The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Governmental Oversight and Accountability
BILL: SPB 7022
INTRODUCER: For consideration by the Governmental Oversight and Accountability Committee
SUBJECT: State Group Health Insurance Program
DATE: January 12, 2022
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Limones-Borja McVaney Pre-meeting
I. Summary:
SPB 7022 makes various changes to the State Group Insurance Program (SGI Program)
administered by the Department of Management Services (DMS) to provide health insurance
benefits to state employees. Specifically, the bill requires the DMS to provide an online
education program relating to all health insurance plans offered under the SGI Program, and to
contract with the State Board Administration to provide at least two hours of tax and financial
education relating to retirement and health care planning to enrollees. The bill establishes a
minimum monthly state contribution into a member’s health savings account whose annual rate
of pay is less than $38,000. The bill expands the preventative care benefits for high deductible
health plans offered in the SGI Program.
The impact on state revenues and expenditures is unknown at this time. The DMS will incur
costs implementing the online education program and the tax and financial education programs.
The State Employee Health Insurance Trust Fund will incur higher costs associated with higher
contributions into the health savings accounts as well higher costs associated with the trust fund
covering additional preventative care benefits for participants in the high deductible health plans.
However, the purpose of the bill is to encourage higher participation in the high deductible health
insurance plans which have historically experienced lower claims, potentially resulting in overall
savings for the SGI Program.
The bill takes effect July 1, 2022.
II. Present Situation:
State Group Insurance Program
Overview
The State Group Insurance Program (SGI Program) is created by s. 110.123, F.S., and is
administered by the Division of State Group Insurance (DSGI) within the Department of
Management Services (DMS). The SGI Program is an optional benefit for all state employees
REVISED: BILL: SPB 7022 Page 2
including all state agencies, state universities, the court system, and the Legislature. The SGI
Program health, life, dental, vision, disability, and other supplemental insurance benefits.
State Health Insurance Plans
The SGI Program provides four options for employees and retirees to choose as their health plan:
The standard Preferred Provider Organization (PPO) plan, administered by Florida Blue.
o This plan allows enrollees to receive care from any doctor or health care provider,
although when using the PPO the cost is lower.
1
o In this plan enrollees have a deductible they must meet before the plan pays towards the
cost of their healthcare services, except for most preventive care services.
2
The high deductible PPO plan, administered by Florida Blue.
o This plan has a higher deductible, and once you meet the deductible enrollees pay
coinsurance on the health care services they receive.
3
o This plan comes with a health savings account (HSA).
The standard health maintenance organization (HMO) plans.
4
o This plan has no deductible, enrollees pay a copayment once they receive care from
network providers.
5
The high deductible HMO plans.
6
o This plan has a higher deductible, and once you meet the deductible enrollees pay
coinsurance on the health care services they receive.
7
Pharmacy Benefit
The SGI Program also has a pharmacy benefit for members of the plan. The SGI Program covers
all federal legend drugs (open formulary) for covered medical conditions, and employs very
limited utilization review and clinical review for traditional or specialty prescription drugs. The
DMS contracts with CVS/Caremark, a pharmacy benefits manager, to administer the
Prescription Drug Plan.
8
Health Savings Accounts
A health savings account (HSA) is an account associated with a high deductible health plan
(HDHP) that allows the participant to use pretax dollars to pay a portion of the cost for eligible
medical, prescription, dental or vision care services not covered by the insurance plan.
9
To open
1
myBenefits, Health Insurance Plans, https://www.mybenefits.myflorida.com/health/health_insurance_plans (last visited
January 9, 2022).
2
Id.
3
Id.
4
These are provided by Aetna, AvMed, Capital Health Plan, and UnitedHealthcare. One of these HMO plans is offered in
each county in the State of Florida.
5
See Supra note 1.
6
See Supra note 4.
7
Id.
8
myBenefits, Prescription Drug Plan,
https://www.mybenefits.myflorida.com/health/health_insurance_plans/prescription_drug_plan (last viewed January 6, 2022).
9
myBenefits, Health Savings Account,
https://www.mybenefits.myflorida.com/health/savings_and_spending_accounts/health_savings_account (last viewed
January 9, 2022). BILL: SPB 7022 Page 3
up an HSA, an eligible employee must first enroll into a HDHP.
10
Once enrolled online into a
HDHP, People First will automatically open an HSA.
