AB388_R1

(Reprinted with amendments adopted on April 15, 2003)

Assembly Bill No. 388–Assemblymen Koivisto, Pierce, McClain, Parks, Ohrenschall, Anderson, Christensen, Claborn and Giunchigliani (by request)

March 17, 2003

____________

Referred to Committee on Government Affairs

SUMMARY—Authorizes creation of health and welfare benefit trust for employees of local government employers. (BDR 23‑762)

FISCAL NOTE: Effect on Local Government: No.

Effect on the State: No.

EXPLANATION – Matter in bolded italics is new; matter between brackets [~~omitted material]~~ is material to be omitted.

Green numbers along left margin indicate location on the printed bill (e.g., 5-15 indicates page 5, line 15).

AN ACT relating to public employees; authorizing one or more local government employers and employee organizations to establish a trust fund to provide health and welfare benefits to participating employees and their dependents; establishing requirements for the administration of the trust; and providing other matters properly relating thereto.

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN

SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

1-1 Section 1. NRS 286.615 is hereby amended to read as follows:

1-2 286.615 1. In addition to the options provided in NRS

1-3 287.023 and subject to the requirements of that section, any officer

1-4 or employee of the governing body of any county, school district,

1-5 municipal corporation, political subdivision, public corporation or

1-6 other public agency of the State of Nevada[,] who retires under the

1-7 conditions set forth in NRS 286.510 and, at the time of his

1-8 retirement, was covered or had his dependents covered by any group

1-9 insurance , plan of benefits or medical and hospital service

1-10 established pursuant to NRS 287.010 [and 287.020,] , 287.020 or

1-11 section 2 of this act, has the option of having the Executive Officer

1-12 deduct and pay his premium or contribution for that [group

2-1 insurance or medical and hospital service] coverage, as well as the

2-2 amount due or to become due upon any obligation designated by the

2-3 Board pursuant to subsection 2, from his monthly retirement

2-4 allowance until:

2-5 (a) He notifies the Executive Officer to discontinue the

2-6 deduction; or

2-7 (b) Any of his dependents elect to assume the premium or

2-8 contribution applicable to the dependent’s coverage before the death

2-9 of such a retired person and continue coverage pursuant to NRS

2-10 287.023 after his death.

2-11 2. The Board may adopt regulations to carry out the provisions

2-12 of subsection 1, including, but not limited to, regulations governing

2-13 the number and types of obligations, amounts for the payment of

2-14 which may be deducted and paid by the Board at the option of the

2-15 officer or employee pursuant to this section.

2-16 3. The Executive Officer, Board and System are not liable for

2-17 any damages resulting from errors or omissions concerning the

2-18 deductions and payment of premiums or contributions authorized

2-19 pursuant to this section unless willful neglect or gross negligence is

2-20 proven.

2-21 Sec. 2. Chapter 287 of NRS is hereby amended by adding

2-22 thereto a new section to read as follows:

2-23 1. A local government employer and any employee

2-24 organization that is recognized by the employer pursuant to

2-25 chapter 288 of NRS may, by written agreement between

2-26 themselves or with other local government employers and

2-27 employee organizations, establish a trust fund to provide health

2-28 and welfare benefits to active and retired employees of the

2-29 participating employers and the dependents of those employees.

2-30 2. All contributions made to a trust fund established pursuant

2-31 to this section must be held in trust and used:

2-32 (a) To provide, from principal or income, or both, for the

2-33 benefit of the participating employees and their dependents,

2-34 medical, hospital, dental, vision, death, disability or accident

2-35 benefits, or any combination thereof, and any other benefit

2-36 appropriate for an entity that qualifies as a voluntary employees’

2-37 beneficiary association under Section 501(c)(9) of the Internal

2-38 Revenue Code of 1986, 26 U.S.C. § 501(c)(9), as amended; and

2-39 (b) To pay any reasonable administrative expenses incident to

2-40 the provision of these benefits and the administration of the trust.

2-41 3. The basis on which contributions are to be made to the

2-42 trust must be specified in a collective bargaining agreement

2-43 between each participating local government employer and

2-44 employee organization or in a written participation agreement

3-1 between the employer and employee organization, jointly, and the

3-2 trust.

