HOUSE BILL 183
48th legislature - STATE OF NEW MEXICO - second session, 2008
INTRODUCED BY
Luciano "Lucky" Varela
AN ACT
RELATING TO RETIREE HEALTH CARE; CHANGING PROVISIONS REGARDING THE MEMBERSHIP AND DUTIES OF THE RETIREE HEALTH CARE BOARD; PROVIDING FOR ADDITIONAL DISTRIBUTIONS AND CONTRIBUTIONS TO THE RETIREE HEALTH CARE FUND; AMENDING PROVISIONS REGARDING RETIREE AND DEPENDENT PREMIUM AMOUNTS; MAKING AN APPROPRIATION.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. Section 7-1-6.56 NMSA 1978 (being Laws 2007, Chapter 168, Section 1) is amended to read:
"7-1-6.56. DISTRIBUTION--RETIREE HEALTH CARE FUND.--In addition to the distribution made pursuant to Section 7-1-6.30 NMSA 1978, [for the period] beginning July 1, 2007 [and ending June 30, 2010], a distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to the retiree health care fund in the amount of two hundred fifty thousand dollars ($250,000)."
Section 2. Section 10-7C-1 NMSA 1978 (being Laws 1990, Chapter 6, Section 1) is amended to read:
"10-7C-1. SHORT TITLE.--[Sections 1 through 16 of this act] Chapter 10, Article 7C NMSA 1978 may be cited as the "Retiree Health Care Act"."
Section 3. Section 10-7C-5 NMSA 1978 (being Laws 1990, Chapter 6, Section 5, as amended by Laws 2002, Chapter 75, Section 1 and by Laws 2002, Chapter 80, Section 1) is amended to read:
"10-7C-5. AUTHORITY CREATED--DUTIES.--
A. There is created the "retiree health care authority", which is established to provide for comprehensive group health insurance programs under the Retiree Health Care Act. The authority shall be administratively attached to the public school insurance authority until December 31, 1993. The director of the public school insurance authority shall be the executive director of the retiree health care authority until December 31, 1993. The board created by Section 10-7C-6 NMSA 1978 shall remain fully independent of the board of the public school insurance authority.
B. The authority shall also administer the senior prescription drug program in conjunction with or through the consolidated purchasing process pursuant to the Health Care Purchasing Act.
C. By December 15 of each year, the authority shall submit a report to the legislative finance committee and the governor on the condition of the fund. The report shall include at a minimum the following information:
(1) the fund balance;
(2) the amount of the unfunded accrued actuarial liability;
(3) the annual required contribution;
(4) the current level of contributions from participating employers; and
(5) the current premium structure."
Section 4. Section 10-7C-6 NMSA 1978 (being Laws 1990, Chapter 6, Section 6, as amended) is amended to read:
"10-7C-6. BOARD CREATED--MEMBERSHIP--AUTHORITY.--
A. There is created the "board of the retiree health care authority". The board shall be composed of not more than [twelve] fourteen members.
B. The board shall include:
(1) one member who is not employed by or on behalf of or contracting with an employer participating in or eligible to participate in the Retiree Health Care Act and who shall be appointed by the governor to serve at the pleasure of the governor;
(2) the educational retirement director or the educational retirement director's designee;
(3) one member to be selected by the [public school superintendents' association of] New Mexico coalition of school administrators;
(4) one member who is a teacher who is certified and teaching in elementary or secondary education to be selected by a committee composed of one person designated by the New Mexico association of classroom teachers, one person designated by the national education association of New Mexico and one person designated by the [New Mexico] American federation of teachers-New Mexico;
(5) one member who is an eligible retiree of a public school and who is selected by the New Mexico association of [retired educators] educational retirees;
(6) the executive secretary of the public employees retirement association or the executive secretary's designee;
(7) one member who is an eligible retiree receiving a benefit from the public employees retirement association and who is selected by the retired public employees of New Mexico;
(8) one member who is an elected official or employee of a municipality participating in the Retiree Health Care Act and who is selected by the New Mexico municipal league;
(9) the state treasurer or the state treasurer's designee; [and]
(10) the secretary of finance and administration or the secretary's designee;
(11) the chief financial officer of a public post-secondary educational institution to be appointed by the governor; and
[(10)] (12) one member who is a classified state employee selected by the personnel board.
