79R5767 PB-D
By: Chisum H.B. No. 1313
A BILL TO BE ENTITLED
AN ACT
relating to establishment of a defined contribution health care
benefits program for certain active state employees that is
operated through the establishment of health reimbursement
arrangements.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle H, Title 8, Insurance Code, is amended by
adding Chapter 1555 to read as follows:
CHAPTER 1555. HEALTH REIMBURSEMENT ARRANGEMENTS FOR CERTAIN STATE
EMPLOYEES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1555.001. GENERAL DEFINITIONS. In this chapter:
(1) "Approved carrier" means a carrier approved by the
board of trustees to offer group health benefit plan coverage under
this chapter.
(2) "Board of trustees" means the board of trustees
established under Chapter 815, Government Code, to administer the
Employees Retirement System of Texas.
(3) "Employee" means an individual who participates in
the program under Section 1555.101.
(4) "Employer" means this state or a state agency
subject to this chapter.
(5) "Full-time employee" has the meaning assigned by
Section 1551.003.
(6) "Health reimbursement arrangement" means a health
benefit plan that:
(A) is paid for solely by the employer;
(B) is not provided under a salary reduction
election;
(C) reimburses a participant for a qualified
health care expense incurred by the participant or the
participant's spouse or dependent;
(D) provides reimbursements up to a maximum
dollar amount at the end of a coverage period; and
(E) provides that any unused portion of the
maximum dollar amount at the end of a coverage period is carried
forward to increase the maximum reimbursement amount in subsequent
coverage periods.
(7) "Institution of higher education" has the meaning
assigned by Section 1551.006.
(8) "Part-time employee" has the meaning assigned by
Section 1551.003.
(9) "Program" means the state employees health
reimbursement arrangement program established under this chapter.
(10) "Service" means personal service to the state
creditable in accordance with rules adopted by the board of
trustees.
(11) "State agency" has the meaning assigned by
Section 1551.003.
Sec. 1555.002. DEFINITION OF DEPENDENT. (a) In this
chapter, "dependent" with respect to an individual means the
individual's:
(1) spouse;
(2) unmarried child younger than 25 years of age;
(3) child of any age who lives with or has the child's
care provided by the individual on a regular basis if the child is
mentally retarded or physically incapacitated to the extent that
the child is dependent on the individual for care or support, as
determined by the board of trustees; or
(4) child of any age who is unmarried on expiration of
the child's continuation coverage under the Consolidated Omnibus
Budget Reconciliation Act of 1985 (Pub. L. No. 99-272).
(b) In this section, "child" includes an adopted child and a
stepchild, foster child, or other child who is in a parent-child
relationship with an individual.
Sec. 1555.003. DEFINITION OF HEALTH BENEFIT PLAN. (a) In
this chapter, "health benefit plan" means a plan that provides,
pays for, or reimburses expenses for health care services,
including comparable health care services for participants who rely
solely on spiritual means through prayer for healing in accordance
with the teaching of a well-recognized church or denomination.
(b) Health benefit plans made available through the program
shall be provided on a group basis through:
(1) a policy or contract;
(2) a medical or hospital service agreement;
(3) a membership or subscription contract;
(4) a health maintenance organization agreement;
(5) a preferred provider arrangement; or
(6) any other similar group arrangement or a
combination of policies, plans, contracts, agreements, or
arrangements described by this subsection.
Sec. 1555.004. DEFINITION OF CARRIER; APPROVAL OF CARRIER.
(a) In this chapter, "carrier" means:
(1) an insurance company that is authorized by the
department under this code to provide any of the types of insurance
coverages, benefits, or services provided for in this chapter;
(2) a corporation operating under Chapter 842 or 843
that provides any of the types of coverage, benefits, or services
provided for in this chapter; or
(3) any combination of entities described by
Subdivisions (1) and (2) on terms the board of trustees prescribes.
(b) The board of trustees shall approve carriers to offer
group health benefit plan coverage under this chapter. The board
may impose requirements for approval of a carrier.
(c) For the initial operation of the program, the board of
trustees may approve only carriers that demonstrate to the
satisfaction of the board of trustees that they:
(1) have professional experience in the provision of
group health benefits under health reimbursement arrangements; and
(2) on or before January 1, 2006, were commercially
providing group health benefits under those arrangements.
Sec. 1555.005. OTHER DEFINITIONS. The board of trustees by
rule may define a word in terms necessary to the administration of
this chapter.
Sec. 1555.006. EXEMPTION FROM EXECUTION. All benefit
payments, state contributions, contributions of employees, 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.
