78R6187 PB-D

By:  Delisi                                                       H.B. No. 3360


A BILL TO BE ENTITLED
AN ACT
relating to the establishment of a defined contribution health care benefits program for state employees, retired state employees, active school employees, and retired school employees that is operated through the establishment of medical savings accounts. 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 to read as follows: Sec. 1551.002. PURPOSES. The purposes of this chapter are to: (1) [provide uniformity in life, accident, and health benefit coverages for all state officers and employees and their dependents; [(2)] enable the state to attract and retain competent and able employees by providing employees and their dependents with life, accident, and health benefit coverages at least equal to those commonly provided in private industry; (2) [(3)] foster, promote, and encourage employment by and service to the state as a career profession for individuals of high standards of competence and ability; (3) [(4)] recognize and protect the state's investment in each permanent employee by promoting and preserving economic security and good health among employees and their dependents; (4) [(5)] foster and develop high standards of employer-employee relationships between the state and its employees; and (5) [(6)] recognize the long and faithful service and dedication of state officers and employees and encourage them to remain in state service until eligible for retirement by providing health benefits for them 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) "Medical savings account program" 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, annunitant, 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 medical savings account program in a manner [health benefit plans] that permits [permit] access to high-quality, cost-effective health care; (13) design, implement, and monitor the medical savings account 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 medical savings account [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 medical savings account program 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 medical savings account program 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 MEDICAL SAVINGS ACCOUNT PROGRAM
Sec. 1551.501. DEFINITIONS. In this subchapter: (1) "Account" means a medical savings account 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 medical savings account 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 medical savings account 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 MEDICAL SAVINGS ACCOUNTS. (a) The board of trustees shall request in writing a ruling or opinion from the Internal Revenue Service as to whether medical savings accounts 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 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 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 medical savings account program; and (2) provide information to participating employees and annuitants regarding the operation of the medical savings accounts 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 medical savings account 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 medical savings account program as provided by this subchapter. (b) Participation in the medical savings account 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 medical savings account program shall provide, through medical savings accounts, 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 medical savings account 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 medical savings account program. Sec. 1551.510. PARTICIPATION BY EMPLOYEES AND ANNUITANTS. (a) Each employee and each annuitant is eligible to participate in the medical savings account 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 medical savings account 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 to 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. 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 medical savings account 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 medical savings account 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. 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 medical savings account 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. At the end of a plan year, the unexpended and unobligated balance of any state contribution deposited in an employee's or annuitant's medical savings account under this subchapter during that plan year remains in the medical savings account and may be spent only as authorized by this subchapter for a qualified health care expense. 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 medical savings account 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 medical savings account 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.
ARTICLE 2. PROGRAM FOR ACTIVE SCHOOL EMPLOYEES
PART A. MEDICAL SAVINGS ACCOUNT PROGRAM
SECTION 2.01. Subtitle H, Title 8, Insurance Code, is amended by adding Chapter 1579 to read as follows:
CHAPTER 1579. TEXAS PUBLIC SCHOOL EMPLOYEES
MEDICAL SAVINGS ACCOUNT PROGRAM
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1579.001. DEFINITIONS. In this chapter: (1) "Account" means a medical savings account 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 medical savings account program 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 medical savings account 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 MEDICAL SAVINGS ACCOUNT
PROGRAM; POWERS AND DUTIES OF BOARD OF TRUSTEES
Sec. 1579.051. CREATION OF PROGRAM; ADMINISTRATION; RULES. (a) The Texas public school employees medical savings account 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 medical savings account 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 MEDICAL SAVINGS ACCOUNTS. (a) The trustee shall request in writing a ruling or opinion from the Internal Revenue Service as to whether the medical savings accounts adopted under this chapter 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 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 medical savings account program; and (2) provide information to participating employees regarding the operation of the medical savings accounts 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 medical savings accounts, 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 medical savings account 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. 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 medical savings account 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.
[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. At the end of a plan year, the unexpended and unobligated balance of any state contribution deposited in a participating employee's medical savings account 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.
PART B. CONFORMING AMENDMENTS--EDUCATION CODE
SECTION 2.02. Sections 22.004(a), (b), (c), (g), and (j), Education Code, are amended to read as follows: (a) A district shall participate in the medical savings account [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 medical savings account 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 medical savings account [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 2.03. 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 2.04. 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 2.05. 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 2.06. 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 2.07. 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 2.08. Sections 26.08(k), (l), and (m), Tax Code, are repealed.
