REPORT TITLE:
Public Employee Health Benefits


DESCRIPTION:
Creates an employer-union trust fund as a single public employees
health benefits delivery system administered by a board of
directors and held outside the state treasury.  (SB2802 HD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2802
THE SENATE                              S.B. NO.           S.D. 1
TWENTIETH LEGISLATURE, 2000                                H.D. 1
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 BENEFITS TRUST FUND
 
 6                       PART I.  DEFINITIONS
 
 7      §  -1 Definitions.  As used in this chapter:
 
 8      "Board" or "board of directors" means the board of directors
 
 9 of the Hawaii employer-union health benefits trust established in
 
10 section    -18.
 
11      "Carrier" means a voluntary association, corporation,
 
12 partnership, or organization engaged in providing, paying for,
 
13 arranging for, or reimbursing the cost of health or long-term
 
14 care services under group insurance contracts or medical,
 
15 hospital, or dental services agreements.
 
16      "Contributions" means money payments made to the fund by the
 
17 State or the several counties or an employee-beneficiary or
 
18 qualified-beneficiary.
 
19      "Dependent-beneficiary" means:
 
20      (1)  An employee-beneficiary's spouse;
 

 
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 1      (2)  Any unmarried child deemed eligible by the board,
 
 2           including a legally adopted child, stepchild, foster
 
 3           child, or recognized natural child who lives with the
 
 4           employee-beneficiary; and
 
 5      (3)  Any unmarried child regardless of age who is incapable
 
 6           of self-support because of a mental or physical
 
 7           incapacity which existed prior to the unmarried child's
 
 8           reaching the age of nineteen years.
 
 9      "Employee" means an employee or officer of the State, county
 
10 government, or legislature:
 
11      (1)  Including:
 
12           (A)  An elective officer or a person who has served as
 
13                a member of the legislature for at least ten
 
14                years;
 
15           (B)  A per diem employee;
 
16           (C)  An officer or employee under an authorized leave
 
17                of absence;
 
18           (D)  An employee of the Hawaii national guard although
 
19                paid from federal funds;
 
20           (E)  A retired member of the employees' retirement
 
21                system, the county pension system, or the police,
 
22                firefighters, or bandsmen pension system of the
 
23                State or county;
 

 
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 1           (F)  A salaried and full-time member of a board,
 
 2                commission, or agency appointed by the governor or
 
 3                the mayor of a county; and
 
 4           (G)  A person employed by contract for a period not
 
 5                exceeding one year, where the director of human
 
 6                resources development, personnel services, or
 
 7                civil service has certified that the service is
 
 8                essential or needed in the public interest and
 
 9                that, because of circumstances surrounding its
 
10                fulfillment, personnel to perform the service
 
11                cannot be obtained through normal civil service
 
12                recruitment procedures;
 
13           and
 
14      (2)  Excluding:
 
15           (A)  A designated beneficiary of a retired member of
 
16                the employees' retirement system, the county
 
17                pension system, or the police, firefighters, or
 
18                bandsmen pension system of the State or county;
 
19           (B)  Except as allowed under paragraph (1)(G), a person
 
20                employed temporarily on a fee or contract basis;
 
21                and
 
22           (C)  A person employed for less than three months and
 

 
 
 
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 1                whose employment is less than one-half of a full-
 
 2                time equivalent position.
 
 3      "Employee-beneficiary" means an employee, the beneficiary of
 
 4 an employee who is killed in the performance of the employee's
 
 5 duty, an employee who retired prior to 1961, or the beneficiary
 
 6 of a retired member of the employees' retirement system, a county
 
 7 pension system, or a police, firefighters, or bandsmen pension
 
 8 system of the State or county, upon the death of the retired
 
 9 member and, which beneficiary, if a child is unmarried and under
 
10 the age of nineteen, or if a surviving spouse, does not remarry;
 
11 provided that the employee, the employee's beneficiary, or the
 
12 beneficiary of the deceased retired member is deemed eligible by
 
13 the board to receive health benefits plan or a long-term care
 
14 benefits plan.
 
15      "Fund" means the Hawaii employer-union health benefits trust
 
16 fund established in section     -2.
 
17      "Health benefits plan" means:
 
18      (1)  A group insurance contract or service agreement that
 
19           may include medical, hospital, surgical, prescribed
 
20           drugs, vision, and dental services, in which a carrier
 
21           agrees to provide, pay for, arrange for, or reimburse
 
22           the cost of medical, hospital, surgical, prescribed
 

 
 
 
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 1           drugs, vision, or dental services as determined by the
 
 2           board; or
 
 3      (B)  A similar schedule of benefits established by the board
 
 4           and provided through the fund on a self-insured basis.
 
 5      "Long-term care benefits plan" means:
 
 6      (1)  A group insurance contract or service agreement in
 
 7           which a carrier agrees to provide, pay for, arrange
 
 8           for, or reimburse the cost of long-term care benefits
 
 9           as determined by the board; or
 
10      (2)  A similar schedule of benefits established by the board
 
11           and provided through the fund on a self-insured basis.
 
