Bill Text: AZ HB2654 | 2010 | Forty-ninth Legislature 2nd Regular | Introduced
Bill Title: State; retirees health insurance pool
Spectrum: Slight Partisan Bill (Democrat 5-3)
Status: (Introduced - Dead) 2010-02-15 - Referred to House PERER Committee [HB2654 Detail]
Download: Arizona-2010-HB2654-Introduced.html
|
REFERENCE TITLE: state; retirees health insurance pool |
|
State of Arizona House of Representatives Forty-ninth Legislature Second Regular Session 2010
|
|
HB 2654 |
|
|
|
Introduced by Representatives Heinz, Reagan, Senator McCune Davis: Representatives Campbell CL, Meyer, Senators Allen C, Lopez, Pierce S
|
AN ACT
amending section 11‑263, Arizona Revised Statutes; amending title 15, chapter 1, article 8, Arizona Revised Statutes, by adding section 15‑186; amending sections 15‑1225, 15‑1451, 15‑1628 and 38‑651, Arizona Revised Statutes; repealing section 38‑651.01, Arizona Revised Statutes; amending sections 38‑654, 38‑782, 38‑783, 38‑817, 38‑857 and 38‑906, Arizona Revised Statutes; relating to public officers and employees health insurance.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 11-263, Arizona Revised Statutes, is amended to read:
11-263. Authorization to procure insurance for county employees and dependents; expenditure of public funds; employee payments; retired county employees prohibition
A. The board of supervisors may adopt a system of insurance for the benefit of county elected officials and employees. The board may procure health, life, accident and disability insurance for the benefit of these elected officials and employees from any insurer licensed to do business in this state and pay the whole or any part of the premiums on the insurance from public funds. Public funds shall not be spent for life insurance in excess of fifty thousand dollars or the amount of the salary annually paid to the elected official or employee, whichever is more. The board may procure health and accident coverage for the dependents of the elected officials and employees and pay all or any part of the premium on the insurance from public funds. The board may deduct from the compensation of the employees and elected officials, and apply to the payment of the premiums, that part of the premiums determined by the board to be payable by the employees and elected officials. The deductions shall be made only from those employees and elected officials who have voluntarily agreed in writing to participate in the program.
B. The board of supervisors may shall not enter into agreements to establish group health and accident coverage for former county employees who are retired and receiving income from a retirement program of this state and their dependents. The agreements may provide that all or any portion of the former employees or their dependents may be grouped with officers and employees of the county or their dependents as necessary to obtain health and accident coverage at favorable rates.
C. The Arizona state retirement system board may enter into agreements with retired county employees who elect to obtain the coverage provided in subsection B. The agreements may include provision for the deduction from the retirement benefits of participants of a retirement program of this state who elect to obtain the coverage of amounts sufficient to pay for the premium and administrative expense of providing the coverage.
D. Public funds of this state shall not be expended to pay all or any part of the premium of insurance pursuant to subsection B, except that a county may expend its public funds to pay all or any part of the premium of insurance pursuant to subsection B.
Sec. 2. Title 15, chapter 1, article 8, Arizona Revised Statutes, is amended by adding section 15-186, to read:
15-186. Sponsored retiree health insurance program prohibited
A charter school that participates in the Arizona State Retirement System shall not establish or sponsor group health and accident coverage for former employees who are retired and receiving income from the Arizona State Retirement System and their dependents.
Sec. 3. Section 15-1225, Arizona Revised Statutes, is amended to read:
15-1225. Postemployment benefits; trust accounts; actuarial report; prohibition
A. If the governing board offers postemployment benefits to school district employees or to spouses and dependents of school district employees, or both, monies to fund these benefits may be deposited in an other postemployment benefits fund or an other postemployment benefits trust account, or both. Additional monies shall not be legislatively appropriated specifically to provide any postemployment benefits offered by a governing board.
B. An other postemployment benefits fund is a cash controlled fund as provided in section 15-905, subsection N. The monies in the other postemployment benefits fund are not subject to reversion, except that at the end of five years of no activity in the fund, any remaining monies shall revert to the maintenance and operations fund.
C. An other postemployment benefits trust account established pursuant to subsection A of this section shall meet all of the following conditions:
1. Contributions made by the school district into the trust account are irrevocable.
2. The assets of the trust account shall be dedicated to providing benefits to school district retirees and their beneficiaries in accordance with the terms of the postemployment benefits plan.
3. Trust assets shall be legally protected from creditors of the school district or the investment manager pursuant to subsection F of this section.
D. Current or prior year postemployment benefits liabilities may be paid from any school district fund from which a school district may pay employee benefits into the other postemployment benefits fund or trust account. Payments for current or prior year liabilities paid into the other postemployment benefits fund or trust account shall be treated as an expenditure from the originating school district fund.
E. The following expenditures may be made from an other postemployment benefits fund or an other postemployment benefits trust account:
1. Administrative and management costs.
2. Payment of benefits.
F. An investment manager for an other postemployment benefits trust account established pursuant to subsection A of this section shall be either:
1. A qualified investment manager appointed by the district governing board.
2. The manager of a public agency pool established pursuant to section 11-952.01.
G. The investment manager for an other postemployment benefits trust account may invest and reinvest the monies in the account and may hold, purchase, sell, assign, transfer and dispose of any of the securities and investments in which any of the trust account monies are invested. The investment manager shall invest the monies in the trust account in the same manner as the monies in the permanent state land fund pursuant to section 35‑314.01, except that not more than thirty per cent of the monies in the trust account may be invested in equity securities at any time. The percentage of investment shall be calculated at cost.
H. If applicable, each school district shall submit on or before September 1, 2009 to the joint legislative budget committee the most recent actuarial study of the school district's existing other postemployment benefits offered by the school district and any prospective other postemployment benefits contemplated to be offered by the school district, including an analysis of defined contribution plans and defined benefits plans if appropriate and if the defined contribution or defined benefit plans are used to administer any other postemployment benefit. Each time a school district conducts a new actuarial study of the school district's existing or prospective other postemployment benefits, the school district shall submit the new study to the joint legislative budget committee within thirty days of the completion of the study.
I. A governing board of a school district that participates in the Arizona state retirement system shall not establish or sponsor group health and accident coverage for former employees who are retired and receiving income from the Arizona state retirement system and their dependents.
I. J. For the purposes of this section, postemployment benefits do not include benefits provided by the Arizona state retirement system.
Sec. 4. Section 15-1451, Arizona Revised Statutes, is amended to read:
15-1451. Optional retirement plans
A. Pursuant to section 15‑1444, subsection B, paragraph 5 7, a community college district board may establish an optional retirement program under which contracts providing retirement and death benefits may be purchased for employees of the institutions under its jurisdiction as designated by the community college district board.
B. An optional retirement program established pursuant to this section shall:
1. Be designed to be a qualified governmental plan under section 401(a) of the internal revenue code.
2. Comply with all requirements of the internal revenue code applicable to governmental plans.
3. Be a qualified plan under section 401(a) of the internal revenue code.
4. Apply for and maintain a current letter of determination issued by the United States internal revenue service.
5. Be a qualified pick‑up plan as defined by section 414(h)(2) of the internal revenue code as confirmed by a private letter ruling issued by the United States internal revenue service.
6. Provide benefits through annuity contracts that are fixed or variable in nature or that are a combination of fixed and variable.
C. Eligible employees may elect to participate in an optional retirement plan established by the community college district board. The eligible employee shall make the election in writing and file the election with the Arizona state retirement system and the disbursing officer of the employing institution. The eligible employee shall make the election either:
1. Within thirty days of the employee's effective date of employment.
2. If the employee is a member of the Arizona state retirement system on the date the optional retirement program becomes effective, within ninety days of the effective date of the optional retirement program.
3. Beginning on October 1, 2001 through December 31, 2001.
D. If an employee who is a member of the Arizona state retirement system elects to participate in an optional retirement program pursuant to subsection C of this section, the Arizona state retirement system shall transfer the employee's contributions to the Arizona state retirement system and interest as determined by the board of the Arizona state retirement system to the optional retirement program within the later of ninety days after the election or ninety days after receipt by the optional retirement program of a favorable letter of determination issued by the United States internal revenue service. If an eligible employee fails to make an election as provided in subsection C of this section, the employee is deemed to have elected to participate in the Arizona state retirement system. The election to participate in an optional retirement program is irrevocable and constitutes a waiver of all benefits provided by the Arizona state retirement system. All eligible employees who elect to participate in an optional retirement program shall remain participants in the optional retirement program during the continuance of employment with the community college district.
