By: Delisi H.B. No. 3287
A BILL TO BE ENTITLED
AN ACT
relating to the establishment of a defined contribution health care
benefits program for state employees and retired state employees.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1. PROGRAM FOR STATE EMPLOYEES AND ANNUITANTS
SECTION 1.01. Section 1551.002, Insurance Code, as
effective June 1, 2003, is amended by amending Section 1551.002(1)
to read as follows:
(1) provide consumer control and choice [uniformity]
in life, accident, and health benefit coverages for all state
officers and employees and their dependents;
SECTION 1.02. Section 1551.003, Insurance Code, as
effective June 1, 2003, is amended by adding Subdivision (10-a) to
read as follows:
(10-a) "Health reimbursement arrangement" means the
program operated under Subchapter K.
SECTION 1.03. Section 1551.011, Insurance Code, as
effective June 1, 2003, is amended to read as follows:
Sec. 1551.011. EXEMPTION FROM EXECUTION. All benefit
payments, state contributions, contributions of employees and
annuitants, and optional benefit payments, any rights, benefits, or
payments accruing to a person under this chapter, and all money in a
fund created by this chapter:
(1) are exempt from execution, attachment,
garnishment, or any other process; and
(2) may not be assigned, except:
(A) for direct payment that a participant may
assign to a provider of health care services; and
(B) as specifically provided by this chapter.
SECTION 1.04. Section 1551.055, Insurance Code, as
effective June 1, 2003, is amended to read as follows:
Sec. 1551.055. GENERAL POWERS OF BOARD OF TRUSTEES
REGARDING COVERAGE PLANS. The board of trustees may:
(1) prepare specifications for a coverage provided
under this chapter;
(2) prescribe the time and conditions under which an
employee, annuitant, or dependent [individual] is eligible for a
coverage provided under this chapter;
(3) determine the methods and procedures of claims
administration;
(4) determine the amount of payroll deductions and
reductions applicable to employees and annuitants and establish
procedures to implement those deductions and reductions;
(5) establish procedures for the board of trustees to
decide contested cases arising from a coverage provided under this
chapter;
(6) study, on an ongoing basis, the operation of all
coverages provided under this chapter, including gross and net
costs, administration costs, benefits, utilization of benefits,
and claims administration;
(7) administer the employees life, accident, and
health insurance and benefits fund;
(8) provide the beginning and ending dates of
coverages of participants under all [benefit] plans;
(9) develop basic group coverage plans applicable to
all individuals eligible to participate in the group benefits
program under Sections 1551.101 and 1551.102;
(10) provide for optional group coverage plans in
addition to the basic group coverage plans;
(11) provide, as the board of trustees determines is
appropriate, either additional statewide optional coverage plans
or individual agency coverage plans;
(12) develop the health reimbursement arrangement in a
manner [health benefit plans] that permits [permit] access to
high-quality, cost-effective health care;
(13) design, implement, and monitor the health
reimbursement arrangement program [health benefit plan] features
intended to discourage excessive utilization, promote efficiency,
and contain costs;
(14) develop and refine, on an ongoing basis, a health
care delivery [benefit] strategy consistent with evolving benefit
delivery systems; and
(15) develop a funding strategy that efficiently uses
employer contributions to achieve the purposes of this chapter [and
that is reasonable and ensures participants a fair choice among
health benefit plans as provided by Section 1551.302].
SECTION 1.05. Section 1551.113(a), Insurance Code, as
effective June 1, 2003, is amended to read as follows:
(a) An individual described by Subsection (b) is entitled to
receive the state contribution [contributions] required to provide
health benefit plan coverage under the health reimbursement
arrangement [group benefits] program for two months after the
effective date of the individual's separation from state service.
