Sub. H. B. No. 46 As Reported by the House Health Committee

Representatives Schaffer, McGregor, J., Fessler, Taylor, Reidelbach, Martin

A BILL

To amend section 9.833 and to enact section 305.172 1
of the Revised Code to permit political 2
subdivisions to offer and make contributions to 3
health savings accounts for employees. 4

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

       Section 1. That section 9.833 be amended and section 305.172 5
of the Revised Code be enacted to read as follows: 6

       Sec. 9.833. (A) As used in this section, "political 7
subdivision" means a municipal corporation, township, county, 8
school district, or other body corporate and politic responsible 9
for governmental activities in a geographic area smaller than that 10
of the state. 11

       (B) Political subdivisions that provide health care benefits 12
for their officers or employees may do any of the following: 13

       (1) Establish and maintain an individual self-insurance 14
program with public moneys to provide authorized health care 15
benefits, including but not limited to, health care, prescription 16
drugs, dental care, and vision care, in accordance with division 17
(C) of this section; 18

       (2) Establish and maintain a health savings account program 19
whereby employees or officers may establish and maintain health 20
savings accounts in accordance with section 223 of the Internal 21
Revenue Code. Public moneys may be used to subsidize premiums for 22
federally qualified high deductible health plans that are linked 23
to health savings accounts or to make contributions to health 24
savings accounts. 25

       (3) After establishing an individual self-insurance program, 26
agree with other political subdivisions that have established 27
individual self-insurance programs for health care benefits, that 28
their programs will be jointly administered in a manner specified 29
in the agreement; 30

       ~~(3)~~(4) Pursuant to a written agreement and in accordance with 31
division (C) of this section, join in any combination with other 32
political subdivisions to establish and maintain a joint 33
self-insurance program to provide health care benefits; 34

       ~~(4)~~(5) Pursuant to a written agreement, join in any 35
combination with other political subdivisions to procure or 36
contract for policies, contracts, or plans of insurance to provide 37
health care benefits for their officers and employees subject to 38
the agreement; 39

       ~~(5)~~(6) Use in any combination any of the policies, contracts, 40
plans, or programs authorized under this division. 41

       (C) Except as otherwise provided in division (E) of this 42
section, the following apply to individual or joint self-insurance 43
programs established pursuant to this section: 44

       (1) Such funds shall be reserved as are necessary, in the 45
exercise of sound and prudent actuarial judgment, to cover 46
potential cost of health care benefits for the officers and 47
employees of the political subdivision. A report of amounts so 48
reserved and disbursements made from such funds, together with a 49
written report of a member of the American academy of actuaries 50
certifying whether the amounts reserved conform to the 51
requirements of this division, are computed in accordance with 52
accepted loss reserving standards, and are fairly stated in 53
accordance with sound loss reserving principles, shall be prepared 54
and maintained, within ninety days after the last day of the 55
fiscal year of the entity for which the report is provided for 56
that fiscal year, in the office of the program administrator 57
described in division (C)(3) of this section. 58

       The report required by division (C)(1) of this section shall 59
include, but not be limited to, disbursements made for the 60
administration of the program, including claims paid, costs of the 61
legal representation of political subdivisions and employees, and 62
fees paid to consultants. 63

       The program administrator described in division (C)(3) of 64
this section shall make the report required by this division 65
available for inspection by any person at all reasonable times 66
during regular business hours, and, upon the request of such 67
person, shall make copies of the report available at cost within a 68
reasonable period of time. 69

       (2) Each political subdivision shall reserve funds necessary 70
for an individual or joint self-insurance program in a special 71
fund that may be established pursuant to an ordinance or 72
resolution of the political subdivision and not subject to section 73
5705.12 of the Revised Code. The political subdivision may 74
allocate the costs of insurance or any self-insurance program, or 75
both, among the funds or accounts in the subdivision's treasury on 76
the basis of relative exposure and loss experience. 77

       (3) A contract may be awarded, without the necessity of 78
competitive bidding, to any person, political subdivision, 79
nonprofit corporation organized under Chapter 1702. of the Revised 80
Code, or regional council of governments created under Chapter 81
167. of the Revised Code for purposes of administration of an 82
individual or joint self-insurance program. No such contract shall 83
be entered into without full, prior, public disclosure of all 84
terms and conditions. The disclosure shall include, at a minimum, 85
a statement listing all representations made in connection with 86
any possible savings and losses resulting from the contract, and 87
potential liability of any political subdivision or employee. The 88
proposed contract and statement shall be disclosed and presented 89
at a meeting of the political subdivision not less than one week 90
prior to the meeting at which the political subdivision authorizes 91
the contract. 92