E. The community college district board shall make contributions from public monies appropriated or any other monies available for this purpose on behalf of each participant in the optional retirement program in an amount that is at least equal to the employer contribution prescribed in title 38, chapter 5, article 2 but that is not more than the amount prescribed in section 15‑1628, subsection C.
F. Subject to subsection H of this section, each community college district board that establishes an optional retirement program shall establish program provisions including:
1. Categories of employees that are eligible to elect to participate in the optional retirement program.
2. The employee contribution rate. This rate may be greater than the employee contribution rate prescribed in title 38, chapter 5, article 2.
3. A vesting period for employer contributions, if any. All employee contributions that are picked up by the employer are fully vested at all times.
4. Restrictions on benefits, except that the optional retirement program shall not allow a participant to withdraw employer contributions except as retirement income payable for life or to provide for loans on retirement income.
G. A community college district board may elect to provide health or long‑term disability coverage to optional retirement program participants under separate benefit plans. The community college district board may allocate a portion of its employer contribution that would otherwise be made to the optional retirement program under subsection E of this section to the separate benefit plans to provide health or long‑term disability coverage. A community college district board shall not provide group health and accident coverage for former employees who are retired and receiving income from a retirement plan or program of this state and their dependents.
H. Community college district boards that establish an optional retirement program under this section may enter into intergovernmental agreements appointing a single administrator or designating a single community college district board to administer the optional retirement program. A community college district board may satisfy the requirements of this section by entering into an intergovernmental agreement with another community college district board to participate in that community college district's optional retirement program. The administration shall include, without limitation, the design and implementation of the plan document establishing the optional retirement program, compliance with the qualification requirements prescribed in subsection B of this section and such other duties that are not inconsistent with this section as may be delegated to the administrator pursuant to the intergovernmental agreements entered into among the community college district boards.
I. Although designated as employee contributions, all employee contributions made to an optional retirement program shall be picked up and paid by the community college district in lieu of contributions by the employee. The contributions picked up by a community college district may be made through a reduction in the employees' salary or an offset against future salary increases, or a combination of both. The employees participating in the optional retirement program do not have the option of choosing to receive the contributed amounts directly instead of the community college district paying the amounts to the optional retirement program. It is intended that all employee contributions that are picked up by the community college district as provided in this subsection shall be treated as employer contributions under section 414(h) of the internal revenue code and shall be excluded from the employees' gross income for federal and state income tax purposes and are includable in the gross income of the employees or their beneficiaries only in the taxable year in which they are distributed.
J. A community college district board shall not be liable to any employee, retiree or other person for any reason relating to the community college district board's provision of or failure to provide for an optional retirement program or health or long‑term disability coverage.
Sec. 5. Section 15-1628, Arizona Revised Statutes, is amended to read:
15-1628. Powers and procedures pertaining to optional retirement programs
A. The Arizona board of regents may establish optional retirement programs under which contracts providing retirement and death benefits may be purchased for members of the faculty and administrative officers of the institutions under its jurisdiction. The benefits to be provided for or on behalf of participants in the optional retirement program shall be provided through annuity contracts, fixed or variable in nature, or a combination thereof, or other retirement plans approved by the Arizona board of regents.
B. Elections to participate in the optional retirement programs shall be made as follows:
1. Eligible employees initially appointed on or after August 9, 1974 shall elect to become members of the Arizona state retirement system or to participate in an optional retirement program established by the Arizona board of regents. The election shall be made in writing and filed with the Arizona state retirement system and the disbursing officer of the employing institution and shall be effective as of the effective date of appointment. If an eligible employee fails to make an election as provided in this paragraph, the eligible employee shall be deemed to have elected membership in the Arizona state retirement system.
2. Eligible employees initially appointed before August 9, 1974 may elect to participate in the optional retirement programs. The election shall be made in writing and filed with the Arizona state retirement system and the disbursing officer of the employing institution on or before December 14, 1974, shall become effective as of January 1, 1975 and shall constitute a waiver of all benefits provided by the Arizona state retirement system, except all such benefits as are expressly provided by law.
3. Any employee who becomes eligible may elect an optional retirement program. The election shall be made in writing and filed with the Arizona state retirement system and the disbursing officer of the employing institution within thirty days after notice in writing to the employee of the employee's eligibility, and shall become effective on the first day of the pay period following such election, and shall constitute a waiver of all benefits provided by the Arizona state retirement system, except all such benefits as are expressly provided by law.
4. Any eligible employee who is a member of the Arizona state retirement system at the time the employee elects to participate in the optional retirement program shall leave the funds in the employee's retirement account on deposit with the Arizona state retirement system during the continuance of employment. Additional contributions to the employee's retirement account shall not be required and continued service with the Arizona board of regents or an institution under the jurisdiction of the Arizona board of regents while under an optional retirement program shall be deemed to be member service in the Arizona state retirement system for the purpose of determining eligibility for any benefits under such system. The amount of any such benefits under such system shall be computed only on the basis of service otherwise creditable to a member of the system and the employee's compensation during such service. For purposes of subsection D of this section, years of member service in the Arizona state retirement system shall count as years of service under the optional retirement programs.
C. The Arizona board of regents shall contribute public funds appropriated or any other funds available for such purpose on behalf of each participant in the optional retirement programs in an amount equal to seven per cent of the participant's compensation. Each participant shall also contribute an amount equal to seven per cent of the participant's compensation. The appropriation to each university for purposes of enabling the Arizona board of regents to make the contribution provided in this subsection shall not exceed the employer contribution required under the Arizona state retirement system as prescribed by title 38, chapter 5, article 2. Funds utilized by the board of regents or by a university to pay that portion of the contribution that represents the difference between the employer contribution as prescribed by title 38, chapter 5, article 2 and the contribution rate provided in this subsection for an optional retirement program do not constitute a use of appropriated monies for supplemental retirement.
D. In the case of an electing employee initially appointed on or after August 9, 1974, contributions pursuant to subsection C of this section shall not be made by the Arizona board of regents until the employee's completion of five years of service. Employee contributions required during this initial five year period and during continued service with an institution under the jurisdiction of the Arizona board of regents shall be promptly remitted to the optional retirement programs approved by the Arizona board of regents. At the end of an electing employee's completion of five years of service, a single contribution in an amount determined pursuant to subsection C of this section, with interest, shall be made by the chief financial officer of the employing institution to the approved company or companies on behalf of such employee. In the case of an electing employee who does not continue in service with an institution under the jurisdiction of the Arizona board of regents for at least five years, the amount of employer contributions, with interest, shall be refunded to this state.
E. If an employee's service is terminated by death prior to the completion of five years of service, a death benefit equal to the sums appropriated for such employee, plus interest, shall be paid to the beneficiary designated by the participant under the participant's optional retirement program.
F. The provisions of Subsection D of this section shall does not apply to any electing employee who, at the time of initial appointment, owns a contract determined by the Arizona board of regents to be acceptable for use in the optional retirement program.
G. The Arizona board of regents may provide for the administration of such optional retirement programs and perform or authorize the performance of such functions as may be necessary for such purposes. The Arizona board of regents shall approve the company or companies from which benefits may be purchased under the optional retirement programs. Such optional retirement programs shall not permit loans. In giving its approval, the board shall consider:
1. The nature and extent of the rights and benefits to be provided for participants and their beneficiaries.
2. The relation of such rights and benefits to the amount of contributions to be made.
3. The suitability of such rights and benefits to the needs of the participants and the interests of the institutions under its jurisdiction in the recruitment and retention of faculty and administrative officers.
4. The ability of the approved company or companies to provide such suitable rights and benefits.
H. Any eligible employee initially appointed after August 9, 1974, electing to participate in the optional retirement programs, shall be ineligible for membership in the Arizona state retirement system as long as the employee remains continuously employed in any position by the Arizona board of regents or by an institution under its jurisdiction, except as expressly provided by law.
I. The benefits, annuities and employee and employer contributions provided for in this section, and all interest, earnings and other credits pertaining to such benefits, annuities and contributions, shall not be subject to execution or attachment and shall be nonassignable. The employee and employer contributions provided for in this section and all interest, earnings and other credits pertaining to such contributions are exempt from state, county and municipal taxes. The benefits and annuities received by an employee under this section after December 31, 1988 are subject to tax pursuant to title 43.
J. Subject to amendment of the federal‑state agreement provided for in section 38‑702, every eligible employee electing to participate in the optional retirement programs shall have old age, survivors and disability insurance coverage provided by the federal social security act in accordance with the provisions of title 38, chapter 5, article 1.
