By Armbrister S.B. No. 178 77R1277 GJH-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 certain public schools. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Title 1, Insurance Code, is amended by adding 1-6 Chapter 3A to read as follows: 1-7 CHAPTER 3A. TEXAS SCHOOL EMPLOYEES UNIFORM GROUP 1-8 INSURANCE BENEFITS ACT 1-9 SUBCHAPTER A. GENERAL PROVISIONS 1-10 Art. 3A.001. SHORT TITLE. This chapter may be cited as the 1-11 Texas School Employees Uniform Group Insurance Benefits Act. 1-12 Art. 3A.002. DEFINITIONS. In this chapter: 1-13 (1) "Administering firm" means any firm designated by 1-14 the board of trustees to administer any coverage, service, benefit, 1-15 or requirement under this chapter and the board of trustees' rules 1-16 adopted under this chapter. 1-17 (2) "Board of trustees" means the board of trustees of 1-18 the Teacher Retirement System of Texas. 1-19 (3) "Cafeteria plan" means a plan as defined and 1-20 authorized by Section 125, Internal Revenue Code of 1986 (26 U.S.C. 1-21 Section 125), as amended. 1-22 (4) "Employee" means an individual who: 1-23 (A) is a member of the system; 1-24 (B) is employed by a school district 2-1 participating in the group program; and 2-2 (C) is not a direct participant in a group 2-3 insurance program under the Texas Employees Uniform Group Insurance 2-4 Benefits Act (Article 3.50-2, Vernon's Texas Insurance Code) or the 2-5 Texas State College and University Employees Uniform Insurance 2-6 Benefits Act (Article 3.50-3, Vernon's Texas Insurance Code). 2-7 (5) "Employer" means an institution of higher 2-8 education as defined by Section 61.003, Education Code, or a school 2-9 district. 2-10 (6) "Group program" means the Texas school employees 2-11 group insurance program authorized by this chapter. 2-12 (7) "Health benefits plan" means a group insurance 2-13 policy or contract, medical, dental, or hospital service agreement, 2-14 membership or subscription contract, salary continuation plan, 2-15 health maintenance organization agreement, preferred provider 2-16 arrangement, or any similar group arrangement or any combination of 2-17 those policies, plans, contracts, agreements, or arrangements to 2-18 provide, pay for, or reimburse expenses for health care services, 2-19 including comparable health care services for employees and 2-20 retirees who rely solely on spiritual means through prayer for 2-21 healing in accordance with the teaching of a recognized church or 2-22 denomination. 2-23 (8) "Optional insurance fund" means the school 2-24 employees optional insurance fund created under Article 3A.202 of 2-25 this chapter. 2-26 (9) "Plan provider" means an insurance company, group 2-27 hospital service corporation, health maintenance organization, or 3-1 other entity authorized by the department under this code to 3-2 provide any insurance coverage, benefit, or service provided by 3-3 this chapter. 3-4 (10) "Primary health plan" means the health benefits 3-5 plan determined by the board of trustees in which each full-time 3-6 employee and each retiree participates automatically unless 3-7 participation is specifically waived. 3-8 (11) "Primary health fund" means the school employees 3-9 primary health coverage fund described under Article 3A.201 of this 3-10 chapter. 3-11 (12) "Program participant" means an employee or a 3-12 retiree who participates in the group program. 3-13 (13) "School district" means a political subdivision 3-14 organized to provide general elementary or secondary public 3-15 education, including an open-enrollment charter school that has 3-16 been granted a charter under Subchapter D, Chapter 12, Education 3-17 Code. The term does not include any state agency, a junior college 3-18 district, a special-purpose school district established under 3-19 Section 11.351, Education Code, or the Windham School District 3-20 established under Section 19.002, Education Code. 3-21 (14) "System" means the Teacher Retirement System of 3-22 Texas. 