By Ehrhardt                                             H.B. No. 12
         77R1529 PB-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to a statewide group insurance program for employees and
 1-3     retirees of school districts.
 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 3.50-7 to read as follows:
 1-7             Art. 3.50-7.  TEXAS SCHOOL EMPLOYEES UNIFORM GROUP HEALTH
 1-8     INSURANCE BENEFITS ACT
 1-9             Sec. 1.  SHORT TITLE.   This article may be cited as the
1-10     Texas School Employees Uniform Group Health Insurance Benefits Act.
1-11             Sec. 2.  DEFINITIONS.   In this article:
1-12                     (1)  "Administering firm" means any entity
1-13     designated by the trustee to administer any coverages, services,
1-14     benefits, or requirements under this article and the trustee's
1-15     rules adopted under this article.
1-16                     (2)  "Basic coverage" means the program of group
1-17     coverages determined by the trustee in which each full-time
1-18     employee and retiree participates automatically unless
1-19     participation is specifically waived.
1-20                     (3)  "Cafeteria plan" means a plan as defined and
1-21     authorized by Section 125, Internal Revenue Code of 1986 (26 U.S.C.
1-22     Section 125) and its subsequent amendments.
1-23                     (4)  "Employee" means a participating member of the
1-24     Teacher Retirement System of Texas who is employed by a
 2-1     participating school district and who is not covered by a group
 2-2     insurance program under the Texas Employees Uniform Group Insurance
 2-3     Benefits Act (Article 3.50-2, Vernon's Texas Insurance Code) or the
 2-4     Texas State College and University Employees Uniform Insurance
 2-5     Benefits Act (Article 3.50-3, Vernon's Texas Insurance Code).  The
 2-6     term does not include an individual performing personal services
 2-7     for a school district as an independent contractor.
 2-8                     (5)  "Health benefit plan" means any group policy
 2-9     or contract, medical, dental, or hospital service agreement,
2-10     membership or subscription contract, salary continuation plan,
2-11     health maintenance organization agreement, preferred provider
2-12     arrangement, or any similar group arrangement or any combination of
2-13     those policies, plans, contracts, agreements, or arrangements that
2-14     provides for, pays for, or reimburses expenses for health care
2-15     services, including comparable health care services for employees
2-16     and retirees who rely solely on spiritual means through prayer for
2-17     healing in accordance with the teaching of a recognized church or
2-18     denomination.
2-19                     (6)  "Retiree" means a person who:
2-20                             (A)  has retired under the Teacher
2-21     Retirement System of Texas with at least 10 years of credit for
2-22     service in public schools of this state or has retired under the
2-23     Teacher Retirement System of Texas for disability and is entitled
2-24     to receive an annuity from the system based on the person's
2-25     service; and
2-26                             (B)  is not eligible to participate in the
 3-1     group insurance program provided under the Texas Employees Uniform
 3-2     Group Insurance Benefits Act (Article 3.50-2, Vernon's Texas
 3-3     Insurance Code) or the Texas State College and University Employees
 3-4     Uniform Insurance Benefits Act (Article 3.50-3, Vernon's Texas
 3-5     Insurance Code).
 3-6                     (7)  "Trustee" means the Teacher Retirement System
 3-7     of Texas.
 3-8             Sec. 3.  ADMINISTRATION.   (a)  The Teacher Retirement
 3-9     System of Texas, as trustee, shall implement and administer the
3-10     statewide uniform group insurance program described by this
3-11     article.
3-12             (b)  The trustee may hire and compensate employees.
3-13             (c)  The trustee may, on a competitive bid basis, contract
3-14     with a qualified, experienced firm of group insurance specialists
3-15     or an administering firm who will act for the trustee in the
3-16     capacity of independent administrators and managers of the program
3-17     authorized under this article. The independent administrator
3-18     selected by the trustee shall assist the trustee to ensure the
3-19     proper administration of this article and the coverages, services,
3-20     and benefits provided for or authorized by this article and shall
3-21     be paid by the trustee.
3-22             (d)  The trustee may enter into interagency contracts with
3-23     any agency of the state, including the Employees Retirement System
3-24     of Texas, for the purpose of assistance in implementing the program
3-25     provided by this article.
3-26             (e)  The trustee has the powers with regard to the program
 4-1     described by this article that the Employees Retirement System of
 4-2     Texas has in administering the Texas Employees Uniform Group
 4-3     Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance
 4-4     Code), including the power to adjudicate claims, expel participants
 4-5     from the program for cause, and adopt rules to administer this
 4-6     article.
 4-7             Sec. 4.  PARTICIPATION IN PROGRAM.   (a)  Each school
 4-8     district is required to participate in the program.
 4-9             (b)  Each full-time employee or retiree of a school
4-10     district is automatically covered by the basic coverage for
4-11     employees or retirees, as applicable, unless the employee or
4-12     retiree specifically waives coverage or unless the employee or
4-13     retiree is expelled from the program.
4-14             (c)  Each part-time employee of a participating school
4-15     district is eligible to participate in the program provided by this
4-16     article on application in the manner provided by the trustee,
4-17     unless the employee has been expelled from the program. A
4-18     participating school district shall notify each of its part-time
4-19     employees of the employee's eligibility for participation in the
4-20     program.
4-21             Sec. 5.  GROUP COVERAGES.   (a)  The trustee shall
4-22     establish plans of group coverages for employees and retirees of
4-23     school districts and their dependents. The coverages shall be
4-24     comparable in scope and, to the greatest extent possible, in cost
4-25     to the coverages provided under the Texas Employees Uniform Group
4-26     Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance
 5-1     Code) and may include group life coverages, health benefit plans,
 5-2     accidental death and dismemberment coverages, coverages against
 5-3     short-term or long-term loss of salary, and other coverages
 5-4     considered advisable by the trustee.  Comparable plans of each type
 5-5     of coverage established must be offered to employees and retirees
 5-6     of all school districts.
