1-1 By: Lewis of Tarrant (Senate Sponsor - Shapleigh) H.B. No. 3178
1-2 (In the Senate - Received from the House May 11, 1999;
1-3 May 12, 1999, read first time and referred to Committee on State
1-4 Affairs; May 14, 1999, reported favorably by the following vote:
1-5 Yeas 7, Nays 0; May 14, 1999, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to coverage for certain health benefits under the Texas
1-9 State College and University Employees Uniform Insurance Benefits
1-10 Act.
1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12 SECTION 1. Section 3(a), Texas State College and University
1-13 Employees Uniform Insurance Benefits Act (Article 3.50-3, Vernon's
1-14 Texas Insurance Code), is amended to read as follows:
1-15 (a) Unless a different meaning is plainly required by the
1-16 context, the following words and phrases as used in this Act shall
1-17 have the following meanings:
1-18 (1) "Administering carrier" shall mean any carrier or
1-19 organization, qualified to do business in Texas, designated by an
1-20 institution to administer any services, benefits, insurance
1-21 coverages, or requirements in accordance with this Act [and the
1-22 council's regulations thereunder].
1-23 (2)(A) "Retired employee" shall mean a former [an]
1-24 employee as defined in this Act who has at least three years'
1-25 service as an eligible employee with an employing institution,
1-26 whose last state employment before retirement was with that
1-27 employing institution, and who retires or has retired under a
1-28 retirement provision under the jurisdiction of:
1-29 (i) [(A)] the Teachers Retirement System
1-30 of Texas, pursuant to Subtitle C, Title 8, Government Code;
1-31 (ii) [(B)] the Optional Retirement
1-32 Program, Chapter 830, Government Code; provided, however, that the
1-33 employee has met service requirements, age requirements, and other
1-34 applicable requirements as may be promulgated by the institution
1-35 comparable to the requirements for retirement under the Teachers
1-36 Retirement System of Texas;
1-37 (iii) [(C)] the Employees Retirement
1-38 System of Texas; or
1-39 (iv) [(D)] any other federal or state
1-40 statutory retirement program to which the institution has made
1-41 employer contributions; provided, however, that the employee has
1-42 met service requirements, age requirements, and other applicable
1-43 requirements as may be promulgated by the institution comparable to
1-44 the requirements for retirement under the Teachers Retirement
1-45 System of Texas.
1-46 (B) A former employee is eligible to be
1-47 classified as a retired employee at an employing institution if the
1-48 former employee:
1-49 (i) meets the minimum requirements
1-50 established under Paragraph (A) of this subdivision to qualify as a
1-51 retired employee except that the last state employment before
1-52 retirement is not at the employing institution; and
1-53 (ii) does not meet the requirements for a
1-54 retired employee under Section 3, Texas Employees Uniform Group
1-55 Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance
1-56 Code).
1-57 (3) "Carrier" shall mean a qualified carrier as
1-58 defined in this Act.
1-59 (4)(A) "Employee" shall mean any person employed by a
1-60 governing board of an institution:
1-61 (i) [who retires under the provisions
1-62 cited in Subsection (a)(2) of this section;]
1-63 [(ii)] who receives his compensation for
1-64 services rendered to an institution [on a warrant or check issued
2-1 pursuant to a payroll certified by an institution or by an elected
2-2 or duly appointed officer of this state], [and who] is eligible for
2-3 participation in the Teacher Retirement System of Texas, and is
2-4 expected to work at least 20 hours per week and to continue in the
2-5 employment for a term of at least 4-1/2 months or is appointed for
2-6 at least 50 percent of a standard full-time appointment; or
2-7 (ii) [(iii)] who receives his compensation
2-8 for services rendered as provided in this subdivision but is not
2-9 permitted to be a member of the Teacher Retirement System of Texas
2-10 because he is solely employed by an institution of higher education
2-11 that as a condition of employment requires the employee to be
2-12 enrolled as a student in the institution in graduate-level courses
2-13 and who is employed at least 20 hours a week.
2-14 (B) Persons performing personal services for
2-15 such institutions as independent contractors shall never be
2-16 considered employees for purposes of this Act.
