1.1 	A bill for an act
1.2 	relating to insurance; requiring school districts to obtain employee health 
1.3 	coverage through the public employees insurance program; appropriating money;
1.4 	amending Minnesota Statutes 2008, sections 43A.316, subdivisions 9, 10, by 
1.5 	adding subdivisions; 62E.02, subdivision 23; 62E.10, subdivision 1; 62E.11, 
1.6 	subdivision 5; 297I.05, subdivision 5; 297I.15, subdivision 3.
1.7 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.8 	Section 1. Minnesota Statutes 2008, section 43A.316, is amended by adding a 
1.9 	subdivision to read:
1.10 		Subd. 3a.Health improvement programs. The commissioner, with the approval 
1.11 	of the school employee insurance committee, is authorized to plan, develop, purchase, 
1.12 	administer, and evaluate disease management and other programs, strategies, and 
1.13 	incentives to improve the health and health outcomes of members.

1.14 	Sec. 2. Minnesota Statutes 2008, section 43A.316, subdivision 9, is amended to read:
1.15 		Subd. 9.Insurance trust fund. (a) The insurance trust fund in the state treasury 
1.16 	consists of deposits of the premiums received from employers participating in the 
1.17 	program and transfers before July 1, 1994, from the excess contributions holding account 
1.18 	established by section 353.65, subdivision 7. All money in the fund is appropriated to 
1.19 	the commissioner to pay insurance premiums, approved claims, refunds, administrative 
1.20 	costs, and other related service costs, including costs incurred under chapters 62E and 
1.21 	297I in connection with the school employee insurance program. Premiums paid by 
1.22 	employers to the fund are exempt from the taxes imposed by chapter 297I, except as 
1.23 	described in paragraph (b). The commissioner shall reserve an amount of money to cover 
1.24 	the estimated costs of claims incurred but unpaid. The State Board of Investment shall 
2.1 	invest the money according to section 11A.24. Investment income and losses attributable 
2.2 	to the fund must be credited to the fund. 
2.3 	(b) Notwithstanding paragraph (a), premium revenues collected from the school 
2.4 	employee insurance program, described in subdivisions 12 and 13, are not exempt from 
2.5 	the taxes imposed under section 297I.05, subdivision 5, paragraph (b).

2.6 	Sec. 3. Minnesota Statutes 2008, section 43A.316, subdivision 10, is amended to read:
2.7 		Subd. 10.Exemption. (a) The public employee insurance program and, where 
2.8 	applicable, the employers participating in it are exempt from chapters 60A, 62A, 62C, 
2.9 	62D, 62E, and 62H, section 471.617, subdivisions 2 and 3, and the bidding requirements 
2.10 	of section 471.6161. 
2.11 	(b) Notwithstanding paragraph (a), the school employee insurance program, 
2.12 	described in subdivisions 12 and 13, is a contributing member of the Minnesota 
2.13 	Comprehensive Health Association and must pay assessments made by the association on 
2.14 	the premium revenue attributed to the school employee insurance program, prorated as 
2.15 	provided in section 62E.11, subdivision 5, paragraph (b).

2.16 	Sec. 4. Minnesota Statutes 2008, section 43A.316, is amended by adding a subdivision 
2.17 	to read:
2.18 		Subd. 11.Definitions. (a) For purposes of subdivisions 11 to 14, the terms defined 
2.19 	in this subdivision have the meanings given.
2.20 	(b) "Eligible employee" means an employee of a school employer, a dependent of 
2.21 	such an employee, a retiree, or other person, who is eligible for health insurance coverage 
2.22 	under the school employer's plan.
2.23 	(c) "School Employee Insurance Committee" means the committee created in 
2.24 	subdivision 14.
2.25 	(d) "School employer" means a school district as defined in section  120A.05, service 
2.26 	cooperative as defined in section  123A.21, intermediate district as defined in section 
2.27 	136D.01, Cooperative Center for Vocational Education as defined in section  123A.22, 
2.28 	regional management information center as defined in section  123A.23, or an education 
2.29 	unit organized under a joint powers agreement under section 471.59.