       A contract awarded to a nonprofit corporation or a regional 93
council of governments under this division may provide that all 94
employees of the nonprofit corporation or regional council of 95
governments and the employees of all entities related to the 96
nonprofit corporation or regional council of governments may be 97
covered by the individual or joint self-insurance program under 98
the terms and conditions set forth in the contract. 99

       (4) The individual or joint self-insurance program shall 100
include a contract with a member of the American academy of 101
actuaries for the preparation of the written evaluation of the 102
reserve funds required under division (C)(1) of this section. 103

       (5) A joint self-insurance program may allocate the costs of 104
funding the program among the funds or accounts in the treasuries 105
of the participating political subdivisions on the basis of their 106
relative exposure and loss experience. 107

       (6) An individual self-insurance program may allocate the 108
costs of funding the program among the funds or accounts in the 109
treasury of the political subdivision that established the 110
program. 111

       (7) Two or more political subdivisions may also authorize the 112
establishment and maintenance of a joint health care cost 113
containment program, including, but not limited to, the employment 114
of risk managers, health care cost containment specialists, and 115
consultants, for the purpose of preventing and reducing health 116
care costs covered by insurance, individual self-insurance, or 117
joint self-insurance programs. 118

       (8) A political subdivision is not liable under a joint 119
self-insurance program for any amount in excess of amounts payable 120
pursuant to the written agreement for the participation of the 121
political subdivision in the joint self-insurance program. Under a 122
joint self-insurance program agreement, a political subdivision 123
may, to the extent permitted under the written agreement, assume 124
the risks of any other political subdivision. A joint 125
self-insurance program established under this section is deemed a 126
separate legal entity for the public purpose of enabling the 127
members of the joint self-insurance program to obtain insurance or 128
to provide for a formalized, jointly administered self-insurance 129
fund for its members. An entity created pursuant to this section 130
is exempt from all state and local taxes. 131

       (9) Any political subdivision may issue general obligation 132
bonds, or special obligation bonds that are not payable from real 133
or personal property taxes, and may also issue notes in 134
anticipation of such bonds, pursuant to an ordinance or resolution 135
of its legislative authority or other governing body for the 136
purpose of providing funds to pay expenses associated with the 137
settlement of claims, whether by way of a reserve or otherwise, 138
and to pay the political subdivision's portion of the cost of 139
establishing and maintaining an individual or joint self-insurance 140
program or to provide for the reserve in the special fund 141
authorized by division (C)(2) of this section. 142

       In its ordinance or resolution authorizing bonds or notes 143
under this section, a political subdivision may elect to issue 144
such bonds or notes under the procedures set forth in Chapter 133. 145
of the Revised Code. In the event of such an election, 146
notwithstanding Chapter 133. of the Revised Code, the maturity of 147
the bonds may be for any period authorized in the ordinance or 148
resolution not exceeding twenty years, which period shall be the 149
maximum maturity of the bonds for purposes of section 133.22 of 150
the Revised Code. 151

       Bonds and notes issued under this section shall not be 152
considered in calculating the net indebtedness of the political 153
subdivision under sections 133.04, 133.05, 133.06, and 133.07 of 154
the Revised Code. Sections 9.98 to 9.983 of the Revised Code are 155
hereby made applicable to bonds or notes authorized under this 156
section. 157

       (10) A joint self-insurance program is not an insurance 158
company. Its operation does not constitute doing an insurance 159
business and is not subject to the insurance laws of this state. 160

       (D) A political subdivision may procure group life insurance 161
for its employees in conjunction with an individual or joint 162
self-insurance program authorized by this section, provided that 163
the policy of group life insurance is not self-insured. 164

       (E) Divisions (C)(1), (2), and (4) of this section do not 165
apply to individual self-insurance programs in municipal 166
corporations, townships, or counties. 167

       (F) A public official or employee of a political subdivision 168
who is or becomes a member of the governing body of the program 169
administrator of a joint self-insurance program in which the 170
political subdivision participates is not in violation of division 171
(D) or (E) of section 102.03, division (C) of section 102.04, or 172
section 2921.42 of the Revised Code as a result of either of the 173
following: 174

       (1) The political subdivision's entering under this section 175
into the written agreement to participate in the joint 176
self-insurance program; 177

       (2) The political subdivision's entering under this section 178
into any other contract with the joint self-insurance program. 179

       Sec. 305.172. As used in this section, "county officer or 180
employee" includes, but is not limited to, a member or employee of 181
the county board of elections. 182

