MISSISSIPPI LEGISLATURE

1997 Regular Session

To: Appropriations

By: Representatives McBride, Morris

AN ACT TO AUTHORIZE THE BOARD OF TRUSTEES OF THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM TO PROVIDE PRE-RETIREMENT DEATH BENEFITS TO MEMBERS OF THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM AT NO COST TO THE EMPLOYEE; TO AUTHORIZE THE BOARD TO PROVIDE OPTIONAL POST-RETIREMENT DEATH BENEFITS TO BE PAID FOR BY THOSE RETIREES WHOSE RETIREMENT BEGAN BEFORE THE EFFECTIVE DATE OF THIS ACT; TO AUTHORIZE THE BOARD TO PROVIDE OPTIONAL POST-RETIREMENT HEALTH BENEFITS TO RETIREES WHO DO NOT PARTICIPATE IN HEALTH BENEFITS OFFERED TO RETIRED STATE EMPLOYEES UNDER THE STATE EMPLOYEES HEALTH INSURANCE PLAN; TO AMEND SECTIONS 25-15-3, 25-15-9, 25-15-11, 25-15-15, 25-15-23 AND 25-11-141, MISSISSIPPI CODE OF 1972, IN CONFORMITY THERETO; AND FOR RELATED PURPOSES. 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. (1) The Board of Trustees of the Public Employees' Retirement System shall implement a plan to provide pre-retirement death benefits for all employees in state service who are active members of the Public Employees' Retirement System and the Mississippi Highway Safety Patrol Retirement System. This plan shall be qualified as a life insurance contract within the meaning of Section 101(a)(1) of the federal Internal Revenue Code. The plan shall provide benefits in an amount found to be actuarially sound within the funds provided for under this section and Section 2 of this act, but shall be in a sum of not less than the participant's annual wage to the next highest One Thousand Dollars ($1,000.00), not to exceed the sum of Fifty Thousand Dollars ($50,000.00). In addition, the plan shall provide a like amount for each employee for accidental death and dismemberment on a twenty-four-hour basis. Life insurance amounts shall be adjusted on the policy anniversary next following the earning adjustment. The plan shall also contain a premium waiver provision if a covered employee becomes totally or permanently disabled before age sixty-five (65).

The plan shall provide that all payments be made to the person designated as beneficiary on the membership information form of the retirement system or to the estate of the active member if there is no surviving designated beneficiary. The plan shall require that all payments made under this section shall be paid in a lump sum or in a manner authorized by Section 101(d) of the federal Internal Revenue Code.

These death benefits shall be separately funded by a contribution to be paid by each employer at the rate of one-fourth of one percent (1/4 of 1%) of payroll reported on each report of wages paid. This sum shall be in addition to the sums provided in Section 25-11-123.

The board of trustees may provide additional death benefits found by it to be actuarially sound.

The provisions of this subsection shall apply only to those employees who are not retired on the effective date of this act.

(2) The board of trustees may provide optional post-retirement death benefits to retirees and may provide optional post-retirement health benefits to retirees who do not participate in health benefits offered to retired state employees under the State Employees Health Insurance Plan. Any such benefits shall be actuarially sound and shall be paid by the retired member through withholding from the monthly retirement allowance of the retiree. The provisions of this subsection requiring payment for death benefits by retirees shall apply only to those retirees whose retirement began before the effective date of this act.

(3) Nothing in this section shall be construed to prohibit the provision of group life insurance to employees under Article 3, Chapter 15, Title 25, Mississippi Code of 1972, by those local public entities authorized to do so under that article.

SECTION 2. On January 1, 1998, the Department of Finance and Administration shall transfer to the Public Employees' Retirement System for the support of the death benefits plan implemented under Section 1 of this act, all monies under the control of the Department of Finance and Administration which were derived from employer and employee contributions made to defray the cost of the group life insurance plan provided by the Department of Finance and Administration before January 1, 1998.