PART F. REPEALER
SECTION 2.09. 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 2.10. The Teacher Retirement System of Texas shall develop the medical savings account 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 2.11. 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 2.12. Not later than July 31, 2004, the Teacher Retirement System of Texas shall provide written information to school districts eligible to participate in the medical savings account 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 2.13. 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 2.14. (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.
ARTICLE 3. PROGRAM FOR RETIRED SCHOOL EMPLOYEES
SECTION 3.01. (a) Section 1575.001, Insurance Code, is amended to conform to Section 3.02, Chapter 1187, Acts of the 77th Legislature, Regular Session, 2001, to read as follows: Sec. 1575.001. SHORT TITLE. This chapter may be cited as the Texas Public School Retired Employees Group Benefits Act. (b) Section 3.02, Chapter 1187, Acts of the 77th Legislature, Regular Session, 2001, is repealed. SECTION 3.02. (a) Section 1575.002, Insurance Code, is amended to conform to Section 3.03, Chapter 1187, Acts of the 77th Legislature, Regular Session, 2001, by amending Subdivisions (4), (5), and (7) and further amended by adding Subdivision (6-a) to read as follows: (4) "Fund" means the Texas public school retired employees group insurance fund. (5) "Group program" means the Texas Retired Public School Employees Group Insurance Program authorized by this chapter. (6-a) "Medical savings account program" means the program operated under Subchapter L. (7) "Trustee" ["System"] means the Teacher Retirement System of Texas. (b) Section 1575.003(1), Insurance Code, is amended 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 subdivision was derived, to read as follows: (1) "Dependent" means: (A) the spouse of a retiree [or active employee]; (B) an unmarried child of a retiree[, active employee,] or deceased active member [employee] if the child is younger than 25 years of age, including: (i) an adopted child; (ii) a foster child, stepchild, or other child who is in a regular parent-child relationship; or (iii) a recognized natural child; (C) a retiree's [or active employee's] recognized natural child, adopted child, foster child, stepchild, or other child who[, without regard to the age of the child, if the child] is in a regular parent-child relationship and who[,] lives with or has his or her [the child's] care provided by the retiree[, active employee,] or surviving spouse on a regular basis regardless of the child's age, if the child[, and] is mentally retarded or physically incapacitated to an extent that the child is dependent on the retiree[, active employee,] or surviving spouse for care or support, as determined by the trustee [board of trustees]; or (D) a deceased active member's [employee's] recognized natural child, adopted child, foster child, stepchild, or other child who is in a regular parent-child relationship, without regard to the age of the child, if, while the active member [employee] was alive, the child: (i) lived with or had the child's care provided by the active member [employee] on a regular basis; and (ii) was mentally retarded or physically incapacitated to an extent that the child was dependent on the active member [employee] or surviving spouse for care or support, as determined by the trustee [board of trustees]. (c) Section 3.03, Chapter 1187, Acts of the 77th Legislature, Regular Session, 2001, is repealed. SECTION 3.03. (a) Section 1575.005, Insurance Code, is amended to conform to Section 3.07, 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, to read as follows: Sec. 1575.005. ISSUANCE OF CERTIFICATE OF COVERAGE. At the time and in the circumstances specified by the trustee [board of trustees], a carrier shall issue to each retiree, surviving spouse, or surviving dependent child[, or active employee of a participating school district] covered under this chapter a certificate of coverage that: (1) states the benefits to which the person is entitled; (2) states to whom the benefits are payable; (3) states to whom a claim must be submitted; and (4) summarizes the provisions of the coverage principally affecting the person. (b) Section 3.07, Chapter 1187, Acts of the 77th Legislature, Regular Session, 2001, is repealed. SECTION 3.04. (a) Section 1575.052, Insurance Code, is amended to conform to Section 3.05, 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 amended, to read as follows: Sec. 1575.052. AUTHORITY TO ADOPT RULES AND PROCEDURES; OTHER AUTHORITY. (a) The trustee [board of trustees] may adopt rules, plans, procedures, and orders reasonably necessary to implement this chapter, including: (1) minimum benefit and financing standards for group coverage for retirees, dependents, surviving spouses, and surviving dependent children[, and active employees of participating school districts]; (2) basic and optional group coverage for