12      "Periodic charge" means the periodic payment by the board to
 
13 a carrier for any health benefits, or long-term care benefits
 
14 plan.
 
15      "Qualified-beneficiary" means, for purposes of the long-term
 
16 care benefits plan, a former employee or an employee who is not
 
17 eligible for benefits due to a reduction in work hours including
 
18 the employee's spouse or a divorced spouse of an employee or
 
19 retiree; provided that the qualified beneficiary was enrolled in
 
20 the plan prior to loss of benefits.
 
21      "Trustee" means a trustee of the board of trustees of the
 
22 Hawaii employer-union health benefits trust fund established in
 
23 section     -13.
 

 
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 1                       PART II.  TRUST FUND
 
 2      §  -2 The Hawaii employer-union health benefits trust
 
 3 fund; establishment.  There is established outside the state
 
 4 treasury, a trust fund to be known as the "Hawaii employer-union
 
 5 health benefits trust fund."  The fund shall consist of
 
 6 contributions, interest, income, dividends, refunds, rate
 
 7 credits, and other returns.  The fund shall be under the control
 
 8 of the board and placed under the department of budget and
 
 9 finance for administrative purposes.
 
10      §  -3 Purpose of trust 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, and to pay administrative and other
 
14 expenses of the trust fund; provided that the fund, including
 
15 rate credits or reimbursements from any carrier or self-insured
 
16 plan or any earning or interest derived therefrom, and any
 
17 earnings on investments, may be used to stabilize health benefits
 
18 plan or long-term care benefits plan rates, and, with the
 
19 approval of the governor and the legislature, fund administrative
 
20 and other expenses necessary to effectuate these purposes.
 
21      (b)  To the extent that contributions are provided for group
 
22 life insurance benefits in sections     -4,     -5,     -6,
 
23     -7, and     -9, the fund may also be used for the purpose of
 

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

 
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 1 beneficiaries, the total contribution by the State or the
 
 2 appropriate county shall not exceed the monthly contribution of a
 
 3 family plan for both of them.  If, however, the State or any of
 
 4 the several counties establish cafeteria plans in accordance with
 
 5 section 125 of the Internal Revenue Code of 1986, as amended, and
 
 6 part II of chapter 78, the monthly contribution to the fund for
 
 7 those employee-beneficiaries who participate in a cafeteria plan
 
 8 shall be made through the cafeteria plan.  In this event, the
 
 9 payments made by the State or the counties shall include the
 
10 State's and the counties' respective contributions to the fund
 
11 and the employee-beneficiary's share of the cost of the health
 
12 benefits plan selected and authorized by the employee-beneficiary
 
13 through the cafeteria plan.
 
14      (b)  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 amount established under chapter 89C or specified in the
 
18 applicable public sector collective bargaining agreement,
 
19 whichever is applicable, for each of their respective employees,
 
20 to be used towards the payment of group life insurance benefits
 
21 for each employee.
 
22      (c)  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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 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      §  -5 State and county contributions to the fund, retired
 
 5 employees.(a)  Notwithstanding any law to the contrary, this
 
 6 section shall apply to state and county contributions to the fund
 
 7 for:
 
 8      (1)  The beneficiary of an employee who is killed in the
 
 9           performance of duty;
 
10      (2)  An employee-beneficiary who retired after June 30,
 
11           1984, due to a disability as defined in sections 88-79
 
12           and 88-285;
 
13      (3)  An employee-beneficiary who retired before July 1,
 
14           1984;
 
15      (4)  An employee-beneficiary who:
 
16           (A)  Was hired before July 1, 1996;
 
17           (B)  Retired after June 30, 1984; and
 
18           (C)  Who had ten years or more of credited service,
 
19                excluding sick leave;
 
20           and
 
21      (5)  An employee-beneficiary who was hired after June 30,
 
22           1996, and who retired with twenty-five or more years of
 
23           credited service, excluding sick leave, except as
 
24           provided in section     -9;
 

 
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 1 or upon their death their beneficiary except as provided in
 
 2 section     -8, including employees who retired prior to 1961 and
 
 3 their beneficiaries.
 
 4      (b)  Effective July 1, 2002, there is established a base
 
 5 monthly contribution for health benefit plans which the State
 
 6 through the department of budget and finance and the several
 
 7 counties through their respective departments of finance shall
 
 8 pay to the fund, up to the following:
 
 9      (1)  $     for employee-beneficiaries enrolled in
 
10           supplemental medicare self plans;
 
11      (2)  $     for employee-beneficiaries enrolled in
 
12           supplemental medicare family plans;
 
13      (3)  $     for employee-beneficiaries enrolled in non-
 
14           medicare self plans; or
 
15      (4)  $     for employee-beneficiaries enrolled in non-
 
16           medicare family plans;
 
17 provided the monthly contribution shall not exceed the actual
 
18 cost of the health benefits plan or plans; and provided further
 
19 if both husband and wife are employee-beneficiaries, the total
 
20 contribution by the State or the appropriate county shall not
 
21 exceed the monthly contribution of a family supplemental medicare
 
22 or family non-medicare plan, as appropriate.
 