SECTION 3. Section 25-15-3, Mississippi Code of 1972, is amended as follows:

25-15-3. For the purposes of this article, the words and phrases used herein shall have the following meanings:

(a) "Employee" means any person who works full time for the State of Mississippi and receives his compensation in a direct payment from a department, agency or institution of the state government. This term includes legislators, employees of the legislative branch and the judicial branch of the state, * * * full-time salaried judges and full-time district attorneys and their staff and full-time compulsory school attendance officers. For the purposes of this article, any "employee" making contributions to the * * * retirement plan shall be considered a full-time employee.

(b) "Department" means the Department of Finance and Administration.

(c) "Plan" means the State Employees * * * Health Insurance Plan created under this article.

(d) "Fund" means the State Employees Insurance Fund set up under this article.

(e) "Retired employee" means any person who is retired under the Public Employees' Retirement System or the Highway Safety Patrol Retirement System and receiving a retirement allowance from such system.

SECTION 4. Section 25-15-9, Mississippi Code of 1972, is amended as follows:

25-15-9. (1) (a) The department shall design a plan of health insurance for state employees which provides benefits for semi-private rooms in addition to other incidental coverages which the department deems necessary. The amount of the coverages shall be in such reasonable amount as may be determined by the department to be adequate, after due consideration of current health costs in Mississippi. The plan shall also include major medical benefits in such amounts as the department * * * determines. The department is also authorized to accept bids for such alternate coverage and optional benefits as the department * * * deems proper. The department may employ or contract for such consulting or actuarial services as may be necessary to formulate the * * * plan, and to assist the department in the preparation of specifications and in the process of advertising for the bids for the plan. The department is authorized to promulgate rules and regulations to implement the provisions of this subsection.

The department shall develop plans for the insurance plan authorized by this section in accordance with the provisions of Section 25-15-5.

(b) There is created the State Employees' Health Insurance Advisory Council to advise the department in the formulation of the * * * plan. The council shall be composed of the State Insurance Commissioner or his designee, an employee-representative of the institutions of higher learning appointed by the board of trustees thereof, an employee-representative of the Department of Transportation appointed by the director thereof, an employee-representative of the State Tax Commission appointed by the Commissioner of Revenue, an employee-representative of the Mississippi Department of Health appointed by the State Health Officer, an employee-representative of the Mississippi Department of Corrections appointed by the Commissioner of Corrections, and an employee-representative of the Department of Human Services appointed by the Executive Director of Human Services.

The Lieutenant Governor may designate the Secretary of the Senate, the Chairman of the Senate Appropriations Committee and the Chairman of the Senate Insurance Committee, and the Speaker of the House of Representatives may designate the Clerk of the House, the Chairman of the House Appropriations Committee and the Chairman of the House Insurance Committee, to attend any meeting of the * * * council. The appointing authorities may designate an alternate member from their respective houses to serve when the regular designee is unable to attend such meetings of the council. Such designees shall have no jurisdiction or vote on any matter within the jurisdiction of the council. For attending meetings of the council, such legislators shall receive per diem and expenses which shall be paid from the contingent expense funds of their respective houses in the same amounts as provided for committee meetings when the Legislature is not in session; however, no per diem and expenses for attending meetings of the council will be paid while the Legislature is in session. No per diem and expenses will be paid except for attending meetings of the council without prior approval of the proper committee in their respective houses.

(c) No change in the terms of the * * * plan may be made effective unless the Executive Director of the Department of Finance and Administration, or his designee, has provided notice to the * * * council and has called a meeting of the council at least fifteen (15) days before the effective date of such change. In the event that the * * * council does not meet to advise the department on the proposed changes, the changes to the plan shall become effective at such time as the department has informed the council that the changes shall become effective.

(d) Medical benefits for retired employees and dependents under age sixty-five (65) years. The same health insurance coverage as for all other active employees and their dependents shall be available to retired employees and all dependents under age sixty-five (65) years, the level of benefits to be the same level as for all other active participants. This section will apply to those employees who retire due to one hundred percent (100%) medical disability as well as those employees electing early retirement.

