Bill Text: PA HB2080 | 2011-2012 | Regular Session | Introduced

---

Bill Title: Establishing the Public School Employees' Benefit Board and providing for its powers and duties; requiring a school employee benefits study and evaluation; providing for a Statewide health benefits program for public school employees, for alternative measures for cost reduction and for a retirement health savings plan; and establishing the Public School Employees' Benefit Trust Fund.

Spectrum: Bipartisan Bill

Status: (Introduced - Dead) 2011-12-15 - Referred to EDUCATION [HB2080 Detail]

Download: Pennsylvania-2011-HB2080-Introduced.html

---

PRINTER'S NO. 2904
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 2080 Session of2011
INTRODUCED BY O'NEILL, HANNA, BARBIN, BOYD, CALTAGIRONE, D. COSTA, DALEY, GEIST, GINGRICH, GOODMAN, GRELL, HALUSKA, HARKINS, HESS, HORNAMAN, JOSEPHS, MURT, SANTONI, SWANGER AND VULAKOVICH, DECEMBER 15, 2011
REFERRED TO COMMITTEE ON EDUCATION, DECEMBER 15, 2011
AN ACT
Establishing the Public School Employees' Benefit Board and
providing for its powers and duties; requiring a school
employee benefits study and evaluation; providing for a
Statewide health benefits program for public school
employees, for alternative measures for cost reduction and
for a retirement health savings plan; and establishing the
Public School Employees' Benefit Trust Fund.
TABLE OF CONTENTS
Chapter 1. Preliminary Provisions
Section 101. Short title.
Chapter 3. Administration of Benefits
Subchapter A. Definitions
Section 301. Definitions.
Subchapter B. Public School Employees' Benefit Board
Section 311. Public School Employees' Benefit Board.
Section 312. Administrative duties of board.
Subchapter C. Study and Options Election
Section 321. School employee health benefits study and
evaluation.
Section 322. Board review and election.
Section 323. Plan adoption.
Subchapter D. Statewide Health Benefits Program
Section 331. Health benefits program.
Section 332. Participation.
Section 333. Continuation of coverage and transfer employees.
Section 334. Partnership for stable benefits funding.
Section 335. Powers and duties of board.
Section 336. Public School Employees' Benefit Trust Fund.
Section 337. Misrepresentation, refusal to cooperate and fraud.
Section 338. Miscellaneous provisions.
Subchapter E. Alternative Measures for Cost Reduction
Section 351. Alternative measures program.
Subchapter F. Retirement Health Savings Plan
Section 361. Retirement health savings plan.
Chapter 5. Miscellaneous Provisions
Section 501. Feasibility report.
Section 502. Effective date.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
CHAPTER 1
PRELIMINARY PROVISIONS
Section 101. Short title.
This act shall be known and may be cited as the Public School
Employees' Benefit Act.
CHAPTER 3
ADMINISTRATION OF BENEFITS
SUBCHAPTER A
DEFINITIONS
Section 301. Definitions.
20110HB2080PN2904 - 2 -
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Alternate health care plan." A plan or plan design
established by the Public School Employees' Benefit Board
pursuant to section 331(f)(2)(ii) which the board in its
exclusive authority determines to contain benefits equivalent to
the standard benefit package.
"Alternative measures program." A program created by the
Public School Employees' Benefit Board in accordance with the
provisions of Subchapter E.
"Annuitant." Any "annuitant" or "disability annuitant" as
defined in 24 Pa.C.S. § 8102 (relating to definitions).
"Best practices." Standards of criteria, measures and
results developed by the Public School Employees' Benefit Board
that may be reflective of such standards developed by broadly
accepted organizations such as the National Committee for
Quality Assurance (NCQA) and the Centers for Medicare and
Medicaid Services (CMS), consulting firm benchmarks and medical
and industry journals that promote the precisions of efficient
delivery and design of employee benefits.
"Board." The Public School Employees' Benefit Board created
in section 311.
"Board member." A person designated or appointed to the
Public School Employees' Benefit Board pursuant to section
311(a).
"Consortium." A coalition of two or more geographically
defined public school entities, or a coalition of one or more
geographically defined public school entities and one or more
political subdivisions as defined by 61 Pa. Code § 315.2
20110HB2080PN2904 - 3 -
(relating to definitions), formed for the purpose of pooling
combined purchasing of the individual participants in order to
increase bargaining power to obtain health care benefits.
"Contribution rate." The rate established by the Public
School Employees' Benefit Board in accordance with section
334(b) and (c) used to determine contributions by the
Commonwealth and public school entities for the funding of the
standard benefit package for eligible individuals in each health
care region.
"Cost-sharing." The fee paid by the member that covers a
share of the cost of providing group health benefits under the
Statewide health benefits program or the fee paid by a school
employee or annuitant that covers a share of the cost of
providing health care coverage in a plan sponsored by the public
school entity. The term shall not include:
(1) any fee paid by the member, school employee or
annuitant at the time of service, such as copayments or
deductibles, in order to obtain prescription drugs or other
specific health care services; or
(2) any additional cost paid by the member, school
employee or annuitant for optional benefit packages.
"Eligible individual." An individual who is a member or the
health care dependent of a member.
"Employee benefits account." A ledger account of the Public
School Employees' Benefit Trust Fund created in section 336(a)
(1).
"Employer contribution account." A ledger account of the
Public School Employees' Benefit Trust Fund created in section
336(a)(3).
"Health care dependent." An individual who is eligible to
20110HB2080PN2904 - 4 -
receive health care coverage under the Statewide health benefits
program due to the individual's relation to the member, as
determined by the Public School Employees' Benefit Board.
"Health care region." The geographic regions determined by
the Public School Employees' Benefit Board to be appropriate for
providing health benefits for eligible individuals based on the
availability of insurance carriers, benefit administrators,
health care providers, health care provider networks, costs and
any other factors related to health care or the financing of the
benefits.
"IRC." The Internal Revenue Code of 1986, as designated and
referred to in section 2 of the Tax Reform Act of 1986 (Public
Law 99-514, 100 Stat. 2085, 2095). A reference in this chapter
to "IRC § " shall be deemed to refer to the identically numbered
section and subsection or other subdivision of such section in
26 U.S.C. (relating to Internal Revenue Code).
"Long-term substitute." A school employee who is
substituting for an officer, administrator or employee of a
public school entity for a qualifying period of time to be
determined by the Public School Employees' Benefit Board.
"Medicare." The programs established by Title XVIII of the
Social Security Act (49 Stat. 620, 42 U.S.C. § 1395 et seq.)
which include: Part A, Hospital Insurance Benefits for the Aged
and Disabled; Part B, Supplementary Medical Insurance Benefits
for the Aged and Disabled; Part C, Medicare+ Choice Program; and
Part D, Voluntary Prescription Drug Benefit Program; and
including any subsequent changes or additions to those programs.
"Member." An eligible individual who is so specified for
enrollment in the Statewide health benefits program and in whose
name the identification card is issued. A member can be:
20110HB2080PN2904 - 5 -
(1) A school employee.
(2) An annuitant.
(3) A transfer employee.
(4) An individual separated from employment with a
public school entity who the Public School Employees' Benefit
Board determines is eligible to purchase continuation of
coverage in the Statewide health benefits program.
(5) Others as approved by the Public School Employees'
Benefit Board.
"Optional benefit package." A plan or plan design
established by the Public School Employees' Benefit Board
pursuant to section 331(f)(2)(iii) which includes specific
health care services that are not part of the standard benefit
package.
"Participant account holder." A school employee
participating in a retirement health savings plan or a school
employee who retires or otherwise terminates employment with a
public school entity and becomes eligible to be reimbursed from
the employee's retirement health savings plan account for the
I.R.C.-qualified health-related expenses. The term shall also
include the health care dependent of a school employee who
succeeds in interest to a deceased school employee and becomes
eligible to be reimbursed for health-related expenses from the
school employee's account.
"Phase-in period." The period of program operation in any
health care region from the time the Public School Employees'
Benefit Board begins implementation of mandatory participation
under section 332 until the commencement of the first plan year
in which 75% of school districts in that region are
participating in the program.
20110HB2080PN2904 - 6 -
"Program." The Statewide health benefits program sponsored
by the Public School Employees' Benefit Board in accordance with
the provisions of Subchapter D.
"Public School Code." The act of March 10, 1949 (P.L.30,
No.14), known as the Public School Code of 1949.
"Public school entity." A school district of any class,
intermediate unit, area vocational-technical school, charter
school or other school, as provided for under the act of March
10, 1949 (P.L.30, No.14), known as the Public School Code of
1949. The term shall also include the former Scotland School for
Veterans' Children and the former Scranton State School for the
Deaf.
"Qualified majority vote." A vote by the Public School
Employees' Benefit Board requiring the support of a majority of
the members of the board present and voting, with the support of
at least two board members described in section 311(a)(1), at
least two board members appointed under section 311(a)(3) and at
least four board members appointed under section 311(a)(2), of
whom at least two board members must be appointed under section
311(a)(2)(i)(A), to pass.
"Qualifying event." A change in marital status, death of a
member or the change in a health care dependent's status,
subsequent to the commencement of coverage under this chapter,
or the involuntary termination of health plan coverage that was
obtained through a health care dependent.
"Reserve account." A ledger account of the Public School
Employees' Benefit Trust Fund created in section 336(a)(2).
"Retirement system." The term shall have the same meaning as
"system" in 24 Pa.C.S. § 8102 (relating to definitions).
"School employee." Any person regularly employed by or in a
20110HB2080PN2904 - 7 -
public school entity for which work the person is receiving
regular remuneration as an officer, administrator, employee or
long-term substitute. The term excludes any independent
contractor, person compensated on a fee basis or, unless
otherwise determined by the Public School Employees' Benefit
Board, any part-time hourly school employee. The term includes
any employee of a public school entity who has a position for
which eligibility in a health care plan sponsored by the public
school entity is in effect as of the effective date of this
chapter.
"Standard benefit package." The benefit package established
by the Public School Employees' Benefit Board pursuant to
section 331(f)(1).
"Supplemental benefits." Dental care, vision care and
employee assistance program benefits that may be offered in
addition to medical and hospital services and prescription drug
benefits.
"Transfer employee." A person who is not a school employee
who is regularly employed at a worksite in a public school
entity, regardless of who actually employs the person, if the
person is performing services previously performed by a school
employee.
