2461
HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO PUBLIC EMPLOYEE HEALTH BENEFITS.
 


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

 1      SECTION 1.  The Hawaii Revised Statutes is amended by adding
 
 2 a new chapter to be appropriately designated and to read as
 
 3 follows:
 
 4                           CHAPTER _____
 
 5          HAWAII EMPLOYER-UNION HEALTH BENEFIT TRUST FUND
 
 6      §  -1 Definitions.  As used in this chapter:
 
 7      "Board" means the board of trustees of the Hawaii employer-
 
 8 union health benefit trust described in section   -2;
 
 9      "Carrier" means a voluntary association, corporation,
 
10 partnership, or organization engaged in providing, paying for,
 
11 arranging for, or reimbursing the cost of health or long-term
 
12 care services under group insurance contracts or medical,
 
13 hospital, or dental services agreements;
 
14      "Contributions" means money payments made to the fund by the
 
15 State or the several counties or an employee-beneficiary or
 
16 qualified-beneficiary;
 
17      "Dependent-beneficiary" means (a) an employee-beneficiary's
 
18 spouse; (b) any unmarried child deemed eligible by the board,
 
19 including a legally adopted child, stepchild, foster child, or
 

 
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 1 recognized natural child who lives with the employee-beneficiary;
 
 2 and (c) an unmarried child regardless of age who is incapable of
 
 3 self-support because of a mental or physical incapacity which
 
 4 existed prior to the unmarried child's reaching the age of
 
 5 nineteen years;
 
 6      "Employee" means an employee or officer of the State or
 
 7 county government or the legislature,
 
 8      (A)  Including:
 
 9           (i)  An elective officer or a person who has served as
 
10                a member of the legislature for at least ten
 
11                years;
 
12          (ii)  A per diem employee;
 
13         (iii)  An officer or employee under an authorized leave
 
14                of absence;
 
15          (iv)  An employee of the Hawaii national guard although
 
16                paid from federal funds;
 
17           (v)  A retired member of the employees' retirement
 
18                system, the county pension system, or the police,
 
19                firefighters, or bandsmen pension system of the
 
20                State or county;
 
21          (vi)  A salaried and full-time member of a board,
 
22                commission, or agency appointed by the governor or
 
23                the mayor of a county; and
 

 
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 1         (vii)  A person employed by contract for a period not
 
 2                exceeding one year, where the director of human
 
 3                resources development, personnel services, or
 
 4                civil service has certified that the service is
 
 5                essential or needed in the public interest and
 
 6                that, because of circumstances surrounding its
 
 7                fulfillment, personnel to perform the service
 
 8                cannot be obtained through normal civil service
 
 9                recruitment procedures,
 
10      (B)  But excluding:
 
11           (i)  A designated beneficiary of a retired member of
 
12                the employees' retirement system, the county
 
13                pension system, or the police, firefighters, or
 
14                bandsmen pension system of the State or county;
 
15          (ii)  Except as allowed under [paragraph] (A)(vii), a
 
16                person employed temporarily on a fee or contract
 
17                basis; and
 
18         (iii)  A person employed for less than three months and
 
19                whose employment is less than one-half of a full-
 
20                time equivalent position.
 
21      "Employee-beneficiary" means an employee, the beneficiary of
 
22 an employee who is killed in the performance of the employee's
 
23 duty, an employee who retired prior to 1961, or the beneficiary
 

 
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 1 of a retired member of the employees' retirement system, a county
 
 2 pension system, or a police, firefighters, or bandsmen pension
 
 3 system of the State or county, upon the death of the retired
 
 4 member and, which beneficiary, if a child is unmarried and under
 
 5 the age of nineteen, or if a surviving spouse, does not remarry;
 
 6 provided that the employee, the employee's beneficiary, or the
 
 7 beneficiary of the deceased retired member is deemed eligible by
 
 8 the board to receive health benefits plan or a long-term care
 
 9 benefits plan;
 
10      "Fund" means the trust fund described in section   -23;
 
11      "Health benefits plan" means (A) a group insurance contract
 
12 or service agreement that may include medical, hospital,
 
13 surgical, prescribed drugs, vision, and dental services, in which
 
14 a carrier agrees to provide, pay for, arrange for, or reimburse
 
15 the cost of medical, hospital, surgical, prescribed drugs,
 
16 vision, or dental services as determined by the board; or (B) a
 
17 similar schedule of benefits established by the board and
 
18 provided through the fund on a self-insured basis;
 
19      "Long-term care benefits plan" means (A) a group insurance
 
20 contract or service agreement in which a carrier agrees to
 
21 provide, pay for, arrange for, or reimburse the cost of long-term
 
22 care benefits as determined by the board, or (B) a similar
 
23 schedule of benefits established by the board and provided
 

 
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 1 through the fund on a self-insured basis;
 
 2      "Periodic charge" means the periodic payment by the board to
 
 3 a carrier for any health benefits, or long-term care benefits
 
 4 plan;
 
 5      "Qualified-beneficiary" means, for purposes of the long-term
 
 6 care benefits plan, a former employee or an employee who is not
 
 7 eligible for benefits due to a reduction in work hours including
 
 8 the employee's spouse or a divorced spouse of an employee or
 
 9 retiree provided the qualified beneficiary was enrolled in the
 
10 plan prior to loss of benefits; and
 
11      "Trustee" means a trustee of the board of trustees as
 
12 described in section   -2.
 
