HB 231-FN – AS AMENDED BY THE HOUSE

16Mar2011… 0642h

2011 SESSION

11-0484

10/05

HOUSE BILL 231-FN

AN ACT relative to payment of medical benefits for state retirees, their spouses, and dependents.

SPONSORS: Rep. Kurk, Hills 7

COMMITTEE: Special Committee on Public Employee Pensions Reform

AMENDED ANALYSIS

This bill provides that the payment by the state of the premium for the medical benefit for state retirees, their spouses, and dependents shall be subject to a limit on total state general fund cost.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

16Mar2011… 0642h

11-0484

10/05

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Eleven

AN ACT relative to payment of medical benefits for state retirees, their spouses, and dependents.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 State Retiree Medical Benefit for Retiree, Spouse, and Dependents. Amend RSA 21-I:30, I to read as follows:

I. The state shall pay a premium toward group hospitalization, hospital medical care, surgical care and other medical benefits plan or a self-funded alternative within the limits of the funds appropriated at each legislative session and providing any change in plan or vendor is approved by the fiscal committee of the general court prior to its adoption for:

(a) Each state employee and permanent temporary or permanent seasonal employee as defined in RSA 98-A:3 including spouse and minor, fully dependent children, if any, and

(b) Subject to the funding limitation under paragraph I-a, each retired employee, as defined in paragraph II of this section, and his or her spouse, or retired employee’s beneficiary, only if an option was taken at the time of retirement and the employee is not now living[, toward group hospitalization, hospital medical care, surgical care and other medical benefits plan or a self-funded alternative within the limits of the funds appropriated at each legislative session and providing any change in plan or vendor is approved by the fiscal committee of the general court prior to its adoption].

I-a. The total cost to the general fund for the benefit provided in subparagraph I(b) shall not exceed $27.5 million, including the administrative costs of the department, in each fiscal year of a biennium. If in any calendar year the total general fund cost of the retiree medical benefit is projected to exceed that amount, the commissioner of the department of administrative services shall, with the prior approval of the fiscal committee of the general court, adjust the plan design of the group hospitalization, hospital medical care, surgical care and other medical benefits plan or the self-funded alternative to reduce the cost of the benefit to that amount.

I-b. Funds appropriated for [this] the purpose described in this section shall not be transferred or used for any other purpose.

2 Effective Date. This act shall take effect July 1, 2011.

LBAO

11-0484

Amended 03/30/11

HB 231 FISCAL NOTE

AN ACT relative to payment of medical benefits for state retirees, their spouses, and dependents.

FISCAL IMPACT:

The Department of Administrative Services states this bill, as amended by the House (Amendment #2011-0642h), will decrease state general fund expenditures by $8,826,395 in FY 2012, $11,841,211 in FY 2013, $16,480,281 in FY 2014, and $21,385,756 in FY 2015, and decrease state restricted expenditures by $4,618,203 in FY 2012, $6,424,997 in FY 2013, $8,873,997 in FY 2014, and $11,515,407 in FY 2015. There will be no fiscal impact on state revenues, or county and local revenues or expenditures.

METHODOLOGY:

The Department of Administrative Services states this bill caps general fund appropriations at $27,500,000 per fiscal year for health benefit expenditures for retired state employees. The Department states in FY 2010 it disbursed approximately $66,700,000 towards retiree health benefits, of which $34,700,000 were state general funds and $32,000,000 were other funds (includes non-general funded agencies, medical subsidy payments from the New Hampshire Retirement System, and $65 per month contributions from retirees under age 65). For FY 2012 and FY 2013, the Department estimates general funding of $36,326,395 and $39,341,211, respectively, for retiree health costs. The Department states as a result this bill reduces general fund appropriations for retiree health by 24% in FY 2012, and 30% in FY 2013 and would require equal reductions to be applied to non-general fund agencies. The Department states this bill would not impact the fixed medical subsidy from the New Hampshire Retirement System, or the $65 per month contribution from retirees under the age of 65. The following is a summary of this bill’s impact on retiree health care funding and expenditures for FY 2012 through FY 2015 (plan costs assume current plan design):

* The Department estimates an increase of approximately 9% in health care costs per year.

The Department states implementing this bill would result in a level funding of retiree health care costs going forward and would necessitate plan design changes each year to offset medical trends.