"Trust fund." The Public School Employees' Benefit Trust
Fund established in section 336.
SUBCHAPTER B
PUBLIC SCHOOL EMPLOYEES' BENEFIT BOARD
Section 311. Public School Employees' Benefit Board.
(a) Status and membership.--The board shall be an
independent administrative board and shall consist of the
following board members:
20110HB2080PN2904 - 8 -
(1) The Secretary of the Budget, the Secretary of
Education, the Secretary of Administration and the Insurance
Commissioner, who shall serve ex officio.
(2) Eight persons representing school employees who are
covered by the program appointed in the following manner:
(i) Six persons representing school employees who
are covered by the program in an approximate proportion
to the percentage of professional employees represented
in collective bargaining by school employee unions
working in public school entities that will be covered by
the program when it is fully operational and based on
full participation by all school entities, appointed by
the Governor and chosen from a list of candidates
submitted by those school employee unions; provided that
all of the following shall occur:
(A) no fewer than five persons shall be
appointed from a list of candidates submitted by the
school employee union that on the effective date of
this chapter represents in collective bargaining the
greatest proportion of all professional employees
working in public school entities that will be
covered by the program when it is fully operational
based on full participation by all school entities;
(B) no less than one person shall be appointed
from a list of candidates submitted by any school
employee union that on the effective date of this
chapter represents in collective bargaining more than
4,000 professional employees working in public school
entities that will be covered by the program when it
is fully operational; and
20110HB2080PN2904 - 9 -
(ii) Two persons representing school employees who
are covered by the program represented in collective
bargaining by school employee unions other than school
employee unions within subparagraph (i) appointed by the
Governor and chosen from a list of candidates submitted
by those school employee unions other than school
employee unions within subparagraph (i).
(iii) For purposes of this section "school employee
unions" shall include a Statewide affiliate of such
school employee unions.
(3) Four persons representing public school entity
employers appointed by the Governor and chosen from a list of
candidates submitted by the Pennsylvania School Boards
Association. At least one of the school entity employer
representatives initially named to the board shall be a
member of a consortium board.
The school employee unions and the Pennsylvania School Boards
Association shall provide the Governor with their respective
lists of candidates within 15 days following the effective date
of this section. The Governor shall make his appointments within
45 days following receipt of the lists.
(b) Terms.--
(1) Three board members appointed under subsection (a)
(2)(i), as designated by the Governor, shall serve a term of
two years, and three board members appointed under subsection
(a)(2)(i), as designated by the Governor, shall serve a term
of four years.
(2) One board member appointed under subsection (a)(2)
(ii), as designated by the Governor, shall serve a term of
two years, and one board member appointed under subsection
20110HB2080PN2904 - 10 -
(a)(2)(ii), as designated by the Governor, shall serve a term
of four years.
(3) Two board members appointed under subsection (a)(3),
as designated by the Governor, shall serve a term of two
years, and two board members appointed under subsection (a)
(3), as designated by the Governor, shall serve a term of
four years, except that the Pennsylvania School Boards
Association shall designate for which initial term the
representative who is a member of a consortium board shall
serve.
(4) Successors for all board members shall be appointed
for terms of four years, except as provided in subsection
(d). Board members shall be eligible for reappointment.
(c) Meetings.--The board shall meet as needed to fulfill its
duties, and nine board members shall constitute a quorum. Board
members shall elect the chairman of the board. Except in
instances where a qualified majority is required under this
chapter, a majority of the board members present and voting
shall have authority to act upon any matter. The board is
authorized to establish rules of its operation, including a
provision for the removal of board members for nonattendance.
(d) Vacancies.--A vacancy occurring during the term of any
board member shall be filled for the unexpired term by a
successor appointed in the same manner as his predecessor. The
school employee unions and the Pennsylvania School Boards
Association shall provide the Governor with their respective
lists of candidates within 60 days prior to the end of a
member's term or within 15 days of any other vacancy.
(e) Oath of office.--Each board member shall take an oath of
office that the member will, so far as it devolves upon the
20110HB2080PN2904 - 11 -
member, diligently and honestly administer the affairs of the
board and that the member will not knowingly violate or
willfully permit to be violated any of the provisions of law
applicable to this chapter. The oath shall be subscribed by the
board member making it and certified by the officer before whom
it is taken and shall be immediately filed in the office of the
Secretary of the Commonwealth.
(f) Compensation and expenses.--Board members who are
members of the retirement system or the State Employees'
Retirement System shall serve without compensation. Board
members who are members of the retirement system and who are
employed by a public school entity shall not suffer loss of
salary or wages through serving on the board. The board, on
request of the employer of any board member who is an active
professional or nonprofessional member of the retirement system,
may reimburse the employer for the salary or wages of the member
or for the cost of employing a substitute for the board member
while the board member is necessarily absent from employment to
execute the duties of the board. The board members who are not
members of either the retirement system or the State Employees'
Retirement System may be paid $100 per day when attending
meetings, and all board members shall be reimbursed for any
necessary expenses. When, however, the duties of the board as
mandated are not executed, no compensation or reimbursement for
expenses of board members shall be paid or payable during the
period in which the duties are not executed.
(g) Corporate power and legal advisor.--For the purposes of
this chapter, the board shall possess the power and privileges
of a corporation. The Office of General Counsel shall be the
legal advisor of the board.
20110HB2080PN2904 - 12 -
(h) Duties of the board.--The board shall have the power and
authority to carry out the duties established by this chapter,
including the design, implementation and administration of the
school employee health benefits study pursuant to Subchapter C
and either the Statewide health benefits program if approved
pursuant to section 323 or the alternative measures program if
created pursuant to section 351.
Section 312. Administrative duties of board.
(a) Employees.--The compensation of all officers and
employees of the board who are not covered by a collective
bargaining agreement shall be established by the board
consistent with the standards of compensation established by the
Executive Board.
(b) Secretary.--The board shall select a secretary, who
shall not be a board member. The secretary shall act as chief
administrative officer for the board. In addition to other
powers and duties conferred upon and delegated to the secretary
by the board, the secretary shall:
(1) Serve as the administrative agent of the board and
as liaison between the board and applicable legislative
committees.
(2) Review and analyze proposed legislation and
legislative developments affecting the program and present
findings to the board, legislative committees and other
interested groups or individuals.
(3) Receive inquiries and requests for information
concerning the program from the press, Commonwealth
officials, public school entities, school employees and the
general public and provide information as authorized by the
board.
20110HB2080PN2904 - 13 -
(c) Professional personnel.--The board may employ or
contract with consultants and other professional personnel as
needed to conduct the school employee health benefits study and
evaluation pursuant to Subchapter C and to operate the program,
including third-party administrators, managed care managers,
chief medical examiners, actuaries, investment advisors and
managers, legal counsel and other professional personnel as it
deems advisable. The board may also contract for the services of
any national or State banking corporation or association having
trust powers, with respect to carrying out the business and
other matters of the program.
(d) Expenses.--The board shall, through the Governor, submit
to the General Assembly annually a budget covering the
administrative expenses of this chapter. The expenses, as
approved by the General Assembly in an appropriation bill, shall
be paid:
(1) from the General Fund; or
(2) starting in the first fiscal year after the
transition period is complete and every fiscal year
thereafter, from reserves and investment earnings of the
trust fund.
(e) Meetings.--The board shall hold at least four regular
meetings annually and other meetings as it may deem necessary.
(f) Records.--The board shall keep a record of all its
proceedings which shall be open to inspection by the public.
(g) Procurement.--The board shall not be subject to 62
Pa.C.S. Pt. I (relating to Commonwealth Procurement Code).
(h) Temporary regulations.--
(1) Notwithstanding any other provision of law to the
contrary and in order to facilitate the prompt implementation
20110HB2080PN2904 - 14 -
of this chapter, regulations promulgated by the board during
the two years following the effective date of this chapter
shall be deemed temporary regulations which shall expire no
later than three years following the effective date of this
chapter or upon promulgation of regulations as generally
provided by law. The temporary regulations shall not be
subject to:
(i) Sections 201, 202, 203, 204 and 205 of the act
of July 31, 1968 (P.L.769, No.240), referred to as the
Commonwealth Documents Law.
(ii) The act of June 25, 1982 (P.L.633, No.181),
known as the Regulatory Review Act.
(2) The authority provided to the board to adopt
temporary regulations in this subsection shall expire two
years from the effect date of this chapter. Regulations
adopted after the two-year period shall be promulgated as
provided by law.
(i) Postretirement benefits study.--The board shall conduct
an assessment of public school entity postretirement health care
liability in this Commonwealth and publish a report providing
generalized data regarding the scope of the liability to be
borne by public school entities and measures implemented by
public school entities to prepare for this liability. This
assessment may be conducted in conjunction with the study
required by section 321.
SUBCHAPTER C
STUDY AND OPTIONS ELECTION
Section 321. School employee health benefits study and
evaluation.
(a) Study.--The board shall conduct a thorough evaluation of
20110HB2080PN2904 - 15 -
existing health care arrangements covering school employees in
this Commonwealth, examine future cost forecasts and collect
data necessary to determine if the board could construct and
sponsor a health care benefit program that would reduce long-
term costs or the rate of growth of long-term costs in the
aggregate for public school entities while maintaining a
comprehensive package of quality health care benefits for school
employees. The board shall conduct the study as provided under
this section.
(b) Data elements.--No later than 60 days after the board is
constituted, the board shall determine the information necessary
to evaluate the existing health care arrangements covering
school employees in this Commonwealth and begin to collect the
data, including, but not limited to:
(1) The total cost of providing medical/hospital and
prescription drug coverage.
(2) The types and levels of coverage currently made
available to school employees.
(3) The nature of health care purchasing arrangements.
(4) An explanation and estimate of any financial
obligation of or funds owed to a public school entity related
to the termination of coverage under a school district-
sponsored health benefits plan.
(5) An estimate of the amount of and basis for claims
which may be outstanding during the transition for public
school entities which self-fund their coverage and the status
of any reserves established for such outstanding claims.
(6) The term and effect of collective bargaining
agreements governing health benefits.
(7) The amount and basis of any school employee cost-
20110HB2080PN2904 - 16 -
sharing, both individual and in aggregate.
(8) The total amount of employer-paid costs in
aggregate.
(9) An assessment of any postretirement health care
benefit liabilities and claims experience data.
