Bill S.1380

SENATE DOCKET, NO. 1890 FILED ON: 1/16/2015

SENATE . . . . . . . . . . . . . . No. 1380

By Mr. Joyce, a petition (accompanied by bill, Senate, No. 1380) of Brian A. Joyce and Donald H. Wong for legislation to ensure continued public retiree healthcare benefits. Public Service.

The Commonwealth of Massachusetts

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In the One Hundred and Eighty-Ninth General Court
(2015-2016)

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An Act to ensure continued public retiree healthcare benefits.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Section 2 of chapter 32A of the General Laws, as amended by section 34 of chapter 224 of the acts of 2012, is hereby further amended by adding the following subsection:-

(j) “Qualified retiree,” a person who was an employee after January 1, 1956, is receiving a retirement allowance from a system, as defined in section 1 of chapter 32 and who is eligible for contributions to group health care coverage under this chapter, including retirees receiving a retirement allowance from the optional retirement plans of participating retirees under section 40 of chapter 15A, but excluding retirees receiving a retirement allowance from any plan designed specifically to comply with the federal Omnibus Budget Reconciliation Act of 1990 (P.L. 101 - 508), as amended.

(1) An individual who receives a superannuation retirement from a position classified as Group 1, Group 2, Group 3, or Group 4 under section 3 of chapter 32 shall not be a qualified retiree for purposes of this chapter unless the individual has received a minimum of 20 years of creditable service

(2)The requirements of subparagraph (1) of this definition shall not apply to (a) employees who were hired prior to January 1, 2016 or (b) individuals receiving an accidental disability retirement under section 7 of chapter 32. Individuals in these categories, upon retirement, shall be considered qualified retirees for purposes of this chapter.

SECTION 2. Section 8 of said chapter 32A, as appearing in the 2012 Official Edition, is hereby amended by striking out the first paragraph and inserting in place thereof the following paragraphs:

For policies of group life insurance and accidental death and dismemberment insurance, and group health insurance purchased by the commission in accordance with sections 4, 5 and 10C, the commonwealth, on behalf of qualified retirees and their dependents, shall contribute not less than 40 per cent of the total monthly premium or rate applicable to said coverages and the qualified retirees on behalf of themselves or themselves and their dependents shall contribute the remaining 60 per cent of the total monthly premium or rate. For purposes of this section, “maximum available benefit” shall mean the percentage of the total monthly premium or rate paid by the commonwealth to qualified retirees with a minimum of 35 years of creditable service. The commonwealth shall contribute an increased amount of the total monthly premium or applicable rate according to the following schedule:

(a) Qualified retirees with a minimum of 20 years of creditable service shall be eligible to receive a minimum of 40 per cent of the total monthly premium or applicable rate.

(b) Qualified retirees with a minimum of 23 years of creditable service shall be eligible to receive a minimum of 40 per cent of the total monthly premium or applicable rate, plus 1/4 of the difference between 40 per cent and the maximum available benefit.

(c) Qualified retirees with a minimum of 27 years of creditable service shall be eligible to receive a minimum of 40 per cent of the total monthly premium or applicable rate, plus 1/2 of the difference between 50 per cent and the maximum available benefit.

(d) Qualified retirees with a minimum of 31 years of creditable service shall be eligible to receive a minimum of 40 per cent of the total monthly premium or applicable rate, plus 3/4 of the difference between 40 per cent and the maximum available benefit.

(e) Qualified retirees with a minimum of 35 years of creditable service shall be eligible to receive the maximum available benefit.

(f) Individuals receiving an ordinary disability retirement under section 6 of chapter 32 who have received a minimum of 10 years of creditable service shall be eligible to receive a minimum of 40 per cent of the total monthly premium or applicable rate.

(g) Notwithstanding clauses (a) through (f), individuals considered qualified retirees pursuant to subparagraph (2) of subsection (j) of section 2 shall be eligible to receive the maximum available benefit.

