By: Darby H.B. No. 3496

A BILL TO BE ENTITLED

AN ACT

relating to a health reimbursement arrangement program for certain eligible retirees covered by the Employees Retirement System, the Teacher Retirement System, and the University of Texas and Texas A&M Uniform Benefits.

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

SECTION 1. Section 1551.003, Insurance Code, is amended by adding Subsection (5-a) to read as follows:

(5-a). "Health reimbursement arrangement" means an arrangement that:

(A) is funded solely by the board of trustees;

(B) is not provided under a salary reduction election or otherwise pursuant to a cafeteria plan;

(C) reimburses an annuitant, dependent, surviving spouse, or surviving dependent in the group benefits program for medical care as defined in Section 213(d) of the Internal Revenue Code (26 U.S.C. Section 213(d)), including reimbursements for insurance premiums for health coverage covering such medical care;

(D) provides reimbursements up to a maximum dollar amount for 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.

SECTION 2. Subchapter E, Chapter 1551, Insurance Code, is amended by adding Section 1551.226 to read as follows:

Sec 1551.226. HEALTH REIMBURSEMENT ARRANGEMENTS. The board of trustees may self-fund a plan under this chapter which provides health reimbursement arrangements to annuitants, dependents, surviving spouses, and surviving dependents who are covered by Medicare. The board of trustees shall have the authority to determine the terms and conditions of the health reimbursement arrangements. Funds allocated to the health reimbursement arrangements for annuitants, dependents, surviving spouses, and surviving dependents who are covered by Medicare may be used to pay for or to make reimbursements for individual health insurance policy premiums. The annuitants (or dependents, surviving spouses, or surviving dependents, as applicable) may select any individual health insurance policy, including a Medigap or Medicare supplement policy, Medicare Advantage policy or a Medicare prescription drug policy, as applicable, to the extent provided by the terms and conditions of the health reimbursement arrangement. Pursuant to Section 1551.212 of this chapter, the board of trustees may contract with an administering firm to administer the health reimbursement arrangements.

SECTION 3. Section 1575.002, Insurance Code, is amended by adding Subsection (5-a) to read as follows:

(5-a). "Health reimbursement arrangement" means an arrangement that:

(A) is funded solely by the Teacher Retirement System of Texas;

(B) is not provided under a salary reduction election or otherwise pursuant to a cafeteria plan;

(C) reimburses a participant, dependent, surviving spouse, or surviving dependent child in the group program for medical care as defined in Section 213(d) of the Internal Revenue Code (26 U.S.C. Section 213(d)), including reimbursements for insurance premiums for health coverage covering such medical care;

(D) provides reimbursements up to a maximum dollar amount for 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.

SECTION 4. Section 1575.103, Texas Code, is amended to read as follows:

Sec. 1575.103. PLANS MAY VARY ACCORDING TO MEDICARE COVERAGE. For retirees, dependents, [and] surviving spouses, and surviving dependent children who are not covered by Medicare, the trustee may provide one or more plans that are different from the plans provided for retirees, dependents, [and] surviving spouses, and surviving dependent children who are [not] covered by Medicare using funds from health reimbursement arrangements.

SECTION 5. Subchapter C, Chapter 1575, Insurance Code, is amended by adding Section 1575.011 to read as follows:

Sec 1575.011. HEALTH REIMBURSEMENT ARRANGEMENTS. The trustee may self-fund a plan under this chapter which provides health reimbursement arrangements to retirees, dependents, surviving spouses, and surviving dependent children who are covered by Medicare. The trustee has the authority to determine the terms and conditions of the health reimbursement arrangements. Funds allocated to the health reimbursement arrangements for retirees, dependents, surviving spouses and surviving dependent children who are covered by Medicare may be used to pay for or to make reimbursements for individual health insurance policy premiums. The retirees (or dependents, surviving spouses, or dependent children, as applicable) may select any individual health insurance policy, including a Medigap or Medicare supplement policy, Medicare Advantage policy or a Medicare prescription drug policy, as applicable, to the extent provided by the terms and conditions of the health reimbursement arrangement. Pursuant to Sections 1575.106 and 1575.107 of this chapter, the trustee may contract with a third-party to administer the health reimbursement arrangements.

SECTION 6. Section 1601.003, Insurance Code, is amended by amending Subsection (1) and (4) to read as follows:

(1) "Administering firm [carrier]" means an [a carrier or] organization that is:

(A) qualified to engage in business in this state; and

(B) designated by a system to administer services, benefits, insurance coverages, or requirements in accordance with this chapter.

