By Gallego H.B. No. 625
77R1211 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. Sections 2(2) and (5), Article 3.50-4, Insurance
1-6 Code, are amended to read as follows:
1-7 (2) "Carrier" means:
1-8 (A) an [any] insurance company authorized to do
1-9 business in this state;
1-10 (B) a group [or] hospital service corporation
1-11 operating under Chapter 20 of this code; [authorized by the State
1-12 Board of Insurance to provide any of the insurance coverages,
1-13 benefits,] or
1-14 (C) a health maintenance organization regulated
1-15 under the Texas Health Maintenance Organization Act (Chapter 20A,
1-16 Vernon's Texas Insurance Code) [services provided by this article
1-17 under the insurance laws of this state].
1-18 (5) "Health benefit plan" or "plan" means a group
1-19 insurance policy, contract, or certificate, medical or hospital
1-20 service agreement, membership or subscription contract, salary
1-21 continuation plan, or similar group arrangement, including coverage
1-22 through a health maintenance organization regulated under the Texas
1-23 Health Maintenance Organization Act (Chapter 20A, Vernon's Texas
1-24 Insurance Code), to provide, pay for, or reimburse expenses for
2-1 health care services.
2-2 SECTION 2. Section 3(a), Article 3.50-4, Insurance Code, is
2-3 amended to read as follows:
2-4 (a) The Texas Public School Employees Group Insurance
2-5 Program is established to provide for a health benefit [an
2-6 insurance] plan or plans under this article and may provide other
2-7 insurance coverages as provided by this article.
2-8 SECTION 3. Section 5(a), Article 3.50-4, Insurance Code, is
2-9 amended to read as follows:
2-10 (a) The trustee may adopt rules, plans, procedures, and
2-11 orders reasonably necessary to implement this article, including:
2-12 (1) establishment of minimum benefit and financing
2-13 standards for group health benefits [insurance] coverage and other
2-14 coverage to be provided to all retirees, active employees,
2-15 dependents, surviving spouses, and surviving dependent children;
2-16 (2) establishment of basic and optional group coverage
2-17 to be provided to retirees, active employees, dependents, surviving
2-18 spouses, and surviving dependent children;
2-19 (3) establishment of the procedures for contributions
2-20 and deductions;
2-21 (4) establishment of periods for enrollment and
2-22 selection of optional coverage and procedures for enrolling and
2-23 exercising options under the plan;
2-24 (5) determination of methods and procedures for claims
2-25 administration;
2-26 (6) study of the operation of all [insurance] coverage
2-27 provided under this article;
3-1 (7) administration of the fund;
3-2 (8) adoption of a timetable for the development of
3-3 minimum benefit and financial standards for group [insurance]
3-4 coverage, establishment of group health benefit plans and other
3-5 insurance plans, and the taking of bids for and awarding of
3-6 contracts for group health benefit plans and other insurance plans;
3-7 and
3-8 (9) contracting with an independent and experienced
3-9 group insurance consultant or actuary, who does not receive
3-10 [insurance] commissions from any carrier [insurance company], for
3-11 advice and counsel in implementing and administering this program.
3-12 SECTION 4. Section 6, Article 3.50-4, Insurance Code, is
3-13 amended by amending Subsections (a), (c), and (f) and adding
3-14 Subsection (h) to read as follows:
3-15 (a) There is created a Health Benefit [Retirees] Advisory
3-16 Committee composed of nine members appointed by the trustee. One
3-17 member shall be an active school administrator. One member shall
3-18 be a retired school administrator. Two members shall be active
3-19 teachers. Three members shall be retired teachers. One member
3-20 shall be an active member of the auxiliary personnel of a school
3-21 district. One member shall be a retired member of the auxiliary
3-22 personnel.
3-23 (c) The committee shall:
3-24 (1) hold public hearings on group health and other
3-25 insurance benefits;
3-26 (2) recommend to the trustee minimum standards and
3-27 features of the plan or plans that it considers appropriate; and
4-1 (3) recommend to the trustee desirable changes in
4-2 rules and legislation affecting the program.
