Does the carve-out in Ark. Code Ann. § 21-5-406(e)(3)(C) exempt every SEBCO benefit from state oversight, or only the specific plan as it existed on July 1, 1995?

Plain-English summary

State Senator Bart Hester asked the AG to clarify the scope of an oversight carve-out in Ark. Code Ann. § 21-5-406(e)(3)(C). The statute gives the Executive Director of the Employee Benefits Division (EBD) of the Arkansas Department of Finance and Administration broad authority to supervise the State and Public School Life and Health Insurance Program and "other employee benefits, plans, and individual and group policies." But subsection (e)(3)(C) carves out one specific thing: "the State Employees Benefit Corporation benefit plan in effect on July 1, 1995."

The AG read the carve-out narrowly. Three answers:

1. Products SEBCO offers today that were not part of its 1995 plan are within EBD's supervisory authority.
2. The EBD Executive Director supervises those non-1995 SEBCO plans and products.
3. A materially revised SEBCO plan offered after 1995 is also subject to EBD supervision, because "the plan in effect on July 1, 1995" means that plan as of that date, not future iterations.

The reasoning relied on plain-meaning statutory construction and legislative history. The original 1995 enactment used the phrase "which is in effect on July 1, 1995." The 2013 amendment removed "which is" but kept the July 1, 1995 reference. The legislature could have removed the date entirely, or could have exempted all SEBCO plans the way subdivision (e)(3)(E) exempts the Arkansas State Police Employee Health Plan ("exempt from any mandatory participation required by this section"). It chose not to.

Currency note

This opinion was issued in 2015. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Background and statutory framework

The State and Public School Life and Health Insurance Program is the self-funded plan that covers Arkansas state employees and public-school employees. It is designed and managed jointly by the State and Public School Life and Health Insurance Board and the Executive Director of EBD. The Executive Director's broader supervisory authority extends to other employee benefits, plans, and policies, covering life, accident, dental, disability, optional retirement programs, deferred compensation, cafeteria plans, and similar offerings.

The State Employees Benefit Corporation (SEBCO) is a separate offering channel: members of the Arkansas State Employees Association can be offered voluntary supplemental products through SEBCO. When the legislature first set up the EBD's broader supervisory role in 1995, it grandfathered in SEBCO's then-existing plan, presumably to avoid disrupting whatever arrangement SEBCO already had with state and public-school employees as of that date.

The interpretive question turned on whether "the plan in effect on July 1, 1995" was a moving target (any future SEBCO plan would inherit the exemption) or a snapshot (only that specific 1995 plan was exempt). The AG read it as a snapshot, citing two clues:

• The use of the definite article "the" coupled with a specific date suggests a fixed, identified plan rather than a category.
• The legislature explicitly knew how to write a broader exemption when it wanted to. Subsection (e)(3)(E) does exactly that for the State Police Employee Health Plan, using clear "exempt from any mandatory participation" language without a date anchor.

Common questions

What is SEBCO?

The State Employees Benefit Corporation is an entity that offers voluntary supplemental benefits to Arkansas State Employees Association members. It is distinct from the state's self-funded insurance program.

Does this opinion mean EBD can dictate SEBCO's product design?

It means the Executive Director has supervisory authority over SEBCO products and plans that fall outside the 1995 grandfathered plan. The exact scope of "supervise" in this context is statutory and would require looking at the full text of § 21-5-406 to confirm.

What if SEBCO just keeps offering the 1995 plan unchanged?

Then it stays in the carve-out. The carve-out is plan-specific, not entity-specific.

Why did the legislature single out SEBCO's 1995 plan?

The opinion does not address legislative purpose in detail. The likely answer is that the 1995 plan was a pre-existing arrangement the legislature did not want to disrupt when it expanded EBD's authority over voluntary supplemental products generally.

Does this change anything for individual state or school employees who buy SEBCO products?

Not directly. The opinion is about who supervises the products, not whether employees can buy them or what they cost.

Citations

• Ark. Code Ann. § 21-5-406(e)(3) (EBD Executive Director supervisory authority)
• Ark. Code Ann. § 21-5-406(e)(3)(C) (1995 SEBCO plan carve-out)
• Ark. Code Ann. § 21-5-406(e)(3)(E) (State Police Health Plan exemption)
• Acts of 1995, Act 1206, § 8 (original SEBCO carve-out language)
• Acts of 2013 (1st Ex. Sess.), Act 6, § 2 (2013 amendment removing "which is")

Source

• Landing page: https://arkansasag.gov/divisions/opinions-foia/attorney-general-opinions-search/

Original opinion text

Opinion No. 2015-090
September 2, 2015
The Honorable Bart Hester
State Senator
Post Office Box 85
Cave Springs, AR 72718
Dear Senator Hester:

STATE OF ARKANSAS
ATTORNEY GENERAL
LESLIE RUTLEDGE

This is my opinion on your questions about "regulation and oversight of the products offered through the State Employees Benefit Corporation and the supervisory authority of the Executive Director of the Employee Benefits Division of the Arkansas Department of Finance and Administration under [Ark. Code Ann.] § 21-5-406."

You offer the following background information:

The State and Public School Life and Health Insurance Board works with the Executive Director of the Employee Benefits Division of the Department of Finance and Administration to design and manage the State and Public School Life and Health Insurance Program, a self-funded plan that provides health and other benefits to state and public school employees. In addition, state and public school employees who are members of the Arkansas State Employees Association may be offered voluntary products by the State Employees Benefit Corporation.

