Legislative Report #07-20

Report 07-20
June 8, 2007

BIG DIFFERENCES ON HEALTH PLAN

The House and Senate this week appointed members to a joint conference committee to resolve differences in the budget bills that have been approved by the two chambers. The House appointed 77 members and the Senate selected 37 members to serve as conferees. The list of House and Senate budget conferees is posted on the General Assembly home web page (www.ncga.state.nc.us).

We reported last week on the House/Senate budget provisions affecting pension benefits and the retirement systems. The two budgets also include important changes to the State Health Plan. The Senate budget differs significantly from the House version with regard to replacing the existing indemnity plan with a PPO plan.

The Senate budget authorizes the Executive Administrator of the State Health Plan to replace the indemnity plan with a PPO or other type of benefit plan that includes non-contributory coverage (no premiums for members). The old indemnity plan would cease to exist on July 1, 2008. The House budget does not contain a similar provision. However, there is a separate bill (House Bill 1985) that would phase out the indemnity plan and establish a new non-contributory plan for retirees and employees.

OUR CONCERNS

The General Assembly is seeking ways to maintain a quality health plan for retired and active employees while controlling the long-term costs of this benefit. We are not opposed to the current effort to revamp the existing indemnity plan, but we do have concerns about the Senate proposal as currently written. These concerns are summarized below.

1. The new State Health Plan must provide benefits that are comparable to the existing indemnity plan.
2. The new plan must maintain the principle of providing health care coverage for retired and active employees on a non-contributory basis (no premiums charged to members for individual coverage).
3. The provider network of the new plan must be as comprehensive as possible. A waiver procedure should be included in the new plan to assure that members living in isolated areas can use out-of-network providers without penalty where preferred providers are not available.
4. There must be adequate time during the transition to allow for proper counseling of plan members.
5. The General Assembly must maintain oversight of the process as the new plan is developed and implemented. The new plan should be reviewed and approved by the General Assembly before it is implemented.

TAKE ACTION

Please let your legislators know of our concerns. Ask them to urge the members of the budget conference committee to address these issues as they work to finalize the budget. Also, remind your legislators that your post retirement health insurance coverage is a benefit that you earned through your years of service to the people of North Carolina.

OTHER BILL ACTIVITY

The House Pensions and Retirement Committee met on Wednesday and acted on several bills. A summary of committee actions is presented below.

House Bill 1433: Fire and Rescue Workers’ Retirement
This bill changes eligibility for retirement of career fire and rescue workers to full retirement at any age with 30 years of service or at age 55 with 5 years of service. The bill provides full time local firefighters and rescue squad workers with the same retirement eligibility requirements as law enforcement officers. The bill received a favorable report and was sent to the House Appropriations Committee.

House Bill 233: Equal Tax Treatment of Government Retirement Benefits
The bill would provide a state income tax exclusion on pensions received from North Carolina state and local retirement systems and on Federal retiree pensions. Also, state and local government retirees receiving pensions from states other than North Carolina would receive a $4,000 income exclusion. The bill failed to receive a favorable report and remains in committee.