4-3 (f) A person is not eligible for appointment as a member of
4-4 the advisory committee if the person is required to register [with
4-5 the secretary of state] under Chapter 305, Government Code [422,
4-6 Acts of the 63rd Legislature, Regular Session, 1973 (Article
4-7 6252-9c, Vernon's Texas Civil Statutes)].
4-8 (h) The advisory committee is not subject to Section
4-9 2110.008, Government Code.
4-10 SECTION 5. The heading to Section 7, Article 3.50-4,
4-11 Insurance Code, is amended to read as follows:
4-12 Sec. 7. PARTICIPATION BY RETIREE.
4-13 SECTION 6. Section 7A, Article 3.50-4, Insurance Code, is
4-14 amended to read as follows:
4-15 Sec. 7A. PARTICIPATION BY ACTIVE EMPLOYEES. (a) A public
4-16 school district may elect to participate in the program provided
4-17 under this article. A district that elects to participate must
4-18 accept the schedule of costs adopted by the trustee. A district
4-19 may not offer an alternative health benefit plan to its active
4-20 employees during the period of its participation in the program [if
4-21 the trustee approves the plan as providing contributions,
4-22 participation, and a design that are in accordance with sound group
4-23 benefit underwriting principles]. A district that does not elect
4-24 to participate in the program is not eligible to receive state
4-25 contributions for the funding of a group health benefit plan for
4-26 district employees.
4-27 (b) The trustee by rule shall establish [provide]:
5-1 (1) minimum benefit standards for the program
5-2 [eligibility requirements for participation by a school district,
5-3 which may include criteria based on size];
5-4 (2) other participation requirements for school
5-5 districts as determined by the trustee to be necessary for the
5-6 operation of the program, including restrictions on the ability of
5-7 a school district to begin or discontinue participation, which may
5-8 include a minimum period of participation and limited periods for
5-9 elections to begin or discontinue participation;
5-10 (3) administrative fees to be paid by participating
5-11 school districts to cover the trustee's administrative costs in
5-12 administering [extending] the program [to active employees]; and
5-13 (4) requirements to minimize the effects of adverse
5-14 selection on the program.
5-15 (c) The trustee shall provide basic group health benefits
5-16 coverage for each active employee and may provide optional group
5-17 coverages for active employees participating in the program. The
5-18 coverages must be equivalent to the coverages provided for state
5-19 employees by the Employees Retirement System of Texas under the
5-20 Texas Employees Uniform Group Insurance Benefits Act (Article
5-21 3.50-2, Vernon's Texas Insurance Code) and may be combined with or
5-22 similar to, but separate from, coverages provided to retirees. The
5-23 trustee by rule shall define the requirements of the basic coverage
5-24 [sum of premiums and administrative fees received from
5-25 participating school districts and active employees must cover all
5-26 expenses of school district employee participation in the program].
5-27 (d) Each [Participation by an] active employee of a
6-1 participating school district shall participate in the basic
6-2 coverage unless [is optional with] the employee specifically waives
6-3 participation in writing. A school district may not offer a
6-4 financial incentive to an active employee for declining to
6-5 participate in the program. An active employee is entitled to
6-6 obtain coverage for dependents in the same manner as a
6-7 participating retiree.
6-8 (e) Each participating school district shall contribute for
6-9 each district employee covered by the program an amount not to
6-10 exceed 65 [equal to not less than 75] percent of the cost for the
6-11 employee only of the plans of group coverages authorized by the
6-12 trustee for active employees, and may contribute additional amounts
6-13 for the cost of optional or dependent coverages selected by the
6-14 employee. Not later than September 1 of each year, the [The]
6-15 district shall certify to the trustee the amount the district will
6-16 contribute monthly toward the cost of coverage. The trustee shall
6-17 determine if the amount is sufficient to underwrite the plan for
6-18 the district based on sound group benefit underwriting principles.
6-19 A determination by the trustee under this subsection is final.
6-20 (f) Each active employee covered by the program shall pay,
6-21 through a deduction from the employee's compensation, that portion
6-22 of the cost of employee-only coverage and optional coverage or
6-23 dependent coverage selected by the employee that exceeds the amount
6-24 of [employer] contributions for those coverages paid by the state
6-25 and the employing school district.