K. The Arizona board of regents shall not establish group health and accident coverage for former employees who are retired and receiving income from a retirement plan or program of this state and their dependents.
Sec. 6. Section 38-651, Arizona Revised Statutes, is amended to read:
38-651. Expenditure of monies for health and accident insurance; definition
A. The department of administration may expend public monies appropriated for such purpose to procure health and accident coverage for full‑time officers and employees of this state and its departments and agencies. The department of administration may adopt rules that provide that if an employee dies while the employee's surviving spouse's health insurance is in force, the surviving spouse is entitled to no more than thirty‑six months of extended coverage at one hundred two per cent of the group rates by paying the premiums. No public monies may be expended to pay all or any part of the premium of health insurance continued in force by the surviving spouse. The department of administration shall seek a variety of plans, including indemnity health insurance, hospital and medical service plans, dental plans and health maintenance organizations. On a recommendation of the department of administration and the review of the joint legislative budget committee, the department of administration may self‑insure for the purposes of this subsection. If the department of administration self‑insures, the department may contract directly with preferred provider organizations, physician and hospital networks, indemnity health insurers, hospital and medical service plans, dental plans and health maintenance organizations. If the department self‑insures, the department shall provide that the self‑insurance program include all health coverage benefits that are mandated pursuant to title 20. The self‑insurance program shall include provisions to provide for the protection of the officers and employees, including grievance procedures for claim or treatment denials, creditable coverage determinations, dissatisfaction with care and access to care issues. The department of administration by rule shall designate and adopt performance standards, including cost competitiveness, utilization review issues, network development and access, conversion and implementation, report timeliness, quality outcomes and customer satisfaction for qualifying plans. The qualifying plans for which the standards are adopted include indemnity health insurance, hospital and medical service plans, closed panel medical and dental plans and health maintenance organizations, and for eligibility of officers and employees to participate in such plans. Any indemnity health insurance or hospital and medical service plan designated as a qualifying plan by the department of administration must be open for enrollment to all permanent full‑time state employees, except that any plan established prior to June 6, 1977 may be continued as a separate plan. Any closed panel medical or dental plan or health maintenance organization designated as the qualifying plan by the department of administration must be open for enrollment to all permanent full‑time state employees residing within the geographic area or area to be served by the plan or organization. Officers and employees may select coverage under the available options.
B. The department of administration may expend public monies appropriated for such purpose to procure health and accident coverage for the dependents of full‑time officers and employees of this state and its departments and agencies. The department of administration shall seek a variety of plans, including indemnity health insurance, hospital and medical service plans, dental plans and health maintenance organizations. On a recommendation of the department of administration and the review of the joint legislative budget committee, the department of administration may self‑insure for the purposes of this subsection. If the department of administration self‑insures, the department may contract directly with preferred provider organizations, physician and hospital networks, indemnity health insurers, hospital and medical service plans, dental plans and health maintenance organizations. If the department self‑insures, the department shall provide that the self‑insurance program include all health coverage benefits that are mandated pursuant to title 20. The self‑insurance program shall include provisions to provide for the protection of the officers and employees, including grievance procedures for claim or treatment denials, creditable coverage determinations, dissatisfaction with care and access to care issues. The department of administration by rule shall designate and adopt performance standards, including cost competitiveness, utilization review issues, network development and access, conversion and implementation, report timeliness, quality outcomes and customer satisfaction for qualifying plans. The qualifying plans for which the standards are adopted include indemnity health insurance, hospital and medical service plans, closed panel medical and dental plans and health maintenance organizations, and for eligibility of the dependents of officers and employees to participate in such plans. Any indemnity health insurance or hospital and medical service plan designated as a qualifying plan by the department of administration must be open for enrollment to all permanent full‑time state employees, except that any plan established prior to June 6, 1977 may be continued as a separate plan. Any closed panel medical or dental plan or health maintenance organization designated as a qualifying plan by the department of administration must be open for enrollment to all permanent full‑time state employees residing within the geographic area or area to be served by the plan or organization. Officers and employees may select coverage under the available options.
C. The department of administration may designate the Arizona health care cost containment system established by title 36, chapter 29 as a qualifying plan for the provision of health and accident coverage to full‑time state officers and employees and their dependents. The Arizona health care cost containment system shall not be the exclusive qualifying plan for health and accident coverage for state officers and employees either on a statewide or regional basis.
D. Except as provided in section 38‑652, public monies expended pursuant to this section each month shall not exceed:
1. Five hundred dollars multiplied by the number of officers and employees who receive individual coverage.
2. One thousand two hundred dollars multiplied by the number of married couples if both members of the couple are either officers or employees and each receives individual coverage or family coverage.
3. One thousand two hundred dollars multiplied by the number of officers or employees who receive family coverage if the spouses of the officers or employees are not officers or employees.
E. Subsection D of this section:
1. Establishes a total maximum expenditure of public monies pursuant to this section.
2. Does not establish a minimum or maximum expenditure for each individual officer or employee.
F. In order to ensure that an officer or employee does not suffer a financial penalty or receive a financial benefit based on the officer's or employee's age, gender or health status, the department of administration shall consider implementing the following:
1. Requests for proposals for health insurance that specify that the carrier's proposed premiums for each plan be based on the expected age, gender and health status of the entire pool of employees and officers and their family members enrolled in all qualifying plans and not on the age, gender or health status of the individuals expected to enroll in the particular plan for which the premium is proposed.
2. Recommendations from a legislatively established study group on risk adjustments relating to a system for reallocating premium revenues among the contracting qualifying plans to the extent necessary to adjust the revenues received by any carrier to reflect differences between the average age, gender and health status of the enrollees in that carrier's plan or plans and the average age, gender and health status of all enrollees in all qualifying plans.
G. Each officer or employee shall certify on the initial application for family coverage that the officer or employee is not receiving more than the contribution for which eligible pursuant to subsection D of this section. Each officer or employee shall also provide the certification on any change of coverage or marital status.
H. If a qualifying health maintenance organization is not available to an officer or employee within fifty miles of the officer's or employee's residence and the officer or employee is enrolled in a qualifying plan, the officer or employee shall be offered the opportunity to enroll with a health maintenance organization when the option becomes available. If a health maintenance organization is available within fifty miles and it is determined by the department of administration that there is an insufficient number of medical providers in the organization, the department may provide for a change in enrollment from plans designated by the director when additional medical providers join the organization.
I. Notwithstanding subsection H of this section, officers and employees who enroll in a qualifying plan and reside outside the area of a qualifying health maintenance organization shall be offered the option to enroll with a qualified health maintenance organization offered through their provider under the same premiums as if they lived within the area boundaries of the qualified health maintenance organization, if:
1. All medical services are rendered and received at an office designated by the qualifying health maintenance organization or at a facility referred by the health maintenance organization.
2. All nonemergency or nonurgent travel, ambulatory and other expenses from the residence area of the officer or employee to the designated office of the qualifying health maintenance organization or the facility referred by the health maintenance organization are the responsibility of and at the expense of the officer or employee.
3. All emergency or urgent travel, ambulatory and other expenses from the residence area of the officer or employee to the designated office of the qualifying health maintenance organization or the facility referred by the health maintenance organization are paid pursuant to any agreement between the health maintenance organization and the officer or employee living outside the area of the qualifying health maintenance organization.
J. The department of administration shall allow any school district in this state that meets the requirements of section 15‑388, a charter school in this state that meets the requirements of section 15‑187.01 or a city, town, county, community college district, special taxing district, authority or public entity organized pursuant to the laws of this state that meets the requirements of section 38‑656 to participate in the health and accident coverage prescribed in this section, except that participation is only allowed in a health plan that is offered by the department and that is subject to title 20, chapter 1, article 1. The participation by an entity pursuant to this subsection shall be for at least a period of three consecutive years. The department shall group all individuals who participate pursuant to this subsection with officers and employees of this state and its departments and agencies and their dependents as necessary to obtain health and accident coverage at favorable rates. State monies shall not be spent to pay for all or any part of the premium for health or accident insurance for a nonstate employee or dependent. A school district, a charter school, a city, a town, a county, a community college district, a special taxing district, an authority or any public entity organized pursuant to the laws of this state rather than this state shall pay directly to the benefits provider the premium for its employees. The department shall develop a tiered system, with at least three tiers, that prescribes the percentage amount that each political subdivision and the participating employees of that political subdivision pay for the premiums for the health and accident coverage.