2.30 	Sec. 5. Minnesota Statutes 2008, section 43A.316, is amended by adding a subdivision 
2.31 	to read:
2.32 		Subd. 12.School employee insurance program. The commissioner shall develop 
2.33 	and administer within the public employees insurance program a separately rated and 
3.1 	administered program for eligible employees of school employers, to be called the 
3.2 	school employee insurance program. The initial offerings shall be the PEIP Advantage, 
3.3 	Advantage Value, and Advantage HSA plans offered by the public employee insurance 
3.4 	program. Health coverage offered through the school employee insurance program shall 
3.5 	be made available beginning January 1, 2011.

3.6 	Sec. 6. Minnesota Statutes 2008, section 43A.316, is amended by adding a subdivision 
3.7 	to read:
3.8 		Subd. 13.Enrollment; school employee insurance program. (a) A school 
3.9 	employer that provides health coverage to eligible employees or contributes money to pay 
3.10 	for all or part of the cost of health coverage for eligible employees, must purchase such 
3.11 	coverage through the school employee insurance program under subdivision 12. School 
3.12 	employers described in paragraph (b) may opt-out as described in paragraphs (b) to (e).
3.13 	(b) Each exclusive representative of employees of a school employer that, on 
3.14 	July 1, 2009, was individually self-insured shall determine whether the employees it 
3.15 	represents will participate in the school employee insurance program, in the same manner 
3.16 	described in subdivision 5, paragraph (b). Paragraphs (c), (d), and (e) apply only to school 
3.17 	employees of the school employers described in this paragraph.
3.18 	(c) School employees not represented by an exclusive representative may enter 
3.19 	the school employee insurance program in the same manner described in subdivision 5, 
3.20 	paragraph (c).
3.21 	(d) School employees who do not enter the program upon first becoming eligible 
3.22 	for participation are ineligible to participate for four years and must be pooled and rated 
3.23 	separately from the other enrollees in the school employee insurance program for the 
3.24 	first four years after entering the program. This paragraph does not apply to a school 
3.25 	employee upon later becoming a member of a school employee group that has not 
3.26 	declined participation.
3.27 	(e) The decision of an exclusive representative of school employees or, in the case of 
3.28 	unorganized employees, the decision of a school district, to enter into the school employee 
3.29 	insurance program is irrevocable and applies to all future years.

3.30 	Sec. 7. Minnesota Statutes 2008, section 43A.316, is amended by adding a subdivision 
3.31 	to read:
3.32 		Subd. 14.School Employee Insurance Committee. (a) Notwithstanding any other 
3.33 	provision of law, all plan design decisions, including all pilot or demonstration programs 
3.34 	in which school employees participate, must first be developed by the School Employee 
4.1 	Insurance Committee in consultation with the commissioner or the commissioner's 
4.2 	designee and other consultants as the committee sees fit. This paragraph does not apply to 
4.3 	the initial offerings specified in subdivision 12.
4.4 	(b) The committee must be composed of 14 members who represent school 
4.5 	district employees and employers in equal number. The employee representatives shall 
4.6 	be appointed as follows: four shall be appointed by Education Minnesota, one shall be 
4.7 	appointed by the Service Employees International Union, one shall be appointed by the 
4.8 	American Federation of State, County, and Municipal Employees, and one shall be 
4.9 	appointed by the Minnesota School Employees Association. The seven school employer 
4.10 	representatives who serve on the School Employee Insurance Committee must be 
4.11 	appointed by the Minnesota School Boards Association. Members of the committee 
4.12 	shall serve at the will of the appointing organization. The committee will select a chair 
4.13 	from its membership.
4.14 	(c) The School Employee Insurance Committee members are eligible for 
4.15 	compensation and expense reimbursement under section 15.0575, subdivision 3. In 
4.16 	addition, if actual salary is lost by a committee member, or if a cost is charged by an 
4.17 	employer of a committee member for time missed while performing the duties of a 
4.18 	committee member, then the commissioner shall reimburse the member for the lost salary 
4.19 	or the cost from funds appropriated for the operations of the committee. 
4.20 	(d) The commissioner shall provide the necessary meeting space and staff support 
4.21 	for the committee.

