COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:2816H.01I Bill No.:HB 1444 Subject:Insurance - Health; State Employees Type:Original Date:March 11, 2025Bill Summary:This proposal creates provisions relating to an option to opt out of coverage
under the Missouri Consolidated Health Care Plan and receive an annual
stipend instead.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDFUND AFFECTEDFY 2026FY 2027FY 2028General Revenue
Fund
Could exceed
($47,596,500)
Could exceed
($47,596,500)
Could exceed
($47,596,500)
Total Estimated Net
Effect on General
Revenue
Could exceed
($47,596,500)
Could exceed
($47,596,500)
Could exceed
($47,596,500)
ESTIMATED NET EFFECT ON OTHER STATE FUNDSFUND AFFECTEDFY 2026FY 2027FY 2028
Other State Funds
Could exceed
($11,332,500)
Could exceed
($11,332,500)
Could exceed
($11,332,500)
Total Estimated Net
Effect on Other State
Funds
Could exceed
($11,332,500)
Could exceed
($11,332,500)
Could exceed
($11,332,500)
Numbers within parentheses: () indicate costs or losses. L.R. No. 2816H.01I
Bill No. HB 1444
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ESTIMATED NET EFFECT ON FEDERAL FUNDSFUND AFFECTEDFY 2026FY 2027FY 2028Federal FundsCould exceed
($16,621,000)
Could exceed
($16,621,000)
Could exceed
($16,621,000)
Total Estimated Net
Effect on All Federal
Funds
Could exceed
($16,621,000)
Could exceed
($16,621,000)
Could exceed
($16,621,000)
ESTIMATED NET EFFECT ON FULL TIME EQUIVALENT (FTE)FUND AFFECTEDFY 2026FY 2027FY 2028Total Estimated Net
Effect on FTE 000
☒ Estimated Net Effect (expenditures or reduced revenues) expected to exceed $250,000 in any
of the three fiscal years after implementation of the act or at full implementation of the act.
☐ Estimated Net Effect (savings or increased revenues) expected to exceed $250,000 in any of
the three fiscal years after implementation of the act or at full implementation of the act.
ESTIMATED NET EFFECT ON LOCAL FUNDSFUND AFFECTEDFY 2026FY 2027FY 2028Local Government$0$0$0 L.R. No. 2816H.01I
Bill No. HB 1444
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FISCAL ANALYSIS
ASSUMPTION
§103.087 – Annual Stipend for opting out of MCHCP coverage
Officials from the Missouri Consolidated Health Care Plan (MCHCP) assume this bill creates
a provision for employees and retirees to opt out of coverage under the Missouri Consolidated
Health Care Plan (MCHCP) and receive an annual stipend for opting out of the coverage.
Fiscal Impact of the Bill:
Employees:
The legislation states that stipend paid to an employee shall equal the amount that the state would
have paid to contribute toward the cost of the health care coverage for the individual employee or
retiree during the relevant calendar year if the employee or retiree had enrolled in such coverage.
The amount the state contributes is not a single number and is based on the plan that the
employee chooses. For the purposes of this fiscal note a weighted average for employee only
coverage of $735 per employee per month is used for the calculations for active employees.
As of January 1, 2025, there are approximately 4,112 employees who have not elected coverage
under Missouri Consolidated who are eligible. It is assumed that all the employees who
currently do not elect coverage under MCHCP would opt in for the annual stipend. This results
in a new cost of $3,022,320 per month, or $36,267,840 annually. The number of employees who
waive coverage fluctuates monthly as employees are hired and leave employment, so the number
of employees annually is typically greater than the number of employees on any given date.
Offering an incentive to not elect or waive coverage would most likely increase the number of
employees waiving coverage and opting for the incentive. The most likely employees who
would waive coverage are those with low overall expected utilization. Based on claims,
MCHCP’s actuary estimated that anywhere from an additional 3% to 20% of employees may opt
out. For fiscal note purposes, MCHCP will assume a 10% cost of $28.7 million. L.R. No. 2816H.01I
Bill No. HB 1444
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In addition, as employees who are low utilizers opt out of coverage the average cost per member
would increase, due to adverse selection leading to an increasing medical trend above and
beyond the market trend of 6-8%. As the premium costs for coverage increases, the waiver
incentive given to those who waive coverage would experience a corresponding increase.
