By Bernsen S.B. No. 473
77R3978 PB-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to a statewide group insurance program for active and
1-3 retired school district employees.
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 benefits
3-25 coverage and other 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 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.]
4-24 (b) The trustee by rule shall establish [provide]:
4-25 (1) minimum benefit standards for the program
4-26 [eligibility requirements for participation by a school district,
4-27 which may include criteria based on size]; and
5-1 (2) other participation requirements for school
5-2 districts as determined by the trustee to be necessary for the
5-3 operation of [restrictions on the ability of a school district to
5-4 begin or discontinue participation, which may include a minimum
5-5 period of participation and limited periods for elections to begin
5-6 or discontinue participation;]
5-7 [(3) administrative fees to be paid by participating
5-8 school districts to cover the trustee's administrative costs in
5-9 extending the program to active employees; and]
5-10 [(4) requirements to minimize the effects of adverse
5-11 selection on] the program.
5-12 (c) The trustee shall provide basic group health benefits
5-13 coverage for each active employee and may provide optional group
5-14 coverages for active employees participating in the program. The
5-15 coverages must be the same as the [may be combined with or similar
5-16 to, but separate from,] coverages provided to retirees. The
5-17 trustee by rule shall define the requirements of the basic coverage
5-18 [sum of premiums and administrative fees received from
5-19 participating school districts and active employees must cover all
5-20 expenses of school district employee participation in the program].
5-21 (d) Each [Participation by an] active employee of a
5-22 participating school district shall participate in the basic
5-23 coverage unless [is optional with] the employee specifically waives
5-24 participation in writing. A school district may not offer a
5-25 financial incentive to an active employee for declining to
5-26 participate in the program. An active employee is entitled to
5-27 obtain coverage for dependents in the same manner as a
6-1 participating retiree. An active employee of a school district
6-2 that does not elect to participate may not participate in the
6-3 coverage as an individual.
6-4 (e) [Each participating school district shall contribute for
6-5 each district employee covered by the program an amount equal to
6-6 not less than 75 percent of the cost for the employee only of the
6-7 plans of group coverages authorized by the trustee for active
6-8 employees. The district shall certify to the trustee the amount
6-9 the district will contribute monthly toward the cost of coverage.
6-10 The trustee shall determine if the amount is sufficient to
6-11 underwrite the plan for the district based on sound group benefit
6-12 underwriting principles. A determination by the trustee under this
6-13 subsection is final.]
6-14 [(f)] Each active employee covered by the program shall pay,
6-15 through a deduction from the employee's compensation, 100 percent
6-16 [that portion] of the cost of optional coverage or dependent
6-17 coverage selected by the employee [that exceeds the amount of
6-18 employer contributions].
6-19 (f) [(g)] The trustee shall pay, from [deposit in] the fund,
6-20 the administrative costs incurred in extending the program to
6-21 active employees and may use for that purpose any unexpended
6-22 balance of the [all] fees collected under Section 44(d), Chapter
6-23 812, Acts of the 73rd Legislature, 1993[, except that portion used
6-24 to conduct the survey required by Section 44. The trustee shall
6-25 continue to collect the fee through the 1996-1997 school year,
6-26 after which time the fee expires].
6-27 (g) [(h)] The state shall, for each active employee covered
7-1 by the program, contribute in the manner provided by Section 16 of
7-2 this article an amount equal to 100 percent of the cost for
7-3 employee-only coverage under the plan of basic coverage authorized
7-4 by the trustee for active employees. The state may also make
7-5 contributions to the fund in addition to those required by Section
7-6 16(b) of this article for the purpose of assisting in the expansion
7-7 of the program to active employees.
7-8 [(i) The trustee shall begin enrollment in the program for
7-9 active employees to be effective beginning with the 1996-1997
7-10 school year.]
7-11 SECTION 7. Section 8(b), Article 3.50-4, Insurance Code, is
7-12 amended to read as follows:
7-13 (b) The basic group health benefits coverage [coverages]
7-14 provided under the plan or plans must be comparable to the coverage
7-15 provided under the Texas Employees Uniform Group Insurance Benefits
7-16 Act (Article 3.50-2, Vernon's Texas Insurance Code) and must
7-17 include coverage for prescribed drugs, medicines, and prosthetic
7-18 devices. In addition to the basic group health benefits coverage
7-19 required under this subsection, the coverages provided under the
7-20 plan or plans may include [but are not limited to] life insurance,
7-21 accidental death and dismemberment, [hospital care and benefits,
7-22 surgical care and treatment, medical care and treatment, dental
7-23 care, eye care, obstetrical benefits,] long-term care, [prescribed
7-24 drugs, medicines, and prosthetic devices, and] other supplemental
7-25 benefits, supplies, and services [as provided by this article],
7-26 protection against loss of salary, and other coverages considered
7-27 advisable by the trustee.