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

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

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

 
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 1      (c)  The State, through the department of budget and finance
 
 2 and the several counties through their respective departments of
 
 3 finance, shall pay to the fund a monthly contribution equal to
 
 4 one-half of the base monthly contribution set forth under section
 
 5     -5(a) for retired employee's enrolled in medicare or non-
 
 6 medicare health benefit plans with ten or more years but fewer
 
 7 than fifteen years of service; and seventy-five per cent of the
 
 8 base monthly contribution set forth under section     -5(a) for
 
 9 retired employee's enrolled in medicare or nonmedicare health
 
10 benefit plans with at least fifteen but fewer than twenty-five
 
11 years of service.  If both husband and wife are employee-
 
12 beneficiaries, the total contribution by the State or the
 
13 appropriate county, after an employee's retirement pursuant to
 
14 this section, shall not exceed the monthly contribution of a
 
15 family plan for both of them.
 
16      (d)  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 monthly contribution equal to
 
19 the base monthly contribution as set forth in section     -5(c)
 
20 for each retired employee enrolled in the fund's group life
 
21 insurance benefits plan under this section.
 
22      (e)  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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 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      §  -8 State and county contributions to the fund;
 
 5 employees retiring after December 31, 2001, reduced survivor
 
 6 benefits.  This section shall apply to state and county
 
 7 contributions to the fund for employees retiring after December
 
 8 31, 2001.  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 monthly contributions for the
 
11 retired employee whether enrolled in a self or family plan as
 
12 specified in sections     -5,    -6,     -7, and     -9, except
 
13 that one-half of the monthly contributions for the employee-
 
14 beneficiary or employee-beneficiary with dependent-beneficiaries
 
15 shall be paid once the employee, as specified in section
 
16     -1(1)(E), is deceased.
 
17      §  -9 State and county contributions to the fund;
 
18 employees hired after June 30, 2000, and retired.(a)  This
 
19 section shall apply to state and county contributions to the fund
 
20 for employees who were hired after June 30, 2000, and who
 
21 retired, except that this section shall not apply if an employee
 
22 is hired prior to July 1, 2000, and transfers employment after
 
23 June 30, 2000, nor to any employee who has at least ten years of
 

 
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 1 credited service and who has suffered a break in service.  For
 
 2 the purposes of this section, "transfer" means to leave state or
 
 3 county employment and return to state or county employment within
 
 4 ninety calendar days.
 
 5      (b)  For purposes of this section, if an employee leaves
 
 6 state or county employment and returns to state or county
 
 7 employment after the effective date of this Act, then the
 
 8 employee's years of service shall be computed in the same manner
 
 9 as set forth in chapter 88.
 
10      (c)  The State through the department of budget and finance
 
11 and the several counties through their respective departments of
 
12 finance shall pay to the fund a monthly contribution equal to
 
13 one-half of the the base medicare or non-medicare monthly
 
14 contribution set forth under section     -5(a) for retired
 
15 employees based on the self plan with ten or more years but fewer
 
16 than fifteen years of service; and seventy-five per cent of the
 
17 base medicare or non-medicare monthly contribution set forth
 
18 under section     -5(a) for retired employees based on the self
 
19 plan with at least fifteen but fewer than twenty-five years of
 
20 service; and one-hundred per cent of the base medicare or non-
 
21 medicare monthly contribution set forth under section     -5(a)
 
22 for retired employees based on the self plan with twenty five or
 
23 more years of service.  If both husband and wife are employee-
 

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

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

 
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 1 the State of Hawaii, or finance officer who disburses the
 
 2 employee-beneficiary's compensation, pension, or retirement pay.
 
 3 If, however, an employee-beneficiary's contribution to the fund
 
 4 is not withheld and transmitted to the fund, the employee-
 
 5 beneficiary shall pay the monthly contribution:
 
 6      (1)  Directly to the fund by the first day of each month, in
 
 7           the case of an employee-beneficiary who normally
 
 8           receives the employee-beneficiary's compensation from
 
 9           the comptroller of the State, or the employees'
 
10           retirement system of the State of Hawaii; or
 
11      (2)  In the case of all other employee-beneficiaries, to the
 
12           respective finance officer from whom the employee-
 
13           beneficiary normally receives compensation for
 
14           transmittal to the fund by the first day of each month.
 
15      (c)  Notwithstanding subsection (a) to the contrary, an
 
16 employee-beneficiary's monthly contribution to the fund,
 
17 amounting to the difference between the monthly cost of the
 
18 health benefits plan selected by the employee-beneficiary and the
 
19 State's or appropriate county's contribution to the fund, shall
 
20 be deemed to include the amount which would have been the
 
21 employee-beneficiary's contribution if the employee-beneficiary
 
22 had not elected to participate in the cafeteria plan.
 

