2021 WSSRA END OF SESSION REPORT
May 27, 2021
The 2021 Legislative Session was one for the history books – more for the circumstances than passed legislation. Due to the Covid-19 pandemic, legislators held the first digital legislative session in state history. The digital format had substantive effects on the process. Citizens had an easier time joining meetings – no one had to drive from Pond Oreille or Clarkston; however, citizens and advocates had no access at the capitol building. It was likely the least transparent legislative session in modern history.
School retirees did have a good session. Due to a sharp recession caused by Covid-19 the associated response, there was a real threat of benefit cuts. Fortunately, the economy rebounded and federal aid arrived before the budget was complete. There were no budget cuts. Legislators also added a proviso to the budget requiring an $800 million payment on June 30, 2023 to the TRS 1 unfunded liability. Paying off the unfunded pension liability will lower the cost of future COLAs and make an automatic Plan 1 COLA much easier to achieve.
All unpassed 2021 legislation will remain active until the end of the biennium on December 31, 2022.
PART A – PENSION LEGISLATION
Maintaining Pension Credits During Covid-19 – Senate Bill 5021
Many classified school employees were furloughed during the Covid-19 pandemic. Senate Bill 5021 protects those employees from having their pension credits reduced during that timeframe. This measure passed the legislature and was signed by Governor Inslee. With the bill now codified, no school employee will have pension reductions due to lost income during the pandemic.
State Operating Budget – Retiree Medical Benefits, Plan 1 Minimum Benefits, and payments to the Plan 1 unfunded liability – Senate Bill 5092
The 2021-2023 state operating budget contains multiple provisions important to retirees. The budget continued funding for the $183 Medicare Eligible Healthcare Benefit through June 2023. The normal increases for the Plan 1 minimum benefits are funded through the pension payment. Those on the Plan 1 Basic Minimum Benefit will receive a raise of $2.40 per month, per year of service credit. Those on the Alternative Minimum Benefit will receive a 3% increase. Legislators made the full actuarially recommended pension payment. They also committed themselves to an additional $800 million payment to the Plan 1 unfunded liability in June 2023.
Refunding Inactive Pension Accounts – Senate Bill 5367
The Department of Retirement Systems has thousands of inactive pension accounts with small values. Administering inactive, nonvested accounts is burdensome for the Department. SB 5367 gives the state authority to contact inactive members with account balances of less than $1,000.00 and return the accountholder’s money. This bill passed unanimously.
Early Retirement During the Covid-19 Pandemic – House Bill 1032
WSSRA sponsored legislation with Representative Harris (R-Vancouver), to reduce early retirement penalties for school employees during the Covid-19 pandemic. The bill would allow full retirement for employees with 30 years’ service credit and who had attained age 60. It would lower the early retirement penalty to 3% per year for employees between the ages of 60-65, providing they had at least 20-30 years’ service credit. This bill died in the House Appropriations Committee.
Opting Out of Retirement Plans – Senate Bill 5352
Current law requires all full-time employees at DRS covered agencies to participate in the pension systems. SB 5352 would allow new employees over the age of 60 to opt-out of participating. This legislation has been sponsored by Senators Braun and Schoesler for several years. SB 5352 died in the House Appropriations Committee.
Plan 1 COLA – HB 1565
Representative Johnson sponsored this Plan 1 COLA bill at the end of session. It was in response to the Senate suggesting the $800 million payment to the Plan 1 unfunded liability. HB 1565 would have provided a 3% COLA on the first $17,600 in pension income – capping at $22 per month. Attempts to amend and improve the proposal failed. HB 1565 died in the House Appropriations Committee.
TRS 1 / LEOFF 1 Merger – Senate Bill 5453
This legislation would merge the assets of the TRS 1 and LEOFF 1 trusts. It would not merge the plans themselves or change benefits. LEOFF 1 is overfunded, and the merger would have eliminated the TRS 1 unfunded liability. This highly controversial bill died in the Senate Ways and Means Committee.
PART B – HEALTHCARE LEGISLATION
Generic Prescription Drugs – Senate Bill 5203
Senate Bill 5203 gives the state authority to contract with drug manufactures for bulk drug prices, similarly to the way the state purchases vaccines. Washington can now also coordinate those efforts with other states. Plans managed by the State Healthcare Authority – PEBB and Medicaid – will be required to participate. Private insurers and providers can choose to opt-in. SB 5203 also allows the state to contract with public laboratories – at the University of Washington for example – to produce generic prescription drugs with open patents. Theoretically Washington state could produce its own insulin and bypass pharmaceutical companies entirely. SB 5203 passed the legislature and has been signed by the governor.