retirees, dependents, surviving spouses, and surviving dependent children[, and active employees of participating school districts]; (3) procedures for contributions and deductions; (4) periods for enrollment and selection of optional coverage and procedures for enrolling and exercising options under the group program; (5) procedures for claims administration; (6) procedures to administer the fund; and (7) a timetable for: (A) developing minimum benefit and financial standards for group coverage; (B) establishing group plans; and (C) taking bids and awarding contracts for group plans. (b) The trustee [board of trustees] may: (1) study the operation of all group coverage provided under this chapter; and (2) contract for advice and counsel in implementing and administering the group program with an independent and experienced group insurance consultant or actuary [who does not receive a commission from any insurance company]. (c) The trustee by rule shall establish the medical savings account program under Subchapter L. (b) Section 3.05, Chapter 1187, Acts of the 77th Legislature, Regular Session, 2001, is repealed. SECTION 3.05. (a) Subchapter B, Chapter 1575, Insurance Code, is amended to conform to Section 3A, Article 3.50-4, Insurance Code, as added by Section 3.01, Chapter 1187, Acts of the 77th Legislature, Regular Session, 2001, by adding Section 1575.056 and further amending that section to read as follows: Sec. 1575.056. TRANSFER OF RECORDS RELATING TO ACTIVE EMPLOYEES. The trustee shall, not later than the 30th day after the date on which the medical savings account program established under Chapter 1579 is implemented, transfer from the program any records relating to active employees participating in any group health coverage program established under this chapter and operated under the jurisdiction of the trustee. (b) Section 3A, Article 3.50-4, Insurance Code, as added by Section 3.01, Chapter 1187, Acts of the 77th Legislature, Regular Session, 2001, is repealed. SECTION 3.06. (a) Section 1575.106, Insurance Code, is amended to conform to Section 3.06, 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, to read as follows: Sec. 1575.106. COMPETITIVE BIDDING REQUIREMENTS; RULE. (a) A contract to provide group benefits under this chapter may be awarded only through competitive bidding under rules adopted by the trustee [board of trustees]. (b) [The rules: [(1) must require that a prospective bidder provide, for each area consisting of a county and all adjacent counties, information on the number and types of qualified providers willing to participate in the plan for which the bid is made; and [(2) may provide criteria for determining whether a provider is qualified. [(c) The board of trustees may not require a bidder to demonstrate a minimum standard of provider participation. [(d)] The trustee [board of trustees] shall submit for competitive bidding at least every six years each contract under this chapter. (b) Section 1575.107(a), Insurance Code, is amended to conform to Section 3.06, Chapter 1187, Acts of the 77th Legislature, Regular Session, 2001, and to conform more closely to the source law from which the subsection was derived, to read as follows: (a) In awarding a contract to provide group benefits under this chapter, the trustee [board of trustees] is not required to select the lowest bid and[: [(1) shall consider information obtained under Section 1575.106; and [(2)] may consider any relevant criteria, including the bidder's: (1) [(A)] ability to service contracts; (2) [(B)] past experiences; and (3) [(C)] financial stability. (c) Section 3.06, Chapter 1187, Acts of the 77th Legislature, Regular Session, 2001, is repealed. SECTION 3.07. Section 1575.151, Insurance Code, is amended to conform more closely to the source law from which the section was derived, and further amended to read as follows: Sec. 1575.151. TYPES OF COVERAGES. (a) The trustee [board of trustees] may include in a plan any coverage it considers advisable, including: (1) life insurance; (2) accidental death and dismemberment coverage; and (3) [coverage for: [(A) hospital care and benefits; [(B) surgical care and treatment; [(C) medical care and treatment; [(D) dental care; [(E) eye care; [(F) obstetrical benefits; [(G) long-term care; [(H) prescribed drugs, medicines, and prosthetic devices; and [(I) supplemental benefits, supplies, and services in accordance with this chapter; and [(4)] protection against loss of salary. (b) The group coverage plan shall provide health benefit coverage through the medical savings account program established under Subchapter L. SECTION 3.08. (a) Section 1575.153, Insurance Code, is amended to conform to Section 3.10, 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, to read as follows: Sec. 1575.153. AUTOMATIC BASIC COVERAGE. A retiree [or active employee of a participating school district] who applies for coverage during an enrollment period may not be denied coverage in a basic plan provided under this chapter unless the trustee [board of