State Prescription Drug Benefits - Retirees

EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
*hb0696*

HOUSE BILL 696
P6, P4 6lr0976
HB 356/25 – APP
By: Delegates Grammer, Arikan, Chisholm, Fisher, M. Morgan, Nawrocki, and
Szeliga
Introduced and read first time: February 2, 2026
Assigned to: Appropriations

A BILL ENTITLED

AN ACT concerning 1

State Prescription Drug Benefits – Retirees 2

FOR the purpose of authorizing certain retirees who began State service before a certain 3
date to be eligible for prescription drug benefits in the State Employee and Retiree 4
Health and Welfare Benefits Program; specifying that prescription drug benefits 5
shall be discontinued for certain Medicare–eligible retirees who began State service 6
on or after a certain date and their Medicare –eligible spouses and dependent 7
children; repealing the Maryland State Retiree Prescription Drug Coverage 8
Program, the Maryland State Retiree Catastrophic Prescription Drug Assistance 9
Program, and the Maryland State Retiree Life –Sustaining P rescription Drug 10
Assistance Program; repealing a requirement that the Secretary of Budget and 11
Management provide a certain notice; repealing a requirement for the Department 12
of Budget and Management to submit certain reports and ensure Medicare –eligible 13
retirees have access to certain services; and generally relating to State prescription 14
drug benefits for retirees from State employment. 15

BY repealing and reenacting, with amendments, 16
Article – State Personnel and Pensions 17
Section 2–509.1 18
Annotated Code of Maryland 19
(2024 Replacement Volume and 2025 Supplement) 20

BY repealing 21
Chapter 767 of the Acts of the General Assembly of 2019 22
Section 2, 4, and 5 23

SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 24
That the Laws of Maryland read as follows: 25

Article – State Personnel and Pensions 26
2 HOUSE BILL 696

2–509.1. 1

(a) (1) Except as provided in subsection (b) of this section, the State shall 2
continue to include a prescription drug benefit plan in the health insurance benefit options 3
established under the Program and available to retirees under §§ 2–508 and 2–509 of this 4
subtitle notwithstanding the enactment of the federal Medicare Prescription Drug, 5
Improvement, and Modernization Act of 2003 or any other federal law permitting states to 6
discontinue prescription drug benefit plans to retirees of a state. 7

(2) Except as provided in subsection (b) of this section: 8

(i) a retiree may elect to cover the retiree’s spouse or dependent 9
child under the State prescription drug benefit plan under §§ 2 –508 and 2 –509 of t his 10
subtitle; and 11

(ii) if a surviving spouse or surviving dependent child of a retiree is 12
eligible to enroll in the State prescription drug benefit plan under § 2–508 or § 2–509 of this 13
subtitle, the surviving spouse or surviving dependent child may elect to enroll in the State 14
prescription drug benefit plan. 15

(b) (1) THIS SUBSECTION APPLI ES ONLY TO A RETIREE WHO BEGAN 16
STATE SERVICE ON OR AFTER JULY 1, 2011. 17

(2) Except as provided in [subsection (c) of this section ] PARAGRAPH (3) 18
OF THIS SUBSECTION, on January 1, 2019, the State shall discontinue prescription drug 19
benefits for: 20

[(1)] (I) a Medicare–eligible retiree; 21

[(2)] (II) the Medicare–eligible spouse or surviving spouse of a retiree; and 22

[(3)] (III) a Medicare–eligible dependent child or surviving dependent child 23
of a retiree. 24

[(c) (1)] (3) (I) If a retiree is eligible to participate in the prescription 25
drug benefit plan under Medicare, but the retiree’s spouse or dependent child is not eligible 26
to participate in a Medicare prescriptio n drug benefit plan, the retiree may elect to cover 27
the retiree’s spouse or dependent child under the State prescription drug benefit plan. 28

[(2)] (II) If the surviving spouse or surviving dependent child of a retiree 29
is eligible to enroll in the State p rescription drug benefit plan under § 2–508 or § 2–509 of 30
this subtitle, but is not eligible to participate in the prescription drug benefit plan under 31
Medicare, the surviving spouse or surviving dependent child may elect to enroll in the State 32
prescription drug benefit plan. 33

HOUSE BILL 696 3

[(d) (1) This subsection applies only to a retiree, a retiree’s spouse or surviving 1
spouse, and a retiree’s dependent child or surviving dependent child: 2