4.22 	Sec. 8. Minnesota Statutes 2008, section 43A.316, is amended by adding a subdivision 
4.23 	to read:
4.24 		Subd. 15.Reinsurance. The commissioner shall, on behalf of the program, 
4.25 	participate in an insured or self-insured reinsurance pool for the first three years of the 
4.26 	program and may continue to participate in a reinsurance pool after the first three years.

4.27 	Sec. 9. Minnesota Statutes 2008, section 62E.02, subdivision 23, is amended to read:
4.28 		Subd. 23.Contributing member. "Contributing member" means those companies 
4.29 	regulated under chapter 62A and offering, selling, issuing, or renewing policies or 
4.30 	contracts of accident and health insurance; health maintenance organizations regulated 
4.31 	under chapter 62D; nonprofit health service plan corporations regulated under chapter 
4.32 	62C; community integrated service networks regulated under chapter 62N; fraternal 
4.33 	benefit societies regulated under chapter 64B; the Minnesota employees insurance 
4.34 	program established in section 43A.317, effective July 1, 1993; and joint self-insurance 
5.1 	plans regulated under chapter 62H; and the school employee insurance program created 
5.2 	under section 43A.316. For the purposes of determining liability of contributing members 
5.3 	pursuant to section 62E.11 payments received from or on behalf of Minnesota residents 
5.4 	for coverage by a health maintenance organization or, a community integrated service 
5.5 	network, or the school employee insurance program shall be considered to be accident 
5.6 	and health insurance premiums.  

5.7 	Sec. 10. Minnesota Statutes 2008, section 62E.10, subdivision 1, is amended to read:
5.8 		Subdivision 1.Creation; tax exemption. There is established a Comprehensive 
5.9 	Health Association to promote the public health and welfare of the state of Minnesota with 
5.10 	membership consisting of all insurers; self-insurers; fraternals; joint self-insurance plans 
5.11 	regulated under chapter 62H; the Minnesota employees insurance program established 
5.12 	in section 43A.317, effective July 1, 1993; the school employee insurance program 
5.13 	created under section 43A.316, subdivision 12; health maintenance organizations; and 
5.14 	community integrated service networks licensed or authorized to do business in this 
5.15 	state. The Comprehensive Health Association is exempt from the taxes imposed under 
5.16 	chapter 297I and any other laws of this state and all property owned by the association 
5.17 	is exempt from taxation.  

5.18 	Sec. 11. Minnesota Statutes 2008, section 62E.11, subdivision 5, is amended to read:
5.19 		Subd. 5.Allocation of losses. (a) Each contributing member of the association shall 
5.20 	share the losses due to claims expenses of the comprehensive health insurance plan for 
5.21 	plans issued or approved for issuance by the association, and shall share in the operating 
5.22 	and administrative expenses incurred or estimated to be incurred by the association 
5.23 	incident to the conduct of its affairs. Claims expenses of the state plan which exceed 
5.24 	the premium payments allocated to the payment of benefits shall be the liability of the 
5.25 	contributing members. Contributing members shall share in the claims expense of the 
5.26 	state plan and operating and administrative expenses of the association in an amount equal 
5.27 	to the ratio of the contributing member's total accident and health insurance premium, 
5.28 	received from or on behalf of Minnesota residents as divided by the total accident and 
5.29 	health insurance premium, received by all contributing members from or on behalf of 
5.30 	Minnesota residents, as determined by the commissioner. Payments made by the state 
5.31 	to a contributing member for medical assistance, MinnesotaCare, or general assistance 
5.32 	medical care services according to chapters 256, 256B, and 256D shall be excluded when 
5.33 	determining a contributing member's total premium.
6.1 	(b) In making the allocation of losses provided in paragraph (a) in each future year, 
6.2 	the association's assessment against the school employee insurance program must be 
6.3 	based on premiums received by the school employee insurance program in that future year 
6.4 	from the school employers that, on May 1, 2009, were receiving health care coverage 
6.5 	from a contributing member of the association. The association shall assess the premiums 
6.6 	paid in each future year by those employers at the same rate as premiums paid to other 
6.7 	members of the association. For purposes of this calculation, premiums of the program 
6.8 	used must be net of rate credits and retroactive rate refunds on the same basis as the 
6.9 	premiums of other association members.