(c) Data sources.--All entities providing health benefit
coverage for eligible individuals or administering coverage for
health benefits under this chapter shall provide information on
coverage, benefits, plan design, claims data, premiums, cost-
sharing and financial arrangements as the board shall specify to
meet the requirements of subsection (b). Notwithstanding any law
to the contrary, any agency, authority, board, commission,
council, department or office under the jurisdiction of the
Governor shall cooperate with the board in its collection of
health insurance or health care coverage data as specified by
the board to effectuate this section in accordance with this
section.
(d) Public school entities.--The Secretary of Education
shall assist the board in obtaining the necessary data for the
study from public school entities and consortia. In the event it
is necessary to facilitate the collection of data from a
noncooperating public school entity or consortium, the Secretary
of Education may request the State Treasurer to cause the
suspension of any payment of moneys due to the noncooperating
public school entity or public school entities that are
participants in a noncooperating consortium on account of any
appropriation for schools or other purposes until the necessary
information is properly provided. A public school entity shall
be notified before any payments are suspended and may appeal to
the secretary and request an extension of time if there have
20110HB2080PN2904 - 17 -
been extenuating circumstances preventing the timely submission
of all necessary information. In considering an appeal, the
secretary may grant an extension of time for the public school
entity or consortium to provide the necessary information before
the suspension is instituted. The board is authorized and shall
authorize school entities and consortia to enter into agreements
with entities providing or administering coverage for health
care benefits under this chapter for the purpose of carrying out
the provisions of this section.
(e) Health benefit entities.--
(1) An entity providing or administering health
insurance or health care coverage for public school
employees, with the exception of public school entities or
consortia as provided for in subsection (d), shall, upon the
written request of the board, public school entities,
consortium or insured, provide claims and loss information
within 60 days of the request or sooner, if so determined by
the board.
(2) The Insurance Commissioner, the Department of Health
and any other agency, authority, board, commission, council,
department or office under the jurisdiction of the Governor
having regulatory authority over any entity charged under
paragraph (1), hereafter known as "regulating authority,"
shall cooperate with the board, if necessary, to obtain
information from any insurance company, third-party
administrator or other administrator or provider of health
insurance benefits for school employees, other than a public
school entity or consortium. Following notice and hearing,
the board may impose an order assessing a penalty of up to
$1,000 per day upon any entity, other than a public school
20110HB2080PN2904 - 18 -
entity or consortium, that willfully fails to comply with the
obligations imposed by this section. If the entity does not
comply with the obligations imposed by this section within 15
days of an order being imposed, the board shall notify the
regulating authority of the failure of an entity under its
jurisdiction to provide data as set forth in this section.
Upon notification, the regulating authority shall suspend or
revoke the license of the entity or otherwise suspend or
revoke the entity's ability to operate until such time as the
board notifies the regulating authority that the entity is in
compliance. The board shall have standing to petition the
Commonwealth Court to seek enforcement of the order.
(3) This subsection shall apply to every entity
providing or administering group health coverage in
connection with providing health care benefits to school
employees within this Commonwealth, including plans,
policies, contracts or certificates issued by:
(i) A stock insurance company incorporated for any
of the purposes set forth in section 202(c) of the act of
May 17, 1921 (P.L.682, No.284), known as The Insurance
Company Law of 1921.
(ii) A mutual insurance company incorporated for any
of the purposes set forth in section 202(d) of The
Insurance Company Law of 1921.
(iii) A professional health services plan
corporation as defined in 40 Pa.C.S. Ch. 63 (relating to
professional health services plan corporations).
(iv) A health maintenance organization as defined in
the act of December 29, 1972 (P.L.1701, No.364), known as
the Health Maintenance Organization Act.
20110HB2080PN2904 - 19 -
(v) A fraternal benefit society as defined in
section 2403 of The Insurance Company Law of 1921.
(vi) A hospital plan corporation as defined in 40
Pa.C.S. Ch. 61 (relating to hospital plan corporations).
(vii) Health care plans subject to the Employee
Retirement Income Security Act of 1974 (Public Law
93-406, 88 Stat. 829), to the maximum extent permitted by
Federal law.
(viii) An administrator as defined in section 1002
of the act of May 17, 1921 (P.L.789, No.285), known as
The Insurance Department Act of 1921.
(ix) A person licensed pursuant to Article VI-A of
The Insurance Department Act of 1921.
(x) Any other person providing or administering
group health care coverage on behalf of a public school
entity, or accepting charges or premiums from a public
school entity, in connection with providing health care
coverage for school employees, including, but not limited
to, multiple employer welfare arrangements, self-insured
public school entities and third-party administrators.
(f) Confidentiality.--Any data requested by or provided to
the board pursuant to this section shall comply with the
standards for privacy established pursuant to the Health
Insurance Portability and Accountability Act of 1996 (Public Law
104-191, 110 Stat. 1936).
(g) Prepared materials.--Any documents, materials or
information solely prepared or created for the purpose of
implementation of subsection (b) are confidential and shall not
be discoverable or admissible as evidence in any civil or
administrative action or proceeding. Any documents, materials,
20110HB2080PN2904 - 20 -
records or information that would otherwise be available from
original sources shall not be construed as immune from discovery
or use in any civil or administrative action or proceeding
merely because they were presented to the board. Nothing in this
subsection shall be construed to prevent publication or
dissemination of the aggregate study findings.
(h) Received materials.--Any documents, materials or
information received by the board or by a department under the
jurisdiction of the Governor on the board's behalf for the
purpose of implementation of subsection (b) shall not be
discoverable from the board, any department or the submitting
entity, nor shall they be admissible as evidence in any civil or
administrative action or proceeding. Any documents, materials,
records or information that would otherwise be available from
original sources shall not be construed as immune from discovery
or use in any civil or administrative action or proceeding
merely because they were received by the board or any
department.
(i) Document review.--No current or former member or
employee of the board or any department shall be allowed to
testify as to any matters by reason of the member's or
employee's review of documents, materials, records or
information submitted to the board by the entity providing
health insurance or health care coverage pursuant to subsection
(b). The enjoinment of testimony does not apply to findings or
actions by the board or any department that are public records.
(j) Original source document.--In the event an original
source document as set forth in subsection (g) is determined by
a court of competent jurisdiction to be unavailable from the
entity providing health insurance or health care coverage in a
20110HB2080PN2904 - 21 -
civil action or proceeding, then, in that circumstance alone,
the board may be required pursuant to a court order to release
that original source document to the party identified in the
court order.
(k) Right-to-know requests.--Any documents, materials or
information made confidential by subsection (f) shall not be
subject to requests under the act of February 14, 2008 (P.L.6,
No.3), known as the Right-to-Know Law, or any successor statute.
(l) Liability.--Notwithstanding any other provision of law,
no person or entity providing any documents, materials or
information to the board, any department or other entity on the
board's behalf shall be held by reason of having provided the
documents, materials or information to have violated any
criminal law, or to be civilly liable under any law, unless the
information is false and the person providing the information
knew or had reason to believe that the information was false and
was motivated by malice toward any person directly affected by
the action.
Section 322. Board review and election.
(a) Options assessment.--Upon collection of the necessary
information, the board shall evaluate existing public school
entity health care arrangements, examine options that would
aggregate, either Statewide or regionally, health care coverage
for public school employees, assess possible cost-management
improvements and solicit input from public school entities and
consortia identified with best practice standards. The board
shall investigate the creation of a Statewide health benefits
program as provided for in section 331 with the goal of
improving the overall affordability of providing health care
coverage for public school employees. The cost projections shall
20110HB2080PN2904 - 22 -
be predicated on a plan that provides quality health care
benefits at a level consistent with those now provided to most
school employees through existing collective bargaining
contracts and offers coverage to school employees and other
eligible individuals.
(b) Election to proceed with program.--No later than ten
months after the board is constituted, unless a request by the
board for an extension is granted by the Governor, the board
shall decide whether to implement a Statewide health benefits
program, as provided for in section 331, or to implement an
alternative measures program, as provided for in section 351, to
reduce health coverage costs for public school entities. The
board's election to implement a Statewide health benefits
program or to implement an alternative measures program shall
require approval by a qualified majority vote. Upon election to
proceed with a Statewide health benefits program, the board
shall develop a plan for adoption, pursuant to section 323.
(c) Alternative election.--If the board decides that a
Statewide health benefits program cannot be created in
accordance with subsection (a), or the board fails to achieve
agreement and approve a plan for implementing a Statewide health
benefits program, the board will proceed with consideration of
an alternative measures program that will reduce long-term costs
or the rate of growth of such costs in the aggregate for public
school entities in accordance with Subchapter E.
Section 323. Plan adoption.
(a) Statewide health benefits program adoption.--Within
three months of electing to proceed with the Statewide health
benefits program, pursuant to section 322(b), the board shall
verify that implementation of a Statewide health care program
20110HB2080PN2904 - 23 -
will result in reduction in the Statewide aggregate cost of the
purchase of benefits or the rate of growth of such costs and
adopt a proposed plan for the implementation of the program. The
proposed plan shall be in writing and shall include a detailed
description of the program and the transition procedures
necessary to phase in and implement the program. The board's
adoption of a proposed plan shall require approval by a
qualified majority vote.
(b) Parameters of program.--The description of the Statewide
health benefits program shall at minimum include:
(1) The eligibility requirements for a school employee
and the employee's health care dependents to qualify for
participation in the program.
(2) The identification of the benefits to be included as
part of the standard benefit package.
(3) Disclosure of any member cost-sharing contributions,
whether expressed as a target percentage of overall program
costs or individually determined as a percentage of salary
and whether the cost-sharing is uniform on a Statewide basis
or varies by health care region.
(4) The designation of health care regions.
(5) The design of the Statewide pool or regional pools
that would be established to aggregate public school entities
for the purpose of purchasing services and managing health
insurance risks.
(6) The requirements for electronic eligibility
transmission between the board and other participating
entities, including public school entities, consortia and the
retirement system.
(7) Financial and accounting plans, including the
20110HB2080PN2904 - 24 -
establishment of any necessary reserves or escrow accounts
with carriers.
(8) The method to be used to compare costs and levels of
health care benefits pursuant to section 332(d)(2).
(c) Transition procedures.--The description of the steps to
phase in and implement the Statewide health benefits program
shall at minimum include:
(1) A determination of when the standard benefit package
shall become the mandatory program offering for eligible
individuals in a public school entity as health care benefits
for school employees are normalized on a Statewide basis.
