HB521: relative to medical insurance coverage for members of the Manchester employees' contributory retirement system.

CHAPTER 41

HB 521 – FINAL VERSION

23Mar2005… 0719h

2005 SESSION

05-0379

10/04

HOUSE BILL 521

AN ACT relative to medical insurance coverage for members of the Manchester employees’ contributory retirement system.

SPONSORS: Rep. Baroody, Hills 13

COMMITTEE: Executive Departments and Administration

ANALYSIS

This bill establishes a program for medical insurance coverage for members of the city of Manchester employees retirement system. The provisions of the bill are subject to a referendum vote in the city of Manchester.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

23Mar2005… 0719h

05-0379

10/04

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Five

AN ACT relative to medical insurance coverage for members of the Manchester employees’ contributory retirement system.

Be it Enacted by the Senate and House of Representatives in General Court convened:

41:1 New Section; Manchester Retirement System; Medical Insurance Coverage. Amend 1973, 218, as amended by 2002, 194, by inserting after section 27 the following new section:

218:28 Medical Insurance Coverage.

I. The plan shall establish a subtrust pursuant to Internal Revenue Code Section 401(h) for the purposes of funding a flat rate subsidy to assist in the payment of group health insurance premiums for members. The retirement system shall enact such rules and regulations as the board may deem necessary to implement this section.

II. Member contributions toward this subsidy shall be funded by an increase in the member contribution rate established pursuant to section 218:9, I by 1.25 percent. Under no circumstances shall a member be entitled to a refund of contributions made to the Section 401(h) subtrust. Notwithstanding any other provisions of chapter 218 to the contrary, members shall not be entitled to a refund of contributions made to the Section 401(h) subtrust. The city shall fund the remaining cost of funding the 401(h) subtrust based on methods and assumptions determined by the board. Any contribution made by the city intended to fund the 401(h) subtrust shall be so designated. Any transfers of retirement system assets to the 401(h) subtrust shall be limited to excess assets as defined in Internal Revenue Code Section 420(e)(2). All such transfers must be made in accordance with Internal Revenue Code Section 420 and all applicable Treasury regulations.

III. The benefits provided by the 401(h) subtrust will be payable only to members who have retired in accordance with sections 218:12, 218:14, or 218:15. The amount payable by the retirement system on account of qualified members shall be paid over to the city, insurer, or health care administrator as may be determined by contractual arrangements between the city and such entities. Benefits provided by the 401(h) subtrust shall cease at the death of the member.

IV. Eligibility shall be limited to single person coverage or single person Medicare supplement for the member to whom the benefit accrued and shall not apply to beneficiaries as defined by this act.

V. The value of the subsidy provided to a member shall depend upon the years of service credit earned by the member prior to retirement and the date on which the member retires. The initial base amount available to members retiring on or before the effective date of this section shall be $1,200 per year. The initial base amount available to members who have terminated employment before the effective date of this section and retire after the effective date of this section shall be $1,200 per year. The initial base amount available to members in the employment of the city at the effective date of this section and who contributed toward this benefit and retire after the effective date of this section shall be $2,400 per year. The base amounts shall increase by 4 percent on January 1 of each year beginning on January 1, 2007. A member who retires with less than 10 years of service credit shall receive 25 percent of the initial base amount as has been adjusted annually. A member who retires with at least 10 years of service credit but less than 15 years of service credit shall receive 50 percent of the initial base amount as has been adjusted annually. A member who retires with at least 15 years of service but less than 20 years of service credit shall receive 75 percent of the initial base amount as has been adjusted annually. A member who retires with at least 20 years of service credit shall receive 100 percent of the initial base amount as has been adjusted annually.

