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By: Delisi H.B. No. 3257
A BILL TO BE ENTITLED
AN ACT
relating to the establishment of a defined contribution health care
benefits program for active school employees.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1. PROGRAM FOR ACTIVE SCHOOL EMPLOYEES
PART A. HEALTH REIMBURSEMENT ARRANGEMENT PROGRAM
SECTION 1.01. Subtitle H, Title 8, Insurance Code, is
amended by adding Chapter 1579 to read as follows:
CHAPTER 1579. TEXAS PUBLIC SCHOOL EMPLOYEES
HEALTH REIMBURSEMENT ARRANGEMENT PROGRAM
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1579.001. DEFINITIONS. In this chapter:
(1) "Account" means a health reimbursement
arrangement established under this chapter for a participating
employee.
(2) "Account administrator" means a person qualified
to act as an account administrator under Section 1579.054.
(3) "Charter school" means an open-enrollment charter
school established under Subchapter D, Chapter 12, Education Code.
(4) "Dependent" means:
(A) the spouse of a person;
(B) an unmarried child of the person if that
child is under 25 years of age, including:
(i) an adopted child;
(ii) a stepchild, foster child, or other
child who has a regular parent-child relationship with the person;
or
(iii) a recognized natural child; or
(C) the person's recognized natural child,
adopted child, foster child, stepchild, or other child who is in a
regular parent-child relationship with the participating employee
and who lives with or has his or her care provided by the person on a
regular basis regardless of the child's age if the child is mentally
retarded or physically incapacitated to an extent that the child is
dependent on the person for care or support, as determined by the
trustee.
(5) "District" means a public school district of this
state.
(6) "Employee" means an individual who is employed by
a participating entity and who is not covered by a group insurance
program under Chapter 1551 or 1601. The term does not include an
individual performing personal services for a participating entity
as an independent contractor.
(7) "Health benefit plan" means a plan designed to
provide, pay for, or reimburse expenses for health care services.
The term includes:
(A) a group insurance policy, contract, or
certificate;
(B) a medical or hospital service agreement; and
(C) a similar group arrangement, including
coverage through a health maintenance organization operating under
Chapter 843.
(8) "Health benefit plan provider" means an entity
that provides health benefit plan coverage in this state. The term
includes:
(A) an insurance company authorized to do
business in this state;
(B) a group hospital service corporation
operating under Chapter 842;
(C) a health maintenance organization operating
under Chapter 843;
(D) a stipulated premium insurance company
operating under Chapter 884;
(E) a multiple employer welfare arrangement
subject to Chapter 846;
(F) an approved nonprofit health corporation
that holds a certificate of authority issued under Chapter 844; and
(G) any other entity providing a plan of health
insurance or health benefits coverage subject to state regulation
by the department.
(9) "Participant" means a person enrolled in the
program.
(10) "Participating entity" means an entity
participating in the Health reimbursement arrangement established
under this chapter. The term includes:
(A) a school district;
(B) another educational district whose employees
are members of the Teacher Retirement System of Texas;
(C) a regional education service center; and
(D) a charter school that meets the requirements
of Section 1579.102.
(11) "Program" means the Texas public school employees
health reimbursement arrangement program established by this
chapter.
(12) "Qualified health care expense" means an expense
paid by a participating employee for medical care, as defined by 26
U.S.C. Section 213(d), as amended, for the employee or the
employee's dependents, as defined by 26 U.S.C. Section 152, as
amended.
(13) "Regional education service center" means a
regional education service center established under Chapter 8,
Education Code.
(14) "Trustee" means the board of trustees of the
Teacher Retirement System of Texas.
Sec. 1579.002. APPLICABILITY OF OTHER LAW. This chapter
does not prohibit a participating entity from providing additional
or supplemental insurance coverage under Article 3.51 or 26.036 of
this code or Section 22.005, Education Code.
[Sections 1579.003-1579.050 reserved for expansion]
SUBCHAPTER B. ESTABLISHMENT OF HEALTH REIMBURSEMENT ARRANGEMENT
PROGRAM; POWERS AND DUTIES OF BOARD OF TRUSTEES
Sec. 1579.051. CREATION OF PROGRAM; ADMINISTRATION; RULES.