Universal Healthcare Coverage – Senate Bill 5399
The state is inching closer to single-payer healthcare. This year’s legislation sets up a commission to study the state’s healthcare system and make recommendations about where public coverage could improve coverage and lower cost. The commission is required to start producing reports for the legislature in 2022. The bill passed and has been signed into law.
Drug Takeback Programs – House Bill 1161
As a means for reducing drug abuse and environmental pollution – flushing prescription drugs down the toilet – the state has been implementing drug takeback programs for safe disposal of unneeded medications. HB 1161 enhances those programs and ensures they have physical drop off locations in addition to mail back services. HB 1161 passed the legislature and has been signed by Governor Inslee.
Prescriptions for Parks – Senate Bill 5292
SB 5292 did not pass, but would have created a task force to study offering state parks as a way to improve public health. This bill passed the Senate but died in the House of Representatives Committee on Healthcare and Wellness.
Open PEBB Enrollment Period – House Bill 1040
Roughly 60% of school retirees participate in PEBB retiree insurance. Most of those who do not are locked out for various administrative reasons. HB 1040 would have re-opened PEBB to many retirees who are currently locked out. This bill died in the House Appropriations Committee.
Expanding Pharmaceutical Coverage – Senate Bill 5075
SB 5075 would regulate pharmacy benefit managers – the middlemen between insurers and pharmacies. It would simply require PBMs to cover retail and community pharmacies in their benefit networks. This bill died in the Senate Healthcare Committee.
Penalties for Unsupported Prescription Drug Price Increases – Senate Bill 5020
This legislation would require pharmaceutical companies to justify price increases on their products. Price increases without scientific justification could allow pharmaceutical companies to be fined by the state. SB 5020 died in the Senate Health Committee.
PART C – SENIOR CITIZEN LEGISLATION
Long-Term-Care Bill of Rights – House Bill 1218
HB 1218 enhances the rights of individuals living in long-term-care (LTC) facilities – both group homes and nursing homes. The pandemic highlighted rights and safety issues requiring improvement. This bill will require LTC facilities to have a disaster plans on-hand and a stockpile of personal protective equipment. It will also ensure patients have telephone access and the right to see an outside caregiver or family member at least once per day. HB 1218 passed the legislature and was signed by Governor Inslee.
Senior Citizen Property Tax Exemption & Freeze – House Bill 1438
Numerous property tax exemption bills were sponsored this year; however, HB 1438 is the one that passed. It enhances the previous property tax exemptions by allowing medical expense to be deducted from calculating gross income. In most rural counties, a gross household income of $45,000 allows for a property tax deferral, exemption, or freeze. The threshold is higher in urban counties, reaching as high as $60,000 in King County. Now school retirees will be able to deduct any PEBB premiums or medical expenses from their income to qualify for those benefits.
Rural High-Speed Internet – HB 1336
HB 1336 would shift high-speed internet management to a utility model. Larger cities already have the legal authority to manage internet providers. This bill gave the same program management authority to small cities, county governments, public utility districts, and port districts. This bill passed the legislature and was signed by Governor Inslee. HB 1336 does conflict with other broadband legislation passed this session, so the differences will likely be worked out in the court system.
Senior Citizen Telecommunications Access – House Bill 1460.
This AARP sponsored bill would have instituted a small tax on cell phones and internet connections to pay for several communications program enhancements. It would have created a low-cost cell phone program for seniors. It would also have created a daily call check-in service seniors could sign-up for. HB 1460 gained a lot of support, but it did not pass the legislature.
This report highlighted a small selection of the over 1000 bills legislators sponsored during the 2021 Legislative Session. Many of those bills had amendments and substitutes. The WSSRA Office is happy to answer any questions regarding the bills listed above or the thousands of other documents generated by legislators over the last four months. The 2022 Legislative Session begins January 10. Bills not passing during the 2021 session will still be active in the 2022 session.
Any WSSRA member may petition WSSRA to lobby on specific legislation. The process is for a retirees’ local unit to make a formal motion that can be debated by the regional coordinating council and finally the WSSRA Executive Board.
2020 WSSRA END OF SESSION REPORT
April 7, 2020
The world looked very different on January 13th, 2020 when the recent legislative session began than on the end of session March 12th. Even in mid-February when the state revenue forecast came out, the nation had been on a long positive economic stretch. By March 1st, the economic repercussions of the SARS-CoV-2 pandemic were beginning to bite. It is unknown how much tax revenue will be lost before the 2021 Legislative Session, but it appears that this particular run of positive economic growth is over.