Sec. 1555.007. EXEMPTION FROM STATE TAXES AND FEES. Any
coverage established under this chapter, including a policy, an
insurance contract, a certificate of coverage, an evidence of
coverage, and an agreement with a health maintenance organization
or a plan administrator, is not subject to any state tax, regulatory
fee, or surcharge, including a premium or maintenance tax or fee.
[Sections 1555.008-1555.050 reserved for expansion]
SUBCHAPTER B. ESTABLISHMENT AND ADMINISTRATION OF PROGRAM
Sec. 1555.051. ESTABLISHMENT OF PROGRAM. The state
employees health reimbursement arrangement program is established
to provide group health benefit coverages to employees through the
operation of health reimbursement arrangements.
Sec. 1555.052. ADMINISTRATION AND IMPLEMENTATION; GENERAL
POWERS. (a) Subject to Sections 1555.053(b) and (c), the
administration and implementation of this chapter are vested solely
in the board of trustees.
(b) Except as otherwise provided by this chapter, the board
of trustees may exercise under this chapter any power granted to the
board of trustees under Subchapter B, Chapter 1551.
Sec. 1555.053. GENERAL POWERS OF BOARD OF TRUSTEES
REGARDING PROGRAM. (a) As necessary for the operation of the
program, the board of trustees may:
(1) prescribe the time and conditions under which an
employee or employee's dependent is eligible for a coverage
provided under this chapter;
(2) determine the methods and procedures of claims
administration;
(3) determine the amount of payroll deductions and
reductions applicable to participating employees and establish
procedures to implement those deductions and reductions;
(4) establish procedures for the board of trustees to
decide contested cases arising from a coverage provided under this
chapter;
(5) 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;
(6) administer the employees life, accident, and
health insurance and benefits fund;
(7) provide the beginning and ending dates of
coverages of participants;
(8) make health benefit plan coverage available to all
employees who are required to or elect to participate in the program
and their dependents through plans offered by approved carriers;
and
(9) develop a funding structure, as provided by
Section 1555.252, that efficiently uses state and other employer
contributions to achieve the purposes of this chapter and that is
reasonable and ensures participants a fair choice among health
benefit plans.
(b) The board of trustees may not directly administer group
health benefit plan coverages made available under the program and
may not provide those coverages on a self-funded basis.
(c) The board of trustees may not establish, approve, or
limit premium rates for group health benefit plan coverages made
available under the program.
Sec. 1555.054. CERTIFICATE OF COVERAGE. An approved
carrier shall issue to each employee purchasing group health
benefit plan coverage from the carrier under the program a
certificate of coverage that states:
(1) the benefits to which the participant is entitled;
(2) to whom the benefits are payable;
(3) to whom a claim must be submitted; and
(4) the provisions of the plan document, in summary
form, that principally affect the participant.
Sec. 1555.055. CARRIER REQUIREMENTS. Any carrier providing
coverages to participants in the program shall:
(1) furnish any reasonable report the board of
trustees determines is necessary to enable the board to perform its
functions under this chapter; and
(2) permit the board and a representative of the state
auditor to examine records of the carrier as necessary to
accomplish the purposes of this chapter.
Sec. 1555.056. CONFIDENTIALITY OF CERTAIN RECORDS. (a)
The records of a participant in the program in the custody of the
board of trustees, or of an administrator or carrier acting under
the program, are confidential and not subject to disclosure and are
exempt from the public access provisions of Chapter 552, Government
Code, except as provided by this section.
(b) A participant's records may be released to a participant
or to an authorized attorney, family member, or representative
acting on behalf of the participant.
(c) The board of trustees may release a participant's
records to:
(1) an administrator, carrier, agent, or attorney
acting under the program;
(2) another governmental entity;
(3) a medical provider of the participant to
accomplish the purposes of this chapter; or
(4) a party in response to a subpoena issued under
applicable law.
Sec. 1555.057. ANNUAL REPORT. (a) The board of trustees
shall submit a written report not later than January 1 of each year
to the governor, lieutenant governor, speaker of the house of
representatives, and Legislative Budget Board concerning:
(1) the operation of the program; and
(2) the coverages provided to and the benefits and
services being received by participants under this chapter.
(b) The report must include information about and analysis
of the effectiveness of the use of health reimbursement
arrangements in providing comprehensive and efficient health
benefits coverage to state employees.