2-17 (5) "Employer" shall mean the institutions defined
2-18 [elsewhere] in Subdivision (7) [Subsection (8)] of this section.
2-19 (6) "Group life, accident, or health insurance plan"
2-20 shall mean any group insurance policy or contract, life, accident,
2-21 medical, dental, or hospital service agreement, membership or
2-22 subscription contract, or similar group arrangement provided by an
2-23 administering carrier.
2-24 (7) "Institution" shall mean The University of Texas
2-25 System or[,] The Texas A&M University System[, Texas Tech
2-26 University, and the University of Houston System, except that an
2-27 institution that elects to participate in the Employees Uniform
2-28 Group Insurance Program under Section 3A of the Texas Employees
2-29 Uniform Group Insurance Benefits Act (Article 3.50-2, Vernon's
2-30 Texas Insurance Code) on or before April 1, 1992, may not
2-31 participate in the Texas State College and University Employees
2-32 Uniform Insurance Benefits Program after coverage has begun under
2-33 the Employees Uniform Group Insurance Program].
2-34 (8) "Dependent" shall mean the spouse, as defined in
2-35 the Texas Family Code, of an employee or retired employee, and an
2-36 unmarried child under 25 years of age including: (A) an adopted
2-37 child, (B) a stepchild, foster child, or other child who is in a
2-38 regular parent-child relationship, (C) any such child, regardless
2-39 of age, who lives with or whose care is provided by an employee or
2-40 retired employee on a regular basis, if such child is mentally
2-41 retarded or physically incapacitated to such an extent as to be
2-42 dependent upon the employee or retired employee for care or
2-43 support, as the institution shall determine.
2-44 (9) "President" shall mean the duly authorized chief
2-45 official of any institution covered under the provisions of this
2-46 Act or such other official as may be designated by a governing
2-47 board to carry out the provisions of this Act.
2-48 (10) "Qualified carrier" shall mean:
2-49 (A) any insurance company authorized to do
2-50 business in this state by the Texas Department [State Board] of
2-51 Insurance to provide any of the types of insurance coverages,
2-52 benefits, or services provided for in this Act under any of the
2-53 insurance laws of the State of Texas, which has an adequate
2-54 surplus, a successful operating history, and which has had
2-55 successful experience in providing and servicing any of the types
2-56 of group coverage provided for in this Act as determined by the
2-57 Texas Department [State Board] of Insurance;
2-58 (B) any corporation operating under Chapter 20
2-59 of the Texas Insurance Code which provides any of the types of
2-60 coverage, benefits, or services provided for in this Act, which has
2-61 a successful operating history, and which has had successful
2-62 experience in providing and servicing any of the types of group
2-63 coverage provided for in this Act as determined by the Texas
2-64 Department [State Board] of Insurance; or
2-65 (C) any combination of carriers as herein
2-66 defined, upon such terms and conditions as may be prescribed by the
2-67 institution; provided, however, that for purposes of this Act
2-68 carriers combining for the purpose of bidding and/or underwriting
2-69 this program shall not be considered in violation of [Sections
3-1 15.01 through 15.34,] Chapter 15, [Title 2, Competition and Trade
3-2 Practices, Texas] Business & Commerce Code.
3-3 (11) "Service" shall mean any personal services of any
3-4 employee creditable in accordance with rules and regulations
3-5 promulgated by the institution.
3-6 (12) "Active employee plan" shall mean a plan or
3-7 program of group life, accident, or health insurance for active
3-8 employees as determined by the institution as provided in this Act.
3-9 (13) "Retired employee plan" shall mean a plan or
3-10 program of group insurance as determined by the institution as
3-11 defined in this Act for all retired employees as defined in this
3-12 Act.
3-13 (14) "Cafeteria plan" means a plan as defined and
3-14 authorized by Section 125, Internal Revenue Code of 1986 (26 U.S.C.
3-15 Sec. 125).
3-16 (15) "The University of Texas System" means the
3-17 entities listed or described in Section 65.02, Education Code.