(a) The Texas public school employees health reimbursement
arrangement program is established for the benefit of active public
school employees and those employees' dependents.
(b) The board of trustees of the Teacher Retirement System
of Texas is the trustee for the program and shall administer the
program.
(c) The trustee shall adopt rules, plans, and procedures as
necessary for the administration of the health reimbursement
arrangement program adopted under this chapter.
Sec. 1579.052. CONTRACTS. On a competitive bid basis, the
trustee shall, as necessary to implement this chapter, contract
with:
(1) a qualified, experienced firm of group insurance
specialists;
(2) a qualified, experienced firm of specialists in
any of the benefit options authorized under this chapter; or
(3) an administering firm to act for the trustee in the
capacity of account administrator.
Sec. 1579.053. REQUIREMENTS FOR HEALTH REIMBURSEMENT
ARRANGEMENTS. (a) The trustee shall request in writing a ruling or
opinion from the Internal Revenue Service as to whether the health
reimbursement arrangements adopted under this chapter and the state
rules governing those accounts qualify the arrangements for
appropriate federal tax exemptions. Based on the response of the
Internal Revenue Service, the trustee shall:
(1) modify the rules, plans, and procedures adopted
under Section 1579.051 as necessary to ensure the qualification of
those accounts for appropriate federal tax exemptions; and
(2) certify the information regarding federal tax
qualifications to the comptroller.
(b) Once finalized rules, plans, and procedures are adopted
by the trustee and approved by the Internal Revenue Service, the
trustee shall:
(1) solicit bids for the development and establishment
of the health reimbursement arrangement program; and
(2) provide information to participating employees
regarding the operation of the health reimbursement arrangements
adopted under this chapter.
Sec. 1579.054. ACCOUNT ADMINISTRATOR. (a) The following
persons may act as an account administrator under this chapter:
(1) a bank, savings and loan association, savings
bank, or credit union chartered under the laws of this state or the
United States;
(2) a trust company authorized to act as a fiduciary;
(3) an insurance company authorized to engage in the
business of health insurance in this state, a group hospital
service corporation authorized under Chapter 842 to engage in
business in this state, or a health maintenance organization
authorized under Chapter 843 to engage in business in this state;
(4) a third-party administrator holding a certificate
of authority issued under Article 21.07-6 of this code; or
(5) a certified public accountant licensed by the
Texas State Board of Public Accountancy.
(b) An account administrator may charge a fee for services
performed as the administrator of an account. The amount of the fee
shall be established in the contract between the account
administrator and the trustee.
(c) The account administrator is the fiduciary of the
participating employee who has an account under this chapter.
Sec. 1579.055. PERSONNEL. The trustee may employ persons
as necessary to assist the trustee in administering this chapter.
Sec. 1579.056. ANNUAL REPORT OF PROGRAM ACTIVITIES. (a)
Not later than June 1 of each year, the trustee shall submit a
report to the governor, the lieutenant governor, the speaker of the
house of representatives, and the commissioner.
(b) The report must summarize the activities of the program
in the calendar year preceding the year in which the report is
submitted.
[Sections 1579.057-1579.100 reserved for expansion]
SUBCHAPTER C. PROGRAM PARTICIPATION AND COVERAGE
Sec. 1579.101. REQUIRED PARTICIPATION; PARTICIPATION
OBLIGATIONS. (a) Each participating entity shall participate in
the program as provided by this chapter.
(b) Participation in the program includes compliance with
rules adopted by the trustee for the administration of the program
and provision of a notice to each employee as prescribed by the
trustee relating to the existence of the program. The notice must
contain a mailing address and the address of an Internet site from
which an employee may obtain information about:
(1) the coverage offered by the program;
(2) eligibility requirements for and costs of that
coverage;
(3) contributions that the employee is eligible to
receive from the state and the employing participating entity for
the costs of the coverage; and
(4) other information considered useful by the
trustee.
Sec. 1579.102. PARTICIPATION BY CHARTER SCHOOLS;
ELIGIBILITY. (a) A charter school is eligible to participate in
the program if the school agrees:
(1) that all records of the school relating to
participation in the program are open to inspection by the trustee,
the administering firm, the commissioner of education, or a
designee of any of those entities; and
(2) to have the school's accounts relating to
participation in the program annually audited by a certified public
accountant at the school's expense.
