REPORT TITLE:
Long-term care; public
employees


DESCRIPTION:
Establishes a long-term care insurance program for public
employees and repeals existing provisions allowing the hawaii
public employees health fund to establish a long-term care
benefits plan.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2181 
HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO THE PUBLIC EMPLOYEES LONG-TERM CARE INSURANCE
   PROGRAM.


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

 1      SECTION 1.  The legislature finds that a national crisis
 
 2 looms for America's long-term care system as more than seventy
 
 3 million baby boomers age into retirement and double the nation's
 
 4 elderly population.  Recent research shows that most states will
 
 5 face painful problems as long-term care demands outpace the
 
 6 states' ability to fund their local Medicaid programs.
 
 7      Studies have found that long-term care is the biggest cost
 
 8 driver for the elderly.  At the present time, Medicaid is the
 
 9 biggest payer of long-term care expenses, accounting for thirty-
 
10 eight per cent of all long-term care expenditures.  As health
 
11 care costs skyrocket and the elderly population continues to
 
12 grow, the legislature finds that it cannot rely solely on
 
13 Medicaid to address the health care costs of Hawaii's people.
 
14      In the next thirty years, total nursing home expenditures
 
15 paid by Medicaid are expected to increase three hundred sixty per
 
16 cent to $134,000,000,000.  If current trends continue, out-of-
 
17 pocket costs for individuals for nursing home care will increase
 

 
 
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 1 by three hundred seventy-eight per cent from an estimated
 
 2 $33,000,000,000 in 2000 to $158,000,000,000 in 2030.
 
 3      One way to deal with long-term care costs is to encourage
 
 4 baby boomers to purchase long-term care insurance at younger
 
 5 ages.  In most cases, premiums are much lower when purchased
 
 6 before age 65.  If more baby boomers purchase long-term care
 
 7 insurance, the share of nursing home expenditures paid by private
 
 8 insurance could increase from three per cent today to twenty-nine
 
 9 per cent in 2030.  If this is the case, Medicaid could save
 
10 $28,000,000,000 or twenty-one per cent of total Medicaid nursing
 
11 home expenditures.
 
12      Twenty-one states now offer long-term care coverage for
 
13 their public employees.  The legislature finds that encouraging
 
14 its residents, beginning with public employees, to purchase long-
 
15 term care insurance will enable the people of Hawaii to be
 
16 prepared to deal with debilitating long-term care costs in the
 
17 future.
 
18      The purpose of this Act is to establish the public employees
 
19 long-term care insurance program and repeal existing provisions
 
20 allowing the health fund to establish a long-term care benefits
 
21 plan.  This program will encourage public employees and retirants
 
22 to purchase long-term insurance coverage at reasonable rates.
 

 
 
 
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                                     H.B. NO.           
                                                        
                                                        

 
 1      SECTION 2.  The Hawaii Revised Statutes is amended by adding
 
 2 a new chapter to be appropriately designated and to read as
 
 3 follows:
 
 4                             "CHAPTER
 
 5         PUBLIC EMPLOYEES LONG-TERM CARE INSURANCE PROGRAM
 
 6      �   -1 Definitions.  As used in this chapter, unless the
 
 7 context otherwise requires:
 
 8      "Advisory committee" means the advisory committee
 
 9 established by this chapter.
 
10      "Commissioner" means the insurance commissioner.
 
11      "Committee member" means a person serving on the advisory
 
12 committee established by this chapter.
 
13      "Eligible person" means an employee or retirant as defined
 
14 in section 88-21.
 
15      "Employee" means an employee as defined in section 88-21.
 
16      "Program" means the public employees long-term care
 
17 insurance program established by this chapter.
 
18      "Public employer" means the State and the counties of
 
19 Hawaii, Honolulu, Kauai, and Maui.
 
20      "Retirant" means a retirant as defined in section 88-21.
 
21      "Qualified vendor" means an entity licensed or authorized to
 
22 underwrite, provide, or administer long-term care insurance
 
23 benefits in this State.
 

 
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 1      �   -2 Program establishment; general provisions.(a)
 
 2 There is established the public employees long-term care
 
 3 insurance program to be placed with the insurance division of the
 
 4 department of commerce and consumer affairs for administrative
 
 5 purposes.  The insurance commissioner may administer a program to
 
 6 make long-term care coverage available to eligible persons.  The
 
 7 commissioner may determine the program's funding arrangements,
 
 8 request bids from qualified vendors, and negotiate and enter into
 
 9 contracts with qualified vendors.  Contracts shall be for a
 
10 uniform term of at least one year, but may be made automatically
 
11 renewable from term to term in the absence of notice of
 
12 termination by either party.  The program may not be self-insured
 
13 until the commissioner has completed an actuarial study of the
 
14 program and reported the results of the study to the legislature
 
15 and self-insurance has been specifically authorized by law.
 