8-1 SECTION 8. Section 9, Article 3.50-4, Insurance Code, is
8-2 amended to read as follows:
8-3 Sec. 9. BENEFIT CERTIFICATES. At such times, or upon such
8-4 events, as designated by the trustee, each insurance carrier shall
8-5 issue to each retiree, active employee, surviving spouse, or
8-6 surviving dependent child entitled to coverage [insured] under this
8-7 article a certificate of benefits [insurance] that:
8-8 (1) states the benefits to which the person is
8-9 entitled;
8-10 (2) states to whom the benefits are payable;
8-11 (3) states to whom the claims must be submitted; and
8-12 (4) summarizes the provisions of the health benefit
8-13 plan or other plan [policy] principally affecting the person.
8-14 SECTION 9. Sections 10(a) and (b), Article 3.50-4, Insurance
8-15 Code, are amended to read as follows:
8-16 (a) Not later than the 180th day after the end of each state
8-17 fiscal year, the trustee shall make a written report to the
8-18 commissioner [State Board of Insurance] concerning the [insurance]
8-19 coverages provided and the benefits and services being received by
8-20 persons covered [insured] under this article.
8-21 (b) Coverage [Insurance coverage] purchased under this
8-22 article shall provide for an accounting to the trustee by each
8-23 carrier providing coverage not later than the 90th day after the
8-24 end of each plan [policy] year. The accounting shall be on a form
8-25 approved by the trustee. Other reports shall be prepared by each
8-26 carrier if considered necessary by the trustee. An extra charge
8-27 may not be assessed by the carrier for the accounting reports.
9-1 SECTION 10. Section 13, Article 3.50-4, Insurance Code, is
9-2 amended to read as follows:
9-3 Sec. 13. AUTOMATIC COVERAGE. A retiree or active employee
9-4 who applies during an enrollment period may not be denied any of
9-5 the [group insurance] basic coverage provided under this article
9-6 unless the person has been found under Section 18A of this article
9-7 to have defrauded or attempted to defraud the Texas Public School
9-8 Employees Group Insurance Program.
9-9 SECTION 11. Sections 16(a), (b), (c), (f), (g), (h), and (i),
9-10 Article 3.50-4, Insurance Code, are amended to read as follows:
9-11 (a) For [the state fiscal year beginning September 1, 1985,
9-12 and for] each [subsequent] state fiscal year, each active employee,
9-13 as a condition of employment, shall contribute to the fund an
9-14 amount equal to .25 percent of the employee's salary. Each month
9-15 the employer of an active employee shall deduct the contributions
9-16 from the employee's salary and shall remit the contributions to the
9-17 trustee as provided by any procedures that the trustee may require.
9-18 In lieu of deducting the contributions from salaries, an employer
9-19 may assume and pay the total contributions due from its active
9-20 employees for any month.
9-21 (b) The state shall contribute as the state's contribution
9-22 for coverage for retirees to the fund each fiscal year an amount
9-23 equal to .50 percent of the salary of each active employee. The
9-24 state may contribute amounts in addition to the contribution
9-25 required by this subsection.
9-26 (c) If [after the state fiscal year beginning September 1,
9-27 1990,] the amount of state and active employee contributions to the
10-1 fund is raised by the legislature above the percentages provided by
10-2 Subsections (a) and (b) of this section to provide adequate
10-3 funding for the program, the ratio between the state's contribution
10-4 and the active employees' contributions must be maintained at two
10-5 to one.
10-6 (f) Before the first day of November preceding each regular
10-7 session of the legislature, the trustee shall certify, for
10-8 information and review, to the Legislative Budget Board and the
10-9 budget division of the governor's office the amounts necessary to
10-10 pay the contributions of the state to the fund for the basic group
10-11 health benefit plans for active employees and retirees under this
10-12 article [for information and review]. Not later than August 31 of
10-13 each year, the trustee shall certify to the comptroller of public
10-14 accounts the estimated amount of state contributions to be received
10-15 by the fund for the next fiscal year under the appropriations
10-16 authorized by this article.