K. The department of administration shall determine the actual administrative and operational costs associated with school districts, charter schools, cities, towns, counties, community college districts, special taxing districts, authorities and public entities organized pursuant to the laws of this state participating in the state health and accident insurance coverage. These costs shall be allocated to each school district, charter school, city, town, county, community college district, special taxing district, authority and public entity organized pursuant to the laws of this state based on the total number of employees participating in the coverage. This subsection only applies to a health plan that is offered by the department and that is subject to title 20, chapter 1, article 1.
L. Insurance providers contracting with this state shall separately maintain records that delineate claims and other expenses attributable to participation of a school district, charter school, city, town, county, community college district, special taxing district, authority and public entity organized pursuant to the laws of this state in the state health and accident insurance coverage and, by November 1 of each year, shall report to the department of administration the extent to which state costs are impacted by participation of school districts, charter schools, cities, towns, counties, community college districts, special taxing districts, authorities and public entities organized pursuant to the laws of this state in the state health and accident insurance coverage. By December 1 of each year, the director of the department of administration shall submit a report to the president of the senate and the speaker of the house of representatives detailing the information provided to the department by the insurance providers and including any recommendations for possible legislative action.
M. Notwithstanding subsection J of this section, any school district in this state that meets the requirements of section 15‑388, a charter school in this state that meets the requirements of section 15‑187.01 or a city, town, county, community college district, special taxing district, authority or public entity organized pursuant to the laws of this state that meets the requirements of section 38‑656 may apply to the department of administration to participate in the self‑insurance program that is provided by this section pursuant to rules adopted by the department. The participation by an entity pursuant to this subsection shall be for at least a period of three consecutive years. The department shall group all individuals who participate pursuant to this subsection with officers and employees of this state and its departments and agencies and their dependents as necessary to obtain health and accident coverage at favorable rates. State monies shall not be spent to pay for all or any part of the premium for health or accident insurance for a nonstate employee or dependent. A participating entity shall reimburse forward to the department for all premiums and administrative or other insurance costs. The department shall actuarially prescribe the annual premium for each participating entity to reflect the actual cost of each participating entity. The department shall develop a tiered system, with at least three tiers, that prescribes the percentage amount that each political subdivision and the participating employees of that political subdivision pay for the premiums for the health and accident coverage.
N. Any person that submits a bid to provide health and accident coverage pursuant to this section shall disclose any court or administrative judgments or orders issued against that person within the last ten years before the submittal.
O. For the purposes of this section, beginning October 1, 2009, "dependent" means a spouse under the laws of this state, a child who is under nineteen years of age or a child who is under twenty‑three years of age and who is a full‑time student.
Sec. 7. Repeal
Section 38-651.01, Arizona Revised Statutes, is repealed.
Sec. 8. Section 38-654, Arizona Revised Statutes, is amended to read:
38-654. Special employee health insurance trust fund; purpose; investment of monies; use of monies; exemption from lapsing; annual report
A. There is established a special employee health insurance trust fund for the purpose of administering the state employee health insurance benefit plans. The fund shall consist of legislative appropriations, monies collected from the employer and employees for the health insurance benefit plans and investment earnings on monies collected from employees. The fund shall be administered by the director of the department of administration. Monies in the fund that are determined by the legislature to be for administrative expenses of the department of administration, including monies authorized by subsection D G, paragraph 4 of this section, are subject to legislative appropriation.
B. A board of trustees shall administer the fund. The board of trustees consists of five members who serve three‑year terms that expire on the third Monday in January of the appropriate year. The appropriate appointing authority shall appoint a person to fill the remainder of any vacant term. The board shall be appointed as follows:
1. One member who is appointed by the governor.
2. One member who is appointed by the speaker of the house of representatives.
3. One member who is appointed by the house minority leader.
4. One member who is appointed by the president of the senate.
5. One member who is appointed by the senate minority leader.
C. The members of the board must have experience in the field of finance, insurance, employment benefits or health care. The member who is appointed by the governor shall be either an employee of this state or a retiree who retired from state service. All other appointees shall not have been employed by this state. The term of each member automatically ends:
1. On death.
2. On written resignation to the governor.
3. On failure to attend two consecutive board meetings.
4. If currently a state employee, on termination of state employment.
D. The department shall provide assistance to the board of trustees. Members serve on the board without compensation but members are subject to the conflict of interest provisions of chapter 3, article 8 of this title.
B. E. On notice from the department of administration board of trustees, the state treasurer shall invest and divest monies in the fund as provided by section 35‑313, and monies earned from investment shall be credited to the fund. There shall be a separate accounting of monies contributed by the employer, monies collected from state employees and investment earnings on monies collected from employees. Monies collected from state employees for health insurance benefit plans shall be expended prior to expenditure of monies contributed by the employer.
C. F. The director of the department of administration board of trustees may authorize the employer health insurance contributions by fund to be payable in advance whether the budget unit is funded in whole or in part by state monies. By July 15 each year, the joint legislative budget committee staff shall determine the amount appropriated for employer health insurance contributions. The department of administration board of trustees may transfer to the special employee health insurance trust fund in whole or in part the amount appropriated to budget units for employer health insurance contributions as deemed necessary.
D. G. Monies in the fund shall be used by the department of administration board of trustees for the following purposes for the benefit of officers and employees who participate in a health insurance benefit plan pursuant to this article:
1. To administer a health insurance benefit program for state officers and employees and other governmental employees who participate in the program.
2. To pay health insurance premiums, claims costs and related administrative expenses.
3. To apply against future premiums, claims costs and related administrative expenses.
4. To apply the equivalent of not more than one dollar fifty cents for each employee for each month to administer applicable federal and state laws relating to health insurance benefit programs and to design, implement and administer improvements to the employee health insurance or benefit program.
E. H. Subsection D G of this section shall not be construed to require that all monies in the special employee health insurance trust fund shall be used within any one or more fiscal years. Any person who is no longer a state employee or an employee who is no longer a participant in a health insurance plan under contract with the department of administration shall have no claim upon monies in the fund.
F. I. Monies deposited in or credited to the fund are exempt from the provisions of section 35‑190 relating to lapsing of appropriations.
G. J. Claims for services rendered prior to July 1, 1989 shall not be paid from the special employee health insurance trust fund.
H. K. The department of administration board of trustees shall submit an annual report on the financial status of the special employee insurance trust fund to the governor, the president of the senate, the speaker of the house of representatives, the chairpersons of the house and senate appropriations committees and the joint legislative budget committee staff by March 1. The report shall include:
1. The actuarial assumptions and a description of the methodology used to set premiums and reserve balance targets for the health insurance benefit program for the current plan year.
2. An analysis of the actuarial soundness of the health insurance benefit program for the previous plan year.
3. An analysis of the actuarial soundness of the health insurance benefit program for the current plan year, based on both year-to-date experience and total expected experience.
4. A preliminary estimate of the premiums and reserve balance targets for the next plan year, including the actuarial assumptions and a description of the methodology used.
I. L. The department board of trustees shall submit a report to the joint legislative budget committee detailing any changes to the type of benefits offered under the plan and associated costs at least forty‑five days before making the change. The report shall include:
1. An estimate of the cost or saving associated with the change.
2. An explanation of why the change was implemented before the next plan year.
Sec. 9. Section 38-782, Arizona Revised Statutes, is amended to read:
38-782. Group health and accident coverage for retired public employees and elected officials and their dependents
A. The board shall establish group health and accident coverage for eligible retired and disabled members and their dependents. Eligible retired and disabled members are those members who are receiving retirement benefits from ASRS or long‑term disability benefits pursuant to section 38‑651.03 or article 2.1 of this chapter and who elect not to obtain health and accident insurance through their former employer. If an insured retired or disabled member dies before the insured member's dependent beneficiary or an insured surviving dependent, the dependent beneficiary or insured surviving dependent is entitled to coverage at group rates if the dependent beneficiary or surviving dependent elects to continue in the coverage within six months of the insured member's death and the dependent beneficiary or surviving dependent agrees to pay the cost of the premium for group health and accident insurance. On notification of the insured member's death, the board shall immediately notify a dependent beneficiary or an insured surviving dependent of the provisions of this section.
B. Retired members of the public safety personnel retirement system, the elected officials' retirement plan, the corrections officer retirement plan, a city or town whose employees are not under ASRS or the optional retirement programs authorized pursuant to sections 15‑1451 and 15‑1628 and their dependents who are receiving benefits from the public safety personnel retirement system, the elected officials' retirement plan, the corrections officer retirement plan, a city or town retirement plan or program or the optional retirement programs authorized pursuant to sections 15‑1451 and 15‑1628 and who are not covered by section 38‑651.01 may participate in group health and accident coverage provided pursuant to this section. On the death of an insured member of the public safety personnel retirement system, the elected officials' retirement plan, the corrections officer retirement plan, a city or town retirement plan or program or the optional retirement programs authorized pursuant to sections 15‑1451 and 15‑1628, the insured surviving dependent is entitled to coverage at group rates. Except as provided in subsection H of this section, the surviving dependent shall be charged amounts that are sufficient to pay for the premium and administrative expense of providing the coverage.