trustees] finds under Subchapter K that the individual defrauded or attempted to defraud the group program. (b) Section 3.10, Chapter 1187, Acts of the 77th Legislature, Regular Session, 2001, is repealed. SECTION 3.09. (a) Section 1575.160, Insurance Code, is amended to conform to Section 3.09, 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, to read as follows: Sec. 1575.160. GROUP LIFE OR ACCIDENTAL DEATH AND DISMEMBERMENT INSURANCE: PAYMENT OF CLAIM. The amount of group life insurance or group accidental death and dismemberment insurance covering a retiree, [active employee,] dependent, surviving spouse, or surviving dependent child on the date of death shall be paid, on the establishment of a valid claim, only to: (1) the beneficiary designated by the person in a signed and witnessed document received before death in the office of the trustee system; or (2) a person in the order prescribed by Section 824.103(b), Government Code, if a beneficiary is not properly designated or a beneficiary does not exist. (b) Section 3.09, Chapter 1187, Acts of the 77th Legislature, Regular Session, 2001, is repealed. SECTION 3.10. Section 1575.201, Insurance Code, is amended to read as follows: Sec. 1575.201. [ADDITIONAL] STATE CONTRIBUTIONS FOR HEALTH CARE. For each participating retiree, the [The] state through the trustee [system] shall annually contribute from money in the fund $3,000 or the amount specified in the General Appropriations Act to the medical savings account established for that retiree for the payment of qualified health care expenses if the trustee has determined that those accounts meet the requirements described by Section 1575.554 [the total cost of the basic plan covering each participating retiree]. SECTION 3.11. Section 1575.202, Insurance Code, is amended to read as follows: Sec. 1575.202. ADDITIONAL STATE CONTRIBUTION FOR OTHER COVERAGES [BASED ON ACTIVE EMPLOYEE COMPENSATION]. [(a)] Each state fiscal year, the state shall contribute to the fund an amount as determined by the General Appropriations Act to pay all or part of coverages provided under the plan other than health benefit coverages provided through the medical savings account program [equal to 0.5 percent of the salary of each active employee]. [(b) The state may contribute to the fund an amount in addition to the contribution required by Subsection (a).] SECTION 3.12. Section 1575.205, Insurance Code, is amended to conform more closely to the source law from which the section was derived, to read as follows: Sec. 1575.205. PARTICIPANT CONTRIBUTION FOR OPTIONAL PLAN. (a) A retiree, surviving spouse, or surviving dependent child who elects an optional plan shall pay a monthly contribution to cover the cost of the plan. The trustee [board of trustees] shall adopt rules for the collection of additional contributions. (b) As a condition of electing coverage under an optional plan, a retiree or surviving spouse must, in writing, authorize the trustee [board of trustees] to deduct the amount of the contribution from the person's monthly annuity payment. (c) The trustee [board of trustees] may spend a part of the money received for the group program to offset a part of the costs for optional coverage paid by retirees if the expenditure does not reduce the period the group program is projected to remain financially solvent by more than one year in a biennium. SECTION 3.13. Section 1575.207, Insurance Code, is amended to conform more closely to the source law from which the section was derived, to read as follows: Sec. 1575.207. INTEREST ASSESSED ON LATE PAYMENT OF DEPOSITS BY EMPLOYING SCHOOL DISTRICTS. An employing school district that does not remit to the trustee [board of trustees] all contributions required by this subchapter before the 11th day after the last day of the month shall pay to the fund: (1) the contributions; and (2) interest on the unpaid amounts at the annual rate of six percent compounded monthly. SECTION 3.14. Section 1575.208, Insurance Code, is amended to conform more closely to the source law from which the section was derived, to read as follows: Sec. 1575.208. CERTIFICATION OF AMOUNT NECESSARY TO PAY STATE CONTRIBUTIONS. Not later than October 31 preceding each regular session of the legislature, the trustee [board of trustees] shall certify the amount necessary to pay the state contributions to the fund to: (1) the Legislative Budget Board; and (2) the budget division of the governor's office. SECTION 3.15. Section 1575.209, Insurance Code, is amended to conform more closely to the source law from which the section was derived, to read as follows: Sec. 1575.209. CERTIFICATION OF AMOUNT OF STATE CONTRIBUTIONS. Not later than August 31 of each year, the trustee [board of trustees] shall certify to the comptroller the estimated amount of state contributions to be received by the fund for the next fiscal year under the appropriations authorized by this chapter. SECTION 3.16. Section 1575.210(a), Insurance Code, is amended to conform more closely to the source law