The 2019 and 2020 legislative sessions were productive for school retirees. A 3% Plan 1 Cost of Living Adjustment was granted in 2020. In 2019, legislators restored the Medicare Eligible Healthcare Benefit to the pre-recession peak of $183.00 per month. Additional improvements were made in Plans 2 & 3. Not all WSSRA sponsored and supported legislation passed the legislature. Several important bills died and will need to be reintroduced for the 2021-2022 Biennium.
PART A – PENSION LEGISLATION
Plan 1 COLA, House Bill 1390
House Bill 1390 passed the legislature! On July 1st 2020, it provides a one-time 3% increase for Plan 1 retirees up to $62.50 per month. This means that the increase will be permanent, but will not increase again on July 1st, 2021. Additional legislation will be needed for that. Plan 1 retirees on minimum benefits will receive a different increase.
Plan 1 Minimum Benefits
By law, Plan 1 retirees who qualify for minimum benefit levels receive an automatic COLA every July 1st. There are two minimum benefits. The Basic Minimum Benefit is $62.50 per month per year of service credit. This will increase to $64.88 per month, per year of service credit. For Plan 1 retirees who have been retired for twenty-five years and had twenty years of service, or had twenty-five years of service and have been retired twenty years, their minimum benefit is $1,950 per month and will increase to $2,015.86 per month on July 1st.
Plan 1 Minimum Benefits only affect retirees who left their pension money in the retirement system. Retirees who withdrew retirement contributions when they retired have lower minimum benefit opportunities.
Plan 3 & Deferred Compensation Investment Options, Senate Bill 6383
Senate Bill 6383 passed the legislature without opposition or fanfare, but that does not negate the importance of the bill. Currently, the private savings portions of Plan 3 retirement accounts and Deferred Compensation savings are not invested in the state’s pension fund, known as the Comingled Trust Fund (CTF). This bill allows those individuals to invest in the CTF, which consistently has returns in excess of 7%. SB 6383 does not take any investment options away, but just adds another item to the investment menu. This legislation has no cost.
SERS & PERS Annuity Purchases, Senate Bill 5350
SB 5350 passed during the 2019 Legislative Session and took effect during the 2020 Legislative Session. Previously, TRS members were able to purchase annuities from the State of Washington with their private retirement savings, but SERS & PERS members were not. SB 5350 opened up that option to all school retirees.
Plan 2 Default, Senate Bill 5360
SB 5360 is another 2019 bill and it takes effect on July 1st, 2020. After that date, new school employees who fail to fill out their retirement paperwork will default into PERS / SERS / TRS 2 instead of Plan 3. Advocacy groups requested this change because Plan 2 offers a more predictable retirement and requires no management on the employee’s part. WSSRA believes that employees who are failing to fill out their financial paperwork should be placed in the pension plan that requires less financial management by the employee.
Plan 2/3 Retire-Rehire, House Bill 1139
HB 1139 was a sprawling K-12 education workforce bill. However, one small section of the legislation removed return to work restrictions on early retirees from Plans 2 & 3. The change is limited to school employment in non-administrative capacities. However, any early Plan 2 & 3 retirees who would like to substitute teach, coach, or serve in any non-administrative certificated and classified job may do so up to 867 hours per year.
Lowering the Retirement Age in Plans 2 & 3, House Bill 1132 – DIED
HB 1132 would have lowered the full retirement age in retirement plans 2 & 3 to the age of 60. To be eligible, a potential early retiree would have needed thirty years of service and begun school employment prior to May, 2013. The biennial cost was estimated at $25 million. HB 1132 and its companion, SB 5178 both died in committee without receiving a public hearing.
Pension Payment for the Full Month of Death, House Bill 1414- DIED
HB 1414 and its companion, SB 5335, would have ordered the Department of Retirement Systems to pay a full month’s pension payment in the event of a retiree’s death. Current policy is to pay the full month, and then collect a partial month back from the deceased survivor or estate. The cost to pay the full month was estimated at $10 million per biennium. These bills received hearings but did not pass out of committee.
PART B – HEALTH CARE LEGISLATION
Medicare Eligible Benefit
The Medicare Eligible Healthcare Benefit was restored to the pre-recession peak of 50% of the plan premium up to $183 per month in 2019. The benefit was maintained in the 2020 supplemental budget. This legislation is managed in the state budget, and does not have an independent bill number.
Insulin Price Caps, Senate Bill 6087 and House Bill 2662
Legislators passed two bills to cap insulin prices this legislative session. Senate Bill 6087 sets an out of pocket cap of $100 per month for insulin. This affects state managed as well as private health plans. House Bill 2662 also caps insulin prices at $100 per month; however, it also requires the state to study other options for lowering prescription drug costs, including having the Healthcare Authority act as a pharmacy benefit manager.