C. The board, in accordance with the provisions of Paragraph (3) of Subsection D of Section 10-7C-9 NMSA 1978, shall include, if they qualify:
(1) one member who is an eligible retiree of an institution of higher education participating in the Retiree Health Care Act and who is selected by the New Mexico association of [retired educators] educational retirees; and
(2) one member who is an elected official or employee of a county participating in the Retiree Health Care Act and who is selected by the New Mexico association of counties.
D. Every member of the board shall serve at the pleasure of the party that selected that member.
E. The members of the board shall begin serving their positions on the board on the effective date of the Retiree Health Care Act or upon their selection, whichever occurs last, unless that member's corresponding position on the board has been eliminated pursuant to Subsection D of Section 10-7C-9 NMSA 1978.
F. The board shall elect from its membership a president, vice president and secretary.
G. The board may appoint such officers and advisory committees as it deems necessary. The board may enter into contracts or arrangements with consultants, professional persons or firms as may be necessary to carry out the provisions of the Retiree Health Care Act.
H. The members of the board and its advisory committees shall receive per diem and mileage as provided in the Per Diem and Mileage Act but shall receive no other compensation, perquisite or allowance."
Section 5. Section 10-7C-8 NMSA 1978 (being Laws 1990, Chapter 6, Section 8) is amended to read:
"10-7C-8. FUND CREATED--INVESTMENT--PREMIUMS--APPROPRIATION.--
A. There is created the "retiree health care fund". All money in the fund shall be invested as provided for in Subsection [D] E of this section. All income earned from investment of the fund shall be credited to the fund. Except as otherwise specifically provided [herein] in the Retiree Health Care Act, the money in the fund is appropriated to the board to carry out the provisions of [the Retiree Health Care] that act. Any funds remaining at the end of any fiscal year shall not revert to the general fund.
B. The board shall provide for the collection of premiums from eligible retirees and eligible dependents, which money when combined with other money appropriated to the fund shall be sufficient to provide the required insurance coverage and to pay the expenses of the authority. All premiums and other money appropriated to the fund shall be credited to the fund.
C. Money in the fund from the following sources shall be used exclusively for prefunding of future liabilities:
(1) the additional contributions to the fund pursuant to Subsection C of Section 10-7C-15 NMSA 1978; and
(2) beginning July 1, 2010, the distribution to the fund pursuant to Section 7-1-6.56 NMSA 1978.
[C.] D. All premiums and other money collected by the authority shall be received and disbursed directly by the authority. Receipts and disbursements are subject to audit by the state auditor.
[D.] E. The board shall determine which money in the fund constitutes the long-term reserves of the authority. The state investment officer shall invest the long-term reserves of the authority in accordance with the provisions of Sections 6-8-1 through 6-8-16 NMSA 1978. The state treasurer shall invest the money in the fund that does not constitute the long-term reserves of the fund in accordance with the applicable provisions of Chapter 6, Article 10 NMSA 1978."
Section 6. Section 10-7C-13 NMSA 1978 (being Laws 1990, Chapter 6, Section 13, as amended) is amended to read:
"10-7C-13. PAYMENT OF PREMIUMS ON HEALTH CARE PLANS.--
A. Except as otherwise provided in this section, each eligible retiree shall pay a monthly premium for the basic plan in an amount set by the board not to exceed fifty dollars ($50.00) plus the amount, if any, of the compounded annual increases authorized by the board, which increases shall not exceed nine percent until fiscal year 2008 [after which the increases shall not exceed the authority's group health care trend]. Beginning in fiscal year 2009, the monthly premium shall be set by the board in an amount based on the age of the retiree that will result in the aggregate amount paid by all retirees in the designated age category totaling not less than the specified percentage of the total projected cost of the basic plan for those retirees, as follows:
retiree under age 50 one hundred percent
retiree aged 50 to 54 seventy-five percent
retiree aged 55 to 59 sixty percent
retiree aged 60 and over fifty percent.
B. In addition to the monthly premium for the basic plan, each current retiree and nonsalaried eligible participating entity governing authority member who becomes an eligible retiree shall also pay monthly an additional participation fee set by the board. That fee shall be five dollars ($5.00) plus the amount, if any, of the compounded annual increases authorized by the board, which increases shall not exceed nine percent until fiscal year 2008, after which the increases shall not exceed the authority's group health care trend. The additional monthly participation fee paid by the current retirees and nonsalaried eligible participating entity governing authority members who become eligible retirees shall be a consideration and a condition for being permitted to participate in the Retiree Health Care Act.
