall not exceed the monthly
 
19 contribution of a family plan for both of them.  If, however, the
 
20 State or any of the several counties establish cafeteria plans in
 
21 accordance with section 125 of the Internal Revenue Code of 1986,
 
22 as amended, and part II of chapter 78, the monthly contribution
 

 
 
 
Page 11                                                    1870
                                     H.B. NO.           
                                                        
                                                        


 1 to the fund for those employee-beneficiaries who participate in a
 
 2 cafeteria plan shall be made through the cafeteria plan.  In this
 
 3 event, the payments made by the State or the counties shall
 
 4 include the State's and the counties' respective contributions to
 
 5 the fund and the employee-beneficiary's share of the cost of the
 
 6 health benefits plan selected and authorized by the employee-
 
 7 beneficiary through the cafeteria plan.
 
 8      [(b)  The State through the department of budget and finance
 
 9 and the several counties through their respective departments of
 
10 finance shall pay to the fund a monthly contribution equal to the
 
11 amount established under chapter 89C or specified in the
 
12 applicable public sector collective bargaining agreement,
 
13 whichever is appropriate, for each child who has not attained the
 
14 age of nineteen of all employee-beneficiaries who are enrolled
 
15 for dental benefits.  The contributions shall be used towards the
 
16 payment of costs of dental benefits of a health benefits plan.
 
17 Notwithstanding any provisions to the contrary, no part of the
 
18 fund shall be used to finance the contributions except a rate
 
19 credit or reimbursement or earnings or interest therefrom
 
20 received by the fund or general revenues appropriated for that
 
21 purpose.
 
22      (c)  The State through the department of budget and finance
 

 
 
 
Page 12                                                    1870
                                     H.B. NO.           
                                                        
                                                        


 1 and the several counties through their respective departments of
 
 2 finance shall pay to the fund a monthly contribution equal to the
 
 3 amount established under chapter 89C or specified in the
 
 4 applicable public sector collective bargaining agreement,
 
 5 whichever is applicable, for each of their respective employees,
 
 6 to be used towards the payment of group life insurance benefits
 
 7 for each employee.
 
 8      (d)] (b)  The several counties through their respective
 
 9 departments of finance shall annually reimburse the State no
 
10 later than December 30 of each fiscal year for their respective
 
11 pro rata share of the cost of administering the fund for the
 
12 fiscal year for the benefit of their employee-beneficiaries and
 
13 dependent-beneficiaries.  Each county's pro rata share shall be
 
14 determined by allocating the amount appropriated for
 
15 administering the fund for the fiscal year, after excluding
 
16 therefrom state and county contributions for health [and group
 
17 life insurance] benefits, in the same proportion as the aggregate
 
18 annual amount of state and county contributions for such benefits
 
19 as of October 31 of the preceding fiscal year.  The amount of any
 
20 excess or deficiency required to administer the fund shall be
 
21 subtracted from or added to, as the case may be, the amount due
 
22 from each county for the succeeding fiscal year.
 

 
 
 
Page 13                                                    1870
                                     H.B. NO.           
                                                        
                                                        


 1      [(e)] (c)  The State through the department of budget and
 
 2 finance and the several counties through their respective
 
 3 departments of finance shall advance the amount of their
 
 4 respective employee-beneficiaries contributions to the fund on or
 
 5 before the first day of each month.
 
 6      [(f)] (d)  Contributions made by the State or the several
 
 7 counties shall not be considered as wages or salary of an
 
 8 employee-beneficiary, and no employee-beneficiary shall have any
 
 9 vested right in or be entitled to receive any part of any
 
10 contribution made to the fund."
 
11      SECTION 5.  Section 87-4.5, Hawaii Revised Statutes, is
 
12 amended to read as follows:
 
13      "§87-4.5  State and county contributions to fund; retired
 
14 employees with fewer than ten years of service.(a)  This
 
15 section shall apply to state and county contributions to the fund
 
16 for employees specified in section 87-1(5)(A)(v), except those
 
17 hired after June 30, 1996, under section 87-4.6, who retire after
 
18 June 30, 1984, with fewer than ten years of credited service,
 
19 excluding sick leave.
 