3-3 4. The trust must be administered by a board of trustees on

3-4 which participating local government employers and employee

3-5 organizations are equally represented. The agreement that

3-6 establishes the trust must:

3-7 (a) Set forth the powers and duties of the board of trustees,

3-8 which must not be inconsistent with the provisions of this section;

3-9 (b) Establish a procedure for resolving expeditiously any

3-10 deadlock that arises among the members of the board of trustees;

3-11 and

3-12 (c) Provide for an audit of the trust, at least annually, the

3-13 results of which must be reported to each participating employer

3-14 and employee organization.

3-15 5. As used in this section:

3-16 (a) “Employee organization” has the meaning ascribed to it in

3-17 NRS 288.040.

3-18 (b) “Local government employer” has the meaning ascribed to

3-19 it in NRS 288.060.

3-20 Sec. 3. NRS 287.021 is hereby amended to read as follows:

3-21 287.021 1. Except as otherwise provided in subsection 3, the

3-22 surviving spouse and any surviving child of a police officer or

3-23 fireman who was:

3-24 (a) Employed by a public agency that had established group

3-25 insurance , a plan of benefits or medical and hospital service

3-26 pursuant to NRS 287.010, 287.020 or 287.025 [;] or section 2 of

3-27 this act; and

3-28 (b) Killed in the line of duty,

3-29 may elect to accept or continue coverage under that group insurance

3-30 , plan or medical and hospital service if the police officer or fireman

3-31 was a participant or would have been eligible to participate in the

3-32 group insurance , plan or medical and hospital service on the date of

3-33 the death of the police officer or fireman. If the surviving spouse or

3-34 child elects to accept coverage under the group insurance , plan or

3-35 medical and hospital service in which the police officer or fireman

3-36 would have been eligible to participate or to discontinue coverage

3-37 under the group insurance , plan or medical and hospital service in

3-38 which the police officer or fireman was a participant, the spouse,

3-39 child or legal guardian of the child must notify in writing the public

3-40 agency that employed the police officer or fireman within 60 days

3-41 after the date of death of the police officer or fireman.

3-42 2. The public agency that employed the police officer or

3-43 fireman shall pay the entire cost of the premiums or contributions

3-44 for the group insurance , plan of benefits or medical and hospital

4-1 service for the surviving spouse or child who meets the

4-2 requirements set forth in subsection 1.

4-3 3. A surviving spouse is eligible to receive coverage pursuant

4-4 to this section for the duration of the life of the surviving spouse. A

4-5 surviving child is eligible to receive coverage pursuant to this

4-6 section until the child reaches:

4-7 (a) The age of 18 years; or

4-8 (b) The age of 23 years, if the child is enrolled as a full-time

4-9 student in an accredited university, college or trade school.

4-10 4. As used in this section “police officer” has the meaning

4-11 ascribed to it in NRS 617.135.

4-12 Sec. 4. NRS 287.023 is hereby amended to read as follows:

4-13 287.023 1. Whenever an officer or employee of the

4-14 governing body of any county, school district, municipal

4-15 corporation, political subdivision, public corporation or other public

4-16 agency of the State of Nevada retires under the conditions set forth

4-17 in NRS 1A.350 or 1A.480, or 286.510 or 286.620 and, at the time of

4-18 his retirement, was covered or had his dependents covered by any

4-19 group insurance , plan of benefits or medical and hospital service

4-20 established pursuant to NRS 287.010 [and 287.020,] , 287.020 or

4-21 section 2 of this act, the officer or employee has the option upon

4-22 retirement to cancel or continue any such [group insurance or

4-23 medical and hospital service] coverage or join the Public

4-24 Employees’ Benefits Program to the extent that such coverage is not

4-25 provided to him or a dependent by the Health Insurance for the

4-26 Aged Act, 42 U.S.C. §§ 1395 et seq.

4-27 2. A retired person who continues coverage under the Public

4-28 Employees’ Benefits Program shall assume the portion of the

4-29 premium or membership costs for the coverage continued which the

4-30 governing body does not pay on behalf of retired officers or

4-31 employees. A person who joins the Public Employees’ Benefits

4-32 Program for the first time upon retirement shall assume all costs for

4-33 the coverage. A dependent of such a retired person has the option,

4-34 which may be exercised to the same extent and in the same manner

4-35 as the retired person, to cancel or continue coverage in effect on the

4-36 date the retired person dies. The dependent is not required to

4-37 continue to receive retirement payments from the Public

4-38 Employees’ Retirement System to continue coverage.