        The board of county commissioners of any county may establish 183
and maintain a health savings account program whereby county 184
officers or employees may establish and maintain health savings 185
accounts in accordance with section 223 of the Internal Revenue 186
Code. Public moneys may be used to subsidize premiums for 187
federally qualified high deductible health plans that are linked 188
to health savings accounts or to make contributions to health 189
savings accounts. 190

       Section 2. That existing section 9.833 of the Revised Code is 191
hereby repealed. 192

Section 1. That section 9.833 be amended and section 305.172	5
of the Revised Code be enacted to read as follows:	6

Sec. 9.833. (A) As used in this section, "political	7
subdivision" means a municipal corporation, township, county,	8
school district, or other body corporate and politic responsible	9
for governmental activities in a geographic area smaller than that	10
of the state.	11

(B) Political subdivisions that provide health care benefits	12
for their officers or employees may do any of the following:	13

(1) Establish and maintain an individual self-insurance	14
program with public moneys to provide authorized health care	15
benefits, including but not limited to, health care, prescription	16
drugs, dental care, and vision care, in accordance with division	17
(C) of this section;	18

(2) Establish and maintain a health savings account program	19
whereby employees or officers may establish and maintain health	20
savings accounts in accordance with section 223 of the Internal	21
Revenue Code. Public moneys may be used to subsidize premiums for	22
federally qualified high deductible health plans that are linked	23
to health savings accounts or to make contributions to health	24
savings accounts.	25

(3) After establishing an individual self-insurance program,	26
agree with other political subdivisions that have established	27
individual self-insurance programs for health care benefits, that	28
their programs will be jointly administered in a manner specified	29
in the agreement;	30

~~(3)~~(4) Pursuant to a written agreement and in accordance with	31
division (C) of this section, join in any combination with other	32
political subdivisions to establish and maintain a joint	33
self-insurance program to provide health care benefits;	34

~~(4)~~(5) Pursuant to a written agreement, join in any	35
combination with other political subdivisions to procure or	36
contract for policies, contracts, or plans of insurance to provide	37
health care benefits for their officers and employees subject to	38
the agreement;	39

~~(5)~~(6) Use in any combination any of the policies, contracts,	40
plans, or programs authorized under this division.	41

(C) Except as otherwise provided in division (E) of this	42
section, the following apply to individual or joint self-insurance	43
programs established pursuant to this section:	44

(1) Such funds shall be reserved as are necessary, in the	45
exercise of sound and prudent actuarial judgment, to cover	46
potential cost of health care benefits for the officers and	47
employees of the political subdivision. A report of amounts so	48
reserved and disbursements made from such funds, together with a	49
written report of a member of the American academy of actuaries	50
certifying whether the amounts reserved conform to the	51
requirements of this division, are computed in accordance with	52
accepted loss reserving standards, and are fairly stated in	53
accordance with sound loss reserving principles, shall be prepared	54
and maintained, within ninety days after the last day of the	55
fiscal year of the entity for which the report is provided for	56
that fiscal year, in the office of the program administrator	57
described in division (C)(3) of this section.	58

The report required by division (C)(1) of this section shall	59
include, but not be limited to, disbursements made for the	60
administration of the program, including claims paid, costs of the	61
legal representation of political subdivisions and employees, and	62
fees paid to consultants.	63

The program administrator described in division (C)(3) of	64
this section shall make the report required by this division	65
available for inspection by any person at all reasonable times	66
during regular business hours, and, upon the request of such	67
person, shall make copies of the report available at cost within a	68
reasonable period of time.	69

(2) Each political subdivision shall reserve funds necessary	70
for an individual or joint self-insurance program in a special	71
fund that may be established pursuant to an ordinance or	72
resolution of the political subdivision and not subject to section	73
5705.12 of the Revised Code. The political subdivision may	74
allocate the costs of insurance or any self-insurance program, or	75
both, among the funds or accounts in the subdivision's treasury on	76
the basis of relative exposure and loss experience.	77

(3) A contract may be awarded, without the necessity of	78
competitive bidding, to any person, political subdivision,	79
nonprofit corporation organized under Chapter 1702. of the Revised	80
Code, or regional council of governments created under Chapter	81
167. of the Revised Code for purposes of administration of an	82
individual or joint self-insurance program. No such contract shall	83
be entered into without full, prior, public disclosure of all	84
terms and conditions. The disclosure shall include, at a minimum,	85
a statement listing all representations made in connection with	86
any possible savings and losses resulting from the contract, and	87
potential liability of any political subdivision or employee. The	88
proposed contract and statement shall be disclosed and presented	89
at a meeting of the political subdivision not less than one week	90
prior to the meeting at which the political subdivision authorizes	91
the contract.	92

