MISSISSIPPI LEGISLATURE

1999 Regular Session

To: Insurance; Appropriations

By: Representative Reynolds

AN ACT TO CREATE THE LOCAL GOVERNMENT RETIRED EMPLOYEES HEALTH INSURANCE PLAN TO BE DESIGNED AND ADMINISTERED BY THE DEPARTMENT OF FINANCE AND ADMINISTRATION; TO PROVIDE DEFINITIONS; TO AUTHORIZE THE DEPARTMENT TO EXECUTE A CONTRACT OR CONTRACTS TO PROVIDE THE BENEFITS UNDER THE PLAN; TO REQUIRE THE DEPARTMENT TO MAKE CERTAIN REPORTS ON AN ANNUAL BASIS; TO PROVIDE FOR PAYMENT OF THE PREMIUMS BY THE RETIRED EMPLOYEES OR THE EMPLOYERS, OR BOTH; TO CREATE A SPECIAL FUND IN THE STATE TREASURY FOR FUNDS IN EXCESS OF THE AMOUNT NEEDED FOR DISBURSEMENT OF CLAIMS; AND FOR RELATED PURPOSES.

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

SECTION 1. For the purposes of this act, the words and phrases used herein shall have the following meanings:

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

(b) "Plan" means the Local Government Retired Employees Health Insurance Plan created under this act.

(c) "Fund" means the Local Government Retired Employees Insurance Fund set up under this act.

(d) "Local government retired employee" means any person who is retired and is receiving a retirement allowance under the Public Employees' Retirement System and who was an employee of a local institution, department or agency as provided in Section 25-15-101 et seq.

(e) "Employer" means any governing board or governing authority of a local institution, department or agency described in Section 25-15-101 et seq.

SECTION 2. (1) The department is empowered and authorized to administer the plan for the local government retired employees and to adopt and promulgate rules and regulations for its administration, subject to the terms and limitations contained in this act. The department shall employ, subject to the rules and regulations of the State Personnel Board, such personnel as may be needed to carry out the provisions of this act.

(2) The department shall be responsible for fully disclosing to plan members the provisions of the plan. Such disclosure shall consist of the dissemination of educational material on the plan and any proposed changes thereto.

SECTION 3. The department shall design a plan of health insurance for local government retired employees which provides benefits for semiprivate rooms in addition to other incidental coverage which the department deems necessary. The amount of the coverage 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 shall determine. The department is also authorized to accept bids for such alternate coverage and optional benefits as the department shall deem proper. The department may employ or contract for such consulting or actuarial services as may be necessary to formulate the Local Government Retired Employees Health Insurance 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 section.

SECTION 4. The department is authorized to 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 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. 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 group of local government retired employees 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.

The Department of Finance and Administration shall annually report to the Joint Legislative Budget Committee the condition of the Local Government Retired Employees Health Insurance 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. 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 plan (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.

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 5. The local government retired employees shall pay one hundred percent (100%) of the cost of the premiums for the health insurance plan unless the employer elects to pay all or a portion of the cost of the premiums, in which case the local government retired employees shall pay the difference. Funds from such premiums 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 this act. 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 Local Government Retired Employees Insurance Fund. The State Treasurer shall invest all funds in the fund and all interest earned shall be credited to the 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 state shall not share in the cost of coverage for local government 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 Local Government Retired Employees Insurance Fund.

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

SECTION 6. This act shall take effect and be in force from and after July 1, 1999.