[Sections 1555.058-1555.100 reserved for expansion]
SUBCHAPTER C. COVERAGE AND PARTICIPATION
Sec. 1555.101. PARTICIPATION IN PROGRAM BY CERTAIN
EMPLOYEES. (a) Notwithstanding any provision of Chapter 1551,
participation in the health reimbursement arrangement program
established under this chapter is:
(1) mandatory for each employee who begins employment
on or after September 1, 2006; and
(2) elective for each employee:
(A) employed before September 1, 2006; and
(B) eligible to receive a state contribution
under Subchapter G, Chapter 1551.
(b) An individual who elects to participate in the program
shall notify the board of trustees and the individual's employing
state agency in the manner prescribed by the board of trustees by
rule.
(c) An individual who participates in the program is not
entitled to receive group health benefit coverages under the group
benefits program operated under Chapter 1551. The individual is
eligible to receive other coverages through the group benefits
program in the manner provided by Chapter 1551.
Sec. 1555.102. RIGHT TO COVERAGE. Subject to Section
1555.301, an individual who participates in the program may not be
denied any group coverage under this chapter.
Sec. 1555.103. DATE COVERAGE BEGINS. Group health benefit
plan coverage under this chapter begins on the first day of the
calendar month that begins after the 90th day after the date on
which the employee performs services for the state agency, in
accordance with procedures established by the board of trustees.
Coverage under other group coverages provided under the group
benefits program established under Chapter 1551 begins as provided
by the board of trustees under that chapter.
[Sections 1555.104-1555.150 reserved for expansion]
SUBCHAPTER D. COVERAGE FOR DEPENDENTS
Sec. 1555.151. ENTITLEMENT TO COVERAGE. An individual who
participates in the program is entitled to secure for a dependent of
the individual any group coverages provided under this chapter, as
determined by the board of trustees and subject to the exceptions
provided by this subchapter.
Sec. 1555.152. PARTICIPANT RESIDING OUTSIDE OF SERVICE
AREA. An individual who participates in the program and who resides
outside of a health maintenance organization service area is
entitled to group coverages for a dependent of the individual
without evidence of insurability if the individual applies for the
coverage for the dependent during the annual enrollment period.
Sec. 1555.153. EMPLOYEE PAYMENTS. In the manner and form
the board of trustees determines, payments required of an employee
in excess of employer contributions shall be made by:
(1) a deduction from the employee's monthly pay; or
(2) a reduction of the employee's salary.
Sec. 1555.154. REINSTATEMENT OF HEALTH BENEFIT PLAN
COVERAGE BY CERTAIN DEPENDENTS. (a) A dependent child who is
unmarried and whose coverage under this chapter ends when the child
becomes 25 years of age may, on expiration of continuation coverage
under the Consolidated Omnibus Budget Reconciliation Act of 1985
(Pub. L. No. 99-272), reinstate health benefit plan coverage under
this chapter if the child, or the child's participating parent,
pays the full cost of the health benefit plan coverage.
(b) A state contribution is not payable for coverage under
this section.
(c) Coverage under this section terminates at the end of the
month in which the child marries.
[Sections 1555.155-1555.200 reserved for expansion]
SUBCHAPTER E. GROUP COVERAGE
Sec. 1555.201. HEALTH BENEFIT PLAN COVERAGE; APPROVED
HEALTH BENEFIT PLANS. (a) Group health benefit plan coverage shall
be made available under the program in accordance with this
section.
(b) The board of trustees shall approve carriers providing a
range of health benefit plans and must include carriers offering
health benefit plans in which a participant may be enrolled on
selection of the plan without proof of insurability.
(c) The board of trustees by rule shall prescribe the
specifications for each health benefit plan offered under this
chapter, including:
(1) the types of health benefit plans offered;
(2) the benefits offered under each plan;
(3) the levels of copayments, coinsurance, or
deductibles required for each plan; and
(4) any other requirements for a health benefit plan
that are determined to be necessary by the board of trustees.
(d) The Employees Retirement System of Texas is the group
policy or contract holder for a health benefit plan offered by an
approved carrier under this chapter.
Sec. 1555.202. PROGRAM NOT SELF-FUNDED. The board of
trustees may not self-fund health benefit plan coverage under this
chapter.
Sec. 1555.203. ACCOUNTING BY CARRIER. (a) An approved
carrier providing group health benefit plan coverage under this
chapter shall provide an accounting to the board of trustees not
later than the 90th day after the end of each plan year.
(b) The accounting must be in a form approved by the board of
trustees.
(c) The accounting must state for the period from the
coverage's date of issue to the end of the plan year:
(1) the amounts of contributions accrued under the
coverage;
(2) the total claims, charges, losses, and expenses
incurred; and
(3) the amounts of the carrier's allowance for a
reasonable profit and contingencies.