16      (b)  The program may provide coverage for home, community,
 
17 and institutional long-term care and any other benefits for:
 
18      (1)  Employees;
 
19      (2)  Retirants;
 
20      (3)  The spouses or reciprocal beneficiaries of employees or
 
21           retirants;
 
22      (4)  The parents and grandparents of employees or retirants;
 

 
 
 
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 1      (5)  The in-law parents and grandparents of employees or
 
 2           retirants; and
 
 3      (6)  Qualified-beneficiaries, as defined in section 87-1, of
 
 4           employees or retirants who enroll between the ages of
 
 5           twenty and eighty-five, as determined by the
 
 6           commissioner.
 
 7      (c)  Every retirant and employee shall be eligible to enroll
 
 8 in the program.  To participate in the program, the retirant or
 
 9 employee shall first apply to participate in the program as
 
10 follows:
 
11      (1)  Any person who is an employee as of the effective date
 
12           of this Act who plans to participate in the program
 
13           shall apply by         , 2001;
 
14      (2)  Any person who is a retirant as of the effective date
 
15           of this Act who plans to participate in the program
 
16           shall apply by         , 2001; and
 
17      (3)  Any person who becomes an employee on or after the
 
18           effective date of this Act who plans to participate in
 
19           the program shall apply upon hiring.
 
20      (d)  The program shall pay up to $5 of an enrolled eligible
 
21 person's premiums; provided that the premium is for the eligible
 
22 person's own benefit.  The enrolled eligible person shall pay the
 
23 remainder of the premium.
 

 
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 1      (e)  The commissioner may employ and contract with persons
 
 2 and other entities to perform the duties under this section and
 
 3 may determine their duties and compensation consistent with this
 
 4 chapter.
 
 5      (f)  The benefits provided under this section are not terms
 
 6 and conditions of employment and shall not be subject to
 
 7 collective bargaining.
 
 8      (g)  The commissioner shall establish underwriting criteria
 
 9 for entry of all eligible persons into the program.  Eligible
 
10 persons who meet underwriting criteria may enroll in the program:
 
11      (1)  Upon hiring; and
 
12      (2)  Upon application by          , 2001, if the eligible
 
13           person is an employee or retirant as of the effective
 
14           date of this Act.
 
15      (h)  An eligible person enrolled in the program may continue
 
16 to participate in the program even if an event, such as
 
17 termination of employment, changes the person's employment
 
18 status; provided that if the eligible person terminates
 
19 employment, the person shall pay the full cost of coverage.
 
20      (i)  Public employers and the employees' retirement system
 
21 may provide automatic payroll or pension deduction for payment of
 
22 long-term care insurance premiums to qualified vendors contracted
 
23 under this section.
 

 
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 1      (j)  The premium charged to program enrollees may include an
 
 2 administrative fee to cover all program expenses incurred in
 
 3 addition to the cost of coverage.  All fees collected shall be
 
 4 appropriated to the commissioner for the purpose of administering
 
 5 the program.
 
 6      �   -3  Advisory committee.(a)  There is established an
 
 7 advisory committee to advise the commissioner on program issues,
 
 8 including but not limited to benefits, coverage, funding,
 
 9 eligibility, enrollment, underwriting, and marketing.  In
 
10 addition, the advisory committee shall promote activities that
 
11 raise awareness of the need for long-term care insurance among
 
12 residents of the State and encourage the increased prevalence of
 
13 long-term care coverage.  These activities shall include the
 
14 sharing of knowledge gained in the development of the program.
 
15      The advisory committee shall consist of nine members as
 
16 follows:
 
17      (1)  The administrator of the employees' retirement system,
 
18           or designated representative;
 
19      (2)  The director of human services, or designated
 
20           representative;
 
21      (3)  The insurance commissioner, or designated
 
22           representative;
 

 
 
 
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 1      (4)  One member with clinical knowledge of long-term care
 
 2           representing the medical community to be appointed by
 
 3           the commissioner; and
 
 4      (5)  Five members representing the interests of eligible
 
 5           persons to be appointed as follows:
 
 6           (A)  Two members to be appointed by the speaker of the
 
 7                house of representatives;
 
 8           (B)  Two members to be appointed by the senate
 
 9                president; and
 
10           (C)  One member to be appointed by the governor.
 