13                         BOARD OF TRUSTEES
 
14      §  -2 Composition of board.  Notwithstanding section 26-34,
 
15 the board of trustees of the employer-union health benefit trust
 
16 shall consist of ten trustees appointed by the governor, as
 
17 follows:
 
18      (1)  Five members, one of whom shall represent retirees,
 
19           appointed from a list of nominees submitted by
 
20           exclusive employee representative organizations to
 
21           represent public employees; and
 
22      (2)  Five trustees to represent the public employer,
 
23           including the director of the department of human
 

 
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 1           resources development or a designated representative,
 
 2           and the director of finance or a designated
 
 3           representative and one representative of the counties
 
 4           on a rotational basis.
 
 5      §  -3 Term of a trustee; vacancy.  Except for the director
 
 6 of finance, the director of human resources development, and the
 
 7 trustee or trustees representing the counties on a rotational
 
 8 basis, the term of office of each trustee shall be four years;
 
 9 provided the trustee may be reappointed for one additional
 
10 consecutive four year term.  The director of finance and the
 
11 director of human resources development shall serve during the
 
12 directors' terms of office as directors.  The trustee
 
13 representing the counties on a rotational basis shall be limited
 
14 to a term of four years.
 
15      Each term shall commence on January 1 and expire on December
 
16 31.  The governor may reduce the terms of those initially
 
17 appointed so as to provide, as nearly as can be, for the
 
18 expiration of an equal number of terms at intervals of one year.
 
19      A vacancy on the board of trustees shall be filled by
 
20 appointment of the governor.  The person appointed to fill a
 
21 vacancy shall serve for the remainder of the term of the person's
 
22 predecessor.
 
23      If by the end of the trustee's term a trustee is not
 

 
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 1 reappointed or the trustee's successor is not appointed, the
 
 2 trustee shall serve until the trustee's successor is appointed.
 
 3      §  -4 Chair, vice-chair, and secretary-treasurer.  The
 
 4 trustees shall elect from among the members:  a chair, a vice-
 
 5 chair, and a secretary-treasurer.
 
 6      §  -5 Compensation and expenses of a trustee.  Each trustee
 
 7 shall serve without compensation, but the trustees may be
 
 8 reimbursed from the fund for any necessary expense made in behalf
 
 9 of the fund.
 
10      §  -6 Legal adviser.  The attorney general shall serve as
 
11 legal adviser to the board and the Hawaii employer-union health
 
12 benefit trust fund.
 
13                  POWERS AND DUTIES OF THE BOARD
 
14      §  -7 Administration of the fund.  The board shall
 
15 administer and carry out the purpose of the fund.  The board
 
16 shall provide quality health and other benefit plans at a cost
 
17 affordable to both the public employers and the public employees.
 
18      §  -8 Determine health benefits plan; contract with
 
19 carriers; benefit plan eligibility.(a)  The board of trustees
 
20 shall determine the health benefits plan or plans, which shall be
 
21 excepted from the minimum group requirements of chapter 431.
 
22      b)  The board may contract for health benefits plans or
 
23 provide health benefits through a non-insured schedule of
 

 
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 1 benefits.
 
 2      c)  The board shall determine the requirements for
 
 3 eligibility under the health benefits plans.
 
 4      §  -9 Determination of benefits under the group life
 
 5 benefit program or group life insurance program.  The board may
 
 6 provide benefits under a group life benefit program or group life
 
 7 insurance program to employees.
 
 8      §  -10  Determination of long-term care benefits plan;
 
 9 contract with carrier or third-party administrator.(a)  The
 
10 board may determine the benefits of a long-term care benefits
 
11 plan for employee-beneficiaries, or their spouses, as well as
 
12 their parents and grandparents, and in-law parents and
 
13 grandparents, and qualified-beneficiaries.  The plan shall comply
 
14 with article 10H of chapter 431.
 
15      (b)  Notwithstanding any other law to the contrary, the
 
16 benefits shall be available only to employee-beneficiaries, or
 
17 their spouses, as well as their parents and grandparents, and in-
 
18 law parents and grandparents, and qualified-beneficiaries who
 
19 enroll between the ages of twenty and eighty-five.  Eligible
 
20 persons must comply with the plan's age, enrollment, medical
 
21 underwriting, and contribution requirements.
 
22      (c)  The board may contract with a carrier to provide fully-
 
23 insured benefits or a third-party administrator to administer
 

 
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 1 self-insured benefits.
 
 2      §  -11  Health benefits for part-time, temporary, and
 
 3 seasonal or casual employees; provision of.(a)  The board may
 
 4 offer medical, hospital, and surgical benefits plans to part-
 
 5 time, temporary, and seasonal or casual employees at no cost to
 
 6 the employers.  A part-time, temporary, and seasonal or casual
 
 7 employee means a person employed for less than three months or
 
 8 whose employment is less than one-half of a full-time equivalent
 
 9 position.  The board may determine eligibility for part-time,
 
10 temporary, and seasonal or casual employees by rules exempted
 
11 from chapter 91 as provided in section __-18 of this chapter.
 
12      (b)  The board shall determine the medical, hospital, and
 
13 surgical benefits plan, which shall be excepted from the minimum
 
14 group requirements of article 10A of chapter 431.  The medical,
 
15 hospital, and surgical benefits plan shall provide, pay for,
 
16 arrange for, or reimburse the cost of hospitalization, surgery,
 
17 medical, and may include prescribed hospital in-patient and out-
 
18 patient service and medical benefits.
 
19      (c)  The board may contract for the health benefit plans.
 
20 Each part-time, temporary, and seasonal or casual employee
 
21 enrolled for health benefits shall pay monthly contributions
 
22 directly to the board's designated carrier.  The monthly
 
23 contributions may include the carrier's administrative costs.
 

