Second Regular Session Sixty-eighth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 12-0453.01 Gregg Fraser x4325 HOUSE BILL 12-1250 HOUSE SPONSORSHIP Holbert, SENATE SPONSORSHIP Harvey, House Committees Senate Committees Finance Appropriations A BILL FOR AN ACT Concerning the premium subsidy provided by public employers to the health care benefits program administered by the public employees' retirement association. 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 public employees' retirement association (PERA) administers a health benefits program for governmental employers within PERA who elect to belong to the program. Currently, a portion of the employer's share of contributions to PERA equal to 1.02% of its employees' salaries is paid into the PERA health care trust fund (trust fund). These moneys, along with interest and investment income in the trust fund, are used to provide a premium subsidy for retirees to purchase health care coverage through the program. Retirees pay the difference between the amount of the subsidy and the premium for the particular health plan they select. The amount of the subsidy increases for each year of service credit the retiree earned as an employee, with a full subsidy provided to retirees with 20 or more years of service credit. The full subsidy currently specified in law is $230 for retirees who are not eligible for medicare and $115 for retirees who are eligible for medicare. The PERA board is authorized to change the amount of the subsidy by rule. Beginning January 1, 2013, the bill modifies the way employers contribute towards the premium subsidy for PERA retirees. Instead of contributing based on the amount of current employees' salaries, the bill requires employers to contribute an amount equal to the subsidies paid out on behalf of retirees each year. The amount of the subsidy continues to be specified in statute; however, it cannot be modified by the PERA board and any future changes to the subsidy may only be made by the general assembly acting by bill. The premium subsidy for retirees who are eligible for medicare is also eliminated. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. In Colorado Revised Statutes, 24-51-208, amend (1) (f) and (1) (f.5) as follows: 24-51-208. Allocation of moneys. (1) The moneys of the association shall be divided into several trust funds, including, but not limited to: (f) (I) The health care trust fund, created pursuant to the provisions of section 24-51-1201 (1), which consists of a portion of the employer contributions equal to one and two one-hundredths percent of member salaries as specified in subparagraph (II) of this paragraph (f); a portion of the amount paid by members to purchase service credit relating to noncovered employment as determined pursuant to section 24-51-505 (7); thirty percent of the amount of any reduction in the employer contribution rates as determined in section 24-51-408.5 (5) to amortize any overfunding in each division's trust fund; deductions of premium amounts from monthly benefits of participating benefit recipients; premiums paid directly to the trust fund by participating benefit recipients, members, and dependents; monthly payments made by employers on behalf of participating benefit recipients, members, and dependents; and interest; in addition to a proportional share of investment income earned thereon; (II) (A) Prior to January 1, 2013, the health care trust fund consists of a portion of the employer contributions equal to one and two one-hundredths percent of member salaries. (B) On and after January 1, 2013, the health care trust fund consists of a portion of the employer contributions equal to the amount of premium subsidies paid for persons enrolled in the health care program. (f.5) (I) The Denver public schools division health care trust fund, created pursuant to the provisions of section 24-51-1201 (2), which consists of a portion of the employer contributions equal to one and two one-hundredths percent of member salaries as specified in subparagraph (II) of this paragraph (f.5); a portion of the amount paid by members to purchase service credit relating to noncovered employment as determined pursuant to section 24-51-505 (7); deductions of premium amounts from monthly benefits of participating benefit recipients; premiums paid directly to the trust fund by participating benefit recipients, members, and dependents; monthly payments made by employers on behalf of participating benefit recipients, members, and dependents; and interest; in addition to a proportional share of investment income earned thereon; (II) (A) Prior to January 1, 2013, the Denver public schools division health care trust fund consists of a portion of the employer contributions equal to one and two one-hundredths percent of member salaries. (B) On and after January 1, 2013, the Denver public schools division health care trust fund consists of a portion of the employer contributions equal to the amount of premium subsidies paid for persons enrolled in the health care program. SECTION 2. In Colorado Revised Statutes, 24-51-1202, amend (1) (a) as follows: 24-51-1202. Health care program - design. (1) (a) The board shall design a group health care program for retirees, members, DPS members, DPS retirees, and their dependents, with or without full medicare coverage provided by the federal "Health Insurance for the Aged Act", 42 U.S.C. sec. 1395, as amended. This program shall provide health care benefits and a level of reimbursement for health care expenses which are consistent with prevailing community practices and other governmental health care systems, protection from catastrophic financial loss, and current and long-term fiscal soundness of the trust fund as determined by the board. SECTION 3. In Colorado Revised Statutes, 24-51-1206, amend (1) and (2); and repeal (4) and (6) as follows: 24-51-1206. Premium subsidy. (1) (a) The provisions of this section shall apply to the health care trust fund for the school, state, local government, and judicial divisions. (b) After July 1, 1987, but prior