(2) A determination, based on the size and structure of
any risk pool established within a health care region, as to
when the program would be phased in within that region.
(3) The interim steps to aggregate public school
entities into a Statewide pool or regional pools, including
any best practice standards and benchmarks to be applied to
new or existing consortia, or public school entities, or in
any selection process to build a Statewide or regional pool.
(4) Transition rules on member cost-sharing
responsibility until any member cost-sharing is required for
all members Statewide, or within any region.
(5) Transition rules to limit any negative financial
impact on a public school entity required to purchase health
care coverage through a Statewide or regional pool and to
normalize contribution rates for all participating public
school entities within the same health care region.
(d) Alternative measures program adoption.--Within three
months of proceeding with consideration of an alternative
measures program pursuant to section 322(c), the board shall
20110HB2080PN2904 - 25 -
adopt a proposed plan for the implementation of an alternative
measures program, pursuant to Subchapter E, that will result in
reduction in the Statewide aggregate cost of the purchase of
benefits or the rate of growth of such costs. The proposed plan
shall be in writing and shall include a detailed description and
the transition procedures necessary to phase in and implement
the alternative measures program. The board's adoption of a
proposed plan for implementation of an alternative measures
program shall require approval by a qualified majority vote.
(e) Legislative and public review.--
(1) The board shall publish the provisions of any
proposed plan adopted pursuant to this section in the
Pennsylvania Bulletin and make it available on the board's
Internet website. Following publication, the board shall
schedule at least eight public hearings to solicit public
input on the plan. The hearings shall be conducted in
Philadelphia County; Allegheny County; and the Northeast,
Northwest, Southeast, Southwest, North Central and South
Central regions of this Commonwealth.
(2) The board shall submit the provisions of any
proposed plan adopted pursuant to this section to the
chairman and minority chairman of the Education Committee of
the Senate and the chairman and minority chairman of the
Education Committee of the House of Representatives. The
committees shall have 45 days to review the proposed plan and
submit comments to the board.
(f) Final plan adoption.--Upon completion of the public
hearings pursuant to subsection (e)(1) and expiration of the
committee review pursuant to subsection (e)(2), the board shall
review all the testimony and comments received regarding the
20110HB2080PN2904 - 26 -
proposed plan. The board may, subject to a qualified majority
vote, make changes and adjustments to the plan to effectuate
this chapter. Within 90 days of publishing the proposed plan,
pursuant to subsection (e)(1), the board shall publish the final
plan, as adopted by the board, in the Pennsylvania Bulletin and
on the Internet website of the Department of Education.
(g) Legislative oversight.--The board shall proceed with
implementation unless a resolution to the contrary has been
adopted within 45 days after publication of the plan, in
accordance with this subsection. Upon publication of the final
adopted plan in the Pennsylvania Bulletin, the board shall
submit the plan to the Education Committee of the Senate and the
Education Committee of the House of Representatives. Either
committee may recommend to its respective chamber whether the
board shall be prevented from implementing the plan. If the
committee recommends the plan not be implemented, the Secretary
of the Senate or the Chief Clerk of the House of Representatives
shall place on the calendar for the next legislative day the
question, in the form of a resolution, of whether the board
shall proceed with implementation. If the resolution is adopted
in either chamber, it shall be referred to the Education
Committee in the opposite chamber which may recommend the board
not implement the plan. Upon the recommendation, the resolution
shall be placed on the calendar of the chamber. If a majority of
the members elected to each House approve the resolution, the
resolution shall be presented to the Governor for approval or
disapproval in accordance with section 9 of Article III of the
Constitution of Pennsylvania.
(h) Failure to reach consensus.--If the board fails to
achieve agreement and approve a plan for implementing a
20110HB2080PN2904 - 27 -
Statewide health benefits program by a qualified majority vote
or if the board fails to achieve agreement and approve a plan
for implementing an alternative measures program by a qualified
majority vote, the board shall report as to its findings and
reasons preventing agreement on a plan to the Governor, the
President pro tempore of the Senate and the Speaker of the House
of Representatives.
SUBCHAPTER D
STATEWIDE HEALTH BENEFITS PROGRAM
Section 331. Health benefits program.
(a) Creation.--Upon adoption of a Statewide health plan
under section 323(f), the board shall proceed to initiate and
sponsor an employee benefits program for eligible individuals.
(b) Program design.--The board shall design a program which
follows the parameters of the plan and transition procedures as
established in section 323. The board may develop and administer
the program itself or operate through any legal entity
authorized by law to do so, including consortia, and the program
may be developed and administered differently within each health
care region as long as a standard benefit package that is
substantially equivalent in coverage, as determined by the
board, is available to eligible individuals. The program may
also be administered in whole or in part on a fully insured or
self-funded basis at the board's sole discretion. The board
shall seek no fewer than three proposals for the administration
of the program.
(c) Implementation.--The board may:
(1) Establish pools for selected areas of coverage, such
as pharmacy services, transplants, stop-loss insurance,
health care management or other possible areas that in the
20110HB2080PN2904 - 28 -
board's judgment can be offered Statewide or regionally on a
more stable and cost-effective basis. The board may offer
separate plans to public school entities and consortia prior
to the phase-in of the standard benefit package.
(2) Make the program available in some health care
regions before it is made available within all regions.
(d) Eligibility requirements.--The board shall have full
authority to determine eligibility requirements for benefits and
to adopt rules and regulations setting forth the same which will
be binding on all eligible individuals. No coverage shall be
provided for eligible individuals without payment being made,
except under circumstances as may be established by the board
under reasonable guidelines.
(e) Coverage and plan selection.--The board shall have full
authority to select and contract with insurance carriers, health
maintenance organizations, pharmacy benefit managers, third-
party administrators, reinsurers and any other entities
necessary to provide a range of benefit packages to eligible
individuals through the program. The board shall have full
authority to determine the nature, amount and duration and
discontinuation of coverage to be provided.
(f) Standard and optional benefits.--
(1) A standard benefit package shall be established by
the board that shall include coverage for medical and
hospital services, prescription drugs and may include
supplemental and other benefits in amounts to be determined
by the board.
(2) Within each health care region, the board shall
approve and make available to each eligible individual
affiliated with a public school entity which is participating
20110HB2080PN2904 - 29 -
in the program the following:
(i) A health care plan that includes coverage the
board determines to be the equivalent of the standard
benefit package established in paragraph (1).
(ii) One or more alternate health care plans or plan
designs which in the board's judgment contain benefits
equivalent to the standard benefit package in paragraph
(1). The deductibles and copayments for each alternate
health care plan shall be set and annually adjusted so
that the cost of providing the coverage for the
Commonwealth and a public school entity is no greater
than the cost incurred for the health plan in
subparagraph (i).
(iii) One or more optional benefit plans, as
approved by the board, which allow an eligible individual
to purchase coverage that is not included in the standard
benefit package, provided that any cost over and above
the cost of the health care plan in subparagraph (i) is
to be paid by the member except as otherwise provided in
section 338(f)(1)(ii).
(3) The detailed basis on which payment of benefits is
to be made shall be specified in writing. The benefits
provided in this chapter are subject to change or
modification by the board from time to time as the board, in
its discretion, may determine. All changes or modifications
shall be specified in writing and communicated to members
within a reasonable period of time.
Section 332. Participation.
(a) Mandatory participation.--The board shall have the
authority to require public school entities to participate in
20110HB2080PN2904 - 30 -
the program on a Statewide basis or may phase in and require
participation on a regional basis. Except as provided under
subsections (c), (d), (e) and (f), public school entities in any
health care region designated by the board shall be required to
participate in the program.
(b) Transition plan.--When the board determines pursuant to
subsection (a) that a public school entity shall be required to
participate in the program, the public school entity or
consortium in which the public school entity is a participant
shall, within a reasonable period of time as determined by the
board, present to the board a transition plan with a schedule
for the eventual migration of school employees into the program.
The board shall review the transition plan with the public
school entity or consortium and make any necessary modifications
before granting approval of the plan. A public school entity or
consortium shall be subject to adherence to the transition plan
approved by the board.
(c) Extensions of time.--The board shall give due
consideration to a transition plan submitted pursuant to
subsection (b) that includes a request for an extension of time.
Requests may be submitted by, but shall not be limited to, any
of the following:
(1) A public school entity that participates in a
consortium where an extension of time is necessary for the
rundown and proper termination of the consortium's health
care program.
(2) A public school entity that participates in a
consortium where the withdrawal of the public school entity
may undermine the financial stability of the consortium.
(3) A public school entity or a consortium which will
20110HB2080PN2904 - 31 -
incur a significant financial penalty under terms of a
contract with an insurance carrier or other provider of
health care coverage for a contract in existence on or before
January 1, 2010.
(4) A public school entity or consortium which will
incur a significant financial cost, including fees, penalties
or other contractual financial obligations, related to the
termination of coverage under a contract of insurance or, in
the case of a public school entity that self-insures,
insufficient reserves to pay claims incurred during the
previous coverage year, if the obligation relates to a plan
of coverage that was in existence on or before January 1,
2010, and the public school entity or consortium provides the
board with a financial plan for meeting these obligations.
(d) Rejection of participation.--Within 60 days of creation
of the health benefits program under section 331(a), a public
school entity may reject participation in the program under the
following conditions:
(1) the governing body of the school entity and the
school employee union representing the greatest number of
school employees in the school entity that would be covered
by the program when it is fully operational execute a
memorandum of understanding rejecting participation in the
program that is approved by a majority of the members of the
governing body and a majority of the employees that would be
covered by the program; and
(2) the memorandum of understanding demonstrates that
participation in the program would result in:
(i) payment by the school entity on behalf of school
employees and their eligible health care dependents that
20110HB2080PN2904 - 32 -
would exceed the cost, excluding any employee cost-
sharing, of providing, purchasing and administering
health care benefits to members who are school employees
and their eligible health care dependents in the year
before implementation of the program;
(ii) a reduction in the coverage of health care
benefits for school employees; provided that, if more
than one plan is available to school employees in the
school entity, this comparison shall be with the health
care plan that covers the greatest number of bargaining
unit members; or
(iii) both (i) and (ii).
(e) Optional membership.--No school district of the first
class, as classified pursuant to section 202 of the Public
School Code, shall be required to participate in the program,
except as may be agreed upon under terms of a collective
bargaining agreement covering a majority of employees of a
school district of the first class. Upon a school district of
the first class entering participation in the program pursuant
to a collective bargaining agreement, continued participation in
the program shall become mandatory.
