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Minnesota Legislature

Office of the Revisor of Statutes

SF 915

2nd Unofficial Engrossment - 86th Legislature (2009 - 2010) Posted on 12/26/2012 11:17pm

KEY: stricken = removed, old language.
underscored = added, new language.
1.1A bill for an act
1.2relating to insurance; requiring school districts to obtain employee health
1.3coverage through the public employees insurance program; imposing a gross
1.4premiums tax on the program; appropriating money;amending Minnesota
1.5Statutes 2008, sections 43A.316, subdivisions 9, 10, by adding subdivisions;
1.662E.02, subdivision 23; 62E.10, subdivision 1; 62E.11, subdivision 5; 297I.05,
1.7subdivisions 1, 5; 297I.15, subdivision 3.
1.8BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.9    Section 1. Minnesota Statutes 2008, section 43A.316, is amended by adding a
1.10subdivision to read:
1.11    Subd. 3a. Health improvement programs. The commissioner, with the approval
1.12of the school employee insurance committee, is authorized to plan, develop, purchase,
1.13administer, and evaluate disease management and other programs, strategies, and
1.14incentives to improve the health and health outcomes of members.

1.15    Sec. 2. Minnesota Statutes 2008, section 43A.316, subdivision 9, is amended to read:
1.16    Subd. 9. Insurance trust fund. (a) The insurance trust fund in the state treasury
1.17consists of deposits of the premiums received from employers participating in the
1.18program and transfers before July 1, 1994, from the excess contributions holding account
1.19established by section 353.65, subdivision 7. All money in the fund is appropriated to
1.20the commissioner to pay insurance premiums, approved claims, refunds, administrative
1.21costs, and other related service costs, including costs incurred under chapters 62E and
1.22297I in connection with the school employee insurance program. Premiums paid by
1.23employers to the fund are exempt from the taxes imposed by chapter 297I, except as
1.24described in paragraph (b). The commissioner shall reserve an amount of money to cover
2.1the estimated costs of claims incurred but unpaid. The State Board of Investment shall
2.2invest the money according to section 11A.24. Investment income and losses attributable
2.3to the fund must be credited to the fund.
2.4(b) Notwithstanding paragraph (a), premium revenues collected from the school
2.5employee insurance program, described in subdivisions 12 and 13, are not exempt from the
2.6taxes imposed under section 297I.05, subdivisions 1, paragraph (b); and 5, paragraph (b).

2.7    Sec. 3. Minnesota Statutes 2008, section 43A.316, subdivision 10, is amended to read:
2.8    Subd. 10. Exemption. (a) The public employee insurance program and, where
2.9applicable, the employers participating in it are exempt from chapters 60A, 62A, 62C,
2.1062D, 62E, and 62H, section 471.617, subdivisions 2 and 3, and the bidding requirements
2.11of section 471.6161.
2.12(b) Notwithstanding paragraph (a), the school employee insurance program,
2.13described in subdivisions 12 and 13, is a contributing member of the Minnesota
2.14Comprehensive Health Association and must pay assessments made by the association on
2.15the premium revenue attributed to the school employee insurance program, prorated as
2.16provided in section 62E.11, subdivision 5, paragraph (b).

2.17    Sec. 4. Minnesota Statutes 2008, section 43A.316, is amended by adding a subdivision
2.18to read:
2.19    Subd. 11. Definitions. (a) For purposes of subdivisions 11 to 16, the terms defined
2.20in this subdivision have the meanings given.
2.21(b) "Eligible employee" means an employee of a school employer, a dependent of
2.22such an employee, a retiree, or other person, who is eligible for health insurance coverage
2.23under the school employer's plan.
2.24(c) "School Employee Insurance Committee" means the committee created in
2.25subdivision 14.
2.26(d) "School employer" means a school district as defined in section 120A.05, service
2.27cooperative as defined in section 123A.21, intermediate district as defined in section
2.28136D.01, Cooperative Center for Vocational Education as defined in section 123A.22,
2.29regional management information center as defined in section 123A.23, or an education
2.30unit organized under a joint powers agreement under section 471.59.

