BILL ANALYSIS
By: Crownover
Committee Report (Substituted)
BACKGROUND AND PURPOSE
CSHB 1795 provides for the establishment of health savings accounts (HSAs) for ERS members and their dependents.
Health savings accounts (HSAs) are an initiative to encourage consumer-driven health care, under which the cost of care is transparent and individuals can choose care based on need and price shop using available resources. HSAs combine high-deductible health plans (HDHP), which are less expensive than low-deductible health plans, with a savings account specifically dedicated to health care expenses.
The initial cost of care is paid with money accumulated in an individual’s HSA. Once the annual deductible is met, the HDHP covers a portion of any remaining health care costs. Employees are motivated to spend less than the annual contribution to the HSA, because any money not spent by the end of the year rolls forward, continuing to earn interest. HSAs also remain with the individual from job to job as well as into retirement. All contributions to the HSA made by the individual as well as the employer are non-taxable, thus creating another incentive to save money.
CSHB 1795 requires the State of Texas to give state employees the option of choosing an HSA/HDHP instead of a low-deductible health plan. With the cost of health insurance increasing every year, any increase in premiums results in a de facto compensation increase, unseen by the employee. Health Savings Accounts offer a more affordable option in health care. Employees should be given this option to tailor their health insurance to their specific health care needs and the resulting opportunity to use their health care funds more wisely.
RULEMAKING AUTHORITY
It is the committee's opinion that rulemaking authority is expressly granted to the Employees Retirement System of Texas in SECTION 16 of this bill.
ANALYSIS
SECTION 1. Section 1551.002, Insurance Code, is being amended to reflect that there is to be more choice and control by the consumer, rather than simply uniformity, in life, accident, and health benefit coverages for all state officers and employees and their dependents;
SECTION 2. Section 1551.011, Insurance Code, is being amended to reflect that with the creation of the option of a High Deductible Health Plan coupled with a Health Savings Account that there will be a state contribution. This is a conforming change to reflect the addition of Subchapter J to Section 1551 of the Insurance Code.
SECTION 3. Section 1551.055, Insurance Code, is being amended in order to reflect the directive which is being made to ERS that they are to design, implement, and monitor the health savings account program under the creation of Subchapter J. This is a conforming change as to the powers of the Board of Trustees regarding coverage plans because of the addition of Subchapter J.
SECTION 4. Section 1551.201, Insurance Code, is being amended in order to reflect that in the group coverage plans, an option must be given that includes a high deductible health plan used in conjunction with a health savings account.
SECTION 5. Section 1551.301, Insurance Code, is being amended to reflect that this is a conforming change to what is currently in statute relating to the funding of basic coverages. The change relates to an additional option created and offered in the group benefits plan. The additional option is participation in the health savings account program established under Subchapter J.
SECTION 6. Section 1551.303, Insurance Code, is being amended to reflect that this is a conforming change relating to the funding of optional coverages. The change relates to an additional option created and offered in the group benefits plan. The additional option is participation in the health savings account program established under Subchapter J.
SECTION 7. Section 1551.305, Insurance Code, is being amended to reflect that this is a conforming change relating to the cost of basic coverage and also certain other benefits. The change relates to an additional option created and offered in the group benefits plan. The additional option is participation in the health savings account program established under Subchapter J.
SECTION 8. Section 1551.306, Insurance Code, is being amended to reflect that this is a conforming change relating to the payment of costs associated with that which exceeds not only basic coverage but also additional options. The change relates to an additional option created and offered in the group benefits plan. The additional option is participation in the health savings account program established under Subchapter J.
SECTION 9. Section 1551.310, Insurance Code, is being amended to reflect that this is a conforming change relating to the required state contribution for participants and their coverage and also participants' dependents coverages. The change relates to an additional option created and offered in the group benefits plan. The additional option is participation in the health savings account program established under Subchapter J.
SECTION 10. Section 1551.311(a), Insurance Code, is being amended to reflect that this is a conforming change relating to the board of trustees certification to the Legislative Budget Board and the budget division of the governor's office. The change relates to an additional option created and offered in the group benefits plan. The additional option is participation in the health savings account program established under Subchapter J.
SECTION 11. Section 1551.314, Insurance Code, is being amended to reflect that this is a conforming change relating to those required state contributions which are prohibited. The change relates to an additional option created and offered in the group benefits plan. The additional option is participation in the health savings account program established under Subchapter J.
SECTION 12. Section 1551.315(a), Insurance Code, is being amended to reflect that this is a conforming change relating to the governing boards of those participating state agencies. The change relates to an additional option created and offered in the group benefits plan. The additional option is participation in the health savings account program established under Subchapter J.
