84R22452 KFF-D

By: Kuempel H.B. No. 3897

Substitute the following for H.B. No. 3897:

By: Alonzo C.S.H.B. No. 3897

A BILL TO BE ENTITLED

AN ACT

relating to contributions to, benefits from, membership in, and the administration of systems and programs administered by the Teacher Retirement System of Texas.

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

SECTION 1. Sections 22.004(b) and (d), Education Code, are amended to read as follows:

(b) A district that does not participate in the program described by Subsection (a) shall make available to its employees, including employees whose coverage under the group program established under Chapter 1575, Insurance Code, has been suspended, group health coverage provided by a risk pool established by one or more school districts under Chapter 172, Local Government Code, or under a policy of insurance or group contract issued by an insurer, a company subject to Chapter 842, Insurance Code, or a health maintenance organization under Chapter 843, Insurance Code. The coverage must meet the substantive coverage requirements of Chapter 1251, Subchapter A, Chapter 1364, and Subchapter A, Chapter 1366, Insurance Code, and any other law applicable to group health insurance policies or contracts issued in this state. The coverage must include major medical treatment but may exclude experimental procedures. In this subsection, "major medical treatment" means a medical, surgical, or diagnostic procedure for illness or injury. The coverage may include managed care or preventive care and must be comparable to the basic health coverage provided under Chapter 1551, Insurance Code. The [board of trustees of the Teacher Retirement System of Texas shall adopt rules to determine whether a school district's group health coverage is comparable to the basic health coverage specified by this subsection. The rules must provide for consideration of the] following factors shall be considered [concerning the district's coverage] in determining whether a school [the] district's coverage is comparable to the basic health coverage specified by this subsection:

(1) the deductible amount for service provided inside and outside of the network;

(2) the coinsurance percentages for service provided inside and outside of the network;

(3) the maximum amount of coinsurance payments a covered person is required to pay;

(4) the amount of the copayment for an office visit;

(5) the schedule of benefits and the scope of coverage;

(6) the lifetime maximum benefit amount; and

(7) verification that the coverage is issued by a provider licensed to do business in this state by the Texas Department of Insurance or is provided by a risk pool authorized under Chapter 172, Local Government Code, or that a district is capable of covering the assumed liabilities in the case of coverage provided through district self-insurance.

(d) Each district [shall report the district's compliance with this section to the executive director of the Teacher Retirement System of Texas not later than March 1 of each even-numbered year in the manner required by the board of trustees of the Teacher Retirement System of Texas. For a district] that does not participate in the program described by Subsection (a) shall prepare a report addressing the district's compliance with this section. The [, the] report must be available for review, together with the policy or contract for the group health coverage plan, at the central administrative office of each campus in the district and be posted on the district's Internet website if the district maintains a website, must be based on the district group health coverage plan in effect during the current plan year, and must include:

(1) appropriate documentation of:

(A) the district's contract for group health coverage with a provider licensed to do business in this state by the Texas Department of Insurance or a risk pool authorized under Chapter 172, Local Government Code; or

(B) a resolution of the board of trustees of the district authorizing a self-insurance plan for district employees and of the district's review of district ability to cover the liability assumed;

(2) the schedule of benefits;

(3) the premium rate sheet, including the amount paid by the district and employee;

(4) the number of employees covered by the health coverage plan offered by the district; and

(5) information concerning the ease of completing the report[, as required by the executive director of the Teacher Retirement System of Texas; and

[(6) any other information considered appropriate by the executive director of the Teacher Retirement System of Texas].

SECTION 2. Section 22.101(2), Education Code, is amended to read as follows:

(2) "Employee" means an individual who:

(A) is employed by one of the following employers in a position eligible for membership in [active, contributing member of] the Teacher Retirement System of Texas based solely on that employment [who]:

(i) [(A) is employed by] a school district; [,]

(ii) another [other] educational district whose employees are members of the Teacher Retirement System of Texas; [,]

(iii) a participating charter school; [,] or

(iv) a regional education service center;

(B) [is not a retiree eligible for coverage under the program established under Chapter 1575, Insurance Code;

[(C)] is not eligible for coverage authorized [by a group insurance program] under Chapter 1551, 1575, or 1601, Insurance Code; and

(C) [(D)] is not [an individual] performing [personal services] for the employer [a district, other educational district that is a member of the Teacher Retirement System of Texas, participating charter school, or regional education service center] as an independent contractor services that are used to establish eligibility for health care supplementation under this subchapter.