C. The board may enter into agreements with retired and disabled members of ASRS who elect to obtain the coverage provided pursuant to subsection A of this section. Those agreements may include provision provisions for the deduction from the retirement benefits of the members who elect to obtain the coverage of amounts sufficient to pay for the premium not covered under retirement benefits and the administrative expense of providing the coverage.
D. The fund manager of the public safety personnel retirement system may enter into agreements with retired members of the public safety personnel retirement system, the elected officials' retirement plan, the corrections officer retirement plan and their dependents who elect to obtain the coverage provided pursuant to this section. Those agreements may include provisions for the deduction from the retirement benefits of the members who elect to obtain the coverage of amounts sufficient to pay for the premium not covered under their retirement benefits and the administrative expense of providing the coverage.
E. The board may enter into agreements with retired members of the optional retirement programs authorized pursuant to sections 15‑1451 and 15‑1628 and a city or town retirement plan or program and their dependents who elect to obtain the coverage provided pursuant to this section. Those agreements may include provisions for the payment of amounts sufficient to pay for the premium and administrative expense of providing the coverage.
F. If an insured member receiving long‑term disability benefits pursuant to article 2.1 of this chapter becomes ineligible for the long‑term disability benefits, the member and the covered dependents of the member may continue to participate in the group health and accident coverage provided pursuant to this section subject to the following conditions:
1. Participation in the coverage is limited to twelve months from the date the member ceases eligibility for benefits under article 2.1 of this chapter or the member commences employment, whichever occurs first.
2. The member shall pay the full premium cost of the coverage selected, and the member is not eligible for benefits pursuant to section 38‑783.
3. If a member who participates in the coverage dies during the twelve month period provided by this subsection, covered dependents of the member may continue coverage after the death of the member through the end of the twelve month period. Covered dependents of the member who continue coverage pursuant to this paragraph shall pay the full premium cost of the coverage selected and are not eligible for benefits pursuant to section 38‑783.
G. Retired or disabled members who are not eligible for medicare, who live in this state, who enroll in a qualifying health maintenance organization under this section and who reside outside the area of a qualifying health maintenance organization shall be offered the option of enrolling with a qualified health maintenance organization offered through their provider under the same premiums as if they lived within the area boundaries of the qualified health maintenance organization provided that:
1. All medical services are rendered and received at an office designated by the qualifying health maintenance organization or at a facility referred by the health maintenance organization.
2. All nonemergency or nonurgent travel, ambulatory and other expenses from the residence area of the member to the designated office of the qualifying health maintenance organization or the facility referred by the health maintenance organization are the responsibility of and at the expense of the member.
3. All emergency or urgent travel, ambulatory and other expenses from the residence area of the member to the designated office of the qualifying health maintenance organization or the facility referred by the health maintenance organization shall be paid pursuant to any agreement between the health maintenance organization and the member living outside the area of the qualifying health maintenance organization.
H. Public monies shall not be spent to pay all or any part of the insurance premium pursuant to this section except for monies authorized to be paid for any insured from the retirement plan from which the insured is receiving benefits.
I. If a city or town whose employees are not under ASRS elects to participate in group health and accident coverage for its employees pursuant to this section, the city or town shall agree that ASRS shall be the only health and accident insurance coverage offered to the city's or town's retirees.
Sec. 10. Section 38-783, Arizona Revised Statutes, is amended to read:
38-783. Retired members; dependents; health insurance; premium payment; separate account; definitions
A. Subject to subsections G, H and I F, G and H of this section, the board shall pay from ASRS assets part of the single coverage premium of any health and accident insurance for each retired, contingent annuitant or disabled member of ASRS if the member elects to participate in the coverage provided by ASRS or section 38‑651.01 or elects to participate in a health and accident insurance program provided or administered by an employer or paid for, in whole or in part, by an employer to an insurer. A contingent annuitant must be receiving a monthly retirement benefit from ASRS in order to obtain any premium payment provided by this section. The board shall pay:
1. Up to one hundred fifty dollars per month for a member of ASRS who is not eligible for medicare if the retired or disabled member has ten or more years of credited service.
2. Up to one hundred dollars per month for each member of ASRS who is eligible for medicare if the retired or disabled member has ten or more years of credited service.
B. Subject to subsections G, H and I F, G and H of this section, the board shall pay from ASRS assets part of the family coverage premium of any health and accident insurance for a retired, contingent annuitant or disabled member of ASRS who elects family coverage and who otherwise qualifies for payment pursuant to subsection A of this section. If a member of ASRS and the member's spouse are both either retired or disabled under ASRS and apply for family coverage, the member who elects family coverage is entitled to receive the payments under this section as if they were both applying under a single coverage premium unless the payment under this section for family coverage is greater. Payment under this subsection is in the following amounts:
1. Up to two hundred sixty dollars per month if the member of ASRS and one or more dependents are not eligible for medicare.
2. Up to one hundred seventy dollars per month if the member of ASRS and one or more dependents are eligible for medicare.
3. Up to two hundred fifteen dollars per month if either:
(a) The member of ASRS is not eligible for medicare and one or more dependents are eligible for medicare.
(b) The member of ASRS is eligible for medicare and one or more dependents are not eligible for medicare.
C. In addition each retired, contingent annuitant or disabled member of ASRS with less than ten years of credited service and a dependent of such a retired, contingent annuitant or disabled member who elects to participate in the coverage provided by ASRS or section 38‑651.01 or who elects to participate in a health and accident insurance program provided or administered by an employer or paid for, in whole or in part, by an employer to an insurer is entitled to receive a proportion of the full benefit prescribed by subsection A or B of this section according to the following schedule:
1. 9.0 to 9.9 years of credited service, ninety per cent.
2. 8.0 to 8.9 years of credited service, eighty per cent.
3. 7.0 to 7.9 years of credited service, seventy per cent.
4. 6.0 to 6.9 years of credited service, sixty per cent.
5. 5.0 to 5.9 years of credited service, fifty per cent.
6. Those with less than five years of credited service do not qualify for the benefit.
D. The board shall not pay more than the amount prescribed in this section for a member of ASRS.
E. A retired, contingent annuitant or disabled member of ASRS may elect to purchase individual health care coverage and receive a payment pursuant to this section through the retired or disabled member's employer if that employer assumes the administrative functions associated with the payment, including verification that the payment is used to pay for health insurance coverage if the payment is made to the retired or disabled member.
F. E. The board shall establish a separate account that consists of the benefits provided by this section. The board shall not use or divert any part of the corpus or income of the account for any purpose other than the provision of benefits under this section unless the liabilities of ASRS to provide the benefits are satisfied. If the liabilities of ASRS to provide the benefits described in this section are satisfied, the board shall return any amount remaining in the account to the employer.
G. F. Payment of the benefits provided by this section is subject to the following conditions:
1. The payment of the benefits is subordinate to the payment of retirement benefits payable by ASRS.
2. The total of contributions for the benefits and actual contributions for life insurance protection, if any, shall not exceed twenty‑five per cent of the total actual employer and employee contributions to ASRS, less contributions to fund past service credits, after the day the account is established.
3. The board shall deposit the benefits provided by this section in the account.
4. The contributions by the employer to the account shall be reasonable and ascertainable.
H. G. A member who elects to receive a retirement benefit pursuant to section 38‑760, subsection B, paragraph 1 may elect at the time of retirement an optional form of health and accident insurance premium benefit payment pursuant to this subsection as follows:
1. The optional premium benefit payment shall be an amount prescribed by subsection A, B or C of this section that is actuarially reduced to the retiring member for life. The amount of the optional premium benefit payment shall be the actuarial equivalent of the premium benefit payment to which the retired member would otherwise be entitled. The election in a manner prescribed by the board shall name the contingent annuitant and may be revoked at any time before the retiring member's effective date of retirement. At any time after benefits have commenced, the member may name a different contingent annuitant or rescind the election by written notice to the board as follows:
(a) If the retired member names a different contingent annuitant, the optional premium benefit payment shall be adjusted to the actuarial equivalent of the original premium benefit payment based on the age of the new contingent annuitant. The adjustment shall include all postretirement increases or decreases in amounts prescribed by subsection A, B or C of this section that are authorized by law after the retired member's date of retirement. Payment of this adjusted premium benefit payment shall continue under the provisions of the optional premium benefit payment previously elected by the retired member. A retired member cannot name a different contingent annuitant if the retired member has at any time rescinded the optional form of health and accident insurance premium benefit payment.