from which the section was derived, to read as follows: (a) Contributions allocated and appropriated under this subchapter for a state fiscal year shall be: (1) paid from the general revenue fund in equal monthly installments; (2) based on the estimated amount certified by the trustee [board of trustees] to the comptroller for that year; and (3) subject to any express limitations specified in the Act making the appropriation. SECTION 3.17. Section 1575.253, Insurance Code, is amended to conform more closely to the source law from which the section was derived, to read as follows: Sec. 1575.253. MONTHLY CERTIFICATION. An employer shall monthly certify to the trustee [board of trustees] in a form prescribed by the trustee [board]: (1) the total amount of salary paid from federal funds and private grants; and (2) the total amount of state contributions provided by the funds and grants. SECTION 3.18. Section 1575.254, Insurance Code, is amended to conform more closely to the source law from which the section was derived, to read as follows: Sec. 1575.254. MONTHLY MAINTENANCE OF INFORMATION. An employer shall monthly maintain: (1) the name of each employee whose salary is paid wholly or partly from a grant; (2) the source of the grant; (3) the amount of the employee's salary paid from the grant; (4) the amount of the money provided by the grant for state contributions for the employee; and (5) any other information the trustee [board of trustees] determines is necessary to enforce this subchapter. SECTION 3.19. Section 1575.255, Insurance Code, is amended to conform more closely to the source law from which the section was derived, to read as follows: Sec. 1575.255. PROOF OF COMPLIANCE. The trustee [board of trustees] may: (1) require an employer to report an application for federal or private money; (2) require evidence that the application includes a request for funds available to pay state contributions for active employees; and (3) examine the records of an employer to determine compliance with this subchapter and rules adopted under this subchapter. SECTION 3.20. Section 1575.257(b), Insurance Code, is amended to conform more closely to the source law from which the section was derived, to read as follows: (b) The trustee [board of trustees] shall report an alleged noncompliance with this subchapter to the attorney general, the Legislative Budget Board, the comptroller, and the governor. SECTION 3.21. (a) Section 1575.301, Insurance Code, is amended to conform to Section 3.11, 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, to read as follows: Sec. 1575.301. FUND; ADMINISTRATION. (a) The retired [Texas public school] employees group insurance fund is a trust fund with the comptroller, who is custodian of the fund. (b) The trustee [board of trustees] shall administer the fund. (b) The heading to Subchapter G, Chapter 1575, Insurance Code, is amended to conform to Section 3.11, Chapter 1187, Acts of the 77th Legislature, Regular Session, 2001, to read as follows:
SUBCHAPTER G. RETIRED [TEXAS PUBLIC] SCHOOL EMPLOYEES
GROUP INSURANCE FUND
(c) Section 3.11, Chapter 1187, Acts of the 77th Legislature, Regular Session, 2001, is repealed. SECTION 3.22. Section 1575.303, Insurance Code, is amended to conform more closely to the source law from which the section was derived, and further amended, to read as follows: Sec. 1575.303. PAYMENTS FROM FUND. (a) The following shall, without state fiscal year limitation, be paid from the fund: (1) the appropriate premiums to a carrier providing group coverage under a plan under this chapter, including payments made under the medical savings account program established under Subchapter L; (2) claims for benefits under the group coverage; and (3) money spent by the trustee [board of trustees] to administer the group program. (b) The appropriate portion of the contributions to the fund to provide for incurred but unreported claim reserves and contingency reserves, as determined by the trustee [board of trustees], shall be retained in the fund. SECTION 3.23. Section 1575.304, Insurance Code, is amended to conform more closely to the source law from which the section was derived, to read as follows: Sec. 1575.304. TRANSFER OF CERTAIN CONTRIBUTIONS. The trustee [board of trustees] shall transfer into the fund the amounts deducted from annuities for contributions. SECTION 3.24. Section 1575.305, Insurance Code, is amended to conform more closely to the source law from which the section was derived, to read as follows: Sec. 1575.305. INVESTMENT OF FUND. The trustee [board of trustees] may invest money in the fund in the manner provided by Subchapter D, Chapter 825, Government Code, for assets of the system. SECTION 3.25. Section 1575.404, Insurance Code, is amended to conform more closely to the source law from which the section was derived, to read as follows: Sec. 1575.404. VACANCY. The trustee [board of trustees] shall fill a vacancy on the committee by appointing a person who meets the qualifications applicable to the vacated