3-23 Art. 3A.003. DEFINITION OF DEPENDENT AND RELATED TERMS. In 3-24 this chapter: 3-25 (1) "Dependent" means: 3-26 (A) the spouse of a program participant; 3-27 (B) an unmarried child of a program participant 4-1 or deceased employee if that child is under 25 years of age, 4-2 including: 4-3 (i) an adopted child; 4-4 (ii) a stepchild, foster child, or other 4-5 child who has a regular parent-child relationship with the program 4-6 participant; or 4-7 (iii) a recognized natural child; 4-8 (C) a person who is a program participant's 4-9 recognized natural child, adopted child, foster child, stepchild, 4-10 or other child who has a regular parent-child relationship with the 4-11 program participant, without regard to the age of the person, if 4-12 the person: 4-13 (i) lives with or has care provided by the 4-14 program participant or surviving spouse on a regular basis; and 4-15 (ii) is mentally retarded or physically 4-16 incapacitated to an extent that the person is dependent on the 4-17 program participant or surviving spouse for care or support, as 4-18 determined by the board of trustees; or 4-19 (D) a person who is a deceased employee's 4-20 recognized natural child, adopted child, foster child, stepchild, 4-21 or other child who had a regular parent-child relationship with the 4-22 deceased employee, without regard to the age of the person, if 4-23 while the employee was alive, the person: 4-24 (i) lived with or had care provided by the 4-25 deceased employee on a regular basis; and 4-26 (ii) was mentally retarded or physically 4-27 incapacitated to an extent that the person was dependent on the 5-1 deceased employee or surviving spouse for care or support, as 5-2 determined by the board of trustees. 5-3 (2) "Surviving dependent child" means: 5-4 (A) the dependent child of a deceased retiree 5-5 who has survived the deceased retiree and the deceased retiree's 5-6 spouse; or 5-7 (B) the dependent child of a deceased employee 5-8 who has survived the deceased employee and the deceased employee's 5-9 spouse if the deceased employee had 10 or more years of actual 5-10 service credit in the system. 5-11 (3) "Surviving spouse" means: 5-12 (A) the surviving spouse of a deceased retiree; 5-13 or 5-14 (B) the surviving spouse of a deceased employee 5-15 who had 10 or more years of actual service credit in the system. 5-16 Art. 3A.004. DEFINITION OF RETIREE. In this chapter, 5-17 "retiree" means an individual who: 5-18 (1) retired under the system with at least 10 years of 5-19 credit for actual service for an employer or has retired under the 5-20 system for disability and is entitled to receive an annuity from 5-21 the system under Section 824.304(b), Government Code; and 5-22 (2) is not eligible to directly participate in the 5-23 group insurance program provided under the Texas Employees Uniform 5-24 Group Insurance Benefits Act (Article 3.50-2, Vernon's Texas 5-25 Insurance Code) or the Texas State College and University Employees 5-26 Uniform Insurance Benefits Act (Article 3.50-3, Vernon's Texas 5-27 Insurance Code). 6-1 Art. 3A.005. EXEMPTION FROM PROCESS. (a) The following are 6-2 exempt from execution, attachment, garnishment, or any other 6-3 process: 6-4 (1) any contribution or benefit payment under this 6-5 chapter; 6-6 (2) any right, benefit, or payment accruing to any 6-7 person under this chapter; and 6-8 (3) any money in any fund administered under this 6-9 chapter. 6-10 (b) The items listed in Subsection (a) of this article may 6-11 not be assigned except for direct payment to benefit providers as 6-12 authorized by the board of trustees by contract or rule. 6-13 Art. 3A.006. EXEMPTION FROM STATE TAXES AND FEES. A premium 6-14 or contribution on a policy, insurance contract, or agreement 6-15 authorized by this chapter is not subject to any state tax, 6-16 regulatory fee, or surcharge, including a contribution or 6-17 maintenance tax or fee. 6-18 Art. 3A.007. APPLICABILITY OF OTHER LAW. This chapter does 6-19 not prohibit a school district from providing additional or 6-20 supplemental insurance coverage under Article 3.51 or 26.036 of 6-21 this code or Section 22.005, Education Code. 6-22 SUBCHAPTER B. POWERS AND DUTIES OF BOARD OF TRUSTEES 6-23 Art. 3A.051. ADMINISTRATION. (a) The board of trustees is 6-24 the trustee for the group program and shall administer the group 6-25 program. 