Second Regular Session Sixty-seventh General Assembly STATE OF COLORADO INTRODUCED LLS NO. 10-0358.01 Nicole Myers HOUSE BILL 10-1266 HOUSE SPONSORSHIP Frangas, SENATE SPONSORSHIP (None), House Committees Senate Committees Business Affairs and Labor A BILL FOR AN ACT Concerning the inclusion of employees of specified employers in certain aspects of state group benefit plans at the option of the employer. Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://www.leg.state.co.us/billsummaries.) The bill allows certain local governments, small businesses, and nonprofit organizations to offer participation in fully funded state group benefit plans for medical and dental coverages to their employees. The bill: Specifies that participation in state group benefit plans for medical and dental coverages is voluntary for local government, small businesses, and nonprofit organizations and that local government, small business, and nonprofit organization employees cannot participate in state group benefit plans if their employer has not chosen to offer participation to its employees. Allows the state personnel director to charge an administrative fee to participating local government, small business, and nonprofit organization employees to cover the state's cost of administering group benefit plans for local government, small business, and nonprofit organization employees. Precludes participating local governments, small businesses, and nonprofit organizations from offering any other medical and dental benefit coverages to their employees and requires the local governments, small businesses, and nonprofit organizations to agree to participate in state group benefit plans for at least 3 years. Requires participating local governments, small businesses, and nonprofit organizations to contribute on behalf of their participating employees a minimum amount as determined by the director of the department of personnel (director). Requires participating local government, small business, and nonprofit organization employees to comply with all rules and procedures adopted by the director. Allows local governments, small businesses, and nonprofit organizations to determine eligibility of their employees and their dependents for participation in state group benefit plans for medical and dental coverages. Establishes the local government, small business, and nonprofit organization group benefit plans fund in the state treasury and specifies that the fund contains the premium account and the administration account. Specifies that group benefit plan premium costs received by the director for local government, small business, and nonprofit organization employee premiums shall be deposited into the premium account and that expenditures shall be made from the premium account for the payment to carriers of premiums, claims costs, and other administrative fees and costs associated with the group benefit plans for local government, small business, and nonprofit organization employees. Specifies that moneys credited to or expended from the premium account for payment to carriers who provide fully funded group benefit plans to local government, small business, and nonprofit organization employees do not constitute state fiscal year spending for purposes of the state constitutional limitation on spending. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. 24-50-603 (5), (6.5), (7), (8), (9), (11), and (13), Colorado Revised Statutes, are amended, and the said 24-50-603 is further amended BY THE ADDITION OF THE FOLLOWING NEW SUBSECTIONS, to read: 24-50-603. Definitions. As used in this part 6, unless the context otherwise requires: (5) "Dependent" means: (a) An A state employee's legal spouse; each unmarried child, including adopted children, stepchildren, and foster children, through the end of the month in which the child turns nineteen years of age, for whom the state employee is the major source of financial support or for whom the state employee is directed by court order to provide coverage; each unmarried child nineteen years of age, through the end of the month in which that child is no longer a full-time student in an educational or vocational institution, but no longer than through the end of the month in which the full-time student turns twenty-four years of age, and for whom the state employee is the major source of financial support or for whom the state employee is directed by court order to provide coverage; or an unmarried child of any age who has either a physical or mental disability, as defined by the carrier, not covered under other government programs, and for whom the state employee is the major source of financial support or for whom the state employee is directed by court order to provide coverage; (b) Any person authorized by the director to be a dependent in response to statutory changes made to mandated coverage for group benefits insurance pursuant to title 10, C.R.S.; (c) An A state employee's domestic partner, as authorized by the director by rule adopted in accordance with article 4 of this title, who has submitted documentation demonstrating a domestic partnership with an a state employee as required by such rules; (d) Any additional dependents specified by the director by rule adopted in accordance with article 4 of this title; (e) For purposes of any local government, small business, or nonprofit organization that elects to participate in group benefit plans pursuant to section 24-50-604.5, "dependent" means "dependent" as defined by the local government or small business, as applicable, for purposes of determining the eligibility of dependents to participate in group benefit plans offered pursuant to section 24-50-604.5. (6.5) "Domestic partner" means an adult, at least eighteen years of age: (a) Who is of the same gender as the state, local government, small business, or nonprofit organization employee; (b) With whom the state, local government, small business, or nonprofit organization employee has shared an exclusive, committed relationship for at least one year with the intent for the relationship to last indefinitely; (c) Who is not related to the state, local government, small business, or nonprofit organization employee by blood to a degree that would prohibit marriage pursuant to section 14-2-110, C.R.S.; and (d) Who is not married to another person. (7) "Employee" or "state employee" means any officer or employee