(b) If the retired member rescinds the election, the retired member shall thereafter receive the premium benefit payment that the retired member would otherwise be entitled to receive if the retired member had not elected the optional premium benefit payment, including all postretirement increases or decreases in amounts prescribed by subsection A, B or C of this section that are authorized by law after the member's date of retirement. The increased benefit payment shall continue during the remainder of the retired member's lifetime. The decision to rescind shall be irrevocable.
2. If, at the time of the retired member's death:
(a) The retired member was receiving a reduced premium benefit payment based on an amount prescribed in subsection B or C of this section and the contingent annuitant is eligible for family health and accident insurance coverage, the contingent annuitant is entitled to receive a premium benefit payment based on an amount prescribed in subsection B or C of this section times the reduction factor applied to the retired member's premium benefit payment times the joint and survivor option reduction factor elected by the retired member at the time of retirement pursuant to section 38‑760, subsection B, paragraph 1.
(b) The retired member was receiving a reduced premium benefit payment based on an amount prescribed in subsection A or C of this section and the contingent annuitant is eligible for single health and accident insurance coverage, the contingent annuitant is entitled to receive a premium benefit payment based on an amount prescribed in subsection A or C of this section times the reduction factor applied to the retired member's premium benefit payment times the joint and survivor option reduction factor elected by the retired member at the time of retirement pursuant to section 38‑760, subsection B, paragraph 1.
(c) The retired member was receiving a reduced premium benefit payment based on an amount prescribed in subsection B or C of this section and the contingent annuitant is not eligible for family health and accident insurance coverage, the contingent annuitant is entitled to receive a premium benefit payment based on an amount prescribed in subsection A or C of this section times the reduction factor applied to the retired member's premium benefit payment times the joint and survivor option reduction factor elected by the retired member at the time of retirement pursuant to section 38‑760, subsection B, paragraph 1.
I. H. A member who elects to receive a retirement benefit pursuant to section 38‑760, subsection B, paragraph 2 may elect at the time of retirement an optional form of health and accident insurance premium benefit payment pursuant to this subsection as follows:
1. The optional premium benefit payment shall be an amount prescribed by subsection A, B or C of this section that is actuarially reduced with payments for five, ten or fifteen years that are not dependent on the continued lifetime of the retired member but whose payments continue for the retired member's lifetime beyond the five, ten or fifteen year period. The election in a manner prescribed by the board shall name the contingent annuitant and may be revoked at any time before the retiring member's effective date of retirement. At any time after benefits have commenced, the member may name a different contingent annuitant or rescind the election by written notice to the board. If the retired member rescinds the election, the retired member shall thereafter receive the premium benefit payment that the retired member would otherwise be entitled to receive if the retired member had not elected the optional premium benefit payment, including all postretirement increases or decreases in amounts prescribed by subsection A, B or C of this section that are authorized by law after the member's date of retirement. The increased benefit payment shall continue during the remainder of the retired member's lifetime. The decision to rescind shall be irrevocable.
2. If, at the time of the retired member's death:
(a) The retired member was receiving a reduced premium benefit payment based on an amount prescribed in subsection B or C of this section and the contingent annuitant is eligible for family health and accident insurance coverage, the contingent annuitant is entitled to receive a premium benefit payment based on an amount prescribed in subsection B or C of this section times the period certain and life option reduction factor elected by the retired member at the time of retirement pursuant to section 38‑760, subsection B, paragraph 2.
(b) The retired member was receiving a reduced premium benefit payment based on an amount prescribed in subsection A or C of this section and the contingent annuitant is eligible for single health and accident insurance coverage, the contingent annuitant is entitled to receive a premium benefit payment based on an amount prescribed in subsection A or C of this section times the period certain and life option reduction factor elected by the retired member at the time of retirement pursuant to section 38‑760, subsection B, paragraph 2.
(c) The retired member was receiving a reduced premium benefit payment based on an amount prescribed in subsection B or C of this section and the contingent annuitant is not eligible for family health and accident insurance coverage, the contingent annuitant is entitled to receive a premium benefit payment based on an amount prescribed in subsection A or C of this section times the period certain and life option reduction factor elected by the retired member at the time of retirement pursuant to section 38‑760, subsection B, paragraph 2.
J. I. If, at the time of retirement, a retiring member does not elect to receive a reduced premium benefit payment pursuant to subsection H or I G or H of this section, the retired member's contingent annuitant is not eligible at any time for the optional premium benefit payment.
K. J. A contingent annuitant is not eligible for any premium benefit payment if the contingent annuitant was not enrolled in an eligible health and accident insurance plan at the time of the retired member's death or if the contingent annuitant is not the dependent beneficiary or insured surviving dependent as provided in section 38‑782.
L. K. For the purposes of this section:
1. "Account" means the separate account established pursuant to subsection F E of this section.
2. "Credited service" includes prior service.
3. "Prior service" means service for this state or a political subdivision of this state before membership in the defined contribution program administered by ASRS.
Sec. 11. Section 38-817, Arizona Revised Statutes, is amended to read:
38-817. Group health and accident coverage for retired members; payment
A. The fund manager shall pay from the assets of the fund part of the single coverage premium of any group health and accident insurance for each retired member or survivor of the elected officials' retirement plan who receives a pension if the retired member had eight or more years of credited service under the plan. In order to qualify for payment pursuant to this subsection, the retired member or survivor shall elect single coverage and must have elected to participate in the coverage provided in section 38‑651.01 or 38‑782 or any other health and accident insurance coverage provided or administered by a participating employer of the elected officials' retirement plan. The fund manager shall pay up to:
1. One hundred fifty dollars per month for each retired member or survivor of the plan who is not eligible for medicare.
2. One hundred dollars per month for each retired member or survivor of the plan who is eligible for medicare.
B. The fund manager shall pay from the assets of the fund part of the family coverage premium of any group health and accident insurance each month for a benefit recipient who elects family coverage and who otherwise qualifies for payment pursuant to subsection A of this section. The fund manager shall pay up to:
1. Two hundred sixty dollars per month if the retired member or survivor of the plan and one or more dependents are not eligible for medicare.
2. One hundred seventy dollars per month if the retired member or survivor of the plan and one or more dependents are eligible for medicare.
3. Two hundred fifteen dollars per month if either:
(a) The retired member or survivor of the plan is not eligible for medicare and one or more dependents are eligible for medicare.
(b) The retired member or survivor of the plan is eligible for medicare and one or more dependents are not eligible for medicare.
C. Each retired member or survivor of the plan with less than eight years of credited service and a dependent of such a retired member or survivor who participates in the coverage provided by section 38‑651.01 or 38‑782 or who participates in any other health and accident insurance coverage provided or administered by a participating employer of the plan is entitled to receive a proportion of the full benefit prescribed by subsection A, or B, E, F, G or H of this section according to the following schedule:
1. 7.0 to 7.9 years of credited service, ninety per cent.
2. 6.0 to 6.9 years of credited service, seventy‑five per cent.
3. 5.0 to 5.9 years of credited service, sixty per cent.
4. Those with less than five years of credited service do not qualify for the benefit.
D. The fund manager shall not pay more than the amount prescribed in this section for a benefit recipient as a member or survivor of the plan.
E. In addition to the payments provided by subsection A of this section, through June 30, 2005, the fund manager shall pay an insurance premium benefit for medical coverage, not including limited benefit coverage as defined in section 20‑1137, for each retired member or survivor of the plan who is entitled to a premium benefit payment pursuant to subsection A of this section and who lives in a nonservice area as follows:
1. Up to three hundred dollars per month for a retired member or survivor of the plan who is not eligible for medicare and who has eight or more years of credited service. To qualify for this additional benefit, a retired member or survivor shall pay out‑of‑pocket medical insurance premiums of at least one hundred twenty‑five dollars per month.
2. Up to one hundred seventy dollars per month for a retired member or survivor of the plan who is eligible for medicare and who has eight or more years of credited service. To qualify for this additional benefit, a retired member or survivor shall pay out‑of‑pocket medical insurance premiums of at least one hundred dollars per month.