6-26 (b) The board of trustees may adopt rules, plans, 6-27 procedures, and orders reasonably necessary to implement this 7-1 chapter, including: 7-2 (1) minimum benefit and financing standards for group 7-3 coverage for program participants, dependents, surviving spouses, 7-4 and surviving dependent children; 7-5 (2) primary health coverage and optional insurance 7-6 coverage for program participants, dependents, surviving spouses, 7-7 and surviving dependent children; 7-8 (3) procedures for contributions and deductions, 7-9 including annuity or payroll deductions; 7-10 (4) periods for enrollment and selection of optional 7-11 coverage and procedures for enrolling and exercising options under 7-12 the group program; 7-13 (5) adoption of a cafeteria plan; 7-14 (6) procedures for claims administration; and 7-15 (7) procedures to administer the fund. 7-16 Art. 3A.052. PERSONNEL. The board of trustees may employ 7-17 persons to assist the board of trustees in administering this 7-18 chapter. 7-19 Art. 3A.053. USE OF GENERIC AND MAIL-ORDER DRUGS. The board 7-20 of trustees shall adopt rules to maximize any available cost 7-21 savings from the use of generic or mail-order prescription drugs 7-22 unless the use of those drugs would cause an undue burden on or 7-23 adversely affect the health of any individual covered by a health 7-24 benefits plan adopted under this chapter. 7-25 Art. 3A.054. CONTRACTS. (a) The board of trustees may, on a 7-26 competitive bid basis, contract with: 7-27 (1) a qualified, experienced firm of group insurance 8-1 specialists; or 8-2 (2) an administering firm to act for the board of 8-3 trustees in the capacity of an independent administrator and 8-4 manager of a plan authorized under this chapter. 8-5 (b) The independent administrator selected by the board of 8-6 trustees shall assist the board of trustees to ensure the proper 8-7 administration of this chapter and the coverages, services, and 8-8 benefits provided for or authorized by this chapter. 8-9 (c) The board of trustees may enter into interagency 8-10 contracts with any state agency, including the Employees Retirement 8-11 System of Texas, for assistance in implementing or administering 8-12 the group program provided by this chapter. 8-13 Art. 3A.055. ADVISORY COMMITTEES. The board of trustees may 8-14 appoint advisory committees to advise the system in the 8-15 implementation or administration of the group program. The 8-16 advisory committees may include a credentialing advisory committee, 8-17 a medical advisory committee, and a retirement advisory committee. 8-18 SUBCHAPTER C. PROGRAM PARTICIPATION AND COVERAGE 8-19 Art. 3A.101. PARTICIPATION IN GROUP PROGRAM. (a) Each 8-20 school district is required to participate in the group program 8-21 provided by this chapter unless the school district is 8-22 participating in a group insurance program under the Texas 8-23 Employees Uniform Group Insurance Benefits Act (Article 3.50-2, 8-24 Vernon's Texas Insurance Code). 8-25 (b) Each full-time employee or retiree is automatically 8-26 covered by the primary health plan for employees or retirees, as 8-27 applicable, unless the employee or retiree specifically waives 9-1 coverage or unless the employee or retiree is expelled from the 9-2 group program. 9-3 (c) Each part-time employee is eligible to participate in 9-4 the primary health plan provided by this chapter on application in 9-5 the manner provided by the board of trustees unless the employee 9-6 has been expelled from the group program. An employer shall notify 9-7 each of its part-time employees of their eligibility for 9-8 participation in the primary health plan. 9-9 Art. 3A.102. PRIMARY HEALTH COVERAGE. (a) The board of 9-10 trustees shall administer a primary health plan for program 9-11 participants and their dependents, surviving spouses, and 9-12 surviving children. The plan coverages shall be comparable in 9-13 scope and, to the greatest extent possible, in cost to the basic 9-14 coverage for health care that state employees automatically 9-15 participate in under the Texas Employees Uniform Group Insurance 9-16 Benefits Act (Article 3.50-2, Vernon's Texas Insurance Code). 9-17 (b) The board of trustees must offer to program participants 9-18 plans of comparable primary health coverage except that the board 9-19 of trustees may offer enhanced primary health coverage to program 9-20 participants without Medicare coverage so that all program 9-21 participants receive comparable benefits under the primary health 9-22 plan. 9-23 (c) The board of trustees by rule shall define the primary 9-24 health coverage in which each full-time employee or retiree 9-25 participates unless specifically waived. 