79R13758 KCR-D
By: Crownover, Isett, Taylor, Eissler, H.B. No. 1795
et al.
Substitute the following for H.B. No. 1795:
By: Eiland C.S.H.B. No. 1795
A BILL TO BE ENTITLED
AN ACT
relating to the creation of health savings accounts for certain
individuals eligible to participate in the insurance coverage
provided under the Texas Employees Group Benefits Act and their
dependents.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 1551.002, Insurance Code, is amended to
read as follows:
Sec. 1551.002. PURPOSES. The purposes of this chapter are
to:
(1) provide uniformity and individual choice and
control 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;
(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;
(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;
(5) foster and develop high standards of
employer-employee relationships between the state and its
employees;
(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; and
(7) recognize the service to the state by employees
and retired employees of community supervision and corrections
departments by extending to them and their dependents the same
life, accident, and health benefit coverages as those provided
under this chapter to state employees, retired state employees, and
their dependents.
SECTION 2. Section 1551.011, Insurance Code, 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 3. Section 1551.055, Insurance Code, is amended to
read as follows:
Sec. 1551.055. GENERAL POWERS OF BOARD OF TRUSTEES
REGARDING COVERAGE PLANS. The board of trustees may:
(1) prepare specifications for a coverage provided
under this chapter;
(2) prescribe the time and conditions under which an
employee, annuitant, or dependent 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 health benefit plans that permit access
to high-quality, cost-effective health care;
(13) design, implement, and monitor health benefit
plan features intended to discourage excessive utilization,
promote efficiency, and contain costs;
(14) develop and refine, on an ongoing basis, a health
benefit strategy consistent with evolving benefit delivery
systems;
(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; [and]
(16) appoint an advisory committee for the group
benefits program under the terms provided by Section 815.509,
Government Code; and
(17) design, implement, and monitor, as a benefit
under the group benefits program, the health savings account
program established and operated under Subchapter J.
SECTION 4. Section 1551.201, Insurance Code, is amended by
adding Subsection (d) to read as follows:
(d) The board of trustees must give individuals
participating in the group 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.
SECTION 5. Section 1551.301, Insurance Code, is amended to
read as follows:
Sec. 1551.301. FUNDING OF BASIC COVERAGE. The board of
trustees shall use the amount appropriated for employer
contributions in the manner provided by this subchapter to fund, as
applicable, the basic coverage or participation in the health
savings account program under Subchapter J.
SECTION 6. Section 1551.303, Insurance Code, is amended to
read as follows:
Sec. 1551.303. FUNDING OF OPTIONAL COVERAGES. The board of
trustees may allocate any employer contributions remaining after
the basic coverage or participation in the health savings account
program under Subchapter J has been funded to fund optional
coverages in any manner the board determines is appropriate.
SECTION 7. Section 1551.305, Insurance Code, is amended to
read as follows:
Sec. 1551.305. COST OF BASIC COVERAGE AND CERTAIN OTHER
BENEFITS EXCEEDING EMPLOYER CONTRIBUTIONS. If the cost of the
basic coverage for an individual eligible to participate in the
group benefits program under Section 1551.101 or 1551.102 or the
cost of participation in the health savings account program under
Subchapter J exceeds the amount of employer contributions allocated
to fund the basic coverage or participation in the health savings
account program, the state shall deduct from or reduce the monthly
compensation of the participant or deduct from the retirement
benefits of the participant, as applicable, an amount sufficient to
pay the cost of the basic coverage or participation in the health
savings account program.
SECTION 8. Section 1551.306, Insurance Code, is amended to
read as follows:
Sec. 1551.306. PAYMENT OF CERTAIN EXCESS COST [OVER BASIC
COVERAGE CONTRIBUTION]. (a) The board of trustees shall apply the
amount of any employer contribution for optional coverages to the
excess of:
(1) the cost of the basic and optional coverages for
which an individual eligible to participate in the group benefits
program under Section 1551.101 or 1551.102 applies over the basic
coverage contribution; or
(2) the cost of participation in the health savings
account program under Subchapter J and optional coverages that a
participant selects over the amount of the state contribution under
Section 1551.461.
(b) Except as provided by Section 1551.309, if a participant
applies for basic and optional coverages or participation in the
health savings account program under Subchapter J and optional
coverages for which the cost exceeds the employer contributions for
those coverages or participation under this chapter, the
participant shall authorize in a form and manner satisfactory to
the board of trustees a deduction from the participant's monthly
compensation or monthly annuity equal to the difference between:
(1) the cost of basic and optional coverages, or, as
applicable, participation in the health savings account program
under Subchapter J and optional coverages, for which the
participant applies; and
(2) the employer contributions for basic and optional
coverages, or, as applicable, participation in the health savings
account program under Subchapter J and optional coverages.