3-18 (16) "Serious [For purposes of this section, "serious]
3-19 mental illness" means the following psychiatric illnesses as
3-20 defined by the American Psychiatric Association in the Diagnostic
3-21 and Statistical Manual (DSM) III-R:
3-22 (A) schizophrenia;
3-23 (B) paranoid and other psychotic disorders;
3-24 (C) bipolar disorders (mixed, manic, and
3-25 depressive);
3-26 (D) major depressive disorders (single episode
3-27 or recurrent); and
3-28 (E) schizo-affective disorders (bipolar or
3-29 depressive).
3-30 (17) [(16)] "The Texas A&M University System" means
3-31 the entities governed under Chapters 85 through 88, Education Code,
3-32 and includes the Texas Veterinary Diagnostic Laboratory.
3-33 [(17) "Texas Tech University" means Texas Tech
3-34 University, the Texas Tech University Museum, and the Texas Tech
3-35 University Health Sciences Center.]
3-36 (18) "Basic coverage" means health insurance coverage
3-37 and other coverages that meet the basic coverage standards
3-38 established under Section 4(b)(1) of this Act ["University of
3-39 Houston System" means the entities governed under Section 111.20,
3-40 Education Code].
3-41 (19) "Optional coverage" means group coverages other
3-42 than basic coverage.
3-43 SECTION 2. Sections 4(a), (b), (d), (e), and (f), Texas
3-44 State College and University Employees Uniform Insurance Benefits
3-45 Act (Article 3.50-3, Vernon's Texas Insurance Code), are amended to
3-46 read as follows:
3-47 (a) A Texas State College and University Employees Uniform
3-48 Insurance Benefits Program is hereby created. Each institution
3-49 shall implement the program for the benefit of its employees and
3-50 retired employees.
3-51 (b) Each institution shall:
3-52 (1) determine basic coverage standards which shall be
3-53 comparable to those commonly provided in private industry and those
3-54 provided employees of other agencies and institutions of higher
3-55 education of the State of Texas under the Texas Employees Uniform
3-56 Group Insurance Benefits Act (Article 3.50-2, Vernon's Texas
3-57 Insurance Code). The institution may design a plan around existing
3-58 local conditions.
3-59 (2) include in its respective bid documents for the
3-60 various coverages a provision calling for each bidder to identify
3-61 its administrative cost as a distinguishable figure and to
3-62 enumerate what services the bidder will render in exchange for the
3-63 administrative costs so identified.
3-64 (3) determine basic procedural and administrative
3-65 practices for insurance coverages to be provided [employees
3-66 covered] under the provisions of this Act.
3-67 (4) submit its program, including any agreement under
3-68 which a firm is engaged to administer a self-insured program, to
3-69 competitive bidding at least once every six years. It is further
4-1 provided that:
4-2 (A) The Texas Department [State Board] of
4-3 Insurance shall provide, by request of the institution, a list of
4-4 all carriers authorized to do business in the State of Texas and
4-5 who will be eligible to bid on the insurance coverage or coverages
4-6 provided in this Act.
4-7 (B) The Texas Department [State Board] of
4-8 Insurance shall, upon request by the institution, examine and
4-9 evaluate the bidding contracts and certify their actuarial
4-10 soundness to the institution within 15 days from the date of
4-11 request.
4-12 (C) The institution is not required to select
4-13 the lowest bid, but shall take into consideration other factors
4-14 such as ability to service contracts, past experience, financial
4-15 stability, and other relevant criteria. Should the institution
4-16 select a carrier whose bid differs from that advertised, the
4-17 reasons for such deviation shall be fully justified and recorded in
4-18 the minutes of the next meeting of the governing board of the
4-19 institution.
