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					                                   South Carolina General Assembly
                                       117th Session, 2007-2008

S. 462

STATUS INFORMATION

General Bill
Sponsors: Senators Leatherman, Alexander and Verdin
Document Path: l:\council\bills\bbm\9699htc07.doc
Companion/Similar bill(s): 3789

Introduced in the Senate on February 20, 2007
Currently residing in the Senate Committee on Finance

Summary: Retiree Health Insurance Fund and Long Term Disability Insurance Trust Fund


HISTORY OF LEGISLATIVE ACTIONS

    Date     Body   Action Description with journal page number
 2/20/2007   Senate Introduced and read first time SJ-5
 2/20/2007   Senate Referred to Committee on Finance SJ-5
 5/22/2007   Senate Committee report: Favorable with amendment Finance SJ-18
 5/23/2007          Scrivener's error corrected
  3/5/2008   Senate Recommitted to Committee on Finance SJ-36

View the latest legislative information at the LPITS web site


VERSIONS OF THIS BILL

2/20/2007
5/22/2007
5/23/2007
 1   Indicates Matter Stricken
 2   Indicates New Matter
 3
 4   COMMITTEE REPORT
 5   May 22, 2007
 6
 7                                                             S. 462
 8
 9   Introduced by Senators Leatherman, Alexander, Verdin and Short
10
11   S. Printed 5/22/07--S.                      [SEC 5/23/07 5:19 PM]
12   Read the first time February 20, 2007.
13
14
15                   THE COMMITTEE ON FINANCE
16      To whom was referred a Bill (S. 462) to retitle Article 5,
17   Chapter 11, Title 1, Code of Laws of South Carolina, 1976,
18   relating to employees and retirement insurance as “Employees and
19   Retirees Insurance-Accounting for Post-Employment Benefits”,
20   etc., respectfully
21                              REPORT:
22      That they have duly and carefully considered the same and
23   recommend that the same do pass with amendment:
24
25      Amend the bill, as and if amended, by striking all after the
26   enacting words and inserting:
27      / SECTION 1. Article 5, Chapter 11, Title 1 of the 1976 Code
28   is retitled “Employees and Retirees Insurance-Accounting for
29   Post-Employment Benefits”.
30      SECTION 2. Article 5, Chapter 11, Title 1 of the 1976 Code is
31   amended by adding:
32      “Section 1-11-703. As used in this article:
33      (1) „Actuarial accrued liability‟ means that portion, as
34   determined by a particular actuarial cost method, of the actuarial
35   present value of fund obligations and administrative expenses
36   which is not provided for by future normal costs.
37      (2) „Actuarial assumptions‟ means assumptions regarding the
38   occurrence of future events affecting costs of the SCRHI Trust
39   Fund or LTDI Trust Fund such as mortality, withdrawal, disability,
40   and retirement; changes in compensation; aging effects and cost
41   trends for post-employment benefits; benefit election rates; rates of
42   investment earnings and asset appreciation or depreciation;

     [462-1]
 1   procedures used to determine the actuarial value of assets; and
 2   other such relevant items.
 3      (3) „Actuarial cost method‟ means a method for determining
 4   the actuarial present value of the obligations and administrative
 5   expenses of the SCRHI Trust Fund or LTDI Trust Fund and for
 6   developing an actuarially equivalent allocation of such value to
 7   time periods, usually in the form of a normal cost and an actuarial
 8   accrued liability. Acceptable actuarial methods are the aggregate,
 9   attained age, individual entry age, frozen attained age, frozen entry
10   age, and projected unit credit methods.
11      (4) „Actuarial present value of total projected benefits‟ means
12   the present value, at the valuation date, of the cost to finance
13   benefits payable in the future, discounted to reflect the expected
14   effects of the time value of money and the probability of payment.
15      (5) „Actuarial valuation‟ means the determination, as of a
16   valuation date, of the normal cost, actuarial accrued liability,
17   actuarial value of assets, and related actuarial present values for the
18   SCRHI Trust Fund or LTDI Trust Fund.
19      (6) „Actuarially sound‟ means that calculated contributions to
20   the SCRHI Trust Fund or LTDI Trust Fund are sufficient to pay
21   the full actuarial cost of these trust funds. The full actuarial cost
22   includes both the normal cost of providing for fund obligations as
23   they accrue in the future and the cost of amortizing the unfunded
24   actuarial accrued liability over a period of no more than thirty
25   years.
26      (7) „Administrative expenses‟ means all expenses incurred in
27   the operation of the SCRHI Trust Fund and LTDI Trust Fund,
28   including all investment expenses.
29      (8) „LTDI Trust Fund‟ means the Long Term Disability
30   Insurance Trust Fund established pursuant to Section 1-11-707 to
31   fund benefits under the State Basic Long Term Disability (BLTD)
32   Income Benefit Plan.
33      (9) „Board‟ means the State Budget and Control Board.
34      (10) „Employee insurance program‟ or „EIP‟ means the office of
35   the board designated by the board to operate insurance programs
36   pursuant to this article.
37      (11) „IBNR‟ means unpaid health claims incurred but not
38   reported. The liability for IBNR claims is actuarially estimated
39   based on the most current historical claims experience of previous
40   payments, inflation, award trends, and estimates of health care
41   trend changes.
42      (12) „Operating account‟ means the health insurance program‟s
43   business operating activities account maintained by the State

     [462-2]
 1   Treasurer in which are deposited all premiums for enrollees in
 2   self-funded health plans authorized in this article, along with
 3   employer contributions for active employees covered by such
 4   self-funded health plans, and from which claims and administrative
 5   expenses of the self-funded health and dental plans administered
 6   by the employee insurance program are paid.
 7      (13) „State-covered entity‟ means state agencies and institutions,
 8   however described, and school districts. It also includes political
 9   subdivisions of the State that participate in the state health and
10   dental plans.
11      (14) „State health and dental plans‟ means any insurance
12   program administered by the employee insurance program
13   pursuant to this article.
14      (15) „SCRHI Trust Fund‟ means the South Carolina Retiree
15   Health Insurance Trust Fund established pursuant to Section
16   1-11-705 to fund the employer cost for health benefits for retired
17   state employees and retired public school district employees.
18      (16) „State Retirement System‟ or „State Retirement Systems‟
19   means all retirement systems established pursuant to Title 9 except
20   for the National Guard Retirement System.
21      (17) „Unfunded actuarial accrued liability‟ means for any
22   actuarial valuation the excess of the actuarial accrued liability over
23   the actuarial value of the assets of the fund under an actuarial cost
24   method utilized by the fund for funding purposes.
25      (18) „Trust fund paid premiums‟ means the employer premium
26   for state health and dental plans coverage paid by the SCRHI Trust
27   Fund on behalf of a retiree. When it is expressed as a percentage
28   of trust fund paid premiums, it means that the SCRHI Trust Fund
29   shall pay the stated percentage of the employer premiums, with the
30   retiree paying the balance of the employer premiums and the entire
31   employee premium.
32      Section 1-11-705. (A) There is established in the State
33   Treasury separate and distinct from the general fund of the State
34   and all other funds the South Carolina Retiree Health Insurance
35   Trust Fund (SCRHI Trust Fund) to provide for the employer costs
36   of retiree post-employment health insurance benefits for retired
37   state employees and retired employees of public school districts.
38   Earnings on the SCRHI Trust Fund must be credited to it and
39   unexpended funds carried forward in it to succeeding fiscal years.
40      (B) The board is the trustee of the SCRHI Trust Fund.
41      (C) The employee insurance program shall administer the
42   SCRHI Trust Fund.