9-26 Art. 3A.103. COVERAGE FOR DEPENDENTS OF PRIMARY HEALTH PLAN 9-27 PARTICIPANT. A program participant who is covered by the primary 10-1 health plan is entitled to obtain dependent coverage in the primary 10-2 health plan as determined by the board of trustees. Additional 10-3 contribution payments for dependent coverage shall be made by the 10-4 program participant in the manner determined by the board of 10-5 trustees. 10-6 Art. 3A.104. COVERAGE FOR SURVIVING SPOUSE OR DEPENDENTS OF 10-7 SURVIVING SPOUSE. (a) A surviving spouse may elect to retain or 10-8 obtain coverage from the primary health plan for the surviving 10-9 spouse or dependents of the surviving spouse at the applicable rate 10-10 for a dependent. 10-11 (b) A surviving spouse must provide payment of applicable 10-12 contributions in the manner established by rules adopted by the 10-13 board of trustees. 10-14 Art. 3A.105. COVERAGE FOR SURVIVING DEPENDENT CHILD. (a) A 10-15 surviving dependent child, the guardian of the child's estate, or 10-16 the person having custody of the child may elect to retain or 10-17 obtain coverage from the primary health plan for the surviving 10-18 dependent child at the applicable rate for a dependent. 10-19 (b) The applicable contributions must be provided in the 10-20 manner established by rules adopted by the board of trustees. 10-21 Art. 3A.106. OPTIONAL GROUP COVERAGE. (a) The board of 10-22 trustees shall contract with a qualified plan provider to offer 10-23 program participants: 10-24 (1) optional permanent life insurance coverage; 10-25 (2) long-term care insurance that provides coverage 10-26 for home, community, and institutional care; and 10-27 (3) insurance for short-term or long-term loss of 11-1 salary because of disability. 11-2 (b) The board of trustees may offer program participants 11-3 other optional group insurance coverages considered advisable by 11-4 the board of trustees. 11-5 (c) In contracting for any benefits under this article, 11-6 competitive bidding is required. The board of trustees by rule 11-7 shall prescribe the procedure for conducting the bidding. The 11-8 rules may provide criteria to determine qualified plan providers. 11-9 The board of trustees is not required to select the lowest bid and 11-10 shall consider ability to service contracts, past experiences, 11-11 financial stability, and other relevant criteria. If the board of 11-12 trustees awards a contract to an entity whose products deviate from 11-13 those for which bids were solicited, the deviation shall be 11-14 recorded and the reasons for the deviation shall be fully justified 11-15 in the minutes of the next meeting of the board of trustees. 11-16 (d) Insurance coverage provided under this article shall be 11-17 made available periodically during open-enrollment periods 11-18 determined by the board of trustees. 11-19 Art. 3A.107. AVAILABILITY OF OPTIONAL COVERAGE. (a) The 11-20 board of trustees shall offer the optional insurance coverage under 11-21 this chapter to: 11-22 (1) employees through their employers; and 11-23 (2) retirees through the system. 11-24 (b) The board of trustees shall offer long-term care 11-25 insurance to a program participant's: 11-26 (1) dependent; 11-27 (2) surviving spouse; 12-1 (3) parent or grandparent; and 12-2 (4) spouse's or surviving spouse's parent. 12-3 (c) Each program participant who participates in optional 12-4 insurance coverage provided under this chapter is responsible for 12-5 the full cost of that coverage. 12-6 (d) An employee who participates in optional insurance 12-7 coverage provided under this chapter shall pay contributions by 12-8 payroll deduction remitted by the employee's employer at the times 12-9 and in the manner provided by the trustee. 12-10 (e) A retiree who participates in optional insurance 12-11 coverage provided under this chapter shall pay contributions by 12-12 deduction from the retiree's monthly retirement annuity. 