Health plan incentives

AN ACT Relating to wellness incentives for public and school 1
employee health benefit plans; and amending RCW 41.05.065 and 2
41.05.740. 3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:4
Sec. 1. RCW 41.05.065 and 2018 c 260 s 12 are each amended to 5
read as follows: 6
(1) The public employees' benefits board shall study all matters 7
connected with the provision of health care coverage, life insurance, 8
liability insurance, accidental death and dismemberment insurance, 9
and disability income insurance or any of, or a combination of, the 10
enumerated types of insurance for employees and their dependents on 11
the best basis possible with relation both to the welfare of the 12
employees and to the state. However, liability insurance shall not be 13
made available to dependents. 14
(2) The public employees' benefits board shall develop employee 15
benefit plans that include comprehensive health care benefits for 16
employees. In developing these plans, the public employees' benefits 17
board shall consider the following elements: 18
(a) Methods of maximizing cost containment while ensuring access 19
to quality health care; 20
S-2652.1
SENATE BILL 5807
State of Washington 69th Legislature 2025 Regular Session
By Senator Robinson
p. 1 SB 5807
(b) Development of provider arrangements that encourage cost 1
containment and ensure access to quality care, including but not 2
limited to prepaid delivery systems and prospective payment methods;3
(c)(i) Wellness ((incentives)) initiatives that focus on proven 4
strategies, such as smoking cessation, injury and accident 5
prevention, reduction of alcohol misuse, appropriate weight 6
reduction, exercise, automobile and motorcycle safety, blood 7
cholesterol reduction, and nutrition education.8
(ii)(A) As of January 1, 2028, the public employees' benefits 9
board shall no longer offer the smart health program, which includes 10
the wellness incentive and the smart health online portal.11
(B) Employees who have met the eligibility requirements to 12
receive a wellness incentive by December 31, 2027, will still receive 13
the wellness incentive in plan year 2028.14
(C) Employees are not eligible to earn a wellness incentive as of 15
January 1, 2028; 16
(d) Utilization review procedures including, but not limited to a 17
cost-efficient method for prior authorization of services, hospital 18
inpatient length of stay review, requirements for use of outpatient 19
surgeries and second opinions for surgeries, review of invoices or 20
claims submitted by service providers, and performance audit of 21
providers; 22
(e) Effective coordination of benefits; and 23
(f) Minimum standards for insuring entities. 24
(3) To maintain the comprehensive nature of employee health care 25
benefits, benefits provided to employees shall be substantially 26
equivalent to the state employees' health benefit plan in effect on 27
January 1, 1993. Nothing in this subsection shall prohibit changes or 28
increases in employee point-of-service payments or employee premium 29
payments for benefits or the administration of a high deductible 30
health plan in conjunction with a health savings account. The public 31
employees' benefits board may establish employee eligibility criteria 32
which are not substantially equivalent to employee eligibility 33
criteria in effect on January 1, 1993. 34
(4) Except if bargained for under chapter 41.80 RCW, the public 35
employees' benefits board shall design benefits and determine the 36
terms and conditions of employee and retired or disabled school 37
employee participation and coverage, including establishment of 38
eligibility criteria subject to the requirements of this chapter. 39
Employer groups obtaining benefits through contractual agreement with 40
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the authority for employees defined in RCW 41.05.011(6)(a) (i) 1
through (vi) may contractually agree with the authority to benefits 2
eligibility criteria which differs from that determined by the public 3
employees' benefits board. The eligibility criteria established by 4
the public employees' benefits board shall be no more restrictive 5
than the following: 6
(a) Except as provided in (b) through (e) of this subsection, an 7
employee is eligible for benefits from the date of employment if the 8
employing agency anticipates he or she will work an average of at 9
least eighty hours per month and for at least eight hours in each 10
month for more than six consecutive months. An employee determined 11
ineligible for benefits at the beginning of his or her employment 12
shall become eligible in the following circumstances:13
(i) An employee who works an average of at least eighty hours per 14
month and for at least eight hours in each month and whose 15
anticipated duration of employment is revised from less than or equal 16
to six consecutive months to more than six consecutive months becomes 17
eligible when the revision is made. 18
(ii) An employee who works an average of at least eighty hours 19
per month over a period of six consecutive months and for at least 20
eight hours in each of those six consecutive months becomes eligible 21
at the first of the month following the six-month averaging period.22
(b) A seasonal employee is eligible for benefits from the date of 23
employment if the employing agency anticipates that he or she will 24
work an average of at least eighty hours per month and for at least 25
eight hours in each month of the season. A seasonal employee 26
determined ineligible at the beginning of his or her employment who 27