2.31    Sec. 5. Minnesota Statutes 2008, section 43A.316, is amended by adding a subdivision
2.32to read:
3.1    Subd. 12. School employee insurance program. The commissioner shall develop
3.2and administer within the public employees insurance program a separately rated and
3.3administered program for eligible employees of school employers, to be called the
3.4school employee insurance program. The initial offerings shall be the PEIP Advantage,
3.5Advantage Value, and Advantage HSA plans offered by the public employee insurance
3.6program. Health coverage offered through the school employee insurance program shall
3.7be made available beginning January 1, 2011.

3.8    Sec. 6. Minnesota Statutes 2008, section 43A.316, is amended by adding a subdivision
3.9to read:
3.10    Subd. 13. Enrollment; school employee insurance program. (a) A school
3.11employer that provides health coverage to eligible employees or contributes money to pay
3.12for all or part of the cost of health coverage for eligible employees, must purchase such
3.13coverage through the school employee insurance program under subdivision 12. School
3.14employers described in paragraph (b) may opt out as described in paragraphs (b) to (e).
3.15(b) Each exclusive representative of employees of a school employer which, on
3.16January 1, 2010, was individually self-insured or self-insured as a group shall determine
3.17whether the employees it represents will participate in the school employee insurance
3.18program, in the same manner described in subdivision 5, paragraph (b). Paragraphs (c),
3.19(d), and (e) below apply only to school employees of the school employers described in
3.20this paragraph.
3.21(c) School employees not represented by an exclusive representative may enter
3.22the school employee insurance program in the same manner described in subdivision 5,
3.23paragraph (c).
3.24(d) School employees who do not enter the program upon first becoming eligible
3.25for participation are ineligible to participate for four years and must be pooled and rated
3.26separately from the other enrollees in the school employee insurance program for the
3.27first four years after entering the program. This paragraph does not apply to a school
3.28employee upon later becoming a member of a school employee group that has not
3.29declined participation.
3.30(e) The decision of an exclusive representative of school employees or, in the case of
3.31unorganized employees, the decision of a school district, to enter into the school employee
3.32insurance program is irrevocable and applies to all future years.
3.33(f) Health coverage provided under the school employee insurance program to a
3.34retired employee of a school district, or to a dependent of the retired employee, must not
4.1be reduced as compared to the coverage to which the retired employee or dependent was
4.2entitled prior to enrollment in the school employee insurance program.

4.3    Sec. 7. Minnesota Statutes 2008, section 43A.316, is amended by adding a subdivision
4.4to read:
4.5    Subd. 14. School Employee Insurance Committee. (a) Notwithstanding any other
4.6provision of law, all plan design decisions, including all pilot or demonstration programs
4.7in which school employees participate, must first be developed by the School Employee
4.8Insurance Committee in consultation with the commissioner or the commissioner's
4.9designee and other consultants as the committee sees fit. This paragraph does not apply to
4.10the initial offerings specified in subdivision 12.
4.11(b) The committee must be composed of 14 members who represent school
4.12district employees and employers in equal number. The employee representatives shall
4.13be appointed as follows: four shall be appointed by Education Minnesota, one shall be
4.14appointed by the Service Employees International Union, one shall be appointed by the
4.15American Federation of State, County, and Municipal Employees, and one shall be
4.16appointed by the Minnesota School Employees Association. The seven school employer
4.17representatives who serve on the School Employee Insurance Committee must be
4.18appointed by the Minnesota School Boards Association. Members of the committee shall
4.19be appointed no later than August 1, 2009, and shall serve at the will of the appointing
4.20organization.
4.21(c) The School Employee Insurance Committee members are eligible for
4.22compensation and expense reimbursement under section 15.0575, subdivision 3. In
4.23addition, the actual salary lost by a committee member or cost charged by an employer of
4.24a committee member for time missed while performing the duties of a committee member
4.25must be reimbursed to the committee member.

4.26    Sec. 8. Minnesota Statutes 2008, section 43A.316, is amended by adding a subdivision
4.27to read:
4.28    Subd. 15. Reinsurance. The commissioner may, on behalf of the program,
4.29participate in an insured or self-insured reinsurance pool.