The Executive Director of the Employee Benefits Division of the Department of Finance and Administration supervises the State and Public School Life and Health Insurance Program and other employee benefits, plans, and individual and group policies offered pursuant to § 21-5-406(e)(3), including the authority to supervise the coverage, programs, and plans for state and public school employees concerning: (1) Life insurance coverage; (2) Accident coverage; (3) Dental coverage; (4) Disability benefit programs; (5) Optional retirement programs; (6) Deferred compensation; (7) Cafeteria plans; and (8) Other benefit plans, benefit programs, and individual and group benefit coverage that is offered to state and public school employees.

The State Employees Benefit Corporation benefit plan in effect on July 1, 1995, is excluded from the Executive Director of the Employee Benefits Division of the Department of Finance and Administration's supervision under § 21-5-406(e)(3)(C).

Your questions are:

Question 1: Since § 21-5-406(e)(3)(C) specifies that the State Employees Benefit Corporation benefit plan in effect on July 1, 1995, is excluded from supervision by the Executive Director of the Employee Benefits Division of the Department of Finance and Administration, can the Executive Director of the Employee Benefits Division of the Department of Finance and Administration supervise the products offered to state and public school employees by the State Employees Benefit Corporation that are not included [in] the benefit plan in effect on July 1, 1995?

Question 2: Under § 21-5-406(e)(3)(C), what entity or person is responsible for the supervision of a benefit plan and products offered by the State Employees Benefit Corporation to eligible state and public school employees but are not included in the benefit plan in effect on July 1, 1995?

Question 3: If the State Employees Benefit Corporation's benefit plan in effect on July 1, 1995 is the benefit plan that is excluded from supervision by the Executive Director of the Employee Benefits Division of the Department of Finance and Administration under § 21-5-406(e)(3)(C), would a revised benefit plan offered by the State Employees Benefit Corporation after July 1, 1995, be supervised by the Executive Director of the Employee Benefits Division of the Department of Finance and Administration?

RESPONSE

In my opinion, and subject to the qualifications discussed below, the answer to your first and third questions is "yes." With respect to your second question, the Executive Director of the Employee Benefits Division of the Department of Finance and Administration is authorized to supervise the "plans and products" described in your question.

DISCUSSION

Question 1: Since § 21-5-406(e)(3)(C) specifies that the State Employees Benefit Corporation benefit plan in effect on July 1, 1995, is excluded from supervision by the Executive Director of the Employee Benefits Division of the Department of Finance and Administration, can the Executive Director of the Employee Benefits Division of the Department of Finance and Administration supervise the products offered to state and public school employees by the State Employees Benefit Corporation that are not included [in] the benefit plan in effect on July 1, 1995?

The law you cite provides that the Executive Director of the Employee Benefits Division of the Department of Finance and Administration (the "Executive Director") "has the authority to supervise the implementation and day-to-day management of the [State and Public School Life and Health Insurance] program and other employee benefits, plans, and individual and group policies made available to participants, if applicable." It further provides, however, that the supervisory authority granted does not include "supervising the State Employees Benefit Corporation benefit plan in effect on July 1, 1995."

A product not included in the State Employees Benefit Corporation ("SEBCO") benefit plan in effect on July 1, 1995, is clearly subject to the Executive Director's supervisory authority to the extent the product is one of those coming within that authority, i.e., "employee benefit programs, plans, and individual and group policies made available to participants, if applicable."

Question 2: Under § 21-5-406(e)(3)(C), what entity or person is responsible for the supervision of a benefit plan and products offered by the State Employees Benefit Corporation to eligible state and public school employees but are not included in the benefit plan in effect on July 1, 1995?

As noted above, the law authorizes the Executive Director to supervise "employee benefits, plans, and individual and group policies" other than "the [SEBCO] benefit plan in effect on July 1, 1995."

Question 3: If the State Employees Benefit Corporation's benefit plan in effect on July 1, 1995 is the benefit plan that is excluded from supervision by the Executive Director of the Employee Benefits Division of the Department of Finance and Administration under § 21-5-406(e)(3)(C), would a revised benefit plan offered by the State Employees Benefit Corporation after July 1, 1995, be supervised by the Executive Director of the Employee Benefits Division of the Department of Finance and Administration?

The exception to the Executive Director's supervisory authority is limited to "the [SEBCO] benefit plan in effect on July 1, 1995." The plain meaning of the legislature's use of both the definite article "the" and a specified date is that the exception is only for the plan as it existed on that date. To the extent SEBCO may offer a materially different plan, that plan is not the "plan in effect on July 1, 1995" and so is subject to the Executive Director's supervisory authority.

My interpretation is confirmed by the history of this statute. In 1995, the statute stated that the Executive Director's supervisory authority "shall not include the State Employee Benefit Corporation (SEBCO) benefit plan which is in effect on July 1, 1995." In 2013, the legislature amended this language by removing the words "which is," but left the reference to July 1, 1995. The legislature could have, but did not, remove the July 1, 1995 date. The legislature also could have, but did not, otherwise exclude from the Executive Director's supervisory authority all SEBCO plans or benefits as opposed to specifically excluding the July 1, 1995 plan. The legislature could certainly have entirely excluded past, present, and future plans if it so chose. See, e.g., Ark. Code Ann. § 21-5-406(e)(3)(E) ("The Arkansas State Police Employee Health Plan is exempt from any mandatory participation required by this section.").

Sincerely,
LESLIE RUTLEDGE
Attorney General