(4) "Group life, accident, or health benefit plan" means a group agreement, policy, contract, or arrangement provided by a [an administering] carrier, including:

(A) a group insurance policy or contract;

(B) a life, accident, medical, dental, or hospital service agreement;

(C) a membership or subscription contract; [or]

(D) any other similar group arrangement; or

(E) a health reimbursement arrangement.

SECTION 7. Section 1601.003, Insurance Code, is amended by adding Subsection (4-a) to read as follows:

(4-a) "Health reimbursement arrangement" means an arrangement that:

(A) is funded solely by the governing board of a system;

(B) is not provided under a salary reduction election or otherwise through a cafeteria plan;

(C) reimburses a retired employee, dependent, surviving spouse, or surviving dependent in the uniform program for medical care as defined in Section 213(d) of the Internal Revenue Code (26 U.S.C. Section 213(d)), including reimbursements for insurance premiums for health coverage covering such medical care;

(D) provides reimbursements up to a maximum dollar amount for 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.

SECTION 8. Chapter 1601.054, Insurance Code, is amended to read as follows:

Sec. 1601.054. COMPETITIVE BIDDING REQUIRED. A system shall submit the uniform program, including any agreement under which an administering firm [a carrier] is engaged to administer a self-insured program, for competitive bidding at least every six years.

SECTION 9. Chapter 1601.057, Insurance Code, is amended to read as follows:

Sec. 1601.057. SELECTION OF BIDS. (a) A system is not required to select the lowest bid under Section 1601.054 but shall take into consideration other relevant criteria, such as ability to service contracts, past experience, and financial stability.

(b) If a system selects a carrier or administering firm whose bid differs from that advertised, the governing board of the system shall fully justify and record the reasons for the deviation in the minutes of the next meeting of the governing board.

SECTION 10. Chapter 1601.062, Insurance Code, is amended to read as follows:

Sec. 1601.062. REPORTS AND RECORDS BY ADMINISTERING FIRM OR CARRIER. Each contract entered into under this chapter between a system and an administering firm or carrier must:

(1) require the administering firm or carrier to provide reasonable reports that the system determines are necessary for the system to perform its functions under this chapter; and

(2) permit the system and representatives of the state auditor to examine records of the administering firm or carrier as necessary to accomplish the purposes of this chapter.

SECTION 11. Chapter 1601.151, Insurance Code, is amended to read as follows:

Sec. 1601.151. AUTHORITY TO SELF-INSURE; EXEMPTION FROM OTHER INSURANCE LAWS. (a) Notwithstanding any other provisions of this chapter, the governing board of a system may:

(1) self-insure a plan provided under this chapter; and

(2) hire a [an carrier] administering firm to administer the system's uniform program.

(b) A plan for which a system provides coverage on a self- insured basis is exempt from any other insurance law of this state that does not expressly apply to that plan or this chapter.

(c) Expenses for the administration of a self-insured plan may come from the contributions of employees and the state after payments for any coverage provided under this chapter have been made.

SECTION 12. Chapter 1601.155, Insurance Code, is amended to read as follows:

Sec. 1601.155. REINSURANCE. A system may arrange with [an administering] a carrier issuing a policy under this chapter for the reinsurance of portions of the total amount of insurance under the policy with other carriers that elect to participate in the reinsurance.

SECTION 13. Subchapter D, Chapter 1601, Insurance Code, is amended by adding Section 1601.156 to read as follows:

Sec. 1601.156. HEALTH REIMBURSEMENT ARRANGEMENTS. The governing board of a system may self-insure a plan under this chapter which provides health reimbursement arrangements to retired employees, dependents, surviving spouses, and surviving dependents who are covered by Medicare. The board has the authority to determine the terms and conditions of the health reimbursement arrangements. Funds allocated to the health reimbursement arrangements for retired employees, dependents, surviving spouses, and surviving dependents who are covered by Medicare may be used to pay for or to make reimbursements for individual health insurance policy premiums. The retired employees (or dependents, surviving spouses, or surviving dependents, as applicable) may select any individual health insurance policy, including a Medigap or Medicare supplement policy, Medicare Advantage policy or a Medicare prescription drug policy, as applicable, to the extent provided by the terms and conditions of the health reimbursement arrangement. Pursuant to Sections 1601.054 through 1601.057 of this chapter, the system may contract with an administering firm to administer the health reimbursement arrangements.

SECTION 14. EFFECTIVE DATE. 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, 2011.