SECTION 9. Section 1551.310, Insurance Code, is amended to
read as follows:
Sec. 1551.310. STATE CONTRIBUTION REQUIRED. The state
shall contribute to the cost of each participant's group coverages
or participation in the health savings account program under
Subchapter J, including dependents' group coverages and dependents'
participation in the health savings account program under
Subchapter J, the amounts appropriated for the coverages or
participation in the General Appropriations Act.
SECTION 10. Section 1551.311(a), Insurance Code, is amended
to read as follows:
(a) Not later than November 1 preceding each regular session
of the legislature, the board of trustees shall certify to the
Legislative Budget Board and the budget division of the governor's
office for information and review the amount necessary to pay the
contributions of the state to the board for participation in the
health savings account program under Subchapter J or for the
coverages provided under this chapter during the following
biennium.
SECTION 11. Section 1551.314, Insurance Code, is amended to
read as follows:
Sec. 1551.314. CERTAIN STATE CONTRIBUTIONS PROHIBITED. A
state contribution may not be made for participation in the health
savings account program under Subchapter J or for coverages under
this chapter selected by an individual who receives a state
contribution, other than as a spouse, dependent, or beneficiary,
for coverages under a group benefits program provided by an
institution of higher education, as defined by Section 61.003,
Education Code.
SECTION 12. Section 1551.315(a), Insurance Code, is amended
to read as follows:
(a) The governing board of each state agency participating
in the group benefits program shall pay to the board of trustees an
amount equal to the amount appropriated by the legislature for each
employee's individual group coverages or participation in the
health savings account program under Subchapter J or dependents'
group coverages or participation in the health savings account
program under Subchapter J for the agency's employees who are, and
annuitants who were, compensated from funds not appropriated in the
General Appropriations Act, as applicable.
SECTION 13. Section 1551.318(a), Insurance Code, is amended
to read as follows:
(a) The board of trustees shall certify to the governing
board of each state agency participating in the group benefits
program that provides contributions for its employees' group
coverages or participation in the health savings account program
under Subchapter J and dependents' group coverages or participation
in the health savings account program under Subchapter J from
operating budgets provided from sources other than the General
Appropriations Act the proportionate amounts required to pay its
contributions.
SECTION 14. Section 1551.319(a), Insurance Code, is amended
to read as follows:
(a) A full-time employee receives the benefits of a full
state contribution for coverage under this chapter or participation
in the health savings account program under Subchapter J.
SECTION 15. Section 1551.401(d), Insurance Code, is amended
to read as follows:
(d) The fund is available:
(1) without fiscal year limitation for all payments
for any coverages and benefits provided for under this chapter,
including the health savings account program under Subchapter J;
and
(2) for payment of expenses of administering this
chapter within the limitations that may be specified annually by
the legislature.
SECTION 16. Chapter 1551, Insurance Code, is amended by
adding Subchapter J to read as follows:
SUBCHAPTER J. STATE HEALTH SAVINGS ACCOUNT PROGRAM
Sec. 1551.451. DEFINITIONS. In this subchapter:
(1) "High deductible health plan" means a health
benefit plan that complies with Section 223(c), Internal Revenue
Code of 1986, and its subsequent amendments, and other federal law.
(2) "Participant" means an individual who is:
(A) eligible to participate in the group benefits
program; and
(B) enrolled in the program established under
this subchapter.
(3) "Program" means the state health savings account
program established under this subchapter and includes a health
savings account and a high deductible health plan.
(4) "Qualified medical expense" means an expense paid
by a participant for medical care, as defined by Section 213(d),
Internal Revenue Code of 1986, and its subsequent amendments, for
the participant or the participant's dependents as defined by
Section 152, Internal Revenue Code of 1986, and its subsequent
amendments.
Sec. 1551.452. ESTABLISHMENT OF STATE HEALTH SAVINGS
ACCOUNT PROGRAM. (a) The state health savings account program is
established for the benefit of individuals eligible to participate
in the group benefits program and those individuals' eligible
dependents.