F. In addition to the payments provided by subsection B of this section, through June 30, 2005, the fund manager shall pay an insurance premium benefit for medical coverage, not including limited benefit coverage as defined in section 20‑1137, for a retired member or survivor of the plan who is entitled to a premium benefit payment pursuant to subsection B of this section, who is enrolled in a family medical plan and who lives in a nonservice area as follows:
1. Up to six hundred dollars per month if the retired member or survivor of the plan and one or more dependents are not eligible for medicare and the retired member or survivor of the plan has eight or more years of credited service. To qualify for this additional benefit, a retired member or survivor shall pay out‑of‑pocket medical insurance premiums of at least four hundred twenty‑five dollars per month.
2. Up to three hundred fifty dollars per month if the retired member or survivor of the plan and one or more dependents are eligible for medicare and the retired member or survivor of the plan has eight or more years of credited service. To qualify for this additional benefit, a retired member or survivor shall pay out‑of‑pocket medical insurance premiums of at least two hundred dollars per month.
3. If the retired member or survivor of the plan has eight or more years of credited service, up to four hundred seventy dollars per month if either:
(a) The retired member or survivor of the plan is not eligible for medicare and one or more dependents are eligible for medicare.
(b) The retired member or survivor of the plan is eligible for medicare and one or more dependents are not eligible for medicare.
To qualify for this additional benefit, a retired member or survivor shall pay out‑of‑pocket medical insurance premiums of at least four hundred dollars per month.
G. In addition to the payments provided by subsection A of this section, beginning July 1, 2005 through June 30, 2009, the fund manager shall pay an insurance premium benefit for medical coverage, not including limited benefit coverage as defined in section 20‑1137, for each medicare eligible retired member or survivor of the plan who is entitled to a premium benefit payment pursuant to subsection A of this section and who lives in a nonservice area of up to one hundred seventy dollars per month for a retired member or survivor of the plan who is eligible for medicare and who has eight or more years of credited service. To qualify for this additional benefit, a retired member or survivor shall pay out‑of‑pocket medical insurance premiums of at least one hundred dollars per month.
H. In addition to the payments provided by subsection B of this section, beginning July 1, 2005 through June 30, 2009, the fund manager shall pay an insurance premium benefit for medical coverage, not including limited benefit coverage as defined in section 20‑1137, for a medicare eligible retired member or survivor of the plan who is entitled to a premium benefit payment pursuant to subsection B of this section, who is enrolled in a family medical plan and who lives in a nonservice area as follows:
1. Up to three hundred fifty dollars per month if the retired member or survivor of the plan and one or more dependents are eligible for medicare and the retired member or survivor of the plan has eight or more years of credited service. To qualify for this additional benefit, a retired member or survivor shall pay out‑of‑pocket medical insurance premiums of at least two hundred dollars per month.
2. If the retired member or survivor of the plan has eight or more years of credited service, up to four hundred seventy dollars per month if the retired member or survivor of the plan is eligible for medicare and one or more dependents are not eligible for medicare. To qualify for this additional benefit, a retired member or survivor shall pay out‑of‑pocket medical insurance premiums of at least four hundred dollars per month.
I. A retired member or survivor of the plan who is enrolled in a managed care program in a nonservice area is not eligible for the payment prescribed in subsection E, F, G or H of this section.
J. A retired member or survivor of the plan may elect to purchase individual health care coverage and receive a payment pursuant to this section through the retired member's employer if that employer assumes the administrative functions associated with the payment, including verification that the payment is used to pay for health insurance coverage if the payment is made to the retired member or survivor of the plan.
K. For the purposes of this section, "nonservice area" means an area in this state in which the Arizona state retirement system pursuant to section 38‑782, the department of administration pursuant to section 38‑651.01 or the member's or survivor's participating employer does not provide or administer a health care services organization program, excluding any preferred provider organization program or individual health indemnity policy, for which the retired member or survivor of the plan is eligible.
Sec. 12. Section 38-857, Arizona Revised Statutes, is amended to read:
38-857. Group health and accident coverage for retired members; payment
A. The fund manager of the public safety personnel retirement system shall pay part of the single coverage premium of any group health and accident insurance for each retired member or survivor of the system who receives a pension and who has elected to participate in the coverage provided by section 38‑651.01 or 38‑782 or any other health and accident insurance coverage provided or administered by a participating employer of the system. The fund manager shall pay up to:
1. One hundred fifty dollars per month for each retired member or survivor of the system who is not eligible for medicare.
2. One hundred dollars per month for each retired member or survivor of the system who is eligible for medicare.
B. The fund manager of the system shall pay from assets of the fund part of the family coverage premium of any group health and accident insurance each month for a benefit recipient who elects family coverage and otherwise qualifies for payment pursuant to subsection A of this section. The fund manager shall pay up to:
1. Two hundred sixty dollars per month if the retired member or survivor of the system and one or more dependents are not eligible for medicare.
2. One hundred seventy dollars per month if the retired member or survivor of the system and one or more dependents are eligible for medicare.
3. Two hundred fifteen dollars per month if either:
(a) The retired member or survivor of the system is not eligible for medicare and one or more dependents are eligible for medicare.
(b) The retired member or survivor of the system is eligible for medicare and one or more dependents are not eligible for medicare.
C. The fund manager shall not pay from assets of the fund more than the amount prescribed in this section for a benefit recipient as a member or survivor of the system.
D. This section does not apply to a retired member or survivor of the system who is reemployed by this state or a political subdivision of this state and who participates in coverage provided by this state or a political subdivision of this state as an active employee.
E. In addition to the payments provided by subsection A of this section, through June 30, 2005, the fund manager shall pay an insurance premium benefit for medical coverage, not including limited benefit coverage as defined in section 20‑1137, for each retired member or survivor of the system who is entitled to a premium benefit payment pursuant to subsection A of this section and who lives in a nonservice area as follows:
1. Up to three hundred dollars per month for a retired member or survivor of the system who is not eligible for medicare. To qualify for this additional benefit, a retired member or survivor shall pay out‑of‑pocket medical insurance premiums of at least one hundred twenty‑five dollars per month.
2. Up to one hundred seventy dollars per month for a retired member or survivor of the system who is eligible for medicare. To qualify for this additional benefit, a retired member or survivor shall pay out‑of‑pocket medical insurance premiums of at least one hundred dollars per month.
F. In addition to the payments provided by subsection B of this section, through June 30, 2005, the fund manager shall pay an insurance premium benefit for medical coverage, not including limited benefit coverage as defined in section 20‑1137, for a retired member or survivor of the system who is entitled to a premium benefit payment pursuant to subsection B of this section, who is enrolled in a family medical plan and who lives in a nonservice area as follows:
1. Up to six hundred dollars per month if the retired member or survivor of the system and one or more dependents are not eligible for medicare. To qualify for this additional benefit, a retired member or survivor shall pay out‑of‑pocket medical insurance premiums of at least four hundred twenty‑five dollars per month.
2. Up to three hundred fifty dollars per month if the retired member or survivor of the system and one or more dependents are eligible for medicare. To qualify for this additional benefit, a retired member or survivor shall pay out‑of‑pocket medical insurance premiums of at least two hundred dollars per month.
3. Up to four hundred seventy dollars per month if either:
(a) The retired member or survivor of the system is not eligible for medicare and one or more dependents are eligible for medicare.
(b) The retired member or survivor of the system is eligible for medicare and one or more dependents are not eligible for medicare.
To qualify for this additional benefit, a retired member or survivor shall pay out‑of‑pocket medical insurance premiums of at least four hundred dollars per month.
G. In addition to the payments provided by subsection A of this section, beginning July 1, 2005 through June 30, 2009, the fund manager shall pay an insurance premium benefit for medical coverage, not including limited benefit coverage as defined in section 20‑1137, for each medicare eligible retired member or survivor of the system who is entitled to a premium benefit payment pursuant to subsection A of this section and who lives in a nonservice area of up to one hundred seventy dollars per month for a retired member or survivor of the system who is eligible for medicare. To qualify for this additional benefit, a retired member or survivor shall pay out‑of‑pocket medical insurance premiums of at least one hundred dollars per month.
H. In addition to the payments provided by subsection B of this section, beginning July 1, 2005 through June 30, 2009, the fund manager shall pay an insurance premium benefit for medical coverage, not including limited benefit coverage as defined in section 20‑1137, for a medicare eligible retired member or survivor of the system who is entitled to a premium benefit payment pursuant to subsection B of this section, who is enrolled in a family medical plan and who lives in a nonservice area as follows:
1. Up to three hundred fifty dollars per month if the retired member or survivor of the system and one or more dependents are eligible for medicare. To qualify for this additional benefit, a retired member or survivor shall pay out‑of‑pocket medical insurance premiums of at least two hundred dollars per month.