(f) Prohibited membership.--A public school entity that, on
the effective date of this chapter, participates in the
Pennsylvania Employees' Benefit Trust Fund shall be prohibited
from participating in the program, and employees of the public
school entity shall not have the right to elect membership in
the program.
(g) Transition of employees.--A public school entity that
provides some or all of its employees with health benefits
through another health care plan by virtue of one or more
20110HB2080PN2904 - 33 -
collective bargaining agreements, entered into prior to the
effective date of this chapter, shall not be required to join
the program until expiration of the collective bargaining
agreements. The public school entity and some or all of its
employees or bargaining representatives of its employees may by
mutual agreement and approval of the board join the program at
an earlier date. Renewal or extension of a collective bargaining
agreement shall constitute its expiration for the purpose of
this subsection.
Section 333. Continuation of coverage and transfer employees.
(a) Annuitants.--Upon retirement, an annuitant eligible
under paragraph (1) or (2) shall have the option to elect
coverage in the program, including coverage for any eligible
health care dependent. The annuitant shall be responsible to pay
the full cost of the coverage, unless a public school entity has
agreed, separate from any requirements of the program, to pay
toward the coverage pursuant to an award of health benefits
under a written policy or agreement collectively bargained or
otherwise entered into by the public school entity. The board
shall annually determine the cost of coverage as follows:
(1) For an annuitant who is enrolled in the program
pursuant to section 513 of the Public School Code or an
annuitant who pursuant to any award of health benefits for
annuitants under a written policy or agreement collectively
bargained or otherwise entered into by the public school
entity prior to the effective date of this section, payments
shall be based on the total contribution rate established
pursuant to section 334(b) and (c) for a school employee in
the same health care region, plus a 2% administrative fee.
(2) For an annuitant, other than an annuitant qualified
20110HB2080PN2904 - 34 -
for coverage under paragraph (1), payments shall be made on
the same basis as an annuitant qualified for coverage under
paragraph (1), except as determined as follows:
(i) The board shall periodically have the actuary
review and determine the separate cost of providing
continuation of coverage to annuitants under this
paragraph, along with an assessment of its impact on the
cost of providing coverage to members who are school
employees and annuitants qualified for coverage under
paragraph (1). The review and assessment shall first
occur as part of the school employee health benefits
study and evaluation conducted pursuant to section 321
and its results shall be considered in the development of
parameters under section 323(b).
(ii) The board shall consider the findings of the
actuary in subparagraph (i) to determine if there is a
substantial impact on the cost of providing coverage to
members who are school employees and annuitants qualified
for coverage under paragraph (1). If there is a
substantial cost impact, the board shall require payments
for an annuitant qualified to elect coverage in the
program under this paragraph to be separately determined
and the contribution rate to be based on the
disaggregated cost of providing the coverage, plus a 2%
administrative fee.
(b) Separation from service.--The board shall determine the
eligibility of members, other than annuitants covered by
subsection (a), to elect continuation of coverage in the program
upon separation from service as a school employee. The member
shall be responsible to pay the full cost of the coverage in the
20110HB2080PN2904 - 35 -
member's health care region, plus an administrative fee to be
set by the board. The board shall, at minimum, provide
continuation of coverage eligibility that meets the requirements
of Title X of the Employee Retirement Income Security Act of
1974 (Public Law 99-272, 29 U.S.C. § 1161 et seq.) and provide
the continuation of coverage options required pursuant to 51
Pa.C.S. § 7309 (relating to employment discrimination for
military membership or duty) for members on military leave.
(c) Transfer employees.--The board may, in its discretion,
approve the participation of transfer employees in the program,
provided that any position for which a transfer employee who is
provided health benefits in a health care plan sponsored by a
public school entity through an agreement that was in existence
on or before January 1, 2010, with the transfer employee's
employer shall be allowed to participate in the program. The
board shall set the terms and conditions necessary for
participation in the program, including the cost of coverage to
be paid by the third-party entity which shall be based on the
full cost of coverage in the health care region as determined by
the board, plus an administrative fee. The sponsoring public
school entity shall be responsible to the board for the
collection of the payments for transfer employees from the
third-party entity.
Section 334. Partnership for stable benefits funding.
(a) Basis of partnership.--In recognition that the long-term
viability and stability of the program will require public
school entity employers, members and the Commonwealth to be
partners both in sustaining the health benefits program as well
as managing the costs of a reasonable and appropriate standard
benefit package, the board shall determine for each plan year
20110HB2080PN2904 - 36 -
and in each region the payments due from public school entities,
from members and from the Commonwealth.
(b) Determination of contribution rate.--The board shall
determine for each plan year the total amount of the
contributions by the Commonwealth, public school entities and
school employees required to provide projected benefits for that
plan year under the standard benefit package on behalf of each
school employee member and the employee's eligible health care
dependents. The contribution rate shall consist of the amount
required to provide the standard benefit package, including
appropriate reserves and administrative expenses, and shall be
adjusted for each health care region to reflect the cost of
benefits in that region. The contribution rates may
differentiate between single coverage for members only and types
of family coverage, as determined by the board.
(c) Certification of rate.--The board shall certify the
contribution rate for each health care region to the
Commonwealth and public school entities, including the payments
that shall be due from public school entities, from members and
from the Commonwealth. The certifications shall be regarded as
final and not subject to modification by the Secretary of the
Budget.
(d) Commonwealth cost share.--The Commonwealth shall make a
contribution to offset a portion of the cost increase consistent
with subsections (e) and (f) for any plan year in which the
board determines that the aggregate cost of providing the
standard benefit package on behalf of members who are school
employees and their eligible health care dependents exceeds the
sum of:
(1) the projected carry-over balance for the plan year
20110HB2080PN2904 - 37 -
in the employer contribution account after all required
transfers have been made to the employee benefits account for
the prior year; and
(2) any employee cost-sharing for the plan year.
(e) Budget submission and appropriation.--If the board
determines that the requirements of subsection (d) have been
met, all of the following shall occur:
(1) The board shall submit to the Secretary of the
Budget an itemized budget specifying the amount necessary to
be appropriated by the Commonwealth consistent with
subsection (f). The budget submission shall be on a form and
in a manner determined by the Secretary of the Budget and
shall occur no later than November 1 of the fiscal year
preceding the plan year for which funds are requested.
(2) Upon appropriation by the General Assembly to
provide for the obligations of the Commonwealth, the amount
shall be paid by the State Treasurer through the Department
of Revenue into the employer contribution account within 30
days of receipt of the requisition presented each month by
the board.
(f) Limitation on Commonwealth contribution.--
(1) The Commonwealth shall not be obligated to pay any
amount beyond that which is appropriated by the General
Assembly. The amount requested by the board pursuant to
subsection (e)(1) shall not exceed the sum of any amount paid
by the Commonwealth for the fiscal year preceding the plan
year for which funds are requested and the lesser of:
(i) 50% of the amount that the board determines is
necessary to meet the increase in the contribution rate
on behalf of members who are school employees determined
20110HB2080PN2904 - 38 -
pursuant to subsection (b); and
(ii) the product of the total revenue transferred in
the prior plan year from the employer contribution
account to the employee benefits account and the most
recent annual percent change in the per enrollee private
health insurance premium for all benefits, as defined in
the National Health Expenditure Data published by the
Centers for Medicare and Medicaid Services, Department of
Health and Human Services.
(2) If any excess revenue in the employer contribution
account is to be applied to payments for the plan year, then
the excess revenue shall be used to reduce the calculation
under this subsection in proportion to the Commonwealth's
share of the total increase in the contribution rate on
behalf of active members for the plan year.
(g) Additional optional contribution.--Notwithstanding the
limitation in subsection (f), the General Assembly may
appropriate additional revenue to the employer contribution
account in any fiscal year.
(h) Allocation of Commonwealth contribution.--Any
contribution made by the Commonwealth under this section shall
be used to offset an increase in the contribution rate paid in a
health care region by public school entities on behalf of
members who are school employees and their eligible health care
dependents and to maintain any offset that was paid in a prior
year. The Commonwealth contribution shall be allocated to offset
a portion of each participating public school entity's cost of
coverage on a per-member basis, for members who are school
employees and their eligible health care dependents, based on
the public school entity's market value/income aid ratio using
20110HB2080PN2904 - 39 -
the most recent data provided by the Department of Education.
For any public school entity that is not assigned a market
value/income aid ratio by the Department of Education, the
Commonwealth contribution shall not be adjusted based on a
market value/income aid ratio. For the purpose of this
subsection, "market value/income aid ratio" shall have the same
meaning given to it in the Public School Code.
(i) Contributions on behalf of school employees.--Consistent
with any transition procedure pursuant to section 323(c)(5),
each public school entity shall be required to make payments to
the trust fund on behalf of members who are school employees and
their eligible health care dependents based on the contribution
rate certified by the board in subsection (c). The increase in
payments made from one year to the next by public school
entities on behalf of school employees shall be equal to or
greater than the increase in payment from one year to the next
made pursuant to subsection (d), excluding any additional
optional contribution made by the Commonwealth pursuant to
subsection (g).
(j) Deduction from appropriations.--In the event a public
school entity does not make the required payment in the time
allotted, as determined by the board, the Secretary of Education
and the State Treasurer shall cause to be deducted and paid into
the trust fund from the amount of any moneys due to any public
school entity on account of any appropriation for schools or
other purposes the amount due to the trust fund as certified by
the board and as remains unpaid on the date such appropriations
would otherwise be paid to the public school entity by the
Department of Education, and the amount shall be credited to the
public school entity's account in the trust fund.
20110HB2080PN2904 - 40 -
(k) Transition.--Until any transition pursuant to section
323(c)(5) has been completed, the payments made by each public
school entity shall be no less than the total amount paid by the
public school entity to provide, purchase and administer health
care benefits to members who are school employees and their
eligible health care dependents in the year before
implementation of the program. Any contributions received by the
public school entity from school employees in the form of cost-
sharing payments for health care coverage shall be excluded from
the amount.
(l) Referendum exception.--
(1) In addition to the exceptions provided for in
section 333(f) of the act of June 27, 2006 (1st Sp.Sess.,
P.L.1873, No.1), known as the Taxpayer Relief Act, the costs
specified in paragraph (2) shall constitute an exception to
the referendum requirements of section 333(c) of the Taxpayer
Relief Act subject to department approval pursuant to section
333(j) of the Taxpayer Relief Act.