 
 
 
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 1      §  -12  Contributions by an employee-beneficiary or
 
 2 qualified-beneficiary for long-term care benefits plan.(a)
 
 3 During the period the long-term care benefits plan is in effect,
 
 4 the employee-beneficiary shall authorize, if otherwise allowed by
 
 5 law, the employee-beneficiary's contribution to be withheld and
 
 6 transmitted monthly to the fund by the comptroller or finance
 
 7 officer who disburses the employee-beneficiary's compensation,
 
 8 pension, or retirement pay.  If, however, an employee-
 
 9 beneficiary's monthly contribution to the fund is not withheld
 
10 and transmitted to the fund, the employee-beneficiary shall pay
 
11 the monthly contribution directly to the board's designated
 
12 carrier or third-party administrator by the first day of each
 
13 month.
 
14      (b)  Qualified-beneficiaries shall pay monthly contributions
 
15 directly to the board's designated carrier or third-party
 
16 administrator by the first day of each month.
 
17                   PART III.  BOARD OF TRUSTEES
 
18      §  -13  Composition of board of trustees; establishment.
 
19 There is established the board of trustees of the Hawaii
 
20 employer-union health benefits trust fund.  The board of trustees
 
21 shall be composed of ten trustees to be appointed by the
 
22 governor, without regard to section 26-34, as follows:
 

 
 
 
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 1      (1)  Five trustees, one of whom shall represent retirees,
 
 2           appointed from a list of nominees submitted by
 
 3           exclusive employee representative organizations to
 
 4           represent public employees; and
 
 5      (2)  Five trustees to represent the public employer,
 
 6           including the director of human resources development,
 
 7           or a designated representative, and the director of
 
 8           finance, or a designated representative, and one
 
 9           representative of the counties on a rotational basis.
 
10      (b)  The trustees shall elect a chair, a vice-chair, and a
 
11 secretary-treasurer from among its members.
 
12      §  -14  Terms of trustees; vacancies.  (a)  Except for the
 
13 director of finance, the director of human resources development,
 
14 and the trustee or trustees representing the counties on a
 
15 rotational basis, the term of office of each trustee shall be
 
16 four years; provided that the trustee may be reappointed for one
 
17 additional consecutive four-year term.  The director of finance
 
18 and the director of human resources development shall serve
 
19 during the directors' terms of office as directors.  The trustee
 
20 representing the counties on a rotational basis shall be limited
 
21 to a term of four years.
 
22      (b)  Each term shall commence on January 1 and expire on
 
23 December 31.  The governor may reduce the terms of those
 

 
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 1 initially appointed so as to provide, as nearly as can be, for
 
 2 the expiration of an equal number of terms at intervals of one
 
 3 year.
 
 4      (c)  A vacancy on the board of trustees shall be filled by
 
 5 appointment of the governor.  The person appointed to fill a
 
 6 vacancy shall serve for the remainder of the term of the person's
 
 7 predecessor.
 
 8      (d)  If by the end of the trustee's term a trustee is not
 
 9 reappointed or the trustee's successor is not appointed, the
 
10 trustee shall serve until the trustee's successor is appointed.
 
11      §  -15  Compensation and expenses of a trustee.  Each
 
12 trustee shall serve without compensation, but may be reimbursed
 
13 from the fund for any necessary expenses made in behalf of the
 
14 fund.
 
15      §  -16  Legal adviser.  The attorney general shall serve
 
16 as legal adviser to the board of trustees of the Hawaii employer-
 
17 union health benefits trust fund.
 
18      §  -17  Power and duties of the board of trustees.  The
 
19 board of trustees shall:
 
20      (1)  Act in an advisory capacity to the Hawaii employer-
 
21           union health benefits trust fund;
 
22      (2)  Select the members of the board of directors;
 

 
 
 
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 1      (3)  Have the authority to remove any member or members of
 
 2           the board of directors, including all of them, who do
 
 3           not perform their duties to the expectations of the
 
 4           board of trustees or for any legitimate reason;
 
 5           provided that no member of the board of directors shall
 
 6           be removed without a majority vote of the full board of
 
 7           trustees agreeing to removal.
 
 8                   PART IV.  BOARD OF DIRECTORS
 
 9      §  -18   Board of directors; establishment.(a)  There is
 
10 established the board of directors of the Hawaii employer-union
 
11 health benefits trust fund.  The board shall be composed of three
 
12 directors to be appointed by the board of trustees, without
 
13 regard to section 26-34, as follows:
 
14      (1)  One member shall have substantial experience and
 
15           knowledge in the field of health care;
 
16      (2)  One member shall have substantial experience and
 
17           knowledge of the health care insurance industry or have
 
18           a comprehensive understanding of actuarial principles;
 
19           and
 
20      (3)  One member shall have legal experience or have
 
21           substantial knowledge and experience with the Employee
 
22           Retirement Income Security Act of 1974, as amended.
 

 
 
 
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 1      (b)  The board of trustees shall select one of the board of
 
 2 directors to serve as chair of the board of directors.
 
 3      §  -19  Terms of directors; vacancies.(a)  The term of
 
 4 each director shall be for four years; provided that a director
 
 5 may be appointed for one consecutive additional four-year term.
 
 6      (b)  Any vacancy on the board of directors shall be filled
 
 7 by appointment by the board of trustees.  The person appointed to
 
 8 fill a vacancy shall serve for the remainder of the term of the
 
 9 person's predecessor.
 