20      (b)  The State through the department of budget and finance
 
21 and the several counties through their respective departments of
 
22 finance shall pay to the fund a monthly contribution equal to
 

 
 
 
Page 14                                                    1870
                                     H.B. NO.           
                                                        
                                                        


 1 one-half of the retired employee's monthly Medicare or non-
 
 2 Medicare premium[:], only after the retired employee attains the
 
 3 age of sixty-five.  The retired employee shall continue to make a
 
 4 monthly contribution to the fund for health benefit coverage in
 
 5 an amount equal to        per cent of the retiree's monthly
 
 6 premium until the retiree attains the age of sixty-five:
 
 7      (1)  For hospital, medical, and surgical benefits of a
 
 8           health benefits plan for each of their respective
 
 9           employee-beneficiaries or their respective employee-
 
10           beneficiaries and their dependent-beneficiaries
 
11           enrolled under this section; and
 
12      (2)  For prescription drug benefits of a health benefits
 
13           plan for each of their respective employee-
 
14           beneficiaries or their respective employee-
 
15           beneficiaries and their dependent-beneficiaries
 
16           enrolled under this section[;
 
17      (3)  For vision care benefits of a health benefits plan for
 
18           each of their respective employee-beneficiaries or
 
19           their respective employee-beneficiaries and their
 
20           dependent-beneficiaries enrolled under this section;
 
21           and
 
22      (4)  For adult dental benefits of a health benefits plan for
 

 
 
 
Page 15                                                    1870
                                     H.B. NO.           
                                                        
                                                        


 1           each of their respective employee-beneficiaries or
 
 2           their respective employee-beneficiaries and their
 
 3           spouses enrolled under this section].
 
 4      If both husband and wife are employee-beneficiaries, the
 
 5 total contribution by the State or the appropriate county shall
 
 6 not exceed the monthly contribution of a family plan for both of
 
 7 them.
 
 8      [(c)  The State through the department of budget and finance
 
 9 and the several counties through their respective departments of
 
10 finance shall pay to the fund a monthly contribution equal to the
 
11 total monthly premium for each child who has not attained the age
 
12 of nineteen of all employee-beneficiaries who are enrolled in the
 
13 fund's dental plan for children under this section.
 
14      (d)  The State through the department of budget and finance
 
15 and the several counties through their respective departments of
 
16 finance shall pay to the fund a monthly contribution equal to the
 
17 total monthly premium for each retired employee enrolled in the
 
18 fund's group life insurance benefits plan under this section.
 
19      (e)] (c)  For the purpose of this section, the retired
 
20 employee's monthly Medicare and non-Medicare premiums for the
 
21 hospital, medical, and surgical plan[,] and the prescription drug
 
22 plan[, the vision care plan, and the adult dental plan] shall be
 

 
 
 
Page 16                                                    1870
                                     H.B. NO.           
                                                        
                                                        


 1 established annually by the board and shall be equal to the
 
 2 retired employee's Medicare and non-Medicare premiums for the
 
 3 hospital, medical, and surgical plan[,] and the prescription drug
 
 4 plan[, the vision care plan, and the adult dental plan]
 
 5 contracted by the fund with the largest enrollments.
 
 6      [(f)] (d)  The State through the department of budget and
 
 7 finance and the several counties through their respective
 
 8 departments of finance shall advance the amount of their
 
 9 respective employee-beneficiaries' contributions to the fund on
 
10 or before the first day of each month.
 
11      [(g)] (e)  Contributions made by the State or the several
 
12 counties shall not be considered as wages or salary of an
 
13 employee-beneficiary, and no employee-beneficiary shall have any
 
14 vested right in or be entitled to receive any part of any
 
15 contribution made to the fund."
 
