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.