(2) Costs incurred by a school district in providing
health care-related benefits which are attributable to the
school district's participation in the program shall
constitute an expenditure for purposes of section 333(f)(1)
and (2) of the Taxpayer Relief Act to the extent the
anticipated increase in such costs between the current year
and the upcoming year is greater than the index established
for the school district pursuant to section 313(1)(ii) of the
Taxpayer Relief Act. The dollar amount of this exception
shall be equal to the portion of the increase which exceeds
the index established for the school district pursuant to
section 313(1)(ii) of the Taxpayer Relief Act.
20110HB2080PN2904 - 41 -
Section 335. Powers and duties of board.
(a) Powers.--In addition to the powers granted by other
provisions of this chapter, the board shall have the powers
necessary or convenient to carry out this subchapter, including,
but not limited to, the power to:
(1) Determine appropriate geographic health care regions
for the administration of the program and make changes to the
regions as necessary; provided, that a school district of the
first class shall be designated as its own health care
region.
(2) Formulate and establish the conditions of
eligibility, including eligibility for health care dependent
coverage for members, to include consideration if a member or
health care dependent is covered, or eligible for coverage,
under another employer-sponsored group health insurance plan;
provisions for payment of benefits; and all other provisions
that may be required or necessary to carry out the intent and
purpose of the program.
(3) Determine and make necessary changes to the standard
benefit package and benefit structure of the program.
(4) Establish copayments, annual deductibles,
coinsurance levels, exclusions, formularies and other
coverage limitations and payment responsibilities of members
incurred at the time of service.
(5) Set and adjust member cost-sharing contributions to
be expressed as a target percentage of overall program costs
or individually determined as a percentage of salary. The
board shall determine whether member cost-sharing shall be
uniform on a Statewide basis or shall vary by health care
region.
20110HB2080PN2904 - 42 -
(6) Impose and collect necessary fees and charges.
(7) Determine enrollment procedures.
(8) Establish procedures for coordination of benefits
with other plans and third-party payers, including
coordinating benefits or contracting directly with Medicare.
(9) Establish a plan with the retirement system to
coordinate health care coverage for annuitants between the
program established by this chapter and the group health
insurance program sponsored by the retirement system under
the provisions of 24 Pa.C.S. Ch. 89 (relating to group health
insurance program) and to coordinate the sharing of
information pertaining to premium assistance payment
transfers.
(10) Set and adjust contribution rates sufficient to
maintain the adequacy of any reserves established by this
chapter and to fully fund the benefits offered by and to pay
for the administrative expenses related to the program.
(11) Set and adjust costs for members electing to
continue coverage upon retirement or separation from
employment. The board may establish different cost rates to
be charged for different categories of members electing to
continue coverage.
(12) Purchase insurance or employ self-insurance, alone
or in combination, to provide benefits as shall be determined
by the board.
(13) Establish appropriate reserves based on generally
accepted standards as applied by Federal and State regulators
to similar types of plans.
(14) Issue self-liquidating debt or borrow against
contributions, payments or other accounts receivable for the
20110HB2080PN2904 - 43 -
purposes of prepaying any health benefits, establishing
reserves or otherwise lowering the cost of coverage.
(15) Establish procedures to verify the accuracy of
statements and information submitted by eligible individuals
on enrollment forms, claim forms or other forms.
(16) Receive and collect all contributions due and
payable to the accounts or delegate to a public school entity
or claims processor the right to receive contributions,
payments or perform ministerial functions required to assert
the board's rights. In so doing, the board shall have the
right to:
(i) maintain any and all actions and legal
proceedings necessary for the collection of
contributions; and
(ii) prosecute, defend, compound, compromise,
settle, abandon or adjust any actions, suits,
proceedings, disputes, claims, details and things related
to the accounts and program.
(17) Establish procedures to hear and determine any
claims and controversies under this chapter.
(18) Promulgate rules and regulations regarding the
administration of the program, including the establishment of
the plan year.
(19) Ensure that a public school entity provides
detailed information about the program to eligible employees
at least 90 days before program coverage begins to be offered
to school employees.
(20) Seek and take all necessary steps to retain
eligibility for the members, public school entities and the
Commonwealth to receive tax-preferred or tax-free treatment
20110HB2080PN2904 - 44 -
under the IRC for contributions to and earnings of the trust
fund.
(21) Enter into agreements with entities providing or
administering coverage for health benefits under this chapter
for the electronic exchange of data between the parties at a
frequency as determined by the board.
(22) Perform and do any and all such actions and things
that may be properly incidental to the exercising of powers,
rights, duties and responsibilities of the board.
(23) Determine best practice standards and benchmarks
for consortia in any selection process to build a Statewide
pool or regional pools, including the power to require a
consortium to merge with another consortium. The board shall
have the power to require consortia, as a condition of
continued participation in the program, to accept any public
school entity applying to join and participate in a
consortium.
(24) Enter into agreements with any public school entity
or consortium to implement the program developed pursuant to
this chapter and delegate powers necessary to administer
coverage for health benefits.
(b) Administrative duties of board.--In addition to other
duties of the board provided in this chapter, the following
duties shall be afforded to the board for the implementation of
this section.
(c) Regulations and procedures.--The board shall, with the
advice of the Office of General Counsel and the actuary, adopt
and promulgate rules and regulations for the uniform
administration of the program. The actuary shall approve in
writing all computational procedures used in the calculation of
20110HB2080PN2904 - 45 -
contributions and the cost of benefits, and the board shall by
resolution adopt the computational procedures prior to their
application by the board. The rules, regulations and
computational procedures as so adopted from time to time and as
in force and effect at any time, together with tables that are
adopted as necessary for the calculation of contributions and
the cost of benefits, shall be effective as if fully set forth
in this chapter.
(d) Data.--The board shall keep in electronic format records
of claims, eligibility and other data as are stipulated by the
actuary in order that an annual contribution rate determination
for each health care region and various program options can be
completed within six months of the close of each plan year. The
board shall have final authority over the means by which data is
collected, maintained and stored and in so doing shall protect
the rights of its membership as to privacy and confidentiality.
(e) Annual financial statement.--The board shall prepare and
have published within six months following the end of each plan
year a financial statement showing the condition of the trust
fund as of the end of the previous plan year. The board shall
submit said financial statement to the Governor and shall make
copies available to public school entities for the use of the
school employees and the public.
(f) Independent audit.--The board shall provide for an
annual audit of the trust fund by an independent certified
public accounting firm.
(g) Manual of regulations.--The board shall, with the advice
of the Office of General Counsel and the actuary, prepare within
six months of the commencement of a program adopted under this
chapter a manual incorporating rules and regulations consistent
20110HB2080PN2904 - 46 -
with the provisions of this chapter for each participating
public school entity that shall make information contained in
the manual available to school employees. The board shall
thereafter advise public school entities within 90 days of any
changes in rules and regulations due to changes in the law or
due to changes in administrative policies.
(h) Annual budget.--The board shall establish an annual
budget for the program and make disbursements from the trust
fund that are consistent with the budget.
(i) Program assistance.--The board may solicit and accept
grants, loans and other aid from any person, corporation or
other legal entity or from the Federal, State or local
government and participate in any Federal, State or local
government program if necessary for prudent management of the
program.
(j) Functions.--The board shall perform other functions as
are required for the execution of this chapter and shall have
the right to inspect employment records of public school
entities.
(k) Qualified majority voting provision.--A qualified
majority vote shall be required on any matter voted upon by the
board affecting the development of or any change in:
(1) The plan to implement the program adopted pursuant
to section 323(f).
(2) The standard benefit package, benefit options or
plan design offered by the program to covered employees.
(3) Membership eligibility criteria.
(4) The addition, deletion or significant change in
status of an insurance carrier, benefits administrator or
other major contractor in the administration of benefits, or
20110HB2080PN2904 - 47 -
the addition, deletion or significant change in status of a
health care provider network.
(5) Any determination on the use of excess fund
payments.
(6) The overall per-employee cost of the standard
benefit package to the trust fund and any public school
entity funding and member cost-sharing responsibilities.
(7) Cost containment measures such as managed care,
wellness centers and large case management.
(8) Contracts valued at more than $25,000,000.
(9) Changes in trust document, bylaws or any major
internal operating policies or procedures, such as claims
appeal procedures, not to include routine ministerial
functions.
(10) The alternative measures program created pursuant
to section 351(a).
(11) Approve employment of and contracts with
consultants and professional personnel.
(l) Duties conferred upon secretary.--The secretary of the
board shall supervise a staff of administrative, technical and
clerical employees engaged in recordkeeping and clerical
processing activities in maintaining files of members,
accounting for contributions, processing payments, preparing
required reports and counseling.
Section 336. Public School Employees' Benefit Trust Fund.
(a) Establishment of trust fund.--The Public School
Employees' Benefit Trust Fund is established in the State
Treasury. The moneys of the trust fund are appropriated on a
continuing basis and shall be used exclusively for the purposes
set forth in this chapter. All of the assets of the trust fund
20110HB2080PN2904 - 48 -
shall be maintained and accounted for, separate from all other
funds and moneys of the Commonwealth. The Treasury Department
shall credit to the trust fund all moneys received from the
Department of Revenue arising from the contributions required
under this chapter and all earnings from investments or moneys
of the trust fund. There shall be established and maintained by
the board the several ledger accounts, including:
(1) The employee benefits account shall be the ledger
account to which shall be credited the payments from section
333(a),(b) and (c), payments from members for cost sharing
and any additional member-paid cost associated with optional
benefit packages elected by members and transfers from the
employer contribution account as provided in paragraph (3).
All earnings derived from investment of the assets of the
employee benefits account shall be credited to this account.
The board is authorized to separately invest the amounts in
the employee benefits account in a prudent manner intended to
maximize the safety of the capital contained in the employee
benefits account. Payments for member health care benefits
and the direct administrative expenses of the board related
to the administration of the employee benefits program, as
provided in section 312(d), shall be charged to this account.
(2) Reserve account.