     [462-3]
 1      (D) The employee insurance program shall engage actuarial and
 2   other services as required to transact the business of the SCRHI
 3   Trust Fund. The actuary engaged by the employee insurance
 4   program shall provide technical advice to the board regarding
 5   operation of the SCRHI Trust Fund.
 6      (E) Upon recommendations of the actuary, the board shall
 7   adopt generally accepted and reasonable actuarial assumptions and
 8   methods for the operation and funding of the SCRHI Trust Fund as
 9   it considers necessary and prudent. The actuarial assumptions and
10   methods adopted by the board must be appropriate for the purposes
11   at hand and must be reasonable, individually and in the aggregate,
12   taking into account the experience of the plan and reasonable
13   expectations. Utilizing the actuarial assumptions most recently
14   adopted by the board, the actuary engaged by the employee
15   insurance program shall set the annual actuarial valuations of
16   normal cost, actuarial liability, actuarial value of assets, and related
17   actuarial present values for the SCRHI Trust Fund.
18      (F) The board may adopt rules and promulgate regulations as
19   necessary for the proper administration of the SCRHI Trust Fund.
20      (G)(1)The funds of the SCRHI Trust Fund must be invested and
21   reinvested by the State Treasurer in the manner allowed by law.
22   The State Treasurer shall consult with the employee insurance
23   program and the employee insurance program‟s actuary to develop
24   an annual investment plan for the SCRHI Trust Fund taking into
25   account the cash flow needs of the employee insurance program
26   with regard to payment of the employer share of premiums and
27   claims for covered retirees.
28         (2) Effective beginning with the first fiscal year after the
29   ratification of an amendment to Section 16, Article X of the
30   Constitution of this State allowing funds in post-employment
31   benefits trust funds to be invested in equity securities, the
32   Retirement System Investment Commission (RSIC) established
33   pursuant to Chapter 16 of Title 9, shall invest and reinvest the
34   funds of the SCRHI Trust Fund as assets of a retirement system are
35   invested. The chief investment officer shall consult with the
36   employee insurance program and the employee insurance
37   program‟s actuary to develop an annual investment plan for the
38   SCRHI Trust Fund taking into account the cash flow needs of the
39   employee insurance program with regard to payment of the
40   employer share of premiums and claims for covered retirees. After
41   the initial fiscal year the RSIC assumes this investing function, the
42   annual investment plan for the SCRHI Trust Fund must be


     [462-4]
 1   approved by the commission no later than June first of each year
 2   for the fiscal year beginning July first of the same calendar year.
 3      (H) The board annually shall determine the minimum annual
 4   required contributions to the SCRHI Trust Fund on an actuarially
 5   sound basis in accordance with Governmental Accounting
 6   Standards Board Statement No. 45, or any other Governmental
 7   Accounting Standards Board statements that may be applicable to
 8   the SCRHI Trust Fund.
 9      (I) [RESERVED]
10      (J) Each month, the employee insurance program shall
11   determine the monthly amount of the state-funded employer
12   premium with respect to retired state employees and retired public
13   school district employees who are eligible for state-paid employer
14   premiums pursuant to Section 1-11-730, and shall transfer this
15   amount to the operating account from the SCRHI Trust Fund. In
16   addition, the employee insurance program shall transfer the total
17   cost of post-employment benefits for retirees and their dependents,
18   net of premium contributions made on behalf of retirees and other
19   sources of revenue attributable to retirees, in accordance with
20   Governmental Accounting Standards Board Statements No. 43 and
21   45 and the Implementation Guide.
22      (K) The funds of the SCRHI Trust Fund may only be used for
23   the payment of employer-provided other post-employment benefits
24   under the terms of the state health and dental plans. The
25   administrative costs related to the administration of the SCRHI
26   Trust Fund, and the investment and reinvestment of its funds, may
27   be funded from the earnings of the SCRHI Trust Fund.
28      (L) As a trust, the funds of the SCRHI Trust Fund are not
29   assets of the State or the school districts or their respective
30   agencies. The contributions to the SCRHI Trust Fund are
31   irrevocable and may not revert to the employer except upon
32   complete satisfaction of all liabilities and administrative expenses
33   of the state health and dental plans of other post-employment
34   benefits provided pursuant to the state health and dental plans.
35      Section 1-11-707. (A) There is established in the State
36   Treasury separate and distinct from the general fund of the State
37   and all other funds the South Carolina Long Term Disability
38   Insurance Trust Fund (LTDI Trust Fund) to provide for the
39   payment of benefits under the state‟s Basic Long Term Disability
40   Income Benefit Plan. Earnings on the LTDI Trust Fund must be
41   credited to it and unexpended funds carry forward in it to
42   succeeding fiscal years.
43      (B) The board is the trustee of the LTDI Trust Fund.

     [462-5]
 1      (C) The employee insurance program shall administer the LTDI
 2   Trust Fund.
 3      (D) The employee insurance program shall engage actuarial and
 4   other services as required to transact the business of the LTDI
 5   Trust Fund. The actuary engaged by the employee insurance
 6   program shall provide technical advice to the board regarding
 7   operation of the LTDI Trust Fund.
 8      (E) Upon recommendations of the actuary, the board shall
 9   adopt generally accepted and reasonable actuarial assumptions and
10   methods for the operation and funding of the LTDI Trust Fund as
11   it considers necessary and prudent. The actuarial assumptions and
12   methods adopted by the board must be appropriate for the purposes
13   at hand and must be reasonable, individually and in the aggregate,
14   taking into account the experience of the plan and reasonable
15   expectations. Utilizing the actuarial assumptions most recently
16   adopted by the board, the actuary engaged by the employee
17   insurance program shall set the annual actuarial valuations of
18   normal cost, actuarial liability, actuarial value of assets, and related
19   actuarial present values for the LTDI Trust Fund.
20      (F) The board may adopt rules and promulgate regulations as
21   necessary for the proper administration of the LTDI Trust Fund.
22      (G)(1) The funds of the LTDI Trust Fund must be invested and
23   reinvested by the State Treasurer in the manner allowed by law.
24   The State Treasurer shall consult with the employee insurance
25   program and the employee insurance program‟s actuary to develop
26   an annual investment plan for the LTDI Trust Fund taking into
27   account the cash flow needs of the employee insurance program
28   with regard to payment of the employer share of premiums and
29   claims for covered retirees.
30         (2) Effective beginning with the first fiscal year after the
31   ratification of an amendment to Section 16, Article X of the
32   Constitution of this State allowing funds in post-employment
33   benefits trust funds to be invested in equity securities, the
34   Retirement System Investment Commission (RSIC) established
35   pursuant to Chapter 16 of Title 9, shall invest and reinvest the
36   funds of the LTDI Trust Fund as assets of a retirement system are
37   invested. The chief investment officer shall consult with the
38   employee insurance program and the employee insurance
39   program‟s actuary to develop an annual investment plan for the
40   LTDI Trust Fund taking into account the cash flow needs of the
41   employee insurance program with regard to payment of the
42   employer share of premiums and claims for covered retirees. After
43   the initial fiscal year the RSIC assumes this investing function, the

