80R6706 KCR-D

By: Menendez H.B. No. 2062

A BILL TO BE ENTITLED

AN ACT

relating to a health coverage or compensation supplementation program for active school employees.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subtitle H, Title 8, Insurance Code, is amended by adding Chapter 1580 to read as follows: CHAPTER 1580. ACTIVE EMPLOYEE HEALTH COVERAGE OR COMPENSATION SUPPLEMENTATION SUBCHAPTER A. GENERAL PROVISIONS

Sec. 1580.001. DEFINITIONS. In this chapter:

(1) "Cafeteria plan" means a plan as defined and authorized by Section 125, Internal Revenue Code of 1986, and its subsequent amendments.

(2) "Employee" means a participating member of the Teacher Retirement System of Texas who:

(A) is employed by a school district, other educational district whose employees are members of the Teacher Retirement System of Texas, participating charter school, or regional education service center; and

(B) is not a retiree covered under the program established under Chapter 1575.

(3) "Participating charter school" means an open-enrollment charter school established under Subchapter D, Chapter 12, Education Code, that participates in the program established under Chapter 1579.

(4) "Regional education service center" means a regional education service center established under Chapter 8, Education Code.

(5) "Trustee" means the Teacher Retirement System of Texas.

Sec. 1580.002. AUTHORITY TO ADOPT RULES; OTHER AUTHORITY. (a) The trustee may adopt rules to implement this chapter.

(b) The trustee may enter into interagency contracts with any agency of this state for the purpose of assistance in implementing this chapter. [Sections 1580.003-1580.050 reserved for expansion] SUBCHAPTER B. DISTRIBUTION OF STATE FUNDS BY TRUSTEE

Sec. 1580.051. DISTRIBUTION BY TRUSTEE. Each year, the trustee shall deliver to each school district, including a school district that is ineligible for state aid under Chapter 42, Education Code, each other educational district that is a member of the Teacher Retirement System of Texas, each participating charter school, and each regional education service center state funds in an amount, as determined by the trustee, equal to the product of the number of active employees employed by the district, school, or service center multiplied by $1,000 or a greater amount as provided by the General Appropriations Act for purposes of this chapter.

Sec. 1580.052. EQUAL INSTALLMENTS. The trustee shall distribute funds under this chapter in equal monthly installments.

Sec. 1580.053. FUNDS HELD IN TRUST. All funds received by a school district, other educational district, participating charter school, or regional education service center under this chapter are held in trust for the benefit of the active employees on whose behalf the district, school, or service center received the funds.

Sec. 1580.054. RECOVERY OF DISTRIBUTIONS. The trustee is entitled to recover from a school district, other educational district, participating charter school, or regional education service center any amount distributed under this chapter to which the district, school, or service center was not entitled.

Sec. 1580.055. DETERMINATION OF TRUSTEE FINAL. A determination by the trustee under this subchapter is final and may not be appealed. [Sections 1580.056-1580.100 reserved for expansion] SUBCHAPTER C. EMPLOYEE ELECTION

Sec. 1580.101. EMPLOYEE COVERED BY CAFETERIA PLAN. (a) If an active employee is covered by a cafeteria plan of a school district, other educational district, participating charter school, or regional education service center, the state contribution under this chapter shall be deposited in the cafeteria plan, and the employee may elect among the options provided by the cafeteria plan.

(b) A cafeteria plan receiving state contributions under this chapter may include a medical savings account option and must include, at a minimum, the following options:

(1) a health care reimbursement account;

(2) a benefit or coverage other than that provided under Chapter 1579, or any employee coverage or dependent coverage available under Chapter 1579 but not otherwise fully funded by the state or the employer contributions, any of which must be a "qualified benefit" under Section 125, Internal Revenue Code of 1986, and its subsequent amendments;

(3) an option for the employee to receive the state contribution as supplemental compensation; or

(4) an option to divide the state contribution among two or more of the other options provided under this subsection.

Sec. 1580.102. EMPLOYEE NOT COVERED BY CAFETERIA PLAN. If an active employee is not covered by a cafeteria plan of a school district, other educational district, participating charter school, or regional education service center, the state contribution under this chapter shall be paid to the active employee as supplemental compensation.

Sec. 1580.103. SUPPLEMENTAL COMPENSATION. Supplemental compensation under this subchapter must be in addition to the rate of compensation that:

(1) the school district, other educational district, participating charter school, or regional education service center paid the employee in the preceding school year; or

(2) the district, school, or service center would have paid the employee in the preceding school year if the employee had been employed by the district, school, or service center in the same capacity in the preceding school year.

Sec. 1580.104. TIME FOR ELECTION. For each state fiscal year, an election under this subchapter must be made before the later of:

(1) August 1 of the preceding state fiscal year; or

(2) the 31st day after the date the employee is hired.

Sec. 1580.105. WRITTEN EXPLANATION; ELECTION FORM. (a) The trustee shall prescribe and distribute to each school district, other educational district, participating charter school, and regional education service center:

(1) a model explanation written in English and Spanish of the options active employees may elect under this section and the effect of electing each option; and

(2) an election form to be completed by active employees.

(b) Each state fiscal year, a school district, other educational district, participating charter school, or regional education service center shall prepare and distribute to each active employee a written explanation in English and Spanish, as appropriate, of the options the employee may elect under this section. The explanation must be based on the model explanation prepared by the trustee under Subsection (a) and must reflect all available health coverage options available to the employee. The explanation must be distributed to an employee before the later of:

(1) July 1 of the preceding state fiscal year; or

(2) the fifth day after the date the employee is hired.

(c) The written explanation under Subsection (b) must be accompanied by a copy of the election form prescribed under Subsection (a)(2).

Sec. 1580.106. RETURN OF UNENCUMBERED FUNDS. Any unencumbered funds that are returned to the school district from accounts established under Section 1580.101 may be used only to provide employee compensation, benefits, or both. [Sections 1580.107-1580.150 reserved for expansion] SUBCHAPTER D. MEDICAL SAVINGS ACCOUNT

Sec. 1580.151. DEFINITION. In this subchapter, "qualified health care expense" means an expense paid by an employee for medical care, as defined by Section 213(d), Internal Revenue Code of 1986, and its subsequent amendments, for the employee or the employee's dependents, as defined by Section 152, Internal Revenue Code of 1986, and its subsequent amendments.

Sec. 1580.152. RULES. The trustee, by rule, shall specify the requirements for a medical savings account established under this chapter.

Sec. 1580.153. QUALIFICATION OF ACCOUNT. (a) The trustee shall request in writing a ruling or opinion from the Internal Revenue Service as to whether the medical savings accounts established under this chapter and the state rules governing those accounts qualify the accounts for appropriate federal tax exemptions.

(b) Based on the response of the Internal Revenue Service under Subsection (a), the trustee shall:

(1) modify the rules, plans, and procedures adopted under this section 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.

Sec. 1580.154. EMPLOYEE ELECTION. An employee who elects under Section 1580.101 to have state funds distributed under this chapter placed in a medical savings account may use the money in that account only for a qualified health care expense.

SECTION 2. Subchapter D, Chapter 22, Education Code, is repealed.

SECTION 3. The functions and duties of the Texas Education Agency with respect to the compensation supplementation program established under Subchapter D, Chapter 22, Education Code, as that subchapter existed before repeal under this Act, and any appropriation relating to that program, are transferred to the Teacher Retirement System of Texas. A reference in law to the Texas Education Agency with respect to the compensation supplementation program means the Teacher Retirement System of Texas.

SECTION 4. The changes in law made by this Act apply beginning with the 2007-2008 school year.

SECTION 5. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2007.