1 TACCBO Conference June 19 – 22 Reporting for Public Junior Colleges

2 TACCBO Conference June 19 – 22 Tobacco Premium Differential

3 Overview of Tobacco User Premium Differential Mandated by Senate Bill 1664, 82nd Legislature Tobacco users in the Texas Employees Group Benefits Program (GBP) Effective January 1, 2012

4 Overview of Tobacco User Premium Differential What are considered tobacco use? Smoking tobacco in the form of a cigarette, pipe, or cigar Chewing tobacco or snuff What are not considered tobacco use? Nicotine chewing gum Nicotine patches Electronic cigarettes

5 Tobacco User Premium rates You must certify as a tobacco user if you or a covered family member uses tobacco. Tobacco usersMonthly fee Member only$30 Spouse only$30 Child* only$30 Member + spouse$60 Member + child*$60 Spouse + child*$60 Member + spouse + child* (family)$90 *The charge for a child is the same regardless of how many children in the household use tobacco.

6 Reporting to ERS TEXNET, the State of Texas Financial Network The Amount Type is C [Tobacco User Prem. Differential (Employee)] TEXNET hotline – (800) , ext Amount Type: 1 = Insurance (Employee) 2 = Insurance (Employer-Active) 3 = Insurance (Employer-Retired) 4 = Cafeteria Plan (Employee) 9 = Insurance (Employer – SKIP) A = Insurance (Active Opt-out) B = Insurance (Retiree Opt-out) C = Tobacco User Prem. Differential (Employee) D = Payroll Health Insurance (Employer)

7 Frequently Asked Questions Is the tobacco user premium differential a pre-tax deduction? It is a pre-tax deduction for Social Security wages and Federal Income Tax (FIT) withholding. It is an after tax deduction for Federal Insurance Contributions Act (FICA) wages for retirees.

8 Frequently Asked Questions Does the premium apply to newly hired employees in the 90-day wait for health insurance coverage? No Even if the employees certifies themselves as users of tobacco products during the 90-day wait, the system should not accept a tobacco user premium differential deduction when there is not health line coverage.

9 Frequently Asked Questions Does ERS view Tobacco User Premium Differential as health coverage rather than voluntary coverage? Yes ERS views the tobacco user premium differential as part of the health coverage. ERS considers that the premium differential is not a voluntary coverage.

10 Frequently Asked Questions Does the Tobacco User Premium Differential apply to retirees? Yes

11 Frequently Asked Questions Should the Tobacco User Premium Differential be included in the “all or nothing” logic that is in place for insurance deductions? Yes If the employees’ monthly payroll is not sufficient to cover the premium, employees are required to send the entire premium directly to ERS.

12 Frequently Asked Questions How is the Tobacco User Premium Differential affect COBRA participants? They will be required to pay the same tobacco user premium as any active employees would pay.

13 Frequently Asked Questions What report will list the Tobacco User Premium Differential by participant? Available on the ERS FPT server Report name is mth***.mmddyyyy where *** is the agency number Example If your agency number is 327 and the reporting month is May 2012, the report name should be mth Download this report into Excel, use the following filters to identify the “tobacco rows” and sum the total amount of Tobacco User Premium Differential  Participant Coverage Line Code Column = 1T  Transaction Type Code Column = E

14 TACCBO Conference June 19 – 22 1% Payroll Contribution for Group Health Insurance

15 Overview of 1% Payroll Contributions Mandated by HB 1, 82nd Legislature Sec Payroll Contribution for Group Health Insurance. Effective September 1, 2011

16 Overview of 1% Contribution What is included in the 1% calculation?  Base salary What are not included in the 1% calculation?  Longevity pay  Hazardous pay  BRP pay  Overtime pay  Any other payment that is not part of the base pay

17 Overview of 1% Contribution Who are included?  All entities who participate in the State of Texas Group Benefits Program (GBP)  Active employees who have active insurance should be included to calculate the 1% contribution Who are not included?  Components within the University of Texas and Texas A&M Systems

18 Reporting to ERS TEXNET, the State of Texas Financial Network The Amount Type is D [Payroll Health Insurance (Employer)] TEXNET hotline – (800) , ext Amount Type: 1 = Insurance (Employee) 2 = Insurance (Employer-Active) 3 = Insurance (Employer-Retired) 4 = Cafeteria Plan (Employee) 9 = Insurance (Employer – SKIP) A = Insurance (Active Opt-out) B = Insurance (Retiree Opt-out) C = Tobacco User Prem. Differential (Employee) D = Payroll Health Insurance (Employer)

19 Frequently Asked Questions Is this an extra 1% contribution? No. It is not an additional contribution. The 1% contribution comes from funding sources other than the insurance appropriation Transfers made shall be consistent with provisions requiring salaries and benefits to be proportional to the source of funds

20 Frequently Asked Questions Will employees in the 90-day wait be included? No. Employers are not required to make contribution for a member during their 90-day wait. However, if an employer pays for the coverage of a member during their 90 day wait; the member should be included.

21 Frequently Asked Questions Will employees who Opt-Out of the GBP be included? Yes, up to the amount of the employer contribution requirement

22 Frequently Asked Questions Why do higher education institutions need to report the 1% payroll contributions? Ensure ERS’ compliance with the statute Provide legislature with the information on the impact of the legislation.

23 Frequently Asked Questions How do you access more information on insurance benefits? Visit our website at

24 Contact Information Carolyn Collins (512) Erin Williams (512) Eric Cruz (512)

25 Questions?