SECTION 3. Section 42.260(c), Education Code, is amended to read as follows:

(c) Notwithstanding any other provision of this code, a school district or participating charter school may use the following amount of funds only to pay contributions under a group health coverage plan for district or school employees:

(1) an amount equal to 75 percent of the amount certified for the district or school under Subsection (b); or

(2) if the following amount is less than the amount specified by Subdivision (1), the sum of:

(A) the amount determined by multiplying the amount of $900 or the amount specified in the General Appropriations Act for that year for purposes of the state contribution under Section 1579.251 [9, Article 3.50-7], Insurance Code, by the number of district or school employees who participate in a group health coverage plan provided by or through the district or school; and

(B) the difference between the amount necessary for the district or school to comply with Section 1581.052 [Section 3, Article 3.50-9], Insurance Code, for the school year and the amount the district or school is required to use to provide health coverage under Section 1581.051, Insurance Code, [2 of that article] for that year.

SECTION 4. Sections 821.001(4) and (6), Government Code, are amended to read as follows:

(4) "Annual compensation" means the compensation to a member of the retirement system for service during a 12-month period determined by the retirement system [school year] that is reportable and subject to contributions as provided by Section 822.201.

(6) "Employee" means a person who is employed, as determined by the retirement system, on other than a temporary basis by a single [an] employer for at least one-half time at a regular rate of pay comparable to that of other persons employed in similar positions.

SECTION 5. Section 822.001, Government Code, is amended by adding Subsection (c) to read as follows:

(c) Membership in the retirement system may only be established through employment with a single employer on at least a half-time basis.

SECTION 6. Section 822.003(c), Government Code, is amended to read as follows:

(c) A person does not terminate membership under Subsection (a)(4) if the person:

(1) is performing military service creditable in the retirement system;

(2) is on leave of absence from employment in a public school; [or]

(3) is earning service credit in another retirement system covered by Chapter 803 or 805; or

(4) is employed by an employer covered by the retirement system and is not eligible for membership in the retirement system because the person is employed on less than a half-time basis.

SECTION 7. Section 822.005(c), Government Code, is amended to read as follows:

(c) A person is not entitled to withdraw contributions if the person [who] is employed, has applied for employment, or has received a promise of employment with an employer [, in a position] covered by the retirement system.

SECTION 8. Section 822.201(b), Government Code, is amended to read as follows:

(b) "Salary and wages" as used in Subsection (a) means:

(1) normal periodic payments of money for service the right to which accrues on a regular basis in proportion to the service performed;

(2) amounts by which the member's salary is reduced under a salary reduction agreement authorized by Chapter 610;

(3) amounts that would otherwise qualify as salary and wages under Subdivision (1) but are not received directly by the member pursuant to a good faith, voluntary written salary reduction agreement in order to finance payments to a deferred compensation or tax sheltered annuity program specifically authorized by state law or to finance benefit options under a cafeteria plan qualifying under Section 125 of the Internal Revenue Code of 1986, if:

(A) the program or benefit options are made available to all employees of the employer; and

(B) the benefit options in the cafeteria plan are limited to one or more options that provide deferred compensation, group health and disability insurance, group term life insurance, dependent care assistance programs, or group legal services plans;

(4) performance pay awarded to an employee by a school district as part of a total compensation plan approved by the board of trustees of the district and meeting the requirements of Subsection (e);

(5) the benefit replacement pay a person earns under Subchapter H, Chapter 659, except as provided by Subsection (c);

(6) stipends paid to teachers in accordance with Section 21.410, 21.411, 21.412, or 21.413, Education Code;

(7) amounts by which the member's salary is reduced or that are deducted from the member's salary as authorized by Subchapter J, Chapter 659;

(8) a merit salary increase made under Section 51.962, Education Code;

(9) amounts received under the relevant parts of the educator excellence awards program under Subchapter O, Chapter 21, Education Code, or a mentoring program under Section 21.458, Education Code, that authorize compensation for service;

(10) salary amounts designated as health care supplementation by an employee under Subchapter D, Chapter 22, Education Code; and

(11) to the extent required by Sections 3401(h) and 414(u)(12) [414(u)(2)], Internal Revenue Code of 1986, differential wage payments received by an individual from an employer on or after January 1, 2009, while the individual is performing qualified military service as defined by Section 414(u), Internal Revenue Code of 1986.

SECTION 9. Section 823.006, Government Code, is amended to read as follows:

Sec. 823.006. LIMITS ON ANNUAL CONTRIBUTIONS FOR PURCHASE OF SERVICE CREDIT. Notwithstanding any other provision of this subtitle, the retirement system shall [may] limit the purchase of service credit to the extent required by applicable limits on the amount of annual contributions a participant may make to a qualified plan under Sections 401(a) and 415(c), Internal Revenue Code of 1986.

SECTION 10. Section 823.401, Government Code, is amended by amending Subsection (f) and adding Subsection (f-1) to read as follows:

(f) Except as provided by Subsection (f-1), the [The] amount of service credit a member may establish under this section may not exceed the lesser of the number of years of membership service credit the member has in the retirement system for actual service in public schools or 15 years.

(f-1) A member may not purchase more than five years of service credit under this section for service credit considered nonqualified service credit under Section 415(n)(3), Internal Revenue Code of 1986.