For 2025, the State’s projected medical and prescription drug claims are approximately $470
million for the active population. Assuming opt-out percentages with corresponding projected
claims shown in the above, premiums for remaining participants would be impacted as follows
(note that these increases would be in addition to market trend rates):
Opt-out %
Projected
Med / Rx
Claims in
2025
Projected
Contracts
Projected
Per Capita
Cost
Projected
Premium
Increase
0.00%$470,000,00033,800$1,1590%3.00%$470,000,00032,786$1,1953%7.00%$469,695,80031,434$1,2457%10.00%$468,935,30030,420$1,28511%15.00%$466,231,30028,730$1,35217%20.00%$461,583,80027,040$1,42323%
Therefor it is anticipated that the increase in the amount paid out to employees who opt out could
cost up to an additional $7.15 million per year.
Affordability under the Affordable Care Act:
Since the opt-out credit will be non-contingent on having coverage elsewhere and would be
introduced after December 16, 2015, the opt-out payment would be included in the employee’s
costs when testing for affordability for purposes of compliance with employer shared
responsibility requirements. By nature of how the payment is calculated, the full premium
amount would need to be used for testing purposes, meaning a significant portion of the
population (anyone making under $91,827 in 2025) would potentially qualify for a subsidy in the
exchange. In addition to the waive incentive, for each participant that receives a subsidy, the
State would be required to pay an IRS penalty of $4,350 (in 2025). These are calculated based
on 9.02% affordability threshold in 2025 and the HDHP premium of $704 / month, since it is the
lowest priced plan. MCHCP does not have salary data on state employees and is unable to
calculate an estimated cost. Nor do they have an estimate of the number of employees who L.R. No. 2816H.01I
Bill No. HB 1444
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would subsequently seek coverage in the exchange. They are placing a fiscal impact of unknown
but greater than $100,000.
MCHCP assumes the cost estimate provided above would be a penalty that the state could be
subject to since the insurance offered is no longer affordable under the ACA. It is speculative as
it is never a certainty that a penalty will be assessed. The penalty would be to the state itself as
the employer and not to MCHCP as the health plan and therefore will not be calculated as a cost
in the fiscal note.
Retirees:
The language of the legislation states that the retiree must make the election within thirty-one
days of his or her first day he or she is qualified to enroll for coverage. This language does not
exactly match the timeframe for when retirement coverage must be elected. MCHCP has
assumed that the timeframe to elect an incentive payment would need to be made within 31 days
of retiring to mirror the requirements for electing coverage.
MCHCP has assumed this incentive decision may only be made upon retirement and the member
would forgo coverage until a life event which would allow the retiree to come onto coverage.
Based on these assumptions, only new retirees after the date of this legislation would become
eligible for this cash payment.
Retirees receive a subsidy pursuant to 22 CSR 10-2.030. A member’s contribution percentage is
based on years of service multiplied by 2.5% and is capped at 65% or 26 years of service. For
non-Medicare retirees, the contribution is based on the retiree only PPO 1250 premium after
incentives with an average state contribution of $692.00 in 2025. For Medicare retirees, the state
contribution is based on the retiree only Medicare Advantage Plan premium with an average
contribution of $138.44 in 2025. Since each retiree’s contribution could differ based on their
years of service, these weighted averages are used for the calculation of this fiscal note.
In 2024, 1,234 employees retired from the state that were eligible for coverage through MCHCP
and 412 of those individuals did not elect retiree coverage through MCHCP. MCHCP assumes
these retirees would have elected to receive the cash payment had it been an option. MCHCP
estimates an additional cost of $285,104 per month or $3,421,248 annually. It is further assumed
that if a cash payment is available with the ability to return to coverage upon a life event, the
number of retirees who elect a cash payment will increase, thus increasing the estimated cost.
Each year this amount will grow as the number of retirees electing this option also increases and
as premium costs increase.
Like active employees, retiree costs associated with this change will increase over time due to
adverse selection and increasing premiums over time. Annual cash costs could initially increase
by $1.1 million but this would be expected to increase significantly each year going forward, just
as the active employee costs would be expected to be above normal trend. L.R. No. 2816H.01I
Bill No. HB 1444
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Total cost for retirees is estimated to be $3.4 million for the first year with increasing costs in the
following years as the number of retirees would increase, as well as the subsidy given to the
retirees.