Sec. 1555.204. SPECIAL CONTINGENCY RESERVE. (a) An
approved carrier providing group health benefit plan coverage under
this chapter shall hold as a special contingency reserve an amount
that equals the amount by which the amount described by Section
1555.203(c)(1) exceeds the sum of the amounts described by Sections
1555.203(c)(2) and (3).
(b) The carrier may use the special contingency reserve only
for charges, claims, and expenses under the plan.
(c) The special contingency reserve earns interest at a rate
determined before each plan year by the carrier and approved by the
board of trustees as consistent with the rates generally used by the
carrier for similar funds held under other group coverage plans.
(d) On a determination by the board of trustees that the
special contingency reserve has attained an amount estimated by the
board to make satisfactory provision for adverse fluctuations in
future charges, claims, or expenses under the plan, any further
excess shall be deposited to the credit of the employees life,
accident, and health insurance and benefits fund in the state
treasury.
(e) On discontinuation of a plan, any balance remaining in
the special contingency reserve after all charges have been made
shall be deposited to the credit of the employees life, accident,
and health insurance and benefits fund in the state treasury. The
carrier may make the deposit in equal monthly installments over a
period of not more than two years.
[Sections 1555.205-1555.250 reserved for expansion]
SUBCHAPTER F. CONTRIBUTIONS AND COSTS
Sec. 1555.251. STATE CONTRIBUTION; FUNDING OF COVERAGE.
(a) For each participating employee, the state annually shall
contribute the amount specified by the legislature to the health
reimbursement arrangement account established for that employee
for the payment of qualified health care expenses.
(b) Each individual who participates in the program under
Section 1555.101 shall direct the expenditure of:
(1) the amount of the state contribution made under
this subchapter that is allocated to the participant in accordance
with the General Appropriations Act and this subchapter;
(2) the amount of other employer contributions made
under this subchapter that is allocated to the participant in
accordance with the General Appropriations Act and this subchapter;
and
(3) the amount of the participant's contributions to
the program under this subchapter.
(c) Money described by Subsection (b) may be used by an
individual who participates in the program under Section 1555.101
to purchase coverage under a health benefit plan offered by an
approved carrier for the individual and the individual's
dependents. At least $500 of the money in the health reimbursement
arrangement account must be spendable at the individual's
discretion for qualified health care expenses.
Sec. 1555.252. FUNDING STRUCTURE; RULES. (a) The board of
trustees, in consultation with the comptroller, shall by rule
develop a funding structure that:
(1) implements Section 1555.251 in accordance with
this subchapter;
(2) permits an individual who participates in the
program under Section 1555.101 to carry over money allocated to the
individual throughout the period the individual is eligible to
participate; and
(3) ensures, to the extent feasible and consistent
with this subchapter, favorable federal tax treatment to the
individual.
(b) The funding structure shall use a system of health
reimbursement arrangements established in a manner compatible with
federal tax law.
(c) To implement this section, the comptroller shall, if
requested by the board of trustees:
(1) establish separate accounts attributable to
individual participants within the employees life, accident, and
health insurance and benefits fund; or
(2) transfer funds from the employees life, accident,
and health insurance and benefits fund to trust accounts that are
outside the fund, in the custody of the comptroller, and
established for the benefit of individual participants.
Sec. 1555.253. EFFECT OF SEPARATION FROM SERVICE WITH
PARTICIPATING STATE AGENCY. Notwithstanding any other provision of
this chapter, on an individual's separation from service with the
state, the individual may continue to use for qualified health care
expenses any money carried over by the individual under Section
1555.252(a)(2) that was allocated to the individual under this
chapter and was not spent before the effective date of the
separation.
Sec. 1555.254. COST OF COVERAGE EXCEEDING STATE AND OTHER
EMPLOYER CONTRIBUTIONS. If the cost of the coverage selected by an
individual who participates in the program under Section 1555.101
exceeds the amount available to pay the cost from state and other
employer contributions allocable to the individual, the state shall
deduct from the monthly compensation of the individual an amount
sufficient to pay the cost of the coverage selected or reduce the
monthly compensation of the individual in an amount sufficient to
pay the cost of the coverage selected.
Sec. 1555.255. PAYMENT OF EXCESS COST. (a) If an
individual who participates in the program under Section 1555.101
applies for group health coverages for which the cost exceeds the
state and other employer contributions for those coverages under
this chapter, the individual shall authorize in a form and manner
satisfactory to the board of trustees a deduction from the
individual's monthly compensation equal to the difference between:
(1) the cost of the coverages for which the individual
applies; and
(2) the individual's contribution.