SECTION 1.06. Sections 1551.159(a) and (g), Insurance Code,
as effective June 1, 2003, are amended to read as follows:
(a) Subject to any applicable limit in the General
Appropriations Act, the board of trustees shall use money
appropriated for state [employer] contributions to fund 80 percent
of the cost of basic coverage for a child who:
(1) is a dependent of an employee;
(2) would be eligible, if the child were not the
dependent of the employee, for benefits under the program
established by the state to implement Title XXI, Social Security
Act (42 U.S.C. Section 1397aa et seq.), as amended; and
(3) is not eligible for the state Medicaid program.
(g) If the program established under Chapter 62, Health and
Safety Code, using federal funding under Title XXI, Social Security
Act (42 U.S.C. Section 1397aa et seq.), as amended, is terminated,
the use of state contributions for benefits for those eligible
under Subsection (a) also terminates.
SECTION 1.07. Section 1551.201, Insurance Code, as
effective June 1, 2003, is amended by amending Subsection (b) and by
adding Subsection (d) to read as follows:
(b) The group coverage plans may, in the board of trustees'
discretion, include:
(1) life coverage;
(2) accidental death and dismemberment coverage;
(3) [health benefit coverage, including coverage for:
[(A) hospital care and benefits;
[(B) surgical care and treatment;
[(C) medical care and treatment;
[(D) dental care;
[(E) obstetrical benefits;
[(F) prescribed drugs, medicines, and prosthetic
devices; and
[(G) supplemental benefits, supplies, and
services in accordance with this chapter;
[(4)] coverage providing protection against either
long-term or short-term loss of salary; and
(4) [(5)] any other group coverage that the board of
trustees[, in consultation with the group benefits advisory
committee created under Subchapter J,] considers advisable.
(d) The group coverage plans shall include health benefit
coverage through the health reimbursement arrangement established
under Subchapter K.
SECTION 1.08. Section 1551.202(c), Insurance Code, as
effective June 1, 2003, is amended to read as follows:
(c) Basic coverage must include basic health coverage. The
basic health coverage shall [may] be offered through the Health
reimbursement arrangement established under Subchapter K [any
health benefit plan].
SECTION 1.09. Chapter 1551, Insurance Code, as effective
June 1, 2003, is amended by adding Subchapter K to read as follows:
SUBCHAPTER K. PROVISION OF STATE EMPLOYEE
HEALTH CARE BENEFITS THROUGH HEALTH REIMBURSEMENT ARRANGEMENTS
Sec. 1551.501. DEFINITIONS. In this subchapter:
(1) "Account" means a health reimbursement
arrangement established under this subchapter for a participating
employee or annuitant.
(2) "Account administrator" means a person qualified
to act as an account administrator under Section 1551.505.
(3) "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.
(4) "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.
(5) "Participant" means an employee or annuitant
enrolled in the program.
(6) "Program" means the health reimbursement
arrangement program established under this subchapter.
(7) "Qualified health care expense" means an expense
paid by a participant for medical care, as defined by 26 U.S.C.
Section 213(d), as amended, for the participant or the
participant's dependents as defined by 26 U.S.C. Section 152, as
amended.
Sec. 1551.502. ESTABLISHMENT OF PROGRAM. (a) The Texas
state employees health reimbursement arrangement program is
established for the benefit of state employees and annuitants and
their dependents.
(b) The board of trustees shall adopt rules, plans, and
procedures as necessary to administer this subchapter.
Sec. 1551.503. CONTRACTS. On a competitive bid basis, the
board of trustees shall, as necessary to implement this subchapter,
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 board of
trustees in the capacity of account administrator.
Sec. 1551.504. REQUIREMENTS FOR HEALTH REIMBURSEMENT
ARRANGEMENTS. (a) The board of trustees shall request in writing a
ruling or opinion from the Internal Revenue Service as to whether
health reimbursement arrangements adopted under this subchapter
and the state rules governing those accounts qualify the accounts
for appropriate federal tax exemptions. Based on the response of
the Internal Revenue Service, the board of trustees shall:
(1) modify the rules, plans, and procedures adopted
under Section 1551.502 as necessary to ensure the qualification of
those arrangements 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 board of trustees and approved by the Internal Revenue
Service, the board of trustees shall:
(1) solicit bids for the development and establishment
of the health reimbursement arrangement program; and
(2) provide information to participating employees
and annuitants regarding the operation of the health reimbursement
arrangements adopted under this subchapter.
