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K-12 Health Benefits Act ESD 113 Superintendents Meeting August 15, 2012. Introductions Overview of ESSB 5940 – The K-12 Health Benefits Act Discuss Issues Facing Districts over next few months and years Discussion of QHDHP’s and HSA’s Questions. Agenda.
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ESD 113 Superintendents Meeting
August 15, 2012
Passed early on April 11, 2012 – first and last day of 2nd special session
Act is effective July 11, 2012 with legislative intent to be effective for 2012-13 school year
If goals of Act are not met, recommendation could be to create new K-12 benefit program similar to Public Employee Benefits (PEB) program for Classified only, Certificated only or CombinedOverview
Create greater affordability and greater equity [§1(2)(b)]
Promote health care innovations, cost savings and reduce administrative costs [§1(2)(c)]
Provide greater parity in state allocations for state employees and K-12 employees [§1(2)(d)]
Retain current collective bargaining for benefits, and retain state, school district, and employee contributions to benefits [§1(3)]Legislative Goals
Each employee who elects medical coverage must pay a “minimum premium charge” or payroll deduction [§2(2)(c)]
Employee premiums must be structured so that employees who elect richer benefit plans pay higher premium charge [§2(2)(d)]
Make progress toward employee deductions for full family coverage not more than three times deduction for single coverage [§3(4)(b)]Changes in Medical Coverage – 1
Must offer a Qualified High Deductible Health Plan (QHDHP) and Health Savings Account (HSA) [§3(4)(a)]
Must offer a plan with employee premium share that does not exceed premium share on one of the PEB plans for all tiers [§3(4)(c)]Changes in Medical Coverage – 2
Districts must provide annual reports to Office of Insurance Commissioner (OIC)
OIC required to submit report to Legislature by December 1, 2013, then annually
Health Care Authority (HCA) must report to the Governor and Legislature by June 1, 2015
Joint Legislative Audit and Review Committee (JLARC) must review reports and submit recommendations to Legislature by December 31, 2015Oversight
That carriers/providers are complying with Act
That coverage is becoming more affordable, especially for families
Whether a new statewide K-12 benefits pool should be created for classified employees, certificated employees or both groups combinedWhat Are Agencies Looking For?
Each employee electing District sponsored medical coverage pays a minimum premium charge – subject to collective bargaining [§2(1)(c)]
Employees selecting “richer” benefit plans pay the higher premium [§2(1)(d)]
Offer at least one plan in which the employee share of the premium does not exceed state employees share of the premium [§3(5)(c)]
Make progress towards 3 to 1 ratio between Employee/Family and Employee Only coverage [§3(5)(b)]Issues Facing Districts – 2
Issues 2-5 are all payroll deduction issues
When do they need to be implemented?
What is the best approach to meet goals?
Will flat percent of premium meet goal of richer plans paying more, or is higher percentage needed?
Does each item need to be bargained?
Must you bargain this year or when the contract next opens?Issues Facing Districts – 3
New reporting requirements [§4(2) to §4(5)]
More detailed reporting to OIC
Details and reporting format are being developed now
Expected deadline is next spring/summer so that the OIC can meet their December 1, 2013 deadline
Failure to substantially comply can lead to OIC recommending to OSPI that coverage be purchased through PEB programIssues Facing Districts – 4
All contracts subject to competitive procedure [§3(6)]
Benefit plans must make progress on health care innovation and cost savings, and reduce administrative costs [§3(7)]
Contracts or agreements for employee benefits may not exceed one year [§4(1)]
When and how frequently to go to quote?
Is health care innovation/administrative costs a carrier or district issue?
Will WEA going to quote satisfy requirement?Issues Facing Districts – 5
If do not comply with OIC reporting rules, OSPI could require purchase of benefits through PEB
If inadequate progress, OIC, HCA and JLARC could recommend creation of statewide K-12 pool to 2016 legislature
Employees or unions could sue based on non-compliance with K-12 Act
Section 125 rules – potential huge tax liability
Non Discrimination rules – plan could be subject to fines of $100 per day per person discriminated againstPenalties For Non-Compliance
(increasing to $1,250 and $2,500 in 2013)
(increasing to $6,250 and $12,500 in 2013)
Funds are available as soon as deposited
HSA funds can be used for expenses incurred after account is opened, even if deposited later
Maximum HSA contribution for 2012 tax year is $3,100 for single coverage or $6,250 for family coverage
(increasing to $3,250 and $6,450 for 2013)
Maximum is pro-rated
$1,000 catch-up provision if 55 or olderHSA’s – 2