VI. Any subsidy made available pursuant to this plan shall be limited to members who participate in the city’s group health insurance program. No benefit or subsidy shall be payable directly to a retired member, nor shall any cash equivalent or other form of subsidy be payable for purposes outside of group health coverage provided by the city to its retirees. Any member who has retired before the effective date of this section shall have the option of re-enrollment in the medical or health plan sponsored by the city and of receiving benefits under this section at such re-enrollment date, provided that such retired member shall apply to the city within 90 days of the effective date of this section. Any member who terminated employment before the effective date of this section and later retires and becomes eligible to receive benefits under this section shall have the option of re-enrolling in the medical or health plan sponsored by the city and of receiving benefits at such re-enrollment date, provided that such member shall apply to the city within 90 days of the member’s retirement. Such re-enrollment rights to participate in the medical or health plan sponsored by the city shall be available for all members when they retire. Upon receipt of any enrollment application, the city shall enroll such retiree in the city’s plan in the same manner and subject to the same conditions as enrollment of a new employee but without any benefit-waiting period which may be applicable to new employees. The 401(h) subtrust, the city and the city’s group health plan shall not be liable for any claims incurred prior to the date of enrollment. The retirement system shall notify all retirees of their right to re-enroll in the city’s health plan and to receive benefits at their re-enrollment date under this section. Any member who is eligible to receive a subsidy under the provisions of this section, but who does not need and who declines such benefits because they would be duplicative of coverage under any employer-sponsored plan, shall nevertheless continue to be eligible and, upon ceasing to be eligible for the other coverage, shall be permitted to re-enroll in the medical or health plan sponsored by the city without any waiting period and receive the benefits allowable under this section at such re-enrollment date.

VII. All contributions made by the members and by the city to provide medical benefits under this section shall be maintained in a separate account and all such funds shall not be used for or diverted to any purpose other than to provide medical benefits. Similarly, none of the funds accumulated to provide the retirement benefits set forth in chapter 218 may be used or diverted to provide medical benefits through the 401(h) subtrust. The funds, if any, providing medical benefits through the 401(h) subtrust shall be invested pursuant to the provisions of section 218:6. At all times, the aggregate contributions to provide medical benefits through the 401(h) subtrust must not exceed the subordination limits set forth in Internal Revenue Code Section 401(h) and any applicable Treasury regulations. Notwithstanding the foregoing, in the event of the termination of the 401(h) subtrust, upon satisfaction of all liabilities to provide medical benefits, any amount remaining in the subtrust shall be returned to the city.

41:2 Referendum. At the election to be held in the city of Manchester in September or November, 2005, the city clerk then in office shall cause to be included on the ballot the following statement and question: “A contributory retirement plan for city employees was adopted by the voters of Manchester at the November 1973 election. The plan became effective in January 1974, and now, benefit improvements are requested. Are you in favor of the passage of an act of the General Court of 2005, amending the city of Manchester employees contributory retirement system to add a Section 401(h) subtrust for the payment of a health subsidy to retirees?” Beneath this statement and question shall be printed the word “Yes” and the word “No” with a square immediately opposite such word in which the voter may indicate his or her choice. If a majority of the voters present and voting on the question shall signify their approval thereof, this act shall be declared adopted effective 90 days after the date of the election, except as otherwise provided within the act. The city clerk shall, within 10 days after said election, certify to the secretary of state the result of the vote on the question.

41:3 Effective Date. Section 2 of this act, relative to the referendum, shall take effect upon its passage. If the provisions of section 1 of this act shall be adopted as provided in section 2, said provisions shall be declared adopted and shall become effective as follows:

I. Creation of the 401(h) subtrust pursuant to 218:28 as inserted by section 1 of this act and contributions by the member shall commence 90 days after the date of the election.

II. Contributions by the employer shall commence with payrolls paid after July 1, 2006.

III. Commencement of benefits to retirees in the form of subsidies paid to their former employer shall commence with remittances made after July 1, 2006 for group health insurance purposes.

(Approved: May 17, 2005)

(Effective Date: Section 2, relative to the referendum, shall take effect May 17, 2005. If the provisions of section 1 shall be adopted as provided in section 2, said provisions shall be declared adopted and shall become effective as follows:

I. Creation of the 401(h) subtrust pursuant to 218:28 as inserted by section 1 and contributions by the member shall commence 90 days after the date of the election.

II. Contributions by the employer shall commence with payrolls paid after July 1, 2006.

III. Commencement of benefits to retirees in the form of subsidies paid to their former employer shall commence with remittances made after July 1, 2006 for group health insurance purposes.)