11      (b)  The members of the advisory committee shall serve for a
 
12 term of four years; provided that upon the initial appointment of
 
13 the members, three shall be appointed for a term of one year,
 
14 three for a term of two years, and three for a term of four
 
15 years.
 
16      (c)  The advisory committee shall select its own chairperson
 
17 and vice chairperson and may adopt such rules as it may consider
 
18 necessary for the conduct of its business.
 
19      (d)  The members of the advisory committee shall serve
 
20 without compensation, but may be reimbursed for traveling
 
21 expenses incurred in the performance of their duties.
 
22      �   -4 Long-term care insurance trust fund.(a)  There is
 
23 established the long-term care insurance trust fund in the state
 

 
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 1 treasury into which shall be deposited moneys appropriated by the
 
 2 legislature and premiums received from persons enrolled in the
 
 3 program.  Moneys in the fund shall be used to pay premiums,
 
 4 claims, refunds, administrative costs, and other related service
 
 5 costs; provided that the payment of any claims from the fund
 
 6 shall be made directly to the provider of services.  The
 
 7 commissioner shall reserve an amount of money sufficient to cover
 
 8 the actuarially estimated costs of claims incurred but unpaid.
 
 9 The trust fund shall be used solely for the purpose of the
 
10 program.
 
11      �    -5 Private sources.  This chapter shall not prohibit
 
12 or limit individuals or local governments from purchasing long-
 
13 term care insurance through other private sources."
 
14      SECTION 3.  Section 87-1, Hawaii Revised Statutes, is
 
15 amended to read as follows:
 
16      "�87-1 Definitions.  As used in this chapter:
 
17      (1)  "Board" means the board of trustees as described in
 
18           section 87-11;
 
19      (2)  "Carrier" means a voluntary association, corporation,
 
20           partnership, or organization engaged in providing,
 
21           paying for, arranging for, or reimbursing the cost of
 
22           health [or long-term care] services under group
 
23           insurance contracts or medical, hospital, or dental
 
24           services agreements;
 

 
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 1      (3)  "Contributions" means money payments made to the fund
 
 2           by the State or the several counties or an employee-
 
 3           beneficiary or qualified-beneficiary;
 
 4      (4)  "Dependent-beneficiary" means an employee-beneficiary's
 
 5           spouse and any unmarried child, including an adopted
 
 6           child, stepchild, foster child, or recognized natural
 
 7           child who lives with the employee-beneficiary, deemed
 
 8           eligible by the board to receive health or dental
 
 9           services of a health benefits plan;
 
10      (5)  "Employee" means an employee or officer of the state or
 
11           county government or the legislature,
 
12           (A)  Including:
 
13                (i)  An elective officer or a person who has
 
14                     served as a member of the legislature for at
 
15                     least ten years;
 
16               (ii)  A per diem employee;
 
17              (iii)  An officer or employee under an authorized
 
18                     leave of absence;
 
19               (iv)  An employee of the Hawaii national guard
 
20                     although paid from federal funds;
 
21                (v)  A retired member of the employees' retirement
 
22                     system, the county pension system, or the
 
23                     police, firefighters, or bandsmen pension
 
24                     system of the State or county;
 

 
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 1               (vi)  A salaried and full-time member of a board,
 
 2                     commission, or agency appointed by the
 
 3                     governor or the mayor of a county; and
 
 4              (vii)  A person employed by contract for a period
 
 5                     not exceeding one year, where the director of
 
 6                     human resources development, personnel
 
 7                     services, or civil service has certified that
 
 8                     the service is essential or needed in the
 
 9                     public interest and that, because of
 
10                     circumstances surrounding its fulfillment,
 
11                     personnel to perform the service cannot be
 
12                     obtained through normal civil service
 
13                     recruitment procedures,
 
14           (B)  But excluding:
 
15                (i)  A designated beneficiary of a retired member
 
16                     of the employees' retirement system, the
 
17                     county pension system, or the police,
 
18                     firefighters, or bandsmen pension system of
 
19                     the State or county;
 
20               (ii)  Except as allowed under [paragraph]
 
21                     (5)(A)(vii), a person employed temporarily on
 
22                     a fee or contract basis; and
 

 
 
 
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 1              (iii)  A person employed for less than three months
 
 2                     and whose employment is less than one-half of
 
 3                     a full-time equivalent position.
 