(i) who is enrolled in a prescription drug benefit plan under 3
Medicare; 4

(ii) if the retiree is retired on or before December 31, 2019; and 5

(iii) if the retiree is eligible under § 2 –508 or § 2–509 of this subtitle 6
to enroll and participate in the health insurance benefit options established under the 7
Program. 8

(2) (i) Subject to subparagraph (ii) of this paragraph, on or before 9
January 1, 2020, the Department shall establish a Maryland State Retiree Prescription 10
Drug Coverage Program that reimburses a participant for out–of–pocket costs that exceed 11
the limits established for non –Medicare–eligible retirees in § 2 –508(d)(2)(iii) of this 12
subtitle. 13

(ii) The Department may establish an out –of–pocket limit higher 14
than the limits established in subparagraph (i) of this paragraph for a retiree who qualifies 15
for a partial State subsidy. 16

(3) The Maryland State Retiree Prescription Drug Coverage Program 17
established under paragraph (2) of this subsection may include: 18

(i) a health reimbursement account established in accordance with 19
§ 105(h) of the Internal Revenue Code; or 20

(ii) another program that provides assistance with prescription drug 21
costs. 22

(4) A retiree, a retiree’s spouse or surviving spouse, and a retiree’s 23
dependent child or surviving dependent child may enroll in the Maryland State Retiree 24
Prescription Dru g Coverage Program during the open enrollment period or any special 25
enrollment period for retiree health insurance benefit options. 26

(e) (1) This subsection applies only to a retiree, a retiree’s spouse or surviving 27
spouse, and a retiree’s dependent child or surviving dependent child: 28

(i) who is enrolled in a prescription drug benefit plan under 29
Medicare; and 30

(ii) if the retiree: 31

1. began State service on or before June 30, 2011; 32

2. retired on or after January 1, 2020; and 33
4 HOUSE BILL 696

3. is eligible under § 2–508 or § 2–509 of this subtitle to enroll 1
and participate in the health insurance benefit options established under the Program. 2

(2) (i) Subject to subparagraph (ii) of this paragraph, on or before 3
January 1, 2020, the Department shall es tablish a Maryland State Retiree Catastrophic 4
Prescription Drug Assistance Program that reimburses a participant for out –of–pocket 5
costs after the participant has entered catastrophic coverage under a prescription drug 6
benefit plan under Medicare. 7

(ii) The Department may establish a maximum reimbursement 8
amount for a retiree who qualifies for a partial State subsidy. 9

(3) The Maryland State Retiree Catastrophic Prescription Drug Assistance 10
Program under paragraph (2) of this subsection may provide reimbursements through: 11

(i) a health reimbursement account established in accordance with 12
§ 105(h) of the Internal Revenue Code; or 13

(ii) another program that provides assistance with prescription drug 14
costs. 15

(4) A retiree, a retiree’s spouse or surviving spouse, and a retiree’s 16
dependent child or surviving dependent child may enroll in the Maryland State Retiree 17
Catastrophic Prescription Drug Assistance Program during the open enrollment period or 18
any special enrollment period for retiree health insurance benefit options. 19

(f) (1) This subsection applies only to a retiree, a retiree’s spouse or surviving 20
spouse, and a retiree’s dependent child or surviving dependent child: 21

(i) who is enrolled in: 22

1. the Maryland State Retiree Prescriptio n Drug Coverage 23
Program established under subsection (d) of this section; or 24

2. the Maryland State Retiree Catastrophic Prescription 25
Drug Assistance Program established under subsection (e) of this section; and 26

(ii) if the retiree is eligible under § 2–508 or § 2–509 of this subtitle 27
to enroll and participate in the health insurance benefit options established under the 28
Program. 29

(2) (i) On or before January 1, 2020, the Department shall establish a 30
Maryland State Retiree Life –Sustaining Prescrip tion Drug Assistance Program that 31
reimburses a participant for out–of–pocket costs for a life–sustaining prescription drug that 32
is: 33

HOUSE BILL 696 5

1. covered by the prescription drug benefit plan in the health 1
insurance benefit options established under the Program; and 2

2. not covered by the prescription drug benefit plan under 3
Medicare in which the participant is enrolled. 4

(ii) The Department shall develop a list of the prescription drugs 5
that qualify for reimbursement under subparagraph (i) of this paragraph. 6

(iii) The Department may establish maximum reimbursement 7
amounts for a retiree who qualifies for a partial State subsidy. 8