(b) After final rules, plans, and procedures are adopted by
the board of trustees and qualified by the Internal Revenue Service
under Section 1551.453, the board of trustees shall:
(1) administer, or solicit bids for the administration
of, health savings accounts under this subchapter;
(2) fund or purchase at least one high deductible
health plan in accordance with Sections 1551.208-1551.216; and
(3) provide information to individuals eligible to
participate in the group benefits program regarding the option to
participate in and operation of health savings accounts and high
deductible health plans established under this subchapter.
(c) The board of trustees shall adopt rules, plans, and
procedures as necessary to administer this subchapter.
Sec. 1551.453. QUALIFICATION OF HEALTH SAVINGS ACCOUNTS.
The board of trustees shall request in writing a ruling or opinion
from the Internal Revenue Service as to whether the program
established under this subchapter and the rules adopted under this
subchapter qualify the health savings accounts established under
this subchapter for federal tax treatment as health savings
accounts under Section 223(e), Internal Revenue Code of 1986, and
its subsequent amendments, and any other 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 1551.452 as necessary to ensure the qualification of
health savings accounts established under this subchapter for
appropriate federal tax exemptions; and
(2) certify the information regarding federal tax
qualifications to the comptroller.
Sec. 1551.454. ACCOUNT ADMINISTRATOR. (a) The account
administrator of a health savings account established under this
subchapter must be a person:
(1) qualified to serve as trustee under Section
223(d)(1)(B), Internal Revenue Code of 1986, and its subsequent
amendments, and the rules adopted under that section; and
(2) experienced in administering health savings
accounts or other similar trust accounts.
(b) The account administrator is the fiduciary of a
participant who has a health savings account established under this
subchapter.
(c) Section 1551.056(b) does not apply to the account
administrator.
Sec. 1551.455. REQUIRED PARTICIPATION. Each state agency,
including an institution of higher education, shall make
participation in the program as provided by this subchapter
available to employees and inform employees of an employee's option
to participate in the program.
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. (a) Each
individual eligible to participate in the group benefits program
may participate in the program if the participant is an eligible
individual under Section 223(c)(1), Internal Revenue Code of 1986,
and its subsequent amendments. A participant in the program waives
basic plan coverage and must be enrolled in a high deductible health
plan.
(b) Participation in the program qualifies a participant to
receive a contribution to a health savings account under Section
1551.461. An individual who elects not to participate in the
program is not eligible to receive a contribution under Section
1551.461.
(c) An individual who elects to participate in the program
is subject to Subchapter H in the same manner as an individual who
participates in a group coverage plan offered under the group
benefits program.
(d) Under this section, the board of trustees has exclusive
authority to determine an individual's eligibility to participate
in the program and shall adopt rules, plans, and procedures
regarding eligibility to participate in the program.
Sec. 1551.459. COVERAGE FOR DEPENDENTS; REQUIRED
CONTRIBUTIONS. (a) Subject to Subsection (d), a participant is
entitled to obtain for the participant's dependents coverage in the
high deductible health plan selected by the participant in the
manner determined by the board of trustees.
(b) The participant shall make any required additional
contribution payments for the dependent coverage in the manner
prescribed by the board of trustees.
(c) Amounts contributed by a participant under this section
may be:
(1) used to pay the cost of coverage in the high
deductible health plan not paid by the state under Section
1551.461(b)(1); or
(2) contributed to the health savings account provided
to the participant.
(d) A participant's dependent who is covered by a high
deductible health plan selected by the participant:
(1) is subject to Subchapter H in the same manner as a
dependent who is covered by a group coverage plan offered under the
group benefits program; and
(2) must be a dependent for purposes of:
(A) Section 152, Internal Revenue Code of 1986,
and its subsequent amendments; and
(B) Section 1551.004.
Sec. 1551.460. IDENTIFICATION CARDS FOR PARTICIPANTS. (a)
The board of trustees or the account administrator, as applicable,
shall issue to each participant an identification card.
(b) The board of trustees or the account administrator, as
applicable, shall issue a duplicate identification card to each
participant's dependent for whom qualified medical expenses may be
paid out of a health savings account established under the program.
Sec. 1551.461. STATE CONTRIBUTION. (a) For each
participant, the state shall annually contribute:
(1) to a high deductible health plan in which the
participant is enrolled, the same percentage of the cost of
coverage under the high deductible health plan as the state
annually contributes for a full-time or part-time employee covered
by the basic coverage plan; and
(2) to the participant's health savings account, an
amount determined by the board of trustees under Section 1551.462.