(e) Medical benefits for retired employees over age sixty-five (65) years. The health insurance coverage available to retired employees over age sixty-five (65) years, and all dependents over age sixty-five (65) years, shall be the major medical coverage with the lifetime maximum of One Million Dollars ($1,000,000.00). Benefits shall be reduced by Medicare benefits as though such Medicare benefits were the base plan.

All covered individuals shall be assumed to have full Medicare coverage, Parts A and B; and any Medicare payments under both Parts A and B shall be computed to reduce benefits payable under this plan.

(2) Nonduplication of benefits--reduction of benefits by Title XIX benefits: When benefits would be payable under more than one (1) group plan, benefits under those plans will be coordinated to the extent that the total benefits under all plans will not exceed the total expenses incurred.

Benefits for hospital or surgical or medical benefits shall be reduced by any similar benefits payable in accordance with Title XIX of the Social Security Act or under any amendments thereto, or any implementing legislation.

Benefits for hospital or surgical or medical benefits shall be reduced by any similar benefits payable by workers' compensation.  * * *

(3) Any participant of the State Employees Health Insurance Plan who otherwise would lose coverage and who would be eligible as a dependent under an existing Public School Employees Health Insurance Plan contract may transfer to the Public School Employees Health Insurance Plan as a dependent under the existing contract. Any participant of the Public School Employees Health Insurance Plan who otherwise would lose coverage and who would be eligible as a dependent under an existing State Employees Health Insurance Plan contract may transfer to the State Employees Health Insurance Plan as a dependent under the existing contract. A transfer pursuant to this subsection must occur within thirty-one (31) days of losing coverage. Credit shall be given for any deductible amount satisfied, out-of-pocket expenses and time served toward the twelve-month pre-existing waiting period.

(4) If both spouses are eligible employees who participate in the plan, the benefits shall apply individually to each spouse by virtue of his or her participation in the plan. If those spouses also have one or more eligible dependents participating in the plan, the cost of their dependents shall be calculated at a special family plan rate. The cost for participation by the dependents shall be paid by the spouse who elects to carry such dependents under his or her coverage. The special family plan rate shall also apply if the state employee's spouse is a covered eligible employee under the Public School Employees Health Insurance Plan.

(5) (a) The department may offer medical savings accounts as defined in Section 71-9-3 as a plan option. * * * However, before offering such accounts as a plan option, the Department of Finance and Administration shall prepare and present to the Senate and House Insurance Committees by December 15, 1996, a comprehensive study of medical savings accounts to include a proposed implementation timetable and potential actuarial effects of such accounts on the existing * * * plan. The department's study shall also include, but not be limited to, recommended employer contribution levels, recommended employee contribution levels, recommendations on annual rollover of balances or withdrawals for nonmedical purposes, and recommendations on medical coverage for persons who expend their account balances. The department shall use existing staff resources and those of other agencies to conduct this study. In no case shall the department employ a consultant or contractor other than an actuary to conduct this study. No later than July 15, 1996, the Department of Finance and Administration shall meet with the staff of the PEER Committee and the Legislative Budget Office to receive recommendations on the issues and methods which the department shall consider in preparing its report. No later than October 15, 1996, the Department of Finance and Administration shall submit a copy of its draft report to the PEER Committee and the Legislative Budget Office which shall analyze the report and prepare comments for publication in the final report to be submitted to the House and Senate Insurance Committees on December 15, 1996.

(b) In no case shall the department offer medical savings accounts as an option to health plan participants prior to January 1, 1998.

(c) This subsection shall stand repealed from and after December 31, 1997.

(6) Any premium differentials, differences in coverages, discounts determined by risk or by any other factors shall be uniformly applied to all active employees participating in the insurance plan. It is the intent of the Legislature that the state contribution to the plan be the same for each employee throughout the state.