6.10 	Sec. 12. Minnesota Statutes 2008, section 297I.05, subdivision 5, is amended to read:
6.11 		Subd. 5.Health maintenance organizations, nonprofit health service plan 
6.12 	corporations, and community integrated service networks, and the school employee 
6.13 	insurance program. (a) A tax is imposed on health maintenance organizations, 
6.14 	community integrated service networks, and nonprofit health care service plan 
6.15 	corporations. The rate of tax is equal to one percent of gross premiums less return 
6.16 	premiums on all direct business received by the organization, network, or corporation or 
6.17 	its agents in Minnesota, in cash or otherwise, in the calendar year.
6.18 	(b)  A tax is imposed on the school employee insurance program created under 
6.19 	section 43A.316, subdivision 12. The rate of tax imposed for each year shall be the 
6.20 	rate specified in paragraph (a) and shall be assessed upon gross premiums less return 
6.21 	premiums received by the school employee insurance program in that calendar year from 
6.22 	school employers that, on May 1, 2009, were receiving health care coverage from an 
6.23 	entity that is required to pay the tax under paragraph (a). The commissioner shall assess 
6.24 	the premiums paid in each year by those employers at the same rate as premiums paid by 
6.25 	entities taxed under paragraph (a).
6.26 	(c) The commissioner shall deposit all revenues, including penalties and interest, 
6.27 	collected under this chapter from health maintenance organizations, community integrated 
6.28 	service networks, and nonprofit health service plan corporations, and the school employee 
6.29 	insurance program in the health care access fund. Refunds of overpayments of tax 
6.30 	imposed by this subdivision must be paid from the health care access fund. There is 
6.31 	annually appropriated from the health care access fund to the commissioner the amount 
6.32 	necessary to make any refunds of the tax imposed under this subdivision.

6.33 	Sec. 13. Minnesota Statutes 2008, section 297I.15, subdivision 3, is amended to read:
7.1 		Subd. 3.Public employees insurance program. Premiums paid to the public 
7.2 	employees insurance program under section 43A.316 are exempt from the taxes imposed 
7.3 	under this chapter, except for premiums paid to the school employee insurance program as 
7.4 	provided in section 297I.05, subdivision 5, paragraph (b). 

7.5 	Sec. 14. APPOINTMENTS TO SCHOOL EMPLOYEE INSURANCE 
7.6 	COMMITTEE; FIRST MEETING.
 7.7 	The appointing authorities under Minnesota Statutes, section 43A.316, subdivision 
7.8 	14, shall complete their initial appointments no later than August 1, 2009. The 
7.9 	commissioner of finance, or the commissioner's designee, shall convene the first meeting 
7.10 	of the school employee insurance committee within 30 days after determining that (1) 
7.11 	an amendment or change to the coverage offered under Minnesota Statutes, section 
7.12 	43A.316, subdivision 12, is necessary; or (2) advice from the committee concerning the 
7.13 	administration of the coverage would assist the commissioner.

7.14 	Sec. 15. APPROPRIATION.
 7.15 	(a) The commissioner of Minnesota management and budget shall use funds 
7.16 	available in the insurance trust fund under section 43A.316, subdivision 9, in the form of 
7.17 	temporary funding to pay for the administrative start-up costs necessary under this act in 
7.18 	the amount of $489,000 for fiscal year 2010 and $736,000 for fiscal year 2011. In addition 
7.19 	to the amounts of temporary funding, the commissioner shall determine the amount of 
7.20 	interest lost to the insurance trust fund as a result of the temporary funding.
7.21 	(b) The commissioner of Minnesota management and budget shall impose an 
7.22 	enrollment fee upon the premium charged for the first three months of coverage under 
7.23 	the school employee insurance program created in this act sufficient to repay to the 
7.24 	insurance trust fund the loans provided to cover the costs incurred by the commissioner 
7.25 	under paragraph (a), plus foregone interest to the insurance trust fund, as determined 
7.26 	under paragraph (a). The commissioner shall deposit the enrollment fees in the insurance 
7.27 	trust fund.

7.28 	Sec. 16. EFFECTIVE DATE.
 7.29 	Sections 1 to 6 and 8 to 12 are effective for coverage to begin January 1, 2011. 
7.30 	Sections 7 and 13 are effective August 1, 2009.