under the state personnel system of the state of Colorado whose salary is paid by state funds or any employee of the department of education, the Colorado commission on higher education, or the Colorado school for the deaf and the blind whose salary is paid by state funds, or any member of the military employed pursuant to section 28-3-904, C.R.S. "Employee" or "state employee" includes any officer or employee of the legislative or judicial branch, any elected or appointed state official or employee who receives compensation other than expense reimbursement from state funds, any elected state official who does not receive compensation other than expense reimbursement from state funds, and includes any member of the board of assessment appeals. "Employee" or "state employee" does not include persons employed on a temporary basis; except that it shall include a member of the military employed pursuant to section 28-3-904, C.R.S., for more than thirty consecutive days. (8) "Flexible benefits" means an array of group benefit plans from which an a state employee can select using the state's contribution, the state employee's own funds, or a combination of both, to pay for such benefits. (9) (a) "Group benefit plans" means any group benefit coverages contracted for or administered by the director for state employees, including but not limited to, medical, dental, life, and disability benefits. (b) For purposes of local governments, small businesses, and nonprofit organizations, "group benefit plans" means group benefit coverages contracted for or administered by the director that include medical and dental benefits only. (9.3) "Local government" means the Colorado association of school boards, the Colorado high school activities association, the fire and police pension association, the special districts association, the Colorado water resources and power development authority, the public employees' retirement association, all school districts in Colorado including a charter school district, and any political subdivision, city, municipality, county, housing authority, special district, library district, regional planning commission, public hospital, county or district health department, state university, state college, state junior college, or other public entity in the state. (9.5) "Local government employee" means an employee of a local government as defined by the local government. (11) "Medical benefits" includes, but is not limited to, hospital room and board, other hospital services, certain out-patient benefits, maternity benefits, surgical benefits including obstetrical care, in-hospital medical care, diagnostic X rays, laboratory benefits, physician services, prescription drugs, mental health and substance abuse services, comparable medical benefits for state, local government, small business, and nonprofit organization employees who rely solely on spiritual means for healing, and such other similar benefits as the director deems reasonable and appropriate for eligible state, local government, small business, and nonprofit organization employees and dependents. (12.3) "Nonprofit organization" means a public or private organization that is exempt from federal income taxation under section 501 (c) (3) of the federal "Internal Revenue Code of 1986", as amended. (12.5) "Nonprofit organization employee" means an employee of a nonprofit organization as defined by the nonprofit organization. (13) "Short-term disability plan" means a group policy or contract provided by a carrier for the purpose of providing short-term disability income replacement to be provided to any eligible state employee who has completed any required waiting period. (14) "Small business" means: (a) A Colorado business employing no more than one hundred employees; or (b) A business group of one, as defined in section 10-16-102 (6), C.R.S. (15) "Small business employee" means an employee of a small business as defined by the small business. SECTION 2. The introductory portion to 24-50-604 (1) and 24-50-604 (1) (d), (1) (e), (1) (f), (1) (i), and (3), Colorado Revised Statutes, are amended to read: 24-50-604. Powers and duties of the director. (1) The director shall administer and manage the state employees group benefit plans for state, local government, small business, and nonprofit organization employees and, subject to the provisions of this part 6, has the following powers and duties: (d) The determination of the eligibility of state employees and their dependents to participate in group benefit plans; (e) The determination of the amount of state employee payroll deductions and the responsibility for collecting such deductions for state employees; (f) The establishment of a grievance procedure by which the director shall act as an appeals authority for complaints by state, local government, small business, and nonprofit organization employees and COBRA participants regarding the allowance and payment of claims, eligibility of state employees, and other matters; (i) The authority to negotiate and enter into amendments to existing contracts providing group benefit plans in order to provide appropriate coverage for state, local government, small business, and nonprofit organization employees and their dependents who may become eligible for coverage after the effective date of said contracts and to provide for the enrollment thereof; (3) The director shall have the authority to adopt procedures to determine benefit eligibility requirements and the percentage of the state contribution to health benefits for all state employees, as defined in section 24-50-603 (7), who work less than full time, are governed by the rules established pursuant to subsection (2) of this section, and are hired on or after January 1, 2005. The director shall include any proposed changes to the group benefits policy in the annual compensation report and recommendations submitted to the governor and the joint budget committee of the general assembly pursuant to section 24-50-104 (4) (c). SECTION 3. Part 6 of article 50 of title 24, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW SECTION to read: 24-50-604.5. Group benefit plans for local government, small business, and nonprofit organization employees - participation limited to fully funded plans - election of local governments, small businesses, and nonprofit organizations - powers and duties of the director - administrative