works an average of at least eighty hours per month over a period of 28
six consecutive months and at least eight hours in each of those six 29
consecutive months becomes eligible at the first of the month 30
following the six-month averaging period. A benefits-eligible 31
seasonal employee who works a season of less than nine months shall 32
not be eligible for the employer contribution during the off season, 33
but may continue enrollment in benefits during the off season by 34
self-paying for the benefits. A benefits-eligible seasonal employee 35
who works a season of nine months or more is eligible for the 36
employer contribution through the off season following each season 37
worked. 38
(c) Faculty are eligible as follows: 39
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(i) Faculty who the employing agency anticipates will work half–1
time or more for the entire instructional year or equivalent nine-2
month period are eligible for benefits from the date of employment. 3
Eligibility shall continue until the beginning of the first full 4
month of the next instructional year, unless the employment 5
relationship is terminated, in which case eligibility shall cease the 6
first month following the notice of termination or the effective date 7
of the termination, whichever is later. 8
(ii) Faculty who the employing agency anticipates will not work 9
for the entire instructional year or equivalent nine-month period are 10
eligible for benefits at the beginning of the second consecutive 11
quarter or semester of employment in which he or she is anticipated 12
to work, or has actually worked, half-time or more. Such an employee 13
shall continue to receive uninterrupted employer contributions for 14
benefits if the employee works at least half-time in a quarter or 15
semester. Faculty who the employing agency anticipates will not work 16
for the entire instructional year or equivalent nine-month period, 17
but who actually work half-time or more throughout the entire 18
instructional year, are eligible for summer or off-quarter or off-19
semester coverage. Faculty who have met the criteria of this 20
subsection (4)(c)(ii), who work at least two quarters or two 21
semesters of the academic year with an average academic year workload 22
of half-time or more for three quarters or two semesters of the 23
academic year, and who have worked an average of half-time or more in 24
each of the two preceding academic years shall continue to receive 25
uninterrupted employer contributions for benefits if he or she works 26
at least half-time in a quarter or semester or works two quarters or 27
two semesters of the academic year with an average academic workload 28
each academic year of half-time or more for three quarters or two 29
semesters. Eligibility under this section ceases immediately if this 30
criteria is not met. 31
(iii) Faculty may establish or maintain eligibility for benefits 32
by working for more than one institution of higher education. When 33
faculty work for more than one institution of higher education, those 34
institutions shall prorate the employer contribution costs, or if 35
eligibility is reached through one institution, that institution will 36
pay the full employer contribution. Faculty working for more than one 37
institution must alert his or her employers to his or her potential 38
eligibility in order to establish eligibility. 39
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(iv) The employing agency must provide written notice to faculty 1
who are potentially eligible for benefits under this subsection 2
(4)(c) of their potential eligibility. 3
(v) To be eligible for maintenance of benefits through averaging 4
under (c)(ii) of this subsection, faculty must provide written 5
notification to his or her employing agency or agencies of his or her 6
potential eligibility. 7
(vi) For the purposes of this subsection (4)(c):8
(A) "Academic year" means summer, fall, winter, and spring 9
quarters or summer, fall, and spring semesters; 10
(B) "Half-time" means one-half of the full-time academic workload 11
as determined by each institution; except that for community and 12
technical college faculty, half-time academic workload is calculated 13
according to RCW 28B.50.489. 14
(d) A legislator is eligible for benefits on the date his or her 15
term begins. All other elected and full-time appointed officials of 16
the legislative and executive branches of state government are 17
eligible for benefits on the date his or her term begins or they take 18
the oath of office, whichever occurs first. 19
(e) A justice of the supreme court and judges of the court of 20
appeals and the superior courts become eligible for benefits on the 21
date he or she takes the oath of office. 22
(f) Except as provided in (c)(i) and (ii) of this subsection, 23
eligibility ceases for any employee the first of the month following 24
termination of the employment relationship. 25
(g) In determining eligibility under this section, the employing 26
agency may disregard training hours, standby hours, or temporary 27
changes in work hours as determined by the authority under this 28
section. 29
(h) Insurance coverage for all eligible employees begins on the 30
first day of the month following the date when eligibility for 31
benefits is established. If the date eligibility is established is 32
the first working day of a month, insurance coverage begins on that 33
date. 34
(i) Eligibility for an employee whose work circumstances are 35
described by more than one of the eligibility categories in (a) 36