(b) Money contributed by an individual under this section
shall be allocated to the individual in accordance with rules
adopted under Section 1555.252. Money contributed by the individual
is subject to Section 1555.253.
Sec. 1555.256. NO CONTRIBUTION ON REFUSAL OF COVERAGE. The
state or a state agency may not make any contribution to the cost of
any coverages or benefits provided under this chapter for an
individual who refuses the coverages or benefits in a form and
manner satisfactory to the board of trustees.
Sec. 1555.257. REQUIRED CONTRIBUTIONS BY STATE AGENCIES.
(a) The governing board of each state agency participating in the
program shall pay to the board of trustees an amount equal to the
amount appropriated by the legislature for each employee's
individual group health coverages or dependents' group health
coverages for the agency's employees who are compensated from funds
not appropriated in the General Appropriations Act.
(b) The state agency shall:
(1) include the required contributions from funds not
appropriated in the General Appropriations Act in its annual
operating budget;
(2) ensure current participant coverages based on the
records of the board of trustees;
(3) make timely payments of amounts due the board of
trustees from all fund sources under the state agency's control;
and
(4) each month reconcile board of trustees and state
agency records of coverages and payments.
Sec. 1555.258. ALLOCATION TO BOARD OF TRUSTEES OF EMPLOYER
CONTRIBUTIONS. From the several funds from which employees receive
their respective salaries, all employer contributions computed in
accordance with this chapter and rules adopted under this chapter
are allocated to the board of trustees to allocate to a participant
as provided by this subchapter.
Sec. 1555.259. PAYMENT OF EMPLOYER CONTRIBUTIONS ALLOCATED
BY THE STATE. (a) All money allocated by this state to the board of
trustees for participants under this chapter shall be paid to the
board in monthly installments based on the annual estimate by the
board of the contributions to be received for all employees during
the year.
(b) At the end of each fiscal year, the board of trustees
shall make any adjustments required to cover the difference
between:
(1) the annual estimate; and
(2) the actual amount of the employer contributions
during the year.
(c) Each monthly installment shall be paid to the
appropriate fund in the amount certified by the board of trustees.
Sec. 1555.260. AMOUNT OF CONTRIBUTION FOR FULL-TIME AND
PART-TIME EMPLOYEES. (a) A full-time employee receives the
benefits of a full state contribution for coverage under this
chapter.
(b) A part-time employee receives the benefits of one-half
of the amount of the state contribution received by a full-time
employee.
[Sections 1555.261-1555.300 reserved for expansion]
SUBCHAPTER G. EXPULSION AND ADJUDICATION OF CLAIM
Sec. 1555.301. GENERAL REQUIREMENTS. (a) The board of
trustees shall apply Subchapter H, Chapter 1551, to determine
grounds for expulsion from the program and adjudication of any
claim arising under this chapter.
(b) The board of trustees, by rule, may modify a procedure
established under Subchapter H, Chapter 1551, as necessary to
implement this chapter.
[Sections 1555.302-1555.350 reserved for expansion]
SUBCHAPTER H. FUND REQUIREMENTS
Sec. 1555.351. USE OF EMPLOYEES LIFE, ACCIDENT, AND HEALTH
INSURANCE AND BENEFITS FUND. (a) Contributions of participants
and the state provided for under this chapter shall be credited to
the employees life, accident, and health insurance and benefits
fund in the state treasury and allocated from the fund in accordance
with the funding structure adopted by the board under Section
1555.252.
(b) The fund is available:
(1) without fiscal year limitation for all allocations
to participants for payments for any coverages provided for under
this chapter; and
(2) for payment of expenses of administering this
chapter within the limitations that may be specified annually by
the legislature.
SECTION 2. (a) The board of trustees of the Employees
Retirement System of Texas, in consultation with the comptroller,
shall develop the funding structure required by Section 1555.252,
Insurance Code, as added by this Act, and shall take necessary
action to implement the program in accordance with Chapter 1555,
Insurance Code, as added by this Act, not later than September 1,
2006.
(b) In accordance with the program established by this Act,
the board of trustees shall transfer to the employees life,
accident, and health insurance and benefits fund from the
contingency reserve fund for self-funded coverage established
under Section 1551.211, Insurance Code, any amounts contained in
the contingency reserve fund for self-funded coverage allocable to
coverages that are no longer self-funded under the program. A
transfer under this subsection is effective September 1, 2006.
SECTION 3. This Act takes effect September 1, 2005.