C. A legislative member or a former participating employer governing authority member shall pay a monthly premium for any selected plan equal to one-twelfth of the annual cost of the claims and administrative costs of that plan allocated to the member by the board. In addition, a legislative member or a former participating employer governing authority member shall pay the additional monthly participation fee set by the board pursuant to [this] Subsection B of this section as a consideration and condition for participation in the Retiree Health Care Act.
D. Eligible dependents shall pay monthly premiums in amounts that with other money appropriated to the fund shall cover the cost of the basic plan for the eligible dependents. Beginning in fiscal year 2009, the monthly premium to be paid by eligible dependents shall be set by the board in an amount based on the age of the retiree that will result in the aggregate amount paid by all dependents in the designated age category totaling not less than the specified percentage of the total projected cost of the basic plan for those dependents, as follows:
retiree under age 50 one hundred percent
retiree 50 and over seventy-five percent.
[B.] E. Eligible retirees and eligible dependents shall pay monthly premiums to cover the cost of the optional plans that they elect to receive, and the board shall adopt rules for the collection of additional premiums from eligible retirees and eligible dependents participating in the optional plans. An eligible retiree or eligible dependent may authorize the authority in writing to deduct the amount of these premiums from the monthly annuity payments, if applicable.
[C.] F. The participating employers, active employees and retirees are responsible for the financial viability of the program. The overall financial viability is not an additional financial obligation of the state.
[D.] G. For eligible retirees who become eligible for participation on or after July 1, 2001, the board may determine monthly premiums based on the retirees' years of credited service with participating employers."
Section 7. Section 10-7C-15 NMSA 1978 (being Laws 1990, Chapter 6, Section 15, as amended) is amended to read:
"10-7C-15. RETIREE HEALTH CARE FUND CONTRIBUTIONS.--
A. Following completion of the preliminary contribution period, each participating employer shall make contributions to the fund in the amount of:
(1) one percent of each participating employee's annual salary for the period July 1, 1990 through June 30, 2002; [and]
(2) up to one and three-tenths percent of each participating employee's annual salary beginning July 1, 2002; and
(3) beginning July 1, 2008, an additional three-tenths percent of each participating employee's annual salary to be used exclusively for prefunding of unfunded liabilities for active employees.
Each employer that chooses to become a participating employer after January 1, 1998 shall make contributions to the fund in the amount determined to be appropriate by the board.
B. Following completion of the preliminary contribution period, each participating employee, as a condition of employment, shall contribute to the fund an employee contribution in an amount equal to:
(1) one-half of one percent of the employee's salary for the period July 1, 1990 through June 30, 2002; [and]
(2) up to sixty-five hundredths of one percent beginning July 1, 2002; and
(3) beginning July 1, 2008, an additional fifteen-hundredths percent of the employee's annual salary to be used exclusively for prefunding of unfunded liabilities for active employees.
As a condition of employment, each participating employee of an employer that chooses to become a participating employer after January 1, 1998 shall contribute to the fund an amount that is determined to be appropriate by the board. Each month, participating employers shall deduct the contribution from the participating employee's salary and shall remit it to the board as provided by any procedures that the board may require.
C. Beginning July 1, 2008, each participating employer, other than the state or a school district, shall make an additional contribution to the fund, in an amount determined by the board, to be used exclusively for prefunding of future liabilities. The aggregate amount of the additional contribution pursuant to this subsection shall be one million dollars ($1,000,000) annually.
[C.] D. A participating employer that fails to remit before the tenth day after the last day of the month all employer and employee deposits required by the Retiree Health Care Act to be remitted by the employer for the month shall pay to the fund, in addition to the deposits, interest on the unpaid amounts at the rate of six percent per year compounded monthly.
[D.] E. The employer and employee contributions shall be paid in monthly installments based on the percent of payroll certified by the employer.
[E.] F. Except in the case of erroneously made contributions or as may be otherwise provided in Subsection D of Section 10-7C-9 NMSA 1978, contributions from participating employers and participating employees shall become the property of the fund on receipt by the board and shall not be refunded under any circumstances, including termination of employment or termination of the participating employer's operation or participation in the Retiree Health Care Act.
[F.] G. Notwithstanding any other provision in the Retiree Health Care Act and at the first session of the legislature following July 1, 2010, the legislature shall review and adjust the distribution pursuant to Section 7-1-6.1 NMSA 1978 and the employer and employee contributions to the authority in order to ensure the actuarial soundness of the benefits provided under the Retiree Health Care Act."
Section 8. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2008.
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