ARIZONA STATE SENATE
Phoenix, Arizona
Temporarily increases the health care premium subsidy for 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) in areas where no managed care program is available, for a period of two years. Appropriates $698,000 from the ASRS administration account in FY 2001-2002 to the ASRS to administer the increased subsidies.
Currently, the Legislature requires ASRS, PSPRS, CORP and EORP to pay a portion of a retired member’s health care premium. The subsidy amount differs between the four plans and whether the member, survivor or dependents are eligible for Medicare. The portion of the member’s health care premium that is not covered by the various plans is paid from the member’s retirement benefit or out of the member’s pocket. Recently, insurance providers in rural areas of Arizona have stopped offering health maintenance organization (HMO) coverage to plan members. Many providers offer a more costly preferred provider organization (PPO) as the only managed care program. This bill would temporarily increase the amount that fund administrators pay to subsidize the premium of those members who live in rural areas where no HMO is available for a period of two years.
According to Joint Legislative Budget Committee staff, the total estimated impact in FY 2004 for all four retirement systems would be $474,100 from the state general fund and $163,200 from other appropriated funds if the subsidy remains in place for three years. As enacted, the subsidy will last for two years.
Provisions
1. Requires ASRS, PSPRS, EORP and CORP fund managers to pay, from fund assets, through June 30, 2003, an insurance premium benefit to each retired or disabled member who elects to participate in the coverage provided by the respective fund or any other health and accident insurance coverage provided by an employer, if that person resides in a nonservice area. Specifically, the insurance premium benefit is as follows:
·
Up
to $300 per month if the retired or disabled person is not eligible for
Medicare and has ten or more years of credited service.
·
Up
to $170 if the retired or disabled member is eligible for Medicare and has ten
or more years of credited service.
2. Requires the ASRS, PSPRS, EORP and CORP fund managers to pay, from fund assets, through June 30, 2003, part of the family coverage premium of a member who elects family coverage provided by the fund or any other health and accident insurance coverage provided by an employer. Specifically, the insurance premium benefits are as follows:
·
Up
to $600 per month if the retired or disabled member of one of the four
specified retirement systems and one or more dependants are not eligible for
Medicare.
·
Up
to $350 per month if the retired or disabled member and one or more dependents
are eligible for Medicare.
·
Up
to $470 per month if the member is not eligible for Medicare, but one or more
dependents are eligible for Medicare, or if the member is eligible for Medicare
and one or more dependents are not eligible for Medicare.
3. Appropriates $698,000 from the ASRS administration account in FY 2001-2002 to the ASRS to administer the increased subsidies.
4. Stipulates that a member who resides in a nonservice area and is enrolled in a managed care program is not eligible for the insurance premium benefit if the member terminates coverage under his or her current managed care program.
5. Allows a member to elect to purchase individual health care coverage and receive payment through June 30, 2003 equal to the amount of the subsidy stipulated through the retired member's employee if that employee assumes the administrative functions associated with the payment.
6. Requires a participating employer that agrees to administer the payment in lieu of the increased health care benefit subsidy to verify that the payment is used to pay for health insurance coverage if the payment is made to the retired member or survivor.
7. Defines “nonservice area” as an area in Arizona in which ASRS, the Department of Administration or a participating employer does not provide or administer a health care services organization (also commonly referred to as an HMO) program, excluding any PPO program or individual indemnity program, for which the member is eligible.
8. Applies subsidy increases to survivors.
9. Makes technical and conforming changes.
10. Provides for a retroactive effective date of July 1, 2001.
Amendments Adopted by Committee
1. Changes the definition of a "nonservice area" from an area in Arizona where no managed care program is provided to an area in Arizona where no HMO program, excluding any PPO or individual health indemnity policy, is offered.
2. Shortens the period during which the increased subsidy will be offered from five years to three years.
3. Eliminates the provision of the bill that allows individuals to receive the subsidy as a temporary increase to their retirement benefits and instead allows a retired member or survivor to purchase individual health care coverage and receive a payment equal to the subsidy through the retired member's employer if that employer assumes the administrative functions associated with the payment and verifies that the payment is being used to purchase health insurance coverage.
Amendments Adopted by the House of Representatives
1. Appropriates $698,000 from the ASRS administration account in FY 2001-2002 to the ASRS to administer the increased subsidies.
2. Increases the amount of the temporary health care premium benefit from $300 to $470 for members and survivors of members of all four retirement systems who elect family coverage and who are not eligible for Medicare but have one or more dependents who are eligible for Medicare or if the member is eligible for Medicare and one or more dependents are not eligible for Medicare.
3. Reduces the duration of the temporary health care benefit increase to two years.
4. Makes technical and conforming changes.
Senate Action House Action
FIN 2/12/01 DPA 6-2-0-0 FII 4/4/01 DPA 9-0-0-1
APPROP 3/9/01 DP 10-0-2-0 APPROP 4/18/01 DP 12-2-0-2
3rd Read 3/15/01 25-4-1-0 3rd Read 4/26/01 54-2-4-0
Signed by Governor 5/7/01
Chapter 376
Prepared by Senate Staff
May 25, 2001