MEDICAL PLAN CONTRIBUTION LIMIT                                                       S.B. 323 (S-2):

                                                                                                      FLOOR SUMMARY

Senate Bill 323 (Subsitute S-2 as reported)

Sponsor:  Senator Bruce Caswell

Committee:  Reforms, Restructuring and Reinventing

CONTENT

The bill would amend the Publicly Funded Health Insurance Contribution Act to increase the limit on a public employer's contribution to a medical benefit plan, by raising the multiplier for individual-and-spouse coverage for a medical benefit plan coverage year beginning on or after January 1, 2013, through December 31, 2013.  The multiplier would be increased from $11,000 to $13,455.

The Act sets a relative ceiling on the amount that a public employer may contribute to its medical benefit plan for employees or elected public officials.  Except as otherwise provided, a public employer may not pay more than a total amount equal to the sum of the following: $5,500 times the number of employees with single-person coverage; $11,000 times the number of employees with individual-and-spouse coverage; and $15,000 times the number of employees with family coverage.  A public employer may allocate payments for its medical benefit plan among employees and elected public officials as it sees fit.  The multipliers must be adjusted by October 1 of each year for medical benefit plan coverage years beginning the following calendar year, based on the change in the medical care component of the United States consumer price index. 

(As an alternative to the dollar-amount limit, a public employer may elect an 80% limit on its contributions to employee medical benefit plans.)

MCL 15.563                                                              Legislative Analyst:  Glenn Steffens

FISCAL IMPACT

Based on 2011 data, there are an estimated 49,500 employees enrolled in a State health plan.  Of that number, an estimated 7,900 employees are enrolled in an individual-and-spouse health care plan.  The bill would increase the cap on the State's portion for those individuals enrolled in an individual-and-spouse plan from the current $11,000 annually to $13,455 annually.  Although the State's currently negotiated contracts require the State to pay up to a maximum of 20% of an employee's health care costs instead of the capped dollar amount, if the State and employee unions negotiate to pay the capped dollar amount in the future, the State would incur higher costs. 

Using the estimated figure of 7,900 employees currently enrolled in an individual-and-spouse plan, the proposed change would increase the State's contribution by $2,455 per employee or a total of $19.4 million annually.  For the State, the GF/GP cost is estimated at 53% of the gross cost, or $10.3 million annually.

Comprehensive data do not exist to accurately calculate the potential cost to local government, school districts, and public higher education employers from this bill.  However, for a local unit of government that has chosen to pay the capped dollar amount rather than the 80% of premium cap, the bill would increase the costs for the public employer by $2,455 per employee enrolled in an individual-and-spouse plan.

Date Completed:  6-13-13                                                    Fiscal Analyst:  Joe Carrasco

This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent.