Budget Pressures

There have been a number of new pressures on the GIC’s budget. Two communities, Orange and Peabody, joined mid-year in FY13 after the appropriation for FY14 was passed. 

Another area of concern is the GIC’s administrative fund.  Although the GIC’s enrollment growth has exploded by 36.5% during the last five years, and total expenditures are now at $2.1 billion, the GIC’s staffing levels have remained the same during this time period at 55 full-time employees.  Because the Commission has voted the use of employee-generated trust funds to pay for some administrative needs, including information technology, telephones, and communications the GIC’s appropriation for these services has not been included in the General Appropriation Act.  Because of the low interest rates over the past several years, the trust fund is expected to be exhausted by FY19 (see Financial and Trend Reports for additional details).

A third budgetary issue is the misperception about how much money the Commonwealth spends on employee benefits.  While over 50% of the GIC’s appropriation is reimbursed from offline housing and redevelopment authorities and municipalities, these offsets to the total appropriation do not show on the GIC’s budget line item.  They are instead returned to the Commonwealth’s General Fund and are accounted for as revenues, but the result is that the GIC’s appropriation appears much larger than it actually is (see Financial and Trend Reports for additional details).

In the short term, the GIC has been able to pay FY13 and FY14 claims shortfalls using funds available through the Affordable Care Act.  The Early Retiree Reinsurance Program (ERRP) reimbursed employers that covered pre-Medicare retirees.  These funds will be depleted in FY14 and we will need a jump in appropriation to cover the use of these one-time revenues.

Implementing Federal Health Care Reform

More aspects of federal health care reform went into effect in FY13 and the GIC implemented all of these without additional resources:

  • W-2 reporting:  For the 2012 calendar year, the value of each individual’s health plan was required to be reported on employees’ W-2 form.  The GIC created and sent almost 40 data feeds to municipalities and offline agencies for their employees.  The GIC also worked on coordinating this project with the Comptroller to report these amounts for employees covered by the HR/CMS and UMass payroll systems.
  • Summary of Benefits and Coverage: These standardized plan descriptions were required to be distributed to all employees before the beginning of Annual Enrollment and to new hires.  The GIC devised standard template language that could be used by all plans, particularly with the GIC’s tiered networks and then worked with the health plans to develop and distribute the notices to employees.  We also updated new hire procedures to administer these changes.
  • Section 125 Plan for Non-GIC Eligible Employees:  Under state health care reform, the GIC, in partnership with Administration and Finance, the Comptroller, and the Connector Authority, had offered non-GIC eligible employees the option of purchasing health insurance on a pretax basis through the Connector Authority.  As the Connector would become an Exchange under federal health care reform effective January 1, 2014, they would no longer be able to offer this program.  During FY13, the GIC, A&F, and the Comptroller worked together to find a replacement solution.

Enrolling and Disenrolling Members

Adding new members is a major endeavor to ensure smooth transitions, including data exchanges, training sessions, communications development and distribution, programming changes, health fairs, data entry, and billing reconciliation.  During FY13, the following new groups joined for health insurance benefits:

Effective January 1, 2013: 2,270 New Members

Town of Orange

MBTA Superior Officers

City of Peabody

Legislation passed to allow Building Based Educators in the City of Lawrence to join; 20 employees joined and were manually processed so that the coverage could be effective March 1, 2013.

Effective July 1, 2013:  Almost 830 New Members

Town of Dracut

Nashoba Valley Regional Dispatch District

Withdrawals from Coverage

The GIC received its first request to withdraw from municipal coverage from the Wachusett Regional School District, with 700 members leaving effective July 1, 2013.  Additionally, the following communities, representing 125 members, withdrew from the GIC Retired Municipal Teacher (RMT) program: Amherst, Pelham, and Amherst-Pelham Regional School District effective September 30, 2012, and Ware effective July 1, 2013.  For RMT withdrawals, the GIC coordinates the termination of life and health insurance coverage with the governmental unit, notifies the Department of Revenue to adjust the annual cherry sheet assessment, and monitors activity for the next two years to adjust any estimated and actual premium assessments.  Approximately 420 Retired Municipal Teachers converted from RMT to municipal coverage when Orange and Peabody joined the GIC under municipal health reform.

New Municipal Retiree Dental Option

The FY13 budget amended municipal health care reform to allow participating municipalities to join the GIC’s Retiree Dental Plan.  The GIC created, implemented and distributed to its municipalities an Administrative Bulletin to outline the administrative steps of this option.  The following municipalities elected to join the GIC’s Retiree Dental Plan effective July 1, 2013, and the GIC completed the operational, programming and communications steps, enrolling over 1,200 municipal members in the program:

City of Melrose
City of Peabody
City of Pittsfield

Town of Bedford
Town of Brookline
Town of Holbrook

Town of Holden
Town of Hopedale
Town of Millis
Town of Randolph
Town of Saugus

Athol Roylston School District
Northeast Metropolitan Regional Vocational School

This information provided by the Group Insurance Commission .