State of California M E M O R A N D U M REFERENCE CODE: 2000-057 DATE: September 2000 TO: Personnel Officers Personnel Transactions Supervisors FROM: Department of Personnel Administration Benefits Division SUBJECT: Rural Health Care Equity Program (RHCEP) Implementation CONTACT: Belinda Collins, RHCEP Manager (916) 324-0468, CALNET 454-0468 FAX: (916) 322-3769 Email: belindacollins@dpa.ca.gov Recent legislation (Government Code Section 22825.01) established the Rural Health Care Equity Program (RHCEP) to provide reimbursements of certain health care expenses for State employees (and annuitants) who do not have access to a Health Maintenance Organization (HMO). Although the Program was effective January 1, 2000, it could not be implemented until necessary contracting, data exchange testing, and funding was finalized. The Department of Personnel Administration (DPA) will be mailing detailed RHCEP information and RHCEP Claim Forms (DPA 678) to all eligible employees during the next few weeks. RHCEP Claim Forms will also be available through DPA. In general, the Program will apply on a retroactive basis to eligible health care costs incurred on or after January 1, 2000, for both represented and excluded employees. Departmental Personnel Offices are not required to administer the RHCEP. The Program will be administered through DPA. The information on the following pages is designed to explain the Program and reimbursement process for active State employees. 1. Who is eligible? Represented and excluded employees who reside in an area with no Health Maintenance Organization (HMO) option available through the CalPERS Health Program. (State annuitants are also eligible to participate in the RHCEP. Their reimbursements are based on the type of plan in which they are enrolled. See Item 16.) No enrollment form is required enrollment is automatic, based on residence zip code. To determine zip code eligibility, you may access DPA's website at www.dpa.ca.gov/benefits/health/rural/ruralmain.shtm or you may contact DPA for assistance at (916) 322-0300. Employees must be enrolled in a CalPERS approved health plan in an area where there is no contracted HMO available e.g., PERSCare, PERS Choice. Permanent Intermittent (P.I.) employees who qualify for health benefits are eligible for this program, subject to the same program criteria as full-time employees. Employees enrolled in Medical Reimbursement Accounts (MRA) under the FlexElect program are eligible to participate in this program. However, employees may not be reimbursed for the same medical expense from both programs. Employees enrolled in the cash option of the FlexElect program are not eligible for this program. Employees on an active leave whose health benefits are continued are eligible. The RHCEP applies to active employees and State annuitants living in California and out of state. 2. What expenses qualify for reimbursement? Deductibles and co-insurance costs for eligible employees and their enrolled dependents are reimbursable expenses. A deductible is the annual amount of out-of-pocket expenses that a State employee must pay before the health plan begins paying for expenses. Co-insurance is when the health plan and the employee share the cost of hospital or medical expenses at a specified ratio. For example, the co-insurance ratio for PERSCare is typically 90% for the health plan, and 10% for the employee. PERS Choice generally has an 80% plan/20% employee co-insurance ratio. 3. Are premiums reimbursable? Employee portions of premiums are not currently reimbursable. However, under the current law, portions of premiums may become eligible for reimbursement in the future. 4. Are office visit co-payments and pharmacy benefit co- payments reimbursable? No. Office visit co-payments and pharmacy co-payments are not reimbursable. 5. What about dental, vision or other ancillary services? No. Expenses such as dental and vision costs that are not typically covered under the CalPERS HMO standard plan design are not reimbursable. 