Senate panel debates shifting PERS health plan from 'grandfathered' to ACA-compliant model

Senate Appropriations — Human Resources Division members spent the hearing examining Senate Bill 2160, which would shift the Public Employees Retirement System (PERS) state employee health plan out of its grandfathered status and into a non‑grandfathered, Affordable Care Act (ACA) compliant plan, producing new benefits for members and a multi‑million dollar fiscal impact.

The bill’s sponsor, identified in the transcript as Senator Davidson, told the committee the core objective is “to get our insurance to a non grandfathered clause” and described the change as a one‑time decision that “you obviously can't go back to grandfathered.”

Rebecca Fricke, executive director of the Public Employees Retirement System, told the committee the measure would apply to the state employee plan and a small population of pre‑Medicare retirees and former legislators who remain on the plan. “The benefits under a non grandfathered plan from a consumer standpoint are enhancements to coverage,” Fricke said, and listed examples the plan would begin covering at 100 percent (preventive colonoscopies, contraception and certain well‑child and adult preventive screenings), plus lactation counseling and breast pumps.

Committee members and PERS staff discussed the primary driver of the fiscal estimate: non‑grandfathered plans require co‑payments to count toward a member’s out‑of‑pocket maximum, which PERS staff said increases plan cost materially. Senate fiscal materials discussed a fiscal note in the $25,000,000–$26,700,000 range for the biennium; Fricke and Derek Holbein, PERS’s chief operating and financial officer, said some of the differences reflect whether the estimate is calculated for 12 months or the bill’s actual implementation window (18 months of enhanced coverage under the amendment being discussed).

An amendment the sponsor proposed would split financing among general funds, special/federal funds, PERS reserves and a limited employee cost share. As drafted in committee discussion, employees would pay $25 per month beginning Jan. 1, 2027 for roughly six months of the coming biennium (and another six months in the next biennium), while the state and reserve funds would cover the remainder. Holbein told the committee there was about a $5 million discrepancy between some of the draft accounting and the original Deloitte pricing; he said the discrepancy could be fixed in follow‑up work with legislative counsel and fiscal staff.

Committee members asked clarifying questions about how the change would affect participating political subdivisions. Fricke said PERS would keep a grandfathered plan option open for the majority of participating political subdivisions, which are generally small employers, because ACA rules require small groups to offer metallic plans in a non‑grandfathered framework and many small political subdivisions would otherwise be unable to stay in PERS coverage.

Committee discussion also covered timing and metadata in the measure: the amendment would make the plan design change effective Jan. 1, 2026, to align with calendar‑year renewals and avoid mid‑year benefit redesigns; the amendment included a sunset/expiration date (Dec. 31, 2027) so the legislature could revisit funding and design in the 2027 session. Fricke confirmed moving out of grandfathered status is a permanent change once implemented.

No final committee vote was recorded on SB2160 in the transcript; the committee concluded discussion and agreed to bring the item back later in the day for further accounting and drafting work. The record shows PERS staff and legislative fiscal staff agreed to meet after the hearing to reconcile the outstanding $5 million difference before the measure is brought back to the committee for action.

Why it matters: the change would expand benefit coverage for state employees and some retirees while changing the funding balance among employees, the state and PERS reserves. The proposal also removes certain plan design limits imposed by grandfathered status and gives the legislature different levers to address medical inflation going forward.