(3) The Maryland State Retiree Life –Sustaining Prescription Drug 9
Assistance Program established under paragraph (2) of this subsection may provide 10
reimbursements through: 11

(i) a health reimbursement account established in accordance with 12
§ 105(h) of the Internal Revenue Code; or 13

(ii) another program that provides assistance with prescription drug 14
costs. 15

(4) A retiree, a retiree’s spouse or surviving spouse, and a retiree’s 16
dependent child or surviving dependent child shall be automatically enrolled in the 17
Maryland State Retiree Life –Sustaining Prescription Drug Assistance Program on 18
enrollment in: 19

(i) the Maryland State Retiree Prescription Drug Coverage Program 20
established under subsection (d) of this section; or 21

(ii) the Maryland State Retiree Catastrophic Prescription Drug 22
Assistance Program established under subsection (e) of this section. 23

(g) (1) Subject to paragraph (2) of this subsection, not later than July 1 of each 24
year, the Secretary shall provide written certified notice of the change in the State 25
prescription drug benefit plan under this section to the individuals who will become eligible 26
in the next calendar year to enroll in the: 27

(i) Maryland State Retiree Prescription Drug Coverage Program; 28

(ii) Maryland State Retiree Catastrophic Prescription Drug 29
Assistance Program; or 30

(iii) Maryland State Retiree Life –Sustaining Prescriptio n Drug 31
Assistance Program. 32

(2) The notice shall include information regarding: 33
6 HOUSE BILL 696

(i) coverage options available in the Medicare prescription drug 1
benefit plan, including options that are similar to the prescription drug benefit plan in the 2
health insurance benefit options established under the Program; 3

(ii) the potential for significant penalties if an individual does not 4
promptly choose a Medicare prescription drug benefit plan immediately on termination of 5
the individual’s participation in the State prescription drug benefit plan; 6

(iii) the programs available under subsections (d), (e), and (f) of this 7
section; and 8

(iv) any additional resources made available by the Department in 9
accordance with this section. 10

(h) (1) The Department shall ensure Medicare–eligible retirees have access to 11
one–on–one counseling services to assist retirees in selecting a Medicare prescription drug 12
benefit plan. 13

(2) The Department shall develop a plan to communicate to 14
Medicare–eligible retirees the availability of: 15

(i) the programs under subsections (d), (e), and (f) of this section; 16
and 17

(ii) services and information regarding prescription drug benefit 18
plans under Medicare. 19

(3) On or before December 31, 2019, the Department shall submit a report 20
to the Senate Budget and Taxation Committee and the House Appropriations Committee, 21
in accordance with § 2–1257 of the State Government Article, on the plan developed under 22
paragraph (2) of this subsection. 23

(4) The report required under paragraph (3) of this subsection shall 24
include: 25

(i) options for providing one–on–one counseling, including: 26

1. in–person, over–the–phone, or web–based counseling; 27

2. the times at which one –on–one counseling will be 28
available; 29

3. a plan to ensure equitable geographic access to 30
one–on–one counseling; and 31

4. entering into a statewide contract with an employee 32
HOUSE BILL 696 7

benefits administrator or similar entity to provide one–on–one counseling services; 1

(ii) plans for holding seminars in every county of the State to provide 2
information regarding eligibility for and available benefits under the programs established 3
under subsections (d), (e), and (f) of this section; 4

(iii) plans for providing access to a web –based overview and 5
interactive website that provide information on: 6

1. Medicare prescription drug benefit plans; and 7

2. subsidy and financial assistance programs for low–income 8
individuals; and 9

(iv) plans for providing a toll –free hotline for reporting issues and 10
concerns regarding the services provided in accordance with this paragraph. 11

(i) Subject to the requirements of § 13–108 of the State Finance and Procurement 12
Article, the Department may make an emergency procurement for: 13

(1) staff required to carry out the provisions of this section; and 14

(2) a third party to administer health reimbursement accounts established 15
under this section. 16

(j) The Department shall submit quarterly reports to the Governor and, in 17
accordance with § 2 –1257 of the State Government Article, the Ho use Appropriations 18
Committee, the Senate Budget and Taxation Committee, and the Joint Committee on 19
Pensions, on: 20

(1) the status of establishing the programs under subsections (d), (e), and 21
(f) of this section, including: 22

(i) the status of procuring any contracts necessary to operate the 23
programs; and 24