4-39 3. Except as otherwise provided in NRS 287.0235, notice of

4-40 the selection of the option must be given in writing to the last public

4-41 employer of the officer or employee within 60 days after the date of

4-42 retirement or death, as the case may be. If no notice is given by that

4-43 date, the retired employee and his dependents shall be deemed to

4-44 have selected the option to cancel the coverage or not to join the

4-45 Public Employees’ Benefits Program, as the case may be.

5-1 4. The governing body of any county, school district,

5-2 municipal corporation, political subdivision, public corporation or

5-3 other public agency of this state may pay the cost, or any part of the

5-4 cost, of [group insurance and medical and hospital service] coverage

5-5 for persons eligible for [that] coverage pursuant to subsection 1, but

5-6 it must not pay a greater portion than it does for its current officers

5-7 and employees.

5-8 Sec. 5. NRS 287.024 is hereby amended to read as follows:

5-9 287.024 1. If a member of the board of trustees of a school

5-10 district who has served at least one full term of office does not seek

5-11 reelection or is defeated for reelection and, upon the expiration of

5-12 his term of office, was covered or had his dependents covered by

5-13 any group insurance , plan of benefits or medical and hospital

5-14 service established pursuant to NRS 287.010 [and 287.020,] ,

5-15 287.020 or section 2 of this act, the board member has the option

5-16 upon the expiration of his term of office to cancel or continue any

5-17 such [group insurance] coverage to the extent that [such] coverage

5-18 is not provided to him or a dependent by the Health Insurance for

5-19 the Aged Act, 42 U.S.C. §§ 1395 et seq. A board member who

5-20 continues coverage [under the program of group insurance]

5-21 pursuant to this section shall assume all costs for the continued

5-22 coverage. A dependent of such a board member has the option,

5-23 which may be exercised to the same extent and in the same manner

5-24 as the board member, to cancel or continue coverage in effect on the

5-25 date the board member dies.

5-26 2. Notice of the selection of the option must be given in writing

5-27 to the board of trustees of the school district within 30 days after the

5-28 expiration of the board member’s term of office or the date of his

5-29 death, as the case may be. If no notice is given by that date, the

5-30 board member and his dependents shall be deemed to have selected

5-31 the option to cancel the coverage.

5-32 Sec. 6. NRS 287.025 is hereby amended to read as follows:

5-33 287.025 The governing body of any county, school district,

5-34 municipal corporation, political subdivision, public corporation or

5-35 other public agency of the State of Nevada may, in addition to the

5-36 other powers granted in NRS 287.010 and 287.020[:] and section 2

5-37 of this act:

5-38 1. Negotiate and contract with any other such agency or with

5-39 the Board of the Public Employees’ Benefits Program to secure

5-40 group insurance for its officers and employees and their dependents

5-41 by participation in any group insurance plan established or to be

5-42 established or in the Public Employees’ Benefits Program. Each

5-43 such contract:

6-1 (a) Must be submitted to the Commissioner of Insurance not less

6-2 than 30 days before the date on which the contract is to become

6-3 effective for approval.

6-4 (b) Does not become effective unless approved by the

6-5 Commissioner.

6-6 (c) Shall be deemed to be approved if not disapproved by the

6-7 Commissioner [of Insurance] within 30 days after its submission.

6-8 2. To secure group health, life or workers’ compensation

6-9 insurance for its officers and employees and their dependents,

6-10 participate as a member of a nonprofit cooperative association or

6-11 nonprofit corporation that has been established in this state to secure

6-12 such insurance for its members from an insurer licensed pursuant to

6-13 the provisions of title 57 of NRS.

6-14 3. In addition to the provisions of subsection 2, participate as a

6-15 member of a nonprofit cooperative association or nonprofit

6-16 corporation that has been established in this state to:

6-17 (a) Facilitate contractual arrangements for the provision of

6-18 medical services to its members’ officers and employees and their

6-19 dependents and for related administrative services.

6-20 (b) Procure health-related information and disseminate that

6-21 information to its members’ officers and employees and their

6-22 dependents.

6-23 Sec. 7. NRS 287.030 is hereby amended to read as follows:

6-24 287.030 No provisions of law prohibiting, restricting or

6-25 limiting the assignment of or order for wages or salary shall be

6-26 deemed in any way to prohibit, restrict or limit the powers

6-27 enumerated in NRS 287.010 and 287.020, and section 2 of this act,

6-28 nor the right and power of officers or employees to authorize and

6-29 approve payment of premiums or contributions by wage and salary

6-30 deductions.