 
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 1      §  -12  Selection of a carrier or third-party administrator
 
 2 for a health benefits, group life insurance, or long-term care
 
 3 benefits plan.  Procurement of a carrier or third-party
 
 4 administrator for any benefit plan shall be exempted from chapter
 
 5 103D.
 
 6      §  -13  Determine eligibility of employee, dependent, or
 
 7 person.  The board of trustees shall establish and adopt
 
 8 eligibility requirements to determine which employee, dependent,
 
 9 or person may qualify as an employee-beneficiary, dependent-
 
10 beneficiary, or qualified-beneficiary, respectively, provided
 
11 that a retired member of the employees' retirement system, a
 
12 county pension system, or a police, firefighters, and bandsmen
 
13 pension system of the State or county, or the retired member's
 
14 dependent shall be eligible to qualify as an employee-beneficiary
 
15 or dependent-beneficiary, whether or not the retired member was
 
16 actively employed by the State or county at the time of the
 
17 retired member's retirement and whether or not the employee
 
18 retired before or after 1961.  Employees who retired prior to
 
19 1961 shall be treated as if they were members of the fund during
 
20 their period of employment with the State or county and receive
 
21 the same benefits as other members.  Only an employee-beneficiary
 
22 or dependent or person satisfying the eligibility requirements
 
23 may qualify as an employee-beneficiary, dependent-beneficiary, or
 

 
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 1 qualified-beneficiary.
 
 2      §  -14  Information and enrollment.(a)  The board shall
 
 3 make available to each employee-beneficiary summary information
 
 4 on approved benefit plans.  The information plans shall be
 
 5 distributed to each employee-beneficiary at the same time and in
 
 6 the same manner.
 
 7      (b)  The board shall establish conditions for benefit plan
 
 8 enrollments.
 
 9      §  -15  Supplemental plan to federal Medicare.  Any other
 
10 provision of this chapter notwithstanding, the board shall
 
11 establish a health benefit plan which takes into account benefits
 
12 available to an employee-beneficiary and spouse under the federal
 
13 Medicare plan, subject to the following conditions:
 
14      (1)  There shall be no duplication of benefits payable under
 
15           federal Medicare, but the plan so established by the
 
16           board, when it is determined to be secondary to the
 
17           federal Medicare plan, will supplement the federal
 
18           Medicare plan such that when this plan is combined with
 
19           federal Medicare, and any other plan to which this plan
 
20           is subordinate under the coordination of benefit rules
 
21           as determined by the National Association of Insurance
 
22           Commissioners, the combination of this plan and all
 
23           other plans will approximate the benefits payable to a
 

 
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 1           similarly situated beneficiary not eligible for the
 
 2           federal Medicare plan;
 
 3      (2)  The State through the department of budget and finance
 
 4           and the several counties through their respective
 
 5           departments of finance shall pay to the fund a monthly
 
 6           contribution of $45.50 or the federal Medicare plan
 
 7           rate, whichever is less for voluntary medical insurance
 
 8           coverage under federal Medicare for each employee-
 
 9           beneficiary who is a retired employee, and spouse while
 
10           the employee-beneficiary is living, including members
 
11           of the old pension system and after death the employee-
 
12           beneficiary's spouse if the spouse qualifies as an
 
13           employee-beneficiary;
 
14      (3)  The benefits available under the plan, when taken
 
15           together with the benefits available under the federal
 
16           Medicare plan or any other coverage or plan to which
 
17           this plan is subordinate under the coordination of
 
18           benefit rules as determined by the National Association
 
19           of Insurance Commissioners, the combination of this
 
20           plan and all other plans will approximate the benefits
 
21           that would be payable to a similarly situated
 
22           beneficiary not eligible for the federal Medicare plan;
 
23      (4)  Notwithstanding any other law to the contrary, all
 

 
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 1           employee-beneficiaries or dependent-beneficiaries who
 
 2           are eligible to enroll in the federal Medicare Part B
 
 3           medical insurance plan shall enroll in that federal
 
 4           plan as a requirement to receive the contributions and
 
 5           to participate in the employee benefit plans described
 
 6           in this chapter.  This paragraph shall pertain to
 
 7           retired employees and their spouses and the surviving
 
 8           spouses of deceased retirees and employees killed in
 
 9           the performance of duty; and
 
10      (5)  The board of trustees shall determine which employee-
 
11           beneficiaries and dependent-beneficiaries, who are not
 
12           enrolled in the federal Medicare Part B medical
 
13           insurance plan, may participate in such other plans as
 
14           are set forth in section   -8.
 
15      §  -16  Other powers.  In addition to the power to
 
16 administer the fund, the board may:
 
17      (1)  Collect, receive, deposit, and withdraw money on behalf
 
18           of the fund;
 
19      (2)  Invest funds in the same manner specified in section
 
20           88-119(1)(a), (1)(b), (1)(c), (2), (3), (4), (5), (6),
 
21           and (7);
 
22      (3)  Hold, purchase, sell, assign, transfer, or dispose of
 
23           any securities and investments in which the fund shall
 

 
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 1           have been invested, as well as the proceeds of the
 
 2           investments and any monies belonging to the fund;
 
 3      (4)  Appoint and at pleasure dismiss an administrator and
 
 4           other required staff.  Such administrator and other
 
 5           staff shall be exempt from chapters 76 and 77 and shall
 
 6           serve under and at the pleasure of the board;
 
 7      (5)  Make payments of periodic charges and pay for
 
 8           reasonable expenses incurred to:
 
 9           (A)  Perform financial audits of the fund and claims
 
10                audits of its insurance carriers; or
 
11           (B)  Carry out the purposes of the fund;
 
12      (6)  Without the necessity of complying with the
 
13           requirements of chapter 103D, retain auditors,
 
14           actuaries, investment firms and managers, benefit plan
 
15           consultants, or other professional advisors to carry
 
16           out the purposes of this chapter;
 
17      (7)  Establish health benefit plan and long-term care
 
18           benefit plan rates that include administrative and
 
19           other expenses necessary to effectuate the purposes of
 
20           the fund; or
 
21      (8)  Require any department, agency, or employee of the
 
22           State and county to furnish information to the board to
 
23           carry out the purposes of this chapter.
 

