SRC-JEC S.B. 1370 78(R)BILL ANALYSIS Senate Research CenterS.B. 1370 By: Duncan Finance 6/20/2003 Enrolled DIGEST AND PURPOSE Currently, the Texas Employees Retirement System, University of Texas System, Texas A&M University System, and Teacher Retirement System of Texas provide group health insurance benefits to over 1 million Texans. S.B. 1370 implements cost-saving measures for these programs. RULEMAKING AUTHORITY This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS ARTICLE 1. TEXAS SCHOOL EMPLOYEES UNIFORM GROUP HEALTH COVERAGE ACT AND BENEFITS FOR SCHOOL EMPLOYEES SECTION 1.01. Amends Section 2, Article 3.50-8, Insurance Code, by adding Subsection (a-1), as follows: (a-1) Requires the Teacher Retirement System of Texas (TRS), notwithstanding any other provision of this article or other law, on and after September 1, 2005, each year, to deliver to each school district, including a school district that is ineligible for state aid under Chapter 42, Education Code, each other educational district that is a member of TRS, each participating charter school, and each regional education service center state funds in an amount, as determined by TRS, determined by a certain formula. SECTION 1.02. Requires the comptroller of public accounts, effective September 1, 2003, to transfer $42 million from the Texas school employees uniform group coverage trust fund established under Section 8, Article 3.50-7, Insurance Code, to the retired school employees group insurance fund described by Subchapter G, Chapter 1575, Insurance Code, to compensate the retired school employees group insurance fund for money transferred from that fund under Section 4.01, Chapter 1187, Acts of the 77th Legislature, Regular Session, 2001. ARTICLE 2. TEXAS EMPLOYEES GROUP BENEFITS ACT SECTION 2.01. Amends Subdivisions (3), (9), and (11), Section 1551.003, Insurance Code, as effective June 1, 2003, as follows: (3) Redefines "basic coverage." (9) Redefines "full-time employee." (11) Redefines "part-time employee." SECTION 2.02. Amends Section 1551.006, Insurance Code, as effective June 1, 2003, by adding Subsection (c), to provide that, notwithstanding Subsection (b), the Texas A&M University System, including the Texas Veterinary Medical Diagnostic Laboratory, participates in the group benefits program if, not later than November 1, 2004, the system notifies the board of trustees of the Employee Retirement System of Texas (ERS) of the system's election to participate. Provides that if notice is provided as required by this subsection, the employees and annuitants of the system, including the veterinary medical laboratory, and the dependents of those employees and annuitants, participate in the group benefits program effective not later than September 1, 2005. SECTION 2.03. Amends Section 1551.101(a), Insurance Code, as effective June 1, 2003, to make eligible an elected or appointed officer or employee who has certain characteristics to participate in the group benefits program as an employee on the date specified by Section 1551.1055. SECTION 2.04. Amends Section 1551.102(a), Insurance Code, as effective June 1, 2003, to conform to Section 27, Chapter 1231, Acts of the 77th Legislature, Regular Session, 2001, and further, to provide that an individual who has at least 10, rather than three, years of service credit, as determined by the board of trustees of ERS, for which the individual was eligible to participate in the group benefits program under Section 1551.101 or who has at least five years of membership and five years of military service credited in ERS, and who retires in a manner described by this section, is eligible, subject to Section 1551.1055, to participate as an annuitant in the group benefits program. SECTION 2.05. Amends Section 1551.102, Insurance Code, as effective June 1, 2003, by amending Subsections (b), (c), (d), (f), and (g), and adding Subsection (h), as follows: (b) Modifies the criteria for an individual's participation in the group benefits program. (c) Modifies the criteria for an individual's participation in the group benefits program. (d) Modifies the criteria for an individual's participation in the group benefits program. (f) Modifies the criteria for an individual's participation in the group benefits program. (g) Modifies the criteria for an individual's participation in the group benefits program. (h) Authorizes a person eligible to participate and participating in the group benefits program as an annuitant on September 1, 2003, to continue to participate in the program as an annuitant if a lapse in coverage has not occurred. SECTION 2.06. Amends Section 1551.104(a), Insurance Code, as effective June 1, 2003, to make conforming changes. SECTION 2.07. Amends Subchapter C, Chapter 1551, Insurance Code, as effective June 1, 2003, by adding Section 1551.1055, as follows: Sec. 1551.1055. DATE ELIGIBILITY BEGINS; WAITING PERIOD. (a) Provides that, except as provided by Subsection (c) or (d), eligibility under Section 1551.101 begins on the first day of the calendar month that begins after the 90th day after the date the employee performs services for a state agency or is qualified for and begins to hold elected or appointed office. (b) Provides that, except as provided by Subsection (c), for an individual who does not retire at the end of the last month for which the individual is on the payroll of a state agency before retirement, eligibility under Section 1551.102 begins on the first day of the calendar month that begins after