(i) A restricted reserve account, or more than one
account if the board determines it necessary to have
segregated accounts, is established within the trust fund
for the purpose of establishing and maintaining a reserve
or separate reserves sufficient:
(A) to pay the expected claims experience of the
program in the event the board elects to self-fund
20110HB2080PN2904 - 49 -
all or a portion of the program for any plan years;
(B) to prefund the accrued liability for any
postretirement health care benefits earned by
employees enrolled in the program pursuant to section
333(a)(1) as the benefit is earned by the employees;
and
(C) to amortize the unfunded actuarial accrued
liability for postretirement health care benefits
already earned by employees and annuitants pursuant
to section 333(a)(1) in the event the board elects to
assume all or a portion of the liability. The board
shall use an amortization period that does not exceed
30 years for this purpose.
(ii) The board shall annually establish through an
actuary retained by the board the amount necessary, if
any, to establish and maintain a reserve or separate
reserves sufficient for the purposes of this paragraph.
Any moneys needed to maintain the reserve or separate
reserves established under this paragraph shall be
collected through the adjustment of the contribution rate
established pursuant to section 334(b) and (c) or through
other available sources.
(iii) The moneys in any reserve account may be
invested by the board separate from other moneys of the
trust fund. All earnings derived from investment of the
assets of any reserve account shall be credited to the
reserve account.
(3) The employer contribution account shall be the
ledger account to which shall be credited all contributions
made by the Commonwealth as determined in accordance with
20110HB2080PN2904 - 50 -
section 334(e) and payments from public school entities as
determined in accordance with section 334(i), as well as all
earnings derived from the investment of the assets of the
employer contribution account. The total amount of the
Commonwealth and public school entity contributions required
to provide the standard benefit package on behalf of all
members who are school employees and their eligible health
care dependents shall be transferred on a monthly basis to
the employee benefits account.
(b) Composition.--The trust fund shall consist of:
(1) All payments made by members or received from the
Commonwealth and public school entities and all interest,
earnings and additions thereto.
(2) Any other money, public or private, appropriated or
made available to the board for the trust fund or any reserve
account from any source and all interest, earnings and
additions thereto.
(c) Administration of trust and associated funds.--The
assets of the trust fund shall be preserved, invested and
expended solely pursuant to and for the purposes set forth in
this chapter.
(d) Control and management of trust fund.--
(1) The board shall have exclusive control and
management of the trust fund and full power to invest and
manage the assets of each account of the trust fund as a
prudent investor would, by considering the purposes, terms
and other circumstances of each account and by pursuing an
overall investment strategy reasonably suited to the trust
fund.
(2) The board may invest in every kind of property and
20110HB2080PN2904 - 51 -
type of investment, including, but not limited to, mutual
funds and similar investments, consistent with this
subsection.
(3) In making investment and management decisions, the
board shall consider, among other things, to the extent
relevant to the decision or action:
(i) the size and nature of the account;
(ii) the liquidity and payment requirements of the
account;
(iii) the role that each investment or course of
action plays in the overall investment strategy;
(iv) to the extent reasonably known to the board,
the needs for present and future payments; and
(v) the reasonable diversification of assets, taking
into account the purposes, terms and other circumstances
of the trust fund and the requirements of this section.
(e) Custodian of trust fund.--The State Treasurer shall be
the custodian of the trust fund.
(f) Name for transacting business.--By the name of "The
Public School Employees' Benefit Trust Fund," all of the
business of the trust fund shall be transacted, its fund
invested, all requisitions for money drawn and payments made and
all of its cash and securities and other property shall be held,
except that, any other law to the contrary notwithstanding, the
board may establish a nominee registration procedure for the
purpose of registering securities in order to facilitate the
purchase, sale or other disposition of securities.
(g) Payment from trust fund.--All payments from the trust
fund shall be made by the State Treasurer in accordance with
requisitions signed by the secretary of the board or the
20110HB2080PN2904 - 52 -
secretary's designee. The board shall reimburse the State
Treasurer for the cost of making disbursements from the trust
fund.
(h) Fiduciary status of board.--Board members, employees of
the board and agents thereof shall stand in a fiduciary
relationship to the members regarding the investments and
disbursements of any of the moneys of the trust fund and shall
not profit either directly or indirectly with respect thereto.
(i) Transfers.--The board may transfer moneys among the
various accounts of the trust fund, including any reserve
accounts established under subsection (a)(2), as may be
necessary to satisfy the provisions of this chapter. Transfers
from funds retained in the reserve account pursuant to
subsection (a)(2)(i)(A) may be made only for the payment of
claims or expected claims as determined by the actuary retained
by the board. Transfers from funds retained in the reserve
account pursuant to subsection (a)(2)(i)(B) or (C) may be made
only for paying toward the cost of providing health care
benefits to annuitants enrolled in the program pursuant to
section 333(a)(1).
(j) Additional powers of board.--The board may:
(1) Adopt, from time to time, appropriate investment
policy guidelines and convey the same to those fiduciaries
who have the responsibility for the investment of funds.
(2) Retain such portion of the moneys of the accounts in
cash or cash balances as the board may deem desirable,
without any liability or interest thereon.
(3) Settle, compromise or submit to arbitration all
claims or damages due from or to the accounts, commence or
defend any legal, equitable or administrative proceedings
20110HB2080PN2904 - 53 -
brought in connection with the program and represent the
trust fund in all proceedings under this paragraph.
(k) Additional duties of secretary.--The secretary of the
board shall serve as liaison to the Treasury Department, the
Department of the Auditor General and between the board and the
investment counsel and the mortgage supervisor in arranging for
investments to secure maximum returns to the trust fund.
Section 337. Misrepresentation, refusal to cooperate and fraud.
(a) Misrepresentation.--If the eligible individual or anyone
acting on behalf of an eligible individual makes a false
statement or withholds information on the application for
enrollment with intent to deceive or affect the acceptance of
the enrollment application or the risks assumed by the program
or otherwise misleads the board, the board shall be entitled to
recover its damages, including legal fees, from the eligible
individual or from any other person responsible for misleading
the board and from the person for whom the benefits were
provided. Any material misrepresentation on the part of the
eligible individual in making application for coverage or any
application for reclassification thereof or for service
thereunder shall render the coverage under the program null and
void.
(b) Refusal to cooperate.--The board may refuse to pay
benefits, or cease to pay benefits, on behalf of an eligible
individual who fails to sign any document deemed by the board to
be relevant to protecting its subrogation rights or certifying
eligibility or who fails to provide relevant information when
requested. As used in this subsection, the term "information"
includes any documents, insurance policies, police reports or
any reasonable request by the claims processor to enforce the
20110HB2080PN2904 - 54 -
board's rights.
(c) Penalty for fraud.--In any case in which the board finds
that an eligible individual is receiving benefits based on false
information, the additional amounts received predicated on the
false information, together with interest doubled and compounded
and legal fees, shall be due from the member. To secure payment
of funds, the board shall have the right to garnish or attach
all or a portion of any compensation payable to the party by the
party's employer, any annuity payable to the party by the
retirement system, any accumulated deductions held by the
retirement system in the party's account or any process
whatsoever.
Section 338. Miscellaneous provisions.
(a) Construction of chapter.--
(1) Any termination or other modifications of the
program, including, but not limited to, a change in rates,
benefits options or structure of the provision of health care
benefits, shall not give rise to any contractual rights or
claims by any eligible individuals or any other person
claiming an interest, either directly or indirectly, in the
program. No provisions of this chapter, nor any rule or
regulation adopted pursuant to this chapter, shall create in
any person a contractual right in that provision.
(2) The provisions of this chapter are severable and if
any of its provisions shall be held to be unconstitutional,
the decision of the court shall not affect or impair any of
the remaining provisions. It is hereby declared to be the
legislative intent that this chapter would have been adopted
had the unconstitutional provisions not been included.
(3) This subsection shall not apply to policies designed
20110HB2080PN2904 - 55 -
primarily to provide coverage payable on a per diem, fixed
indemnity or nonexpense incurred basis, or policies that
provide accident only coverage, where payment for such policy
is made solely by the school employee.
(b) Hold harmless.--Neither the Commonwealth nor the board,
including their respective officers, directors and employees,
shall be liable for any claims, demands, actions or liability of
any nature, including, but not limited to, attorney fees and
court costs, based upon or arising out of the operations of the
program, whether incurred directly or indirectly. The eligible
individuals who enroll and participate in the program shall be
deemed to agree, on behalf of themselves and their heirs,
successors and assigns, to hold harmless the Commonwealth and
the board, including their respective officers, directors and
employees, from any claims, demands, actions or liability of any
nature, whether directly or indirectly, including attorney fees
and court costs, based upon or arising out of the operation of
the program.
(c) No recourse.--Under no circumstances shall the assets of
the Commonwealth be liable for or its assets be used to pay any
claims, demands, actions or liability of any nature, whether
directly or indirectly, including, but not limited to, attorney
fees and court costs, based upon or arising out of the operation
of the program.
(d) Reservation of immunities.--Nothing contained in this
chapter shall be construed as a waiver of the Commonwealth's or
board's immunities, defenses, rights or actions arising out of
their sovereign status or from the 11th amendment to the
Constitution of the United States.
(e) Collective bargaining, mediation and binding
20110HB2080PN2904 - 56 -
arbitration.--Except as otherwise provided in subsection (f),
nothing in this chapter or in any other law shall be construed
to permit, authorize or require collective bargaining, mediation
or binding arbitration to create, alter or modify health
benefits set forth in this chapter or administered by the board
for school employees and their health care dependents. Further,
except as otherwise provided in subsection (f), nothing in this
chapter or in any other law shall be construed to permit,
authorize or require a public school entity, through collective
bargaining, mediation or binding arbitration, or otherwise, to
establish, create, alter or modify a health benefits plan or pay
health benefits set forth in this chapter or administered by the
board that modify or supplement in any way the health benefits
set forth in this chapter for school employees and their health
care dependents.
(f) Exceptions.--
(1) The parties may:
(i) Continue to engage in collective bargaining with
regard to health benefits until such time as the board-
sponsored program, pursuant to this subchapter, is
released and the standard benefit package is made
available to employees of a public school entity.
However, any health benefits provided under a collective
bargaining agreement entered into on or after the
effective date of this chapter shall contain a provision
that school employees covered by the agreement must join
the board-sponsored program as required by section 332 as
a condition of continuing to receive health benefits. The
board shall determine the appropriate timing and phase-in
of the program in any public school entity taking into
20110HB2080PN2904 - 57 -
consideration the need for the public school entity to
properly terminate any existing health benefits
arrangements.
(ii) Negotiate or otherwise agree to provide or make
payment for supplemental benefits that have not been
included as part of the standard benefit package.
