House File 447 - Introduced HOUSE FILE 447 BY MURPHY A BILL FOR An Act relating to state employee life insurance programs and 1 recording certain benefits to the Iowa public employees’ 2 retirement system and including effective date provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 1363YH (3) 84 aw/sc

H.F. 447 Section 1. NEW SECTION . 70A.21 Employees’ group whole life 1 insurance program. 2 1. A state employees’ group whole life insurance program 3 is created which shall be administered by the director of 4 the department of administrative services. The director 5 shall contract with a third-party administrator to modify the 6 structure of life insurance for active employees from a group 7 term life insurance policy to a group whole life insurance 8 policy. 9 2. The department shall adopt rules to ensure that: 10 a. The death benefit available to an active employee’s named 11 beneficiaries will remain the same as under group term life 12 insurance. 13 b. When an individual is no longer an active employee of the 14 state, the death benefit coverage shall vest to the Iowa public 15 employees’ retirement system. 16 c. Employees hired before the effective date of this section 17 shall retain the right to continue coverage under a group term 18 life insurance policy after termination of active service as 19 provided for in section 509A.6. 20 d. Employees hired on or after the effective date of this 21 section shall receive group term life insurance, with the right 22 to continue such life insurance in force after termination of 23 active service at such employee’s sole expense. 24 Sec. 2. Section 97B.9, Code 2011, is amended by adding the 25 following new subsection: 26 NEW SUBSECTION . 3A. The system shall record, as an 27 asset, the present value of the total death benefit of the 28 state employees’ group whole life insurance program created 29 in section 70A.21, less an amount to account for employee 30 mortality, as determined by the director of the department of 31 administrative services. 32 Sec. 3. Section 509A.6, Code 2011, is amended to read as 33 follows: 34 509A.6 Contract with insurance carrier, health maintenance 35 -1- LSB 1363YH (3) 84 aw/sc 1/ 3

H.F. 447 organization, or organized delivery system. 1 The governing body may contract with a nonprofit corporation 2 operating under the provisions of this chapter or chapter 514 3 or with any insurance company having a certificate of authority 4 to transact an insurance business in this state with respect 5 of a group insurance plan, which may include life, accident, 6 health, hospitalization and disability insurance during period 7 of active service of such employees, with the right of any 8 employee to continue such a group term life insurance policy in 9 force after termination of active service at such employee’s 10 sole expense; may contract with a nonprofit corporation 11 operating under and governed by the provisions of this chapter 12 or chapter 514 with respect of any hospital or medical service 13 plan; and may contract with a health maintenance organization 14 or an organized delivery system authorized to operate in this 15 state with respect to health maintenance organization or 16 organized delivery system activities. 17 Sec. 4. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 18 immediate importance, takes effect upon enactment. 19 EXPLANATION 20 This bill creates a state employees’ group whole life 21 insurance program and allocates realized benefits from the 22 program to the Iowa public employees’ retirement system 23 (IPERS). 24 The bill requires that the director of the department 25 of administrative services administer the state employees’ 26 group whole life insurance program. The bill requires that 27 the director contract with a third-party administrator to 28 modify current group term life insurance to group whole life 29 insurance. The bill requires that employee death benefits 30 remain the same, but that when an employee becomes inactive 31 or is terminated, the death benefit shall vest to IPERS. The 32 bill requires that employees hired after the date of enactment 33 participate in a group term life insurance policy, and those 34 employees have the right to continue such coverage at the 35 -2- LSB 1363YH (3) 84 aw/sc 2/ 3

H.F. 447 employee’s own expense upon the end of employment with the 1 state. 2 The bill requires that IPERS record the present value of 3 IPERS’ interest in the employee group whole life insurance 4 program as an asset. 5 The bill strikes language in current law that would allow 6 any employee, current or future, to carry the employee’s death 7 benefit after employment if the former employee was responsible 8 for the continued expense. The current law pertained only to 9 group term life policies. 10 -3- LSB 1363YH (3) 84 aw/sc 3/ 3