July 16, 2009 |
2009-R-0272 | |
A COMPARISON OF THE MUNICIPAL EMPLOYEE HEALTH INSURANCE PLAN AND THE CONNECTICUT HEALTHCARE PARTNERSHIP | ||
By: Janet L. Kaminski Leduc, Senior Legislative Attorney | ||
You asked for a comparison of the Municipal Employee Health Insurance Plan (MEHIP), which exists pursuant to statute, and the Connecticut Healthcare Partnership, as established in PA 09-147, which the governor vetoed July 8, 2009.
SUMMARY
By law, the comptroller is authorized to contract with insurance carriers to procure health insurance policies for state employees, state retirees, and their dependents. The law also authorizes the comptroller to procure health insurance for municipalities, nonprofits, and other employers under the Municipal Employee Health Insurance Program (MEHIP). MEHIP, while sponsored by the state, does not permit participating groups' employees to be pooled with state employees.
PA 09-147 (vetoed) requires the comptroller to convert the state employee health insurance plan, excluding dental, to a self-insured arrangement for benefit periods beginning July 1, 2009 and later. It requires the comptroller to open enrollment in the self-insured state plan to (1) nonstate public employers (e. g. , municipalities) beginning January 1, 2010; (2) municipal-related and nonprofit employers beginning July 1, 2010; and (3) small employers beginning January 1, 2011. These employers may offer the state plan to their employees and retirees. The comptroller may open the state plan only (1) after the General Assembly receives written consent from the State Employees' Bargaining Agent Coalition (SEBAC) and (2) subject to specified requirements and conditions.
A self-insured health benefit plan is one that is not backed by an insurance policy. Rather, the plan sponsor funds and administers the benefit plan (i. e. , pays claims covered by the benefit plan from its own money, which may include money collected from plan enrollees as premiums). A plan sponsor may outsource or delegate the administration of its self-insured plan to a third-party administrator (TPA), but the TPA does not provide the employer with financial backing or assume financial risk associated with the claims. Due to federal law, state insurance benefit mandates generally do not apply to self-insured benefit plans, but the plan sponsor may choose to include some or all of them in its benefit plan.
MUNICIPAL EMPLOYEE HEALTH INSURANCE PLAN
MEHIP was authorized by law in 1996 and implemented in 1998 to help cities and towns provide health coverage for municipal employees (CGS § 5-259(i)). It was later opened to other groups. The law requires that (1) MEHIP not affect the rates the state pays for state employee health plans and (2) the participating municipalities and other groups bear all MEHIP administrative costs. The law also prohibits MEHIP from turning away any group of employees due to past or future health care costs or claims experience.
The law authorizes the state comptroller to arrange coverage under MEHIP, on a fully-insured or risk-pooled (e. g. , self-insured) basis, for (1) employees of municipalities, nonprofit corporations, community action agencies, and small employers (businesses with one to 50 employees); (2) people eligible for a health coverage tax credit under federal law; (3) members of an association of personal care assistants; and (4) people eligible for a retirement benefit from the Connecticut municipal employees' retirement system. “Municipality” includes a town, city, borough, school district, taxing district, fire district, district department of health, probate district, housing authority, regional work force development board, regional emergency telecommunications center, tourism district, flood commission, regional planning agency, or transit district.
The comptroller offers fully insured plans for these groups. Effective July 1, 2008, she also sponsors a self-insured plan for municipalities. Employers participating in MEHIP have a choice of plans from Anthem Blue Cross and Blue Shield, Health Net, and Oxford Health Plans. According to the Office of the Comptroller's MEHIP website (http: //www. ctmehip. com/snoDefault. aspx), the comptroller sponsors MEHIP, but it is administered by Stirling Benefits, Inc. , which is a third-party administrator responsible for sales, marketing, enrollment, billing, and all customer service issues.
THE CONNECTICUT HEALTHCARE PARTNERSHIP
PA 09-147 (vetoed July 8, 2009) requires the comptroller to convert the state employee health insurance plan, excluding dental, to a self-insured arrangement for benefit periods beginning July 1, 2009 and later.
It then requires the comptroller to offer employee and retiree coverage under the self-insured state plan to (1) nonstate public employers beginning January 1, 2010; (2) municipal-related and nonprofit employers beginning July 1, 2010; and (3) small employers beginning January 1, 2011. She must do this (1) after the General Assembly receives written consent from the State Employees' Bargaining Agent Coalition (SEBAC) and (2) subject to specified requirements and conditions. The comptroller does not have to offer each plan included in the state employee plan to every employer. Employers that apply and are approved for coverage must agree to benefit periods of at least two years.