(2) Nothing contained in this chapter shall restrict a
public school entity from negotiating or otherwise agreeing
to make payment for postretirement health benefits for
members or as may be provided for in Subchapter F.
SUBCHAPTER E
ALTERNATIVE MEASURES FOR COST REDUCTION
Section 351. Alternative measures program.
(a) Creation.--Upon completing the study required under
section 321 with either a negative recommendation to proceed
with implementation of a Statewide health care program or if the
board fails to achieve agreement and approve a plan for
implementing a Statewide health benefits program by a qualified
majority vote, the board shall proceed to initiate and sponsor
an alternative measures program to reduce the costs for public
school entities in providing health care coverage to employees
and other eligible individuals.
(b) Program design.--In designing an alternative measures
program, the board may consider all of the following:
(1) Establishment of pools for selected areas of
coverage, such as pharmacy services, transplants, stop-loss
insurance, health care management or other possible areas
that in the board's judgment can be offered Statewide or
regionally on a more stable and cost-effective basis.
(2) Assistance in the formation of consortia to serve
20110HB2080PN2904 - 58 -
public school entities that do not have the option of joining
an existing consortium.
(3) Development of best practice standards and
benchmarks for public school entities and consortia-
sponsoring health care plans for school employees.
(4) Requirements that public school entities and
consortia aggregate into larger regional pools, with opt-out
provisions for public school entities or consortia that meet
best practice standards and benchmarks.
(5) Requirements for public disclosure by public school
entities and consortia comparing their health benefits
purchasing to established best practice standards in their
region.
(c) Implementation.--The board shall have full authority to
select and contract with insurance carriers, health maintenance
organizations, pharmacy benefit managers, third-party
administrators, reinsurers and any other entities necessary to
provide the selected areas of coverage. The board shall have
full authority to determine the nature, amount and duration and
discontinuation of coverage to be provided.
(d) Mandatory and optional participation.--The board shall
have the authority to require public school entities and
consortia to participate in the alternative measures program.
(e) Transition plan.--If the board determines that a public
school entity or consortium shall be required to participate in
the alternative measures program, the public school entity or
consortium shall, within a reasonable period of time as
determined by the board, present to the board a transition plan
with a schedule for the public school entity or consortium to
join the alternative measures program. The board shall review
20110HB2080PN2904 - 59 -
the transition plan with the public school entity or consortium
and make any necessary modifications before granting approval of
the plan. A public school entity or consortium shall be subject
to adherence to the transition plan approved by the board.
(f) Extensions of time.--The board shall give due
consideration to a transition plan submitted pursuant to
subsection (e) that includes a request for an extension of time.
Consideration shall be given to a public school entity or
consortium which will incur a significant financial cost or
penalty.
(g) Prohibited membership.--A public school entity that
participates in the Pennsylvania Employees' Benefit Trust Fund
shall be prohibited from participating in the alternative
measures program.
(h) Transition of employees.--A public school entity that
provides some or all of its employees with health benefits
through another health care plan by virtue of one or more
collective bargaining agreements entered into prior to the
effective date of this chapter shall not be required to join the
alternative measures program until expiration of the collective
bargaining agreements. The public school entity and some or all
of its employees, or bargaining representatives of its
employees, may, by mutual agreement and approval of the board,
join the program at an earlier date. Renewal or extension of a
collective bargaining agreement shall constitute its expiration
for the purposes of this subsection.
(i) Optional membership.--No school district of the first
class, as classified pursuant to section 202 of the Public
School Code, shall be required to participate in the alternative
measures program, except as may be agreed upon under the terms
20110HB2080PN2904 - 60 -
of a collective bargaining agreement covering a majority of
employees of the school district. Upon a school district of the
first class entering participation in the alternative measures
program pursuant to a collective bargaining agreement, continued
participation in the alternative measures program shall become
mandatory.
SUBCHAPTER F
RETIREMENT HEALTH SAVINGS PLAN
Section 361. Retirement health savings plan.
(a) Plan created.--The board shall establish a retirement
health savings plan through which school employees can save to
cover health-related expenses following retirement. For this
purpose the board shall make available one or more trusts
including a governmental trust or governmental trusts authorized
under the IRC as eligible for tax-preferred or tax-free
treatment. The board may promulgate regulations regarding the
prudent and efficient operation of the retirement health savings
plan, including, but not limited to:
(1) Establishment of an annual administrative budget and
disbursements in accordance with the budget.
(2) Determination of the structure of the retirement
health savings accounts available to eligible school
employees.
(3) Determination of enrollment procedures.
(b) Contracting authorized.--The board is authorized to
administer the retirement health savings plan and to contract
with any lawfully authorized entities to provide investment
services, recordkeeping, benefit payments and other functions
necessary for the administration of the retirement health
savings plan. The board may contract with the retirement system
20110HB2080PN2904 - 61 -
to invest funds in an account that shall be maintained and
accounted for separately from the funds of the retirement system
and invested in a prudent manner intended to maximize the safety
of the capital, with all earnings derived from investment of the
assets to be credited to the retirement health savings plan.
Costs and expenses incurred by the retirement system in
administering the investment option shall be paid by the
retirement health savings plan.
(c) Separate account.--All funds related to the retirement
health savings plan shall be maintained and accounted for
separately from the health benefits program sponsored by the
board. The assets of the retirement health savings plan shall
not be liable or utilized for payment of any expenses or claims
incurred by the health benefits program other than as may be
directed by the participant account holder for reimbursement of
an IRC-qualifying health-related expense.
(d) Enrollment.--The board shall establish eligibility
guidelines consistent with the IRC for school employees to
participate in the retirement health savings plan.
(e) Contributions.--
(1) The board shall determine what contributions are
eligible under the IRC for tax-preferred or tax-free
treatment and may be made into a retirement health savings
plan by a school employee. The board shall authorize and
allow contributions, subject to appropriate limits as may be
established by the board, to be paid by a school employee
electing participation in the retirement health savings plan
subject to the following conditions:
(i) A mandatory school employee contribution
established as a fixed percentage of compensation may be
20110HB2080PN2904 - 62 -
established through a collective bargaining agreement
between a public school entity and a bargaining group
representing school employees. The retirement health
savings plan contribution rate does not have to be
uniform for all groups of school employees.
(ii) An optional employee contribution at a fixed
percentage of compensation may be elected by a school
employee during an annual election window that, once
elected, shall continue in effect, except to the extent
it may be changed or discontinued at a subsequent annual
election window as provided for by the board or
supplanted by a mandatory contribution.
(iii) An optional school employee contribution of
all or any portion of annual leave, vacation pay,
personal days or sick leave may be elected by a school
employee as so designated by the employee and agreed to
by the employee's employer. The board may provide that
the election shall be made during an annual election
window of no greater than 90 days as determined by the
board. Once the election has been made, an employee shall
not be allowed to change the amount or discontinue the
contributions until the next annual election window.
(2) The following contributions shall be made into a
retirement health savings plan on behalf of a school
employee:
(i) For an employee who elects participation in the
retirement health savings plan, the employee's employer
shall make a contribution to the employee's account equal
to the public school entity's savings in Social Security
and Medicare taxes resulting from the tax-preferred or
20110HB2080PN2904 - 63 -
tax-free treatment of contributions made by the school
employee under this subsection. Additional contributions
by a public school entity may be established through a
collective bargaining agreement between a public school
entity and a bargaining group representing school
employees.
(ii) Any other payments by the Commonwealth or
public school entity, including any set-aside payments to
be made to school employee accounts under section 334 as
determined by the board.
(3) Contributions to the plan by a school employee or by
the Commonwealth or a public school entity on behalf of an
employee must be held in trust for reimbursement of employee
health-related expenses and the health-related expenses of
any health care dependents following retirement of the
employee or when otherwise determined to be benefit eligible.
The board shall maintain a separate account of the
contributions made by or on behalf of each participant and
the earnings thereon. The board shall make available a
selection of investment options for participants who wish to
direct the investment of the accumulations in the
participant's account, in addition to a default option for
participants to be invested in a prudent manner as determined
by the board.
(f) Reimbursement for health-related expenses.--
(1) Upon retirement or separation from employment with a
public school entity, a participant becomes eligible to seek
reimbursements for IRC-qualifying health-related expenses
from the participant's retirement health savings plan
account, including reimbursements for the health-related
20110HB2080PN2904 - 64 -
expenses of the participant's eligible health care
dependents.
(2) If a school employee dies prior to exhausting the
balance in the employee's retirement health savings plan
account, the employee's health care dependents are eligible
to seek reimbursement for IRC-qualifying health-related
expenses from the account.
(3) The board shall pay reimbursements from a retirement
health savings plan account until the accumulation in the
account has been exhausted. If an account balance remains
after the death of all participant account holders, the
remainder of the account must be paid to the school
employee's beneficiaries or, if none, to the employee's
estate.
(g) Annual financial statement.--Quarterly and annually the
board shall prepare summary retirement health savings plan
statements for individual participant account holders listing
information on contributions, investment earnings and
distributions for the account holders' accounts.
(h) Fees.--The board is authorized to charge uniform fees to
participants to cover the ongoing costs of operating the plan.
Any fees not needed must revert to participant accounts or be
used to reduce plan fees the following year.
(i) Advisory committee.--
(1) The board shall establish a participant advisory
committee for the retirement health savings plan composed of:
(i) One representative appointed by each Statewide
union that represents bargaining groups of school
employees participating in the plan.
(ii) One representative of each Statewide
20110HB2080PN2904 - 65 -
organization representing at least 10% of annuitants.
(iii) One representative of the Pennsylvania
Association of School Business Officials.
(iv) One representative of the Pennsylvania School
Boards Association.
(2) Each participant group shall be responsible for the
expenses of its own representative.
(3) The advisory committee shall meet at least two times
per year and shall be consulted on plan offerings. By October
1 of each year, the board shall give the advisory committee a
statement of fees collected and the use of the fees.
CHAPTER 5
MISCELLANEOUS PROVISIONS
Section 501. Feasibility Report.
Within 18 months after the Statewide health benefits program
or the alternative measures program is fully implemented, the
Secretary of Administration shall report to the Governor, the
President pro tempore of the Senate and the Speaker of the House
of Representatives the feasibility of including community
college employees in the program.
Section 502. Effective date.
This act shall take effect immediately.
20110HB2080PN2904 - 66 -