6-26 (g) The trustee shall pay, from [deposit in] the fund, the
6-27 administrative costs incurred in extending the program to active
7-1 employees and may use for that purpose any unexpended balance of
7-2 the [all] fees collected under Section 44(d), Chapter 812, Acts of
7-3 the 73rd Legislature, 1993[, except that portion used to conduct
7-4 the survey required by Section 44. The trustee shall continue to
7-5 collect the fee through the 1996-1997 school year, after which time
7-6 the fee expires].
7-7 (h) The state shall, for each active employee covered by the
7-8 program, contribute in the manner provided by Section 16 of this
7-9 article an amount equal to 35 percent of the cost for employee-only
7-10 coverage under the plan of basic coverage authorized by the trustee
7-11 for active employees. The state may also make contributions to the
7-12 fund in addition to those required by Section 16(b) of this article
7-13 for the purpose of assisting in the expansion of the program to
7-14 active employees.
7-15 [(i) The trustee shall begin enrollment in the program for
7-16 active employees to be effective beginning with the 1996-1997
7-17 school year.]
7-18 SECTION 7. Sections 8(e) and (h), Article 3.50-4, Insurance
7-19 Code, are amended to read as follows:
7-20 (e) The trustee may contract for and make available to all
7-21 retirees, active employees, dependents, surviving spouses, and
7-22 surviving dependent children optional group health benefit plans in
7-23 addition to the basic plans. The optional coverage may include a
7-24 smaller deductible, lower coinsurance, or additional categories of
7-25 benefits permitted under Subsection (b) of this section to provide
7-26 additional levels of coverages and benefits. The trustee may
7-27 utilize a portion of the funds received for the Texas Public School
8-1 Employees Group Insurance Program to offset some portion of costs
8-2 paid by the retiree or active employee for optional coverage if
8-3 such utilization does not reduce the period the program is
8-4 projected to remain financially solvent by more than one year in a
8-5 biennium. Any additional contributions for these optional plans
8-6 shall be paid for by the retiree, active employee, surviving
8-7 spouse, or surviving dependent children.
8-8 (h) The coverage provided by the plan or plans may be
8-9 secondary to all other benefit coverage to which the retiree,
8-10 active employee, surviving spouse, dependent, or surviving
8-11 dependent child is entitled. If a [In the event the] retiree or
8-12 a[,] surviving spouse, dependent, or surviving dependent child is
8-13 entitled to receive medicare hospital insurance benefits at no
8-14 charge, then the coverage provided by the plan or plans shall be
8-15 secondary to medicare hospital and medical insurance to the extent
8-16 permitted by federal law.
8-17 SECTION 8. Section 9, Article 3.50-4, Insurance Code, is
8-18 amended to read as follows:
8-19 Sec. 9. BENEFIT CERTIFICATES. At such times, or upon such
8-20 events, as designated by the trustee, each insurance carrier shall
8-21 issue to each retiree, active employee, surviving spouse, or
8-22 surviving dependent child covered [insured] under this article a
8-23 certificate of benefits [insurance] that:
8-24 (1) states the benefits to which the person is
8-25 entitled;
8-26 (2) states to whom the benefits are payable;
8-27 (3) states to whom the claims must be submitted; and
9-1 (4) summarizes the provisions of the health benefit
9-2 plan or other plan [policy] principally affecting the person.
9-3 SECTION 9. Sections 10(a) and (b), Article 3.50-4, Insurance
9-4 Code, are amended to read as follows:
9-5 (a) Not later than the 180th day after the end of each state
9-6 fiscal year, the trustee shall make a written report to the
9-7 commissioner [State Board of Insurance] concerning the [insurance]
9-8 coverages provided and the benefits and services being received by
9-9 persons covered [insured] under this article.
9-10 (b) Coverage [Insurance coverage] purchased under this
9-11 article shall provide for an accounting to the trustee by each
9-12 carrier providing coverage not later than the 90th day after the
9-13 end of each plan [policy] year. The accounting shall be on a form
9-14 approved by the trustee. Other reports shall be prepared by each
9-15 carrier if considered necessary by the trustee. An extra charge
9-16 may not be assessed by the carrier for the accounting reports.