The act defines “nonstate public employer” as a municipality or other state political subdivision, including a board of education, quasi-public agency, or public library. A “municipal-related employer” is a property management, food service, or school transportation business that contracts with a nonstate public employer.
A “nonprofit employer” is (1) a nonprofit corporation organized under federal law (26 USC § 501) that contracts with the state or receives a portion of its funding from a local, state, or federal government or (2) a tax-exempt organization under federal law (26 USC § 501(c)(5)).
A “small employer” is a person, firm, corporation, limited liability company, partnership, or association actively engaged in business or self-employed for at least three consecutive months that, on at least 50% of its working days during the preceding 12 months, employed 50 or fewer employees most of whom are in Connecticut. When counting the number of employees, companies that are affiliates under state law or eligible to file a combined tax return are considered one employer. The act specifies that a nonstate public employer is not a small employer.
The act requires a health care actuary to (1) review certain employer applications for coverage under the state plan and (2) certify to the comptroller in writing if the group will shift a significantly disproportionate share of its employees' medical risks to the state plan. If so, the comptroller must decline the group coverage.
The full public act summary for PA 09-147 is available online.
COMPARISON OF THE TWO PROGRAMS
The table below compares features of MEHIP and the Healthcare Partnership.
Table 1: Comparison of MEHIP and Healthcare Partnership
MEHIP |
Partnership | |
Eligible for Coverage |
Full-time employees of: ● Municipal employers ● Nonprofits ● Small employers ● Community action agencies (Part-time, temporary, and seasonal employees are not eligible. ) Individuals who are: ● Eligible for a federal health coverage tax credit ● Members of an association of personal care assistants ● Eligible for a retirement benefit from the Connecticut municipal employees' retirement system |
Employees and retirees of: ● Nonstate public employers ● Municipal-related employers ● Nonprofits ● Small employers Employers can choose to not offer coverage to part-time, temporary, or seasonal employees or retirees enrolled in Medicare. Employees that are covered through an employer's plan issued to, or in accordance with, a trust established through collective bargaining under the federal Taft-Hartley Act are not eligible to participate in the state plan. |
Relation to State Employee Plan |
None. MEHIP is a separate program that, by law, must not affect the rates the state pays for state employee health plans and cannot pool enrollees with the state employees. |
Allows groups to join the state employee plan. |
Coverage Term |
Participation is for the duration of the plan's benefit period or for such other period as mutually agreed by the group and comptroller. MEHIP plans generally run in one-year terms with an annual renewal opportunity. |
A group must agree to benefit terms of at least two years. |
Funding Arrangement |
By law, MEHIP may be offered on a fully underwritten or risk-pooled basis. MEHIP currently offers fully-insured plans to all eligible groups and people. “Enhanced MEHIP” offers a self-insured plan to municipalities. |
Self-insured plan only. |
Union Agreement |
If an employee organization represents employees, MEHIP participation must be by mutual agreement between the employer and the employee organization. |
Requires SEBAC consent to open state plan to other groups. A nonstate public employer's initial participation is a permissive subject of collective bargaining; continued participation is a mandatory subject of collective bargaining. |
Risk Exposure |
A group cannot be declined coverage based on past or future health care costs or claims experience. |
A group that seeks to offer the state plan to less than all eligible employees or retirees is subject to actuarial review. If the actuary determines the group will shift a disproportionate amount of risk to the state plan, the comptroller must deny the group's application for coverage. |
Administrative Costs |
The law prohibits the state from paying administrative costs, thus, the costs are paid by the plan participants. |
The act authorizes the comptroller to charge groups an administrative fee calculated on a per-member, per-month basis. She may also charge a fluctuating reserves fee necessary to ensure an adequate claims reserve. |
Premiums |
Monthly billing cycle. By law, rates paid by the state for its employee benefit plan cannot be adversely affected by MEHIP. By law, premiums for a small employer group may be adjusted to reflect the group's characteristics (e. g. , age, gender, industry, group size, geographic area). |
Monthly billing cycle. The premiums a group pays for the state plan must be the same as those the state pays, including any premiums state employees and retirees pay. However, the comptroller may adjust the premiums for a small employer to reflect the group's characteristics (e. g. , age, gender, industry, group size, geographic area). |
Late Payments |
Coverage may be cancelled for failure to pay premiums. |
If a group does not pay premiums on time, it is charged interest. If a nonstate public employer, the comptroller may have state money withheld from the group until past due amounts are paid or a payment arrangement is determined that is satisfactory to the state treasurer. A group's coverage may be cancelled for failure to pay premiums. |
Employer Contribution |
An employer must contribute at least 50% of the cost of coverage. |
Employees or retirees may be required to pay part of the cost of coverage. The act does not set a minimum employer contribution rate. |
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