Amend CSHB 3257 as follows:                                                  
	(1) On page 1, strike lines 6-9.                                               
	(2) Strike SECTION 1.05 of the bill (page 5, line 17 through 
page 7, line 17) and substitute the following:
	SECTION 1.05. Sections 3(a) and (b), Article 3.50-8, 
Insurance Code, are amended to read as follows:
	(a) For purposes of this section, "cafeteria plan" means a 
plan as defined and authorized by Section 125, Internal Revenue 
Code of 1986, and its subsequent amendments. If an active 
employee is covered by a cafeteria plan of a school district, other 
educational district, participating charter school, or regional 
education service center, the state contribution under this article 
may [shall] be deposited in the cafeteria plan, and the employee may 
elect among the options provided by the cafeteria plan.  A cafeteria 
plan receiving state contributions under this article may include a 
medical savings account option and must include, at a minimum, the 
following options:
		(1) [a health care reimbursement account;                                     
		(2) ] a benefit or coverage other than that provided 
under Article 3.50-7 of this code, or any employee coverage or 
dependent coverage available under Article 3.50-7 of this code but 
not otherwise fully funded by the state or the employer 
contributions, any of which must be a "qualified benefit" under 
Section 125, Internal Revenue Code of 1986, and its subsequent 
amendments;
		(2) [(3)] an option for the employee to receive the 
state contribution as supplemental compensation; or
		(3) [(4)] an option to divide the state contribution 
among two or more of the other options provided under this 
subsection.
	(b) If an active employee is not covered by a cafeteria plan 
of a school district, other educational district, participating 
charter school, or regional education service center, the state 
contribution under this article shall, at the election of the 
employee:
		(1) be paid to the active employee as supplemental 
compensation; or
		(2) contributed to a health reimbursement arrangement 
account established for that employee as provided by this article.
	SECTION 1.06. Article 3.50-8, Insurance Code, is amended by 
adding Sections 3A and 3B to read as follows:
	Sec. 3A. HEALTH REIMBURSEMENT ARRANGEMENT PROGRAM. (a) Each 
employee that elects to participate in the health reimbursement 
arrangement program authorized under Section 3 of this article 
shall direct the expenditure of the amount of the state 
contribution made to an account for that employee under this 
article.
	(b) Money described by Subsection (a) of this section may be 
used by an employee only in accordance with this article for the 
employee and the employee's dependents for health benefit plan 
coverage offered by approved health benefit plan providers and for 
other qualified health care expenses.
	(3) On page 7, line 18, strike "Sec. 2A." and substitute 
"Sec.3B.".
	(4) On page 7, line 21, strike "Section 2" and substitute 
"Section 3A".
	(5) On page 9, line 10, strike "Section 2" and substitute 
"Section 3A".
	(6) On page 9, line 13, strike "Section 2(a) of this article" 
and substitute "Section 3(b) of this article".
	(7) Renumber the SECTIONS of ARTICLE 1 of the bill 
appropriately.            
	(8) On page 12, line 7, strike "[supplemental compensation]" 
and substitute "or supplemental compensation".
	(9) On page 12, strike lines 11-12.                                            
	(10) On page 12, line 16, strike "Section 2A" and substitute 
"Section 3B".   
	(11) On page 13, strike lines 1-11.                                            
	(12) Renumber the SECTIONS of ARTICLE 3 of the bill 
appropriately.