11
The state contributes pretax money into
the employee’s HSA each month to pay for eligible health expenses.
12
For fiscal year 2021-2022,
the state contributes $41.66 monthly for a member electing single coverage, and $83.33 monthly
a member electing family coverage.
13
Any unused funds in the HSA carry over each year. The
funds in a member’s HSA remains even after the member terminates employment with the
state.
14
Eligible Employees
The SGI Program is open to the following individuals:
All state officers;
All state employees paid from “salaries and benefits” appropriation categories, regardless of
the number of hours worked;
Retired state officers and state employees;
Surviving spouses of deceased state officers and state employees;
Certain terminated state officers and state employees; and
Certain state employees paid from “other-personal-services” (OPS) appropriation categories.
For OPS employees hired after April 1, 2013, to be eligible to participate in the health insurance
program, the employee must:
15
Be reasonably expected to work an average of at least 30 hours per week; and
Have worked an average of at least 30 hours per week during the person’s measurement
period (which is 12 consecutive months
16
of employment).
State Employee Health Insurance Program
Health Insurance Premiums and Revenues
The health insurance benefit for active employees has premium rates for single, spouse
program,
17
or family coverage regardless of plan selection. These premiums cover both medical
and pharmacy claims. For Fiscal Year 2022-2023, the SGI Program revenue is estimated to be
roughly $2.9 billion.
18
The state will contribute $2.2 billion, active employees will contribute
$170 million, retirees and Consolidated Omnibus Budget Reconciliation Act (COBRA)
participants will contribute $240 million from premiums, and lastly there will be an additional
$260 million from other revenue.
19
10
myBenefits, Savings and Spending Accounts,
https://www.mybenefits.myflorida.com/health/savings_and_spending_accounts (last viewed January 9, 2022).
11
Id.
12
Id.
13
Section 110. 123(12)(a)1., F.S.
14
See Supra note 9.
15
Section 110.123(2)(c)2., F.S.
16
Section 110.123(13)(d), F.S.
17
The Spouse Program provides discounted rates for family coverage when both spouses work for the state.
18
State Employee’s Group Health Self-Insurance Trust Fund, Report on Financial Outlook, For the Fiscal Years Ending
June 30, 2021 through June 30, 2026, http://edr.state.fl.us/content/conferences/healthinsurance/HealthInsuranceOutlook.pdf
(last visited January 7, 2022).
19
Id. BILL: SPB 7022 Page 4
State Employee Health Insurance (Medical Claims)
The DMS provides medical services to health plan members through a self-insured PPO, self-
insured HMO plans, and a fully-insured HMO plan. Under current contracts, a single provider
(Florida Blue) administers the statewide PPO plan.
Three providers (Aetna, AvMed, and United Health Care) administer the self-insured HMO
plans providing services in 60 counties combined. Capital Health Plan is a fully-insured HMO
plan providing services in 7 counties. The current HMO contracts were awarded on a county-by-
county basis with service based on the county in which the member works or resides.
Based on information provided by the DSGI, the average costs per member for each plan are
noted in the table below for Plan Year 2020.
Plan Year 2020
Plan Type Cost Per Member
Standard HMO (Self-Insured) $6,768.68
Standard HMO (Fully-Insured)* $6,618.85
Standard PPO (Self-Insured) $7,156.00
HDHP HMO (Self-Insured) $2,706.32
HDHP HMO (Fully-Insured)* $5,716.03
HDHP PPO (Self-Insured) $3,056.30
Enrollment
For FY 2020-21, the final enrollment reflected 175,046 subscribers and 187,244 dependents,
totaling 362,290 covered lives.
20
Approximately 47.1% of subscribers were enrolled in PPO
plans, 52.3% were enrolled in HMO plans, and 0.6% were enrolled in a Medicare Advantage
Prescription Drug plan.
21
Subscriber enrollment in individual coverage was 47.8%, and 52.2%
were enrolled in family coverage, which had an average size of 3.05 members.
22
Expansion of Preventative Care Benefits
In 2019, President Trump issued Executive Order 13877, Improving Price & Quality
Transparency in American Healthcare to Put Patients First.
23
The Executive Order requested the
Treasury Department and the Internal Revenue Service (IRS) to issue guidance on how to
expand the ability of patients to select HDHPs that can be used alongside HSAs, and that cover
low-cost preventative care, before the deductible, that helps maintain the health status for
individuals with chronic conditions. Following the Executive Order, the Treasury Department
and the IRS issued Notice 2019-45.