through (e) of this subsection shall be determined solely by the 37
criteria of the category that most closely describes the employee's 38
work circumstances. 39
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(j) Except for an employee eligible for benefits under (b) or 1
(c)(ii) of this subsection, an employee who has established 2
eligibility for benefits under this section shall remain eligible for 3
benefits each month in which he or she is in pay status for eight or 4
more hours, if (i) he or she remains in a benefits-eligible position 5
and (ii) leave from the benefits-eligible position is approved by the 6
employing agency. A benefits-eligible seasonal employee is eligible 7
for the employer contribution in any month of his or her season in 8
which he or she is in pay status eight or more hours during that 9
month. Eligibility ends if these conditions are not met, the 10
employment relationship is terminated, or the employee voluntarily 11
transfers to a noneligible position. 12
(k) For the purposes of this subsection, the public employees' 13
benefits board shall define "benefits-eligible position."14
(5) The public employees' benefits board may authorize premium 15
contributions for an employee and the employee's dependents in a 16
manner that encourages the use of cost-efficient managed health care 17
systems. 18
(6)(a) For any open enrollment period following August 24, 2011, 19
the public employees' benefits board shall offer a health savings 20
account option for employees that conforms to section 223, Part VII 21
of subchapter B of chapter 1 of the internal revenue code of 1986. 22
The public employees' benefits board shall comply with all applicable 23
federal standards related to the establishment of health savings 24
accounts. 25
(b) By November 30, 2015, and each year thereafter, the authority 26
shall submit a report to the relevant legislative policy and fiscal 27
committees that includes the following: 28
(i) Public employees' benefits board health plan cost and service 29
utilization trends for the previous three years, in total and for 30
each health plan offered to employees; 31
(ii) For each health plan offered to employees, the number and 32
percentage of employees and dependents enrolled in the plan, and the 33
age and gender demographics of enrollees in each plan;34
(iii) Any impact of enrollment in alternatives to the most 35
comprehensive plan, including the high deductible health plan with a 36
health savings account, upon the cost of health benefits for those 37
employees who have chosen to remain enrolled in the most 38
comprehensive plan. 39
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(7) Notwithstanding any other provision of this chapter, for any 1
open enrollment period following August 24, 2011, the public 2
employees' benefits board shall offer a high deductible health plan 3
in conjunction with a health savings account developed under 4
subsection (6) of this section. 5
(8) Employees shall choose participation in one of the health 6
care benefit plans developed by the public employees' benefits board 7
and may be permitted to waive coverage under terms and conditions 8
established by the public employees' benefits board.9
(9) The public employees' benefits board shall review plans 10
proposed by insuring entities that desire to offer property insurance 11
and/or accident and casualty insurance to state employees through 12
payroll deduction. The public employees' benefits board may approve 13
any such plan for payroll deduction by insuring entities holding a 14
valid certificate of authority in the state of Washington and which 15
the public employees' benefits board determines to be in the best 16
interests of employees and the state. The public employees' benefits 17
board shall adopt rules setting forth criteria by which it shall 18
evaluate the plans. 19
(10) Before January 1, 1998, the public employees' benefits board 20
shall make available one or more fully insured long-term care 21
insurance plans that comply with the requirements of chapter 48.84 22
RCW. Such programs shall be made available to eligible employees, 23
retired employees, and retired school employees as well as eligible 24
dependents which, for the purpose of this section, includes the 25
parents of the employee or retiree and the parents of the spouse of 26
the employee or retiree. Employees of local governments, political 27
subdivisions, and tribal governments not otherwise enrolled in the 28
public employees' benefits board sponsored medical programs may 29
enroll under terms and conditions established by the director, if it 30
does not jeopardize the financial viability of the public employees' 31
benefits board's long-term care offering. 32
(a) Participation of eligible employees or retired employees and 33
retired school employees in any long-term care insurance plan made 34
available by the public employees' benefits board is voluntary and 35
shall not be subject to binding arbitration under chapter 41.56 RCW. 36
Participation is subject to reasonable underwriting guidelines and 37
eligibility rules established by the public employees' benefits board 38
and the health care authority. 39
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(b) The employee, retired employee, and retired school employee 1
are solely responsible for the payment of the premium rates developed 2
by the health care authority. The health care authority is authorized 3
to charge a reasonable administrative fee in addition to the premium 4
charged by the long-term care insurer, which shall include the health 5
