SB-0007, As Passed Senate, May 18, 2011

SUBSTITUTE FOR

SENATE BILL NO. 7

     A bill to limit a public employer's portion of the cost of

health insurance benefits; and to provide for exceptions.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 1. This act shall be known and may be cited as the

"publicly funded health insurance contribution act".

     Sec. 3. As used in this act:

     (a) "Costs" of a medical benefit plan and "total costs" of

medical benefit plans do not include copayments, coinsurance,

deductibles, other out-of-pocket expenses, or other service-related

fees assessed to the coverage beneficiary.

     (b) "Local unit of government" means a city, county, township,

authority created under 1939 PA 147, MCL 119.51 to 119.62, or

village.

Senate Bill No. 7 as amended May 18, 2011

     (c) "Medical benefit plan" means a plan established and

maintained by a carrier or 1 or more public employers that provides

for the payment of medical, optical, or dental benefits, including,

but not limited to, hospital and physician services, prescription

drugs, and related benefits, to public employees.

     (d) "Public employer" means this state; a city, village,

township, county, or other political subdivision of this state; any

intergovernmental, metropolitan, or local department, agency, or

authority, or other local political subdivision; a school district,

a public school academy, or an intermediate school district, as

those terms are defined in sections 4 to 6 of the revised school

code, 1976 PA 451, MCL 380.4 to 380.6; a community college or

junior college described in section 7 of article VIII of the state

constitution of 1963; or an institution of higher education

described in section 4 of article VIII of the state constitution of

1963.

     Sec. 5. <<(1)>> Except as otherwise provided in this act, <<

subject to the implementation dates prescribed in subsection (2)>>,

a public employer that offers a medical benefit plan

to its employees or elected officials shall pay no more than 80% of

the total annual cost of all of the medical benefit plans it offers

to its employees and elected officials. Each elected official who

participates in a medical benefit plan offered by a public employer

shall be required to pay 20% or more of the annual cost of that

plan. The public employer may allocate the employees' share of

medical benefit plan costs among its employees as it sees fit. In

addition, a public employer that offers a medical benefit plan that

includes a health savings account as permitted in section 223 of

the internal revenue code of 1986, 26 USC 223, shall increase the

amount it pays toward the annual total cost of an employee's or

public official's medical benefit plan by an amount equivalent to

the amount the employee or public official contributes to the

health savings account, and that increase shall be excluded from

the maximum public employer expenditure otherwise permitted under

this section.

<<(2) This subsection shall be implemented on the following dates:

     (a) Any collective bargaining agreement or other contract settled

on or after the effective date of this act, on July 1, 2011, shall comply

with the requirements of this section. However, the limitation imposed by

this section on the employer shall not become operative until January 1,

2012.

     (b) Except as provided in section 11, for any collective bargaining agreement or other contract in effect on the effective date of this act and for all other public employees subject to the provisions of this act, on January 1, 2012.>>

     Sec. 7. A public employer's contribution is not included in

the public employer's annual maximum allowable payment for the cost

of medical benefit plans if it is either of the following:

     (a) A contribution to an employee's or elected official's

health savings account as permitted in section 223 of the internal

revenue code of 1986, 26 USC 223.

     (b) A contribution to a health reimbursement arrangement that

complies with all relevant statutory provisions, regulatory

provisions, and internal revenue service rulings governing health

reimbursement arrangements, including, but not limited to, section

105(b) of the internal revenue code, 26 USC 105, internal revenue

notice 2002-45, and internal revenue rulings 2005-24 and 2006-36.

     Sec. 9. A public employer may deduct the covered employee's or

elected public officer's portion of the cost of a medical benefit

plan from compensation due to the covered employee or elected

officer. The employer may condition eligibility for the medical

benefit plan on the employee's or elected official's authorizing

the public employer to make the deduction.

     Sec. 11. If a collective bargaining agreement or other

contract that is inconsistent with section 5 is in effect for a

group of employees of a public employer on the effective date of

this act, the requirements of section 5 do not apply to that group

of employees until the collective bargaining agreement or other

contract expires or is amended, extended, or renewed.

     Sec. 13. The requirements of section 5 apply to medical

benefit plans of all public employees to the greatest extent

consistent with constitutionally allocated powers, whether or not a

public employee is a member of a collective bargaining unit.

     Sec. 15. (1) By a 2/3 vote of its governing body, a local unit

of government may exempt itself from the requirements of this act

for the next succeeding contract period.

     (2) Another 2/3 vote of the governing body of the local unit

of government is required to extend an exemption under this section

to a new contract period after a contract for a medical benefit

plan expires or terminates or is amended, extended, or renewed.