the 90th day after the date the individual retires. (c) Provides that the waiting period established by Subsections (a) and (b) applies only to the determination of initial eligibility to participate in the group health benefits program and does not apply to the determination of initial eligibility to participate in optional and voluntary insurance coverages under the group benefits program. (d) Provides that this subsection applies only to an employee of an institution of higher education or a dependent of the employee. Prohibits eligibility under Section 1551.101 from beginning earlier than the first day that an employee performs services for an institution of higher education if any amount paid for premium incurred before the date specified under Subsection (a) for the employee and any dependents of the employee is paid from money not appropriated from the general revenue fund, in accordance with policies and procedures established by the governing body of the institution of higher education. SECTION 2.08. Amends Subchapter G, Chapter 1551, Insurance Code, as effective June 1, 2003, by adding Section 1551.3015, as follows: Sec. 1551.3015. COST ASSESSMENT FOR CERTAIN PARTICIPANTS. Authorizes the ERS board of trustees, notwithstanding any other provision of law, to impose against an employer whose employees are not paid salaries from amounts appropriated by the General Appropriations Act and whose participation in the group benefits program begins after August 31, 2003, as a condition for participation in the program, a one-time assessment of administrative costs for participation of the employees and annuitants in the program, which may include the actuarial costs of including the group in the program and a participation premium determined by the board. Requires the board of trustees of ERS to deposit all amounts recovered under this section in the employees life, accident, and health insurance and benefits fund. SECTION 2.09. Amends Section 1551.109(a), Insurance Code, as effective June 1, 2003, to provide that, subject to Section 1551.351, on application to the board of trustees of ERS and arrangement for payment of contributions, an individual participating in the group benefits program on August 31, 2003, as a current or former member of a governing body with administrative responsibility over a state agency created under a statute of this state that has statewide jurisdiction and whose employees are covered by this chapter or as a current or former member of the State Board of Education, the governing body of an institution of higher education remains eligible for participation in a health benefit plan offered under this chapter if a lapse in coverage has not occurred. SECTION 2.10. Amends Section 1551.111(b), Insurance Code, as effective June 1, 2003, to limit participation to individuals with certain characteristics. SECTION 2.11. Amends Section 1551.112(a), Insurance Code, as effective June 1, 2003, to make conforming changes. SECTION 2.12. Amends Section 1551.319, Insurance Code, as effective June 1, 2003, by adding Subsections (c), (d), and (e), as follows: (c) Requires the superintendents of the Texas School for the Deaf and the Texas School for the Blind and Visually Impaired to determine whether an educational professional employee under contract with the school under Section 30.024 or 30.055, Education Code, as applicable, is a full-time employee for purposes of this section. (d) Requires the executive head of the Windham School District to determine whether an educational professional employee of the school is a full-time employee for purposes of this chapter. (e) Provides that this section does not prohibit an institution of higher education from contributing, from money not appropriated from the general revenue fund, amounts in excess of the state contribution for a part-time employee described by Section 1551.101(e)(2). SECTION 2.13. Repealer: Section 27 (amending the definitions of "annuitant" and "dependent"), Chapter 1231, Acts of the 77th Legislature, Regular Session, 2001. SECTION 2.14. Repealers: Sections 1551.101 (c) and (d) (pertaining to eligibility for the program), Insurance Code, as effective June 1, 2003. ARTICLE 3. TEXAS RETIRED SCHOOL EMPLOYEES GROUP BENEFITS ACT SECTION 3.01. Amends Section 1575.002, Insurance Code, as effective June 1, 2003, to conform to Section 3.03, Chapter 1187, Acts of the 77th Legislature, Regular Session, 2001, and to conform more closely to the source law from which the section was derived, and further, to redefine "active employee" and "carrier," to define "public school" and "trustee," and to delete the definitions of "system" and "board of trustees." SECTION 3.02. Amends Section 1575.203(a), Insurance Code, as effective June 1, 2003, to require each active employee, each fiscal year, as a condition of employment, to contribute to the Texas public school employees group insurance fund an amount equal to 0.5, rather than 0.25, percent of the employee's salary. ARTICLE 4. UNIFORM INSURANCE BENEFITS ACT FOR EMPLOYEES OF THE UNIVERSITY OF TEXAS SYSTEM AND THE TEXAS A&M UNIVERSITY SYSTEM SECTION 4.01. Amends Subchapter A, Chapter 1601, Insurance Code, as effective June 1, 2003, by adding Section 1601.011, as follows: Sec. 1601.011. PARTICIPATION OF THE TEXAS A&M UNIVERSITY SYSTEM. Provides that, notwithstanding any other provision of this chapter, if The Texas A&M University System elects to participate in the group benefits program under Section 1551.006(c), that