9-17 SECTION 10. Section 13, Article 3.50-4, Insurance Code, is
9-18 amended to read as follows:
9-19 Sec. 13. AUTOMATIC COVERAGE. A retiree or active employee
9-20 who applies during an enrollment period may not be denied any of
9-21 the [group insurance] basic coverage provided under this article
9-22 unless the person has been found under Section 18A of this article
9-23 to have defrauded or attempted to defraud the Texas Public School
9-24 Employees Group Insurance Program.
9-25 SECTION 11. Section 15(a), Article 3.50-4, Insurance Code, is
9-26 amended to read as follows:
9-27 (a) The school employees group insurance fund is created.
10-1 The comptroller is the custodian of the fund, and the trustee shall
10-2 administer the fund. All contributions from active employees,
10-3 retirees, school districts, and the state, contributions for
10-4 optional coverages, investment income, appropriations for
10-5 implementation of this program, and other money required or
10-6 authorized to be paid into the fund shall be paid into the fund.
10-7 From the fund shall be paid, without state fiscal year limitation,
10-8 the appropriate premiums to the carrier or carriers providing group
10-9 coverage under the plan or plans under this article, claims for
10-10 benefits under the group coverage, and the amounts expended by the
10-11 trustee for administration of the program. The appropriate portion
10-12 of the contributions to the fund to provide for incurred but
10-13 unreported claim reserves and contingency reserves, as determined
10-14 by the trustee, shall be retained in the fund.
10-15 SECTION 12. Sections 16(a), (b), (c), (f), (g), (h), and
10-16 (i), Article 3.50-4, Insurance Code, are amended to read as
10-17 follows:
10-18 (a) For [the state fiscal year beginning September 1, 1985,
10-19 and for] each [subsequent] state fiscal year, each active employee,
10-20 as a condition of employment, shall contribute to the fund an
10-21 amount equal to .25 percent of the employee's salary. Each month
10-22 the employer of an active employee shall deduct the contributions
10-23 from the employee's salary and shall remit the contributions to the
10-24 trustee as provided by any procedures that the trustee may require.
10-25 In lieu of deducting the contributions from salaries, an employer
10-26 may assume and pay the total contributions due from its active
10-27 employees for any month.
11-1 (b) The state shall contribute as the state's contribution
11-2 for coverage for retirees to the fund each fiscal year an amount
11-3 equal to .50 percent of the salary of each active employee. The
11-4 state may contribute amounts in addition to the contribution
11-5 required by this subsection.
11-6 (c) If [after the state fiscal year beginning September 1,
11-7 1990,] the amount of state and active employee contributions to the
11-8 fund is raised by the legislature above the percentages provided by
11-9 Subsections (a) and (b) of this section to provide adequate
11-10 funding for the program, the ratio between the state's contribution
11-11 and the active employees' contributions must be maintained at two
11-12 to one.
11-13 (f) Before the first day of November preceding each regular
11-14 session of the legislature, the trustee shall certify, for
11-15 information and review, to the Legislative Budget Board and the
11-16 budget division of the governor's office the amounts necessary to
11-17 pay the contributions of the state to the fund for the basic group
11-18 health benefit plans for active employees and retirees under this
11-19 article [for information and review]. Not later than August 31 of
11-20 each year, the trustee shall certify to the comptroller of public
11-21 accounts the estimated amount of state contributions to be received
11-22 by the fund for the next fiscal year under the appropriations
11-23 authorized by this article.
11-24 (g) Contributions allocated and appropriated under this
11-25 article [section] shall be paid from the General Revenue Fund in
11-26 equal monthly installments, based on the annual estimate certified
11-27 by the trustee to the comptroller of public accounts for that year,
12-1 and subject to any express limitations specified in the Act making
12-2 the appropriation. Variations between the certified amount and the
12-3 actual amount due for the year shall be reconciled at the close of
12-4 the fiscal year and proper adjustments in the annual contributions
12-5 to the fund shall be made.