SECTION 13. Section 1551.318(a), Insurance Code, is being amended to reflect that this is a conforming change relating to the certification by the board of trustees to the governing boards of those participating state agencies. The change relates to an additional option created and offered in the group benefits plan. The additional option is participation in the health savings account program established under Subchapter J.
SECTION 14. Section 1551.319(a), Insurance Code, is being amended to reflect that it is a conforming change relating to the receiving of benefits of a full state contribution by a full-time employee. This is because of the addition of Subchapter J. This conforming change is the additional option of participation in the health savings account program established under Subchapter J.
SECTION 15. Section 1551.401(d), Insurance Code, being amended to reflect that it is a conforming change because of the addition of Subchapter J. This conforming change is the additional option of the health savings account program established under Subchapter J.
SECTION 16. Section 1551, Insurance Code, is amended by adding Subchapter J to read as follows:
Sec. 1551.451. adds DEFINITIONS. In this subchapter various terms are defined:
(1) "High deductible health plan" is defined as one that complies with federal law under Section 223(c) of the IRS Code of 1986.
(2) "Participant" means one who is eligible to participate in group benefits and is enrolled in the program established under this subchapter.
(3) "Program" means the state health savings account program established under this subchapter and includes the health savings account (HSA) and high deductible health plan (HDHP).
(4) "Qualified medical expense" means an expense paid by a participant for medical care or the participants dependents.
Sec. 1551.452. ESTABLISHMENT OF HEALTH SAVINGS ACCOUNT PROGRAM.
(a) The state health savings account program is established for the benefit of those individuals and participants eligible to participate.
(b) Sets forth actions which the board of trustees shall perform:
(1) administer or solicit bids
(2) fund or purchase at least one HDHP
(3) provide information to those eligible to participate regarding the option which is available
(c) The board shall adopt rules, plans, and procedures necessary to administer the subchapter
Sec. 1551.453. QUALIFICATION OF HEALTH SAVINGS ACCOUNTS.
The board of trustees shall request in writing an opinion from the IRS as to whether the program established is compliance with the federal rule. And upon response
(1) modify if necessary
(2) certify with the comptroller
Sec. 1551.454. ACCOUNT ADMINISTRATOR.
Sets forth rules required for the account administrator of the health savings account program. Must meet federal requirements under the IRS Code as well as be experienced.
Sec. 1551.455. REQUIRED PARTICIPATION.
States that each state agency and an institution of higher education shall make this available as well be informative of the fact that this is an option.
Sec. 1551.456. PROVISION OF COVERAGE.
The program shall provide, through a high deductible health plan, health benefit plan coverage to a participant and, as provided by this chapter, to that participant's dependents.
Sec. 1551.457. HIGH DEDUCTIBLE HEALTH PLANS.
The program must include a high deductible health plan.
Sec. 1551.458. PARTICIPATION IN PROGRAM.
States that a participant in the program waives basic coverage and must be enrolled in a HDHP. Also that participation in the program qualifies a participant to receive a contribution to an HSA. An individual who elects to opt into this program is subject to the same rules as those in a group coverage plan offered the group benefits program. Finally, the board has exclusive authority to determine eligibility and set rules regarding eligibility.
Sec. 1551.459. COVERAGE FOR DEPENDENTS; REQUIRED CONTRIBUTIONS.
Sets forth those rules regarding required contributions by the participant and the participants dependent(s).
Sec. 1551.460. IDENTIFICATION CARDS FOR PARTICIPANTS.
The board or account administrator shall issue to each eligible participant and dependent an identification card.
Sec. 1551.461. STATE CONTRIBUTION.
Directs the state to annually contribute to an HDHP in which the participant is enrolled, the same percentage of the cost of coverage for which one who is enrolled in a basic coverage plan. Also, to a participants HAS, an amount determined by the board. This is applicable for each participants dependent who is covered under this plan.
Sec. 1551.462. DETERMINATION OF STATE CONTRIBUTION TO HEALTH SAVINGS ACCOUNT.
Sets forth that the board of trustees shall determine an amount of the state's contribution and the guidelines for which they are to follow when determining that amount.
Sec. 1551.463. PARTICIPANT CONTRIBUTIONS.
Directs that each participant shall contribute any amount required to cover the selected participation in the HDHP that exceeds the state contribution amount. Also that a participant may contribute any amount to the HSA.
Sec. 1551.464. COORDINATION WITH CAFETERIA PLAN.
States that the board of trustees has exclusive authority to determine the eligibility of a participant in the program in any medical flexible savings account that is part of a cafeteria plan offered under this chapter. The board shall adopt rules, plans, and procedures regarding eligibility and coordination of benefits.
Sec. 1551.465. CONFIDENTIALITY OF RECORDS.