4.30    Sec. 9. Minnesota Statutes 2008, section 43A.316, is amended by adding a subdivision
4.31to read:
4.32    Subd. 16. Nonidentifiable aggregate claims data from past coverage. Upon
4.33request by the commissioner, entities that are providing or have provided coverage to
5.1eligible employees of school employers within two years before the effective date of
5.2this section, shall provide to the commissioner at no charge nonidentifiable aggregate
5.3claims data for that coverage. The information must include data relating to employee
5.4group benefit sets, demographics, and claims experience. Notwithstanding section 13.203,
5.5Minnesota service cooperatives must comply with this subdivision.

5.6    Sec. 10. Minnesota Statutes 2008, section 62E.02, subdivision 23, is amended to read:
5.7    Subd. 23. Contributing member. "Contributing member" means those companies
5.8regulated under chapter 62A and offering, selling, issuing, or renewing policies or
5.9contracts of accident and health insurance; health maintenance organizations regulated
5.10under chapter 62D; nonprofit health service plan corporations regulated under chapter
5.1162C; community integrated service networks regulated under chapter 62N; fraternal
5.12benefit societies regulated under chapter 64B; the Minnesota employees insurance
5.13program established in section 43A.317, effective July 1, 1993; and joint self-insurance
5.14plans regulated under chapter 62H; and the school employee insurance program created
5.15under section 43A.316. For the purposes of determining liability of contributing members
5.16pursuant to section 62E.11 payments received from or on behalf of Minnesota residents
5.17for coverage by a health maintenance organization or, a community integrated service
5.18network, or the school employee insurance program shall be considered to be accident
5.19and health insurance premiums.

5.20    Sec. 11. Minnesota Statutes 2008, section 62E.10, subdivision 1, is amended to read:
5.21    Subdivision 1. Creation and membership; tax exemption. (a) There is established
5.22a Comprehensive Health Association to promote the public health and welfare of the state
5.23of Minnesota with membership consisting of all insurers; self-insurers; fraternals; joint
5.24self-insurance plans regulated under chapter 62H; the Minnesota employees insurance
5.25program established in section 43A.317, effective July 1, 1993; the school employee
5.26insurance program created under section 43A.316, subdivision 12; health maintenance
5.27organizations; and community integrated service networks licensed or authorized to do
5.28business in this state.
5.29(b) The Comprehensive Health Association is exempt from the taxes imposed under
5.30chapter 297I and any other laws of this state and all property owned by the association
5.31is exempt from taxation.

5.32    Sec. 12. Minnesota Statutes 2008, section 62E.11, subdivision 5, is amended to read:
6.1    Subd. 5. Allocation of losses. (a) Each contributing member of the association shall
6.2share the losses due to claims expenses of the comprehensive health insurance plan for
6.3plans issued or approved for issuance by the association, and shall share in the operating
6.4and administrative expenses incurred or estimated to be incurred by the association
6.5incident to the conduct of its affairs. Claims expenses of the state plan which exceed
6.6the premium payments allocated to the payment of benefits shall be the liability of the
6.7contributing members. Contributing members shall share in the claims expense of the
6.8state plan and operating and administrative expenses of the association in an amount equal
6.9to the ratio of the contributing member's total accident and health insurance premium,
6.10received from or on behalf of Minnesota residents as divided by the total accident and
6.11health insurance premium, received by all contributing members from or on behalf of
6.12Minnesota residents, as determined by the commissioner. Payments made by the state
6.13to a contributing member for medical assistance, MinnesotaCare, or general assistance
6.14medical care services according to chapters 256, 256B, and 256D shall be excluded when
6.15determining a contributing member's total premium.
6.16    (b) In making the allocation of losses provided in paragraph (a) in each future year,
6.17the association's assessment against the school employee insurance program must be
6.18based on premiums received by the school employee insurance program in that future year
6.19from the school employers that, on May 1, 2009, were receiving health care coverage
6.20from a contributing member of the association. The association shall assess the premiums
6.21paid in each future year by those employers at the same rate as premiums paid to other
6.22members of the association. For purposes of this calculation, premiums of the program
6.23used must be net of rate credits and retroactive rate refunds on the same basis as the
6.24premiums of other association members.