16      SECTION 6.  Section 87-4.6, Hawaii Revised Statutes, is
 
17 amended to read as follows:
 
18      "§87-4.6  State and county contributions to fund; employees
 
19 hired after June 30, 1996, and retired with fewer than twenty-
 
20 five years of service.  (a)  This section shall apply to state
 
21 and county contributions to the fund for employees who were hired
 
22 after June 30, 1996, and who retire with fewer than twenty-five
 

 
 
 
Page 17                                                    1870
                                     H.B. NO.           
                                                        
                                                        


 1 years of credited service, excluding sick leave; provided that
 
 2 this section shall not apply if an employee is hired prior to
 
 3 July 1, 1996, and transfers employment after June 30, 1996 nor to
 
 4 any employee who has at least ten years of credited service and
 
 5 who has suffered a break in service.  For purposes of this
 
 6 section, "transfer" means to leave state or county employment and
 
 7 return to state or county employment within ninety calendar days.
 
 8      (b)  For purposes of this section, if an employee leaves
 
 9 state or county employment and returns to state or county
 
10 employment after June 30, 1996, when the employee retires, the
 
11 employee's years of service shall be computed in the same manner
 
12 as set forth in chapter 88.
 
13      (c)  The State, through the department of budget and finance
 
14 and the several counties through their respective departments of
 
15 finance, shall pay to the fund a monthly contribution equal to
 
16 one-half of the retired employee's monthly medicare or
 
17 nonmedicare premium for the following benefits for retired
 
18 employees with ten or more years but fewer than fifteen years of
 
19 service[;], but only after the retired employee attains the age
 
20 of sixty-five.  The retired employee shall continue to make a
 
21 monthly contribution to the fund for health benefit coverage in
 
22 an amount equal to        per cent of the retiree's monthly
 

 
 
 
Page 18                                                    1870
                                     H.B. NO.           
                                                        
                                                        


 1 premium until the retiree attains the age of sixty-five; and
 
 2 seventy-five per cent of the retired employee's monthly medicare
 
 3 or nonmedicare premium for the following benefits for retired
 
 4 employees with at least fifteen but fewer than twenty-five years
 
 5 of service[:], but only after the retired employee attains the
 
 6 age of sixty-five.  The retired employee shall continue to make a
 
 7 monthly contribution to the fund for health benefit coverage in
 
 8 an amount equal to        per cent of the retiree's monthly
 
 9 premium until the retiree attains the age of sixty-five:
 
10      (1)  For hospital, medical, and surgical benefits of a
 
11           health benefits plan for each of their respective
 
12           employee-beneficiaries or their respective employee-
 
13           beneficiaries and their dependent-beneficiaries
 
14           enrolled under this section; and
 
15      (2)  For prescription drug benefits of a health benefits
 
16           plan for each of their respective employee-
 
17           beneficiaries or their respective employee-
 
18           beneficiaries and their dependent-beneficiaries
 
19           enrolled under this section[;
 
20      (3)  For vision care benefits of a health benefits plan for
 
21           each of their respective employee-beneficiaries or
 
22           their respective employee-beneficiaries and their
 

 
 
 
Page 19                                                    1870
                                     H.B. NO.           
                                                        
                                                        


 1           dependent-beneficiaries enrolled under this section;
 
 2           and
 
 3      (4)  For adult dental benefits of a health benefits plan for
 
 4           each of their respective employee-beneficiaries or
 
 5           their respective employee-beneficiaries and their
 
 6           spouses enrolled under this section].
 
 7      If both husband and wife are employee-beneficiaries, the
 
 8 total contribution by the State or the appropriate county, after
 
 9 an employee's retirement pursuant to this section, shall not
 
10 exceed the monthly contribution of a family plan for both of
 
11 them.
 