The active and retired employees on behalf of themselves or themselves and their dependents shall contribute the remaining share of the total monthly premium or rate, except, that upon approval by way of an annual, or more frequent appropriation act, the commonwealth may contribute more than the percentage indicated above, but less than the entire total monthly premium or rate. Each appropriation act as may be applicable, shall provide the necessary sum based upon the estimated monthly cost as required by section 4 and shall describe the ratio of contribution to be paid by the commonwealth and by the active and retired employees insured under the aforesaid sections. The description of the ratio may include a condition that if, as a result of a change in the total monthly premium or rate which occurs during the current or ensuing fiscal year from a change in a contract between the commission and the insurance carrier or carriers, the amount of the contribution paid by the active and retired employee and dependents is to remain unchanged and the difference in the amount thus paid and the total monthly premium or rate as changed is to be added to, or deducted from as the case may be, the contribution by the commonwealth. This ratio shall continue until changed by a subsequent appropriation act, and the aforesaid sum shall also include the commonwealth’s contribution of the total monthly premium or rate required for coverages contained in other sections of this chapter.

SECTION 3. The second paragraph of said section 8 of said chapter 32A, as so appearing, is hereby amended by striking out the second sentence and inserting in place thereof the following sentence:-

With respect to any period of insurance authorized by this chapter which is in effect for a qualified retiree and dependent, there shall be withheld from each payment of pension or retirement allowance not more than 60 per cent of the aforesaid total monthly premium, or there shall be withheld a lesser amount as provided in this section and the most recent applicable appropriation act.

SECTION 4. The first paragraph of section 10 of said chapter 32A, as so appearing, is hereby amended by adding the following sentence:-

A retiree who is not a qualified retiree may continue all such insurance coverage if the retiree files an application to the commission on a form prescribed by the rules and regulations of the commission, and makes payment to the commission for the total monthly premium or rate applicable to the coverage in such manner as the commission may prescribe.

SECTION 5. Section 10C of said chapter 32A, as so appearing, is hereby amended by striking out, in lines 69 to 71, the words “fifty per cent of the premium for such insurance, and the commonwealth shall make primary payment of the remaining fifty per cent” and inserting in place thereof the following words:- the appropriate per cent of the premium for such insurance, and the commonwealth shall make primary payment of the remaining share.

SECTION 6. Section 11 of said chapter 32A, as so appearing, is hereby amended by striking out, in lines 13 to 14, the words “contributes, pursuant to section eight, on behalf retired employees,” and inserting in place thereof the following words:- had contributed on behalf of the deceased employee or retiree as of the date of death.

SECTION 7. Section 12 of said chapter 32A, as so appearing, is hereby amended by inserting, after the first paragraph, the following paragraph:

Notwithstanding the first paragraph of this section, for retired teachers who are qualified retirees as defined in section 2 of chapter 32B, the commission shall determine a schedule of contribution ratios consistent with section 5 of chapter 32B. Notwithstanding the first paragraph of this section, a retired teacher who is not a qualified retiree as defined in section 2 of chapter 32B may continue all insurance coverage to which the retiree is entitled under this section if the retiree files an application therefor with the commission, and makes payment for the total monthly premium or rate applicable to the coverage to the commission in such manner as it may prescribe.

SECTION 8. Section 2 of chapter 32B of the General Laws, as amended by section 1 of 127 chapter 69 of the acts of 2011, is hereby further amended by inserting after the definition of “political subdivision” the following definition:-

“Qualified retiree,” a retired employee who is eligible for contributions to group healthcare coverage under this chapter.

(1) An individual who receives a superannuation retirement from a position classified as Group 1, Group 2, Group 3 or Group 4 under section 3 of chapter 32 shall not be a qualified retiree unless the individual has received a minimum of 20 years of creditable service.

(2) The requirements of subparagraph (1) of this definition shall not apply to (a) employees or former employees who were hired prior to January 1, 2016 or (b) individuals receiving an accidental disability retirement under section 7 of chapter 32. Individuals in these categories, upon retirement, shall be considered qualified employees for purposes of this chapter.

SECTION 9. Section 7 of said chapter 32B, as so appearing, is hereby amended by striking out, in line 2, the words “or retired employee” and inserting in place thereof the following words:- employee or qualified retiree.