Pharmacy and Healthcare Benefit Managers, Senate Bill 5601
Pharmacy Benefit Managers (PBM) and Healthcare Benefit Managers (HCBM) are middle men who contract with health insurance providers. They negotiate rates with drug companies and pharmacies, and also frequently review and accept or deny claims on behalf of insurance companies. SB 5601 requires PBM’s and HCBM’s to register with the Office of the Insurance Commissioner. It also requires contracts between health carriers and PBM / HCBM’s to be reviewed by the Office of the Insurance Commissioner.
Reviewing Part Time Employee Eligibility for SEBB Insurance, Senate Bill 6189
WSSRA opposed SB 6189. This bill started the legislative session as a means to eliminate substitute teachers and retirees from participating in SEBB insurance plans for full time employees. This change would be detrimental to the financial well-being of retirees who substitute teach more than 630 hours per year. Also, it is illegal under federal law to discriminate based on eligibility for Medicare. The bill was sufficiently watered down (a big thank you to our friends at WEA) and is now only a study bill.
Increasing the Number of Beds at Adult Family Homes, House Bill 1023
Under current law, adult family homes are limited to six beds. HB 1023 would allow adult family homes with sufficient space and emergency evacuation ability to have up to eight beds. Adult family homes are substantially cheaper than nursing homes and are increasingly being used for long-term-care patients who need more services than home health nursing, but do not need full time nursing home care.
Reviewing Health Insurance Carrier Financial Surpluses, Senate Bill 6097
Starting with the 2021 health plans, Senate Bill 6097 allows the Office of the Insurance Commissioner to review the surplus, capital, and profit of health insurance carriers before setting future health premium rates.
Continuing VEBA and Fringe Benefits, House Bill 2458
A recent Healthcare Authority (HCA) decision mandated that schools may only offer benefits that were provided by the Healthcare Authority. In creating the SEBB program, the legislature did not intend to restrict all other fringe benefits offered to school employees. House Bill 2458 ensures that programs like VEBA (tax free medical savings) and Aflac cancer insurance can continue to be offered by school districts as benefits, as long as they do not compete with HCA programs.
Switching from Medicare Plan F to Plan G, Administrative Law Change
Medigap Plan F has been discontinued by the federal government. The Washington State Healthcare Authority can no longer add members to Plan F, and it is in what they call a death spiral. Every year premiums will increase as the plan has fewer participants. Medigap Plan G is taking its place. Plan G will offer lower monthly premiums but will incorporate higher co-pays for medical services.
Importing Prescription Drugs from Canada, Senate Bills 6110 & 6111 – DIED
Senate Bills 6110 & 6111 were designed to provide bulk prescription drug importation from Canada. SB 6110 was designed to implement 90-day mail order from Canadian pharmacies. SB 6111 set up a pharmacy tourism / safe pharmacy program for PEBB and SEBB participants. Both bills received public hearings in the Senate Heath Committee, but died in committee.
Insulin Single Purchaser, Senate Bill 6113 – DIED
The State Healthcare Authority serves as the central medication purchaser for state government managed health plans. SB 6113 would have made HCA the central insulin purchaser for the entire state of Washington. SB 6113 passed the Senate 28-20, but died on the House Floor.
Creating Prescription Drug Price Review Board, Senate Bill 6088 - DIED
In 2019, the Washington State Legislature passed legislation requiring medication pricing be made available to the Washington State Healthcare Authority (House Bill 1224). Senate Bill 6088 would have built on that legislation and created a board to review large spikes in medication prices. The board would be required to make a recommendation to the Healthcare Authority on whether those increases were justified. SB 6088 passed the legislature but was vetoed by the governor
Increasing Accrued Sick Leave for School Employees, HB 1409 & SB 5414 – DIED
School employees are not allowed to accrue as much sick leave as state agency employees. WSSRA sought to correct that discrepancy by sponsoring these bills. Both HB 1409 and SB 5414 would have increased the number of sick days an employee is allowed to accrue from one hundred eighty to two hundred and sixty. The legislation hit an unexpected snag when the fiscal report indicated a $40 million budget impact across school districts. The lower cap on hours forces leave cash outs at lower salaries. Neither HB 1409 or SB 5414 received a public hearing.
This report highlighted a small selection of the 3,672 bills legislators sponsored during the 2019-2020 Biennium. Many of those bills had amendments and substitutes. The WSSRA Office is happy to answer any questions regarding the bills listed above or the thousands of other documents generated by legislators over the past 15 months.
The 2021 Washington State Legislative Session begins January 11th. The bills listed above that did not pass in 2020 may be re-sponsored. Any member may petition WSSRA to lobby on specific legislation. The process is for a retirees’ local unit to make a formal motion that can be debated by the regional coordinating council and finally the WSSRA Executive Board.