12      [(d)  The State, through the department of budget and
 
13 finance and the several counties through their respective
 
14 departments of finance, after an employee's retirement pursuant
 
15 to this section, shall pay to the fund a monthly contribution
 
16 equal to the total monthly premium for each child who has not
 
17 attained the age of nineteen of all employee-beneficiaries who
 
18 are enrolled in the fund's dental plan for children under this
 
19 section.
 
20      (e)  The State, through the department of budget and finance
 
21 and the several counties through their respective departments of
 
22 finance, shall pay to the fund a monthly contribution equal to
 

 
 
 
Page 20                                                    1870
                                     H.B. NO.           
                                                        
                                                        


 1 the total monthly premium for each retired employee enrolled in
 
 2 the fund's group life insurance benefits plan under this section.
 
 3      (f)] (d)  For the purpose of this section, the retired
 
 4 employee's monthly medicare and nonmedicare premiums for the
 
 5 hospital, medical, and surgical plan[,] and the prescription drug
 
 6 plan[, the vision care plan, and the adult dental plan] shall be
 
 7 established annually by the board and shall be equal to the
 
 8 retired employee's medicare and nonmedicare premiums for the
 
 9 hospital, medical, and surgical plan[,] and the prescription drug
 
10 plan[, the vision care plan, and the adult dental plan]
 
11 contracted by the fund with the largest enrollments.
 
12      [(g)] (e)  The State, through the department of budget and
 
13 finance and the several counties through their respective
 
14 departments of finance, shall advance the amount of their
 
15 respective employee-beneficiaries' contributions to the fund on
 
16 or before the first day of each month.
 
17      [(h)] (f)  Contributions made by the State or the several
 
18 counties shall not be considered as wages or salary of an
 
19 employee-beneficiary, and no employee-beneficiary shall have any
 
20 vested right in or be entitled to receive any part of any
 
21 contribution made to the fund."
 
22      SECTION 7.  Section 87-22, Hawaii Revised Statutes, is
 

 
 
 
Page 21                                                    1870
                                     H.B. NO.           
                                                        
                                                        


 1 amended to read as follows:
 
 2      "§87-22  Determine health benefits plan; contract with
 
 3 carriers.(a)  The board of trustees shall determine the health
 
 4 benefits plan or plans, which shall be excepted from the minimum
 
 5 group requirements of chapter 431.  The health benefits plan or
 
 6 plans shall provide, pay for, arrange for, or reimburse the cost
 
 7 of hospitalization, surgery[,] and medical[, dental treatment,
 
 8 and] care, and may include prescribed drugs, medicines,
 
 9 prosthetic appliances, hospital in-patient and out-patient
 
10 service benefits, [vision treatment and care,] and medical[, and
 
11 dental] benefits.
 
12                                                            13 benefits plans; provided that benefits provided under any
 
14 respective plan shall be equally available to all employee-
 
15 beneficiaries and dependent-beneficiaries selecting the plan
 
16 regardless of age, as provided for below:
 
17      (1)  An indemnity benefit plan or plans under which a
 
18           carrier agrees to pay certain sums of money not in
 
19           excess of the actual expenses incurred for health
 
20           services;
 
21      (2)  A service benefit plan or plans under which payment is
 
22           made by a carrier under contracts with physicians,
 

 
 
 
 
 
Page 22                                                    1870
                                     H.B. NO.           
                                                        
                                                        


 1           hospitals, or other providers of health services or,
 
 2           under certain conditions, payment is made by a carrier
 
 3           to an employee-beneficiary;
 
 4      (3)  Health maintenance organization plans, which provide or
 
 5           arrange health services for members on a prepaid basis,
 
 6           with professional services provided by physicians
 
 7           practicing individually or as a group in a common
 
 8           center or centers;
 
 9     [(4)  Plans to offer dental benefits through an indemnity
 
10           plan or plans, a service benefit plan or plans, dental
 
11           maintenance organization plans, or combinations
 
12           thereof;
 