4-20 (D) The institution shall select and contract
4-21 for services performed by health maintenance organizations that are
4-22 approved by [the federal government, if available, or by] the State
4-23 of Texas[, if available,] to offer health-care services to eligible
4-24 employees and retired employees [persons] in a specific area of the
4-25 state. [Eligible employees and retired persons may participate in
4-26 a selected health maintenance organization in lieu of participation
4-27 in the health insurance benefits under this Act, and the employer
4-28 contributions provided by Section 13 of this Act for health-care
4-29 coverage shall be paid to the selected health maintenance
4-30 organizations on behalf of the participants. A health maintenance
4-31 organization that has been approved to provide health-care services
4-32 to employees and retired persons of the state under the Texas
4-33 Employees Uniform Group Insurance Benefits Act (Article 3.50-2,
4-34 Vernon's Texas Insurance Code) is qualified upon proper application
4-35 to the institution to provide similar services to eligible
4-36 employees and retired persons of any institution or agency under
4-37 this Act located in the same area of the state. More stringent
4-38 requirements may not be imposed on health maintenance organizations
4-39 under this Act than are imposed by the state or by the federal
4-40 government.]
4-41 (5) adopt rules and regulations consistent with the
4-42 provisions of this Act and its purpose as it deems necessary to
4-43 carry out the statutory responsibilities.
4-44 (6) establish procedures to allow each covered
4-45 employee and retired employee to obtain prompt action regarding
4-46 claims pertaining to insurance provided under this Act.
4-47 (d) Notwithstanding any other provisions of this Act, the
4-48 governing boards providing programs of benefits under this Act are
4-49 authorized to self-insure the programs and may, at their
4-50 discretion, engage a firm to administer the program. Any plan of
4-51 coverages for which an institution does not purchase insurance but
4-52 provides coverage on a self-insured basis is exempt from any other
4-53 insurance law of this state unless the law expressly applies to
4-54 that plan or this Act.
4-55 (e) The governing board of each institution providing
4-56 benefits under this Act may [study the feasibility of establishing
4-57 a cafeteria plan and may] design, develop, adopt, implement, and
4-58 administer a cafeteria plan [if the governing board determines that
4-59 the establishment of a cafeteria plan is feasible, would be
4-60 beneficial to the institution and to employees who would be
4-61 eligible to participate in the cafeteria plan, and would not
4-62 adversely affect the insurance program established under this Act].
4-63 The governing board may include in a cafeteria plan any benefit
4-64 that may be included in a cafeteria plan under federal law. In
4-65 addition to other authority granted to a governing board by this
4-66 Act, the governing board may cooperate and work with and may enter
4-67 into necessary contracts and agreements with one or more
4-68 independent and qualified agencies, persons, or entities to design,
4-69 develop, adopt, implement, or administer or to assist in the
5-1 design, development, adoption, implementation, or administration of
5-2 a cafeteria plan under this Act. A cafeteria plan may be designed,
5-3 developed, adopted, implemented, and administered by or on behalf
5-4 of an institution. If the governing board determines that a
5-5 cafeteria plan adopted under this subsection is no longer
5-6 advantageous to the institution and its employees, the governing
5-7 board may adopt an order terminating the cafeteria plan and
5-8 providing a procedure for the orderly withdrawal of the institution
5-9 and its employees from that plan.
5-10 (f) An institution may join with another institution to
5-11 procure one or more group contracts with any insurance company
5-12 authorized to do business in this state, insuring the employees and
5-13 retired employees of each participating institution. The purpose
5-14 of this authorization is to provide institutions of higher
5-15 education with the ability to obtain the benefits of economy and
5-16 improved coverages for their employees and retired employees which
5-17 may occur through increased purchasing economies for larger groups
5-18 of employees.
5-19 SECTION 3. Section 5, Texas State College and University
5-20 Employees Uniform Insurance Benefits Act (Article 3.50-3, Vernon's
5-21 Texas Insurance Code), is amended to read as follows:
5-22 Sec. 5. BENEFIT CERTIFICATES. Each institution shall assure
5-23 that each employee and retired employee insured under this Act is
5-24 issued a certificate of insurance or plan description setting forth
5-25 the benefits to which the employee or retired employee is entitled,
5-26 to whom the benefits are payable, to whom the claims shall be
5-27 submitted, and summarizing the provisions of the policy or contract
5-28 principally affecting the employee or retired employee.