 
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 1      §  -17  Other duties.  The board shall:
 
 2      (1)  Authorize charges and payments from the fund only upon
 
 3           vouchers countersigned by the chairperson and such
 
 4           other person as may be designated by the board;
 
 5      (2)  Maintain accurate records and accounts of all financial
 
 6           transactions of the fund that shall be audited annually
 
 7           and summarized in an annual report to the Governor and
 
 8           legislature;
 
 9      (3)  Maintain suitable and adequate records and provide
 
10           information requested by the State and county employers
 
11           as necessary to carry out the purpose of the fund; and
 
12      (4)  Procure fiduciary liability insurance and error and
 
13           omissions coverage for all trustees and a fidelity bond
 
14           of a reasonable amount for the chairperson and any
 
15           other person authorized to handle money of the fund.
 
16      §  -18  Rules; policies and standards.(a)  Whenever the
 
17 board is required to or finds it necessary to prescribe rules for
 
18 the purposes of this chapter, the rules shall be prescribed,
 
19 without regard to chapter 91.  The procedures for rule-making
 
20 shall be as set forth in rules, which shall minimally provide
 
21 for:
 
22      (1)  Consultation on proposed rules with employers and
 
23           affected employee organizations;
 

 
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 1      (2)  Adoption of rules at open meetings that permit the
 
 2           attendance of any interested person;
 
 3      (3)  Approval of rules by the governor; and
 
 4      (4)  Filing of rules with the lieutenant governor.
 
 5      (b)  The board may also issue policies, standards, and
 
 6 procedures consistent with its rules.
 
 7                      PROCEDURE OF THE BOARD
 
 8      §__-19  Meetings; notice.  The chairperson may call a
 
 9 meeting of the board of trustees at any time by giving at least
 
10 seven days' written notice of the time and place of the meeting
 
11 to all other trustees.  Any two trustees may call a meeting of
 
12 the board by giving at least ten days' written notice of the time
 
13 and place to all other trustees.  A meeting of the board may be
 
14 called at any time without notice if all trustees agree.
 
15      §  -20  Quorum.  A quorum shall consist of six trustees,
 
16 three of whom shall be employer representatives and three of whom
 
17 shall be union representatives.
 
18      §  -21  Voting power; majority.  Each trustee shall have one
 
19 vote.  Any action taken shall be by a simple majority of trustees
 
20 present at a meeting.
 
21      §  -22  Records and minutes.  The board of trustees shall
 
22 keep records and minutes of all meetings of the board.
 
23          HAWAII EMPLOYER-UNION HEALTH BENEFIT TRUST FUND
 

 
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 1      §  -23  Establishment of the fund.  There is established
 
 2 outside the state treasury, a trust fund to be known as the
 
 3 "Hawaii Employer-Union Health Benefit Trust Fund."  The fund
 
 4 shall consist of contributions, interest, income, dividends,
 
 5 refunds, rate credits and other returns.  The fund shall be under
 
 6 the control of the board and placed under the department of
 
 7 budget and finance for administrative purposes.
 
 8      §  -24 Purpose of the fund.(a)  The fund shall be used for
 
 9 the purpose of providing employee-beneficiaries and dependent-
 
10 beneficiaries with a health benefits plan, a long-term care
 
11 benefits plan, and to pay administrative and other expenses of
 
12 the trust fund; provided that the fund, including rate credits or
 
13 reimbursements from any carrier or self-insured plan or any
 
14 earning or interest derived therefrom, and any earnings on
 
15 investments, may be used to stabilize health benefits plan or
 
16 long-term care benefits plan rates, and with the approval of the
 
17 governor and the legislature fund administrative and other
 
18 expenses necessary to effectuate these purposes.
 
19      (b)  To the extent that contributions are provided for group
 
20 life insurance benefits in sections   -25,   -26,   -27,   -28,
 
21 and   -30, the fund may also be used for the purpose of providing
 
22 group life insurance benefits to employees.
 
23      (c)  To the extent that contributions are received from
 

 
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 1 employee-beneficiaries and qualified-beneficiaries for long-term
 
 2 care insurance benefits under section   -33, the fund may also be
 
 3 used for the purpose of providing long-term care insurance
 
 4 benefits to eligible participants.
 
 5      (d)  The fund may assist the State and the counties to
 
 6 implement and administer cafeteria plans authorized under section
 
 7 125 of the Internal Revenue Code of 1986, as amended, and under
 
 8 part II of chapter 78.
 
