By Berlanga                                     H.B. No. 3055

      75R6649 CAS-D                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to group insurance coverage for certain employees of

 1-3     public schools.

 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-5           SECTION 1.  Section 2, Texas Employees Uniform Group

 1-6     Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance

 1-7     Code), is amended to read as follows:

 1-8           Sec. 2.  PURPOSES.  It is hereby declared that the purposes

 1-9     of this Act are:

1-10                 (a)  to provide uniformity in life, accident, and

1-11     health benefits coverages for [on] all employees of the State of

1-12     Texas and of public schools in this state, and their dependents;

1-13                 (b)  to enable the State of Texas and public schools in

1-14     this state to attract and retain competent and able employees by

1-15     providing them and their dependents with life, accident, and health

1-16     benefits coverages at least equal to those commonly provided in

1-17     private industry;

1-18                 (c)  to foster, promote, and encourage employment by

1-19     and service to the State of Texas and public schools in this state

1-20     as a career profession for persons of high standards of competence

1-21     and ability;

1-22                 (d)  to recognize and protect the [state's] investment

1-23     of the state and public schools in each permanent employee by

1-24     promoting and  preserving economic security and good health among

 2-1     [state] employees and their dependents;

 2-2                 (e)  to foster and develop high standards of

 2-3     employer-employee relationships between the State of Texas or

 2-4     public schools in this state, as applicable, and [its] employees;

 2-5                 (f)  to recognize the service to the state by elected

 2-6     state officials by extending to them and their dependents the same

 2-7     life, accident, and health benefits coverages as are provided

 2-8     herein for state and public school employees and their dependents;

 2-9     and

2-10                 (g)  to recognize the long and faithful service and

2-11     dedication of employees of the State of Texas and of public schools

2-12     in this state and to encourage them to remain in state or public

2-13     school service until eligible for retirement by providing health

2-14     benefits for such employees and their dependents.

2-15           SECTION 2.  Sections 3(a)(5), (6), (14), and (15), Texas

2-16     Employees Uniform Group Insurance Benefits Act (Article 3.50-2,

2-17     Vernon's Texas Insurance Code), are amended to read as follows:

2-18                 (5)(A)  "Employee" shall mean any appointive or

2-19     elective officer or employee in the service of the State of Texas,

2-20     including an employee of an institution of higher education:

2-21                             (i)  who is retired or retires and is an

2-22     annuitant under the jurisdiction of the Employees Retirement System

2-23     of Texas, pursuant to Subtitle B, D, or E;

2-24                             (ii)  who is retired or retires and is an

2-25     annuitant under the jurisdiction of the Teacher Retirement System

2-26     of Texas, pursuant to Subtitle C, Title 8, Government Code, or

2-27     pursuant to Chapter 803, Government Code, and whose last employment

 3-1     with the state prior to retirement, including employment by a

 3-2     public community/junior college, was as an employee of a department

 3-3     whose employees are authorized to participate in the Texas

 3-4     employees uniform group insurance program;

 3-5                             (iii)  who is retired or retires and is an

 3-6     annuitant under the optional retirement program established by

 3-7     Chapter 830, Government Code, if the person's last state employment

 3-8     before retirement, including employment by a public

 3-9     community/junior college, was as an employee of a department whose

3-10     employees are authorized to participate in the Texas employees

3-11     uniform group insurance program, and if the person either:

3-12                                            (a)  would have been

3-13     eligible to retire and receive a service retirement annuity from

3-14     the Teacher Retirement System of Texas or the Employees Retirement

3-15     System of Texas had the person not elected to participate in the

3-16     optional retirement program; or

3-17                                            (b)  is disabled as

3-18     determined by the Employees Retirement System of Texas;

3-19                             (iv)  who receives compensation for

3-20     services rendered to the State of Texas, other than an employee of

3-21     an institution of higher education described by this subdivision,

3-22     on a warrant issued pursuant to a payroll certified by a department

3-23     or by an elected or duly appointed officer of this state;

3-24                             (v)  who receives payment for the

3-25     performance of personal services on a warrant issued pursuant to a

3-26     payroll certified by a department and drawn by the State

3-27     Comptroller of Public Accounts upon the State Treasury [Treasurer]

 4-1     against appropriations made by the Texas Legislature from any state

 4-2     funds or against any trust funds held by the Comptroller [State

 4-3     Treasurer] or who is paid from funds of an official budget of a

 4-4     state department, rather than from funds of the General

 4-5     Appropriations Act;

 4-6                             (vi)  who is appointed, subject to

 4-7     confirmation of the senate, as a member of a board or commission

 4-8     with administrative responsibility over a statutory agency having

 4-9     statewide jurisdiction whose employees are covered by this Act;

4-10                             (vii)  who is a member of the governing

4-11     body of an institution of higher education, as that term is defined

4-12     by this Act;

4-13                             (viii) who is a member of the State Board

4-14     of Education;

4-15                             (ix)  who receives compensation for

4-16     services rendered to an institution of higher education on a

4-17     warrant or check issued pursuant to a payroll certified by an

4-18     institution of higher education or by an elected or duly appointed

4-19     officer of this state, and who is eligible for participation in the

4-20     Teacher Retirement System of Texas; or

4-21                             (x)  who receives compensation for services

4-22     rendered to an institution of higher education as provided by this

4-23     subdivision but is not permitted to be a member of the Teacher

4-24     Retirement System of Texas because the person is solely employed by

4-25     an institution of higher education that as a condition of

4-26     employment requires the person to be enrolled as a student in an

4-27     institution of higher education in graduate-level courses and who

 5-1     is employed by the institution at least 20 hours a week.

 5-2                       (B)  "Employee" also means a person who is

 5-3     employed, as determined by the Teacher Retirement System of Texas,

 5-4     on other than a temporary basis, by an employer described under

 5-5     Subdivision (6)(B) of this subsection at a regular rate of pay

 5-6     comparable to that of other persons employed in similar positions.

 5-7                       (C)  Persons performing personal services for the

 5-8     State of Texas as independent contractors shall never be considered

 5-9     employees of the state for purposes of this Act.

5-10                 (6)  "Employer" shall mean:

5-11                       (A)  the State of Texas and all its departments;

5-12     or

5-13                       (B)  an employer as defined by Section

5-14     821.001(7), Government Code, other than the board of regents of a

5-15     college or university not included in the meaning of "institution

5-16     of higher education" under Subdivision (18) of this subsection.

5-17                 (14)  "Part-time employee" shall mean, for purposes of

5-18     this Act, an employee designated by his employing agency as working

5-19     less than 20 hours per week.  A part-time employee shall receive

5-20     the benefits of one-half the amount of the [state's] contribution

5-21     from the state or an employer described under Subdivision (6)(B) of

5-22     this subsection, as applicable, received by full-time employees.

5-23                 (15)  "Full-time employee" shall mean, for purposes of

5-24     this Act, an employee designated by his employing agency as working

5-25     20 or more hours per week.  A full-time employee shall receive the

5-26     benefits of a full [state] contribution from the state or an

5-27     employer described under Subdivision (6)(B) of this subsection, as

 6-1     applicable, for coverage under this Act.

 6-2           SECTION 3.  Section 5(a), Texas Employees Uniform Group

 6-3     Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance

 6-4     Code), is amended to read as follows:

 6-5           (a)  The trustee is authorized, empowered, and directed to

 6-6     establish plans of group coverages for active employees and retired

 6-7     employees which in the trustee's discretion may include but are not

 6-8     necessarily limited to the following:  group life coverages,

 6-9     accidental death and dismemberment, health benefits plans,

6-10     including but not limited to hospital care and benefits, surgical

6-11     care and treatment, medical care and treatment, dental care,

6-12     obstetrical benefits, prescribed drugs, medicines, and prosthetic

6-13     devices and supplemental benefits, supplies, and services in

6-14     conformity with the provisions of this Act, protection against

6-15     either long or short term loss of salary and any other group

6-16     coverages which in the discretion of the trustee with consultation

6-17     from the advisory committee shall be deemed advisable.  All rules

6-18     and regulations shall be promulgated pursuant thereto.  The trustee

6-19     shall determine the coverages desired for [state] employees and

6-20     will submit this information to the Texas Department [State Board]

6-21     of Insurance for any recommendations as to the types and

6-22     sufficiency of such coverages.  The Texas Department [State Board]

6-23     of Insurance will notify the board of trustees within 30 days as to

6-24     any such recommendations and will furnish the board of trustees

6-25     with a list of all carriers authorized to do business in the State

6-26     of Texas who would be eligible to bid on the coverages that are to

6-27     be insured by a carrier.  The trustee will notify those carriers

 7-1     that competitive bidding will be conducted and that they are to

 7-2     submit their bids to the Texas Department [State Board] of

 7-3     Insurance by a specified date if they wish to bid on the contract.

 7-4     The Texas Department [State Board] of Insurance will, after the

 7-5     designated closing date of receiving bids, examine and evaluate the

 7-6     bidding contracts and certify their actuarial soundness to the

 7-7     trustee within 15 days from the closing date.  The trustee shall

 7-8     select the desired carrier or carriers and will notify the bidding

 7-9     eligible carriers as to the results of the bidding.  The trustee

7-10     shall select the desired carrier or carriers to provide services

7-11     which shall be in the best interest of the employees covered by

7-12     this Act.  The trustee is not required to select the lowest bid but

7-13     shall take into consideration other factors such as ability to

7-14     service contracts, past experience, financial ability, and other

7-15     relevant criteria.  Should the trustee select a carrier whose bid

7-16     differs from that advertised, such deviation shall be recorded and

7-17     the reasons for such deviation shall be fully justified and

7-18     explained in the minutes of the next meeting of the trustee.

7-19           SECTION 4.  Section 11(a), Texas Employees Uniform Group

7-20     Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance

7-21     Code), is amended to read as follows:

7-22           (a)  The trustee is authorized and directed to establish a

7-23     group life program for all employees, including retired employees,

7-24     [of this state] as herein provided, which, subject to the

7-25     conditions and limitations contained in this Act and the trustee's

7-26     rules and regulations promulgated pursuant thereto, will provide

7-27     for each employee group life coverages in such an amount as shall

 8-1     be determined by the trustee.  In addition to the benefits

 8-2     hereinabove provided and subject to the conditions and limitations

 8-3     of the policy or policies purchased by the trustee, such policy or

 8-4     policies shall provide such payments and benefits for employees and

 8-5     retired employees as shall be determined by the trustee.  The

 8-6     trustee is also authorized to include the dependents of employees

 8-7     in the life program.

 8-8           SECTION 5.  Section 13(a), Texas Employees Uniform Group

 8-9     Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance

8-10     Code), is amended to read as follows:

8-11           (a)  Except as provided by Section 13A of this Act, no

8-12     employee [of the State of Texas] shall be denied any of the group

8-13     coverage provided under this Act.

8-14           SECTION 6.  Section 13B(c), Texas Employees Uniform Group

8-15     Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance

8-16     Code), is amended to read as follows:

8-17           (c)  If the trustee determines that a cafeteria plan adopted

8-18     under this section is no longer advantageous to the state or

8-19     [state] employees, the trustee may adopt an order terminating the

8-20     cafeteria plan and providing a procedure for the orderly withdrawal

8-21     of the state and [its] employees from that plan.

8-22           SECTION 7.  Sections 14(d)-(h), Texas Employees Uniform Group

8-23     Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance

8-24     Code), are amended to read as follows:

8-25           (d)  If the cost of the basic coverage for an [a state]

8-26     employee or annuitant exceeds the amount of [employer]

8-27     contributions from the state or an employer described under Section

 9-1     3(a)(6)(B) of this Act, as applicable, allocated to fund the basic

 9-2     coverage, the employer [state] shall deduct from or reduce the

 9-3     monthly compensation of the [state] employee, and the state shall

 9-4     deduct from the  retirement benefits of the annuitant an amount

 9-5     sufficient to pay the cost of the basic coverage.  The payroll

 9-6     officer for an employer described under Section 3(a)(6)(B) of this

 9-7     Act shall pay the amounts  deducted under this subsection to the

 9-8     trustee at the time and in the manner prescribed by the trustee.

 9-9           (e)  The trustee shall apply the amount of any employer

9-10     contribution allocated to fund optional coverages to the excess of

9-11     the cost of the basic and optional coverages for which the employee

9-12     or annuitant has applied over the basic coverage contribution.

9-13     Except as provided by Subsection (h) of this section, if an

9-14     employee or annuitant applies for basic and optional coverages for

9-15     which the cost exceeds the contributions for those coverages under

9-16     this Act, the employee or annuitant shall authorize in a form and

9-17     manner satisfactory to the trustee a deduction from the employee's

9-18     or annuitant's monthly compensation or annuity equal to the

9-19     difference between the cost of basic and optional coverages for

9-20     which the employee or annuitant has applied and the employer

9-21     contributions for basic and optional coverage.  The payroll officer

9-22     for an employer described under Section 3(a)(6)(B) of this Act

9-23     shall pay the amounts deducted under this subsection to the trustee

9-24     at the time and in the manner prescribed by the trustee.

9-25           (f)  Except as provided by Subsection (h) of this section, if

9-26     an employee or annuitant applies for voluntary coverages, the

9-27     employee shall authorize in a form and manner satisfactory to the

 10-1    trustee a deduction from the employee's monthly compensation or

 10-2    annuity equal to the cost of the voluntary coverages.  The payroll

 10-3    officer for an employer described under Section 3(a)(6)(B) of this

 10-4    Act shall pay the amounts deducted under this subsection to the

 10-5    trustee at the time and in the manner prescribed by the trustee.

 10-6          (g)  If an employee or annuitant refuses the coverages or

 10-7    benefits provided under this Act in a form and manner satisfactory

 10-8    to the trustee, the employer, state, or [and the] employee's

 10-9    department, as applicable, may not make any contribution to the

10-10    cost  of any coverages or benefits for the employee or annuitant.

10-11          (h)  If an employee elects to participate in the cafeteria

10-12    plan, the employee must execute a salary reduction agreement under

10-13    which the employee's monthly compensation will be reduced in an

10-14    amount that is equal to the difference between the employer

10-15    contributions for basic and optional coverages and the cost of the

10-16    cafeteria plan coverages identified by the trustee as comparable to

10-17    the basic and optional coverages for which the employee is

10-18    eligible.  The salary reduction agreement must also provide for an

10-19    additional reduction in the employee's compensation equal to the

10-20    cost of voluntary coverages for which the employee has applied.  An

10-21    employee who executes a salary reduction agreement for insurance

10-22    coverage included in the cafeteria plan has elected to participate

10-23    in the cafeteria plan and agreed to a salary reduction for the

10-24    insurance coverages for subsequent plan years unless the

10-25    participant, during an annual enrollment period specified by the

10-26    trustee, elects in a form and manner satisfactory to the trustee

10-27    not to participate for the next plan year in the insurance

 11-1    coverages.  An employee who has elected not to participate in the

 11-2    cafeteria plan insurance coverages may re-enroll by executing a new

 11-3    salary reduction agreement during a subsequent annual enrollment

 11-4    period.  A salary reduction agreement for cafeteria plan benefits

 11-5    other than insurance coverages must be executed annually, during

 11-6    the annual enrollment period.  The employee shall pay any remaining

 11-7    portion of the cost of benefits that is not covered by the

 11-8    contributions for basic and optional coverages and the salary

 11-9    reduction under the cafeteria plan by executing a payroll deduction

11-10    agreement.  The payroll officer for an employer described under

11-11    Section 3(a)(6)(B) of this Act shall pay the amounts withheld from

11-12    salary under this subsection to the trustee at the time and in the

11-13    manner prescribed by the trustee.

11-14          SECTION 8.  Section 15, Texas Employees Uniform Group

11-15    Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance

11-16    Code), is amended by amending Subsections (b)-(d) and adding

11-17    Subsection (e) to read as follows:

11-18          (b)  From and after the effective date of this Act, the state

11-19    shall appropriate [there is hereby allocated and appropriated] to

11-20    the trustee, in accordance with the provisions of this Act, from

11-21    the several funds from which state employees receive their

11-22    respective salaries, a sum equal to the total of all employer

11-23    contributions for state employees computed in accordance with the

11-24    provisions of this Act and the rules and regulations of the trustee

11-25    promulgated pursuant thereto.  The amount the state is required to

11-26    contribute on behalf of  employees described under Section

11-27    3(a)(5)(B) of this Act, as provided by Subsection (e) of this

 12-1    section, shall be appropriated to the trustee from the general

 12-2    revenue fund.

 12-3          (c)  All money [hereby allocated and] appropriated by the

 12-4    state to the trustee [under this Act] shall be paid to the trustee

 12-5    in monthly installments based on the annual estimate by the trustee

 12-6    of the contributions to be received from the state for all [state]

 12-7    employees during said year;  provided, however, that in the event

 12-8    said estimate of the contributions from [of] the state [employees]

 12-9    shall vary from the actual amount of [the employer] contributions

12-10    during the year, such adjustments shall be made at the close of

12-11    each fiscal year as may be required.  Each of said monthly

12-12    installments shall be paid into the appropriate fund created by

12-13    this Act in the amount certified by the trustee.

12-14          (d)  The trustee shall certify to the governing boards of

12-15    those state departments who provide contributions for their

12-16    employees from operating budgets provided from sources other than

12-17    the General Appropriations Act the proportionate amounts needed to

12-18    pay their respective contributions.  The trustee shall certify to

12-19    each employer described under Section 3(a)(6)(B) of this Act the

12-20    proportionate amounts needed to pay their respective contributions.

12-21    Such certifications shall be made at least 30 days prior to the

12-22    meeting at which the governing board adopts its operating budget.

12-23          (e)  Each employer described under Section 3(a)(6)(B) of this

12-24    Act shall pay contributions for coverage under this Act for each of

12-25    the employer's employees and annuitants described under Section

12-26    3(a)(5)(B) of this Act in an amount equal to or greater than the

12-27    amount the  employer contributed for the health insurance coverage

 13-1    of an employee or annuitant for the preceding school year.  For

 13-2    each employee described under Section 3(a)(5)(B) of this Act or

 13-3    annuitant who retired as an employee described by that paragraph,

 13-4    the state shall pay an amount equal to the difference between the

 13-5    contribution of the employer described under Section 3(a)(6)(B) of

 13-6    this Act for an employee or annuitant during the preceding school

 13-7    year and the amount the state contributes for basic coverage for a

 13-8    state employee under this Act.  The contributions required under

 13-9    this subsection from an employer described under Section 3(a)(6)(B)

13-10    of this Act shall be paid to the trustee at the time and in the

13-11    manner prescribed by the trustee.

13-12          SECTION 9.  Sections 16(a) and (b), Texas Employees Uniform

13-13    Group Insurance Benefits Act (Article 3.50-2, Vernon's Texas

13-14    Insurance Code), are amended to read as follows:

13-15          (a)  There is hereby created with the treasury of the State

13-16    of Texas an Employees Life, Accident, and Health Insurance and

13-17    Benefits Fund which shall be administered by the trustee.  The

13-18    contributions of employees, annuitants, [and] the state, and

13-19    employers described under Section 3(a)(6)(B) of this Act provided

13-20    for under this Act shall be paid into the fund.  The fund is

13-21    available:

13-22                (1)  without fiscal year limitation for all payments

13-23    for any coverages provided for under this Act; and

13-24                (2)  to pay expenses for administering this Act within

13-25    the limitations that may be specified annually by the legislature.

13-26          (b)  Portions of the contributions made by employees,

13-27    annuitants, [and] the state, and employers described under Section

 14-1    3(a)(6)(B) of this Act shall be regularly set aside in the fund as

 14-2    follows:  a percentage determined by the trustee to be reasonably

 14-3    adequate to pay the administrative expenses made available by

 14-4    Subsection (a) of this section.  The trustee, from time to time and

 14-5    in amounts it considers appropriate, may transfer unused funds for

 14-6    administrative expenses to the contingency reserves to be used by

 14-7    the trustee only for charges, claims, costs, and expenses under the

 14-8    program.

 14-9          SECTION 10.  Sections 16B(a)-(c), and (e), Texas Employees

14-10    Uniform Group Insurance Benefits Act (Article 3.50-2, Vernon's

14-11    Texas Insurance Code), are amended to read as follows:

14-12          (a)  The State and Public School Employees Cafeteria Plan

14-13    Trust Fund is created in the State Treasury.  The trust shall be

14-14    administered by the trustee.  Salary reduction payments for

14-15    benefits included in a cafeteria plan adopted under this Act other

14-16    than coverages under the Texas Employees Uniform Group Insurance

14-17    Program and appropriations by the state for the administration of a

14-18    cafeteria plan adopted under this Act shall be paid into the trust

14-19    fund.  The trust fund is available without fiscal year limitation:

14-20                (1)  for all payments for any benefits included in a

14-21    cafeteria plan adopted under this Act other than coverages under

14-22    the Texas Employees Uniform Group Insurance Program; and

14-23                (2)  to pay expenses for administering the cafeteria

14-24    plan adopted under this Act.

14-25          (b)  The trustee may establish a monthly charge or charges to

14-26    be paid by each employee who elects to participate in a cafeteria

14-27    plan adopted under this Act for the purpose of paying the expenses

 15-1    of administering the cafeteria plan.  The trustee shall establish

 15-2    the amount of the monthly charge or charges and may establish a

 15-3    separate charge for each benefit included in a cafeteria plan

 15-4    adopted under this Act.  If the trustee establishes a monthly

 15-5    charge or charges, each employee who participates in the cafeteria

 15-6    plan shall authorize payment of the charge or charges by executing

 15-7    a payroll deduction agreement or as part of the salary reduction

 15-8    agreement, as determined by the trustee.  The monthly charge or

 15-9    charges shall be paid into the State and Public School Employees

15-10    Cafeteria Plan Trust Fund.  The payroll officer for an employer

15-11    described under Section 3(a)(6)(B) of this Act shall pay the

15-12    amounts deducted under this subsection to the trustee at the time

15-13    and in the manner prescribed by the trustee.

15-14          (c)  The trustee may establish the accounts for money in the

15-15    State and Public School Employees Cafeteria Plan Trust Fund as the

15-16    trustee considers necessary, including any accounts the trustee

15-17    considers necessary for the administration of a cafeteria plan

15-18    adopted under this Act.  The trustee may transfer assets from one

15-19    account to another to pay benefits if the transfer is necessary for

15-20    financial management purposes and if adequate arrangements are made

15-21    to reimburse the account out of which the transfer was made, and to

15-22    pay administrative expenses.

15-23          (e)  The trustee may, under the standard of care provided by

15-24    Section 815.307, Government Code, invest and reinvest any of the

15-25    money in the State and Public School Employees Cafeteria Plan Trust

15-26    Fund.  The interest on, earnings of, and the proceeds from the sale

15-27    of the investments become a part of the trust fund.

 16-1          SECTION 11.  Section 1, Article 3.50-4, Insurance Code, is

 16-2    amended to read as follows:

 16-3          Sec. 1.  SHORT TITLE.  This article may be cited as the Texas

 16-4    Public School Retired Employees Group Insurance Act.

 16-5          SECTION 12.  Sections 2(3) and (4), Article 3.50-4, Insurance

 16-6    Code, are amended to read as follows:

 16-7                (3)  "Dependent" means:

 16-8                      (A)  a spouse of a retiree [or active member];

 16-9                      (B)  a retiree's[, an active member's,] or a

16-10    deceased active member's unmarried child who is younger than 25

16-11    years of age including:

16-12                            (i)  an adopted child;

16-13                            (ii)  a foster child, a stepchild, or other

16-14    child who is in a regular parent-child relationship; and

16-15                            (iii)  a recognized natural child; and

16-16                      (C)  a retiree's [or active member's] recognized

16-17    natural child, adopted child, foster child, stepchild, or other

16-18    child who is in a regular parent-child relationship and who lives

16-19    with or whose care is provided by the retiree[, active member,] or

16-20    surviving spouse on a regular basis, regardless of the child's age,

16-21    if the child is mentally retarded or physically incapacitated to

16-22    such an extent as to be dependent on the retiree[, active member,]

16-23    or surviving spouse for care or support, as determined by the

16-24    trustee, or in the case of a deceased active member, a recognized

16-25    natural child, adopted child, foster child, stepchild, or other

16-26    child who was in a regular parent-child relationship and who lived

16-27    with or whose care was provided by the deceased active member on a

 17-1    regular basis, regardless of the child's age, if the child is

 17-2    mentally retarded or physically incapacitated to such an extent as

 17-3    to have been dependent on the deceased active member or surviving

 17-4    spouse for care or support, as determined by the trustee.

 17-5                (4)  "Fund" means the Texas public school retired

 17-6    employees group insurance fund.

 17-7          SECTION 13.  Section 3(a), Article 3.50-4, Insurance Code, is

 17-8    amended to read as follows:            

 17-9          (a)  The Texas Public School Retired Employees Group

17-10    Insurance Program is established to provide for an insurance plan

17-11    or plans under this article.

17-12          SECTION 14.  Section 5(a), Article 3.50-4, Insurance Code, is

17-13    amended to read as follows:

17-14          (a)  The trustee may adopt rules, plans, procedures, and

17-15    orders reasonably necessary to implement this article, including:

17-16                (1)  establishment of minimum benefit and financing

17-17    standards for group insurance coverage to be provided to all

17-18    retirees, [active employees,] dependents, surviving spouses, and

17-19    surviving dependent children;

17-20                (2)  establishment of basic and optional group coverage

17-21    to be provided to retirees, [active employees,] dependents,

17-22    surviving spouses, and surviving dependent children;

17-23                (3)  establishment of the procedures for contributions

17-24    and deductions;

17-25                (4)  establishment of periods for enrollment and

17-26    selection of optional coverage and procedures for enrolling and

17-27    exercising options under the plan;

 18-1                (5)  determination of methods and procedures for claims

 18-2    administration;

 18-3                (6)  study of the operation of all insurance coverage

 18-4    provided under this article;

 18-5                (7)  administration of the fund;

 18-6                (8)  adoption of a timetable for the development of

 18-7    minimum benefit and financial standards for group insurance

 18-8    coverage, establishment of group insurance plans, and the taking of

 18-9    bids for and awarding of contracts for insurance plans; and

18-10                (9)  contracting with an independent and experienced

18-11    group insurance consultant or actuary, who does not receive

18-12    insurance commissions from any insurance company, for advice and

18-13    counsel in implementing and administering this program.

18-14          SECTION 15.  Section 9, Article 3.50-4, Insurance Code, is

18-15    amended to read as follows:

18-16          Sec. 9.  BENEFIT CERTIFICATES.  At such times, or upon such

18-17    events, as designated by the trustee, each insurance carrier shall

18-18    issue to each retiree, [active employee,] surviving spouse, or

18-19    surviving dependent child insured under this article a certificate

18-20    of insurance that:

18-21                (1)  states the benefits to which the person is

18-22    entitled;

18-23                (2)  states to whom the benefits are payable;

18-24                (3)  states to whom the claims must be submitted; and

18-25                (4)  summarizes the provisions of the policy

18-26    principally affecting the person.

18-27          SECTION 16.  Sections 12 and 13, Article 3.50-4, Insurance

 19-1    Code, are amended to read as follows:

 19-2          Sec. 12.  DEATH CLAIMS:  BENEFICIARIES.  The amount of group

 19-3    life insurance and group accidental death and dismemberment

 19-4    insurance covering a retiree, [active employee,] surviving spouse,

 19-5    dependent, or surviving dependent child at the date of death shall

 19-6    be paid, on the establishment of a valid claim, only:

 19-7                (1)  to the beneficiary or beneficiaries designated by

 19-8    the person in a signed and witnessed written document received

 19-9    before death in the trustee's office; or

19-10                (2)  if no beneficiary is properly designated or in

19-11    existence, to persons in accordance with the trustee's death

19-12    benefit provisions in Subsection (b), Section 824.103, Government

19-13    Code.

19-14          Sec. 13.  AUTOMATIC COVERAGE.  A retiree [or active employee]

19-15    who applies during an enrollment period may not be denied any of

19-16    the group insurance basic coverage provided under this article

19-17    unless the retiree [person] has been found under Section 18A of

19-18    this article to have defrauded or attempted to defraud the Texas

19-19    Public School Retired Employees Group Insurance Program.

19-20          SECTION 17.  The heading to Section 15, Article 3.50-4,

19-21    Insurance Code, is amended to read as follows:

19-22          Sec. 15.  RETIRED SCHOOL EMPLOYEES GROUP INSURANCE FUND.