fees. (1) The director shall administer and manage group benefit plans for local government, small business, and nonprofit organization employees who are employed by local governments, small businesses, and nonprofit organizations that have elected to participate in group benefit plans administered pursuant to section 24-50-604. However, local government, small business, and nonprofit organization employees shall be allowed to participate in only fully funded group benefit plans. Participation by a local government, small business, or nonprofit organization in a group benefit plan administered pursuant to section 24-50-604 shall be voluntary. No local government, small business, or nonprofit organization employee may participate in the group benefit plans administered pursuant to section 24-50-604 if the local government, small business, or nonprofit organization employing the employee has not elected to participate in and offer said plans to its employees. (2) If a local government, small business, or nonprofit organization elects to participate in group benefit plans administered pursuant to section 24-50-604, the local government, small business, or nonprofit organization shall not offer any other plans for medical or dental benefit coverages to its employees, and the local government, small business, or nonprofit organization shall agree to participate in the group benefit plans for not less than three years. Any local government, small business, or nonprofit organization that elects to participate in group benefit plans administered pursuant to section 24-50-604 shall contribute on behalf of its participating local government, small business, or nonprofit organization employees a minimum amount as specified by the director in procedures adopted in accordance with article 4 of this title. Any local government, small business, or nonprofit organization employee that participates in group benefit plans administered pursuant to section 24-50-604 shall be subject to all procedures adopted by the director in accordance with section 24-50-604 (2). (3) The director may charge an administrative fee for each local government, small business, and nonprofit organization employee that participates in group benefit plans administered pursuant to section 24-50-604 to cover the state's cost of administering the plans for participating local government, small business, and nonprofit organization employees. SECTION 4. 24-50-605 (1) (a), (1) (f), (2) (a), (2) (c), and (2) (e), Colorado Revised Statutes, are amended to read: 24-50-605. Group benefit plans - specifications - contracts. (1) (a) The specifications drawn by the director for any group benefit plans include those benefits as determined by the director or as otherwise specifically provided in this part 6. Such specifications shall include provisions for noncancellation for reasons of health of any individual state, local government, small business, or nonprofit organization employee by the carrier and transferability to other group benefit coverages or individual policies with the same carrier by the state, local government, small business, or nonprofit organization employee, if such provisions do not limit the ability of the director to prepare specifications including a lifetime maximum benefit per state, local government, small business, or nonprofit organization employee or state, local government, small business, or nonprofit organization employee's covered dependents. (f) The specifications drawn by the director for any group benefit plans shall include the mandated coverages required by section 10-16-104, C.R.S. The director shall provide to the legislative committee of reference a financial impact statement for any proposed mandated coverage that relates to either the state's, local government's, small business', or nonprofit organization's share of the state, local government, small business, or nonprofit organization employee benefit premium or the state, local government, small business, or nonprofit organization employee's share of the premium. (2) (a) In order to permit each eligible state employee individual selection of a flexible benefits or cafeteria benefits package, the director may establish a variety of group benefit plans. (c) Each contract entered into with a carrier shall be available to be inspected or copied by any state, local government, small business, or nonprofit organization employee at the offices of the director, except for proprietary information of carriers as determined by the director. (e) Financial data will be available to be inspected or copied by any state, local government, small business, or nonprofit organization employee at the offices of the director, except for proprietary and confidential information of carriers and information regarding specific state, local government, small business, or nonprofit organization employees. The director shall not enter into contracts with carriers that do not comply with paragraphs (c) to (e) of this subsection (2). SECTION 5. 24-50-607, Colorado Revised Statutes, is amended to read: 24-50-607. Employees - eligibility - election of coverage. (1) (a) Any state employee eligible as determined by the director for membership in a group benefit plan contracted for pursuant to section 24-50-604 (1) (b) upon the effective date of such plan shall be enrolled in the plan by making application according to the director's procedures. (2) (b) The manner and form of election and acceptance by state employees of group benefit plans contracted for pursuant to section 24-50-604 (1) (b) shall be in compliance with procedures established for that purpose by the director. (2) (a) Any local government, small business, or nonprofit organization employee eligible for membership in a group benefit plan contracted for pursuant to section 24-50-604 (1) (b) upon the effective date of such plan shall be enrolled in the plan by making application according to the director's procedures. (b) The manner and form of election and acceptance by local government, small business, or nonprofit organization employees of group benefit plans contracted for pursuant to section 24-50-604 (1) (b) shall be in compliance with procedures established for that purpose by the director. SECTION 6. 