position. SECTION 3.26. Section 1575.405(a), Insurance Code, is amended to conform more closely to the source law from which the section was derived, to read as follows: (a) The committee shall meet: (1) at least twice each year; and (2) at the call of the trustee [board of trustees]. SECTION 3.27. Section 1575.406, Insurance Code, is amended to conform more closely to the source law from which the section was derived, to read as follows: Sec. 1575.406. DUTIES. The committee shall: (1) hold public hearings on group coverage; (2) recommend to the trustee [board of trustees] minimum standards and features of a plan under the group program that the committee considers appropriate; and (3) recommend to the trustee [board of trustees] desirable changes in rules and legislation affecting the group program. SECTION 3.28 Section 1575.407, Insurance Code, is amended to conform more closely to the source law from which the section was derived, to read as follows: Sec. 1575.407. PROCEDURAL RULES. The trustee [board of trustees] shall adopt procedural rules for the committee to follow in implementing its powers and duties under this subchapter. SECTION 3.29. Sections 1575.451(b) and (c), Insurance Code, are amended to conform more closely to the source law from which the section was derived, to read as follows: (b) Group coverage purchased under this chapter must provide for an accounting to the trustee [board of trustees] by each carrier providing the coverage. (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 [board of trustees]. SECTION 3.30. Section 1575.452, Insurance Code, is amended to conform more closely to the source law from which the section was derived, and further amended, to read as follows: Sec. 1575.452. ANNUAL REPORT. Not later than the 180th day after the last day of each state fiscal year, the trustee [board of trustees] shall submit a written report to the department concerning the group coverages provided to and the benefits and services being received by individuals covered under this chapter. The report must include a summary of the report required under Section 1575.556. SECTION 3.31. Section 1575.453, Insurance Code, is amended to conform more closely to the source law from which the section was derived, to read as follows: Sec. 1575.453. STUDY AND REPORT BY TRUSTEE [BOARD OF TRUSTEES]. (a) The trustee [board of trustees] shall study the operation and administration of this chapter, including: (1) conducting surveys and preparing reports on financing group coverages and health benefit plans available to participants; and (2) studying the experience and projected cost of coverage. (b) The trustee [board of trustees] shall report to the legislature at each regular session on the operation and administration of this chapter. SECTION 3.32. Section 1575.454, Insurance Code, is amended to conform more closely to the source law from which the section was derived, to read as follows: Sec. 1575.454. REPORTS BY AND EXAMINATION OF CARRIER. Each contract entered into under this chapter between the trustee [board of trustees] and a carrier must require the carrier to: (1) furnish to the trustee [board] in a timely manner reasonable reports that the trustee [board] determines are necessary to implement this chapter; and (2) permit the trustee [board] and the state auditor to examine records of the carrier as necessary to implement this chapter. SECTION 3.33. (a) Section 1575.456(a), Insurance Code, is amended to conform to Section 3.13, Chapter 1187, Acts of the 77th Legislature, Regular Session, 2001, and to conform more closely to the source law from which the subsection was derived, and further amended, to read as follows: (a) Section 825.507, Government Code, concerning confidentiality and disclosure of records, applies to [information in] 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 system relating to a retiree, active employee, annuitant, or beneficiary under the group program. (b) Section 3.13, Chapter 1187, Acts of the 77th Legislature, Regular Session, 2001, is repealed. SECTION 3.34. (a) Section 1575.501, Insurance Code, is amended to conform to Section 3.12, 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, to read as follows: Sec. 1575.501. EXPULSION FOR FRAUD. After notice and hearing as provided by this subchapter, the trustee [board of trustees] may expel from participation in the group program a retiree, [active employee,] dependent, surviving spouse, or surviving dependent child who: (1) submits a fraudulent claim or application for coverage under the group program; or (2) defrauds or attempts to defraud a health benefit plan offered under the group program. (b) Section 3.12, Chapter 1187, Acts of the 77th Legislature, Regular Session, 2001, is repealed. SECTION 3.35. Section 1575.502, Insurance Code, is amended to conform more closely to the source law from which the section was derived, to read as follows: Sec. 1575.502. HEARING. On receipt of a complaint or on its own motion, the trustee [board of trustees] may call