A contract awarded to a nonprofit corporation or a regional	93
council of governments under this division may provide that all	94
employees of the nonprofit corporation or regional council of	95
governments and the employees of all entities related to the	96
nonprofit corporation or regional council of governments may be	97
covered by the individual or joint self-insurance program under	98
the terms and conditions set forth in the contract.	99

(4) The individual or joint self-insurance program shall	100
include a contract with a member of the American academy of	101
actuaries for the preparation of the written evaluation of the	102
reserve funds required under division (C)(1) of this section.	103

(5) A joint self-insurance program may allocate the costs of	104
funding the program among the funds or accounts in the treasuries	105
of the participating political subdivisions on the basis of their	106
relative exposure and loss experience.	107

(6) An individual self-insurance program may allocate the	108
costs of funding the program among the funds or accounts in the	109
treasury of the political subdivision that established the	110
program.	111

(7) Two or more political subdivisions may also authorize the	112
establishment and maintenance of a joint health care cost	113
containment program, including, but not limited to, the employment	114
of risk managers, health care cost containment specialists, and	115
consultants, for the purpose of preventing and reducing health	116
care costs covered by insurance, individual self-insurance, or	117
joint self-insurance programs.	118

(8) A political subdivision is not liable under a joint	119
self-insurance program for any amount in excess of amounts payable	120
pursuant to the written agreement for the participation of the	121
political subdivision in the joint self-insurance program. Under a	122
joint self-insurance program agreement, a political subdivision	123
may, to the extent permitted under the written agreement, assume	124
the risks of any other political subdivision. A joint	125
self-insurance program established under this section is deemed a	126
separate legal entity for the public purpose of enabling the	127
members of the joint self-insurance program to obtain insurance or	128
to provide for a formalized, jointly administered self-insurance	129
fund for its members. An entity created pursuant to this section	130
is exempt from all state and local taxes.	131

(9) Any political subdivision may issue general obligation	132
bonds, or special obligation bonds that are not payable from real	133
or personal property taxes, and may also issue notes in	134
anticipation of such bonds, pursuant to an ordinance or resolution	135
of its legislative authority or other governing body for the	136
purpose of providing funds to pay expenses associated with the	137
settlement of claims, whether by way of a reserve or otherwise,	138
and to pay the political subdivision's portion of the cost of	139
establishing and maintaining an individual or joint self-insurance	140
program or to provide for the reserve in the special fund	141
authorized by division (C)(2) of this section.	142

In its ordinance or resolution authorizing bonds or notes	143
under this section, a political subdivision may elect to issue	144
such bonds or notes under the procedures set forth in Chapter 133.	145
of the Revised Code. In the event of such an election,	146
notwithstanding Chapter 133. of the Revised Code, the maturity of	147
the bonds may be for any period authorized in the ordinance or	148
resolution not exceeding twenty years, which period shall be the	149
maximum maturity of the bonds for purposes of section 133.22 of	150
the Revised Code.	151

Bonds and notes issued under this section shall not be	152
considered in calculating the net indebtedness of the political	153
subdivision under sections 133.04, 133.05, 133.06, and 133.07 of	154
the Revised Code. Sections 9.98 to 9.983 of the Revised Code are	155
hereby made applicable to bonds or notes authorized under this	156
section.	157

(10) A joint self-insurance program is not an insurance	158
company. Its operation does not constitute doing an insurance	159
business and is not subject to the insurance laws of this state.	160

(D) A political subdivision may procure group life insurance	161
for its employees in conjunction with an individual or joint	162
self-insurance program authorized by this section, provided that	163
the policy of group life insurance is not self-insured.	164

(E) Divisions (C)(1), (2), and (4) of this section do not	165
apply to individual self-insurance programs in municipal	166
corporations, townships, or counties.	167

(F) A public official or employee of a political subdivision	168
who is or becomes a member of the governing body of the program	169
administrator of a joint self-insurance program in which the	170
political subdivision participates is not in violation of division	171
(D) or (E) of section 102.03, division (C) of section 102.04, or	172
section 2921.42 of the Revised Code as a result of either of the	173
following:	174

(1) The political subdivision's entering under this section	175
into the written agreement to participate in the joint	176
self-insurance program;	177

(2) The political subdivision's entering under this section	178
into any other contract with the joint self-insurance program.	179