(b) A charter school must notify the trustee of the school's
intent to participate in the program in the manner and within the
time required by rule by the trustee.
Sec. 1579.103. PROVISION OF COVERAGE. The program shall
provide, through the health reimbursement arrangements, health
benefit plan coverage as provided by this chapter to an active
employee who is eligible for that coverage under this chapter and,
as provided by this chapter, to that employee's dependents.
Sec. 1579.104. COVERAGE PLANS. (a) The program must
include:
(1) a primary care coverage plan comparable in scope
and, to the greatest extent possible, in cost to the primary care
coverage plan provided to state employees under Chapter 1551; and
(2) a catastrophic care coverage plan.
(b) The catastrophic care coverage plan must be less
expensive for employee-only and employee and dependents coverage
than the primary care coverage plan.
(c) The trustee shall establish an annual deductible of
$4,000 for the catastrophic care coverage plan provided in
conjunction with the health reimbursement arrangement program.
Sec. 1579.105. PARTICIPATION BY EMPLOYEES. (a) Each
active employee is eligible to participate in the program
established under this chapter. An employee who elects to
participate shall be enrolled in the primary care coverage plan
unless the employee elects in writing to participate only in the
catastrophic care coverage plan.
(b) Participation in the program qualifies an employee to
receive a contribution to the employee's account as authorized
under Subchapter D. An employee who elects not to participate in the
program is ineligible to receive a contribution.
Sec. 1579.106. COVERAGE FOR DEPENDENTS. (a) A
participating employee is entitled to obtain for a dependent of the
participating employee coverage in the plan selected by the
employee in the manner determined by the trustee.
(b) The participating employee shall make any required
additional contribution payments for the dependent coverage in the
manner prescribed by the trustee.
(c) A participating entity is not prohibited by this chapter
from voluntarily contributing to the cost of dependent coverage.
(d) Amounts contributed under this section shall not be
contributed to the health reimbursement arrangement provided to the
employee or annuitant, but may be contributed to any other account
or arrangement established under this, or another chapter, or by
rule, to the extent allowed by federal law and regulation.
Sec. 1579.107. IDENTIFICATION CARDS. (a) The account
administrator shall issue to each participating employee an
identification card indicating:
(1) the name of the employee and any dependent of the
employee for whom eligible expenses may be paid under the program;
(2) the name, address, and phone number of the account
administrator; and
(3) a description of the coverage plan in which the
employee is participating.
(b) The account administrator shall issue a duplicate
identification card to each of the employee's dependents for whom
eligible expenses may be paid under the program.
Sec. 1579.108. USE OF ACCOUNT. (a) The account
administrator shall use money in an employee's account to pay:
(1) the costs of the health benefit plan coverage
selected by the employee for the employee and the employee's
dependents; and
(2) any additional eligible medical expenses of the
participating employee or the employee's dependents or to reimburse
the employee for those expenses.
(b) A medical expense is eligible for payment or
reimbursement under Subsection (a)(2) if:
(1) it is a medical expense described under Section
213(d), Internal Revenue Code of 1986, as amended; and
(2) payment or reimbursement for the expense is not
otherwise provided for under the coverage plan selected by the
employee or under another insurance policy, including a motor
vehicle or workers' compensation insurance policy.
Sec. 1579.109. PROMPT PAYMENT OF CLAIMS. (a) Except as
provided by Subsection (b), the account administrator shall pay a
claim for an expense that is eligible for payment or reimbursement
from the account not later than the 30th day after the date the
claim is submitted to the account administrator.
(b) The account administrator may request documents
necessary to verify whether an expense is eligible for payment or
reimbursement from the account. If the account administrator makes
a request under this subsection, the account administrator shall
pay a claim for an expense that is eligible for payment or
reimbursement from the account not later than the 30th day after the
date the documents are received by the account administrator.
[Sections 1579.110-1579.200 reserved for expansion]
SUBCHAPTER D. CONTRIBUTIONS
Sec. 1579.201. STATE CONTRIBUTION. (a) For each
participating employee, the state shall annually contribute $3,000
or the amount specified in the General Appropriations Act to the
medical savings account established for that employee for the
payment of qualified health care expenses if the trustee has
determined that those accounts meet the requirements described by
Section 1579.053.