 4      (6)  "Employee-beneficiary" means an employee, the
 
 5           beneficiary of an employee who is killed in the
 
 6           performance of the employee's duty, an employee who
 
 7           retired prior to the establishment of the fund, or the
 
 8           beneficiary of a retired member of the employees'
 
 9           retirement system, a county pension system, or a
 
10           police, firefighters, or bandsmen pension system of the
 
11           State or county, upon the death of the retired member
 
12           and, which beneficiary, if a child, does not marry, or
 
13           if a surviving spouse, does not remarry; provided that
 
14           for the purposes of this paragraph, "family member"
 
15           means the deceased retired member's or employee's
 
16           spouse and unmarried child under the age of nineteen
 
17           years (including a legally adopted child and a
 
18           stepchild or recognized natural child who lives with
 
19           the deceased retired member or employee in a regular
 
20           parent-child relationship), or unmarried child
 
21           regardless of age who is incapable of self-support
 
22           because of a mental or physical incapacity which
 
23           existed prior to the unmarried child's reaching the age
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1           of nineteen years; and provided further that the
 
 2           employee, the employee's beneficiary, or the
 
 3           beneficiary of the deceased retired member is deemed
 
 4           eligible by the board to receive health or dental
 
 5           services of a health benefits plan [or a long-term care
 
 6           benefits plan];
 
 7      (7)  "Fund" means the trust fund described in section 87-2;
 
 8      (8)  "Health benefits plan" means (A) a group insurance
 
 9           contract or medical, hospital, surgical, prescribed
 
10           drugs, vision, or dental service agreement in which a
 
11           carrier agrees to provide, pay for, arrange for, or
 
12           reimburse the cost of medical, hospital, surgical,
 
13           prescribed drugs, vision, or dental services as
 
14           determined by the board; or (B) a similar schedule of
 
15           benefits established by the board and provided through
 
16           the fund on a self-insured basis;
 
17     [(9)  "Long-term care benefits plan" means (A) a group
 
18           insurance contract or service agreement in which a
 
19           carrier agrees to provide, pay for, arrange for, or
 
20           reimburse the cost of long-term care benefits as
 
21           determined by the board, or (B) a similar schedule of
 
22           benefits established by the board and provided through
 
23           the fund on a self-insured basis;
 

 
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 1    (10)]  (9) "Periodic charge" means the periodic payment by the
 
 2           board to a carrier for any health benefits[, or long-
 
 3           term care benefits] plan;
 
 4    [(11)  "Qualified-beneficiary" means, for purposes of the
 
 5           long-term care benefits plan, a former employee or an
 
 6           employee who is not eligible for benefits due to a
 
 7           reduction in work hours including the employee's spouse
 
 8           or a divorced spouse of an employee or retiree provided
 
 9           the person was enrolled in the plan prior to loss of
 
10           benefits; and
 
11    (12)]  (10) "Trustee" means a trustee of the board of trustees
 
12           as described in section 87-11."
 
13      SECTION 4.  Section 87-3, Hawaii Revised Statutes, is
 
14 amended to read as follows:
 
15      "�87-3 Purpose of the fund.(a)  The fund shall be used
 
16 for the purpose of providing employee-beneficiaries and
 
17 dependent-beneficiaries with a health benefits plan [and a long-
 
18 term care benefits plan]; provided that the fund, including rate
 
19 credits or reimbursements from any carrier or self-insured plan
 
20 or any earning or interest derived therefrom, may be used to
 
21 stabilize health benefits plan [or long-term care benefits plan]
 
22 rates and with approval of the legislature through appropriation
 
23 of funds for other expenses necessary to effectuate [these
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1 purposes.] this purpose.  Notwithstanding any law to the
 
 2 contrary, any rate credit or reimbursement from any carrier or
 
 3 self-insured plan in excess of funds used to stabilize health
 
 4 benefits plan [or long-term care benefits plan] costs, and for
 
 5 other expenses authorized by the legislature or any earning or
 
 6 interest derived therefrom shall be returned to the State or the
 
 7 county for deposit into the appropriate general fund if the
 
 8 moneys are returned from:
 
 9      (1)  A plan that provides health benefits to retirees or the
 
10           surviving spouses of deceased retirees or employees
 
11           killed in the performance of their duty whose coverage
 
12           is financed in whole or in part by the State or by the
 
13           county; or
 
14      (2)  A plan that provides health benefits to employees;
 
15           provided that the amount returned to the general fund
 
16           shall be only that portion financed by the State or by
 
17           the county on behalf of the employee.
 
18      (b)  To the extent that contributions are provided for group
 
19 life insurance benefits in sections 87-4 and 87-4.5, the fund
 
20 shall also be used for the purpose of providing group life
 
21 insurance benefits to employees.
 
