State Employee Health Savings Account Act

State Employee Health Savings Account Act

Summary

This legislation requires the state to offer state employees a health benefit plan that utilizes Health Savings Accounts (HSAs) paired with high-deductible health plans.  The legislation further requires that the employer cost of the HSA-compatible health plan not exceed the average per person employer cost of traditional insurance plans the state is currently offering.

Health Savings Accounts, paired with high-deductible health plans, can create a win-win situation for taxpayers and public employees.  The plans provide state employees more savings, choice, and control over their healthcare needs and expenses, while offering an opportunity for the state to reduce its health insurance costs for state employees.

This legislation is modeled off of public policy in Indiana and legislation that has passed in Illinois.  In 2006, the first year of implementation, just over 4 percent of Indiana state workers signed up for the Health Savings Account option.  In 2010, 70 percent of Indiana state workers selected the HSA option, and only 3 percent have opted to return to the standard PPO after signing up for an HSA.  It is estimated that in 2010, Indiana state employees enrolled in the HSA option saved more than $8 million compared to their counterparts in the traditional PPO option, and the state saved $20 million in healthcare costs.

For further reading, see: Jim Porterfield and Kristina Rasmussen, “Health Savings Accounts: A win-win for Illinois public employees and taxpayers,” Illinois Policy Institute, September 29, 2010, www.illinoispolicy.org/HSA.

Model Legislation

Section 1. Short Title.  This Act shall be known as the “State Employee Health Savings Account Act.”

Section 2. Health Savings Accounts.

(A)  The program of state employee health benefits shall offer, as an alternative and on an optional basis, a program for the use of Health Savings Accounts with a qualifying state-sponsored, high-deductible health plan.  This optional coverage alternative shall be available no later than {insert date}.

(B)  On or before {insert date}, the {insert state agency in charge of state employee health insurance programs} shall:

(1)  Submit the program designs to the {insert government accountability agency responsible for estimating costs [See FN1]} for review.  The report on program designs may include multiple options for final implementation, which may, in turn, include various levels of state participation or types of benefit designs.  The program designs shall include:

(a)  Benefit designs, including deductible amounts, for the high-deductible health plans.

(b)  Premium amounts for the high-deductible health plans.

(c)  Employee and employer contribution strategies for the high-deductible health plan premiums.

(d)  Employer and employee contribution strategies for the Health Savings Account deposits.

(e)  The ability for employees to make pre-tax contributions through a salary deferral arrangement for the Health Savings Accounts.

(f)  Options for custodial arrangements for the Health Savings Accounts.

(g)  Investment options for Health Savings Account holders.

(h)  Assessment of administrative and claim costs.

(i)  Statements of the actuarial assumptions, including demographic, participation, and utilization assumptions, used in program designs.

(j)  An analysis of the impact on existing health plans of offering the option of Health Savings Accounts paired with a high-deductible health plan.

Program designs shall also be based on the creation of coverage options so that the average per person employer cost of the program, including the contributions for the Health Savings Accounts and high-deductible plan, does not exceed the average per person employer cost of the traditional state employee health benefits program for the same fiscal year.

(2)  Offer to all employees training regarding all health plans offered to employees.

(3)  Prepare online training as an option for the training required by this Section.

(C)  Employers participating in a state employee health benefit plan shall require each employee to complete training on the health plan options available to the employee.  This training:

(1)  May be completed online; and

(2)  Shall be completed:

(a)  Before the end of the {insert year} open enrollment period for current employees; and

(b)  For employees hired on or after {insert date}, prior to the employee’s selection of a plan in the program.

Section 3. {Severability Clause.}

Section 4. {Repealer Clause.}

Section 5. {Effective Date.}

 

Approved by ALEC Board of Directors on October 13, 2011.


[FN1] For example, in Illinois, this is the Commission on Government Forecasting and Accountability.

Keyword Tags: Health Savings Account