     [462-6]
 1   annual investment plan for the LTDI Trust Fund must be approved
 2   by the commission no later than June first of each year for the
 3   fiscal year beginning July first of the same calendar year.
 4      (H) The board annually shall determine the minimum annual
 5   required contributions to the LTDI Trust Fund on an actuarially
 6   sound basis in accordance with Governmental Accounting
 7   Standards Board Statement No. 45, or any other Governmental
 8   Accounting Standards Board statements that may be applicable to
 9   the LTDI Trust Fund.
10      (I) [RESERVED]
11      (J) Each month, the employee insurance program shall transfer
12   to the operating account from the LTDI Trust Fund the amount
13   invoiced by the third-party administrator for the BLTD Plan for
14   payment of LTDI claims, including reasonable expenses associated
15   with claims administration of the BLTD Plan.
16      (K) The assets of the LTDI Trust Fund may only be used for
17   the payment of the state‟s claims under the BLTD Plan along with
18   reasonable expenses associated with the operation of the BLTD
19   Plan, and the assets of the LTDI Trust Fund may not be used for
20   any other purpose. The administrative costs related to the
21   administration of the LTDI Trust Fund, and the investment and
22   reinvestment of its funds, must be funded from the earnings of the
23   LTDI Trust Fund.
24      (L) As a trust, the funds of the LTDI Trust Fund are not assets
25   of the State or the school districts or their respective agencies. The
26   contributions to the LTDI Trust Fund are irrevocable and may not
27   revert to the employer except upon complete satisfaction of all
28   liabilities and administrative expenses of the State Basic Long
29   Term Disability Income Benefit Plan of other post-employment
30   benefits provided pursuant to the State Basic Long Term Disability
31   Income Benefit Plan.”
32      SECTION 3. Section 1-11-730 of the 1976 Code is amended to
33   read:
34      “Section 1-11-730. (A) If a person began employment eligible
35   for coverage under the state health and dental plans on or before
36   the reference date, the following eligibility provisions govern that
37   person‟s participation in state health and dental plans as a retiree:
38         (A)(1) A person covered by the state health and dental
39   insurance plans who terminates employment with at least twenty
40   years‟ retirement service credit by a state-covered entity before
41   eligibility for retirement under a state retirement system is eligible
42   for state health and dental plans coverage, the plans effective on
43   the date of retirement under a state retirement system, if the last

     [462-7]
 1   five years are consecutive and in a full-time permanent position
 2   with a state-covered entity. With respect to a retiree eligible for
 3   coverage pursuant to this subsection, the retiree is eligible for trust
 4   fund paid premiums and the retiree is responsible for the entire
 5   employee premium.
 6         (B)(2) A member of the General Assembly who leaves office
 7   or retires with at least eight years‟ credited service in the General
 8   Assembly Retirement System is eligible to participate in the state
 9   health and dental plans by paying the full premium costs as
10   determined by the State Budget and Control Board.
11         (C)(3) With respect to an active employee: (a) employed by
12   the State or a public school district, (b) retiring with ten or more
13   years of state-covered entity service credited under a state
14   retirement system, and (c) with the last five years of earned service
15   credit consecutive and in a full-time permanent position with the
16   State or a public school district, is eligible for state paid premiums,
17   if the last five years are consecutive and in a full-time permanent
18   position with a state covered entity the retiree is eligible for trust
19   fund paid premiums and the retiree is responsible for the entire
20   employee premium.
21         (D)(4) A person covered by the state health and dental plans
22   who retires with at least five years‟ state-covered entity service
23   credited under a state retirement system is eligible to participate in
24   the plan state health and dental plans by paying the full premium
25   costs as determined by the board, if the last five years are
26   consecutive and in a full-time permanent position with a
27   state-covered entity.
28         (E)(5) A spouse or dependent of a person covered by the
29   plans who is killed in the line of duty after December 31, 2001,
30   shall receive equivalent coverage under the state health and dental
31   plans for a period of twelve months and the State shall be is
32   responsible for paying the full premium costs. After the
33   twelve-month period, a spouse or dependent is eligible for
34   state-paid trust fund paid premiums. A spouse is eligible for
35   state-paid trust fund paid premiums under this subsection until the
36   spouse remarries. A dependent is eligible for state-paid trust fund
37   paid premiums under this subsection until the dependent‟s
38   eligibility for coverage under the plans would ordinarily terminate.
39         (F) All state and school district employees employed before
40   July 1, 1984, who were or would have been eligible for the plans
41   upon completion of five years‟ service are exempt from the
42   provisions of this section and are eligible for the plan effective on
43   the date of their retirement.

     [462-8]
 1         (G)(6) A former municipal or county council member of a
 2   county or municipality which participates in the state health and
 3   dental insurance plans who served on the council for at least
 4   twelve years and who was covered under the plans at the time of
 5   termination is eligible to maintain coverage under the plans if the
 6   former member pays the full employer and employee contributions
 7   and if the county or municipal council elects to allow this coverage
 8   for former members.
 9         (H)(7) A person covered by the state health and dental plans
10   who terminated employment with at least eighteen years‟
11   retirement service credit by a state-covered entity before eligibility
12   for retirement under a state retirement system prior to before 1990
13   is eligible for the plans effective on the date of retirement, if this
14   person returns to a state-covered entity and is covered by the state
15   health and dental plans and completes at least two consecutive
16   years in a full-time, permanent position prior to before the date of
17   retirement.
18      (B) If a person began employment eligible for coverage under
19   the state health and dental plans after the reference date, the
20   following eligibility provisions govern that person‟s participation
21   in state health and dental plans as a retiree:
22         (1) An active employee covered by the state health and
23   dental plans who retires with at least five years of earned
24   retirement service credit under a state retirement system with a
25   state-covered entity is eligible to participate as a retiree in the state
26   health and dental plans if the last five years of the person‟s covered
27   employment were consecutive and in a full-time permanent
28   position.
29         (2) A person covered by the state health and dental plans
30   who terminates employment before the person‟s date of retirement
31   with at least twenty years of earned retirement service credit under
32   a state retirement system with a state-covered entity is eligible to
33   participate as a retiree in the state health and dental plans on the
34   person‟s date of retirement under a state retirement system, if the
35   last five years of the person‟s covered employment before
36   termination were consecutive and in a full-time permanent
37   position.
38         (3) A retired state employee or a retired employee of a
39   public school district who retires under a state retirement system
40   and who is eligible for state health and dental plan coverage under
41   the provisions of item (1) or (2) of this subsection, is eligible for
42   trust fund paid premiums as follows:


     [462-9]
 1           (a) If the retiree‟s earned service credit in a state
 2   retirement system is five or more years but fewer than fifteen years
 3   with a state-covered entity, then the retiree shall pay the full
 4   premium for health and dental plans.
 5           (b) If the retiree‟s earned service credit in a state
 6   retirement system is more than fifteen years, but fewer than
 7   twenty-five years with a state-covered entity, then the retiree is
 8   eligible for fifty percent trust fund paid premiums and the retiree
 9   shall pay the remainder of the premium cost.
10           (c) If the retiree‟s earned service credit in a state
11   retirement system is twenty-five or more years with a state-covered
12   entity, then the retiree is eligible for trust fund paid premiums and
13   the retiree is responsible for the entire employee premium.
14         (4) If a retiree under a state retirement system was employed
15   by an entity that participates in the state health and dental plans
16   pursuant to the provisions of Section 1-11-720 and is eligible to
17   participate in state health and dental plans as a retiree pursuant to
18   the provisions of item (1) or (2) of this subsection, then the
19   retiree‟s employer, at its discretion, may elect to pay all or a
20   portion of the premium for the retiree‟s state health and dental
21   plans.
22         (5) A spouse or dependent of a person covered by the plans
23   who is killed in the line of duty on or after the reference date, shall
24   continue to maintain coverage under state health and dental plans
25   for a period of twelve months after the covered person‟s death and
26   the State is responsible for paying the full premium. After the
27   twelve-month period, a spouse or dependent is eligible for trust
28   fund paid premiums and the spouse or dependent is responsible for
29   the entire employee premium. A spouse is eligible for trust fund
30   paid premiums under this subsection until the spouse remarries. A
31   dependent is eligible for trust fund paid premiums pursuant to this
32   subsection until the dependent‟s eligibility for coverage under the
33   plans would ordinarily terminate.
34      (C) For employees who participate in the state health and
35   dental plans pursuant to the provisions of Section 1-11-720 but
36   who are not members of the State Retirement Systems, one year of
37   full-time employment or its equivalent under their employment
38   relation equates to one year of earned retirement service credit
39   under a state retirement system for purposes of the requirements of
40   subsection (B)(1) and (2) of this section. The EIP shall implement
41   the provisions of this subsection and make determinations pursuant
42   to it. A person aggrieved by a determination of the EIP pursuant to
43   this subsection may appeal that determination as a contested case

     [462-10]
 1   as provided in Chapter 23 of Title 1, the Administrative
 2   Procedures Act.
 3      (D) Notwithstanding the dates of employment provided in
 4   subsections (A) and (B) of this section, a member of the General
 5   Assembly on leaving office may elect eligibility for participation
 6   in the state health and dental insurance plans pursuant to
 7   subsection (A) or (B) of this section.”
 8      SECTION 4. If        any     section,    subsection,    paragraph,
 9   subparagraph, sentence, clause, phrase, or word of this act is for
10   any reason held to be unconstitutional or invalid, such holding
11   shall not affect the constitutionality or validity of the remaining
12   portions of this act, the General Assembly hereby declaring that it
13   would have passed this act, and each and every section, subsection,
14   paragraph, subparagraph, sentence, clause, phrase, and word
15   thereof, irrespective of the fact that any one or more other sections,
16   subsections, paragraphs, subparagraphs, sentences, clauses,
17   phrases, or words hereof may be declared to be unconstitutional,
18   invalid, or otherwise ineffective.
19      SECTION 5. The Code Commissioner shall insert the effective
20   date of this act for the phrase “reference date” where it appears in
21   Section 1-11-705 of the 1976 Code as added by this act and in
22   Section 1-11-730 of the 1976 Code as amended by this act.
23      SECTION 6. This act takes effect on the first day of the month
24   following the month during which this act is approved by the
25   Governor. /
26      Renumber sections to conform.
27      Amend title to conform.
28
29   HUGH K. LEATHERMAN, SR. for Committee.
30




     [462-11]
 1
 2
 3
 4
 5
 6
 7
 8
 9                         A BILL
10
11   TO RETITLE ARTICLE 5, CHAPTER 11, TITLE 1, CODE OF
12   LAWS OF SOUTH CAROLINA, 1976, RELATING TO
13   EMPLOYEES AND RETIREMENT INSURANCE AS
14   “EMPLOYEES AND RETIREES INSURANCE-ACCOUNTING
15   FOR POST-EMPLOYMENT BENEFITS”, TO MAKE
16   FINDINGS WITH RESPECT TO THE STATE‟S COMPLIANCE
17   WITH NEW REQUIREMENTS OF THE GOVERNMENTAL
18   ACCOUNTING            STANDARDS         BOARD       FOR
19   POST-EMPLOYMENT BENEFITS; BY ADDING SECTIONS
20   1-11-703, 1-11-705, AND 1-11-707 SO AS TO ESTABLISH THE
21   SOUTH CAROLINA RETIREE HEALTH INSURANCE TRUST
22   FUND (SCRHI TRUST FUND) AND THE SOUTH CAROLINA
23   LONG TERM DISABILITY INSURANCE TRUST FUND AS
24   THE METHOD OF PAYING AND ACCOUNTING FOR
25   RETIREE HEALTH INSURANCE PREMIUMS AND BASIC
26   LONG TERM DISABILITY INCOME BENEFIT PLAN
27   PREMIUMS IN COMPLIANCE WITH NEW ACCOUNTING
28   STANDARDS, TO PROVIDE FOR THE ACTUARIAL
29   FUNDING AND INVESTMENT OF THE ASSETS OF THESE
30   TRUST FUNDS, AND TO PROVIDE DEFINITIONS; TO
31   AMEND SECTION 1-11-710, RELATING TO THE STATE
32   HEALTH AND DENTAL PLANS, SO AS TO PROVIDE
33   FUNDING FOR THE SCRHI TRUST FUND BY MEANS OF
34   INCREASED EMPLOYER CONTRIBUTION RATES; AND TO
35   AMEND SECTION 1-11-730, RELATING TO PERSONS
36   ELIGIBLE FOR POST-EMPLOYMENT PARTICIPATION IN
37   THE STATE HEALTH AND DENTAL PLANS AND
38   ELIGIBILITY FOR EMPLOYER PAID PREMIUMS FOR
39   RETIREES, SO AS TO CONFORM THE PAYMENT OF
40   EMPLOYER PREMIUMS FOR RETIREES TO THE REVISED
41   METHOD PROVIDED IN THIS ACT, PROSPECTIVELY TO
42   REVISE THE ELIGIBILITY REQUIREMENTS FOR