(b) Each year, the trustee shall contribute to the health
reimbursement arrangement of the participating employees of a
participating entity the amount to which the employee is entitled
under Subsection (a). The contributions shall be made in equal
monthly installments.
(c) A school district that is ineligible for state aid under
Chapter 42, Education Code, is entitled to the funds delivered
under this section.
Sec. 1579.202. EMPLOYEE CONTRIBUTIONS. (a) Each
participating employee shall contribute any amounts required to
cover benefit options selected by the employee beyond the state
contribution under Section 1579.201.
(b) The participating employee shall make the employee's
contributions in the manner prescribed by the trustee.
(c) Amounts contributed under this section shall not be
contributed to the health reimbursement arrangement provided to the
employee or annuitant, but may be contributed to any other account
or arrangement established under this, or another chapter, or by
rule, to the extent allowed by federal law and regulation.
[Sections 1579.203-1579.250 reserved for expansion]
SUBCHAPTER E. RECORDS, PROCEEDINGS, AND ACCOUNTING; INVESTMENT
AUTHORITY
Sec. 1579.251. CONFIDENTIALITY OF RECORDS. (a) Section
825.507, Government Code, concerning confidentiality and
disclosure of records, applies to records in the custody of the
trustee or in the custody of an account or other administrator,
carrier, health benefit plan provider, agent, attorney,
consultant, or governmental body acting in cooperation with or on
behalf of the trustee relating to an employee or other participant
under the program.
(b) The program may disclose to a health benefit plan
provider information in the records of an individual that the
trustee determines is necessary to administer the program.
Sec. 1579.252. CLAIM DENIAL; EXPULSION FROM PROGRAM. (a) A
participant may appeal a claim denial or expulsion from the program
to the trustee.
(b) Adjudication of claim disputes and expulsions from the
program are subject to the contested case provisions of Chapter
2001, Government Code.
Sec. 1579.253. HEARING EXAMINER. The trustee may delegate
its authority to adjudicate claim disputes and expulsions to a
qualified hearing examiner.
Sec. 1579.254. APPEAL. (a) A decision of the trustee or
hearing examiner is subject to review by a district court in the
county in which the claimant resides.
(b) An appeal of a determination under this section is under
the substantial evidence rule.
Sec. 1579.255. ANNUAL ACCOUNTING. (a) In this subchapter,
"plan year" means the period beginning on September 1 and ending the
following August 31.
(b) Coverage purchased under this chapter must provide for
an accounting to the trustee by each health benefit plan provider.
(c) The accounting must be submitted:
(1) not later than the 90th day after the last day of
each plan year; and
(2) on a form approved by the trustee.
(d) Each health benefit plan provider shall prepare any
other report required by rule by the trustee.
(e) A health benefit plan provider may not assess an
additional charge for preparation of an accounting report.
Sec. 1579.256. ASSISTANCE. In implementing and
administering this chapter, the trustee may obtain the assistance
of any state agency the trustee considers appropriate.
Sec. 1579.257. ROLLOVER. (a) At the end of a plan year, the
unexpended and unobligated balance of any state contribution
deposited in a participating employee's health reimbursement
arrangement under this chapter during that plan year remains in the
medical savings account and may be spent only as authorized by this
chapter for a qualified health care expense.
(b) At the end of a plan year, the unexpended and
unobligated balance of any state contributions that have rolled
over from previous plan years remain in the health reimbursement
arrangement.
PART B. CONFORMING AMENDMENTS--EDUCATION CODE
SECTION 1.02. Sections 22.004(a), (b), (c), (g), and (j),
Education Code, are amended to read as follows:
(a) A district shall participate in the health
reimbursement arrangement [uniform group coverage] program
established under Chapter 1579 [Article 3.50-7], Insurance Code[,
as provided by Section 5 of that article].