to January 1, 2013, the general assembly shall consider the recommendation of the board and shall approve the premium subsidy that shall be paid monthly from the health care fund for benefit recipients enrolled in the health care program. The premium subsidy shall be set without regard to the division from which the retiree retired. (c) On and after January 1, 2013, the premium subsidy shall be as provided in paragraph (b) of subsection (2) of this section. The premium subsidy shall not be modified by the board through rule-making or otherwise and may only be modified by the general assembly acting by bill. (d) No premium subsidy shall be paid for persons enrolled in the health care program who are not benefit recipients. (2) (a) Except as otherwise provided in this section, and unless otherwise determined by the board through rule-making pursuant to section 24-51-204 (5), on and after July 1, 2000, but prior to January 1, 2013, the premium subsidy shall be: (a) (I) Two hundred thirty dollars per month for benefit recipients who are under sixty-five years of age and who are not entitled to medicare hospital insurance benefits provided by the federal "Health Insurance for the Aged Act", 42 U.S.C. sec. 1395, as amended; and (b) (II) One hundred fifteen dollars per month for benefit recipients who are sixty-five years of age or older or who are under sixty-five years of age and entitled to medicare hospital insurance benefits provided by the federal "Health Insurance for the Aged Act", 42 U.S.C. sec. 1395, as amended. (b) Except as otherwise provided in this section, on and after January 1, 2013, the premium subsidy shall be two hundred thirty dollars per month for benefit recipients who are under sixty-five years of age and who are not entitled to medicare hospital insurance benefits provided by the federal "Health Insurance for the Aged Act", 42 U.S.C. sec. 1395, as amended. (4) The premium subsidy for a benefit recipient who is sixty-five years of age or older and who is not entitled to medicare hospital insurance benefits provided by the federal "Health Insurance for the Aged Act", 42 U.S.C. sec. 1395, as amended, shall be an amount which shall ensure that the premium paid by such benefit recipient is the same amount as the premium paid by a benefit recipient who is sixty-five years of age or older with the same number of years of service credit, who is entitled to medicare hospital insurance benefits, and who has selected the same plan and type of coverage under the health care program. (6) Any member or DPS member who does not have a member contribution account on December 31, 2009, must earn ten years of service credit with an affiliated employer other than an employer within the Denver public schools division in order to qualify, or for any benefit recipient whose benefits are based upon such members to qualify, for the premium subsidy specified in subsection (4) of this section. The service credit used in said calculation of the amount of the premium subsidy specified in subsection (4) of this section for disability retirees or their cobeneficiaries shall be the same service credit used in said calculation of the disability retirement benefit pursuant to the provisions of section 24-51-704. SECTION 4. In Colorado Revised Statutes, 24-51-1206.7, amend (1) and (2) as follows: 24-51-1206.7. Denver public schools division premium subsidy. (1) (a) The provisions of this section apply to the DPS health care trust fund. (b) After January 1, 2010, but prior to January 1, 2013, the general assembly shall consider the recommendation of the board and shall approve by resolution the premium subsidy to be paid monthly from the Denver public schools health care trust fund for subsidy recipients of the Denver public schools division enrolled in the health care program. (c) On and after January 1, 2013, the premium subsidy shall be as provided in paragraph (b) of subsection (2) of this section. The premium subsidy shall not be modified by the board through rule-making or otherwise and may only be modified by the general assembly acting by bill. (d) No premium subsidy shall be paid for persons enrolled in the health care program who are not benefit recipients. It is the intent of this section not to cause an increase or decrease in health care subsidies by DPS. (2) (a) Except as otherwise provided in this section, and unless otherwise determined by the board through rule-making pursuant to section 24-51-204 (5), on and after January 1, 2010, but prior to January 1, 2013, the premium subsidy for benefit recipients of the Denver public schools division shall be: (a) (I) Two hundred thirty dollars per month for subsidy recipients who are not entitled to medicare hospital insurance benefits provided by the federal "Health Insurance for the Aged Act", 42 U.S.C. sec. 1395, as amended; and (b) (II) One hundred fifteen dollars per month for subsidy recipients who are entitled to medicare hospital insurance benefits provided by the federal "Health Insurance for the Aged Act", 42 U.S.C. sec. 1395, as amended. (b) On and after January 1, 2013, the premium subsidy for benefit recipients of the Denver public schools division shall be two hundred thirty dollars per month for subsidy recipients who are not entitled to medicare hospital insurance benefits provided by the federal "Health Insurance for the Aged Act", 42 U.S.C. sec. 1395, as amended. SECTION 5. Act subject to petition - effective date. This act shall take effect at 12:01 a.m. on the day following the expiration of the ninety-day period after final adjournment of the general assembly (August 8, 2012, if adjournment sine die is on May 9, 2012); except that, if a referendum petition is filed pursuant to section 1 (3) of article V of the state constitution against this act or an item, section, or part of this act within such period, then the act, item, section, or part shall not take effect unless approved by the people at the general election to be held in November 2012 and shall take effect on the date of the official declaration of the vote thereon by the governor.