5-29 SECTION 4. Section 8(b), Texas State College and University
5-30 Employees Uniform Insurance Benefits Act (Article 3.50-3, Vernon's
5-31 Texas Insurance Code), is amended to read as follows:
5-32 (b) Any excess of the total of Subsection (a)(1) of this
5-33 section over the corresponding sum of Subsections (a)(2) and (a)(3)
5-34 of this section may be held by the carrier issuing the policy as a
5-35 special reserve. Such reserve may be used at the discretion of the
5-36 institution for, but not limited to, providing additional coverage
5-37 for participating employees or retired employees, offsetting
5-38 necessary [employee] premium rate increases, or to reduce
5-39 participating employee or retired employee premium contributions to
5-40 the coverage. Any reserve held by the carrier would bear interest
5-41 at a rate determined each policy year by the carrier and approved
5-42 by the institution as being consistent with the rate generally used
5-43 by the carrier for similar funds held under other group insurance
5-44 policies.
5-45 SECTION 5. Section 9(a), Texas State College and University
5-46 Employees Uniform Insurance Benefits Act (Article 3.50-3, Vernon's
5-47 Texas Insurance Code), is amended to read as follows:
5-48 (a) All insurance benefits and other payments and
5-49 transactions made pursuant to the provisions of this Act to any
5-50 employee or retired employee covered under the provisions of this
5-51 Act shall be exempt from execution, attachment, garnishment, or any
5-52 other process whatsoever.
5-53 SECTION 6. Section 10, Texas State College and University
5-54 Employees Uniform Insurance Benefits Act (Article 3.50-3, Vernon's
5-55 Texas Insurance Code), is amended to read as follows:
5-56 Sec. 10. DEATH CLAIMS. The amount of group life insurance
5-57 and group accidental death and dismemberment insurance in force on
5-58 an employee or retired employee at the date of his death shall be
5-59 paid, on the establishment of a valid claim, to the person or
5-60 persons surviving at the date of his death, in the following order:
5-61 (a) to the beneficiary or beneficiaries designated by the
5-62 employee or retired employee in a signed and witnessed writing
5-63 received before death in the appropriate [employing] office of the
5-64 institution. For this purpose, a designation, change, or
5-65 cancellation of beneficiary in a will or other document not so
5-66 executed and filed has no force or effect.
5-67 (b) if no beneficiary is designated in accordance with
5-68 Subsection (a) of this section, payment shall be made in accordance
5-69 with the death benefit provisions of Subtitle C [the Teacher
6-1 Retirement System of Texas, Chapter 3], Title 8[1], Government
6-2 [Texas Education] Code[, as amended].
6-3 SECTION 7. Section 11, Texas State College and University
6-4 Employees Uniform Insurance Benefits Act (Article 3.50-3, Vernon's
6-5 Texas Insurance Code), is amended to read as follows:
6-6 Sec. 11. AUTOMATIC COVERAGE. (a) No eligible employee or
6-7 eligible retired employee shall be denied enrollment in any of the
6-8 coverages provided by this Act; provided, however, that the
6-9 employee or retired employee may waive in writing any or all such
6-10 coverages. [Each policy of insurance shall provide for automatic
6-11 coverage on the date the employee becomes eligible for insurance.]
6-12 (b) From the first day of employment, the institution shall
6-13 automatically provide basic coverage for each active full-time
6-14 employee who has not waived basic coverage or selected optional
6-15 coverages [shall be protected by a basic plan of insurance coverage
6-16 automatically]. If the cost of an active employee's or retired
6-17 employee's basic coverage exceeds the amount appropriated by the
6-18 legislature for an employee or retired employee, the institution
6-19 must provide optional coverage at no cost to the employee or
6-20 retired employee. If the employee or retired employee chooses the
6-21 basic coverage rather than optional coverage, the institution may
6-22 deduct from or reduce the monthly compensation of the employee, or,
6-23 for a retired employee, require appropriate payment, up to one-half
6-24 of the amount that exceeds the state's contribution for an
6-25 employee, and the institution shall pay the difference.
6-26 (c) Each employee or retired employee who is automatically
6-27 covered under this section may subsequently retain or waive the
6-28 basic coverage plan and may make application for any other
6-29 coverages provided under this Act within applicable [institutional
6-30 and administrative council] standards.