10-17 (g) Contributions allocated and appropriated under this
10-18 article [section] shall be paid from the General Revenue Fund in
10-19 equal monthly installments, based on the annual estimate certified
10-20 by the trustee to the comptroller of public accounts for that year,
10-21 and subject to any express limitations specified in the Act making
10-22 the appropriation. Variations between the certified amount and the
10-23 actual amount due for the year shall be reconciled at the close of
10-24 the fiscal year and proper adjustments in the annual contributions
10-25 to the fund shall be made.
10-26 (h) An employing district that fails to remit, before the
10-27 11th day after the last day of the month, all [member] deposits
11-1 required by this section to be remitted by the district for the
11-2 month shall pay to the [Texas public school retired employees group
11-3 insurance] fund, in addition to the deposits, interest on the
11-4 unpaid amounts at the annual rate of six percent compounded
11-5 monthly.
11-6 (i) An employing district and its trustees hold amounts due
11-7 to the [Texas public school retired employees group insurance] fund
11-8 under this article in trust for the fund and its participants and
11-9 may not divert the amounts for any other purpose.
11-10 SECTION 12. Section 17(a), Article 3.50-4, Insurance Code, is
11-11 amended to read as follows:
11-12 (a) The trustee shall study the operation and administration
11-13 of this article, including surveys and reports on financing group
11-14 insurance coverages and health benefit [benefits] plans available
11-15 to active employees and retirees, and the experience and projected
11-16 cost of coverage and benefits. The trustee shall make a report to
11-17 the legislature at each regular legislative session relating to the
11-18 operation and administration of this article.
11-19 SECTION 13. Section 19, Article 3.50-4, Insurance Code, is
11-20 amended to read as follows:
11-21 Sec. 19. ASSISTANCE. In implementing and administering this
11-22 article, the commissioner [State Board of Insurance], as requested
11-23 by the trustee, shall assist the trustee in carrying out this
11-24 article.
11-25 SECTION 14. Section 22.004, Education Code, is amended to
11-26 read as follows:
11-27 Sec. 22.004. GROUP HEALTH BENEFITS FOR SCHOOL EMPLOYEES. (a)
12-1 Each district may participate in the group health benefits program
12-2 provided under Article 3.50-4, Insurance Code.
12-3 (b) A district that does not elect to participate in the
12-4 program described by Subsection (a) shall make available to its
12-5 employees group health coverage provided by a risk pool established
12-6 by one or more school districts under Chapter 172, Local Government
12-7 Code, or under a policy of insurance or group contract issued by an
12-8 insurer, a company subject to Chapter 20, Insurance Code, or a
12-9 health maintenance organization under the Texas Health Maintenance
12-10 Organization Act (Chapter 20A, Vernon's Texas Insurance Code). The
12-11 coverage must meet the substantive coverage requirements of Article
12-12 3.51-6, Insurance Code, and any other law applicable to group
12-13 health insurance policies or contracts issued in this state. The
12-14 coverage must include major medical treatment but may exclude
12-15 experimental procedures. In this subsection, "major medical
12-16 treatment" means a medical, surgical, or diagnostic procedure for
12-17 illness or injury. The coverage may include managed care or
12-18 preventive care and must be comparable to the basic health coverage
12-19 provided under the Texas Employees Uniform Group Insurance Benefits
12-20 Act (Article 3.50-2, Vernon's Texas Insurance Code). The board of
12-21 trustees of the Teacher Retirement System of Texas shall adopt
12-22 rules to determine whether a school district's group health
12-23 coverage is comparable to the basic health coverage specified by
12-24 this subsection. The rules must provide for consideration of the
12-25 following factors concerning the district's coverage in determining
12-26 whether the district's coverage is comparable to the basic health
12-27 coverage specified by this subsection:
13-1 (1) the deductible amount for service provided inside
13-2 and outside of the network;
13-3 (2) the coinsurance percentages for service provided
13-4 inside and outside of the network;
13-5 (3) the maximum amount of coinsurance payments a
13-6 covered person is required to pay;
13-7 (4) the amount of the copayment for an office visit;
13-8 (5) the schedule of benefits and the scope of
13-9 coverage;
13-10 (6) the lifetime maximum benefit amount; and
13-11 (7) verification that the coverage is issued by a
13-12 provider licensed to do business in this state by the Texas
13-13 Department of Insurance or is provided by a risk pool authorized
13-14 under Chapter 172, Local Government Code, or that a district is
13-15 capable of covering the assumed liabilities in the case of coverage
13-16 provided through district self-insurance.
