Dec. 14, 2004

State House raided your health insurance program
The Minnesota House raided your group health insurance program (aka, State Employee Group Insurance Program.)

The State of Minnesota self-insures state employee health and dental claims with an insurance trust fund known as SEGIP reserves. SEGIP is funded with insurance premiums paid from state employees’ salaries and employer contributions.

During fiscal year 2003, $11 million in cash was transferred from the SEGIP fund. This amount represented a return of previous state general fund contributions to SEGIP that were made to help build reserves. To help balance Minnesota’s budget in 2003, the Legislature mandated that the commissioner of Finance transfer $23 million in state fiscal year 2005 from the SEGIP contingency reserve to the general fund. This transfer exceeds amounts contributed to SEGIP by the general fund and will significantly reduce reserves to a level below that suggested by fund consultants.

In addition, because insurance premiums for some employees were paid from federal funds, federal regulations require an equitable refund to the federal government for its share of funds transferred.

Legislatively mandated transfers to the state’s general fund will significantly reduce the SEGIP reserves. This action is similar to Congress taking funds from the Social Security.

For a summary or the full report on this topic from the Office of the Legislative Auditor, please go here: www.auditor.leg.state.mn.us/fad/2004/fad04-09.htm