13      (5)] (4)  Plans to offer prescription drug benefits through
 
14           an indemnity plan or plans, a service benefit plan or
 
15           plans, health maintenance organization plans, or
 
16           combinations thereof; or
 
17     [(6)  Plans to offer vision care benefits through an
 
18           indemnity plan or plans, a service benefit plan or
 
19           plans, health maintenance organization plans, or
 
20           combinations thereof; or
 
21      (7)] (5)  A noninsured schedule of benefit similar to any of
 
22           the schedule of benefits set forth in the health
 

 
 
 
Page 23                                                    1870
                                     H.B. NO.           
                                                        
                                                        


 1           benefits plans authorized in paragraphs (1) to [(6).]
 
 2           (4)."
 
 3      SECTION 8.  Section 87-27, Hawaii Revised Statutes, is
 
 4 amended to read as follows:
 
 5      "§87-27  Supplemental plan to federal Medicare.  Any other
 
 6 provision of this chapter notwithstanding, the board of trustees
 
 7 shall establish[, effective July 1, 1966] a health benefit plan
 
 8 which takes into account benefits available to an employee-
 
 9 beneficiary and spouse under the federal Medicare plan, subject
 
10 to the following conditions:
 
11                                                                    12           federal Medicare but the plan so established by the
 
13           board shall be supplemental to the federal Medicare
 
14           plan;
 
15      (2)  The contribution for voluntary medical insurance
 
16           coverage under federal Medicare [may] shall be paid by
 
17           the fund[, in such manner as the board shall specify,
 
18           in the case of] only for an employee-beneficiary who is
 
19           a retired employee[, and spouse while the employee-
 
20           beneficiary is living,] including members of the old
 
21           pension system [and after death the employee-
 
22           beneficiary's spouse provided the spouse qualifies as
 

 
 
 
 
 
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                                     H.B. NO.           
                                                        
                                                        


 1           an employee-beneficiary]; provided that the counties,
 
 2           through their respective departments of finance, shall
 
 3           reimburse the fund for any contributions made for
 
 4           county employee-beneficiaries under this paragraph;
 
 5      (3)  The benefits available under the plan, when taken
 
 6           together with the benefits available under the federal
 
 7           Medicare plan shall, as nearly as is possible,
 
 8           approximate the benefits available under the plans set
 
 9           forth in section 87-22.  If, for any reason, a
 
10           situation develops where the benefits available under
 
11           the supplemental plan and the federal Medicare plan
 
12           substantially differ from those that would otherwise be
 
13           available, the board is authorized to correct this
 
14           inequity to assure substantial equality of benefits;
 
15      (4)  Notwithstanding any other law to the contrary, all
 
16           employee-beneficiaries or dependent-beneficiaries who
 
17           are eligible to enroll in the federal Medicare Part B
 
18           medical insurance plan shall enroll in that federal
 
19           plan as a requirement to receive the contributions and
 
20           to participate in the employee benefit plans described
 
21           in this chapter.  This paragraph shall pertain to
 
22           retired employees and their spouses and the surviving
 

 
 
 
Page 25                                                    1870
                                     H.B. NO.           
                                                        
                                                        


 1           spouses of deceased retirees and employees killed in
 
 2           the performance of duty; and
 
 3      (5)  The board of trustees shall determine which employee-
 
 4           beneficiaries and dependent-beneficiaries, who are not
 
 5           enrolled in the federal Medicare Part B medical
 
 6           insurance plan, may participate in such other plans as
 
 7           are set forth in section 87-22." 
 
 8      SECTION 9.  Section 87-22.5, Hawaii Revised Statutes, is
 
 9 repealed.
 
10      SECTION 10.  Section 87-23, Hawaii Revised Statutes, is
 
11 repealed.
 
12      SECTION 11.  Statutory material to be repealed is bracketed.
 
13 New statutory material is underscored.
 
14      SECTION 12.  This Act shall take effect on July 1, 2001.
 
15 
 
16                         INTRODUCED BY: __________________________
 
17 
 
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