13-17 (c) [(b)] The cost of the coverage provided under the
13-18 program described by Subsection (a) shall be paid by the state and
13-19 the employees in the manner provided by Section 7A, Article 3.50-4,
13-20 Insurance Code. The cost of coverage provided under a plan adopted
13-21 under Subsection (b) shall [may] be shared by the employees and the
13-22 district without contribution by the state.
13-23 (d) [(c)] Each district shall report the district's
13-24 compliance with this section [subsection] to the executive director
13-25 of the Teacher Retirement System of Texas not later than March 1 of
13-26 each even-numbered year in the manner required by the board of
13-27 trustees of the Teacher Retirement System of Texas. For a district
14-1 that does not elect to participate in the program described by
14-2 Subsection (a), the [The] report must be based on the district
14-3 group health coverage plan in effect during the current plan year
14-4 and must include:
14-5 (1) appropriate documentation of:
14-6 (A) the district's contract for group health
14-7 coverage with a provider licensed to do business in this state by
14-8 the Texas Department of Insurance or a risk pool authorized under
14-9 Chapter 172, Local Government Code; or
14-10 (B) a resolution of the board of trustees of the
14-11 district authorizing a self-insurance plan for district employees
14-12 and of the district's review of district ability to cover the
14-13 liability assumed;
14-14 (2) the schedule of benefits;
14-15 (3) the premium rate sheet, including the amount paid
14-16 by the district and employee;
14-17 (4) the number of employees covered by the [each]
14-18 health coverage plan offered by the district; and
14-19 (5) any other information considered appropriate by
14-20 the executive director of the Teacher Retirement System of Texas.
14-21 (e) For each district that does not elect to participate in
14-22 the program described by Subsection (a), and based [(d) Based] on
14-23 the criteria prescribed by Subsection (b) [(a)], the executive
14-24 director of the Teacher Retirement System of Texas shall certify
14-25 whether a district's coverage is comparable to the basic health
14-26 coverage provided under the Texas Employees Uniform Group Insurance
14-27 Benefits Act (Article 3.50-2, Vernon's Texas Insurance Code). If
15-1 the executive director of the Teacher Retirement System of Texas
15-2 determines that the group health coverage offered by a district is
15-3 not comparable, the executive director shall report that
15-4 information to the district and to the Legislative Budget Board.
15-5 The executive director shall submit a report to the legislature not
15-6 later than September 1 of each even-numbered year describing the
15-7 status of each district's group health coverage program based on
15-8 the information contained in the report required by Subsection (d)
15-9 [(c)] and the certification required by this subsection.
15-10 (f) [(e)] A school district that does not elect to
15-11 participate in the program described by Subsection (a) may not
15-12 contract with an insurer, a company subject to Chapter 20,
15-13 Insurance Code, or a health maintenance organization to issue a
15-14 policy or contract under this section, or with any person to assist
15-15 the school district in obtaining or managing the policy or contract
15-16 unless, before the contract is entered into, the insurer, company,
15-17 organization, or person provides the district with an audited
15-18 financial statement showing the financial condition of the insurer,
15-19 company, organization, or person.
15-20 (g) [(f)] An insurer, a company subject to Chapter 20,
15-21 Insurance Code, or a health maintenance organization that issues a
15-22 policy or contract under this section and any person that assists
15-23 the school district in obtaining or managing the policy or contract
15-24 for compensation shall provide an annual audited financial
15-25 statement to the school district showing the financial condition of
15-26 the insurer, company, organization, or person.
15-27 (h) [(g)] An audited financial statement provided under this
16-1 section must be made in accordance with rules adopted by the
16-2 commissioner of insurance or state auditor, as applicable.
16-3 SECTION 15. Section 20, Article 3.50-4, Insurance Code, is
16-4 repealed.
16-5 SECTION 16. The Teacher Retirement System of Texas shall
16-6 begin enrollment in the group health benefits program for active
16-7 employees as provided under Article 3.50-4, Insurance Code, as
16-8 amended by this Act, to be effective beginning with the 2002-2003
16-9 school year.
16-10 SECTION 17. This Act takes effect September 1, 2001.