By Isett H.B. No. 2878 75R5896 PB-D A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the adoption of a catastrophic care and medical savings 1-3 account program for state employees and retired state employees. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Subchapter E, Chapter 3, Insurance Code, is 1-6 amended by adding Article 3.50-2A to read as follows: 1-7 Art. 3.50-2A. CATASTROPHIC CARE AND MEDICAL SAVINGS ACCOUNT 1-8 PROGRAM FOR STATE EMPLOYEES 1-9 Sec. 1. DEFINITIONS. In this article: 1-10 (1) "Account" means a medical savings account 1-11 established under this article. 1-12 (2) "Account administrator" means a person qualified 1-13 to act as an account administrator under Section 4 of this article. 1-14 (3) "Account holder" means an employee or annuitant. 1-15 (4) "Annuitant" has the meaning assigned by Section 3, 1-16 Texas Employees Uniform Group Insurance Benefits Act (Article 1-17 3.50-2, Vernon's Texas Insurance Code). 1-18 (5) "Dependent" has the meaning assigned by Section 3, 1-19 Texas Employees Uniform Group Insurance Benefits Act (Article 1-20 3.50-2, Vernon's Texas Insurance Code). 1-21 (6) "Employee" has the meaning assigned by Section 3, 1-22 Texas Employees Uniform Group Insurance Benefits Act (Article 1-23 3.50-2, Vernon's Texas Insurance Code). 1-24 (7) "Health care facility" means a hospital, 2-1 ambulatory surgical center, chemical dependency treatment facility, 2-2 minor emergency center, pharmacy, clinical laboratory, diagnostic 2-3 imaging center, renal dialysis facility, birthing center, rural 2-4 health clinic, or federally qualified health center. 2-5 (8) "Health benefits plan" has the meaning assigned by 2-6 Section 3, Texas Employees Uniform Group Insurance Benefits Act 2-7 (Article 3.50-2, Vernon's Texas Insurance Code). 2-8 (9) "Person" means an individual, corporation, 2-9 government or governmental subdivision or agency, estate, trust, 2-10 partnership, association, or any other legal entity. 2-11 (10) "Program" means the catastrophic care and medical 2-12 savings account program established under this article. 2-13 (11) "System" means the Employees Retirement System of 2-14 Texas. 2-15 Sec. 2. ACCOUNT AUTHORIZED; ELECTION. (a) An employee or 2-16 annuitant eligible for coverage under the Texas Employees Uniform 2-17 Group Insurance Benefits Act (Article 3.50-2, Vernon's Texas 2-18 Insurance Code) may elect to participate in the catastrophic care 2-19 and medical savings account program established under this article 2-20 for the benefit of that individual and the individual's dependents. 2-21 (b) An employee or annuitant who elects to participate in 2-22 the program is entitled to benefits as provided by this article but 2-23 is not entitled to receive coverage under the Texas Employees 2-24 Uniform Group Insurance Benefits Act (Article 3.50-2, Vernon's 2-25 Texas Insurance Code) for health care for that individual and the 2-26 individual's dependents. 2-27 (c) An employee or annuitant who elects to participate in 3-1 the program must provide written notice to the Employees Retirement 3-2 System of that election not later than August 1 preceding the state 3-3 fiscal biennium for which the person makes the election. An 3-4 election made under this section: 3-5 (1) is binding on the individual for the state fiscal 3-6 biennium beginning after the date of the election; 3-7 (2) may not be revoked during the term of that state 3-8 fiscal biennium; and 3-9 (3) must be renewed in writing as provided by rules 3-10 adopted by the system. 3-11 Sec. 3. PROGRAM REQUIREMENTS. (a) An account under this 3-12 article must be a separate interest-bearing account that is 3-13 federally insured or administered by a fidelity-bonded 3-14 administrator. 3-15 (b) The program must provide for an account administrator to 3-16 manage the account holder's medical savings account. 3-17 (c) The system shall inform each employee in writing of the 3-18 federal tax consequences of contributions made by this state under 3-19 this article before making a contribution on behalf of that 3-20 employee. 