(b) In addition to participation in the health
reimbursement arrangement program under Chapter 1579, Insurance
Code, a [A] district may [that does not participate in the program
described by Subsection (a) shall] make available to its employees
group health coverage provided by a risk pool established by one or
more school districts under Chapter 172, Local Government Code, or
under a policy of insurance or group contract issued by an insurer,
a group hospital service corporation [company] subject to Chapter
842 [20], Insurance Code, or a health maintenance organization
subject to Chapter 843, Insurance Code [under the Texas Health
Maintenance Organization Act (Chapter 20A, Vernon's Texas
Insurance Code)]. [The coverage must meet the substantive coverage
requirements of Article 3.51-6, Insurance Code, and any other law
applicable to group health insurance policies or contracts issued
in this state. The coverage must include major medical treatment
but may exclude experimental procedures. In this subsection,
"major medical treatment" means a medical, surgical, or diagnostic
procedure for illness or injury. The coverage may include managed
care or preventive care and must be comparable to the basic health
coverage provided under the Texas Employees Uniform Group Insurance
Benefits Act (Article 3.50-2, Vernon's Texas Insurance Code). The
board of trustees of the Teacher Retirement System of Texas shall
adopt rules to determine whether a school district's group health
coverage is comparable to the basic health coverage specified by
this subsection. The rules must provide for consideration of the
following factors concerning the district's coverage in
determining whether the district's coverage is comparable to the
basic health coverage specified by this subsection:
[(1) the deductible amount for service provided inside
and outside of the network;
[(2) the coinsurance percentages for service provided
inside and outside of the network;
[(3) the maximum amount of coinsurance payments a
covered person is required to pay;
[(4) the amount of the copayment for an office visit;
[(5) the schedule of benefits and the scope of
coverage;
[(6) the lifetime maximum benefit amount; and
[(7) verification that the coverage is issued by a
provider licensed to do business in this state by the Texas
Department of Insurance or is provided by a risk pool authorized
under Chapter 172, Local Government Code, or that a district is
capable of covering the assumed liabilities in the case of coverage
provided through district self-insurance.]
(c) The cost of the coverage provided under the program
described by Subsection (a) shall be paid by the state[, the
district,] and the employees in the manner provided by Chapter 1579
[Article 3.50-7], Insurance Code. The cost of any coverage
provided under a plan adopted under Subsection (b) shall be shared
by the employees and the district [using the contributions by the
state described by Section 9, Article 3.50-7, Insurance Code, or by
Article 3.50-8, Insurance Code].
(g) An insurer, a group hospital service corporation
[company] subject to Chapter 842 [20], Insurance Code, or a health
maintenance organization subject to Chapter 843, Insurance Code,
that issues a policy or contract under this section and any person
that assists the school district in obtaining or managing the
policy or contract for compensation shall provide an annual audited
financial statement to the school district showing the financial
condition of the insurer, corporation [company], organization, or
person.
(j) This section does not preclude a district that is
participating in the health reimbursement arrangement [uniform
group coverage] program established under Chapter 1579 [Article
3.50-7], Insurance Code, from voluntarily entering into contracts
to provide optional insurance coverages for the employees of the
district.
SECTION 1.03. Section 41.002(a), Education Code, is amended
to read as follows:
(a) A school district may not have a wealth per student that
exceeds $297,500 [$305,000].
SECTION 1.04. Section 42.302(a), Education Code, is amended
to read as follows:
(a) Each school district is guaranteed a specified amount
per weighted student in state and local funds for each cent of tax
effort over that required for the district's local fund assignment
up to the maximum level specified in this subchapter. The amount of
state support, subject only to the maximum amount under Section
42.303, is determined by the formula:
GYA = (GL X WADA X DTR X 100) - LR
where:
"GYA" is the guaranteed yield amount of state funds to be
allocated to the district;
"GL" is the dollar amount guaranteed level of state and local
funds per weighted student per cent of tax effort, which is $25.53
[$27.14] or a greater amount for any year provided by
appropriation;
"WADA" is the number of students in weighted average daily
attendance, which is calculated by dividing the sum of the school
district's allotments under Subchapters B and C, less any allotment
to the district for transportation, any allotment under Section
42.158, and 50 percent of the adjustment under Section 42.102, by
the basic allotment for the applicable year;
"DTR" is the district enrichment tax rate of the school
district, which is determined by subtracting the amounts specified
by Subsection (b) from the total amount of maintenance and
operations taxes collected by the school district for the
applicable school year and dividing the difference by the quotient
of the district's taxable value of property as determined under
Subchapter M, Chapter 403, Government Code, or, if applicable,
under Section 42.2521, divided by 100; and
"LR" is the local revenue, which is determined by multiplying
"DTR" by the quotient of the district's taxable value of property as
determined under Subchapter M, Chapter 403, Government Code, or, if
applicable, under Section 42.2521, divided by 100.
