C.S.S.B. 1370 78(R) BILL ANALYSIS C.S.S.B. 1370 By: Duncan State Health Care Expenditures, Select Committee Report (Substituted) BACKGROUND AND PURPOSE Currently, the Texas Employees Retirement System (ERS), University of Texas System, Texas A&M University System, and Teacher Retirement System of Texas(TRS) provide group health insurance benefits to over 1 million Texans. S.B. 1370 implements cost-saving measures for these programs. RULEMAKING AUTHORITY It is the committee's opinion that rulemaking authority is expressly granted to the Teacher Retirement System of Texas in SECTION SECTION 1.01 (Section 2, Article 3.50-8, Insurance Code) of this bill. 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 Subsections (e), (f), and (g), as follows: (e) Provides that a member of the professional staff of a district, charter school, or service center described by Subsection (a) of this section is not eligible to receive state funds under Subsection (a) of this section. (f) Provides that for purposes of this section, a member of the professional staff of a district, charter school, or service center described by Subsection (a) of this section has the meaning defined by rule by the trustee. (g) Provides that an employee is not eligible to receive a state contribution under this article until the 90th day after the date the employee is employed by an entity described by Section 1(2)(A) of this article. SECTION 1.02. Requires the state, notwithstanding Article 3.50-8, Insurance Code, to pay the state contribution for active employee health coverage or supplemental compensation authorized under Section 2, Article 3.50-8, Insurance Code, for the last month of state fiscal year 2005 not earlier than the first day of the first month of state fiscal year 2006. SECTION 1.03. 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 Sections 1551.003(3), (9), and (11), 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 1551.101(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 2.03. Amends Section (a) 1551.102, Insurance Code, as effective June 1, 2003, to conform to Section 27, Chapter 1231, Acts of the 77th Legislature, Regular Session, 2001, and further amended to read as follows: (a) to provide that an individual who has at least a number of, rather than three, years of service credit, 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. This subsection excludes certain classes of individuals that participate in the Employees Retirement System. SECTION 2.04. 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 to require the individual to be at least 65 years of age, or that the individuals age plus service credit equals or exceeds the number 80 would be eligible for retirement. (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 2.05. Amends Section 1551.104(a), Insurance Code, as effective June 1, 2003, to make conforming changes. SECTION 2.06. 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) and (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 eligibility under Section 1551.101 may not begin 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 in Subsection (a) for the employee and any dependents of the employee is paid from money not appropriated out of the general revenue fund, in accordance with policy and procedures established by the governing board of the institution of higher education. SECTION 2.07. 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 2.08. Amends Section 1551.111(b), Insurance Code, as effective June 1, 2003, to limit participation to individuals with certain characteristics. SECTION 2.09. Amends Section 1551.112(a), Insurance Code, as effective June 1, 2003, to provide that an individual and their dependants may participate as an annuitant, subject to Section 1551.1055, if they began employment or became an officer of the Texas Turnpike Authority on August 31, 1997, or the three year period preceding August 31, 1997, is at least 65 years of age and is eligible to retire with at least 10 years of service credit under the proportionate retirement program. SECTION 2.10. Amends Section 1551.319, Insurance Code, as effective June 1, 2003, by adding Subsection (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) Provides that the executive head of the Windham School District can determine if an educational profession is a full time employee for purposes of this chapter (e) Provides that an institution of higher education can contribute in excess of monies that are appropriated for a part time employee as described in Section 1551.101(e)(2) by using money that is not appropriated from the general revenue fund. SECTION 2.11. Repealer: Section 27 (amending the definitions of "annuitant" and "dependent"), Chapter 1231, Acts of the 77th Legislature, Regular Session, 2001. SECTION 2.12. 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, is amended to conform to Section 3.03, Chapter 1187, Acts of the 77th Legislature and source law it was derived from, and further amends as follows: (1) Redefines "Active employee." (2) Redefines "Carrier." (3) Redefines "Fund." (4) Redefines "Group program." (5) Redefines "Health benefit plan." (6) Redefines "Public School." (7) Redefines "Trustee." SECTION 3.02. Amends Section 1575.202 (a), Insurance Code, that each state fiscal year, the state is required to contribute to the Texas public school employees group insurance fund an amount equal to 1 percent, rather than 0.5 percent of the employee's salary. SECTION 3.03. Amends Section 1575.203(a), Insurance Code, as effective June 1, 2003, to require each active employee, each state 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. SECTION 3.04. Amends Section 1575.204, Insurance Code, as effective June 1, 2003, as follows: Sec. 1575.204. New heading: PUBLIC SCHOOL CONTRIBUTION. Requires each employing school district, each state fiscal year, to contribute to the Texas public school employees group insurance fund the amount prescribed by the General Appropriations Act, which may not be less than 0.25 percent or greater than 0.75 percent of the salary of each active employee of the school district. Deletes text regarding the ratio of state and active employee contributions. 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 Section 1601.101(a), Insurance Code, as effective June 1, 2003, to make a conforming change. SECTION 4.02. 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 4.03. 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) Provides that eligibility under Section 1601.101 may not begin earlier than the first day that an employee performs services for a system, if any amount paid for premium incurred before the date specified in Subsection (a) for the employee and any dependents of the employee is paid from money not appropriated out of the general revenue fund, in accordance with policy and procedures established by the system. SECTION 4.04. 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 for an employee who works more than 40 hours or more a week. (c) Specifies amounts for coverages provided under the uniform program for an employee who works less than 40 hours a week. (d) Provides that an institution of higher education can contribute in excess of monies that are appropriated for a part time employee as described in Section 1551.101(e)(2) by using non general revenue funds. 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. EFFECTIVE DATE This act takes effect September 1, 2003. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute removes SECTION 1.01 of the original bill which amended Subchapter E, Chapter 3, Insurance Code, and renumbers the bill accordingly. The substitute removes in the original bill SECTION 1.02, Section 2, Article 3.50-8, Insurance Code, Subsection (a). The substitute removes in the original bill SECTION 2.10, Section 1551.205, Insurance Code, Subsection (b). The substitute removes the amended Section 1575, Insurance Code, as effective June 1, 2003, by adding Section 1575.16. in SECTION 3.02, and replaces it by amending Section 1575.202, Subsection (a), Insurance Code. The substitute removes from the original bill "as determined by the board of trustees," and replaces it with "except as provided by Subsection (b)(2)(C) or Subsection (f)," in SECTION 2.03 Section 1551.102 (a) of the Insurance Code. The substitute inserts in Section 1551.102 (c) (1) between "credit" and ";" the following language, "including not more than five years of military service credited in the Employees Retirement System of Texas, or has five years of eligible service credit and is the sole surviving spouse of military personnel who was killed in action;". The substitute inserts in Subchapter C, Chapter 1551, Section 1551.1055, Insurance Code, a new Subsection (d). The substitute removes SECTION 2.10 of the original bill relating to conforming changes to Section 1551.205 of the Insurance Code and provision relating to "LIMITATIONS." The substitute inserts in Section 1551.319, Insurance Code, a new Subsection (d). Subsection (d) of the original bill is renumbered as Subsection (e). The substitute removes SECTION 3.02 of the original bill relating to provision on "LIMITATIONS." The substitute replaces Section 3.02 of the original bill with Section 1575.002, Insurance Code, which amends Subsection (a). The substitute inserts in Section 1601.1045 (a) between "(c)" and "," the following language, "or (d)". The substitute inserts in Section 1601.1045, Insurance Code, a new Subsection (d).