12-13 SUBCHAPTER D. CONTRIBUTIONS 12-14 Art. 3A.151. FUNDING OF PRIMARY HEALTH COVERAGE. (a) The 12-15 state shall contribute for each program participant who is covered 12-16 by the primary health plan the amount provided by the General 12-17 Appropriations Act. 12-18 (b) The board of trustees shall pay from the primary health 12-19 fund: 12-20 (1) 100 percent of the cost of primary health coverage 12-21 for employees of a school district participating in the group 12-22 program and for retirees who retired with at least 20 years of 12-23 actual service credit with the system; and 12-24 (2) 50 percent of the cost of primary health coverage 12-25 for retirees who retired with at least 10 years but less than 20 12-26 years of actual service credit with the system. 12-27 (c) That portion of the cost of primary health coverage 13-1 selected by the program participant that exceeds the amount of 13-2 state contributions shall be paid by the employee or retiree or the 13-3 employee's school district, according to the employee's employment 13-4 contract. 13-5 Art. 3A.152. CERTIFICATION OF AMOUNT NECESSARY TO PAY STATE 13-6 CONTRIBUTION. Not later than October 31 preceding each regular 13-7 session of the legislature, the board of trustees shall certify the 13-8 amount necessary to pay the state contributions to the primary 13-9 health fund to: 13-10 (1) the Legislative Budget Board; and 13-11 (2) the budget division of the governor's office. 13-12 SUBCHAPTER E. FUNDS 13-13 Art. 3A.201. SCHOOL EMPLOYEES PRIMARY HEALTH COVERAGE FUND. 13-14 (a) The school employees primary health coverage fund is created 13-15 as a trust fund with the comptroller, who is custodian of the fund. 13-16 (b) The board of trustees shall administer the fund on 13-17 behalf of the participants in the plans of coverage provided under 13-18 this chapter. 13-19 (c) The following shall be paid into the primary health 13-20 fund: 13-21 (1) state appropriations for the premiums or other 13-22 contributions for primary health coverage for program participants; 13-23 (2) premiums or other contributions paid for primary 13-24 health coverage of the retirees, dependents, surviving spouses, and 13-25 surviving children of program participants; 13-26 (3) money recovered under contracts for the 13-27 implementation or administration of the primary health plan; 14-1 (4) appropriations for implementation and 14-2 administration of the primary health plan; 14-3 (5) investment and depository income of the primary 14-4 health fund; and 14-5 (6) other money required or authorized to be paid into 14-6 the primary health fund. 14-7 (d) Money in the primary health fund may be used only to pay 14-8 for primary health coverage provided under this chapter, including 14-9 the expenses of administering the program. 14-10 Art. 3A.202. PUBLIC SCHOOL EMPLOYEES OPTIONAL INSURANCE 14-11 FUND. (a) The school employees optional insurance fund is created 14-12 as a trust fund with the comptroller, who is custodian of the fund. 14-13 (b) The board of trustees shall administer the optional 14-14 insurance fund on behalf of the participants in the plans of 14-15 insurance coverage provided under this chapter. 14-16 (c) The following shall be credited to the optional 14-17 insurance fund: 14-18 (1) premiums and other contributions from participants 14-19 in plans of optional insurance; 14-20 (2) money recovered under contracts for providing 14-21 optional insurance coverage; 14-22 (3) investment and depository income of the optional 14-23 insurance fund; and 14-24 (4) other money required or authorized to be paid into 14-25 the optional insurance fund. 14-26 (d) Money in the optional insurance fund may be used only to 14-27 pay for optional insurance coverage, including the expenses of 15-1 administering the optional insurance program. 15-2 Art. 3A.203. INVESTMENT AUTHORITY. The board of trustees 15-3 may invest assets of any fund administered under this subchapter in 15-4 the manner provided by Subchapter D, Chapter 825, Government Code, 15-5 for assets of the system. 15-6 SUBCHAPTER F. RECORDS, PROCEEDINGS, AND ACCOUNTING 15-7 Art. 3A.251. CONFIDENTIALITY OF RECORDS. (a) Section 15-8 825.507, Government Code, applies to information in records 15-9 relating to a retiree, employee, annuitant, or beneficiary under 15-10 the group program. 15-11 (b) The system may disclose to a health or benefit provider 15-12 information in the records of an individual that the system 15-13 determines is necessary to administer the group program. 