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.