(ii) the prescription drugs determined to qualify for reimbursement 25
under the Maryland State Retiree Life–Sustaining Prescription Drug Assistance Program 26
under subsection (f) of this section; 27

(2) the availability of one –on–one counseling services required under 28
subsection (h) of this section; 29

(3) the details of the health reimbursement accounts or other programs to 30
provide assistance with prescription drug costs for individuals enrolled in the p rograms 31
under subsections (d), (e), and (f) of this section, including: 32

8 HOUSE BILL 696

(i) the specific out–of–pocket costs eligible for reimbursement; 1

(ii) the required process for receiving reimbursement; 2

(iii) the method of reimbursement; 3

(iv) the timing of reimbursement; and 4

(v) a plan to use debit cards to process reimbursements in a 5
convenient and efficient manner; and 6

(4) in total and by category for the previous quarter, the number of issues 7
and concerns reported to the hotline. 8

(k) The Department shall adopt regulations to implement the provisions of this 9
section.] 10

Chapter 767 of the Acts of 2019 11

[SECTION 2. AND BE IT FURTHER ENACTED, That, notwithstanding any other 12
provision of law, if the final resolution of the injunction issued in the U.S. District Court 13
for the District of Maryland in Fitch v. State of Maryland et al, Case No. 1:18 14
CV–0287–PM (D. Md.) occurs on a date that is: 15

(1) less than 9 months before the first day of the next State health benefits 16
open enrollment period, the following shall begin on the first day of the second State health 17
benefits plan year immediately following the resolution: 18

(i) the elimination of the State prescription drug benefits for 19
Medicare–eligible retirees, Medicare–eligible spouses or surviving spouses of retirees, and 20
Medicare–eligible dependent children or surviving dependent children of retirees under § 21
2–509.1(b) of the State Personnel and Pensions Article; 22

(ii) the establishment of the Maryland State Retiree Prescription 23
Drug Co verage Program, the Maryland State Retiree Catastrophic Prescription Drug 24
Assistance Program, and the Maryland State Retiree Life –Sustaining Prescription Drug 25
Assistance Program in § 2–509.1(d), (e), and (f) of the State Personnel and Pensions Article, 26
respectively, as enacted by Section 1 of this Act; and 27

(iii) the provision of written certified notice to individuals under § 28
2–509.1(g) of the State Personnel and Pensions Article, as enacted by Section 1 of this Act; 29
or 30

(2) 9 months or more before t he first day of the next State health benefits 31
open enrollment period, the following shall begin on the first day of the State health 32
benefits plan year immediately following the resolution following the next open enrollment 33
period: 34
HOUSE BILL 696 9

(i) the elimination of the State prescription drug benefits for 1
Medicare–eligible retirees, Medicare–eligible spouses or surviving spouses of retirees, and 2
Medicare–eligible dependent children or surviving dependent children of retirees under § 3
2–509.1(b) of the State Personnel and Pensions Article; 4

(ii) the establishment of the Maryland State Retiree Prescription 5
Drug Coverage Program, the Maryland State Retiree Catastrophic Prescription Drug 6
Assistance Program, and the Maryland State Retiree Life –Sustaining Prescription Drug 7
Assistance Program in § 2–509.1(d), (e), and (f) of the State Personnel and Pensions Article, 8
respectively, as enacted by Section 1 of this Act; and 9

(iii) the provision of written certified notice to individuals under § 10
2–509.1(g) of the State Personnel and Pensions Article, as enacted by Section 1 of this Act.] 11

[SECTION 4. AND BE IT FURTHER ENACTED, That it is the intent of the General 12
Assembly that the Department of Budget and Management establish the Maryland State 13
Retiree Prescription Drug Coverage Program, the Maryland State Retiree Catastrophic 14
Prescription Drug Assistance Program, and the Maryland State Retiree Life –Sustaining 15
Prescription Drug Assistance Program in § 2 –509.1(d), (e), and (f) of the State Personnel 16
and Pensions Article, r espectively, in a manner that allows retirees to access 17
reimbursement at the time of prescription drug purchase, through a mechanism such as 18
debit cards.] 19

[SECTION 5. AND BE IT FURTHER ENACTED, That it is the intent of the General 20
Assembly that the Depar tment of Budget and Management attend at least one meeting 21
each year of the Joint Committee on Pensions to update the Committee on implementation 22
of the provisions of this Act.] 23

SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect July 24
1, 2026. 25