system, including the Veterinary Medical Diagnostic Laboratory, does not participate in a uniform program established under this chapter, effective on the date participation in the group benefits program under Chapter 1551 begins. SECTION 4.02. Amends Section 1601.101(a), Insurance Code, as effective June 1, 2003, to make a conforming change. SECTION 4.03. Amends Section 1601.102, Insurance Code, as effective June 1, 2003, by amending Subsection (a) and adding Subsections (f) and (g), as follows: (a) Provides that an individual who retires in a manner described by this section and who meets the requirements of Subsection (f) is eligible to participate, subject to Section 1601.1045, as a retired employee in the uniform program. (f) Sets forth criteria which must be met by an individual to be eligible to participate in the uniform group program, notwithstanding Subsections (b)-(d). (g) Authorizes a person eligible to participate and participating in the uniform program as an annuitant on September 1, 2003, to continue to participate in the program as annuitant if a lapse in coverage has not occurred. SECTION 4.04. Amends Subchapter C, Chapter 1551, Insurance Code, as effective June 1, 2003, by adding Section 1551.1021, as follows: Sec. 1551.1021. PARTICIPATION ELIGIBILITY: CERTAIN FACULTY OF INSTITUTIONS OF HIGHER EDUCATION. (a) Provides that an adjunct faculty member at a public institution of higher education is eligible to participate in the group benefits program as an employee if the faculty member meets certain criteria. (b) Authorizes a public institution of higher education, from money appropriated from a fund other than the general revenue fund or from money available from local sources, for an adjunct faculty member eligible to receive benefits under this section, to contribute certain amounts for basic coverage for the employee and dependent coverage. (c) Provides that Subsection (b) does not prohibit a public institution of higher education from contributing, from money other than money appropriated from the general revenue fund, amounts that exceed the amount specified in Subsection (b) to provide coverage for a person employed by a public institution of higher education who meets the criteria for eligibility under Subsection (a). SECTION 4.05. Amends Subchapter C, Chapter 1601, Insurance Code, as effective June 1, 2003, by adding Section 1601.1045, as follows: Sec. 1601.1045. DATE ELIGIBILITY BEGINS; WAITING PERIOD. (a) Provides that, except as provided by Subsection (c) or (d), eligibility under Section 1601.101 begins on the first day of the calendar month that begins after the 90th day after the date the employee performs services for a system. (b) Provides that, except as provided by Subsection (c), eligibility under Section 1601.102, for an individual who does not retire at the end of the last month for which the individual is on the payroll of a system before retirement, begins on the first day of the calendar month that begins after the 90th day after the date the individual retires. (c) Provides that the waiting period established by Subsections (a) and (b) applies only to the determination of initial eligibility to participate in the group health benefits program and does not apply to the determination of initial eligibility to participate in optional coverages under the uniform program. (d) Prohibits eligibility under Section 1601.101 from beginning earlier than the first day that an employee performs services for a system if any amount paid for premium incurred before the date specified under Subsection (a) for the employee and any dependents of the employee is paid from money not appropriated from the general revenue fund, in accordance with policies and procedures established by the system. SECTION 4.06. Amends Section 1601.201, Insurance Code, as effective June 1, 2003, as follows: Sec. 1601.201. New heading: PAYMENT FOR COVERAGE. (a) Prohibits a system from contributing more than the amounts specified by this section for coverages provided under the uniform program. Deletes the existing text of Subsections (a) and (b). (b) Specifies amounts for coverages provided under the uniform program. (c) Specifies amounts for coverages provided under the uniform program. (d) Provides that Subsection (c) does not prohibit a system from contributing, from money not appropriated from the general revenue fund, amounts in excess of the amount specified by that subsection for an individual employed by the system in a position that as a condition of employment requires the individual to be enrolled as a student in the system in graduate level courses. SECTION 4.07. Requires the ERS board of trustees to include coverage under Section 1551.1021, Insurance Code, as added by this article, in an insurance policy or contract or in an evidence of coverage delivered, issued for delivery, or renewed on or after January 1, 2004. Authorizes the board of trustees to include such coverage in an insurance policy or contract or in an evidence of coverage delivered, issued for delivery, or renewed before January 1, 2004, if the board of trustees determines that coverage may be reasonably included. ARTICLE 5. EFFECTIVE DATE; GENERAL TRANSITION SECTION 5.01. Provides that, to the extent of any conflict, this Act prevails over another Act of the 78th Legislature, Regular Session, 2003, relating to nonsubstantive codifications of law or nonsubstantive additions to and corrections in enacted codes. SECTION 5.02. Effective date: September 1, 2003.