3-21 Sec. 4. ACCOUNT ADMINISTRATOR. (a) The following persons 3-22 may act as an account administrator under this article: 3-23 (1) a bank, savings and loan association, savings 3-24 bank, or credit union organized under the laws of this state or the 3-25 United States; 3-26 (2) a trust company authorized to act as a fiduciary; 3-27 (3) an insurance company authorized to do business in 4-1 this state under Chapter 3, Insurance Code, a group hospital 4-2 service corporation authorized to do business in this state under 4-3 Chapter 20, Insurance Code, or a health maintenance organization 4-4 authorized to do business in this state under the Texas Health 4-5 Maintenance Organization Act (Chapter 20A, Vernon's Texas Insurance 4-6 Code); 4-7 (4) a third-party administrator holding a certificate 4-8 of authority issued under Article 21.07-6, Insurance Code; or 4-9 (5) a certified public accountant licensed by the 4-10 Texas State Board of Public Accountancy. 4-11 (b) The account administrator may charge an administrative 4-12 fee to cover expenses incurred by the administrator in making 4-13 investments for the account and in claims processing. The amount 4-14 of the fee may not exceed 10 percent of the amount deposited to the 4-15 account in a year and shall be established by an agreement between 4-16 the account administrator and the account holder. 4-17 (c) The account administrator is the fiduciary of the 4-18 account holder. 4-19 Sec. 5. CATASTROPHIC HEALTH INSURANCE PLAN. (a) The system 4-20 shall establish a catastrophic care plan that provides catastrophic 4-21 health care benefits for account holders and dependents. 4-22 (b) The catastrophic care plan shall allow the account 4-23 holder to select from four levels of deductibles, with deductibles 4-24 under the levels set at $500, $1,000, $1,500, and $2,000. 4-25 (c) The system, by rule, shall determine which diseases, 4-26 injuries, or other health conditions require catastrophic health 4-27 care benefits under this section. 5-1 Sec. 6. FUNDING; STATE CONTRIBUTIONS. (a) For each account 5-2 holder, the state shall pay through the system the annual premium 5-3 required for the catastrophic care plan established under Section 5 5-4 of this article. 5-5 (b) In addition to the state contribution under Subsection 5-6 (a) of this section, the state shall pay annually an amount equal 5-7 to 25 percent less than the average premium imposed under all other 5-8 health benefits plans in which a state employee is eligible to 5-9 participate under the Texas Employees Uniform Group Insurance 5-10 Benefits Act (Article 3.50-2, Vernon's Texas Insurance Code) into a 5-11 medical savings account established under this article. The 5-12 account holder may make contributions to the account in addition to 5-13 the contribution made by the state. 5-14 (c) The system shall make the contribution required under 5-15 Subsection (b) of this section until the balance in the account is 5-16 at least $15,000. When the balance in the account reaches $15,000, 5-17 the state contribution ceases until the balance is below $15,000. 5-18 (d) On retirement of the employee or termination of the 5-19 employee's state employment, the system shall disburse the 5-20 outstanding balance in the account to the account holder. 5-21 (e) The total state contribution made each year under 5-22 Subsections (a) and (b) of this section may not exceed the premium 5-23 paid by the state for employee-only coverage under the Texas 5-24 Employees Uniform Group Insurance Benefits Act (Article 3.50-2, 5-25 Vernon's Texas Insurance Code). 5-26 (f) For purposes of Chapter 61, Labor Code, the term 5-27 "wages," as defined by Section 61.001, Labor Code, includes a 6-1 contribution required to be made by this state to a medical savings 6-2 account under this article. 6-3 Sec. 7. USE OF ACCOUNT. (a) Money in an account may be 6-4 spent only for medical purposes. The system may adopt rules 6-5 relating to the determination of whether a specific use constitutes 6-6 a medical purpose for purposes of this article. In making those 6-7 determinations, the system shall construe the term "medical 6-8 purpose" broadly. 6-9 (b) The account administrator shall use money in an account 6-10 for either or both of the following purposes: 6-11 (1) to pay eligible medical expenses of the account 6-12 holder or the account holder's dependents or to reimburse the 6-13 account holder for those expenses; or 6-14 (2) to purchase a health benefits plan that provides 6-15 benefits for the account holder and the account holder's 6-16 dependents. 