ARIZONA STATE SENATE RESEARCH STAFF
FOR CAUCUS &
FLOOR ACTION
MEMO
Randie Stein
Legislative Research Analyst
Senate Finance Committee
542-3171
TO: MEMBERS OF THE SENATE
DATE: April 24, 1998
Re: Strike Everything Amendment to H.B. 2680
Purpose
Increases the health insurance premium benefit for eligible retired members of the
Arizona State Retirement System (ASRS), Public Safety Personnel Retirement System
(PSPRS), Corrections Officer Retirement Plan (CORP) and Elected Officials' Retirement
Plan (EORP) who do not have access to a covered managed care program. The increase
is applicable for calendar years 1999 through 2003.
Background
Current law provides a health insurance premium benefit for retired members of
ASRS with at least ten years of credited service. Additionally, retired members with at
least five but less than ten years of credited service are eligible for a reduced premium
benefit based on years of service. For retired EORP members, the full health insurance
premium benefit is available to members with at least eight years of credited service and
members with at least five but less than eight years of service are eligible for a reduced
benefit. All PSPRS and CORP members eligible for retirement are eligible for the full
health insurance premium benefit. The premium benefit amounts are applicable as a
subsidy toward the cost of health insurance coverage, for which the retiree is eligible,
provided through the Department of Administration (DOA), ASRS or a participating
employer.
The following chart identifies the current maximum health insurance premium
benefit amounts for each retirement program.
Medicare retiree $ 65.00 $ 82.50 $ 65.00 $60.00
non-Medicare retiree $ 95.00 $ 82.50 $ 95.00 $60.00
Medicare retiree & dependent $115.00 $130.00 $115.00 $85.00
non-Medicare retiree & dependent $175.00 $130.00 $175.00 $85.00
mixed retiree & dependent $145.00 $130.00 $145.00 $85.00
The issue addressed by this legislation is the net cost to retirees associated with
health insurance premiums. In all 15 of the counties, retirees eligible for health insurance
coverage provided through DOA have a managed care option available. For retirees
eligible for health insurance provided through ASRS, this is not the case. Presently there
are six counties (Apache, Coconino, Graham, Greenlee, Navajo and Yavapai) in which
retirees eligible for ASRS coverage do not have a managed care option. As a result, the
net cost of obtaining health insurance is higher for ASRS eligible retirees in these six
counties. The following table is an example of the cost difference between Maricopa and
Apache Counties for an ASRS retiree eligible for coverage through ASRS. The final
column is the impact of the legislation. (The least expensive health insurance option is
used for the comparison.)
Apache Apache
Maricopa Current Proposal
Medicare retiree $ 0.00 $ 94.55 $ 34.55
non-Medicare retiree $ 83.78 $281.23 $ 76.23
Medicare retiree & dependent $ 0.00 $204.10 $ 69.10
non-Medicare retiree & dependent $182.57 $577.46 $252.46
mixed retiree & dependent $ 57.69 $390.78 $160.78
The projected fiscal impact associated with providing an increased premium benefit
to retirees who are not eligible for a managed care program is as follows:
ASRS: Increases the unfunded liability by $17.2 million, increases the employer and employee contribution rates by three basis points and has a first year (FY 1999-2000)
employer cost of $1.5 million. Of this amount, $259,900 is borne by the state general fund.
PSPRS: Increases the unfunded liability by $6.6 million, increases the employer contribution rate by seven basis points and has a first year (FY 1999-2000) employer cost
of $385,000. Of this amount, $40,100 is borne by the state general fund.
CORP: Increases the unfunded liability by $550,000, increases the employer contribution rate by one basis point and has a first year (FY 1999-2000) employer cost of
$27,500. Of this amount, $25,800 is borne by the state general fund.
EORP: Increases the unfunded liability by $550,000, increases the employer contribution rate by ten basis points and has a first year (FY 1999-2000) employer cost of
$357,000. Of this amount, $12,480 is borne by the state general fund.
Provisions
1.
Medicare retiree: $125
non-Medicare retiree: $300
Medicare retiree & dependent: $250
non-Medicare retiree & dependent: $500
mixed retiree & dependent: $375
2.
3.
4.
Amendments Adopted by Committee
1.
Senate Action
FIN 4/23/98 DPA 7-0-2
RS/cmh
ASRS PSPRS CORP EORP
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