SBW C.S.H.B. 1700 75(R)BILL ANALYSIS PENSIONS & INVESTMENTS C.S.H.B. 1700 By: Rangel 4-9-97 Committee Report (Substituted) BACKGROUND Current law provides that health insurance programs offered to employees by local school districts must be comparable to the state employees' health insurance program. The Teacher Retirement System (TRS) is responsible for registering the comparability of local district plans through a written confirmation by each school district superintendent. Current law and TRS procedures are inadequate to establish a genuine standard of comparability for factors such as health coverage benefits, copayments, deductibles, and premiums. For example, the state currently pays 100% of a state employee's health insurance premiums for employee only costs at a monthly rate of $186.31, and 50% of a state employee's dependent premiums. According to a survey conducted in 1996 by the TRS, the average reported contribution by school districts toward health insurance premiums was $112.00, and the maximum reported contribution was $243.00. The survey was answered by 829 school districts representing 348,605 employees. Of the districts responding, only 299 were paying the full employee only premium, and only 44 were paying over $186.00 toward employee health insurance premiums. PURPOSE As proposed, this bill would establish a process by which TRS will review and report the substantial similarities of local school district health insurance plans to the basic state employees health insurance program. The objective of the legislation is to set a statewide health insurance substantially similar standard and to provide opportunities for school employees and local school boards to improve local health plans. A procedure is established for school district plans that are not substantially similar to be reported to the Legislative Budget Board and back to the appropriate school district. No sanctions are required for non-conforming districts. A biennial report to the Legislature describing the status of school districts under the program is required of the TRS. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 22.004, Education Code. Sec. 22.004. GROUP HEALTH BENEFITS FOR SCHOOL EMPLOYEES. (a) is amended by striking the term "comparable" and replacing it with the phrase "substantially similar" which is defined as being 90% of the value of of deductibles, coinsureance and maximum lifetime benefit levels of the basic program of the Texas Employees Uniform Group Insurance Benefits Act (UGIP). The district is required to pay at least 90% of the employee cost of coverage and at least 45% of the dependent unit cost of coverage. The plan must be insured by a state authorized entity, or be self-insured with proof of the district's ability to cover liability. (b) Adds language to state that the cost of the coverage may be shared between the employee and the district to the extent of what is authorized under Subsection (a). (c) The districts are to report no later than November 1 of each year in a manner prescribed by the TRS trustees. The report must include verification of contract with a provided licensed by the Texas Department of Insurance; a resolution by the district's board of trustees authorizing a self-insured plan and the district's ability to cover the liability assumed. Also, the schedule of benefits, premium rate sheet as specified and any other information considered appropriate by the TRS Executive Director. (d) Requires the Executive Director to certify that the district's coverage is substantially similar to the UGIP based on the criteria required by Subsection (a). If the district's plan if found not in compliance with these requirements, the Executive Director is required to report the findings to the school district, the Legislative Budget Board and the Legislature as stipulated. (e) Conforming changes -- relettering section (f) Conforming changes -- relettering section. (g) Conforming changes -- relettering section. SECTION 2: Stipulates that this Act begins with the 1997-1998 school year. SECTION 3: Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE SECTION 1 creates a standard for the term "substantially similar" based on specific criteria. A more defined and fiscally responsible mechanism for collection and reporting of data to the Executive Director of TRS is stipulated. Documents required for the report is specified. The original bill did not specify criteria.