15-14 Art. 3A.252. CLAIM DENIAL OR EXPULSION. (a) A program 15-15 participant or a covered dependent, surviving spouse, or surviving 15-16 dependent child may appeal a claim denial or an expulsion from the 15-17 group program to the board of trustees. 15-18 (b) Adjudication of claims and expulsion from the group 15-19 program are subject to the contested case provisions under Chapter 15-20 2001, Government Code. 15-21 Art. 3A.253. HEARING EXAMINER. The board of trustees may 15-22 delegate its authority to adjudicate claims and expulsions to a 15-23 qualified hearing examiner. 15-24 Art. 3A.254. APPEAL. (a) A decision of the board of 15-25 trustees or a hearing examiner is subject to review by a district 15-26 court in Travis County or in the county in which the claimant 15-27 resides. 16-1 (b) An appeal of a determination under this section is under 16-2 the substantial evidence rule. 16-3 Art. 3A.255. ANNUAL ACCOUNTING. (a) In this article, "plan 16-4 year" means the period beginning on September 1 and ending on the 16-5 following August 31. 16-6 (b) Group coverage purchased under this chapter must provide 16-7 for an accounting to the board of trustees by each plan provider 16-8 providing the coverage. 16-9 (c) The accounting must be submitted: 16-10 (1) not later than the 90th day after the last day of 16-11 each plan year; and 16-12 (2) on a form approved by the board of trustees. 16-13 (d) Each plan provider shall prepare any other report 16-14 required by rule by the board of trustees. 16-15 (e) A plan provider may not assess an additional charge for 16-16 preparation of an accounting report. 16-17 SECTION 2. The following are repealed: 16-18 (1) Section 22.004, Education Code; 16-19 (2) Article 3.50-4, Insurance Code; 16-20 (3) Article 3.50-4A, Insurance Code, as added by 16-21 Chapter 1540, Acts of the 76th Legislature, Regular Session, 1999; 16-22 and 16-23 (4) Article 3.50-4A, Insurance Code, as added by 16-24 Chapter 372, Acts of the 76th Legislature, Regular Session, 1999. 16-25 SECTION 3. (a) The Teacher Retirement System of Texas shall 16-26 transfer all assets and liabilities of the programs provided under 16-27 Article 3.50-4A, Insurance Code, as added by Chapter 1540, Acts of 17-1 the 76th Legislature, Regular Session, 1999, and Article 3.50-4A, 17-2 Insurance Code, as added by Chapter 372, Acts of the 76th 17-3 Legislature, Regular Session, 1999, all coverages provided under 17-4 those programs, and all records pertaining to those programs to the 17-5 optional group insurance program provided under Chapter 3A, 17-6 Insurance Code, as added by this Act, not later than the date that 17-7 optional program is implemented. 17-8 (b) The Teacher Retirement System of Texas shall transfer 17-9 all assets and liabilities of the program provided under Article 17-10 3.50-4, Insurance Code, all coverages provided under that program, 17-11 and all records pertaining to that program to the primary health 17-12 plan provided under Chapter 3A, Insurance Code, as added by this 17-13 Act, not later than the date the primary health plan provided under 17-14 Chapter 3A is implemented. 17-15 SECTION 4. (a) The Teacher Retirement System of Texas shall 17-16 use money appropriated by the 77th Legislature for initial costs 17-17 for the establishment of a primary health plan in a manner 17-18 necessary to ensure that enrollment in that plan provided under 17-19 Chapter 3A, Insurance Code, as added by this Act, begins not later 17-20 than the 2003-2004 school year. 17-21 (b) In 2002, the Teacher Retirement System of Texas shall 17-22 deliver with the certification required under Article 3A.152, 17-23 Insurance Code, as added by this Act, a comprehensive report on its 17-24 proposal for the primary health plan under that article and the 17-25 status of planned implementation of the primary health plan. 17-26 SECTION 5. (a) Except as provided by Subsection (b) of this 17-27 section, this Act takes effect immediately if it receives a vote of 18-1 two-thirds of all the members elected to each house, as provided by 18-2 Section 39, Article III, Texas Constitution. If this Act does not 18-3 receive the vote necessary for immediate effect, this Act takes 18-4 effect on the 91st day after the last day of the legislative 18-5 session. 18-6 (b) Section 2 of this Act takes effect September 1, 2003.