SB 81-PUBLIC RETIREE MED. BENEFITS: DEPENDENTS  2:51:48 PM CHAIR EGAN announced SB 81 to be up for consideration. SENATOR DAVIS, sponsor of SB 81, said she introduced this measure because she felt Alaskan retirees were being treated unfairly when they can't insure their dependent children the same way active employees can under the Affordable Health Care Act that allows dependent children to stay on their parents' insurance until age 26. This bill seeks to correct this inequality. 2:53:00 PM TOM OBERMEYER, staff to Senator Davis, said SB 81 requires that dependent coverage for medical benefits in certain state retiree systems be no less than that of active state employees. The state decided to allow active employees to keep dependents through age 26 on their health insurance plans effective July 1, 2011, but specifically excluded the dependents of retirees, citing federal legislation. MR. OBERMEYER said he asked for a memorandum (in their packet) from the Legislative Legal Services to interpret that language and it states a contrary opinion - that retirees should be in this plan. 2:55:58 PM MR. OBERMEYER read the sponsor statement. He said the prior cutoff date for this group was age 23. The state's voluntary change in the active employee medical benefit plan matches the private insurance mandate under the Patient Protection and Affordable Care Act which requires that insurers provide dependent insurance coverage to age 26, effective September 23, 2010. He said that Linda Hall, Director, Division of Insurance, could verify that all insurers in the state have complied with this. Further the statement said: Although the state is not a regulated state insurance company, but rather a self-insured government employer and exempt from ERISA, it provides medical health benefits for the four retirement systems affected by this bill, including: 1. Public Employees Retirement System (AS 39.30) 2. Teachers' Retirement System (AS 14.25) 3. Retirement System of Justices and Judges (AS 22.25) 4. Elected Public Officers Retirement System (former AS 39.37) While state health benefit plans are not subject to the federal Employee Retirement Income Security Act of 1974 (ERISA) which establishes minimum standards for pension plans in private industry, they are covered by the Public Health Service Act (PHSA), at least with respect to the dependent coverage provision in the PPACA. Although there is a difference of opinion by the state's Division of Retirement and Benefits and Legislative counsel as to excepting retiree health insurance plan based on Interim Final Ruses under PPACA without a formal court interpretation it s far easier to require coverage immediately under this bill rather than wait for court action or federal mandate later. Moreover it is only fair that the state extend medical health benefits to dependents of retirees to age 26 while it covers the same for active employees. The numbers of eligible dependents in retiree plans can be readily identified and actuarial statistics can be generated for this young and relatively health group of dependents. 2:58:44 PM BOB DOLL, President, Retired Public Employees of Alaska (RPEA), supported SB 81. He explained that each year the RPEA prepares a list of top concerns for the coming legislative session, but this item did not make it to that list. However, he has heard from members about it in unprecedented numbers. Because it was a relatively new topic, he polled members by email in February 2011 to establish some numbers. Of 1050 respondents (68 percent), they determined that 159 retirees had one or more children under 26 years of age. The total number of children was 231; of those, 140 were ages 21-26. They estimated from this sample that about 70 dependents would fall into the age 23-25 ranges. Of those, they also estimate that about one-third would have some other kind of coverage through the military or employment. MR. DOLL said it appears this coverage is of primary concern to women retirees. In many cases they imagine these women postponed their childbearing until they were well established in their state service and now find themselves retired with children that are still dependents. This group is more concerned because their spouses have passed away or are departed for some other reason. RPEA members know that the issue of cost to the state is involved in any extension of Alaska Care benefits; a majority of them have been supervisors and know what a budget is. They know that most things that are worthwhile have a cost. They also know it's possible to construct a post-retirement health care plan in which the retiree shares some of the cost. They already do that in regard to Dental/Audi/Visual coverage and long term care and life insurance options. So, he urged some similar arrangement for dependents that would take them off Medicare and reduce the cost of that program and yet impose little or no additional cost to the state. Finally, he asked the committee to think of these dependents as more than just spreadsheet numbers. They are Alaska's next generation and the state of Alaska should have the same concern for them as it has for dependents of active employees to be a part of that bright future that we all seek for Alaska. 3:03:46 PM SENATOR PASKVAN asked if the Division of Retirement and Benefits provided a legal opinion to support their position. MR. DOLL answered no; this is the first time it has been discussed publicly. 3:04:26 PM SENATOR GIESSEL asked him to explain what he meant by the retirees being taken off of Medicare. MR. DOLL replied that he was referring to the dependents that had no medical alternative but to go to Medicaid. He meant Medicaid not Medicare. 3:05:29 PM MARIE DARLIN, Legislative Task Force, AARP Juneau, supported SB 81 and for the reasons Mr. Doll stated. She pointed out that this brings more parity between active employees and retirees who kind of get lost in the shuffle. Often retirees are left out with the federal government as well as the state. This does have an effect because it then makes a difference for some people who are planning retirement, but haven't gotten the letter from the state telling them when they retire their kids up to age 26 won't be included on their medical coverage. She said many people have changed their plans for retiring because they suddenly found out they won't be able to include their children on the medical insurance then. To try and get health care coverage for student children if they can't do it through state is almost prohibitive. CHAIR EGAN said Dan Wayne from Legislative Legal Service was available to answer questions. 3:08:39 PM SENATOR PASKVAN asked if he had received a written legal opinion from the Division of Retirement and Benefits supporting its position. DAN WAYNE, Department of Law, Juneau, Alaska, replied no. SENATOR GIESSEL asked for the fiscal note. SENATOR DAVIS responded that they do have a fiscal note, but the money won't come from the state. Most of the money would come from the retirees' retirement plan. She summarized that SB 81 is an important piece of legislation. The age group they are talking about doesn't require a lot of medical and health treatment. Their coverage won't be that expensive, but if they are left off and have to go to emergency rooms or wherever to get treatment, that state pays later. It will pay less by acting on this bill now. SENATOR PASKVAN asked if anyone from the Division of Retirement and Benefits was going to appear before the committee to establish a foundation. CHAIR EGAN replied he would make sure someone from the division would be here. SENATOR PASKVAN said he wanted to know if they have a position as compared to a legally supported opinion. MR. OBERMEYER apologized that the fiscal note hadn't been distributed, but as Senator Davis indicated, the increase in cost to provide this additional coverage would be paid from the Retiree Health Trust. His only concern was that Buck Consultants and Wells Fargo put together low, medium and high numbers based on actuarial figures that may not be relevant to this particular population group; SB 81 uses a medium number. He thought the fiscal note needed to be reexamined no matter how the bill is funded. Dan Wayne's memorandum was based on website information. 3:14:02 PM JIM PUCKETT, Acting Director, Division of Retirement and Benefits, Department of Administration (DOA), said they had a legal opinion from the Department of Law (DOL) and also from Ike Miller, part of the legal team that provides tax consulting for them. He offered to provide them to the committee if they wanted. 3:15:05 PM CHAIR EGAN said the answer is yes and they would schedule SB 81 again in the not too distant future. With that, he adjourned the meeting at 3:15 p.m.