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Legislative Report

Report 09-14
May 1, 2009

LOCAL RETIREE COLA BILL APPROVED BY COMMITTEE

House Bill 934, co-sponsored by Reps. Russell Tucker and Marian McLawhorn, received unanimous approval from the House Committee on Pensions and Retirement Committee on Wednesday, April 29. This bill would provide a 1.0% Cost-Of-Living Adjustment (COLA) effective July 1, 2009 for retired local government employees. The COLA would be paid with undistributed gains available in the Local Governmental Employees’ Retirement System (LGERS) and would not require any state funding. House Bill 934 is supported by our Association as well as the N.C. League of Municipalities and the N.C. County Commissioners Association.

The Pensions Committee voted to re-refer HB 934 to the House Finance Committee. However, preliminary information from Finance Committee staff indicates that the bill will be sent forward to the House Appropriations Committee.

INVESTMENT BILLS APPROVED BY HOUSE PENSIONS COMMITTEE

The House Committee on Pensions and Retirement also took favorable action on several bills dealing with investment of retirement systems funds and technical corrections to retirement systems laws. State Treasurer Janet Cowell addressed the Committee regarding the need for more transparency in the decision-making process for retirement systems investments and a greater range of investment options to allow the state to take advantage of the changing financial markets.

The Committee approved the following bills.

House Bill 556: Treasurer’s Governance and Transparency Act
This bill expands the existing Investment Advisory Board from five to seven members by adding two more seats for public representatives. The bill also clarifies the responsibilities of the State Treasurer as the sole fiduciary of the retirement systems.

HB 556 has been re-referred to the House Finance Committee

House Bill 1507: State Treasurer Investments
The bill provides a broader range of options for investment of retirement systems funds and clarifies the types of allowable investments. Several members of the committee raised questions regarding new language on convertible securities, asset-backed securities, and inflation indexed instruments. The Treasurer’s investment staff will meet with legislators and other stakeholders to address these questions before the bill is considered in the House Finance Committee.

HB 1507 received a favorable report and was re-referred to the Finance Committee.

House Bill 642: Retirement Technical Corrections
This bill makes numerous technical corrections to the retirement system statutes, including: removal of language allowing fire departments that are organized as private non profit organizations to participate in the LGERS, extension of the length of time that an employee may file retirement papers (from 90 to 120 days) prior to retirement date, and a requirement for employers that participate in the state and local retirement systems to report the re-employment of retirees to the Retirement Systems Division.

The bill received a favorable report and has been re-referred to the Finance Committee.

SUMMARY OF NEW STATE HEALTH PLAN PROVISIONS

Following is a summary of changes to the State Health Plan that were contained in Senate Bill 287. This information was copied directly from a State Health Plan communication sent earlier this week to human resources offices across the state.

State Health Plan / Good Health Initiatives) was signed into law by Governor Perdue on April 23, 2009.  This bill includes the State Health Plan benefit changes and rate increases for the 2009/2010 and 2010/2011 benefit years.  See attached documents.

Enrollment Dates

Paper Enrollments -- The annual enrollment period for agencies that process paper applications will begin as soon as the employees receive their enrollment kits.  Annual enrollment kits will be mailed beginning on May 6, 2009.  Annual enrollment forms will be due to HBRs no later than May 29, 2009. 

Electronic Enrollments -- The annual enrollment period for agencies that use electronic enrollment systems (BEACON / BenefitFocus) will be from May 11, 2009 through May 29, 2009. 

All enrollment changes, benefit changes and rate changes will become effective July 1, 2009 with the exception of the routine vision benefit.  Routine vision benefits will no longer be covered beginning January 1, 2010. 

Benefit Changes:

  • The 90/10 Plus plan will no longer be offered.  Employees currently enrolled in the 90/10 Plus plan should only complete a change form if they wish to move to the 70/30 plan. Otherwise, the employee will automatically be moved to the 80/20 Standard Plan, along with any dependents they currently have covered on their plan.  If an employee does not submit a completed form or enroll electronically, they will remain on their current plan or will be automatically moved to the 80/20 plan if they are currently enrolled on the 90/10 Plus plan.  Employees who are moved to the 80/20 plan will no longer have to pay for employee only coverage.
  • Deductibles, copays and coinsurance maximums will increase, effective July 1, 2009.  Please refer to the Benefit Changes Chart for details.
  • As of January 1, 2010, routine vision exams will no longer be covered.

Prescription Drugs

  • The prescription drug number of days supply for one copayment will change from 34 days to 30 days, effective July 1, 2009.
  • The copay for generic drugs will remain $10. 
  • The copay for diabetic supplies will remain $10 for preferred brand and $25 for non-preferred brand. 
  • Prescription drug copays for preferred brand (without a generic available), and non-preferred brand will each increase by $5, effective July 1, 2009. 
  • Beginning July 1, 2009, a 25% coinsurance will be charged for specialty prescription drugs up to $100 for each 30-day supply.  Members currently taking a specialty medication will receive additional information in the mail.
  • The preferred brand copay tier (with generic available) will be eliminated effective July 1, 2009.

Please note: Beginning July 1, 2009, if a generic equivalent is available and a member chooses to have the brand name drug, or their doctor prescribes "Dispense as Written" (DAW), they will be required to pay the difference between the actual cost of the brand name drug and the amount the Plan would have paid for the generic equivalent, in addition to the generic copayment.

IMPORTANT

Because the legislation was just signed into law on April 23, 2009, this annual enrollment is being conducted later than normal for a July 1st effective date and within a very short timeframe. Due to the shortened timeframe for annual enrollment this year:

  • It is likely that not all members will receive their ID card by July 1, 2009.  However, the ID number does not change, so providers and pharmacies will accept members' current ID cards. Therefore, members should continue to use their current ID cards until they receive their new ID card.  
  • Monthly bills for July 2009 premiums will be issued late. 

Rates:

  • On July 1, 2009 there will be an 8.9% increase on all coverage tiers.
  • On July 1, 2010 there will be another 8.9% increase on all coverage tiers.

Have Any Questions?

If employees have any health benefits or pharmacy questions, you can direct them to:

  • State Health Plan Web site at www.shpnc.org <http://www.shpnc.org/index.html> ,
  • Customer Services for plan questions at 1-888-234-2416, or
  • Medco Customer Services for pharmacy questions at 1-800-336-5933.