SECTION 1.05. Sections 22.004(d), (e), (f), and (i),
42.2514, 42.253(e-1), and 42.260, Education Code, are repealed.
PART C. CONFORMING AMENDMENT--GOVERNMENT CODE
SECTION 1.06. Section 822.201(c), Government Code, is
amended to read as follows:
(c) Excluded from salary and wages are:
(1) expense payments;
(2) allowances;
(3) payments for unused vacation or sick leave;
(4) maintenance or other nonmonetary compensation;
(5) fringe benefits;
(6) deferred compensation other than as provided by
Subsection (b)(3);
(7) compensation that is not made pursuant to a valid
employment agreement;
(8) payments received by an employee in a school year
that exceed $5,000 for teaching a driver education and traffic
safety course that is conducted outside regular classroom hours;
(9) the benefit replacement pay a person earns as a
result of a payment made under Subchapter B or C, Chapter 661; and
(10) [supplemental compensation received by an
employee under Article 3.50-8, Insurance Code; and
[(11)] any compensation not described by [in]
Subsection (b).
PART D. CONFORMING AMENDMENT--HEALTH AND SAFETY CODE
SECTION 1.07. Section 62.1015(a), Health and Safety Code,
is amended to read as follows:
(a) In this section, "charter school," "employee," and
"regional education service center" have the meanings assigned by
Subchapter A, Chapter 1579 [Section 2, Article 3.50-7], Insurance
Code.
PART E. CONFORMING AMENDMENT--TAX CODE
SECTION 1.08. Sections 26.08(k), (l), and (m), Tax Code,
are repealed.
PART F. REPEALER
SECTION 1.09. Effective September 1, 2004, the following
laws are repealed:
(1) Articles 3.50-7, 3.50-8, and 3.50-9, Insurance
Code;
(2) Section 3, Article 3.51, Insurance Code; and
(3) Article 26.036(c), Insurance Code.
PART G. TRANSITION; EFFECTIVE DATE
SECTION 1.10. The Teacher Retirement System of Texas shall
develop the health reimbursement arrangement program to be
implemented under Chapter 1579, Insurance Code, as added by this
Act, beginning September 1, 2003, and shall develop enrollment
requirements for the program during the 2003-2004 school year, with
coverage beginning September 1, 2004.
SECTION 1.11. The Teacher Retirement System of Texas shall
continue to operate the uniform group health coverage program
established under Article 3.50-7, Insurance Code, as added by
Chapter 1187, Acts of the 77th Legislature, Regular Session, 2001,
until September 1, 2004.
SECTION 1.12. Not later than July 31, 2004, the Teacher
Retirement System of Texas shall provide written information to
school districts eligible to participate in the health
reimbursement arrangement program under Chapter 1579, Insurance
Code, as added by this Act, that provides a general description of
the requirements for such a program as adopted under Chapter 1579,
Insurance Code, as added by this Act.
SECTION 1.13. During the initial implementation of Chapter
1579, Insurance Code, as added by this Act, and notwithstanding any
bidding requirements or other requirements set forth in Article
3.50-4, Insurance Code, or Article 3.50-7, Insurance Code, as added
by Chapter 1187, Acts of the 77th Legislature, Regular Session,
2001, the Teacher Retirement System of Texas may amend any
agreement in effect on September 1, 2003, that it has entered into
under Article 3.50-4, Insurance Code, or Article 3.50-7, Insurance
Code, as added by Chapter 1187, Acts of the 77th Legislature,
Regular Session, 2001, as necessary to comply with Chapter 1579,
Insurance Code, as added by this Act.
SECTION 1.14. (a) Except as provided by Subsection (b) of
this section, this article takes effect September 1, 2003.
(b) Parts B, C, D, and E of this article take effect
September 1, 2004, and apply beginning with the 2004-2005 school
year.