SB-0986, As Passed Senate, September 8, 2016

SENATE BILL No. 986

May 24, 2016, Introduced by Senator KOWALL and referred to the Committee on Government Operations.

     A bill to amend 1980 PA 350, entitled

"The nonprofit health care corporation reform act,"

by amending sections 653 and 655 (MCL 550.1653 and 550.1655), as

added by 2013 PA 4.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 653. (1) A charitable purpose nonprofit corporation may

be incorporated on a nonstock, directorship basis, under the

nonprofit corporation act, 1982 PA 162, MCL 450.2101 to 450.3192

consistent with this part and, if incorporated under this section,

shall must be organized to receive and administer funds for the

public welfare. The articles of incorporation must include the word

"Michigan" and the phrase "health endowment fund" in the name of

the fund. As soon as practicable after the incorporation of a fund

under this subsection, the fund shall apply for and make its best

effort to obtain tax-exempt status under section 501(c)(3) of the

internal revenue code of 1986, 26 USC 501.

     (2) The articles of incorporation of a fund must provide that

the fund is organized for the following purposes:

     (a) Supporting efforts that improve the quality of health care

while reducing costs to residents of this state.

     (b) Benefitting the health and wellness of minor children and

seniors throughout this state with a significant focus in the

following areas:

     (i) Access to prenatal care and reduction of infant mortality

rates.

     (ii) Health services for foster and adopted children.

     (iii) Access to healthy food.

     (iv) Wellness programs and fitness programs.

     (v) Access to mental health services.

     (vi) Technology enhancements.

     (vii) Health-related transportation needs.

     (viii) Foodborne illness prevention.

     (ix) Public health emergency.

     (c) Awarding grants for a term not exceeding 3 years in

duration for projects that will promote the purposes of the fund.

     (d) Subsidizing the cost of individual medigap coverage to

medicare-eligible Medicare-eligible individuals in this state who

demonstrate a financial need in order to be able to purchase

individual medigap coverage.

     (3) The board shall establish a comprehensive and competitive

process to award grants.

     (4) The nonprofit corporation act, 1982 PA 162, MCL 450.2101

to 450.3192, applies to a fund. If a provision relating to a fund

under this part conflicts with other state law, this part controls.

     (5) If a fund is eligible to receive social mission

contributions under section 220(2), the eligible fund shall

implement a program to disburse money to subsidize the cost of

individual medigap coverage to medicare-eligible Medicare-eligible

individuals in this state who demonstrate a financial need in order

to be able to purchase individual medigap coverage. The

commissioner director of the department of insurance and financial

services shall develop a means test to be used to determine if a

medicare-eligible Medicare-eligible individual applicant is

eligible for the medigap coverage subsidy provided for in this

subsection and shall submit the test developed to the attorney

general for approval.

     (6) If a fund is eligible to receive social mission

contributions under section 220(2), beginning on the first day of

the third August after the fund receives its initial social mission

contribution, and ending on the thirty-first day of the eighth

December after the fund receives its initial social mission

contribution, the fund shall disburse $120,000,000.00 to subsidize

the cost of individual medigap coverage purchased by medicare-

eligible Medicare-eligible individuals in this state, subject to

subsection (5).

     (7) A fund is a private, nonprofit corporation organized for

charitable purposes and is not a state agency, governmental agency,

or other political subdivision of this state. Money of a fund is

held by the fund for the purposes consistent with this part and is

not money of this state or a political subdivision of this state

and shall not be deposited in the state treasury. A member of a

board is not a public officer of this state.

     Sec. 655. (1) Subject to this section, a fund may disburse

money contributed to the fund each year, not including any

interest, earnings, or unrealized gains or losses on those

contributions, for the purposes of the fund as described in section

653. A fund may expend a portion of the money contributed to the

fund in each year following the initial contribution to the fund

according to the following schedule:

     (a) Years 1 through 4, 80%.

     (b) Years 5 through 8, 67%.

     (c) Years 9 through 12, 60%.

     (d) Years 13 through 18, 25%.

     (2) On and after the date that the accumulated principal of

money held by a fund reaches $750,000,000.00, the fund shall must

maintain that amount $750,000,000.00 for investment to provide an

ongoing income to the fund. On and after the date that the

accumulated principal in the fund reaches $750,000,000.00, the

board shall not allow the accumulated principal of the fund to fall

below $750,000,000.00 due to because of expenditures made for the

purposes of the fund as described in section 653.

     (3) A fund may expend money received by the fund from any

source in a fiscal year of the fund that is in excess of the amount

required to maintain the accumulated principal goals as described

in subsection (2), not including any interest, earnings, or

unrealized gains or losses on those funds, on the reasonable

administrative costs of the fund and for the purposes of the fund

as described in this part. The investment of fund money and

donations by the fund are under the exclusive control and

discretion of the fund and are not subject to requirements

applicable to public funds.

     (4) A fund may invest accumulated principal in the fund only

in securities permitted by the laws of this state for the

investment of assets of life insurance companies, as described in

chapter 9 of the insurance code of 1956, 1956 PA 218, MCL 500.901

to 500.947.

     (5) A fund's articles of incorporation or bylaws must provide

for a system of financial accounting, controls, audits, and

reports. The board annually shall have an audit of the fund

conducted by an independent public accountant firm, and the

auditor's audit report and findings shall be submitted to the

board. The expense of an audit required under this subsection is

considered a reasonable administrative cost under subsection (3).

     (6) A fund's articles of incorporation or bylaws must require

that the board shall appoint from its members an audit committee

consisting of no fewer than 3 members and for the audit committee

to contract with an independent auditing firm to provide an annual

financial audit in accordance with applicable auditing standards.

     (7) The executive director shall do all of the following:

     (a) Review and certify external auditor reports.

     (b) Make external auditor reports available to the board and

to the general public.

     (c) Develop and implement corrective actions to address

weaknesses identified in an audit report.

     (8) The articles of incorporation or bylaws of a fund must

require the fund to keep an accurate accounting of all activities,

receipts, and expenditures and annually submit to the board, the

governor, the senate and house of representatives appropriations

committees, and the senate and house of representatives standing

committees on health policy a report regarding those accountings.

     (9) A fund and its directors, officers, and employees shall

fully cooperate with any investigation conducted by this state or a

federal agency under its authority under state or federal law, to

do any of the following:

     (a) Investigate the affairs of the fund.

     (b) Examine the assets and records of the fund.

     (c) Require periodic reports in relation to the activities

undertaken by the fund in compliance with applicable law.