Legislative Summary of 2009

Summary of Legislative Changes Affecting Retired School Personnel

The “long session” of the General Assembly convened January 28, 2009 and adjourned August 11, 2009. The Assembly will reconvene for the “short session”
on May 12, 2010

Appropriations:

Senate Bill 202: (Session Law 2009-451) Appropriations Act
• Appropriates $29 million for 2009-2010 and $160 million for 2010-2011 to the State Retirement Trust Fund. The $29 million moves the State contribution rate from 3.36% to 3.57%, and the $160 million appropriation moves the contribution rate from 3.57% to 4.93%.

• No Cost of Living Adjustment (COLA) for retirees or state employees.

• Appropriates $132 million for 2009-2010 and $276 million for 2010-2011 to the State Health Plan. The state will continue to pay premiums for active and retired employees: $287.20/mth for Medicare eligible retirees, up from $272; $377.22/mth for non-Medicare eligible retirees, up from $346.38.

State Health Plan

Senate Bill 287: (Session Law 2009-16) State Health Plan (SHP)
Ratified April 23, 2009, this law appropriated $250 million to cover the shortfall for 2008-2009 and outlined a comprehensive plan to fund the SHP for 2009-2011 and set new initiatives. The law:

• Eliminates the PPO Plus Option (90/10 Plan) effective July 1, 2009.
• Adds a Comprehensive Wellness Initiative for all non- Medicare eligible members: Smoking cessation plan effective July 1, 2010 and weight management plan effective July 1, 2011.
• Increases cost for certain branded prescription drugs by $5. For branded prescriptions with generic equivalents, members will pay the generic co-pay plus the difference between the cost for the generic and the branded drug. (Generics stay the same---$10)
• Requires that coverage of non-acute specialty medications, excluding cancer medications, be provided by a specialty pharmacy vendor and may impose a co-payment of 25% of the cost of the drug (not to exceed $100) per prescription per 30 day supply. Description of specialty drugs is included in the bill but must be a drug that exceeds $400 per prescription.
• Requires prescriptions to be dispensed on a 30 day supply, instead of 34 day supply.
• Eliminates (January 1, 2010) the routine eye examinations.
• In the Standard Plan (80/20) PPO: Increases the in-network annual deductible to $600 (from $300) and the annual coinsurance maximum to $2750 (from $1750). Increases the in-network primary care co-pay from $20 to $25 and the in-network urgent care co-pay from $50 to $75. Increases the in-network specialist co-pay to $60, except for mental health/substance abuse services, chiropractic services, physical, occupational and speech therapy services which will be $45. Increases the in-network and out-of–network inpatient co-pay to $200 from $150. Different amounts apply to the PPO Basic Plan (70/30).
• Clarifies ‘eligibility’ definitions/coverage
• Includes contract provisions between Plan and third party administrator and pharmacy manager and calls for independent audit.
• Creates a Blue Ribbon Task Force to review the governance of the SHP “and to make recommendations for changes that will ensure the ongoing financial stability of the Plan….”
• Sets the premium rate increases at 8.9% for 2009 and 8.9% in 2010 for those who pay for dependent coverage such as spouse/child or family.
• Maintains fiscal year plan instead of moving to a calendar year.

House Bill 1274: SHP Blue Ribbon Task Force and SHP Changes
• Makes technical changes to the Blue Ribbon Task Force (created in SB 287) and other changes to the SHP, including a provision regarding prescription drugs which states that SHP members shall pay the lesser of the copayment price or the pharmacy’s cash price to the general public for a particular prescription. Pharmacies may be removed from the pharmacy network for violation of this provision.

State Treasurer/ Retirement

• Senate 691 (Session Law 2009-283) includes the Treasurer’s Governance and Transparency Act of 2009. The Transparency Act increases the Investment Advisory Committee from five to seven members by adding two additional public members with experience in large investment programs. It also outlines how the State Treasurer must discharge her duties regarding the retirement systems and if the Treasurer’s investment authority is ever broadened by the General Assembly, the treasurer must provide an annual report on the use and results of this new authority.
• Senate Bill 703 (Session Law 2009-98) State Treasurer Investments
This law expands the set of assets in which the pension funds can invest.

• Senate Bill 658 (Session Law 2009-378) Modifies the membership of the Supplemental Retirement Board by requiring that one of the Governor’s appointments be a state or local government retiree. The law also covers retirement provisions for furloughed local governmental employees.
Retire/Rehire (Return to Work)

• The General Assembly did not extend the Return to Work provision for teachers, thus the current law allowing reemployed retirees to work exempt from the earnings cap in the NC Public Schools or ‘double-dipping’ will no longer be allowed, starting October 1, 2009. For more information visit: www.ncae.org
• House Bill 94 (Session Law 2009-11) changes the definition of retirement to clarify that unpaid volunteer service (answering phones, monitoring halls and cafeteria, etc.) in a local school administrative unit is allowable during the six months after retirement.
• Senate Bill 204 (Session Law 2009-137) allows retirees in the Teachers’ and State Employees’ Retirement System to return to full time employment as Nursing Instructors with a State-supported community college or a State-supported university and continue to receive their pension, for a maximum of three years. The law requires these retirees to have a six month break in service before being rehired. Additionally, the employing entity must certify that it has a shortage of qualified nursing instructors and has made a good faith effort to fill positions with qualified instructors who are not retirees. The law expires June 30, 2013.
(Prepared by NC Retired School Personnel—August 11, 2009)