     [462]                      1
 1   EMPLOYER PAID PREMIUMS FOR RETIREES; AND TO
 2   DELETE AN OBSOLETE PROVISION.
 3
 4   Be it enacted by the General Assembly of the State of South
 5   Carolina:
 6
 7   SECTION 1. (A) The General Assembly finds that:
 8         (1) The Governmental Accounting Standards Board (GASB)
 9   has issued new standards to account for post-employment benefits
10   (OPEB) other than pensions for public employees.
11         (2) South Carolina currently provides OPEB benefits in the
12   form of state health and dental insurance and basic long term
13   disability income benefit plan on a “pay as you go” basis to
14   retirees and that this method of payment fails adequately to
15   account for benefits as they are earned by current employees under
16   the new GASB OPEB accounting standards.
17         (3) It is necessary to establish trust funds as provided in this
18   act so that these post-employment benefits and the liabilities they
19   give rise to may be determined currently in a manner similar to the
20   way in which pension fund liabilities are reported.
21      (B) The General Assembly further finds that bringing the
22   accounting for OPEB into compliance with new GASB standards
23   is solely for the purpose of GASB compliance and the trust funds
24   established by this act and other changes in OPEB contained in this
25   act do not in any way limit the authority of the General Assembly
26   to alter or eliminate these benefits as it determines appropriate, nor
27   do they limit the authority of the State Budget and Control Board
28   to amend the plan of benefits pursuant to Section 1-11-710(A)(2)
29   of the 1976 Code, nor do the provisions of this act give rise to any
30   contract or other right of employees and retirees as to the OPEB‟s
31   to which the provisions of this act apply.
32
33   SECTION 2. Article 5, Chapter 11, Title 1 of the 1976 Code is
34   retitled “Employees and Retirees Insurance-Accounting for
35   Post-Employment Benefits”.
36
37   SECTION 3. Article 5, Chapter 11, Title 1 of the 1976 Code is
38   amended by adding:
39
40     “Section 1-11-703. As used in this article:
41     (1) „Actuarial accrued liability‟ means that portion, as
42   determined by a particular actuarial cost method, of the actuarial


     [462]                             2
 1   present value of fund obligations and administrative expenses
 2   which is not provided for by future normal costs.
 3      (2) „Actuarial assumptions‟ means assumptions regarding the
 4   occurrence of future events affecting costs of the SCRHI Trust
 5   Fund or LTDI Trust Fund such as mortality, withdrawal, disability,
 6   and retirement; changes in compensation; aging effects and cost
 7   trends for post-employment benefits; benefit election rates; rates of
 8   investment earnings and asset appreciation or depreciation;
 9   procedures used to determine the actuarial value of assets; and
10   other such relevant items.
11      (3) „Actuarial cost method‟ means a method for determining
12   the actuarial present value of the obligations and administrative
13   expenses of the SCRHI Trust Fund or LTDI Trust Fund and for
14   developing an actuarially equivalent allocation of such value to
15   time periods, usually in the form of a normal cost and an actuarial
16   accrued liability. Acceptable actuarial methods are the aggregate,
17   attained age, individual entry age, frozen attained age, frozen entry
18   age, and projected unit credit methods.
19      (4) „Actuarial present value of total projected benefits‟ means
20   the present value, at the valuation date, of the cost to finance
21   benefits payable in the future, discounted to reflect the expected
22   effects of the time value of money and the probability of payment.
23      (5) „Actuarial valuation‟ means the determination, as of a
24   valuation date, of the normal cost, actuarial accrued liability,
25   actuarial value of assets, and related actuarial present values for the
26   SCRHI Trust Fund or LTDI Trust Fund.
27      (6) „Actuarially sound‟ means that calculated contributions to
28   the SCRHI Trust Fund or LTDI Trust Fund are sufficient to pay
29   the full actuarial cost of these trust funds. The full actuarial cost
30   includes both the normal cost of providing for fund obligations as
31   they accrue in the future and the cost of amortizing the unfunded
32   actuarial accrued liability over a period of no more than thirty
33   years.
34      (7) „Administrative expenses‟ means all expenses incurred in
35   the operation of the SCRHI Trust Fund and LTDI Trust Fund,
36   including all investment expenses.
37      (8) „LTDI Trust Fund‟ means the Long Term Disability
38   Insurance Trust Fund established pursuant to Section 1-11-707 to
39   fund benefits under the State‟s Basic Long Term Disability
40   (BLTD) Income Benefit Plan.
41      (9) „Board‟ means the State Budget and Control Board.



     [462]                              3
 1      (10) „Employee insurance program‟ or „EIP‟ means the office of
 2   the board designated by the board to operate insurance programs
 3   pursuant to this article.
 4      (11) „IBNR‟ means unpaid health claims incurred but not
 5   reported. The liability for IBNR claims is actuarially estimated
 6   based on the most current historical claims experience of previous
 7   payments, inflation, award trends, and estimates of health care
 8   trend changes.
 9      (12) „Operating account‟ means the health insurance program‟s
10   business operating activities account maintained by the State
11   Treasurer in which are deposited all premiums for enrollees in
12   self-funded health plans authorized in this article, along with
13   employer contributions for active employees covered by such
14   self-funded health plans, and from which claims and administrative
15   expenses of the self-funded health and dental plans administered
16   by the employee insurance program are paid.
17      (13) „State-covered entity‟ means state agencies and institutions,
18   however described, and school districts. It also includes political
19   subdivisions of the State that participate in the state health and
20   dental plans.
21      (14) „State health and dental plans‟ means any insurance
22   program administered by the employee insurance program
23   pursuant to this article.
24      (15) „SCRHI Trust Fund‟ means the South Carolina Retiree
25   Health Insurance Trust Fund established pursuant to Section
26   1-11-705 to fund the employer cost for health benefits for retired
27   state employees and retired public school district employees.
28      (16) „State Retirement System‟ or „State Retirement Systems‟
29   means all retirement systems established pursuant to Title 9 except
30   for the National Guard Retirement System.
31      (17) „Unfunded actuarial accrued liability‟ means for any
32   actuarial valuation the excess of the actuarial accrued liability over
33   the actuarial value of the assets of the fund under an actuarial cost
34   method utilized by the fund for funding purposes.
35      (18) „Trust fund paid premiums‟ means the employer premium
36   for state health and dental plans coverage paid by the SCRHI Trust
37   Fund on behalf of a retiree. When it is expressed as a percentage
38   of trust fund paid premiums, it means that the SCRHI Trust Fund
39   shall pay the stated percentage of the employer premiums, with the
40   retiree paying the balance of the employer premiums and the entire
41   employee premium.
42


     [462]                             4
 1      Section 1-11-705. (A) There is established in the State
 2   Treasury separate and distinct from the general fund of the State
 3   and all other funds the South Carolina Retiree Health Insurance
 4   Trust Fund (SCRHI Trust Fund) to provide for the employer costs
 5   of retiree post-employment health insurance benefits for retired
 6   state employees and retired employees of public school districts.
 7   Earnings on the SCRHI Trust Fund must be credited to it and
 8   unexpended funds carried forward in it to succeeding fiscal years.
 9      (B) The board is the trustee of the SCRHI Trust Fund.
10      (C) The employee insurance program shall administer the
11   SCRHI Trust Fund.
12      (D) The employee insurance program shall engage actuarial and
13   other services as required to transact the business of the SCRHI
14   Trust Fund. The actuary engaged by the employee insurance
15   program shall provide technical advice to the board regarding
16   operation of the SCRHI Trust Fund.
17      (E) Upon recommendations of the actuary, the board shall
18   adopt generally accepted and reasonable actuarial assumptions and
19   methods for the operation and funding of the SCRHI Trust Fund as
20   it considers necessary and prudent. The actuarial assumptions and
21   methods adopted by the board must be appropriate for the purposes
22   at hand and must be reasonable, individually and in the aggregate,
23   taking into account the experience of the plan and reasonable
24   expectations. Utilizing the actuarial assumptions most recently
25   adopted by the board, the actuary engaged by the employee
26   insurance program shall set the annual actuarial valuations of
27   normal cost, actuarial liability, actuarial value of assets, and related
28   actuarial present values for the SCRHI Trust Fund.
29      (F) The board may adopt rules and promulgate regulations as
30   necessary for the proper administration of the SCRHI Trust Fund.
31      (G)(1)The funds of the SCRHI Trust Fund must be invested and
32   reinvested by the State Treasurer in the manner allowed by law.
33   The State Treasurer shall consult with the employee insurance
34   program and the employee insurance program‟s actuary to develop
35   an annual investment plan for the SCRHI Trust Fund taking into
36   account the cash flow needs of the employee insurance program
37   with regard to payment of the employer share of premiums and
38   claims for covered retirees.
39         (2) Effective beginning with the first fiscal year after the
40   ratification of an amendment to Section 16, Article X of the
41   Constitution of this State allowing funds in post-employment
42   benefits trust funds to be invested in equity securities, the
43   Retirement System Investment Commission (RSIC) established

     [462]                              5
 1   pursuant to Chapter 16 of Title 9, shall invest and reinvest the
 2   funds of the SCRHI Trust Fund as assets of a retirement system are
 3   invested. The chief investment officer shall consult with the
 4   employee insurance program and the employee insurance
 5   program‟s actuary to develop an annual investment plan for the
 6   SCRHI Trust Fund taking into account the cash flow needs of the
 7   employee insurance program with regard to payment of the
 8   employer share of premiums and claims for covered retirees. After
 9   the initial fiscal year the RSIC assumes this investing function, the
10   annual investment plan for the SCRHI Trust Fund must be
11   approved by the commission no later than June first of each year
12   for the fiscal year beginning July first of the same calendar year.
13      (H) The board annually shall determine the minimum annual
14   required contributions to the SCRHI Trust Fund on an actuarially
15   sound basis in accordance with Governmental Accounting
16   Standards Board Statement No. 45, or any other Governmental
17   Accounting Standards Board statements that may be applicable to
18   the SCRHI Trust Fund.
19      (I) The board shall fund the SCRHI Trust Fund:
20         (1) through an increase in the employer contribution rate for
21   the South Carolina Retirement Systems as provided in Section
22   1-11-710(A)(2). The total employer contributions collected from
23   the state and school districts for post-employment benefits must be
24   transferred immediately to the SCRHI Trust Fund for investment,
25   reinvestment and the payment of post-employment benefits; and
26         (2) as of January thirty-first of each calendar year, the
27   employee insurance program shall transfer to the trust fund from
28   the employee insurance program‟s operating account, the cash
29   balance in the operating account in excess of one hundred forty
30   percent of the actuarially-determined IBNR reserves of the State‟s
31   health plans as of December thirty-first of the preceding year. On
32   the reference date, an initial transfer must take place applicable to
33   the cash balance as of December 31, 2006.
34      (J) Each month, the employee insurance program shall
35   determine the monthly amount of the state-funded employer
36   premium with respect to retired state employees and retired public
37   school district employees who are eligible for state-paid employer
38   premiums pursuant to Section 1-11-730, and shall transfer this
39   amount to the operating account from the SCRHI Trust Fund. In
40   addition, the employee insurance program shall transfer the total
41   cost of post-employment benefits for retirees and their dependents,
42   net of premium contributions made on behalf of retirees and other
43   sources of revenue attributable to retirees, in accordance with

     [462]                             6
 1   Governmental Accounting Standards Board Statements No. 43 and
 2   45 and the Implementation Guide.
 3      (K) The funds of the SCRHI Trust Fund may only be used for
 4   the payment of employer-provided other post-employment benefits
 5   under the terms of the state health and dental plans. The
 6   administrative costs related to the administration of the SCRHI
 7   Trust Fund, and the investment and reinvestment of its funds, may
 8   be funded from the earnings of the SCRHI Trust Fund.
 9      (L) As a trust, the funds of the SCRHI Trust Fund are not
10   assets of the state or the school districts or their respective
11   agencies. The contributions to the SCRHI Trust Fund are
12   irrevocable and may not revert to the employer except upon
13   complete satisfaction of all liabilities and administrative expenses
14   of the state health and dental plans of other post-employment
15   benefits provided pursuant to the state health and dental plans.
16
17      Section 1-11-707. (A) There is established in the State
18   Treasury separate and distinct from the general fund of the State
19   and all other funds the South Carolina Long Term Disability
20   Insurance Trust Fund (LTDI Trust Fund) to provide for the
21   payment of benefits under the State‟s Basic Long Term Disability
22   Income Benefit Plan. Earnings on the LTDI Trust Fund must be
23   credited to it and unexpended funds carry forward in it to
24   succeeding fiscal years.
25      (B) The board is the trustee of the LTDI Trust Fund.
26      (C) The employee insurance program shall administer the LTDI
27   Trust Fund.
28      (D) The employee insurance program shall engage actuarial and
29   other services as required to transact the business of the LTDI
30   Trust Fund. The actuary engaged by the employee insurance
31   program shall provide technical advice to the board regarding
32   operation of the LTDI Trust Fund.
33      (E) Upon recommendations of the actuary, the board shall
34   adopt generally accepted and reasonable actuarial assumptions and
35   methods for the operation and funding of the LTDI Trust Fund as
36   it considers necessary and prudent. The actuarial assumptions and
37   methods adopted by the board must be appropriate for the purposes
38   at hand and must be reasonable, individually and in the aggregate,
39   taking into account the experience of the plan and reasonable
40   expectations. Utilizing the actuarial assumptions most recently
41   adopted by the board, the actuary engaged by the employee
42   insurance program shall set the annual actuarial valuations of