2. Up to four hundred seventy dollars per month if the retired member or survivor of the system is eligible for medicare and one or more dependents are not eligible for medicare. To qualify for this additional benefit, a retired member or survivor shall pay out‑of‑pocket medical insurance premiums of at least four hundred dollars per month.
I. A retired member or survivor of the system who is enrolled in a managed care program in a nonservice area is not eligible for the payment prescribed in subsection E, F, G or H of this section.
J. A retired member or survivor of the system may elect to purchase individual health care coverage and receive a payment pursuant to this section through the retired member's employer if that employer assumes the administrative functions associated with the payment, including verification that the payment is used to pay for health insurance coverage if the payment is made to the retired member or survivor of the system.
K. For the purposes of this section, "nonservice area" means an area in this state in which the Arizona state retirement system pursuant to section 38‑782, the department of administration pursuant to section 38‑651.01 or the member's or survivor's participating employer does not provide or administer a health care services organization program, excluding any preferred provider organization program or individual health indemnity policy, for which the retired member or survivor of the system is eligible.
Sec. 13. Section 38-906, Arizona Revised Statutes, is amended to read:
38-906. Group health and accident coverage for retired members; payment
A. The fund manager shall pay from the assets of the fund part of the single coverage premium of any group health and accident insurance for each retired member or survivor of the plan who receives a pension and who has elected to participate in coverage provided by section 38‑651.01 or 38‑782 or any other health and accident insurance coverage provided or administered by a participating employer in the plan. The fund manager shall pay up to:
1. One hundred fifty dollars per month for each retired member or survivor of the plan who is not eligible for medicare.
2. One hundred dollars per month for each retired member or survivor of the plan who is eligible for medicare.
B. The fund manager shall pay from the assets of the fund part of the family coverage premium of any group health and accident insurance for each retired member or survivor of the plan who elects family coverage and who otherwise qualifies for payment pursuant to subsection A of this section. Payment under this subsection is in the following amounts:
1. Up to two hundred sixty dollars per month if the retired member or survivor of the plan and one or more dependents are not eligible for medicare.
2. Up to one hundred seventy dollars per month if the retired member or survivor of the plan and one or more dependents are eligible for medicare.
3. Up to two hundred fifteen dollars if either:
(a) The retired member or survivor of the plan is not eligible for medicare and one or more dependents are eligible for medicare.
(b) The retired member or survivor of the plan is eligible for medicare and one or more dependents are not eligible for medicare.
C. The fund manager shall not pay more than the amount prescribed in this section for a benefit recipient as a member or survivor of the plan.
D. In addition to the payments provided by subsection A of this section, through June 30, 2005, the fund manager shall pay an insurance premium benefit for medical coverage, not including limited benefit coverage as defined in section 20‑1137, for each retired member or survivor of the plan who is entitled to a premium benefit payment pursuant to subsection A of this section and who lives in a nonservice area as follows:
1. Up to three hundred dollars per month for a retired member or survivor of the plan who is not eligible for medicare. To qualify for this additional benefit, a retired member or survivor shall pay out‑of‑pocket medical insurance premiums of at least one hundred twenty‑five dollars per month.
2. Up to one hundred seventy dollars per month for a retired member or survivor of the plan who is eligible for medicare. To qualify for this additional benefit, a retired member or survivor shall pay out‑of‑pocket medical insurance premiums of at least one hundred dollars per month.
E. In addition to the payments provided by subsection B of this section, through June 30, 2005, the fund manager shall pay an insurance premium benefit for medical coverage, not including limited benefit coverage as defined in section 20‑1137, for a retired member or survivor of the plan who is entitled to a premium benefit payment pursuant to subsection B of this section, who is enrolled in a family medical plan and who lives in a nonservice area as follows:
1. Up to six hundred dollars per month if the retired member or survivor of the plan and one or more dependents are not eligible for medicare. To qualify for this additional benefit, a retired member or survivor shall pay out‑of‑pocket medical insurance premiums of at least four hundred twenty‑five dollars per month.
2. Up to three hundred fifty dollars per month if the retired member or survivor of the plan and one or more dependents are eligible for medicare. To qualify for this additional benefit, a retired member or survivor shall pay out‑of‑pocket medical insurance premiums of at least two hundred dollars per month.
3. Up to four hundred seventy dollars per month if either:
(a) The retired member or survivor of the plan is not eligible for medicare and one or more dependents are eligible for medicare.
(b) The retired member or survivor of the plan is eligible for medicare and one or more dependents are not eligible for medicare.
To qualify for this additional benefit, a retired member or survivor shall pay out‑of‑pocket medical insurance premiums of at least four hundred dollars per month.
F. In addition to the payments provided by subsection A of this section, beginning July 1, 2005 through June 30, 2009, the fund manager shall pay an insurance premium benefit for medical coverage, not including limited benefit coverage as defined in section 20‑1137, for each medicare eligible retired member or survivor of the plan who is entitled to a premium benefit payment pursuant to subsection A of this section and who lives in a nonservice area of up to one hundred seventy dollars per month for a retired member or survivor of the plan who is eligible for medicare. To qualify for this additional benefit, a retired member or survivor shall pay out‑of‑pocket medical insurance premiums of at least one hundred dollars per month.
G. In addition to the payments provided by subsection B of this section, beginning July 1, 2005 through June 30, 2009, the fund manager shall pay an insurance premium benefit for medical coverage, not including limited benefit coverage as defined in section 20‑1137, for a medicare eligible retired member or survivor of the plan who is entitled to a premium benefit payment pursuant to subsection B of this section, who is enrolled in a family medical plan and who lives in a nonservice area as follows:
1. Up to three hundred fifty dollars per month if the retired member or survivor of the plan and one or more dependents are eligible for medicare. To qualify for this additional benefit, a retired member or survivor shall pay out‑of‑pocket medical insurance premiums of at least two hundred dollars per month.
2. Up to four hundred seventy dollars per month if the retired member or survivor of the plan is eligible for medicare and one or more dependents are not eligible for medicare. To qualify for this additional benefit, a retired member or survivor shall pay out‑of‑pocket medical insurance premiums of at least four hundred dollars per month.
H. A retired member or survivor of the plan who is enrolled in a managed care program in a nonservice area is not eligible for the payment prescribed in subsection D, E, F or G of this section.
I. A retired member or survivor of the plan may elect to purchase individual health care coverage and receive a payment pursuant to this section through the retired member's employer if that employer assumes the administrative functions associated with the payment, including verification that the payment is used to pay for health insurance coverage if the payment is made to the retired member or survivor of the plan.
J. For the purposes of this section, "nonservice area" means an area in this state in which the Arizona state retirement system pursuant to section 38‑782, the department of administration pursuant to section 38‑651.01 or the member's or survivor's participating employer does not provide or administer a health care services organization program, excluding any preferred provider organization program or individual health indemnity policy, for which the retired member or survivor of the plan is eligible.
Sec. 14. Existing retiree health insurance contracts
Any political subdivision of this state that participates in the Arizona state retirement system and that has a retiree health insurance program in existence on the effective date of this act shall continue the program until the expiration of any health insurance contract that has been entered into pursuant to the program. The Arizona state retirement system shall offer an open enrollment period for members of such a retiree program to allow the members the opportunity to enroll in the retiree health insurance program offered by the Arizona state retirement system.
Sec. 15. Initial terms of members of the special employee health insurance trust fund board of trustees
A. Notwithstanding section 38‑654, Arizona Revised Statutes, as amended by this act, the initial terms of members of the special employee health insurance trust fund board of trustees are:
1. For the member who is appointed by the governor, the term ends on the third Monday of January, 2012.
2. For the members who are appointed by the speaker of the house of representatives and the house minority leader, the terms end on the third Monday of January, 2013.
3. For the members who are appointed by the president of the senate and the senate minority leader, the terms end on the third Monday of January, 2014.
B. The appropriate official shall make all subsequent appointments as prescribed by statute.
Sec. 16. Department of administration study; small business; nonprofit organization; inclusion in active state health insurance pool; definitions
A. On or after July 1, 2011, the department of administration shall issue a request for proposals to study the feasibility of allowing Arizona small employers and nonprofit organizations to participate in the health and accident coverage provided by section 38‑651, Arizona Revised Statutes.
B. For the purposes of this section:
1. "Employer" includes the employees of the employer and the individual proprietor or self‑employed person if the employer is an individual proprietor or self‑employed person.
2. "Small employer" means an employer who employs at least one but not more than fifty eligible employees on a typical business day during any one calendar year and who for not less than two successive years has paid real or personal property taxes assessed under title 42, Arizona Revised Statutes.
