SB2262 HD1

THE SENATE	S.B. NO.	2262
TWENTY-FOURTH LEGISLATURE, 2008		S.D. 1
STATE OF HAWAII		H.D. 1

A BILL FOR AN ACT

RELATING TO HEALTH.

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

SECTION 1. Act 245, Session Laws of Hawaii 2005, as amended by Act 294, Session Laws of Hawaii 2007, is amended as follows:

1. By amending section 1 to read:

"SECTION 1. The purpose of this Act is to allow for the [~~temporary~~] establishment of an employee organization sponsored trust that would provide health benefits for state and county employees of a particular bargaining unit, as well as future retirees of that bargaining unit and existing retirees who wish to participate in such a trust. The trust would be established as a voluntary employees' beneficiary association (VEBA) trust pursuant to [~~section~~] Section 501(c)(9) of the Internal Revenue Code of 1986, as amended. The trust would be funded by employer contributions negotiated pursuant to a collective bargaining agreement and employee contributions to be determined by the trust's board of trustees for active employees. The Act imposes on the trust all of the standards and requirements of the Employee Retirement Income Security Act of 1974, as amended (ERISA). Even if the trust is deemed to be a governmental plan exempt from ERISA, the legislative intent is that the trust [~~must~~] shall comply with the standards and requirements of ERISA as a matter of state law and that such shall be enforced by the attorney general, as well as participants, beneficiaries, and fiduciaries of the plan or plans established by the trust.

This Act also provides for retiree coverage for any employee who retires from the State or the counties who was a member of an employee organization that establishes a VEBA trust pursuant to a collective bargaining agreement effective on or after July 1, 2005. Existing retirees who are members of an employee organization and who were previously covered by a collective bargaining agreement will be provided [~~a one-time~~] the opportunity to join the VEBA trust once established. Retiree coverage for existing retirees provided by an employee organization's VEBA trust would be funded by employer contributions made directly to the VEBA trust by the employer.

The [~~requirement of establishing~~] establishment of a VEBA trust [~~in order to be~~] that is exempt from participation in the Hawaii employer-union health benefits trust fund is intended to be a cost containment measure in response to the ever-increasing costs of health care throughout the [~~State. However, because of the lack of data available on the impact of a VEBA trust on the Hawaii employer-union health benefits trust fund, this~~] state. This Act [~~would allow~~] authorizes the establishment of [a] VEBA [trust pilot program for a period of three years. During this period, a thorough analysis of the costs and benefits of a VEBA trust can be evaluated against the Hawaii employer-union health benefits trust fund to determine what actual savings could be realized by the State through this mechanism.] trusts by public employee organizations."

2. By amending section -9(b) in the new chapter added by section 2 to read:

"(b) Any retiree who, immediately prior to retirement, was a member of an employee organization prior to the establishment of a voluntary employees' beneficiary association trust by the employee organization, and who was previously covered by a collective bargaining agreement, shall be given a one-time option to transfer participation from the Hawaii employer-union health benefits trust fund established under chapter 87A to the organization's voluntary employees' beneficiary association trust once the latter is established[.]; provided that any retiree who, prior to July 1, 2008, declined the option to transfer from participation in the Hawaii employer-union health benefits trust fund to the organization's voluntary employees' beneficiary association trust shall be given a final one-time option to transfer participation. Upon the establishment of the voluntary employees' beneficiary association trust, the State, through the department of budget and finance and the counties, through their respective departments of finance, shall pay to the trust for each retiree who opts to transfer into a voluntary employees' beneficiary association trust, a monthly contribution equal to the contribution paid on behalf of a similarly situated retiree under the Hawaii employer-union health benefits trust fund."

3. By amending section 8 to read:

"SECTION 8. This Act shall take effect upon its approval, for the purpose of establishing a voluntary employees' beneficiary association trust [~~pilot~~] program in March, 2006 [and shall be repealed on July 1, 2009; provided that sections 89‑2, 89‑3, 89‑6, and 89‑9, Hawaii Revised Statutes, are reenacted in the form in which they read on the day before the effective date of this Act]."

SECTION 2. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 3. This Act shall take effect upon its approval.