12-6 (h) An employing district that fails to remit, before the
12-7 11th day after the last day of the month, all [member] deposits
12-8 required by this article [section] to be remitted by the district
12-9 for the month shall pay to the [Texas public school retired
12-10 employees group insurance] fund, in addition to the deposits,
12-11 interest on the unpaid amounts at the annual rate of six percent
12-12 compounded monthly.
12-13 (i) An employing district and its trustees hold amounts due
12-14 to the [Texas public school retired employees group insurance] fund
12-15 under this article in trust for the fund and its participants and
12-16 may not divert the amounts for any other purpose.
12-17 SECTION 13. Section 17(a), Article 3.50-4, Insurance Code, is
12-18 amended to read as follows:
12-19 (a) The trustee shall study the operation and administration
12-20 of this article, including surveys and reports on financing group
12-21 insurance coverages and health benefit [benefits] plans available
12-22 to active employees and retirees, and the experience and projected
12-23 cost of coverage and benefits. The trustee shall make a report to
12-24 the legislature at each regular legislative session relating to the
12-25 operation and administration of this article.
12-26 SECTION 14. Section 19, Article 3.50-4, Insurance Code, is
12-27 amended to read as follows:
13-1 Sec. 19. ASSISTANCE. In implementing and administering this
13-2 article, the commissioner [State Board of Insurance], as requested
13-3 by the trustee, shall assist the trustee in carrying out this
13-4 article.
13-5 SECTION 15. Section 22.004, Education Code, is amended to
13-6 read as follows:
13-7 Sec. 22.004. GROUP HEALTH BENEFITS FOR SCHOOL EMPLOYEES. (a)
13-8 Each district may participate in the group health benefits program
13-9 provided under Article 3.50-4, Insurance Code.
13-10 (b) A district that does not elect to participate in the
13-11 program described by Subsection (a) shall make available to its
13-12 employees group health coverage provided by a risk pool established
13-13 by one or more school districts under Chapter 172, Local Government
13-14 Code, or under a policy of insurance or group contract issued by an
13-15 insurer, a company subject to Chapter 20, Insurance Code, or a
13-16 health maintenance organization under the Texas Health Maintenance
13-17 Organization Act (Chapter 20A, Vernon's Texas Insurance Code). The
13-18 coverage must meet the substantive coverage requirements of Article
13-19 3.51-6, Insurance Code, and any other law applicable to group
13-20 health insurance policies or contracts issued in this state. The
13-21 coverage must include major medical treatment but may exclude
13-22 experimental procedures. In this subsection, "major medical
13-23 treatment" means a medical, surgical, or diagnostic procedure for
13-24 illness or injury. The coverage may include managed care or
13-25 preventive care and must be comparable to the basic health coverage
13-26 provided under the Texas Employees Uniform Group Insurance Benefits
13-27 Act (Article 3.50-2, Vernon's Texas Insurance Code). The board of
14-1 trustees of the Teacher Retirement System of Texas shall adopt
14-2 rules to determine whether a school district's group health
14-3 coverage is comparable to the basic health coverage specified by
14-4 this subsection. The rules must provide for consideration of the
14-5 following factors concerning the district's coverage in determining
14-6 whether the district's coverage is comparable to the basic health
14-7 coverage specified by this subsection:
14-8 (1) the deductible amount for service provided inside
14-9 and outside of the network;
14-10 (2) the coinsurance percentages for service provided
14-11 inside and outside of the network;
14-12 (3) the maximum amount of coinsurance payments a
14-13 covered person is required to pay;
14-14 (4) the amount of the copayment for an office visit;
14-15 (5) the schedule of benefits and the scope of
14-16 coverage;
14-17 (6) the lifetime maximum benefit amount; and
14-18 (7) verification that the coverage is issued by a
14-19 provider licensed to do business in this state by the Texas
14-20 Department of Insurance or is provided by a risk pool authorized
14-21 under Chapter 172, Local Government Code, or that a district is
14-22 capable of covering the assumed liabilities in the case of coverage
14-23 provided through district self-insurance.