24-50-608, Colorado Revised Statutes, is amended to read: 24-50-608. Dependents - eligibility - election of coverage. (1) Any eligible state, local government, small business, or nonprofit organization employee may elect to have the employee's dependents covered by the group benefit plans. Such election shall be made at the time the state, local government, small business, or nonprofit organization employee becomes enrolled in the plan under such procedures as the director shall establish. If dependent coverage is not elected at the time that an a state, local government, small business, or nonprofit organization employee becomes enrolled in an appropriate plan, any subsequent election of dependent coverage shall be made under such conditions as the director may impose. (2) Any state, local government, small business, or nonprofit organization employee who elects coverage, as provided in subsection (1) of this section, and who has a change in the number of dependents may, at the time of such change, increase or decrease the number of dependents covered by the group benefit plans under procedures established by and subject to the approval of the director. (3) Any state, local government, small business, or nonprofit organization employee who has no eligible dependents at the time the state, local government, small business, or nonprofit organization employee becomes enrolled in the group benefit plans and who later has an eligible dependent may, at the time the dependency status changes, elect appropriate coverage for such dependent under procedures established by and subject to the approval of the director. SECTION 7. 24-50-609 (2) (b) and (4), Colorado Revised Statutes, are amended to read: 24-50-609. State contributions - supplemental state contribution fund - creation. (2) (b) (I) The total premium for each particular group benefit plan offered to state employees pursuant to this part 6 and for each tier of said plan shall be the same for all eligible state employees. The amount of the state contribution for each tier shall be determined by the director in accordance with section 24-50-104 (4) and shall be the same for all eligible state employees within the state personnel system; except that, beginning with the 2008-09 state fiscal year, the state contribution shall be supplemented for eligible state employees, as defined in section 24-50-609.5 (2) (a), in accordance with section 24-50-609.5. For purposes of this section, "tier" means the particular coverage options offered to eligible state employees, including single state employee, state employee with one covered dependent, and state employee with two or more covered dependents. (II) Effective December 1, 2002, for the 2003 calendar year, the state of Colorado shall contribute an amount necessary to pay one hundred sixty-six dollars and twelve cents per month per single state employee, two hundred thirty-nine dollars and fifteen cents per month per state employee with one covered dependent, and three hundred twenty-eight dollars and eighty-seven cents per month per state employee with two or more covered dependents for each state employee enrolled in group benefit plans that include enrollment in medical benefits. The amounts specified in this subparagraph (II) may be adjusted for future years in accordance with subparagraph (I) of this paragraph (b) and section 24-50-104 (4). (4) For purposes of this section, "state employee" does not include elected state officials who do not receive compensation other than expense reimbursements from state funds. SECTION 8. 24-50-610, Colorado Revised Statutes, is amended to read: 24-50-610. Payroll deductions - employees. The amount of monthly contributions, if any, to be made by state employees enrolled in group benefit plans shall be deducted from the salaries of such state employees and remitted to the department of personnel. The procedure for such deductions and remittances, including a procedure for determination of the appropriate amount and collection and remittance of monthly contributions from elected state officials who do not receive compensation other than expense reimbursement from state funds, shall be established by the department of personnel; except that the department of personnel shall not establish any method of collection and remittances of monthly contributions from elected state officials who do not receive compensation other than expense reimbursement from state funds from any entity other than from such individual state officials. SECTION 9. 24-50-611, Colorado Revised Statutes, is amended to read: 24-50-611. Employer payments. (1) The head of each state agency, department, or institution having state employees enrolled in group benefit plans shall make a monthly payment to the department of personnel for each state employee so enrolled of an amount as provided for in section 24-50-609. The estimated amount required for such payments shall be included in the annual budgets of such agencies, departments, and institutions. (2) The governing body of each local government having local government employees enrolled in group benefit plans and each small business and nonprofit organization having employees enrolled in group benefit plans shall make a monthly payment to the department of personnel for each employee so enrolled of an amount equal to the total amount of the group benefit plan premium for each local government employee plus an amount equal to any administrative fee assessed by the director pursuant to section 24-50-604.5 (3) for each employee enrolled in group benefit plans. Each local government, small business, or nonprofit organization having employees enrolled in a group benefit plan is responsible for ensuring full payment of premiums and administrative fees for its enrolled employees, regardless of any portion of the total premium the employees are obligated to pay, and the local government, small business, or nonprofit organization shall contribute a minimum amount on behalf of its participating employees in accordance with section 24-50-604.5 (2). SECTION 10. 