6-31 Sec. 8. NRS 287.040 is hereby amended to read as follows:

6-32 287.040 The provisions of NRS 287.010 to 287.040, inclusive,

6-33 and section 2 of this act, do not make it compulsory upon any

6-34 governing body of any county, school district, municipal

6-35 corporation, political subdivision, public corporation or other public

6-36 agency of the State of Nevada , [to,] except as otherwise provided in

6-37 NRS 287.021[,] or in an agreement entered into pursuant to

6-38 subsection 3 of section 2 of this act, to make any contributions for

6-39 the payment of any premiums or other costs for group insurance , a

6-40 plan of benefits, or medical or hospital services, or upon any officer

6-41 or employee of any county, school district, municipal corporation,

6-42 political subdivision, public corporation or other public agency of

6-43 this state to accept [or join any plan of group insurance] any such

6-44 coverage or to assign his wages or salary or to authorize deductions

7-1 from his wages or salary in payment of premiums or contributions

7-2 therefor.

7-3 Sec. 9. NRS 683A.025 is hereby amended to read as follows:

7-4 683A.025 1. Except as limited by this section,

7-5 “administrator” means a person who:

7-6 (a) Directly or indirectly underwrites or collects charges or

7-7 premiums from or adjusts or settles claims of residents of this state

7-8 or any other state from within this state in connection with workers’

7-9 compensation insurance, life or health insurance coverage or

7-10 annuities, including coverage or annuities provided by an employer

7-11 for his employees;

7-12 (b) Administers an internal service fund pursuant to

7-13 NRS 287.010;

7-14 (c) Administers a trust established pursuant to section 2 of this

7-15 act, under a contract with the trust;

7-16 (d) Administers a program of self-insurance for an employer;

7-17 [(d)] (e) Administers a program which is funded by an

7-18 employer and which provides pensions, annuities, health benefits,

7-19 death benefits or other similar benefits for his employees; or

7-20 [(e)] (f) Is an insurance company that is licensed to do business

7-21 in this state or is acting as an insurer with respect to a policy

7-22 lawfully issued and delivered in a state where the insurer is

7-23 authorized to do business, if the insurance company performs any

7-24 act described in paragraphs (a) to [(d),] (e), inclusive, for or on

7-25 behalf of another insurer.

7-26 2. “Administrator” does not include:

7-27 (a) An employee authorized to act on behalf of an administrator

7-28 who holds a certificate of registration from the Commissioner.

7-29 (b) An employer acting on behalf of his employees or the

7-30 employees of a subsidiary or affiliated concern.

7-31 (c) A labor union acting on behalf of its members.

7-32 (d) Except as otherwise provided in paragraph [(e)] (f) of

7-33 subsection 1, an insurance company licensed to do business in this

7-34 state or acting as an insurer with respect to a policy lawfully issued

7-35 and delivered in a state in which the insurer was authorized to do

7-36 business.

7-37 (e) A producer of life or health insurance licensed in this state,

7-38 when his activities are limited to the sale of insurance.

7-39 (f) A creditor acting on behalf of his debtors with respect to

7-40 insurance covering a debt between the creditor and debtor.

7-41 (g) A trust and its trustees, agents and employees acting for it, if

7-42 the trust was established under the provisions of 29 U.S.C. § 186.

7-43 (h) Except as otherwise provided in paragraph (c) of

7-44 subsection 1, a trust and its trustees, agents and employees acting

7-45 for it, if the trust was established pursuant to section 2 of this act.

8-1 (i) A trust which is exempt from taxation under section 501(a)

8-2 of the Internal Revenue Code, 26 U.S.C. § 501(a), its trustees and

8-3 employees, and a custodian, his agents and employees acting under

8-4 a custodial account which meets the requirements of section 401(f)

8-5 of the Internal Revenue Code, 26 U.S.C. § 401(f).

8-6 [(i)] (j) A bank, credit union or other financial institution which

8-7 is subject to supervision by federal or state banking authorities.

8-8 [(j)] (k) A company which issues credit cards, and which

8-9 advances for and collects premiums or charges from credit card

8-10 holders who have authorized it to do so, if the company does not

8-11 adjust or settle claims.

8-12 [(k)] (l) An attorney at law who adjusts or settles claims in the

8-13 normal course of his practice or employment, but who does not

8-14 collect charges or premiums in connection with life or health

8-15 insurance coverage or with annuities.

8-16 Sec. 10. Sections 1 to 9, inclusive, of this act do not apply to

8-17 any trust established before July 1, 2003.

8-18 Sec. 11. This act becomes effective on July 1, 2003.

8-19 H