Sec. 1551.505. ACCOUNT ADMINISTRATOR. (a) The following
persons may act as an account administrator under this subchapter:
(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 board of trustees.
(c) The account administrator is the fiduciary of the
participating employee or annuitant who has an account under this
subchapter.
Sec. 1551.506. ANNUAL REPORT OF PROGRAM ACTIVITIES. (a)
Not later than June 1 of each year, the board of trustees 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 health
reimbursement arrangement program in the calendar year preceding
the year in which the report is submitted.
Sec. 1551.507. REQUIRED PARTICIPATION; PARTICIPATION
OBLIGATIONS. (a) Each state agency shall participate in the
health reimbursement arrangement program as provided by this
subchapter.
(b) Participation in the health reimbursement arrangement
program includes compliance with rules adopted by the board of
trustees for the administration of the program and provision of a
notice to each employee and annuitant as prescribed by the board of
trustees 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 or annuitant may obtain information about:
(1) the coverage offered by the program;
(2) eligibility requirements for and costs of that
coverage;
(3) the contribution that the employee or annuitant is
eligible to receive from the state for the costs of the coverage;
and
(4) other information considered useful by the board
of trustees.
Sec. 1551.508. PROVISION OF COVERAGE. The health
reimbursement arrangement program shall provide, through health
reimbursement arrangements, health benefit plan coverage as
provided by this subchapter to an employee or annuitant who is
eligible for that coverage under this chapter and, as provided by
this chapter, to that person's dependents.
Sec. 1551.509. COVERAGE PLANS. (a) The health
reimbursement arrangement program must include:
(1) a primary care coverage plan; and
(2) a catastrophic care coverage plan.
(b) The catastrophic care coverage plan must be less
expensive than the primary care coverage plan for employee-only and
employee and dependents coverage and annuitant-only and annuitant
and dependents coverage.
(c) The board of trustees shall establish an annual
deductible of $4,000 for the catastrophic care coverage plan
provided in conjunction with the health reimbursement arrangement
program.
Sec. 1551.510. PARTICIPATION BY EMPLOYEES AND
ANNUITANTS. (a) Each employee and each annuitant is eligible to
participate in the health reimbursement arrangement program
established under this subchapter. An employee or annuitant who
elects to participate shall be enrolled in the primary care
coverage plan unless the employee or annuitant elects in writing to
participate only in the catastrophic care coverage plan.
(b) Participation in the health reimbursement arrangement
program qualifies an employee or annuitant to receive a
contribution to the employee's or annuitant's account, as
authorized under Section 1551.515. An employee or annuitant who
elects not participate in the program is ineligible to receive a
contribution.
Sec. 1551.511. COVERAGE FOR DEPENDENTS. (a) A
participating employee or annuitant is entitled to obtain for a
dependent of the participating employee or annuitant coverage in
the plan selected by the employee or annuitant in the manner
determined by the board of trustees.
(b) The participating employee or annuitant shall make any
required additional contribution payments for the dependent
coverage in the manner prescribed by the board of trustees.
(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.
Sec. 1551.512. IDENTIFICATION CARDS. (a) The account
administrator shall issue to each participating employee and
annuitant an identification card indicating:
(1) the name of the employee or annuitant and any
dependent of the employee or annuitant for whom eligible expenses
may be paid under the health reimbursement arrangement program;
(2) the name, address, and phone number of the account
administrator; and
(3) a description of the coverage plan in which the
employee or annuitant is participating.
(b) The account administrator shall issue a duplicate
identification card to each dependent for whom eligible expenses
may be paid under the program.
Sec. 1551.513. USE OF ACCOUNT. (a) The account
administrator shall use money in an employee's or annuitant's
account to pay:
(1) the costs of the health benefit plan coverage
selected by:
(A) the employee for the employee and the
employee's dependents; or
(B) the annuitant for the annuitant and the
annuitant's dependents; and
(2) any additional eligible medical expenses of the
participating employee, annuitant, or dependents or to reimburse
the employee or annuitant 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 annuitant or under another insurance policy, including
a motor vehicle or workers' compensation insurance policy.