 9      §  -25  State and County contributions to the fund, active
 
10 employees.(a)  The State through the department of budget and
 
11 finance and the several counties through their respective
 
12 departments of finance shall pay to the fund a monthly
 
13 contribution equal to the amount established under chapter 89C or
 
14 specified in the applicable public sector collective bargaining
 
15 agreements, whichever is appropriate, for each of their
 
16 respective employee-beneficiaries and employee-beneficiaries with
 
17 dependent-beneficiaries, which shall be used toward the payment
 
18 of costs of a health benefits plan; provided that the monthly
 
19 contribution is a specified dollar amount and provided further
 
20 that the monthly contribution shall not exceed the actual cost of
 
21 a health benefits plan.  If both husband and wife are employee-
 
22 beneficiaries, the total contribution by the State or the
 
23 appropriate county shall not exceed monthly contribution of a
 

 
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 1 family plan for both of them.  If, however, the State or any of
 
 2 the several counties establish cafeteria plans in accordance with
 
 3 section 125 of the Internal Revenue Code of 1986, as amended, and
 
 4 part II of chapter 78, the monthly contribution to the fund for
 
 5 those employee-beneficiaries who participate in a cafeteria plan
 
 6 shall be made through the cafeteria plan.  In this event, the
 
 7 payments made by the State or the counties shall include the
 
 8 State's and the counties' respective contributions to the fund
 
 9 and the employee-beneficiary's share of the cost of the health
 
10 benefits plan selected and authorized by the employee-beneficiary
 
11 through the cafeteria plan.
 
12      (b)  The State through the department of budget and finance
 
13 and the several counties through their respective departments of
 
14 finance shall pay to the fund a monthly contribution equal to the
 
15 amount established under chapter 89C or specified in the
 
16 applicable public sector collective bargaining agreement,
 
17 whichever is applicable, for each of their respective employees,
 
18 to be used towards the payment of group life insurance benefits
 
19 for each employee.
 
20      (c)  Contributions made by the State or the several counties
 
21 shall not be considered as wages or salary of an employee-
 
22 beneficiary, and no employee-beneficiary shall have any vested
 
23 right in or be entitled to receive any part of any contribution
 

 
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 1 made to the fund.
 
 2      §  -26  State and County contributions to the fund, retired
 
 3 employees.(a)  Notwithstanding any law to the contrary, this
 
 4 section shall apply to state and county contributions to the fund
 
 5 for:
 
 6      (1)  The beneficiary of an employee who is killed in the
 
 7           performance of duty;
 
 8      (2)  An employee-beneficiary who retired after June 30,
 
 9           1984, due to a disability as defined in sections 88-79
 
10           and 88-285;
 
11      (3)  An employee-beneficiary who retired before July 1,
 
12           1984;
 
13      (4)  An employee-beneficiary who:
 
14           (A)  Was hired before July 1, 1996;
 
15           (B)  Retired after June 30, 1984; and
 
16           (C)  Who had ten years or more of credited service,
 
17                excluding sick leave; and
 
18      (5)  An employee-beneficiary who was hired after June 30,
 
19           1996, and who retired with twenty-five or more years of
 
20           credited service, excluding sick leave, except as
 
21           provided in section   -30;
 
22 or upon their death their beneficiary except as provided in
 
23 section   -29, including employees who retired prior to 1961 and
 

 
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 1 their beneficiaries.
 
 2      (b)  Effective July 1, 2002, there is established a base
 
 3 monthly contribution for health benefit plans which the State
 
 4 through the department of budget and finance and the several
 
 5 counties through their respective departments of finance shall
 
 6 pay to the fund, up to the following:
 
 7      (1)  $_____ for employee-beneficiaries enrolled in
 
 8           supplemental medicare self plans;
 
 9      (2)  $_____ for employee-beneficiaries enrolled in
 
10           supplemental medicare family plans;
 
11      (3)  $_____ for employee-beneficiaries enrolled in non-
 
12           medicare self plans; or
 
13      (4)  $_____ for employee-beneficiaries enrolled in non-
 
14           medicare family plans;
 
15 provided the monthly contribution shall not exceed the actual
 
16 cost of the health benefits plan or plans; and provided further
 
17 if both husband and wife are employee-beneficiaries, the total
 
18 contribution by the State or the appropriate county shall not
 
19 exceed the monthly contribution of a family supplemental medicare
 
20 or family non-medicare plan, as appropriate.
 
21      The base composite monthly contribution shall be annually
 
22 adjusted beginning July 1, 2003.  The adjusted base composite
 
23 monthly contribution for each new plan year shall be calculated
 

 
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 1 by adjusting the base composite monthly contribution in effect
 
 2 through the end of the previous plan year by the change in the
 
 3 medical care component of the Honolulu Consumer Price Index (CPI)
 
 4 for all urban consumers.  The change in the medical care
 
 5 component of the CPI shall be based on the CPI reported as of
 
 6 December 31st of each calendar year.
 
 7      (c)  Effective July 1, 2002, there is established a base
 
 8 monthly contribution of $_____ for each retired employee enrolled
 
 9 in a group life insurance plan.  The base composite monthly
 
10 contribution shall be annually adjusted beginning July 1, 2003.
 
11 The adjusted base composite monthly contribution for each new
 
12 plan year shall be calculated by adjusting the base composite
 
13 monthly contribution in effect through the end of the previous
 
14 plan year by the change in the medical care component of the
 
15 Honolulu Consumer Price Index (CPI) for all urban consumers.  The
 
16 change in the medical care component of the CPI shall be based on
 
17 the CPI reported as of December 31st of each calendar year.
 
18      (d)  Contributions made by the State or the several counties
 
19 shall not be considered as wages or salary of an employee-
 
20 beneficiary, and no employee-beneficiary shall have any vested
 
21 right in or be entitled to receive any part of any contribution
 
22 made to the fund.
 
23      §  -27  State and County contributions to the fund; retired
 

 
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                                     H.B. NO.           
                                            
                                                        


 1 employees with fewer than ten years of service.(a)  This
 
 2 section shall apply to state and county contributions to the fund
 
 3 for employees specified in section   -1(A)(v), except those hired
 
 4 after June 30, 1996 under sections   -28 and   -30, who retire
 
 5 after June 30, 1984, with fewer than ten years of credited
 
 6 service, excluding sick leave.
 