6. Must I incur an out-of-pocket expense before I can request reimbursement? In order to receive a reimbursement from the RHCEP, employees must first incur expenses that qualify for reimbursement. No reimbursement of eligible medical expenses will be processed unless it is documented on an Explanation of Benefits form (EOB), which is provided by the health plan. 7. How do I obtain a duplicate EOB? Copies of EOBs may be obtained from your health plan provider or you may visit the Blue Cross website at www.bluecross.ca.com. 8. How will employees get reimbursed for qualifying expenses? Application Software, Inc. (ASI) processes all claims for reimbursement on behalf of DPA. Employees must submit a completed RHCEP Claim Form and a copy of their Explanation of Benefits (EOB) to: ASI P.O. Box 657 Columbia, MO 65205-0657 Eligible members will be mailed an RHCEP employee notification letter along with several copies of the RHCEP Claim Form (DPA 678). To obtain additional RHCEP Claim Forms, call ASI at 1-(800) 659-3035. See attached copy of RHCEP employee notification letter and RHCEP Claim Form. 9. Are the RHCEP reimbursements taxable? No. The RHCEP reimbursements are "tax neutral" and will not affect employees' state or federal tax base or the ability to continue to participate in the FlexElect MRA program. However, employees should carefully consider how participation in both programs works to their advantage, as employees may not be reimbursed for the same medical expense from both programs. 10. What is the maximum reimbursement amount? The maximum amount of reimbursable expenses for active employees participating in the RHCEP is determined through collective bargaining agreements. All contracts currently provide up to $1,500 per employee, per fiscal year. Under most current contracts, the amount eligible for reimbursement during the period January 1, 2000, to June 30, 2000, will be $750 per employee to accommodate one-half of the fiscal year. Employees may also qualify for an additional, secondary reimbursement as described in Item 13 below. 11. What is the deadline for submitting reimbursement claims? All requests for reimbursement under the RHCEP for each fiscal year (ending June 30th) must be received by ASI no later than the following September 15th. The deadline for the first plan year will be extended to December 31, 2000, to accommodate the delayed program implementation. In subsequent years, reimbursement requests for the previous fiscal year received after September 15th will be disallowed. 12. How are payments issued? The State Controller's Office will issue reimbursement checks once a month. The Program is not available through Electronic Fund Transfer (EFT) or Direct Deposit. 13. What is the secondary reimbursement process? As a result of collective bargaining agreements, active employees may be eligible for a secondary reimbursement following the September 15th deadline each fiscal year. Any unused portion of an employee's maximum reimbursement allotment remaining at the end of the fiscal year will be "rolled" into a pool of money by each collective bargaining unit. Employees of each respective bargaining unit who have been reimbursed their maximum amounts will have the opportunity to request reimbursement of expenses exceeding the fiscal year maximum from their specific bargaining unit pool. This secondary reimbursement will be computed on a proportionate basis to the amounts claimed by all eligible employees in the bargaining unit, and the total available funds in the bargaining unit account. All excluded employees will be combined into one pool for the secondary reimbursement. It is anticipated that the secondary reimbursement for each fiscal year will be completed no later than October 30th of the subsequent fiscal year. Requests for reimbursement of eligible health care expenses under the secondary reimbursement process must exceed $25. Any unused money in any collective bargaining unit pool will roll over into the same collective bargaining unit pool for the following year. 14. What about reimbursement claims that are denied? Questions regarding denied reimbursement claims should be directed to ASI at 1-(800) 659-3035. 15. Is there an appeal process? Yes. All RHCEP appeals must be submitted in writing to DPA at: Department of Personnel Administration Benefits Division 1515 "S" Street, North Building, Suite 400 Sacramento, CA 95814-7243 Attention: RHCEP 16. Am I eligible for any RHCEP benefits when I retire? RHCEP reimbursements for eligible State annuitants are dependent on the type of plan they are enrolled in (Basic Plan or Supplement to Medicare Plan). For details regarding RHCEP reimbursements for annuitants, please contact DPA Benefits information line at (916) 322-0300. This information provides a general outline of the Rural Health Care Equity Program. The provisions of the Program are complex, and this information does not supersede statute or MOU provisions. Personnel staff with questions may call Ms. Belinda Collins of the DPA Benefits Division at (916) 324-0468. Employees with questions about the RHCEP should be directed to ASI at 1-(800) 659-3035, or the DPA Benefits Division information line at (916) 322-0300. Terri Westbrook, Administrator Benefits Attachments will be distributed via mail.