States rules regarding confidentiality of records.
Sec. 1551.466. ASSISTANCE.
In implementing and administering the subchapter, the board of trustees may obtain the assistance of any state agency the board considers appropriate.
SECTION 17. This section states that the Employees Retirement System of Texas shall develop the health savings account program to be implemented beginning September 1, 2005, and shall develop enrollment requirements for the program during 2005-2006, with coverage beginning, subject to the Internal Revenue Service qualifying the health savings account program, September 1, 2006.
SECTION 18. This section states that not later than July 31, 2006, and subject to the Internal Revenue Service qualifying the health savings account program, the Employees Retirement System of Texas shall provide written information, to those eligible to participate in the health savings account program, a general description of the requirements for such a program.
SECTION 19. This section states that notwithstanding any bidding requirements or other requirements set forth, the Employees Retirement System of Texas may amend any agreement in effect on September 1, 2006, that it has entered into as necessary to comply with Chapter 1551, Insurance Code, as amended by this Act.
SECTION 20. Directs the Employees Retirement System of Texas to develop and implement the health savings account program in a manner that will be as close to revenue neutral as possible.
SECTION 21. Effective Date.
EFFECTIVE DATE
Except as otherwise provided by this Act, this Act takes effect September 1, 2005.
COMPARISON OF ORIGINAL TO SUBSTITUTE
SECTION 1. Amends Sec. 1551.002 (1) to read: provide uniformity and individual choice and control in life, accident, and health benefit coverages.
The amending of this phrase is more accurate in its description.
SECTION 4. Amends Sec. 1551.201 (d) to read: (d) The board of trustees must give individuals participating in the benefits program the option of choosing a high deductible health plan to be used in conjunction with a health savings account established under Subchapter J. For purposes of this subsection, "high deductible health plan" has the meaning assigned by Section 1551.451.
This change reflects the boards authority to offer participating individuals the option of a high deductible health plan and health savings account.
SECTION 5. The previous SECTION 5 in the original bill was deleted because it could have been viewed that before it created a different benefit structure under the HDHP/HSA. Also, it would have provided an incentive for members with AIDS or serious mental illness to stay in the traditional health plan, thus creating adverse selection.
Because of the deletion of the above mentioned SECTION 5, the remainder of the bill shall be renumbered to reflect this change.
SECTION 16. Amends Chapter 1551, Subchapter J, to delete the term EMPLOYEE from the title STATE EMPLOYEE HEALTH SAVINGS ACCOUNT PROGRAM to now read STATE HEALTH SAVINGS ACCOUNT PROGRAM; the reason for this change is because more than just state employees may be eligible for this program.
Amends Sec. 1551.451 (1) to change the phrase "compatible with" to "complies with".
Amends Sec. 1551.451 (2) (A) by striking under Section 1551.101 because by tying eligibility to 1551.101 it limits participation in the plan by many current group benefit plan (GBP) members.
Amends Sec. 1551.452 (a) by striking the term employee. This clarifies that eligibility should be open to higher ed employees as well as annuitants.
Amends Sec. 1551.452 (b) (3) by adding language about the option to participate.
Amends Sec. 1551.455 to include institutions of higher education in addition to a state agency.
Amends Sec. 1551.458 (a) to be more clear than previously drafted. Simply reworded and interchanged similar terminology.
Amends Sec. 1551.458 (b) and (c) by striking the term "employee" and substituting "individual" or "eligible individual"' clarifying language to ensure consistency throughout the bill.
Sec. 1551.458 (d) is added to because of the need to give the board the authority to coordinate the HSA with TexFlex.
Amends Sec. 1551.460 (a) by striking subsections (1), (2), and (3); these subsections are unnecessary because content of ID card is prescribed by board rule.
Amends Sec. 1551.463 by striking EMPLOYEE and substituting PARTICIPANT; conforming language to ensure consistency.
Amends Sec. 1551.463 (b); again, conforming language to ensure consistency.
Amends Sec. 1551.463 (b) by striking or to any other health savings account; the state can only administer a payroll deduction for one HSA per member, or it will add to the fiscal note.
Amends Sec. 1551.463 (c); again, conforming language to ensure consistency.
The substitute adds Sec. 1551.464.
Sec. 1551.464. COORDINATION WITH CAFETERIA PLAN.
States that the board of trustees has exclusive authority to determine the eligibility of a participant in the program in any medical flexible savings account that is part of a cafeteria plan offered under this chapter. The board shall adopt rules, plans, and procedures regarding eligibility and coordination of benefits.
SECTION 20. This language was not included in the original bill as filed. This amended SECTION 20 directs the Employees Retirement System of Texas to develop and implement the health savings account program in a manner that will be as close to revenue neutral as is possible.