 7      (b)  The State through the department of budget and finance
 
 8 and the several counties through their respective departments of
 
 9 finance shall pay to the fund a monthly contribution equal to
 
10 one-half of the base monthly contribution setforth under section
 
11 -26(a) for retired employee's enrolled in Medicare or non-
 
12 Medicare health benefit plans.  If both husband and wife are
 
13 employee-beneficiaries, the total contribution by the State or
 
14 the appropriate county shall not exceed the monthly contribution
 
15 of a family plan for both of them.
 
16      (c)  The State through the department of budget and finance
 
17 and the several counties through their respective departments of
 
18 finance shall pay to the fund a base monthly contribution as
 
19 setforth in section   -26(c) for each retired employee enrolled
 
20 in the fund's group life insurance benefits plan under this
 
21 section.
 
22      (d)  Contributions made by the State or the several counties
 
23 shall not be considered as wages or salary of an employee-
 

 
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                                     H.B. NO.           
                                            
                                                        


 1 beneficiary, and no employee-beneficiary shall have any vested
 
 2 right in or be entitled to receive any part of any contribution
 
 3 made to the fund.
 
 4      §  -28  State and County contributions to the fund;
 
 5 employees hired after June 30, 1996, and retired with fewer than
 
 6 twenty-five years of service.(a)  This section shall apply to
 
 7 state and county contributions to the fund for employees who were
 
 8 hired after June 30, 1996, and who retire with fewer than twenty-
 
 9 five years of credited service, excluding sick leave; provided
 
10 that this section shall not apply if an employee is hired prior
 
11 to July 1, 1996, and transfers employment after June 30, 1996 nor
 
12 to any employee who has at least ten years of credited service
 
13 and who has suffered a break in service.  For purposes of this
 
14 section "transfer" means to leave state or county employment and
 
15 return to state or  county employment within ninety calendar
 
16 days.
 
17      (b)  For purposes of this section, if an employee leaves
 
18 state or county employment and returns to state or county
 
19 employment after June 30, 1996, when the employee retires, the
 
20 employee's years of service shall be computed in the same manner
 
21 as set forth in chapter 88.
 
22      (c)  The State, through the department of budget and finance
 
23 and the several counties through their respective departments of
 

 
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                                     H.B. NO.           
                                            
                                                        


 1 finance, shall pay to the fund a monthly contribution equal to
 
 2 one-half of the base monthly contribution setforth under section
 
 3 -26(a) for retired employee's enrolled in medicare or non-
 
 4 medicare health benefit plans with ten or more years but fewer
 
 5 than fifteen years of service; and seventy-five per cent of the
 
 6 base monthly contribution setforth under section   -26(a) for
 
 7 retired employee's enrolled in medicare or nonmedicare health
 
 8 benefit plans with at least fifteen but fewer than twenty-five
 
 9 years of service.  If both husband and wife are employee-
 
10 beneficiaries, the total contribution by the State or the
 
11 appropriate county, after an employee's retirement pursuant to
 
12 this section, shall not exceed the monthly contribution of a
 
13 family plan for both of them.
 
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
 
17 the base monthly contribution as setforth in section   -26(c) for
 
18 each retired employee enrolled in the fund's group life insurance
 
19 benefits plan under this section.
 
20      (e)  Contributions made by the State or the several counties
 
21 shall not be considered as wages or salary of an employee-
 
22 beneficiary, and no employee-beneficiary shall have any vested
 
23 right in or be entitled to receive any part of any contribution
 

 
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                                     H.B. NO.           
                                            
                                                        


 1 made to the fund.
 
 2      §  -29  State and County contributions to the fund;
 
 3 employees retiring after December 31, 2001, reduced survivor
 
 4 benefits.  This section shall apply to state and county
 
 5 contributions to the fund for employees retiring after December
 
 6 31, 2001.  The State through the department of budget and finance
 
 7 and the several counties through their respective departments of
 
 8 finance shall pay to the fund monthly contributions for the
 
 9 retired employee whether enrolled in a self or family plan as
 
10 specified in sections   -26,   -27,   -28 and   -30, except that
 
11 one-half of the monthly contributions for the employee-
 
12 beneficiary or employee-beneficiary with dependent-beneficiaries
 
13 shall be paid once the employee, as specified in section
 
14 -1(A)(v), is deceased.
 
15      §  -30  State and County contributions to the fund;
 
16 employees hired after June 30, 2000 and retired.(a)  This
 
17 section shall apply to state and county contributions to the fund
 
18 for employees who were hired after June 30, 2000, and who
 
19 retired, except that this section shall not apply if an employee
 
20 is hired prior to July 1, 2000, and transfers employment after
 
21 June 30, 2000, nor to any employee who has at least ten years of
 
22 credited service and who has suffered a break in service.  For
 
23 the purposes of this section "transfer" means to leave state or
 

 
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                                     H.B. NO.           
                                            
                                                        


 1 county employment and return to state or county employment within
 
 2 ninety calendar days.
 
 3      (b)  For purposes of this section, if an employee leaves
 
 4 state or county employment and returns to state or county
 
 5 employment after the effective date of this Act, then the
 
 6 employee's years of service shall be computed in the same manner
 
 7 as set forth in chapter 88.
 