SECTION 10. Section 9 of said chapter 32B, as appearing in the 2012 Official Edition, is hereby amended by inserting, after the first paragraph, the following 3 paragraphs:-

Notwithstanding the first paragraph of this section, for policies of group health insurance purchased by the appropriate public authority in accordance with this chapter, the governmental unit, on behalf of qualified retirees and their dependents, shall contribute no less than 40 per cent of the total monthly premium or rate applicable to said insurance coverage and the qualified retirees on behalf of themselves or themselves and their dependents shall contribute the remaining 60 per cent of the total monthly premium or rate. For purposes of this section, “maximum available benefit” shall mean the percentage of the total monthly premium or rate paid by the governmental unit to qualified retirees with a minimum of 35 years of creditable service. The governmental unit shall contribute an increased amount of the total monthly premium or applicable rate according to the following schedule:

(a) Qualified retirees with a minimum of 20 years of creditable service shall be eligible to receive a minimum of 40 per cent of the total monthly premium or applicable rate.

(e) Qualified retirees with a minimum of 35 years of creditable service shall be eligible to receive the maximum available benefit.

(f) Individuals receiving an ordinary disability retirement under section 6 of chapter 32 who have received a minimum of 10 years of creditable service shall be eligible to receive a minimum of 50 per cent of the total monthly premium or applicable rate.

(g) Notwithstanding clauses (a) through (f), individuals considered qualified retirees pursuant to subparagraph (2) of the definition of qualified retiree in section 2 shall be eligible to receive the maximum available benefit.

SECTION 11. Section 9A of said chapter 32B, as so appearing, is hereby amended by striking out, in lines 7 and 12, the words “retired employee” and inserting in place thereof, in each instance, the following words:- qualified retiree.

SECTION 12. Notwithstanding any general or special law to the contrary, an appropriate public authority that changes its contribution percentages to retiree group health care coverage under this act shall delay implementation of these changes as to those retirees whose contribution level is specifically included in a special act that is in effect on the date of implementation of these changes until the term stated in that act has ended.

SECTION 13. The General Laws are hereby amended by inserting after chapter 32B the following chapter:-

CHAPTER 32C.

Retiree Health Care Trust Fund.

Section 1. The Executive Office of Administration and Finance shall promulgate rules and regulations to effectuate the purposes of this chapter, which are to establish and operate a Retiree Health Care Trust Fund similar in nature to the PRIT fund in order to reimburse the cost to the Commonwealth and its Counties, Cities, Towns and Districts of providing retiree healthcare benefits to public employees hired after January 1, 2016.

Section 2. There is established outside the state treasury and separate from the PRIT fund, a trust fund to be known as the "Retiree Healthcare Trust Fund”. The fund shall consist of contributions, interest, income, dividends, refunds, rate credits, and other returns. Any and all sums contributed or paid from any source to the fund created by this part, and all assets of the fund including any and all interest and earnings on the same, are and shall be held in trust by the Pension Reserves Investment Management Board for the exclusive use of providing a funding source to reimburse the cost to the Commonwealth and its Counties, Cities, Towns and Districts of their obligations to pay for health coverage for qualified retired persons under General Laws Chapters 32A and 32B hired after January 1, 2016, and their survivors. No assets shall be subject to appropriation for any other purpose whatsoever. The fund shall be separate from the PRIT fund and shall be under the control of the board and placed under the Executive Office of Administration and Finance for administrative purposes.

Section 3. Payments to the Commonwealth and its Counties, Cities, Towns and Districts shall be paid out of the income of the fund, and the amount paid shall be in proportion to the relative contributions of their employees to the Retiree Health Care Trust Fund. The Executive Office of Administration and Finance shall establish rules and regulations for effectuating fair and proportional payments under this section.

Section 4. Within 14 days of their hiring date, all public employees hired after January 1, 2016 shall contribute 2 per cent of their monthly base salary to the Retiree Healthcare Trust Fund. Employee contributions to the Retiree Health Care Trust Fund are not refundable.

Name:	District/Address:
Brian A. Joyce	Norfolk, Bristol and Plymouth
Donald H. Wong	9th Essex