     [462]                            7
 1   normal cost, actuarial liability, actuarial value of assets, and related
 2   actuarial present values for the LTDI Trust Fund.
 3      (F) The board may adopt rules and promulgate regulations as
 4   necessary for the proper administration of the LTDI Trust Fund.
 5      (G)(1) The funds of the LTDI Trust Fund must be invested and
 6   reinvested by the State Treasurer in the manner allowed by law.
 7   The State Treasurer shall consult with the employee insurance
 8   program and the employee insurance program‟s actuary to develop
 9   an annual investment plan for the LTDI Trust Fund taking into
10   account the cash flow needs of the employee insurance program
11   with regard to payment of the employer share of premiums and
12   claims for covered retirees.
13         (2) Effective beginning with the first fiscal year after the
14   ratification of an amendment to Section 16, Article X of the
15   Constitution of this State allowing funds in post-employment
16   benefits trust funds to be invested in equity securities, the
17   Retirement System Investment Commission (RSIC) established
18   pursuant to Chapter 16 of Title 9, shall invest and reinvest the
19   funds of the LTDI Trust Fund as assets of a retirement system are
20   invested. The chief investment officer shall consult with the
21   employee insurance program and the employee insurance
22   program‟s actuary to develop an annual investment plan for the
23   LTDI Trust Fund taking into account the cash flow needs of the
24   employee insurance program with regard to payment of the
25   employer share of premiums and claims for covered retirees. After
26   the initial fiscal year the RSIC assumes this investing function, the
27   annual investment plan for the LTDI Trust Fund must be approved
28   by the commission no later than June first of each year for the
29   fiscal year beginning July first of the same calendar year.
30      (H) The board annually shall determine the minimum annual
31   required contributions to the LTDI Trust Fund on an actuarially
32   sound basis in accordance with Governmental Accounting
33   Standards Board Statement No. 45, or any other Governmental
34   Accounting Standards Board statements that may be applicable to
35   the LTDI Trust Fund.
36      (I) The board shall increase the employer contributions used to
37   fund the BLTD Plan by an amount equal to or greater than the
38   minimum annual required contribution for the LTDI Trust Fund as
39   determined in subsection (H) of this section. The increased
40   employer contributions remitted to the employee insurance
41   program under this subsection must be deposited in the LTDI Trust
42   Fund.


     [462]                              8
 1      (J) Each month, the employee insurance program shall transfer
 2   to the operating account from the LTDI Trust Fund the amount
 3   invoiced by the third-party administrator for the BLTD Plan for
 4   payment of LTDI claims, including reasonable expenses associated
 5   with claims administration of the BLTD Plan.
 6      (K) The assets of the LTDI Trust Fund may only be used for
 7   the payment of the State‟s claims under the BLTD Plan along with
 8   reasonable expenses associated with the operation of the BLTD
 9   Plan, and the assets of the LTDI Trust Fund may not be used for
10   any other purpose. The administrative costs related to the
11   administration of the LTDI Trust Fund, and the investment and
12   reinvestment of its funds, must be funded from the earnings of the
13   LTDI Trust Fund.
14      (L) As a trust, the funds of the LTDI Trust Fund are not assets
15   of the state or the school districts or their respective agencies. The
16   contributions to the LTDI Trust Fund are irrevocable and may not
17   revert to the employer except upon complete satisfaction of all
18   liabilities and administrative expenses of the State Basic Long
19   Term Disability Income Benefit Plan of other post-employment
20   benefits provided pursuant to the State Basic Long Term Disability
21   Income Benefit Plan.”
22
23   SECTION 4. Section 1-11-710(A) of the 1976 Code is amended
24   to read:
25
26      “(A) The State Budget and Control Board shall:
27        (1) make available to active and retired employees of this
28   State and its public school districts and their eligible dependents
29   group health, dental, life, accidental death and dismemberment,
30   and disability insurance plans and benefits in an equitable manner
31   and of maximum benefit to those covered within the available
32   resources.;
33        (2) approve by August fifteenth of each year a plan of
34   benefits, eligibility, and employer, employee, retiree, and
35   dependent contributions for the next calendar year. The board
36   shall devise a plan for the method and schedule of payment for the
37   employer and employee share of contributions. Provided that the
38   Budget and Control Board, and by July 1first of the current fiscal
39   year, shall develop and implement a plan increasing the employer
40   contribution rates of the State Retirement SystemSystems to a
41   level adequate to cover the employer‟s share for the current fiscal
42   year‟s cost of providing health and dental insurance to retired state
43   and school district employees. For fiscal year 2007-2008, the

     [462]                             9
 1   board‟s plan shall increase the employer contribution rates for the
 2   State Retirement Systems by one percent above what is required to
 3   fund the current fiscal year‟s employer premiums for providing
 4   coverage under the state health and dental plans to currently
 5   enrolled retired state and school district employees. In subsequent
 6   years, the board‟s plan shall increase the employer contribution
 7   rates for the State Retirement Systems in additional increments of
 8   one percent of payroll each year, until the minimum annual other
 9   post-employment benefit cost is attained, in accordance with
10   Governmental Accounting Standards Board Statement No. 45.
11   After that time, the board shall make adjustments to the employer
12   contribution rates for the State Retirement Systems to maintain the
13   minimum annual required contribution determined in accordance
14   with Section 1-11-705(H). The plan state health and dental plans
15   must include a method for the distribution of the funds
16   appropriated as provided by law which are designated for retiree
17   insurance and also must include a method for allocating to school
18   districts, excluding EIA funding, sufficient general fund monies to
19   offset the additional cost incurred by these entities in their federal
20   and other fund activities as a result of this employer contribution
21   charge. The funds collected through increasing the employer
22   contribution rates for the State Retirement Systems under this
23   section must be deposited in the SCRHI Trust Fund established
24   pursuant to Section 1-11-705. The amounts appropriated in this
25   section shall constitute the State‟s pro rata contributions to these
26   programs except the State shall pay its pro rata share of health and
27   dental insurance premiums for retired state and public school
28   employees for the current fiscal year.;
29         (3) adjust the plan, benefits, or contributions, at any time to
30   insure the fiscal stability of the system.;
31         (4) set aside in separate continuing accounts in the State
32   Treasury, appropriately identified, all funds, state-appropriated and
33   other, received for actual health and dental insurance premiums
34   due. Funds credited to these accounts may be used to pay the costs
35   of administering the state health and dental insurance programs
36   plans and may not be used for purposes of other than providing
37   insurance benefits for employees and retirees. A reserve equal to
38   not less than an average of one and one-half months‟ claims must
39   be maintained in the accounts and all funds in excess of the reserve
40   must be used to reduce premium rates or improve or expand
41   benefits as funding permits.”
42


     [462]                             10
 1   SECTION 5. Section 1-11-730 of the 1976 Code, is amended to
 2   read:
 3
 4      “Section 1-11-730. (A) If a person began employment eligible
 5   for coverage under the state health and dental plans on or before
 6   the reference date, the following eligibility provisions govern that
 7   person‟s participation in state health and dental plans as a retiree:
 8         (A)(1) A person covered by the state health and dental
 9   insurance plans who terminates employment with at least twenty
10   years‟ retirement service credit by a state-covered entity before
11   eligibility for retirement under a state retirement system is eligible
12   for state health and dental plans coverage, the plans effective on
13   the date of retirement under a state retirement system, if the last
14   five years are consecutive and in a full-time permanent position
15   with a state-covered entity. With respect to a retiree eligible for
16   coverage pursuant to this subsection, the retiree is eligible for trust
17   fund paid premiums and the retiree is responsible for the entire
18   employee premium.
19         (B)(2) A member of the General Assembly who leaves office
20   or retires with at least eight years‟ credited service in the General
21   Assembly Retirement System is eligible to participate in the state
22   health and dental plans by paying the full premium costs as
23   determined by the State Budget and Control Board.
24         (C)(3) With respect to an active employee: (a) employed by
25   the state or a public school district, (b) retiring with ten or more
26   years of state-covered entity service credited under a state
27   retirement system, and (c) with the last five years of earned service
28   credit consecutive and in a full-time permanent position with the
29   state or a public school district, is eligible for state paid premiums,
30   if the last five years are consecutive and in a full-time permanent
31   position with a state covered entity the retiree is eligible for trust
32   fund paid premiums and the retiree is responsible for the entire
33   employee premium.
34         (D)(4) A person covered by the state health and dental plans
35   who retires with at least five years‟ state-covered entity service
36   credited under a state retirement system is eligible to participate in
37   the plan state health and dental plans by paying the full premium
38   costs as determined by the board, if the last five years are
39   consecutive and in a full-time permanent position with a
40   state-covered entity.
41         (E)(5) A spouse or dependent of a person covered by the
42   plans who is killed in the line of duty after December 31, 2001,
43   shall receive equivalent coverage under the state health and dental