 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
 
11 one-half of the the base medicare or non-medicare monthly
 
12 contribution setforth under section   -26(a) for retired
 
13 employees based on the self plan with ten or more years but fewer
 
14 than fifteen years of service; and seventy-five per cent of the
 
15 base medicare or non-medicare monthly contribution setforth under
 
16 section   -26(a) for retired employees based on the self plan
 
17 with at least fifteen but fewer than twenty-five years of
 
18 service; and one-hundred per cent of the base medicare or non-
 
19 medicare monthly contribution setforth under section   -26(a) for
 
20 retired employees based on the self plan with twenty five or more
 
21 years of service.  If both husband and wife are employee-
 
22 beneficiaries, the total contribution by the State or the
 
23 appropriate county, after an employee's retirement pursuant to
 

 
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                                     H.B. NO.           
                                            
                                                        


 1 this section, shall not exceed the monthly contribution of two
 
 2 self plans.  If the employee-beneficiary and the spouse are state
 
 3 or county retired employees, the total contribution by the State
 
 4 or the appropriate county, after an employee-beneficary's
 
 5 retirement pursuant to this section, shall not exceed the monthly
 
 6 contribution of two self plans.
 
 7      (d)  The State, through the department of budget and finance
 
 8 and the several counties through their respective departments of
 
 9 finance, shall pay to the fund a monthly contribution equal to
 
10 the base monthly contribution as setforth in section   -26(c)for
 
11 each retired employee enrolled in the fund's group life insurance
 
12 benefits plan under this section.
 
13      (e)  Contributions made by the State or the several counties
 
14 shall not be considered as wages or salary of an employee-
 
15 beneficiary, and no employee-beneficiary shall have any vested
 
16 right in or be entitled to receive any part of any contribution
 
17 made to the fund.
 
18      §  -31  Reimbursement for state contributions.  All state
 
19 agencies having control of special funds shall reimburse the
 
20 State for contributions made by the State pursuant to sections
 
21 -25,   -26,   -27,   -28,   -29, and   -30 on account of the
 
22 employees in the agencies whose compensation is paid in whole or
 
23 part from the special funds.  All state and county agencies
 

 
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                                     H.B. NO.           
                                            
                                                        


 1 receiving federal funds, which may be expended for the purpose of
 
 2 absorbing the contributions payable by the State to the fund,
 
 3 shall set aside a portion of the federal funds sufficient to
 
 4 reimburse the State for contributions made by the State pursuant
 
 5 to sections   -25,   -26,   -27,   -28,   -29, and   -30 on
 
 6 account of the employees in the agencies whose compensation is
 
 7 paid in whole or part from federal funds.
 
 8      §  -32  Contributions by an employee-beneficiary for health
 
 9 benefit plans.(a)  Each employee-beneficiary shall make a
 
10 monthly contribution to the fund amounting to the difference
 
11 between the monthly charge of the health benefits plan selected
 
12 by the employee-beneficiary and the State's and county's
 
13 contribution to the fund.  Nothing in this section shall prohibit
 
14 any employee-beneficiary from participating in a cafeteria plan
 
15 authorized under section 125 of the Internal Revenue Code of
 
16 1986, as amended, and part II of chapter 78.
 
17      (b)  During the period the health benefits plan selected by
 
18 an employee-beneficiary is in effect, the employee-beneficiary
 
19 shall authorize, if otherwise allowed by law, the employee-
 
20 beneficiary's contribution to be withheld and transmitted to the
 
21 fund monthly by the comptroller, employees' retirement system of
 
22 the State of Hawaii, or finance officer who disburses the
 
23 employee-beneficiary's compensation, pension, or retirement pay.
 

 
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                                     H.B. NO.           
                                            
                                                        


 1 If, however, an employee-beneficiary's contribution to the fund
 
 2 is not withheld and transmitted to the fund, the employee-
 
 3 beneficiary shall pay the monthly contribution (1) directly to
 
 4 the fund by the first day of each month, in the case of an
 
 5 employee-beneficiary who normally receives the employee-
 
 6 beneficiary's compensation from the comptroller of the State, or
 
 7 employees' retirement system of the State of Hawaii, or (2) in
 
 8 the case of all other employee-beneficiaries, to the respective
 
 9 finance officer from whom the employee-beneficiary normally
 
10 receives compensation for transmittal to the fund by the first
 
11 day of each month.
 
12      (c)  Subsection (a) notwithstanding, an employee-
 
13 beneficiary's monthly contribution to the fund, amounting to the
 
14 difference between the monthly cost of the health benefits plan
 
15 selected by the employee-beneficiary and the State's or
 
16 appropriate county's contribution to the fund, shall be deemed to
 
17 include the amount which would have been the employee-
 
18 beneficiary's contribution if the employee-beneficiary had not
 
19 elected to participate in the cafeteria plan.
 
20      §  -33  Contributions by an employee-beneficiary or
 
21 qualified-beneficiary for long-term care benefits plan.(a)
 
22 During the period the long-term care benefits plan is in effect,
 
23 the employee-beneficiary shall authorize, if otherwise allowed by
 

 
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                                     H.B. NO.           
                                            
                                                        


 1 law, the employee-beneficiary's contribution to be withheld and
 
 2 transmitted to the fund monthly by the comptroller or finance
 
 3 officer who disburses the employee-beneficiary's compensation,
 
 4 pension, or retirement pay.  If, however, an employee-
 
 5 beneficiary's monthly contribution to the fund is not withheld
 
 6 and transmitted to the fund, the employee-beneficiary shall pay
 
 7 the monthly contribution directly to the board's designated
 
 8 carrier or third-party administrator by the first day of each
 
 9 month.
 
10      (b)  Qualified-beneficiaries shall pay monthly contributions
 
11 directly to the board's designated carrier or third-party
 
12 administrator by the first day of each month.
 