10      (c)  If by the end of the trustee's term a trustee is not
 
11 reappointed or the trustee's successor is not appointed, the
 
12 trustee shall serve until the trustee's successor is appointed.
 
13      §  -20  Compensation; bonus.  (a)  Each director shall be
 
14 compensated a base rate of $      per year for services rendered.
 
15      (b)  Each director may also qualify for a bonus in addition
 
16 to the annual base rate, depending on the performance of the
 
17 fund.  The bonus shall be based on the following:
 
18      (1)  Percentage of savings accrued by employers, employee-
 
19           beneficiaries, and qualified-beneficiaries from
 
20           contributions to each health benefits plan and long-
 
21           term care benefits plan.  This amount shall be
 
22           calculated by comparing the average monthly cost of
 
23           contributions by employers, employee-beneficiaries, and
 

 
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 1           qualified-beneficiaries to the Hawaii employer-union
 
 2           health benefits trust fund or the Hawaii public
 
 3           employees health fund during each fiscal year, in
 
 4           comparison to the average monthly cost of contributions
 
 5           made during the previous fiscal year;
 
 6      (2)  Percentage of savings accrued from administrative and
 
 7           investment expenses of the trust.  This amount shall be
 
 8           calculated by comparing how much is spent for
 
 9           administrative and investment expenses of the Hawaii
 
10           employer-union health benefits trust fund or the Hawaii
 
11           public employees health fund during each fiscal year,
 
12           and in comparison to the amount expended for
 
13           administrative and investment expenses during the
 
14           previous fiscal year;
 
15      (3)  Percentage of growth of the reserves of the Hawaii
 
16           employer-union health benefits trust fund.  This amount
 
17           shall be calculated on an annual basis.
 
18      (c)  The bonus for each director shall be the sum of the
 
19 following:
 
20      (1)  The percentage of savings accrued from fund
 
21           contributions under subsection (b)(1) multiplied by
 
22              ;
 

 
 
 
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 1      (2)  The percentage of savings accrued from administrative
 
 2           and investment expenses under subsection (b)(2)
 
 3           multiplied by    ; and
 
 4      (3)  The percentage of growth of the fund reserves under
 
 5           subsection (b)(3) multiplied by    .
 
 6      §  -21  Legal advisor.  The attorney general shall serve
 
 7 as legal advisor to the board of directors of the Hawaii
 
 8 employer-union health benefits trust fund.
 
 9      §  -22  Administration of the fund.  The board of
 
10 directors shall administer and carry out the purpose of the fund.
 
11 The board of directors shall provide quality health and other
 
12 benefit plans at a cost affordable to both the public employers
 
13 and the public employees.
 
14      §  -23  Determine health benefits plan; contract with
 
15 carriers; benefit plan eligibility.(a)  The board shall
 
16 determine the health benefits plan or plans, which shall be
 
17 excepted from the minimum group requirements of chapter 431.
 
18      (b)  The board may contract for health benefits plans or
 
19 provide health benefits through a non-insured schedule of
 
20 benefits.
 
21      (c)  The board shall determine the requirements for
 
22 eligibility under the health benefits plans.
 

 
 
 
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 1      §  -24  Determination of benefits under the group life
 
 2 benefit program or group life insurance program.  The board may
 
 3 provide benefits under a group life benefit program or group life
 
 4 insurance program to employees.
 
 5      §  -25  Determination of long-term care benefits plan;
 
 6 contract with carrier or third-party administrator.(a)  The
 
 7 board may determine the benefits of a long-term care benefits
 
 8 plan for employee-beneficiaries, or their spouses, as well as
 
 9 their parents and grandparents, and in-law parents and
 
10 grandparents, and qualified-beneficiaries.  The plan shall comply
 
11 with article 10H of chapter 431.
 
12      (b)  Notwithstanding any law to the contrary, the benefits
 
13 shall be available only to employee-beneficiaries, or their
 
14 spouses, as well as their parents and grandparents, and in-law
 
15 parents and grandparents, and qualified-beneficiaries who enroll
 
16 between the ages of twenty and eighty-five.  Eligible persons
 
17 must comply with the plan's age, enrollment, medical
 
18 underwriting, and contribution requirements.
 
19      (c)  The board may contract with a carrier to provide fully-
 
20 insured benefits or a third-party administrator to administer
 
21 self-insured benefits.
 
22      §  -26  Health benefits for part-time, temporary, and
 

 


 

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 1 seasonal or casual employees; provision of.(a)  The board may
 
 2 offer medical, hospital, and surgical benefits plans to part-
 
 3 time, temporary, and seasonal or casual employees at no cost to
 
 4 the employers.  A part-time, temporary, and seasonal or casual
 
 5 employee means a person employed for less than three months or
 
 6 whose employment is less than one-half of a full-time equivalent
 
 7 position.  The board may determine eligibility for part-time,
 
 8 temporary, and seasonal or casual employees by rules exempted
 
 9 from chapter 91 as provided in section     -33.
 