     [462]                             11
 1   plans for a period of twelve months and the State shall be is
 2   responsible for paying the full premium costs. After the
 3   twelve-month period, a spouse or dependent is eligible for
 4   state-paid trust fund paid premiums. A spouse is eligible for
 5   state-paid trust fund paid premiums under this subsection until the
 6   spouse remarries. A dependent is eligible for state-paid trust fund
 7   paid premiums under this subsection until the dependent‟s
 8   eligibility for coverage under the plans would ordinarily terminate.
 9         (F) All state and school district employees employed before
10   July 1, 1984, who were or would have been eligible for the plans
11   upon completion of five years‟ service are exempt from the
12   provisions of this section and are eligible for the plan effective on
13   the date of their retirement.
14         (G)(6) A former municipal or county council member of a
15   county or municipality which participates in the state health and
16   dental insurance plans who served on the council for at least
17   twelve years and who was covered under the plans at the time of
18   termination is eligible to maintain coverage under the plans if the
19   former member pays the full employer and employee contributions
20   and if the county or municipal council elects to allow this coverage
21   for former members.
22         (H)(7) A person covered by the state health and dental plans
23   who terminated employment with at least eighteen years‟
24   retirement service credit by a state-covered entity before eligibility
25   for retirement under a state retirement system prior to before 1990
26   is eligible for the plans effective on the date of retirement, if this
27   person returns to a state-covered entity and is covered by the state
28   health and dental plans and completes at least two consecutive
29   years in a full-time, permanent position prior to before the date of
30   retirement.
31      (B) If a person began employment eligible for coverage under
32   the state health and dental plans after the reference date, the
33   following eligibility provisions govern that person‟s participation
34   in state health and dental plans as a retiree:
35         (1) An active employee covered by the state health and
36   dental plans who retires with at least five years of earned
37   retirement service credit under a state retirement system with a
38   state-covered entity is eligible to participate as a retiree in the state
39   health and dental plans if the last five years of the person‟s covered
40   employment were consecutive and in a full-time permanent
41   position.
42         (2) A person covered by the state health and dental plans
43   who terminates employment before the person‟s date of retirement

     [462]                              12
 1   with at least twenty years of earned retirement service credit under
 2   a state retirement system with a state-covered entity is eligible to
 3   participate as a retiree in the state health and dental plans on the
 4   person‟s date of retirement under a state retirement system, if the
 5   last five years of the person‟s covered employment before
 6   termination were consecutive and in a full-time permanent
 7   position.
 8         (3) A retired state employee or a retired employee of a
 9   public school district who retires under a state retirement system
10   and who is eligible for state health and dental plan coverage under
11   the provisions of item (1) or (2) of this subsection, is eligible for
12   trust fund paid premiums as follows:
13           (a) If the retiree‟s earned service credit in a state
14   retirement system is five or more years but fewer than twelve years
15   and six months with a state-covered entity, then the retiree shall
16   pay the full premium for health and dental plans.
17           (b) If the retiree‟s earned service credit in a state
18   retirement system is more than twelve years and six months, but
19   fewer than twenty-five years with a state-covered entity, then the
20   retiree is eligible for fifty percent trust fund paid premiums and the
21   retiree shall pay the remainder of the premium cost.
22           (c) If the retiree‟s earned service credit in a state
23   retirement system is twenty-five or more years with a state-covered
24   entity, then the retiree is eligible for trust fund paid premiums and
25   the retiree is responsible for the entire employee premium.
26         (4) If a retiree under a state retirement system was employed
27   by an entity that participates in the state health and dental plans
28   pursuant to the provisions of Section 1-11-720 and is eligible to
29   participate in state health and dental plans as a retiree pursuant to
30   the provisions of item (1) or (2) of this subsection, then the
31   retiree‟s employer, at its discretion, may elect to pay all or a
32   portion of the premium for the retiree‟s state health and dental
33   plans.
34         (5) A spouse or dependent of a person covered by the plans
35   who is killed in the line of duty on or after the reference date, shall
36   continue to maintain coverage under state health and dental plans
37   for a period of twelve months after the covered person‟s death and
38   the State is responsible for paying the full premium. After the
39   twelve-month period, a spouse or dependent is eligible for trust
40   fund paid premiums and the spouse or dependent is responsible for
41   the entire employee premium. A spouse is eligible for trust fund
42   paid premiums under this subsection until the spouse remarries. A
43   dependent is eligible for trust fund paid premiums pursuant to this

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 1   subsection until the dependent‟s eligibility for coverage under the
 2   plans would ordinarily terminate.
 3      (C) For employees who participate in the state health and
 4   dental plans pursuant to the provisions of Section 1-11-720 but
 5   who are not members of the State Retirement Systems, one year of
 6   full-time employment or its equivalent under their employment
 7   relation equates to one year of earned retirement service credit
 8   under a state retirement system for purposes of the requirements of
 9   subsection (B)(1) and (2) of this section. The EIP shall implement
10   the provisions of this subsection and make determinations pursuant
11   to it. A person aggrieved by a determination of the EIP pursuant to
12   this subsection may appeal that determination as a contested case
13   as provided in Chapter 23 of Title 1, the Administrative
14   Procedures Act.”
15
16   SECTION 6. If any section, subsection, paragraph, subparagraph,
17   sentence, clause, phrase, or word of this act is for any reason held
18   to be unconstitutional or invalid, such holding shall not affect the
19   constitutionality or validity of the remaining portions of this act,
20   the General Assembly hereby declaring that it would have passed
21   this act, and each and every section, subsection, paragraph,
22   subparagraph, sentence, clause, phrase, and word thereof,
23   irrespective of the fact that any one or more other sections,
24   subsections, paragraphs, subparagraphs, sentences, clauses,
25   phrases, or words hereof may be declared to be unconstitutional,
26   invalid, or otherwise ineffective.
27
28   SECTION 7. The Code Commissioner shall insert the effective
29   date of this act for the phrase “reference date” where it appears in
30   Section 1-11-705 of the 1976 Code as added by this act and in
31   Section 1-11-730 of the 1976 Code as amended by this act.
32
33   SECTION 8. This act takes effect on the first day of the month
34   following the month during which this act is approved by the
35   Governor.
36                            ----XX----
37




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