24
Under section 223(c)(2)(A), a HDHP may not provide
20
Id.
21
Id. at p. 1.
22
Id.
23
See Executive Order 13877, https://www.federalregister.gov/documents/2019/06/27/2019-13945/improving-price-and-
quality-transparency-in-american-healthcare-to-put-patients-first.
24
See Internal Revenue Service Notice 2019-45, https://www.irs.gov/pub/irs-drop/n-19-45.pdf. BILL: SPB 7022 Page 5
benefits for any year until the yearly minimum deductible is met, however section 223(c)(2)(C),
allows HDHPs to provide preventative care benefits without the annual deductible being met.
The IRS and Treasury Department are aware of the cost barriers for care that have resulted in
some individuals who are diagnosed with certain chronic conditions failing to see or utilize
effective necessary care that would prevent the exacerbation of the chronic condition. In an effort
to address this, the IRS and Treasury Department, in consultation with the Department of Health
and Human Services, have determined that certain medical care services received and items
purchased, including prescription drugs, for certain chronic conditions should be classified as
preventative care for persons with those chronic conditions.
In determining that these particular medical services and items can be classified as preventative
care with respect to an individual with the relevant chronic condition, the IRS and Treasury
Department considered the following:
The service or item is low cost;
There is medical evidence supporting high cost efficiency of preventing exacerbation of the
chronic condition or the development of a secondary condition; and
There is clinical evidence proving a strong likelihood that preventing the exacerbation of the
chronic condition or the development of a secondary condition avoids significantly higher
cost treatments.
III. Effect of Proposed Changes:
Section 1 amends s. 110.123, F.S., to require the DMS to provide an online education program
with impartial and balanced information regarding the plan choices in the state group insurance
program. Section 1 requires the department to contract with the State Board Administration and
its financial advisors to provide at least two hours per plan year of tax and financial education
relating to retirement and health care planning, as an elective benefit at no cost to the enrollee.
Section 1 sets a minimum monthly employer contribution into the HSAs for members whose
annual rate of pay is $38,000 or less, beginning plan year 2023 and thereafter. The state’s
minimum monthly contribution from the trust fund into a member’s HSA is $55 for an employee
with individual coverage and $110 for an employee with family coverage.
Section 1 establishes new preventative care benefits to be covered by HDHPs in the SGI
Program prior to the member meeting the yearly deductible. The following services and items
25
when prescribed to treat an individual diagnosed with listed chronic conditions will be covered
as preventative care:
25
Id. BILL: SPB 7022 Page 6
Section 2 provides that the bill takes effect July 1, 2022.
IV. Constitutional Issues:
A. Municipality/County Mandates Restrictions:
Not applicable. The bill does not require counties or municipalities to take action
requiring the expenditure of funds, reduce the authority that counties or municipalities
have to raise revenue in the aggregate, nor reduce the percentage of state tax shared with
counties or municipalities.
B. Public Records/Open Meetings Issues:
None.
C. Trust Funds Restrictions:
None.
D. State Tax or Fee Increases:
None.
E. Other Constitutional Issues:
None identified.
V. Fiscal Impact Statement:
A. Tax/Fee Issues:
None.
B. Private Sector Impact:
None. BILL: SPB 7022 Page 7
C. Government Sector Impact:
The fiscal impact on the government sector is unknown at this time. However, the DMS
will incur costs implementing the online education program and the tax and financial
education programs. The State Employee Health Insurance Trust Fund will incur higher
costs associated with higher contributions into the HSAs as well as covering additional
preventative care benefits for participants in the HDHPs. However, the purpose of the bill
is to encourage higher participation in the HDHPs which have historically experienced
lower claims, potentially resulting in overall savings for the SGI Program.
VI. Technical Deficiencies:
None.
VII. Related Issues:
None.
VIII. Statutes Affected:
This bill substantially amends section 110.123 of the Florida Statutes.
IX. Additional Information:
A. Committee Substitute – Statement of Changes:
(Summarizing differences between the Committee Substitute and the prior version of the bill.)
None.
B. Amendments:
None.
This Senate Bill Analysis does not reflect the intent or official position of the bill’s introducer or the Florida Senate.