10      (b)  The board shall determine the medical, hospital, and
 
11 surgical benefits plan, which shall be excepted from the minimum
 
12 group requirements of article 10A of chapter 431.  The medical,
 
13 hospital, and surgical benefits plan shall provide, pay for,
 
14 arrange for, or reimburse the cost of hospitalization, surgery,
 
15 medical, and may include prescribed hospital in-patient and out-
 
16 patient service and medical benefits.
 
17      (c)  The board may contract for the health benefit plans.
 
18 Each part-time, temporary, and seasonal or casual employee
 
19 enrolled for health benefits shall pay monthly contributions
 
20 directly to the board's designated carrier.  The monthly
 
21 contributions may include the carrier's administrative costs.
 
22      §  -27  Selection of a carrier or third-party
 
23 administrator for a health benefits, group life insurance, or
 

 


 

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 1 long-term care benefits plan.  Procurement of a carrier or third-
 
 2 party administrator for any benefit plan shall be exempted from
 
 3 chapter 103D.
 
 4      §  -28  Determine eligibility of employee, dependent, or
 
 5 person.  The board shall establish and adopt eligibility
 
 6 requirements to determine which employee, dependent, or person
 
 7 may qualify as an employee-beneficiary, dependent-beneficiary, or
 
 8 qualified-beneficiary, respectively; provided that a retired
 
 9 member of the employees' retirement system, a county pension
 
10 system, or a police, firefighters, and bandsmen pension system of
 
11 the State or county, or the retired member's dependent shall be
 
12 eligible to qualify as an employee-beneficiary or dependent-
 
13 beneficiary, whether or not the retired member was actively
 
14 employed by the State or county at the time of the retired
 
15 member's retirement and whether or not the employee retired
 
16 before or after 1961.  Employees who retired prior to 1961 shall
 
17 be treated as if they were members of the fund during their
 
18 period of employment with the State or county and receive the
 
19 same benefits as other members.  Only an employee-beneficiary or
 
20 dependent or person satisfying the eligibility requirements may
 
21 qualify as an employee-beneficiary, dependent-beneficiary, or
 
22 qualified-beneficiary.
 
23      §  -29  Information and enrollment.(a)  The board shall
 

 
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 1 make available to each employee-beneficiary summary information
 
 2 on approved benefit plans.  The information plans shall be
 
 3 distributed to each employee-beneficiary at the same time and in
 
 4 the same manner.
 
 5      (b)  The board shall establish conditions for benefit plan
 
 6 enrollments.
 
 7      §  -30  Supplemental plan to federal Medicare.  Any other
 
 8 provision of this chapter notwithstanding, the board shall
 
 9 establish a health benefit plan which takes into account benefits
 
10 available to an employee-beneficiary and spouse under the federal
 
11 Medicare plan, subject to the following conditions:
 
12      (1)  There shall be no duplication of benefits payable under
 
13           federal Medicare, but the plan so established by the
 
14           board, when it is determined to be secondary to the
 
15           federal Medicare plan, will supplement the federal
 
16           Medicare plan such that when this plan is combined with
 
17           federal Medicare, and any other plan to which this plan
 
18           is subordinate under the coordination of benefit rules
 
19           as determined by the National Association of Insurance
 
20           Commissioners, the combination of this plan and all
 
21           other plans will approximate the benefits payable to a
 
22           similarly situated beneficiary not eligible for the
 
23           federal Medicare plan;
 

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

 
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 1           medical insurance plan shall enroll in that federal
 
 2           plan as a requirement to receive the contributions and
 
 3           to participate in the employee benefit plans described
 
 4           in this chapter.  This paragraph shall pertain to
 
 5           retired employees and their spouses and the surviving
 
 6           spouses of deceased retirees and employees killed in
 
 7           the performance of duty; and
 
 8      (5)  The board shall determine which employee-beneficiaries
 
 9           and dependent-beneficiaries, who are not enrolled in
 
10           the federal Medicare Part B medical insurance plan, may
 
11           participate in such other plans as are set forth in
 
12           section     -23.
 
13      §  -31  Other powers.  In addition to the power to
 
14 administer the fund, the board may:
 
15      (1)  Collect, receive, deposit, and withdraw money on behalf
 
16           of the fund;
 
17      (2)  Invest funds in the same manner specified in section
 
18           88-119(1)(a), (1)(b), (1)(c), (2), (3), (4), (5), (6),
 
19           and (7);
 
20      (3)  Hold, purchase, sell, assign, transfer, or dispose of
 
21           any securities and investments in which the fund shall
 
22           have been invested, as well as the proceeds of the
 
23           investments and any monies belonging to the fund;
 

 
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 1      (4)  Appoint and at pleasure dismiss staff.  Such staff
 
 2           shall be exempt from chapters 76 and 77 and shall serve
 
 3           under and at the pleasure of the board; and
 
 4      (5)  Make payments of periodic charges and pay for
 
 5           reasonable expenses incurred to:
 
 6           (A)  Perform financial audits of the fund and claims
 
 7                audits of its insurance carriers; or
 
 8           (B)  Carry out the purposes of the fund;
 
 9      (6)  Without the necessity of complying with the
 
10           requirements of chapter 103D, retain auditors,
 
11           actuaries, investment firms and managers, benefit plan
 
12           consultants, or other professional advisors to carry
 
13           out the purposes of this chapter;
 
14      (7)  Establish health benefit plan and long-term care
 
15           benefit plan rates that include administrative and
 
16           other expenses necessary to effectuate the purposes of
 
17           the fund; or
 
18      (8)  Require any department, agency, or employee of the
 
19           State and county to furnish information to the board to
 
20           carry out the purposes of this chapter.
 
