SR 2 — TO AUTHORIZE THE INTRODUCTION OF A NONAPPROPRIATION BILL TO ESTABLISH A FUNDING MECHANISM TO ENSURE SOLVENCY OF THE STATE AND PUBLIC SCHOOL LIFE AND HEALTH INSURANCE PROGRAM.

Bill Text

• SR 2 View text Current pdf

AI-generated reading aid from the bill's amendatory text — verify against the official bill.

This bill establishes a mandatory reserve balance for the State and Public School Life and Health Insurance Program to ensure its solvency.

• 21-5-419

  Mandatory reserve balance — Funding mechanism established to maintain reserve balance — Legislative intent — Definition.

  This section introduces a funding mechanism to ensure the solvency of the insurance program.

• 21-5-419(a)(1)

  The Director of the Employee Benefits Division shall: Maintain a reserve balance to ensure the solvency of the State and Public School Life and Health Insurance Program; and Work to achieve an optimal reserve balance of fourteen percent (14%) to ensure the solvency of the program;

  It assigns responsibility to the Director for maintaining a reserve balance.

• 21-5-419(b)

  As used in this section, "reserve balance" means the amount in a fund that includes the existing balance, minus the claims that have been incurred but not reported, and calculated as a percentage of expenses for each year for the: (1) Arkansas State Employees Health Benefit Plan; or (2) Arkansas Public School Employees Health Benefit Plan.

  This defines what constitutes a reserve balance in the context of the program.

• 21-5-419(c)(1)

  Beginning in plan year 2023, the director shall take any actions necessary to achieve and maintain an optimal reserve balance of fourteen percent (14%) to ensure the solvency of the program.

  It mandates that the director must act to achieve the specified optimal reserve balance starting in 2023.

• 21-5-419(c)(2)

  An acceptable reserve balance amount is: (A) No less than twelve percent (12%) for state employees; and (B) No less than twelve percent (12%) for public school employees.

  It sets minimum acceptable reserve balance levels for both state and public school employees.

• 21-5-419(d)

  Annually by April 30, the director shall: Calculate the projected reserve balance for: (A) The remaining calendar year; and (B) The next three (3) calendar years; Determine whether the amount of revenue collected by the Employee Benefits Division is projected to satisfy the optimal reserve balance for state employees and the optimal reserve balance for public school employees established under subdivision (c)(2) of this section for the remaining calendar year; Notify the Legislative Council of the projected reserve balance for the remaining calendar year as described in subdivision (d)(1)(A) of this section; and Submit for prior approval by the Legislative Council his or her plan to achieve or maintain the optimal reserve balance.

  It requires the director to calculate and report projected reserves and plans annually.

• 21-5-419(e)

  If the director's determination under subdivision (d)(1)(A) of this section does not equal or exceed the acceptable reserve balance amount as described in subdivision (c)(2) of this section, the director shall notify the Legislative Council of the need to convene to consider providing additional funding.

  It requires action if the reserve balance does not meet acceptable levels.

• 21-5-419(f)(1)

  The Legislative Council shall review the director's determination required under subsection (e) of this section and, if additional funding is needed to maintain the acceptable reserve balance amount as described in subdivision (c)(2) of this section, may: (A) Recommend that the Governor call an extraordinary session of the General Assembly; or (B) Take further action as may be appropriate.

  It gives the Legislative Council authority to recommend extraordinary sessions if funding is needed.

• 21-5-419(f)(2)

  If, by July 30 following the Legislative Council's review of the director's determination under subdivision (f)(1) of this section, the General Assembly fails to provide funding to maintain an acceptable reserve balance amount as described in subdivision (c)(2) of this section, the director shall initiate a process to collect the required additional revenue from program participants through premium rate increases or reducing program benefits, or both, for the next plan year.

  It details consequences for failing to meet funding requirements.

• 21-5-419(g)(1)

  If the director determines that the reserve balance for state employees will exceed sixteen percent (16%) or that the reserve balance for public school employees will exceed sixteen percent (16%), with the approval of the Legislative Council, the director may elect to use the excess to directly benefit the program through lowering of premium rates for the next plan year or through expanding program benefits.

  It allows surplus reserve funds to be used to lower premiums or expand benefits.

• 21-5-419(g)(2)

  If the director does not elect under subdivision (g)(1) of this section to use the amount exceeding sixteen percent (16%) to directly benefit the program through lowering of premium rates for the next plan year or through expanding program benefits, the director shall report to the Legislative Council his or her rationale for not lowering premium rate increases for the next plan year or for not expanding program benefits.

  It requires accountability if surplus funds are not used to benefit the program.

Action History

1. February 15, 2022

   Read the third time and adopted.

2. February 14, 2022

   Read the first time, rules suspended, read the second time and placed on the calendar.

3. February 10, 2022

   Filed

Sponsors

• Jr Jimmy Hickey · Primary
• Ricky Hill · Cosponsor
• Greg Leding · Cosponsor
• Ben Gilmore · Cosponsor
• Scott Flippo · Cosponsor
• Jane English · Cosponsor
• Elliott · Cosponsor
• Jonathan Dismang · Cosponsor
• Beckham · Cosponsor
• Missy Irvin · Cosponsor
• Terry Rice · Cosponsor
• L. Chesterfield · Cosponsor
• K. Ingram · Cosponsor
• B. Sample · Cosponsor

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