6-31 SECTION 8. Section 12, Texas State College and University
6-32 Employees Uniform Insurance Benefits Act (Article 3.50-3, Vernon's
6-33 Texas Insurance Code), is amended to read as follows:
6-34 Sec. 12. PAYMENT OF PREMIUMS. (a) Each institution and
6-35 agency covered under the provisions of this Act shall contribute
6-36 monthly to the cost of each insured employee's and retired
6-37 employee's coverage no less than the amount appropriated therefor
6-38 by the legislature in the General Appropriations Act. An amount
6-39 equal to the amount appropriated for an employee and retired
6-40 employee under the General Appropriations Act shall be appropriated
6-41 for each employee and retired employee by the governing board of
6-42 the institution in its respective official operating budget, if the
6-43 institution's employees are compensated from funds appropriated by
6-44 such budgets rather than by the General Appropriations Act.
6-45 (b) Except for a participant in a cafeteria plan, each [the]
6-46 employee shall authorize, in writing or electronically, and in a
6-47 form satisfactory to the institution, a deduction from his monthly
6-48 compensation of the difference between the total cost of premiums
6-49 and the amount contributed therefor by the institution or agency.
6-50 An employee who is participating in a cafeteria plan shall execute
6-51 a salary reduction agreement under which his monthly compensation
6-52 will be reduced in an amount that is equal to the difference
6-53 between the amount appropriated by the General Appropriations Act
6-54 or the institution's budget and the cost of the employee's selected
6-55 coverages for which he is eligible to pay under the cafeteria plan.
6-56 Also, the electing employee shall execute a salary deduction
6-57 agreement for any portion of the cost that is not covered by state
6-58 or institutional appropriations and cafeteria plan contributions.
6-59 (c) A retired employee shall execute agreements and make
6-60 appropriate contributions in a manner analogous to the requirements
6-61 adopted under Subsection (b) of this section for an active
6-62 employee.
6-63 SECTION 9. Section 17, Texas State College and University
6-64 Employees Uniform Insurance Benefits Act (Article 3.50-3, Vernon's
6-65 Texas Insurance Code), is amended to read as follows:
6-66 Sec. 17. COVERAGE FOR DEPENDENTS. (a) Any employee or
6-67 retired employee shall be entitled to secure for his dependents any
6-68 uniform group insurance coverages provided for such dependents
6-69 under the rules and regulations to be promulgated by each
7-1 institution. Premium payments required of the employee or retired
7-2 employee in excess of employer contributions shall be deducted from
7-3 the monthly pay of the employee, or the employee's monthly pay
7-4 shall be reduced in the appropriate amount, or paid in such manner
7-5 and form as the institution shall determine.
7-6 (b) This subsection applies to the surviving spouse of an
7-7 employee who had at least five years of service on the date of the
7-8 employee's death, including at least three years of service as an
7-9 eligible employee with the employing institution, or the surviving
7-10 spouse of a retired employee. A surviving spouse subject to this
7-11 subsection may elect to retain the decedent's authorized coverages
7-12 and may also retain authorized coverages for any eligible
7-13 dependent, at the group rate for employees, if, on the date of the
7-14 death, those coverages were in effect for the spouse or dependent.
7-15 SECTION 10. This Act takes effect September 1, 1999, and
7-16 applies only to a group coverage that is delivered, issued for
7-17 delivery, or renewed under the Texas State College and University
7-18 Employees Uniform Insurance Benefits Act (Article 3.50-3, Vernon's
7-19 Texas Insurance Code), on or after January 1, 2000. Coverage
7-20 delivered, issued for delivery, or renewed before January 1, 2000,
7-21 is governed by the law as it existed immediately before the
7-22 effective date of this Act, and that law is continued in effect for
7-23 that purpose.
7-24 SECTION 11. This Act takes effect September 1, 1999.
7-25 SECTION 12. The importance of this legislation and the
7-26 crowded condition of the calendars in both houses create an
7-27 emergency and an imperative public necessity that the
7-28 constitutional rule requiring bills to be read on three several
7-29 days in each house be suspended, and this rule is hereby suspended.
7-30 * * * * *