SECTION 5. Section 25-15-11, Mississippi Code of 1972, is amended as follows:

25-15-11. The department may execute a contract or contracts to provide the benefits under the plan. Such contract or contracts may be executed with one or more corporations or associations licensed to transact * * * accident and health insurance business in this state; however, no such contract shall be executed with any corporation, association or company domiciled in any other state except that such corporation, association or company shall meet the conditions and terms for a like contract established by the state of the domicile of such corporation, association or company for a Mississippi corporation, association or company. No corporation, association or company with less than five (5) years' experience in the * * * health insurance field may bid. All of the benefits to be provided under the plan may be included in one or more similar contracts, or the benefits may be classified into different types with each type included under one or more similar contracts issued by the same or different companies.

The department shall supply the statistical information upon which a quotation is to be calculated, upon request, to all carriers licensed in the state. Bids may be accepted at the discretion of the department, and the department shall have the right to adjust rates on an annual basis if the department shall deem such adjustment necessary. The plan for active employees shall be on retention accounting basis, and a separate retention accounting basis shall be used for retired employees. Any additional written information the carrier wishes to submit, supporting the proposed benefits and premium rate, may accompany the proposal. Within thirty (30) days after receiving the proposals, the department shall determine whether to contract with the carrier which has been determined to have submitted the lowest and best bid, or to reject all such bids and receive new proposals.

The department shall authorize any corporation licensed to transact accident and health insurance business in this state issuing any such contract to reinsure portions of such contract with any other such corporation which elected to be a reinsurer and is legally competent to enter into a reinsurance agreement. The department may designate one or more of such corporations as the administering corporation or corporations. Each employee who is covered under any such contract or contracts shall receive a certificate setting forth the benefits to which the employee is entitled thereunder, to whom such benefits shall be payable, to whom claims should be submitted, and summarizing the provisions of the contract principally affecting the employee. Such certificate shall be in lieu of the certificate which the corporation or corporations issuing such contract or contracts would otherwise issue.

The department may, as of the end of any contract year, discontinue any contract or contracts it has executed with any corporation or corporations and replace it or them with a contract or contracts in any other corporation or corporations meeting the requirements of this section.

The department may reject any and all bids and contracts under this section and may elect for the state to become a self-insurer; however, administration and service of any such self-insured program may be contracted to a third party by the department.

Any contract with a third party to administer the plan shall be bid and entered into in accordance with the procedures provided in Section 25-15-301.

The Department of Finance and Administration shall annually report to the Joint Legislative Budget Committee the condition of the * * * plan. Such report shall contain, but not be limited to, a report of the plan's financial condition at the close of the most recent complete calendar year. The report shall also include all recommendations made to the department by consultants regarding the plan and its administration, including a complete departmental response to each recommendation. The department shall also list the history of yearly claims paid and premiums received for each employee subgroup, including, but not limited to, active employees, dependents and retirees, and shall also publish the loss ratios for these subgroups. For purposes of this section, the term "loss ratios" shall mean claims paid by the plan for each subgroup divided by premiums received by the plan for insurance coverage of the members in that subgroup. Any plan revisions made during the previous year shall also be listed in the report and fully described in the report. The department shall also provide the Joint Legislative Budget Committee with a monthly statement of plan utilization.

In addition to the information provided for herein, the department shall provide to the Joint Legislative Budget Committee budgetary information on the * * * plan. All information shall be provided to the Joint Legislative Budget Committee in a format designated by the committee. The information shall be provided in September of each year and at such times throughout the year as the committee deems necessary. The information shall include, but not be limited to:

(a) A detailed breakdown of all expenditures of the plan, administrative and otherwise, for the most recently completed fiscal year and projected expenditures for the current fiscal year.

(b) A schedule of all contracts, administrative and otherwise, executed for the benefit of the plan during the most recent completed fiscal year, and those executed and anticipated for the current fiscal year.

(c) Anticipated plan expenditures, administrative and otherwise, for the next fiscal year.

The department shall also provide to the Joint Legislative Committee on Performance Evaluation and Expenditure Review (PEER) all information described in paragraph (b) in this section. The PEER Committee shall prepare a report by January 1 of each year on all contractors utilized by the department for the health plans (excluding the third-party administrator contract). The committee's report shall address the processes by which the department procured the contractors, the contractors' work products and contract expenditures. The review provided for herein shall be supplemental to the review provided for in Section 25-15-301.