Sec. 1551.514. 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.
Sec. 1551.515. STATE CONTRIBUTION. For each participating
employee or annuitant, the state shall annually contribute $3,000
or the amount specified in the General Appropriations Act to the
health reimbursement arrangement established for that employee or
annuitant for the payment of qualified health care expenses if the
board of trustees has determined that those accounts meet the
requirements described by Section 1551.504.
Sec. 1551.516. EMPLOYEE CONTRIBUTIONS. (a) Each
participating employee or annuitant shall contribute any amounts
required to cover health benefit options selected by the employee
beyond the state contribution under Section 1551.515.
(b) The participating employee or annuitant shall make the
contributions in the manner prescribed by the board of trustees.
(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.
Sec. 1551.517. CONFIDENTIALITY OF RECORDS. (a) Section
1551.063 applies to information in records relating to an employee,
annuitant, or other participant under the health reimbursement
arrangement program.
(b) The program may disclose to a health benefit plan
provider information in the records of an individual that the board
of trustees determines is necessary to administer the program.
Sec. 1551.518. 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 subchapter must provide
for an accounting to the board of trustees 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 board of trustees.
(d) Each health benefit plan provider shall prepare any
other report required by rule by the board of trustees.
(e) A health benefit plan provider may not assess an
additional charge for preparation of an accounting report.
Sec. 1551.519. ASSISTANCE. In implementing and
administering this subchapter, the board of trustees may obtain the
assistance of any state agency the board of trustees considers
appropriate.
Sec. 1551.520. ROLLOVER. (a) At the end of a plan year,
the unexpended and unobligated balance of any state contribution
deposited in an employee's or annuitant's health reimbursement
arrangement under this subchapter during that plan year remains in
the health reimbursement arrangement and may be spent only as
authorized by this subchapter 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.
SECTION 1.10. Sections 1551.003(5) and (12), 1551.005,
1551.060, 1551.205, 1551.206, 1551.207, 1551.302, 1551.309,
1551.402, 1551.403, and 1551.404, Insurance Code, are repealed.
SECTION 1.11. The Employees Retirement System of Texas
shall develop the health reimbursement arrangement program to be
implemented under Chapter 1551, Insurance Code, as amended by this
article, beginning September 1, 2003, and shall develop enrollment
requirements for the program during 2004, with coverage beginning
September 1, 2004.
SECTION 1.12. The Employees Retirement System of Texas
shall continue to operate the health benefit coverage offered under
the group benefits program established under Chapter 1551,
Insurance Code, as that chapter existed before amendment by this
article, until September 1, 2004.
SECTION 1.13. Not later than July 31, 2004, the Employees
Retirement System of Texas shall provide written information to
employees eligible to participate in the health reimbursement
arrangement program under Chapter 1551, Insurance Code, as amended
by this article, that provides a general description of the
requirements for such a program as adopted under Chapter 1551,
Insurance Code, as amended by this article.
SECTION 1.14. During the initial implementation of Chapter
1551, Insurance Code, as amended by this article, and
notwithstanding any bidding requirements or other requirements set
forth in Chapter 1551, Insurance Code, as that chapter existed
before amendment by this article, the Employees Retirement System
of Texas may amend any agreement in effect on September 1, 2003,
that it has entered into as necessary to comply with Chapter 1551,
Insurance Code, as amended by this article.
SECTION 1.15. The unexpended balance as of September 1,
2004, of any payments made by a state employee for participation in
a cafeteria plan under Section 1551.206, Insurance Code, as that
section existed before repeal by this Act, shall be held in trust
with the comptroller for the exclusive benefit for that employee
and that employee's beneficiaries.
SECTION 1.16. Except as otherwise provided by this Act,
this Act takes effect September 1, 2003.