care authority's cost of administration, marketing, and consumer 6
education materials prepared by the health care authority and the 7
office of the insurance commissioner. 8
(c) To the extent administratively possible, the state shall 9
establish an automatic payroll or pension deduction system for the 10
payment of the long-term care insurance premiums. 11
(d) The public employees' benefits board and the health care 12
authority shall establish a technical advisory committee to provide 13
advice in the development of the benefit design and establishment of 14
underwriting guidelines and eligibility rules. The committee shall 15
also advise the public employees' benefits board and authority on 16
effective and cost-effective ways to market and distribute the long-17
term care product. The technical advisory committee shall be 18
comprised, at a minimum, of representatives of the office of the 19
insurance commissioner, providers of long-term care services, 20
licensed insurance agents with expertise in long-term care insurance, 21
employees, retired employees, retired school employees, and other 22
interested parties determined to be appropriate by the public 23
employees' benefits board. 24
(e) The health care authority shall offer employees, retired 25
employees, and retired school employees the option of purchasing 26
long-term care insurance through licensed agents or brokers appointed 27
by the long-term care insurer. The authority, in consultation with 28
the public employees' benefits board, shall establish marketing 29
procedures and may consider all premium components as a part of the 30
contract negotiations with the long-term care insurer.31
(f) In developing the long-term care insurance benefit designs, 32
the public employees' benefits board shall include an alternative 33
plan of care benefit, including adult day services, as approved by 34
the office of the insurance commissioner. 35
(g) The health care authority, with the cooperation of the office 36
of the insurance commissioner, shall develop a consumer education 37
program for the eligible employees, retired employees, and retired 38
school employees designed to provide education on the potential need 39
for long-term care, methods of financing long-term care, and the 40
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availability of long-term care insurance products including the 1
products offered by the public employees' benefits board.2
(11) The public employees' benefits board may establish penalties 3
to be imposed by the authority when the eligibility determinations of 4
an employing agency fail to comply with the criteria under this 5
chapter. 6
Sec. 2. RCW 41.05.740 and 2023 c 13 s 7 are each amended to read 7
as follows: 8
(1) The school employees' benefits board is created within the 9
authority. The function of the school employees' benefits board is to 10
design and approve insurance benefit plans for school employees and 11
to establish eligibility criteria for participation in insurance 12
benefit plans. 13
(2) By September 30, 2017, the governor shall appoint the 14
following voting members to the school employees' benefits board as 15
follows: 16
(a) Two members from associations representing certificated 17
employees; 18
(b) Two members from associations representing classified 19
employees; 20
(c) Four members with expertise in employee health benefits 21
policy and administration, one of which is nominated by an 22
association representing school business officials; and23
(d) The director of the authority or his or her designee.24
(3) Initial members of the school employees' benefits board shall 25
serve staggered terms not to exceed four years. Members appointed 26
thereafter shall serve two-year terms. 27
(4) Compensation and reimbursement related to school employees' 28
benefits board member service are as follows: 29
(a) Members of the school employees' benefits board must be 30
compensated in accordance with RCW 43.03.250 and must be reimbursed 31
for their travel expenses while on official business in accordance 32
with RCW 43.03.050 and 43.03.060. 33
(b) While school employees' benefits board members are carrying 34
out their powers and duties under this chapter, if the service of any 35
certificated or classified employee results in a need for a school 36
employees' benefits board organization to employ a substitute for 37
such certificated or classified employee during such service, payment 38
for such a substitute may be made by the authority from funds 39
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appropriated by the legislature for the school employees' benefits 1
board program. If such substitute is paid by the authority, no 2
deduction shall be made from the salary of the certificated or 3
classified employee. In no event shall a school employees' benefits 4
board organization deduct from the salary of a certificated or 5
classified employee serving on the school employees' benefits board 6
more than the amount paid the substitute employed by the school 7
employees' benefits board organization. 8
(5) The director of the authority or his or her designee shall be 9
the chair and another member shall be selected by the school 10
employees' benefits board as vice chair. The chair shall conduct 11
meetings of the school employees' benefits board. The vice chair 12
shall preside over meetings in the absence of the chair. The school 13
employees' benefits board shall develop bylaws for the conduct of its 14
business. 15
(6) The school employees' benefits board shall:16
(a) Study all matters connected with the provision of health care 17