13      SECTION 2.  Section 87-28, Hawaii Revised Statutes, is
 
14 amended to read as follows:
 
15      "§87-28  Other powers.  In addition to the power to
 
16 administer the fund, the board of trustees may:
 
17      (1)  Collect, receive, deposit, withdraw and invest money in
 
18           behalf of the fund;
 
19      (2)  Appoint an administrator [and ]who shall be exempt from
 
20           chapters 76 and 77 and serve under and at the pleasure
 
21           of the board.  The board of trustees may appoint staff
 
22           necessary to carry out this chapter, subject to the
 
23           limitation of available appropriations and chapters 76
 

 
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                                     H.B. NO.           
                                            
                                                        


 1           and 77 and section 78-1;
 
 2      (3)  Make payments of periodic charges and pay for
 
 3           reasonable expenses incurred to carry out the purposes
 
 4           of the fund; or
 
 5      (4)  Require any department, agency, or employee of the
 
 6           State and county to furnish information to the board to
 
 7           carry out the purposes of this chapter."
 
 8      SECTION  3.  Chapter 87, Hawaii Revised Statutes, is
 
 9 repealed.
 
10      SECTION 4.  Effective July 1, 2002, all positions and
 
11 employees of the Hawaii public employees health fund who are
 
12 subject to chapter 76 and 77, Hawaii Revised Statutes, shall be
 
13 transferred to the Hawaii employer-union health benefit trust.
 
14 All officers and employees whose functions are transferred by
 
15 this Act shall be transferred with their functions and shall
 
16 continue to perform their regular duties upon their transfer,
 
17 subject to the state personnel laws and this Act.
 
18      All civil service positions and incumbents of the Hawaii
 
19 public employees health fund transferred by this Act shall remain
 
20 in the civil service and subject to chapters 76 and 77, Hawaii
 
21 Revised Statutes, provided that in the event the civil service
 
22 administrator position becomes vacant prior to July 1, 2002, its
 
23 successor shall be appointed pursuant to §87-28 as amended in
 

 
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                                     H.B. NO.           
                                            
                                                        


 1 section 2 of this Act.  When such positions are vacated on or
 
 2 after July 1, 2002, the positions shall be exempt from civil
 
 3 service and prospective appointments shall be made pursuant to
 
 4 section 1 of this Act.
 
 5      No officer or employee of the State having tenure shall
 
 6 suffer any loss of salary, seniority, prior service credit,
 
 7 vacation, sick leave, or other employee benefit or privilege as a
 
 8 consequence of this Act, and such officer or employee may be
 
 9 transferred or appointed to a civil service position without the
 
10 necessity of examination; provided that the officer or employee
 
11 possesses the minimum qualifications for the position to which
 
12 transferred or appointed; and provided that subsequent changes in
 
13 status may be made pursuant to the applicable civil service and
 
14 compensation laws.
 
15      In the event that an office or position held by an officer
 
16 or employee having tenure is abolished, the officer or employee
 
17 shall not thereby be separated from public employment, but shall
 
18 remain in the employment of the State with the same pay and
 
19 classification and shall be transferred to some other office or
 
20 position for which the officer or employee is eligible under the
 
21 personnel laws of the State as determined by the head of the
 
22 department or the governor.
 
23      SECTION 5.  All appropriations, assets, including funds to
 

 
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                                     H.B. NO.           
                                            
                                                        


 1 be refunded to employees and any funds in benefit plans and
 
 2 cafeteria plans, records, equipment, machines, computer software
 
 3 and hardware, files, supplies, contracts, books, papers,
 
 4 documents, maps, and other personal property heretofore made,
 
 5 used, acquired, or held by the Hawaii public employees health
 
 6 fund shall be transferred to the Hawaii employer-union health
 
 7 benefit trust, effective July 1, 2002.
 
 8      SECTION 6.  The governor shall appoint all members of the
 
 9 board of trustees of the Hawaii employer-union health benefit
 
10 trust no later than December 29, 2000.  Upon appointment, the
 
11 board of trustees may develop and issue rules, polices and
 
12 procedures and contract for health benefits plans and group life
 
13 insurance plans which shall become effective on July 1, 2002.
 
14 The board of trustees and the administrator of the Hawaii public
 
15 employees health fund shall give necessary assistance to the
 
16 members of the Hawaii employer-union health benefit trust during
 
17 the transition.
 
18      SECTION 7.  Notwithstanding Chapter 103D, the board of
 
19 trustees of the Hawaii public employees health fund under chapter
 
20 87 is authorized to extend current health benefit and life
 
21 insurance plan contracts through June 30, 2002.
 
22      SECTION 8.  There is appropriated out of the general
 
23 revenues of the State of Hawaii the sum of $__________, or so
 

 
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                                     H.B. NO.           
                                            
                                                        


 1 much thereof as may be necessary for fiscal year 2000-2001 to
 
 2 carry out the purposes of this Act, including the hiring of
 
 3 necessary staff.  This appropriation shall not lapse at the end
 
 4 of the fiscal year for which the appropriation is made; provided
 
 5 that all moneys from the appropriation that are unencumbered as
 
 6 of June 30, 2002, shall lapse as of that date. The sum
 
 7 appropriated shall be expended by the department of budget and
 
 8 finance.
 
 9      SECTION 9.  Statutory material to be repealed is bracketed.
 
10 New statutory material is underscored.
 
11      SECTION 10.  The Act shall take effect upon approval;
 
12 provided section 3 shall become effective July 1, 2002; provided
 
13 section 8 shall become effective July 1, 2000; and provided
 
14 further that all rules governing the Hawaii public employees
 
15 health fund under chapter 87, Hawaii Revised Statutes, if not
 
16 contrary to this Act, shall remain in effect until such time that
 
17 the Hawaii employer-union health benefit trust adopts new rules.
 
18 
 
19                           INTRODUCED BY:_________________________
 

 
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