and hold a hearing to determine whether an individual has acted in the manner described by Section 1575.501. SECTION 3.36. Section 1575.504, Insurance Code, is amended to conform more closely to the source law from which the section was derived, to read as follows: Sec. 1575.504. EXPULSION AT CONCLUSION OF HEARING. At the conclusion of the hearing under Section 1575.502, if the trustee [board of trustees] determines that the individual acted in the manner described by Section 1575.501, the trustee [board] shall expel the individual from participation in the group program. SECTION 3.37. Section 1575.505, Insurance Code, is amended to conform more closely to the source law from which the section was derived, and further amended, to read as follows: Sec. 1575.505. EFFECT OF EXPULSION. An individual expelled from participation in the group program may not be covered by a [health benefit] plan offered under the group program, including the medical savings account program, for a period determined by the trustee [board of trustees], not to exceed five years, beginning on the date the expulsion takes effect. SECTION 3.38. Section 1575.506, Insurance Code, is amended to conform more closely to the source law from which the section was derived, to read as follows: Sec. 1575.506. APPEAL. An appeal of a determination by the trustee [board of trustees] under this subchapter is under the substantial evidence rule. SECTION 3.39. Chapter 1575, Insurance Code, is amended by adding Subchapter L to read as follows:
SUBCHAPTER L. PROVISION OF RETIREE HEALTH CARE BENEFITS
THROUGH MEDICAL SAVINGS ACCOUNT PROGRAM
Sec. 1575.551. DEFINITIONS. In this subchapter: (1) "Account" means a medical savings account established under this subchapter for a participating retiree. (2) "Account administrator" means a person qualified to act as an account administrator under Section 1575.555. (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 a retiree enrolled in the program. (6) "Program" means the medical savings account 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. 1575.552. ESTABLISHMENT OF PROGRAM. (a) The Texas school retirees medical savings account program is established for the benefit of retirees and their dependents. (b) The trustee shall adopt rules, plans, and procedures as necessary to administer this subchapter. Sec. 1575.553. CONTRACTS. On a competitive bid basis, the trustee 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; and (3) an administering firm to act for the trustee in the capacity of account administrator. Sec. 1575.554. REQUIREMENTS FOR MEDICAL SAVINGS ACCOUNTS. (a) The trustee shall request in writing a ruling or opinion from the Internal Revenue Service as to whether medical savings accounts 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 trustee shall: (1) modify the rules, plans, and procedures adopted under Section 1575.552 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 medical savings account program; and (2) provide information to participating retirees regarding the operation of the medical savings accounts adopted under this subchapter. Sec. 1575.555. 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 trustee. (c) The account administrator is the fiduciary of the participating retiree who has an account under this subchapter. Sec. 1575.556. 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 medical savings account program in the calendar year preceding the year in which the report is submitted. Sec. 1575.557. PARTICIPATION OBLIGATIONS. (a) Each retiree is eligible to participate in the medical savings account program as provided by Subchapter D and this subchapter. (b) Participation in the medical savings account program includes compliance with rules adopted by the trustee for the administration of the program and provision of a notice to each retiree as prescribed by the trustee relating to the existence of the program that contains the address from which a retiree 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 retiree is eligible to receive from the state for the costs of the coverage; and (4) other information considered useful by the trustee. Sec. 1575.558. PROVISION OF COVERAGE. The medical savings account program shall provide, through medical savings accounts, health benefit plan coverage as provided by this subchapter to a retiree who is eligible for that coverage under this subchapter and, as provided by this subchapter, to the retiree's dependents. Sec. 1575.559. COVERAGE PLANS. (a) The medical savings account 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 retiree and retiree and dependents coverage. (c) The trustee shall establish an annual deductible of $4,000 for the catastrophic care coverage plan provided in conjunction with the medical savings account program. Sec. 1575.560. PARTICIPATION BY RETIREES. (a) Each retiree who elects to participate shall be enrolled in the primary care coverage plan unless the retiree elects in writing to participate only in the catastrophic care coverage