Annually, the Department of Finance and Administration shall request, and the Department of Audit shall conduct, a comprehensive audit of the * * * plan. For purposes of this section, the audit required herein shall be separate and distinct from any audit prepared in conjunction with the development of the Comprehensive Annual Financial Report (CAFR).

SECTION 6. Section 25-15-15, Mississippi Code of 1972, is amended as follows:

25-15-15.  * * * The state shall provide * * * one hundred percent (100%) of the cost of the * * * plan for all active full-time employees, and the employees shall be given the opportunity to purchase coverage for their eligible dependents with the premiums for such dependent coverage * * * to be deductible from the employee's salary by the agency, department or institution head, which deductions, together with * * * funds appropriated to or authorized to be expended by such employing agency, department or institution head, shall be deposited directly into a depository bank or special fund in the State Treasury, as determined by the department. These funds and interest earned on these funds may be used for the disbursement of claims and shall be exempt from the appropriation process. The Department of Finance and Administration may establish and enforce late charges and interest penalties or other penalties for the purpose of requiring the prompt payment of all premiums for * * * health insurance permitted under Chapter 15 of Title 25. All funds in excess of the amount needed for disbursement of claims shall be deposited in a special fund in the State Treasury to be known as the State Employees Insurance Fund. The State Treasurer shall invest all funds in the State Employees Insurance Fund and all interest earned shall be credited to the State Employees Insurance Fund. Such funds shall be placed with one or more depositories of the state and invested on the first day such funds are available for investment in certificates of deposit, repurchase agreements or in United States Treasury bills or as otherwise authorized by law for the investment of Public Employees' Retirement System funds, as long as such investment is made from competitive offering and at the highest and best market rate obtainable consistent with any available investment alternatives; however, such investments shall not be made in shares of stock, common or preferred, or in any other investments which would mature more than one (1) year from the date of investment. The department shall have the authority to draw from this fund periodically such funds as are necessary to operate the self-insurance plan or to pay to the insurance carrier the cost of operation of this plan. * * * The contracting for additional benefits where the cost will be paid in full by the employee is not limited. The state shall not share in the cost of coverage for retired employees.

The department shall also provide for the creation of an Insurance Reserve Fund and funds therein shall be invested by the State Treasurer with all interest earned credited to the State Employees Insurance Fund.

Any retired employee electing to purchase retired * * * health insurance will have the full cost of such insurance deducted monthly from his State of Mississippi retirement plan check or direct billed for the cost of the premium.

SECTION 7. Section 25-15-23, Mississippi Code of 1972, is amended as follows:

25-15-23. No agency, board, institution or authority of the state shall withdraw, or authorize any agency or institution under its management and control to withdraw from the * * * plan established under this article.

SECTION 8. Section 25-11-141, Mississippi Code of 1972, is amended as follows:

25-11-141. The board of trustees may enter into an agreement with insurance companies, hospital service associations, medical or health care corporations, health maintenance organizations, or government agencies authorized to do business in the state for issuance of a policy or contract of * * * health, medical, hospital or surgical benefits, or any combination thereof, for those persons receiving a service, disability or survivor retirement allowance from any system administered by the board. Notwithstanding any other provision of this chapter, the policy or contract also may include coverage for the spouse and dependent children of such eligible person and for such sponsored dependents as the board considers appropriate. If all or any portion of the policy or contract premium is to be paid by any person receiving a service, disability or survivor retirement allowance, such person shall, by written authorization, instruct the board to deduct from the retirement allowance the premium cost and to make payments to such companies, associations, corporations or agencies.

The board may contract for such coverage on the basis that the cost of the premium for the coverage will be paid by the person receiving a retirement allowance.

The board is authorized to accept bids for such optional coverage and benefits and to make all necessary rules pursuant to the purpose and intent of this section.

SECTION 9. Section 1 of this act shall be codified in Article 3, Chapter 11, Title 25, Mississippi Code of 1972.

SECTION 10. This act shall take effect and be in force from and after January 1, 1998.