14-24 (c) [(b)] The cost of the coverage provided under the
14-25 program described by Subsection (a) shall be paid by the state,
14-26 the district, and the employees in the manner provided by Section
14-27 7A, Article 3.50-4, Insurance Code. The cost of coverage provided
15-1 under a plan adopted under Subsection (b) shall [may] be shared by
15-2 the employees and the district without contribution by the state.
15-3 (d) [(c)] Each district shall report the district's
15-4 compliance with this section [subsection] to the executive director
15-5 of the Teacher Retirement System of Texas not later than March 1 of
15-6 each even-numbered year in the manner required by the board of
15-7 trustees of the Teacher Retirement System of Texas. For a district
15-8 that does not elect to participate in the program described by
15-9 Subsection (a), the [The] report must be based on the district
15-10 group health coverage plan in effect during the current plan year
15-11 and must include:
15-12 (1) appropriate documentation of:
15-13 (A) the district's contract for group health
15-14 coverage with a provider licensed to do business in this state by
15-15 the Texas Department of Insurance or a risk pool authorized under
15-16 Chapter 172, Local Government Code; or
15-17 (B) a resolution of the board of trustees of the
15-18 district authorizing a self-insurance plan for district employees
15-19 and of the district's review of district ability to cover the
15-20 liability assumed;
15-21 (2) the schedule of benefits;
15-22 (3) the premium rate sheet, including the amount paid
15-23 by the district and employee;
15-24 (4) the number of employees covered by the [each]
15-25 health coverage plan offered by the district; and
15-26 (5) any other information considered appropriate by
15-27 the executive director of the Teacher Retirement System of Texas.
16-1 (e) For each district that does not elect to participate in
16-2 the program described by Subsection (a), and based [(d) Based] on
16-3 the criteria prescribed by Subsection (b) [(a)], the executive
16-4 director of the Teacher Retirement System of Texas shall certify
16-5 whether a district's coverage is comparable to the basic health
16-6 coverage provided under the Texas Employees Uniform Group Insurance
16-7 Benefits Act (Article 3.50-2, Vernon's Texas Insurance Code). If
16-8 the executive director of the Teacher Retirement System of Texas
16-9 determines that the group health coverage offered by a district is
16-10 not comparable, the executive director shall report that
16-11 information to the district and to the Legislative Budget Board.
16-12 The executive director shall submit a report to the legislature not
16-13 later than September 1 of each even-numbered year describing the
16-14 status of each district's group health coverage program based on
16-15 the information contained in the report required by Subsection (d)
16-16 [(c)] and the certification required by this subsection.
16-17 (f) [(e)] A school district that does not elect to
16-18 participate in the program described by Subsection (a) may not
16-19 contract with an insurer, a company subject to Chapter 20,
16-20 Insurance Code, or a health maintenance organization to issue a
16-21 policy or contract under this section, or with any person to assist
16-22 the school district in obtaining or managing the policy or contract
16-23 unless, before the contract is entered into, the insurer, company,
16-24 organization, or person provides the district with an audited
16-25 financial statement showing the financial condition of the insurer,
16-26 company, organization, or person.
16-27 (g) [(f)] An insurer, a company subject to Chapter 20,
17-1 Insurance Code, or a health maintenance organization that issues a
17-2 policy or contract under this section and any person that assists
17-3 the school district in obtaining or managing the policy or contract
17-4 for compensation shall provide an annual audited financial
17-5 statement to the school district showing the financial condition of
17-6 the insurer, company, organization, or person.
17-7 (h) [(g)] An audited financial statement provided under this
17-8 section must be made in accordance with rules adopted by the
17-9 commissioner of insurance or state auditor, as applicable.
17-10 SECTION 16. Sections 20 and 21, Article 3.50-4, Insurance
17-11 Code, are repealed.
17-12 SECTION 17. The Teacher Retirement System of Texas shall
17-13 begin enrollment in the group health benefits program for active
17-14 employees as provided under Article 3.50-4, Insurance Code, as
17-15 amended by this Act, to be effective beginning with the 2002-2003
17-16 school year.
17-17 SECTION 18. This Act takes effect September 1, 2001.