19-23          SECTION 18.  Section 15(a), Article 3.50-4, Insurance Code,

19-24    is amended to read as follows:

19-25          (a)  The retired school employees group insurance fund is

19-26    created.  The comptroller [State Treasurer] is the custodian of the

19-27    fund, and the trustee shall administer the fund.  All contributions

 20-1    from active employees, retirees, and the state, contributions for

 20-2    optional coverages, investment income, appropriations for

 20-3    implementation of this program, and other money required or

 20-4    authorized to be paid into the fund shall be paid into the fund.

 20-5    From the fund shall be paid, without state fiscal year limitation,

 20-6    the appropriate premiums to the carrier or carriers providing group

 20-7    coverage under the plan or plans under this article, claims for

 20-8    benefits under the group coverage, and the amounts expended by the

 20-9    trustee for administration of the program.  The appropriate portion

20-10    of the contributions to the fund to provide for incurred but

20-11    unreported claim reserves and contingency reserves, as determined

20-12    by the trustee, shall be retained in the fund.

20-13          SECTION 19.  Section 18A(a), Article 3.50-4, Insurance Code,

20-14    is amended to read as follows:

20-15          (a)  After notice and hearing as provided by this section,

20-16    the trustee may expel from participation in the Texas Public School

20-17    Retired Employees Group Insurance Program any retiree, [active

20-18    employee,] surviving spouse, dependent, or surviving dependent

20-19    child who submits a fraudulent claim under, or has defrauded or

20-20    attempted to defraud, any health benefits plan offered under the

20-21    program.

20-22          SECTION 20.  Section 18B(a), Article 3.50-4, Insurance Code,

20-23    is amended to read as follows:

20-24          (a)  Section 825.507, Government Code, concerning the

20-25    confidentiality of information in records that are in the custody

20-26    of the Teacher Retirement System of Texas, applies to information

20-27    in records that are in the custody of the retirement system

 21-1    regarding retirees, [active employees,] annuitants, or

 21-2    beneficiaries under the Texas Public School Retired Employees Group

 21-3    Insurance Program.

 21-4          SECTION 21.  Sections 18C(c), (d), and (i), Article 3.50-4,

 21-5    Insurance Code, are amended to read as follows:

 21-6          (c)  The trustee, the Texas public school retired employees

 21-7    group insurance program, the retired school employees group

 21-8    insurance  fund, and the board of trustees, officers, advisory

 21-9    committee members, and employees of the trustee are not liable for

21-10    damages arising from the acts or omissions of health care providers

21-11    who are participating health care providers in the coordinated care

21-12    network established by the trustee.  Those health care providers

21-13    are independent contractors and are responsible for their own acts

21-14    and omissions.

21-15          (d)  The trustee, the Texas public school retired employees

21-16    group insurance program, the retired school employees group

21-17    insurance  fund, or a member of a credentialing committee, or the

21-18    board of trustees, officers, advisory committee members, or

21-19    employees of the trustee are not liable for damages arising from

21-20    any act, statement, determination, recommendation made, or act

21-21    reported, without malice, in the course of the evaluation of the

21-22    qualifications of health care providers or of the patient care

21-23    rendered by those providers.

21-24          (i)  A credentialing committee, a person participating in a

21-25    credentialing review, a health care provider, the trustee, the

21-26    Texas public school retired employees group insurance program, or

21-27    the board of trustees, officers, advisory committee members, or

 22-1    employees of the trustee that are named as defendants in any civil

 22-2    action filed as a result of participation in the credentialing

 22-3    process may use otherwise confidential information obtained for

 22-4    legitimate internal business and professional purposes, including

 22-5    use in their own defense.  Use of information under this subsection

 22-6    does not constitute a waiver of the confidential and privileged

 22-7    nature of the information.

 22-8          SECTION 22.  Section 7A, Article 3.50-4, Insurance Code, is

 22-9    repealed.

22-10          SECTION 23.  This Act takes effect September 1, 1997.

22-11          SECTION 24.  The importance of this legislation and the

22-12    crowded condition of the calendars in both houses create an

22-13    emergency and an imperative public necessity that the

22-14    constitutional rule requiring bills to be read on three several

22-15    days in each house be suspended, and this rule is hereby suspended.