coverage, life insurance, liability insurance, accidental death and 18
dismemberment, and disability insurance, or any of, or combination 19
of, the enumerated types of insurance for eligible school employees 20
and their dependents on the best basis possible with relation both to 21
the welfare of the school employees and the state. However, liability 22
insurance should not be made available to dependents;23
(b) Develop school employee benefit plans that include 24
comprehensive, evidence-based health care benefits for school 25
employees. In developing these plans, the school employees' benefits 26
board shall consider the following elements: 27
(i) Methods of maximizing cost containment while ensuring access 28
to quality health care; 29
(ii) Development of provider arrangements that encourage cost 30
containment and ensure access to quality care including, but not 31
limited to, prepaid delivery systems and prospective payment methods;32
(iii)(A) Wellness, preventive care, chronic disease management, 33
and other ((incentives)) initiatives that focus on proven strategies.34
(B)(I) As of January 1, 2028, the school employees' benefits 35
board shall no longer offer the smart health program, which includes 36
the wellness incentive and the smart health online portal.37
(II) Employees who have met the eligibility requirements to 38
receive a wellness incentive by December 31, 2027, will still receive 39
the wellness incentive in plan year 2028.40
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(III) Employees are not eligible to earn a wellness incentive as 1
of January 1, 2028; 2
(iv) Utilization review procedures to support cost-effective 3
benefits delivery; 4
(v) Ways to leverage efficient purchasing by coordinating with 5
the public employees' benefits board; 6
(vi) Effective coordination of benefits; and 7
(vii) Minimum standards for insuring entities; 8
(c) Authorize premium contributions for a school employee and the 9
employee's dependents in a manner that encourages the use of cost-10
efficient health care systems. For participating school employees, 11
the required school employee share of the cost for family coverage 12
premiums may not exceed three times the premiums for a school 13
employee purchasing single coverage for the same coverage plan;14
(d) Determine the terms and conditions of school employee and 15
dependent eligibility criteria, enrollment policies, and scope of 16
coverage. Employer groups obtaining benefits through contractual 17
agreement with the authority for school employees defined in RCW 18
41.05.011(6)(b)(iv) may contractually agree with the authority to 19
benefits eligibility criteria which differs from that determined by 20
the school employees' benefits board. At a minimum, the eligibility 21
criteria established by the school employees' benefits board shall 22
address the following: 23
(i) The effective date of coverage following hire;24
(ii) The benefits eligibility criteria, but the school employees' 25
benefits board's criteria shall be no more restrictive than requiring 26
that a school employee be anticipated to work at least six hundred 27
thirty hours per school year to be benefits eligible; and28
(iii) Coverage for dependents, including criteria for legal 29
spouses; children up to age twenty-six; children of any age with 30
disabilities, mental illness, or intellectual or other developmental 31
disabilities; and state registered domestic partners, as defined in 32
RCW 26.60.020, and others authorized by the legislature;33
(e) Establish terms and conditions for a school employees' 34
benefits board organization to have the ability to locally negotiate 35
eligibility criteria for a school employee who is anticipated to work 36
less than six hundred thirty hours in a school year. A school 37
employees' benefits board organization that elects to use a lower 38
threshold of hours for benefits eligibility must use benefits 39
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authorized by the school employees' benefits board and shall do so as 1
an enrichment to the state's definition of basic education;2
(f) Establish penalties to be imposed when a school employees' 3
benefits board organization fails to comply with established 4
participation criteria; and 5
(g) Participate with the authority in the preparation of 6
specifications and selection of carriers contracted for school 7
employee benefit plan coverage of eligible school employees in 8
accordance with the criteria set forth in rules. To the extent 9
possible, the school employees' benefits board shall leverage 10
efficient purchasing by coordinating with the public employees' 11
benefits board. 12
(7) School employees shall choose participation in one of the 13
health care benefit plans developed by the school employees' benefits 14
board. Individual school employees eligible for benefits under 15
subsection (6)(d) of this section may be permitted to waive coverage 16
under terms and conditions established by the school employees' 17
benefits board. 18
(8) By November 30, 2021, the authority shall review the benefit 19
plans provided through the school employees' benefits board, complete 20
an analysis of the benefits provided and the administration of the 21
benefits plans, and determine whether provisions in chapter 13, Laws 22
of 2017 3rd sp. sess. have resulted in cost savings to the state. The 23
authority shall submit a report to the relevant legislative policy 24
and fiscal committees summarizing the results of the review and 25
analysis. 26
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