21      §  -32  Other duties.  The board shall:
 
22      (1)  Authorize charges and payments from the fund only upon
 
23           vouchers countersigned by the chairperson and such
 

 
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 1           other person as may be designated by the board;
 
 2      (2)  Maintain accurate records and accounts of all financial
 
 3           transactions of the fund that shall be audited annually
 
 4           and summarized in an annual report to the Governor and
 
 5           legislature;
 
 6      (3)  Maintain suitable and adequate records and provide
 
 7           information requested by the State and county employers
 
 8           as necessary to carry out the purpose of the fund; and
 
 9      (4)  Procure fiduciary liability insurance and error and
 
10           omissions coverage for all trustees and a fidelity bond
 
11           of a reasonable amount for the chairperson and any
 
12           other person authorized to handle money of the fund.
 
13      §  -33  Rules; policies and standards.(a)  Whenever the
 
14 board is required to or finds it necessary to prescribe rules for
 
15 the purposes of this chapter, the rules shall be prescribed,
 
16 without regard to chapter 91.  The procedures for rulemaking
 
17 shall be as set forth in rules, which shall minimally provide
 
18 for:
 
19      (1)  Consultation on proposed rules with employers and
 
20           affected employee organizations;
 
21      (2)  Adoption of rules at open meetings that permit the
 
22           attendance of any interested person;
 
23      (3)  Approval of rules by the governor; and
 

 
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 1      (4)  Filing of rules with the lieutenant governor.
 
 2      (b)  The board may also issue policies, standards, and
 
 3 procedures consistent with its rules.
 
 4      §  -34  Meetings; notice; quorum; voting power; records
 
 5 and minutes.  (a)  The chairperson may call a meeting of the
 
 6 board at any time by giving at least seven days' written notice
 
 7 of the time and place of the meeting to all other directors.  Any
 
 8 director may call a meeting of the board by giving at least ten
 
 9 days' written notice of the time and place to the other
 
10 directors.  A meeting of the board may be called at any time
 
11 without notice if all directors agree.
 
12      (b)   A quorum shall consist of three directors.
 
13      (c)  Each director shall have one vote.  Any action taken
 
14 shall be by a simple majority.
 
15      (d)  The board shall keep records and minutes of all
 
16 meetings of the board."
 
17      SECTION 2.  Chapter 87, Hawaii Revised Statutes, is amended
 
18 by adding a new section to be appropriately designated and to
 
19 read as follows:
 
20      "§87-     Preferred provider organization plans; drug
 
21 benefit plans.  The board shall:
 
22      (1)  Enter into contracts for and offer preferred provider
 
23           plans (PPO) for medical benefits for employees
 

 
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 1           ineligible for medicare; and
 
 2      (2)  Enter into contracts for drug benefit plans with
 
 3           premiums based on inclusion of a closed formulary for
 
 4           federally approved health maintenance organization
 
 5           plans and a copayment plus a differential for
 
 6           nonpreferred brand name drugs based on an open
 
 7           formulary for service benefit plans."
 
 8      SECTION 3.  Section 87-22.3, Hawaii Revised Statutes, is
 
 9 amended to read as follows:
 
10      "§87-22.3  Determination of health benefits plans[.]; audits
 
11 of employee organization health benefits plans.  Pursuant to
 
12 section 87-4, the board of trustees shall provide health benefits
 
13 to employee-beneficiaries in the following manner:
 
14      (1)  For those employee-beneficiaries who are not
 
15           participating in a health benefits plan of an employee
 
16           organization (hereafter "nonparticipating employee-
 
17           beneficiaries"), the board of trustees shall establish
 
18           health benefits plans and the requirements for
 
19           eligibility under the health benefits plans.  Any rate
 
20           credit or reimbursement from any carrier derived from
 
21           employee-beneficiary rate contributions to health
 
22           benefits plans of nonparticipating employee-
 
23           beneficiaries or interest derived therefrom may be used
 

 
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 1           to improve the respective health benefits plans of
 
 2           nonparticipating employee-beneficiaries or to reduce
 
 3           the employee-beneficiary's respective share of monthly
 
 4           contributions to a health plan; or
 
 5      (2)  For employee-beneficiaries who participate in the
 
 6           health benefits plan of an employee organization, the
 
 7           board of trustees shall pay a monthly contribution for
 
 8           each employee-beneficiary, in the amount provided in
 
 9           section 87-4(a), or the actual monthly cost of the
 
10           coverage, whichever is less, towards the purchase of
 
11           health benefits under the health benefits plan of an
 
12           employee organization.  To ensure the financial
 
13           integrity and cost effectiveness of any health benefits
 
14           plan of an employee organization, the board shall
 
15           annually audit each health benefits plan offered by an
 
16           employee organization.  The costs of the audits shall
 
17           be borne by the fund."
 
