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.