 5-7             (b)  The trustee by rule may define the basic coverage in
 5-8     which each full-time employee or retiree participates unless
 5-9     specifically waived.  Basic coverage must include a health benefit
5-10     plan.  The trustee by rule may define optional coverage, which may
5-11     include coverage for dependents, and voluntary coverage.
5-12             (c)  The trustee may provide a cafeteria plan for employees
5-13     of school districts.
5-14             (d)  The trustee may determine that plans of coverages be
5-15     provided directly from the fund described by Section 7 of this
5-16     article rather than through the purchase of coverage.  Any
5-17     self-funded plan of coverages is exempt from any other provision of
5-18     this code unless the law specifically applies to the plan or to
5-19     this article.
5-20             Sec. 6.  PAYMENT OF CONTRIBUTIONS.   (a)  The state shall
5-21     contribute for each employee and retiree covered by the program an
5-22     amount equal to the amount the state contributes for participants
5-23     in the program provided under the Texas Employees Uniform Group
5-24     Insurance Benefits Act (Article 3.50-2, Vernon's Texas Insurance
5-25     Code).
5-26             (b)  Each employee and retiree covered by the program shall
 6-1     pay that portion of the cost of coverage selected by the employee
 6-2     or retiree that exceeds the amount of state contributions.
 6-3             Sec. 7.  FUND.  (a)  Contributions collected under Section
 6-4     6 of this article and any amounts appropriated by the legislature
 6-5     for contingency reserves or administrative expenses shall be
 6-6     deposited in the Texas school employees uniform group insurance
 6-7     trust fund. The fund is a trust fund with the comptroller.  The
 6-8     trustee may use amounts in the fund only to provide group coverages
 6-9     under this article and to pay the expenses of administering the
6-10     program.
6-11             (b)  The trustee may invest assets of the fund in the
6-12     manner provided by Section 67(a)(3), Article XVI, Texas
6-13     Constitution.
6-14             SECTION 2.  Article 3.50-4, Insurance Code, is amended by
6-15     adding Section 3A to read as follows:
6-16             Sec. 3A.  TERMINATION OF PROGRAM AND TRANSFER OF PROPERTY.
6-17     (a)  The trustee shall transfer from the program established under
6-18     this article all coverages provided under the program and all
6-19     records relating to the program to the group insurance program
6-20     established under Article 3.50-7 of this code not later than the
6-21     date on which the program of coverages provided under Article
6-22     3.50-7 of this code is implemented.
6-23             (b)  The comptroller shall transfer from the program
6-24     established under this article all assets and liabilities of that
6-25     program to the group insurance program established under Article
6-26     3.50-7 of this code not later than the date on which the program of
 7-1     coverages provided under Article 3.50-7 of this code is
 7-2     implemented.
 7-3             (c)  On the transfer of property described by this section,
 7-4     the program provided by this article is terminated.
 7-5             SECTION 3.  Article 3.51, Insurance Code, is amended by
 7-6     adding Section 3 to read as follows:
 7-7             Sec. 3.  Notwithstanding any other provision of this
 7-8     article, a common or independent school district or any other
 7-9     agency or subdivision of the public school system of this state may
7-10     not procure insurance contracts under this article and may not
7-11     renew an insurance contract procured under this article after the
7-12     date on which the program of coverages provided under Article
7-13     3.50-7 of this code is implemented.
7-14             SECTION 4.  Section 26.036, Insurance Code, is amended by
7-15     adding Subsection (c) to read as follows:
7-16             (c)  An independent school district may not participate in
7-17     the small employer market under this article and may not renew an
7-18     insurance contract obtained in accordance with this article after
7-19     the date on which the program of coverages provided under Article
7-20     3.50-7 of this code is implemented.
7-21             SECTION 5.  Section 22.004, Education Code, is amended by
7-22     adding Subsection (h) to read as follows:
7-23             (h)  Notwithstanding any other provision of this section, a
7-24     district may not make group health coverage  available to its
7-25     employees under this section after the date on which the program of
7-26     coverages provided under Article 3.50-7, Insurance Code, is
 8-1     implemented.  A district is required to begin participating in the
 8-2     program provided under Article 3.50-7, Insurance Code, on the later
 8-3     of:
 8-4                     (1)  the first day of the first school year
 8-5     beginning after the date of implementation of Article 3.50-7,
 8-6     Insurance Code; or
 8-7                     (2)  the date on which the district's contract for
 8-8     group health insurance coverage expires.
 8-9             SECTION 6.  (a)  During the 2001-2002 school year, the
8-10     Teacher Retirement System of Texas shall develop the plan or plans
8-11     to be implemented and administered under Article 3.50-7, Insurance
8-12     Code, as added by this Act.  The system may employ persons as
8-13     necessary to implement this subsection.
8-14             (b)  The Employees Retirement System of Texas shall enroll
8-15     persons in the program provided under Article 3.50-7, Insurance
8-16     Code, as added by this Act, beginning with the first school year
8-17     for which the legislature makes an appropriation of contributions
8-18     required by Section 6(a) of that article.
8-19             SECTION 7.  (a)  Except as provided by Subsection (b) of
8-20     this section, this Act takes effect September 1, 2001.
8-21             (b)  The Teacher Retirement System of Texas shall adopt
8-22     rules as necessary to implement Section 6 of this Act not later
8-23     than December 31, 2001.