6-17 (c) A medical expense is eligible for payment or 6-18 reimbursement under Subsection (b) of this section if: 6-19 (1) it is an expense: 6-20 (A) described under Section 213(d), Internal 6-21 Revenue Code of 1986 (26 U.S.C. Section 213(d)); or 6-22 (B) determined by the system to be an expense 6-23 legitimately related to a medical purpose under the rules adopted 6-24 under Subsection (a) of this section; and 6-25 (2) payment or reimbursement for the expense is not 6-26 otherwise provided for under any health plan or other insurance 6-27 policy, including a motor vehicle or workers' compensation 7-1 insurance policy. 7-2 Sec. 8. IDENTIFICATION CARDS. (a) The account 7-3 administrator shall issue to the account holder an identification 7-4 card indicating: 7-5 (1) the name of the account holder and any dependent 7-6 of the account holder for whom eligible expenses may be paid under 7-7 the program; 7-8 (2) the name, address, and phone number of the account 7-9 administrator; and 7-10 (3) whether the account holder is covered by a health 7-11 benefits plan. 7-12 (b) The account administrator shall issue a duplicate 7-13 identification card to each dependent of an account holder for whom 7-14 eligible expenses may be paid under the program. 7-15 Sec. 9. PROMPT PAYMENT OF CLAIMS. (a) Except as provided by 7-16 Subsection (b) of this section, the account administrator shall pay 7-17 a claim that is eligible for payment from the account not later 7-18 than the 30th day after the date the claim is submitted to the 7-19 account administrator. 7-20 (b) The account administrator may request documents 7-21 necessary to verify whether a claim is eligible for payment from 7-22 the account. If the account administrator makes a request under 7-23 this subsection, the account administrator shall pay a claim that 7-24 is eligible for payment from the account not later than the 30th 7-25 day after the date the documents are received by the account 7-26 administrator. 7-27 Sec. 10. ACCESS TO HEALTH CARE SERVICES. (a) A health care 8-1 facility may not refuse to provide medical services to an 8-2 individual on the basis of that individual's inability to pay for 8-3 the services if the individual presents an identification card 8-4 issued under this article and the health benefits plan or medical 8-5 savings account provides full coverage and reimbursement for the 8-6 services requested, excepting any copayment or deductible amounts 8-7 applicable under the plan. 8-8 (b) A health care facility may delay providing services, 8-9 other than emergency services, to an individual in order to contact 8-10 the account administrator to confirm the individual's participation 8-11 in the program. 8-12 Sec. 11. DEATH OF ACCOUNT HOLDER. (a) On the death of the 8-13 account holder, the account administrator shall transfer the 8-14 account to a dependent of the account holder named as a successor 8-15 account holder by the account holder in the agreement establishing 8-16 the account. If the agreement does not designate a successor 8-17 account holder, the account administrator shall pay to the estate 8-18 of the deceased account holder any money in the account, including 8-19 any interest on the account. 8-20 (b) If an account is transferred to a successor account 8-21 holder under this section, the account administrator shall continue 8-22 to administer the account for the benefit of the dependents of the 8-23 original account holder. 8-24 (c) An account administrator shall make the transfer or 8-25 payment required by Subsection (a) of this section not later than 8-26 the 30th day after the date on which the account administrator 8-27 receives proof of the death of the account holder. 9-1 SECTION 2. (a) Except as provided by Subsection (b) of this 9-2 section, Article 3.50-2A, Insurance Code, as added by this Act, 9-3 takes effect September 1, 1997. 9-4 (b) The Employees Retirement System of Texas shall adopt 9-5 rules as necessary to implement Article 3.50-2A, Insurance Code, as 9-6 added by this Act, not later than January 1, 1998. An employee or 9-7 annuitant may begin participation in the program established under 9-8 that article beginning with the state fiscal year starting 9-9 September 1, 1998. 9-10 SECTION 3. The importance of this legislation and the 9-11 crowded condition of the calendars in both houses create an 9-12 emergency and an imperative public necessity that the 9-13 constitutional rule requiring bills to be read on three several 9-14 days in each house be suspended, and this rule is hereby suspended.