22      [(c)  To the extent that contributions are received from
 
23 employee-beneficiaries and qualified-beneficiaries for long-term
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1 care insurance benefits under section 87-23.6, the fund shall
 
 2 also be used for the purpose of providing long-term care
 
 3 insurance benefits to eligible participants.
 
 4      (d)] (c)  The fund may assist the State and the counties to
 
 5 implement and administer cafeteria plans authorized under section
 
 6 125 of the Internal Revenue Code of 1986, as amended, and under
 
 7 part II of chapter 78."
 
 8      SECTION 5.  Section 87-24, Hawaii Revised Statutes, is
 
 9 amended to read as follows:
 
10      "�87-24  Selection of a carrier or third-party administrator
 
11 for a health benefits[,] or group life insurance[, or long-term
 
12 care benefits] plan.  Notwithstanding chapter 103D, selection of
 
13 a carrier or third-party administrator for any benefit plan shall
 
14 be based on specifications and considerations determined by the
 
15 board of trustees.  In that process, the board of trustees may:
 
16      (1)  Prepare specifications;
 
17      (2)  Submit specifications for proposals by interested
 
18           applicants;
 
19      (3)  Evaluate proposals;
 
20      (4)  Give prime consideration to the applicant offering the
 
21           lowest net cost and high quality of services; and
 
22      (5)  Negotiate or use other competitive procedures, as the
 
23           board of trustees deems appropriate in its discretion,
 
24           to select a carrier or a third-party administrator."
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1      SECTION 6.  Section 87-23.5, Hawaii Revised Statutes, is
 
 2 repealed.
 
 3      ["�87-23.5  Determination of long-term care benefits plan;
 
 4 contract with carrier or third-party administrator.(a)  The
 
 5 board shall determine the benefits of a long-term care benefits
 
 6 plan for employee-beneficiaries, their spouses or reciprocal
 
 7 beneficiaries, as well as their parents and grandparents, and in-
 
 8 law parents and grandparents, and qualified-beneficiaries.  The
 
 9 plan shall comply with article    , of chapter 431.
 
10      (b)  Notwithstanding any other law to the contrary, the
 
11 benefits shall be available only to employee-beneficiaries, their
 
12 spouses or reciprocal beneficiaries, as well as their parents and
 
13 grandparents, and in-law parents and grandparents, and qualified-
 
14 beneficiaries who enroll between the ages of twenty and eighty-
 
15 five.  Eligible persons must comply with the plan's age,
 
16 enrollment, medical underwriting, and contribution requirements.
 
17      (c)  The board may contract with a carrier to provide fully-
 
18 insured benefits or a third-party administrator to administer
 
19 self-insured benefits."]
 
20      SECTION 7.  Section 87-23.6, Hawaii Revised Statutes, is
 
21 repealed.
 
22      ["[�87-23.6]  Contributions by an employee-beneficiary or
 
23 qualified-beneficiary for long-term care benefits plan.  (a)
 

 
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 1 During the period the long-term care benefits plan is in effect,
 
 2 the employee-beneficiary shall authorize, if otherwise allowed by
 
 3 law, the employee-beneficiary's contribution to be withheld and
 
 4 transmitted to the fund monthly by the comptroller or finance
 
 5 officer who disburses the employee-beneficiary's compensation,
 
 6 pension, or retirement pay.  If, however, an employee-
 
 7 beneficiary's monthly contribution to the fund is not withheld
 
 8 and transmitted to the fund, the employee-beneficiary shall pay
 
 9 the monthly contribution directly to the board's designated
 
10 carrier or third-party administrator by the first day of each
 
11 month.
 
12      (b)  Qualified-beneficiaries shall pay monthly contributions
 
13 directly to the board's designated carrier or third-party
 
14 administrator by the first day of each month."]
 
15      SECTION 8.  There is appropriated out of the general
 
16 revenues of the State of Hawaii the sum of $           or so much
 
17 thereof as may be necessary for fiscal year 2000-2001 to be
 
18 deposited into the long-term care insurance trust fund for the
 
19 administration and operation of the public employees long-term
 
20 care insurance program established by this Act.
 
21      The sum appropriated shall be expended by the department of
 
22 commerce and consumer affairs for the purposes of this Act.
 

 
 
 
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                                     H.B. NO.           
                                                        
                                                        

 
 1      SECTION 9.  Statutory material to be repealed is bracketed.
 
 2 New statutory material is underscored.
 
 3      SECTION 10.  This Act shall take effect on July 1, 2000.
 
 4 
 
 5                           INTRODUCED BY:_________________________