(b) For each participant's dependent covered by a high
deductible health plan under Section 1551.459, the state shall
annually contribute:
(1) to a high deductible health plan in which the
dependent is enrolled, the same percentage of the cost of coverage
under the high deductible health plan as the state annually
contributes for dependent coverage in the basic coverage plan; and
(2) to the participant's health savings account, as
allowed under federal law, the amount determined by the board of
trustees under Section 1551.462.
(c) For a calendar year, the amount of state contributions
under Subsections (a)(2) and (b)(2), in the aggregate, may not
exceed the sum of the monthly limitations imposed by federal law for
health savings accounts.
Sec. 1551.462. DETERMINATION OF STATE CONTRIBUTION TO
HEALTH SAVINGS ACCOUNT. (a) The board of trustees by rule shall
determine the amount of the state contribution to:
(1) a participant's health savings account under
Section 1551.461(a)(2); and
(2) a participant's health savings account under
Section 1551.461(b)(2).
(b) Subject to Section 1551.461(c), the amount of the state
contribution under Section 1551.461(a)(2) must be an amount equal
to or greater than 50 percent of the difference between the cost of
coverage for a full-time or part-time employee covered by the basic
coverage plan and a participant covered under the high deductible
health plan.
(c) Subject to Section 1551.461(c), the amount of the state
contribution under Section 1551.461(b)(2) must be an amount equal
to or greater than 50 percent of the difference between the cost of
dependent coverage under the basic coverage plan and dependent
coverage under the high deductible health plan.
(d) The board of trustees shall establish state
contributions under Subsection (a) in amounts that encourage
participation in the program while, at the same time, maximize the
use of state resources.
Sec. 1551.463. PARTICIPANT CONTRIBUTIONS. (a) Each
participant, in accordance with Section 1551.305, shall contribute
any amount required to cover the selected participation in the high
deductible health plan that exceeds the state contribution amount
under Section 1551.461.
(b) A participant may contribute any amount allowed under
federal law to the participant's health savings account. A
participant may make a contribution under this section in addition
to receiving the state contribution under Section 1551.461.
(c) A participant shall make contributions under this
section in the manner prescribed by the board of trustees.
Sec. 1551.464. COORDINATION WITH CAFETERIA PLAN. (a) The
board of trustees has exclusive authority to determine the
eligibility of a participant in the program established under this
subchapter to participate in any medical flexible savings account
that is part of a cafeteria plan offered under this chapter.
(b) The board of trustees shall adopt rules, plans, and
procedures regarding:
(1) the eligibility of a participant in the program
established under this subchapter to participate in any medical
flexible savings account that is part of a cafeteria plan offered
under this chapter; and
(2) the coordination of benefits provided under this
subchapter and any medical flexible savings account that is part of
a cafeteria plan offered under this chapter.
(c) The rules adopted by the board of trustees under
Subsection (b) must prohibit a participant in the program
established under this chapter from participating in any medical
flexible savings account that would disqualify the participant's
health savings account from favorable tax treatment under federal
law.
Sec. 1551.465. CONFIDENTIALITY OF RECORDS. To the extent
allowed under federal law and subject to Section 1551.063, the
board of trustees or the program administrator, as applicable, may
disclose to a carrier information in an individual's records that
the board of trustees determines is necessary to administer the
program.
Sec. 1551.466. 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.
SECTION 17. The Employees Retirement System of Texas shall
develop the health savings account program to be implemented under
Chapter 1551, Insurance Code, as amended by this Act, 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 under Section 1551.453, Insurance Code, as added by this
Act, September 1, 2006.
SECTION 18. Not later than July 31, 2006, and subject to the
Internal Revenue Service qualifying the health savings account
program under Section 1551.453, Insurance Code, as added by this
Act, the Employees Retirement System of Texas shall provide written
information to individuals eligible to participate in the state
health savings account program under Chapter 1551, Insurance Code,
as amended by this Act, that provides a general description of the
requirements for such a program as adopted under Chapter 1551,
Insurance Code, as amended by this Act.
SECTION 19. During the initial implementation of Chapter
1551, Insurance Code, as amended by this Act, and notwithstanding
any bidding requirements or other requirements set forth in Chapter
1551, Insurance Code, as that chapter existed before amendment by
this Act, 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. The Employees Retirement System of Texas shall
develop and implement the health savings account program under
Chapter 1551, Insurance Code, as amended by this Act, in a manner
that is as revenue neutral as is possible.
SECTION 21. Except as otherwise provided by this Act, this
Act takes effect September 1, 2005.