2015 Employee Benefit Issues

State Employees Group Health Insurance Program

Although the House introduced a bill that made significant changes to State Employee health benefits, it did not get much traction in the Senate and is dead this session.

HB7097, by Rep. Jason Brodeur makes several changes to the State Employee Group Health Insurance. Below is a summary of these changes.

The State Group Insurance Program (program), administered by the Department of Management Services (DMS), is an optional benefit for employees that includes health, life, dental, vision, disability, and other supplemental insurance benefits. The program offers employees a choice among a health maintenance organization (HMO) plan, prefer provider plan (PPO) plan, and a high-deductible health plan (HDHP) with a health saving account (HSA). However, only one benefit level is offered for each plan type. Additionally, the employee’s premium for the HMO and PPO are the same, even though the HMO provides greater benefits.

The bill directs DMS to establish employee contribution rates for the 2016 plan year which reflect the full actuarial benefit difference between the HMO and the PPO. The PPO contribution rate must be less than the employee contribution level for the 2015 plan year. Consequently, next year, employees will be given a choice between paying more for the higher value HMO and paying less, compared to the prior year, for the lower value PPO. Employees will have a choice between richer benefits and greater take-home pay.

The bill adds new products and services to the program by giving DMS broad authority to contract for a wide variety of additional products and services. Employees will be able to purchase new products as optional benefits. DMS is directed to contract with at least one entity that provides comprehensive pricing and inclusive services for surgery and other types of medical procedures.

Beginning in 2016, DMS is directed to implement a 3-year price transparency pilot project in at least one, but no more than three areas of the state. The purpose of the pilot is to reward value-based pricing by publishing the prices of certain diagnostic and surgical procedures and sharing any savings generated by the enrollee’s choice of providers. Participation in the project will be voluntary for state employees.

Beginning in the 2018 plan year, the bill provides that state employees will have health plan choices at four different benefit levels. If the state’s contribution for premium is more than the cost of the plan selected by the employee, then the employee may use the remainder to:

  • Fund a flexible spending arrangement.
  • Fund a health savings account.
  • Purchase additional benefits offered through the state group insurance program.
  • Increase the employee’s salary.

The bill directs DMS to hire an independent benefits consultant (IBC). The IBC will assist DMS in developing a plan for the implementation of the new benefit levels in the program. The plan shall be submitted to the Governor, the President of the Senate and the Speaker of the House of Representatives no later than January 1, 2017. The IBC will also provide ongoing assessments and analysis for the program.

 

State Employee Retirement System

There no new proposals effecting employees retirement plans.

 

Presentations to Legislature 

DMS Presentation Regarding State Employee Health Care Benefits

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