plan. (b) Participation in the medical savings account program qualifies a retiree to receive a contribution to the retiree's account, as authorized under Section 1575.565. A retiree who elects not to participate in the program is ineligible to receive a contribution. Sec. 1575.561. COVERAGE FOR DEPENDENTS. (a) A participating retiree is entitled to obtain coverage for a dependent of the participating retiree in the plan selected by the retiree in the manner determined by the trustee. (b) The participating retiree shall make any required additional contribution payments for the dependent coverage in the manner prescribed by the trustee. Sec. 1575.562. IDENTIFICATION CARDS. (a) The account administrator shall issue to each participating retiree an identification card indicating: (1) the name of the retiree and any dependent of the retiree for whom eligible expenses may be paid under the medical savings account program; (2) the name, address, and phone number of the account administrator; and (3) a description of the coverage plan in which the retiree 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. 1575.563. USE OF ACCOUNT. (a) The account administrator shall use money in a retiree's account to pay: (1) the costs of the health benefit plan coverage selected by the retiree for the retiree and the retiree's dependents; and (2) any additional eligible medical expenses of the participating retiree or dependents or to reimburse the retiree 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 retiree or under another insurance policy, including a motor vehicle or workers' compensation insurance policy. Sec. 1575.564. 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. 1575.565. STATE CONTRIBUTION. For each participating retiree, the state shall annually contribute to the Texas public school retired employees group insurance fund $3,000 or the amount specified in the General Appropriations Act for distribution to the medical savings account established for that retiree for the payment of qualified health care expenses if the trustee has determined that those accounts meet the requirements described by Section 1575.554. Sec. 1575.566. RETIREE CONTRIBUTIONS. (a) Each participating retiree shall contribute any amounts required to cover health benefit options selected by the retiree beyond the state contribution under Section 1575.565. (b) The participating retiree shall make the contributions in the manner prescribed by the trustee. Sec. 1575.567. CONFIDENTIALITY OF RECORDS. (a) Section 1575.456, applies to records relating to a retiree under the medical savings account 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. 1575.568. 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 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. 1575.569. ASSISTANCE. In implementing and administering this subchapter, the trustee may obtain the assistance of any state agency the trustee considers appropriate. Sec. 1575.570. ROLLOVER. At the end of a plan year, the unexpended and unobligated balance of any state contribution deposited in a retiree's medical savings account under this subchapter during that plan year remains in the medical savings account and may be spent only as authorized by this subchapter for a qualified health care expense. SECTION 3.40. The following laws are repealed: (1) Sections 1575.109, 1575.152, 1575.158, 1575.159, and 1575.204, Insurance Code; and (2) Subchapter H, Chapter 1575, Insurance Code. SECTION 3.41. The Teacher Retirement System of Texas shall develop the medical savings account program to be implemented under Chapter 1575, 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 3.42. The Teacher Retirement System of Texas shall continue to operate the uniform group health coverage program established under Chapter 1575, Insurance Code, as that chapter existed before amendment by this article, until September 1, 2004. SECTION 3.43. Not later than July 31, 2004, the Teacher Retirement System of Texas shall provide written information to retirees eligible to participate in the medical savings account program under Chapter 1575, Insurance Code, as amended by this article, that provides a general description of the requirements for such a program as adopted under Chapter 1575, Insurance Code, as amended by this article. SECTION 3.44. During the initial implementation of Chapter 1575, Insurance Code, as amended by this article, and notwithstanding any bidding requirements or other requirements set forth in Chapter 1575, Insurance Code, as that chapter existed before amendment by this article, the Teacher 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 1575, Insurance Code, as amended by this article.
ARTICLE 4. GENERAL TRANSITION; EFFECTIVE DATE
SECTION 4.01. To the extent of any conflict, this Act prevails over another Act of the 78th Legislature, Regular Session, 2003, relating to nonsubstantive additions to and corrections in enacted codes. SECTION 4.02. Except as otherwise provided by this Act, this Act takes effect September 1, 2003.