18      SECTION 4.  Chapter 87, Hawaii Revised Statutes, is
 
19 repealed.
 
20      SECTION 5.  Effective July 1, 2002, all positions and
 
21 employees of the Hawaii public employees health fund who are
 
22 subject to chapter 76 and 77, Hawaii Revised Statutes, shall be
 
23 transferred to the Hawaii employer-union health benefits trust.
 

 
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 1 All officers and employees whose functions are transferred by
 
 2 this Act shall be transferred with their functions and shall
 
 3 continue to perform their regular duties upon their transfer,
 
 4 subject to the state personnel laws and this Act.
 
 5      All civil service positions and incumbents of the Hawaii
 
 6 public employees health fund transferred by this Act shall remain
 
 7 in the civil service and subject to chapters 76 and 77, Hawaii
 
 8 Revised Statutes, provided that in the event the civil service
 
 9 administrator position becomes vacant prior to July 1, 2002, its
 
10 successor shall be appointed pursuant to section 87-28, Hawaii
 
11 Revised Statutes, as amended in section 2 of this Act.  When such
 
12 positions are vacated on or after July 1, 2002, the positions
 
13 shall be exempt from civil service and prospective appointments
 
14 shall be made pursuant to section 1 of this Act.
 
15      No officer or employee of the State having tenure shall
 
16 suffer any loss of salary, seniority, prior service credit,
 
17 vacation, sick leave, or other employee benefit or privilege as a
 
18 consequence of this Act, and such officer or employee may be
 
19 transferred or appointed to a civil service position without the
 
20 necessity of examination; provided that the officer or employee
 
21 possesses the minimum qualifications for the position to which
 
22 transferred or appointed; and provided that subsequent changes in
 
23 status may be made pursuant to the applicable civil service and
 

 
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 1 compensation laws.
 
 2      In the event that an office or position held by an officer
 
 3 or employee having tenure is abolished, the officer or employee
 
 4 shall not thereby be separated from public employment, but shall
 
 5 remain in the employment of the State with the same pay and
 
 6 classification and shall be transferred to some other office or
 
 7 position for which the officer or employee is eligible under the
 
 8 personnel laws of the State as determined by the head of the
 
 9 department or the governor.
 
10      SECTION 6.  All appropriations, assets, including funds to
 
11 be refunded to employees and any funds in benefit plans and
 
12 cafeteria plans, records, equipment, machines, computer software
 
13 and hardware, files, supplies, contracts, books, papers,
 
14 documents, maps, and other personal property heretofore made,
 
15 used, acquired, or held by the Hawaii public employees health
 
16 fund shall be transferred to the Hawaii employer-union health
 
17 benefits trust, effective July 1, 2002.
 
18      SECTION 7.  The governor shall appoint all members of the
 
19 board of trustees of the Hawaii employer-union health benefit
 
20 trust no later than December 29, 2000.  Upon appointment, the
 
21 board of trustees shall appoint all three members of the board of
 
22 directors no later than July 1, 2001.  Upon appointment, the
 
23 board of directors may develop and issue rules, policies, and
 

 
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 1 procedures, and contract for health benefits plans and group life
 
 2 insurance plans which shall become effective on July 1, 2002.
 
 3 The board of trustees and the administrator of the Hawaii public
 
 4 employees health fund shall give necessary assistance to the
 
 5 members of the Hawaii employer-union health benefits trust during
 
 6 the transition.
 
 7      SECTION 8.  Notwithstanding chapter 103D, Hawaii Revised
 
 8 Statutes, to the contrary, the board of directors of the Hawaii
 
 9 public employees health fund under chapter 87, Hawaii Revised
 
10 Statutes, is authorized to extend current health benefit and life
 
11 insurance plan contracts through June 30, 2002.
 
12      SECTION 9.  There is appropriated out of the general
 
13 revenues of the State of Hawaii the sum of $        or so much
 
14 thereof as may be necessary for fiscal year 2000-2001 to carry
 
15 out the purposes of this Act, including the hiring of necessary
 
16 staff; provided that:
 
17      (1)  This appropriation shall not lapse at the end of the
 
18           fiscal year for which the appropriation is made; and
 
19      (2)  All moneys from the appropriation that are unencumbered
 
20           as of June 30, 2002, shall lapse as of that date.
 
21      The sum appropriated shall be expended by the department of
 
22 budget and finance for the purposes of this Act.
 
23      SECTION 10.  Statutory material to be repealed is bracketed.
 

 
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 1 New statutory material is underscored.
 
 2      SECTION 11.  The Act shall take effect upon its approval;
 
 3 provided that:
 
 4      (1)  Section 4 shall take effect on July 1, 2002;
 
 5      (2)  Section 9 shall take effect on July 1, 2000; and
 
 6      (3)  All rules governing the Hawaii public employees health
 
 7           fund under chapter 87, Hawaii Revised Statutes, if not
 
 8           contrary to this Act, shall remain in effect until such
 
 9           time that the Hawaii employer-union health benefits
 
10           trust adopts new rules.