24-50-613 (1), (3), and (4), Colorado Revised Statutes, are amended to read: 24-50-613. Group benefit plans reserve fund. (1) There is hereby established the group benefit plans reserve fund. The state treasurer shall be ex officio treasurer of this the fund, and the state treasurer's general bond to the state shall cover all liabilities for acts as treasurer of the fund. The director shall remit to the treasurer for deposit in the group benefit plans reserve fund all payments received by the director for group benefit plans premium costs from state employees and the state as employer. The director shall also remit to the treasurer for deposit in the group benefit plans reserve fund any payments received by the director from the carriers of group benefit plans. Such payments shall not be included in the general revenues of the state of Colorado and shall not be general assets of the state. At the end of the fiscal year, any unexpended funds shall not revert to the general fund but shall be held by the state treasurer in custodial capacity, to be used subject to direction from the director. (3) A premium stabilization reserve account shall be established within the group benefit plans reserve fund the purpose of which is to offset unexpected year-end deficits and extraordinary fluctuations in annual premiums for group benefit plans. The moneys in the account shall not be included in the general revenues of the state and shall not be general assets of the state. The moneys in the account shall be expended for purposes of such fund and shall not be appropriated by the general assembly or expended by the director for any other purpose. (4) The state's cost of administering group benefit plans for state employees, other than the costs provided for in subsection (2) of this section, is subject to annual appropriation by the general assembly based on the submission by the director of a budget request containing detailed information on current and projected administrative costs, which include, but are not limited to, personal services, operating expenses, travel expenses, utilization review, and implementation of a flexible benefits plan. SECTION 11. Part 6 of article 50 of title 24, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW SECTION to read: 24-50-613.5. Local government, small business, and nonprofit organization group benefit plans fund. (1) There is hereby established in the state treasury the local government, small business, and nonprofit organization group benefit plans fund. The fund shall consist of two accounts as follows: (a) The premium account, which shall consist of any payments received by the director for group benefit plans premium costs from local government, small business, and nonprofit organization employers or local government, small business, and nonprofit organization employees, or from the carriers of group benefit plans for local government, small business, and nonprofit organization employees. The director shall remit the payments to the state treasurer for deposit in the premium account. Any interest derived from the deposit and investment of moneys in the premium account shall be credited to the account. (b) The administration account, which shall consist of all administrative fees collected by the director pursuant to section 24-50-604.5 (3). The director shall remit the fees to the state treasurer for deposit in the administration account. Any interest derived from the deposit and investment of moneys in the administration account shall be credited to the account. (2) Expenditures shall be made from the premium account in the local government, small business, and nonprofit organization group benefit plans fund, upon certification by the director, for the payment to the carriers of premiums, claims costs, and other administrative fees and costs associated with the group benefit plans for local government, small business, and nonprofit organization employees. Moneys that are credited to or expended from the premium account for payment to carriers who provide fully funded group benefit plans to local government, small business, and nonprofit organization employees shall not constitute fiscal year spending of the state for purposes of section 20 (7) of article X of the state constitution, and such moneys shall be deemed custodial funds that are not subject to appropriation by the general assembly except as authorized in subsection (3) of this section. (3) The state's cost of administering group benefit plans for local government, small business, and nonprofit organization employees, other than the costs provided for in subsection (2) of this section, is subject to annual appropriation from the administration account in the local government, small business, and nonprofit organization group benefit plans fund to the department of personnel by the general assembly based on the submission by the director of a budget request containing detailed information on current and projected administrative costs, which include, but are not limited to, personal services, operating expenses, travel expenses, and utilization review. Any moneys appropriated by the general assembly pursuant to this subsection (3) shall not constitute fiscal year spending for the state for purposes of section 20 (7) of article X of the state constitution. (4) From time to time, the director shall certify in writing to the state treasurer those portions of the premium account in the local government, small business, and nonprofit organization group benefit plans fund that, in the director's judgment, may not be needed for the payment of premiums and claims costs to the carriers and may be available for investment. Such investments shall be made as determined by the state treasurer and shall be limited to those securities authorized for investment by the board of trustees of the public employees' retirement association pursuant to section 24-51-206. Interest on the investment of moneys in the premium account shall be credited to the account in accordance with paragraph (a) of subsection (1) of this section. SECTION 12. 24-50-614, Colorado Revised Statutes, is amended to read: 24-50-614. State payments - authority of controller. The state contributions to group benefit plans shall be paid monthly to the director by the state controller, who shall make a charge against the accounts of the state departments, agencies, and institutions for this purpose. Such charges shall be the amounts necessary to cover the state contributions, as defined in section 24-50-609, for state employees and shall be made against both general revenue fund accounts and specific cash fund accounts as required. SECTION 13. Specified effective date - applicability. This act shall take effect upon passage and shall apply to group benefit plans offered on or after January 1, 2011. SECTION 14. Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.