Other Post-Employment Benefits (OPEB) Liability:
Other Post-Employment Benefits (OPEB) liabilities are the unfunded costs of benefits that
retired employees receive in addition to their pension. For this fiscal note, health insurance is the
benefit under discussion.
The Governmental Accounting Standards Board (GASB) has required that governmental
employers calculate the future cost of provided health insurance to retirees. That liability then
becomes part of the employer’s annual financial report. For fiscal year 2024, the unfunded OPEB
liability for retiree coverage is at $1.58 billion. The actuary has estimated the impact resulting
from this bill to the state’s OPEB liability will be an additional $480 million.
An increase in the OPEB trust liabilities will not be reflected in the fiscal note.
Overall Fiscal Impact:
Active Employees Fiscal Impact
MCHCP estimated cost is unknown but greater than $72.15 million ($36.3 + $28.7 + $7.15).
In addition, state employees would experience an increase in individual premiums unknown but
potentially greater than $95 annually per employee due to the adverse selection principle. This
cost will not be reflected in the fiscal note.
Retirees
MCHCP estimated cost is unknown but greater than $3.4 million. This estimation does not take
into account any increases in retiree premiums based on adverse selection as it speculative as to
which retirees would take the opt out payment and how it would affect premium.
In summary, MCHCP assumes a cost of $75,550,000 annually to provide for the implementation
of the changes in this proposal.
Oversight does not have any information to the contrary. Therefore, Oversight will reflect the
following to the General Revenue Fund, Other State Funds and Federal Funds.
General Revenue - $47,596,500 (63%)
Federal Funds - $16,621,000 (22%)
Other State Funds - $11,332,500 (15%)
Total - $75,550,000 (100%) L.R. No. 2816H.01I
Bill No. HB 1444
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Officials from the Office of Administration and the Missouri State Employee's Retirement
System each assume the proposal will have no fiscal impact on their respective organizations.
Oversight does not have any information to the contrary. Therefore, Oversight will reflect a zero
impact in the fiscal note for these agencies.
Oversight does not have any information to the contrary. Therefore, Oversight will reflect a zero
impact in the fiscal note.
FISCAL IMPACT – State GovernmentFY 2026
(10 Mo.)
FY 2027FY 2028GENERAL REVENUE FUNDCost – MCHCP
Annual Stipend (§103.087)
Could exceed
($47,596,500)
Could exceed
($47,596,500)
Could exceed
($47,596,500)
ESTIMATED NET EFECT TO THE
GENERAL REVENUE FUND
Could exceed
($47,596,500)
Could exceed
($47,596,500)
Could exceed
($47,596,500)
FEDERAL FUNDSCost – MCHCP
Annual Stipend (§103.087)
Could exceed
($16,621,000)
Could exceed
($16,621,000)
Could exceed
($16,621,000)
ESTIMATED NET EFECT TO
FEDERAL FUNDS
Could exceed
($16,621,000)
Could exceed
($16,621,000)
Could exceed
($16,621,000)
OTHER STATE FUNDSCost – MCHCP
Annual Stipend (§103.087)
Could exceed
($11,332,500)
Could exceed
($11,332,500)
Could exceed
($11,332,500)
ESTIMATED NET EFECT TO
OTHER STATE FUNDS
Could exceed
($11,332,500)
Could exceed
($11,332,500)
Could exceed
($11,332,500) L.R. No. 2816H.01I
Bill No. HB 1444
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FISCAL IMPACT – Local GovernmentFY 2026
(10 Mo.)
FY 2027FY 2028$0$0$0
FISCAL IMPACT – Small Business
No direct fiscal impact to small businesses would be expected as a result of this proposal.
FISCAL DESCRIPTION
This bill allows state employees or retirees eligible for state health care coverage to opt out of the
health insurance and receive an annual stipend equal to the amount the state would have
contributed to the individual's health coverage. The stipend amount doesn't include contributions
for spouses or dependents and is considered taxable income. If any relevant period in which the
employee or retiree is forgoing health care coverage is less than a full calendar year, the stipend
will be prorated. These provisions do not apply to dental or vision benefits.
This legislation is not federally mandated, would not duplicate any other program and would not
require additional capital improvements or rental space.
SOURCES OF INFORMATION
Office of Administration
Missouri Consolidated Health Care Plan
Missouri State Employee's Retirement System
Julie MorffJessica HarrisDirectorAssistant DirectorMarch 11, 2025March 11, 2025