6.25    Sec. 13. Minnesota Statutes 2008, section 297I.05, subdivision 1, is amended to read:
6.26    Subdivision 1. Domestic and foreign companies. (a) Except as otherwise provided
6.27in this section, a tax is imposed on every domestic and foreign insurance company. The
6.28rate of tax is equal to two percent of all gross premiums less return premiums on all
6.29direct business received by the insurer or agents of the insurer in Minnesota, in cash or
6.30otherwise, during the year.
6.31(b) A tax is imposed on the school employee insurance program enacted under
6.32section 43A.316, subdivision 12. The rate of tax imposed for each year shall be the rate
6.33specified in paragraph (a) and shall be assessed upon all gross premiums less return
6.34premiums on all direct business received in that year, in cash or otherwise, by the school
6.35employees insurance program from school employers that, on May 1, 2009, were receiving
7.1health care coverage from an entity that is required to pay the tax under paragraph (a). The
7.2commissioner shall assess the premiums paid to the school employee insurance program
7.3by those employers at the same rate paid by entities taxed under paragraph (a).

7.4    Sec. 14. Minnesota Statutes 2008, section 297I.05, subdivision 5, is amended to read:
7.5    Subd. 5. Health maintenance organizations, nonprofit health service plan
7.6corporations, and community integrated service networks, and the school employee
7.7insurance program. (a) A tax is imposed on health maintenance organizations,
7.8community integrated service networks, and nonprofit health care service plan
7.9corporations. The rate of tax is equal to one percent of gross premiums less return
7.10premiums on all direct business received by the organization, network, or corporation or
7.11its agents in Minnesota, in cash or otherwise, in the calendar year.
7.12(b) A tax is imposed on the school employee insurance program created under
7.13section 43A.316, subdivision 12. The rate of tax imposed for each year shall be the
7.14rate specified in paragraph (a) and shall be assessed upon gross premiums less return
7.15premiums received by the school employee insurance program in that calendar year from
7.16school employers that, on May 1, 2009, were receiving health care coverage from an
7.17entity that is required to pay the tax under paragraph (a). The commissioner shall assess
7.18the premiums paid in each year by those employers at the same rate as premiums paid by
7.19entities taxed under paragraph (a).
7.20(c) The commissioner shall deposit all revenues, including penalties and interest,
7.21collected under this chapter from health maintenance organizations, community integrated
7.22service networks, and nonprofit health service plan corporations, and the school employee
7.23insurance program in the health care access fund. Refunds of overpayments of tax
7.24imposed by this subdivision must be paid from the health care access fund. There is
7.25annually appropriated from the health care access fund to the commissioner the amount
7.26necessary to make any refunds of the tax imposed under this subdivision.

7.27    Sec. 15. Minnesota Statutes 2008, section 297I.15, subdivision 3, is amended to read:
7.28    Subd. 3. Public employees insurance program. Premiums paid to the public
7.29employees insurance program under section 43A.316 are exempt from the taxes imposed
7.30under this chapter, except for premiums paid to the school employee insurance program as
7.31provided in section 297I.05, subdivisions 1, paragraph (b); and 5, paragraph (b).

7.32    Sec. 16. APPROPRIATION.
8.1    (a) $425,000 is appropriated from the insurance trust fund under Minnesota Statutes,
8.2section 43A.316, subdivision 9, to the commissioner of Minnesota Management and
8.3Budget for fiscal year 2010 and $541,000 for fiscal year 2011 for the administrative
8.4responsibilities created in this act.
8.5    (b) The commissioner of management and budget shall impose an enrollment
8.6fee upon the premium charged for the first three months of coverage under the school
8.7employee insurance program created in this act in the amount of $106,000 to cover the
8.8costs incurred by the commissioner under paragraph (a). The commissioner shall deposit
8.9the enrollment fees in the insurance trust fund.

8.10    Sec. 17. EFFECTIVE DATE.
8.11Sections 1 to 16 are effective for coverage to begin January 1, 2011.