SECTION 11. Sections 824.007(a) and (b), Government Code, are amended to read as follows:

(a) In this section, "program administrator" means the person who administers:

(1) the uniform program under Section 1601.102, Insurance Code; or

(2) the group program under Chapter 1575, Insurance Code.

(b) An individual eligible to participate in the uniform program under Section 1601.102, Insurance Code, or the group program under Chapter 1575, Insurance Code, may authorize the retirement system to deduct the amount of the contribution and any other qualified health insurance premium from the individual's regular monthly service or disability retirement annuity payment if the individual is:

(1) eligible to receive a monthly annuity from the retirement system greater than the amount of the authorized deduction; and

(2) eligible under Section 402(l), Internal Revenue Code of 1986, or a similar law, to elect to exclude from annual gross income up to $3,000 of distributions from an eligible retirement plan used for qualified health insurance premiums.

SECTION 12. Section 824.1012(a), Government Code, is amended to read as follows:

(a) As an exception to Section 824.101(c), a retiree who selected an optional service retirement annuity under Section 824.204(c)(1), (c)(2), or (c)(5) or an optional disability retirement annuity under Section 824.308(c)(1), (c)(2), or (c)(5) and who has received at least one payment under the plan selected may change the optional annuity selection made by the retiree to a standard service or disability retirement annuity as provided for in this section. If the beneficiary of the optional annuity was [is] the spouse [or former spouse] of the retiree when the retiree designated the spouse as beneficiary of the optional annuity, to change from the optional annuity to a standard retirement annuity under this subsection, the spouse or former spouse, as applicable, who was designated [,] the beneficiary of the optional annuity must sign a notarized consent to the change[,] or a court with jurisdiction over the marriage of [in a divorce proceeding involving] the retiree and beneficiary must approve or order the change [in the divorce decree or acceptance of a property settlement]. The change in plan selection takes effect when the retirement system receives the request to change the plan, provided the signed consent form or court order, as applicable, is subsequently received by the retirement system [it].

SECTION 13. Sections 824.1013(b) and (c-1), Government Code, are amended to read as follows:

(b) If the beneficiary designated at the time of the retiree's retirement is the spouse of the retiree at the time of the designation:

(1) the spouse must give written, notarized consent to the change;

(2) if the parties divorce after the designation, the former spouse who was designated beneficiary must give written, notarized consent to the change; or

(3) a court with jurisdiction over the marriage must approve or order [have ordered] the change.

(c-1) Notwithstanding Subsection (c), a beneficiary designated under this section is entitled on the retiree's death to receive monthly payments of the survivor's portion of the retiree's optional retirement annuity for the remainder of the beneficiary's life if the beneficiary designated at the time of the retiree's retirement is a trust and the beneficiary designated under this section is:

(1) the sole beneficiary of that trust; or

(2) an individual who at the time of the retiree's death is the sole beneficiary of that trust.

SECTION 14. Section 825.103, Government Code, is amended by adding Subsection (h) to read as follows:

(h) The board of trustees may accept on behalf of the retirement system gifts of money, services, or other property from any public or private source.

SECTION 15. Section 825.115, Government Code, is amended by adding Subsection (f) to read as follows:

(f) Notwithstanding any other law, Chapter 551 does not apply to an assembly of the board of trustees or one of the board's committees while attending a summit, conference, convention, workshop, or other event held for educational purposes if the assembly or committee does not deliberate, vote, or take action on a specific matter of public business or public policy over which the board of trustees or a committee of the board has supervision or control. This subsection does not apply to a regular, special, or emergency meeting of the board of trustees scheduled or called under the board's bylaws.

SECTION 16. Section 825.208(b), Government Code, is amended to read as follows:

(b) The retirement system is exempt from Sections 651.002 and 651.004, Chapter 660, [and] Subchapter K, Chapter 659, and Subchapter A, Chapter 661, to the extent the board of trustees determines an exemption is necessary for the performance of fiduciary duties.

SECTION 17. Section 825.212, Government Code, is amended by adding Subsection (d) to read as follows:

(d) Notwithstanding any other law, all personal financial disclosures made by employees of the retirement system under this section, including a rule or policy adopted under this section, are confidential and excepted from the requirements of Section 552.021.

SECTION 18. Section 825.3011(b), Government Code, is amended to read as follows:

(b) Chapter 551 does not require the board of trustees to confer with one or more employees, consultants, or legal counsel of the retirement system or with a third party, including representatives of an issuer of restricted securities or a private investment fund, in an open meeting if the only purpose of the conference is to receive information from or question the employees, consultants, or legal counsel of the retirement system or the third party relating to:

(1) [an] investment transactions or [a] potential investment transactions if, before conducting the closed meeting, a majority of [by] the board of trustees in an open meeting vote that deliberating or conferring in an open meeting would have a detrimental effect on the position of the retirement system in negotiations with third parties or put the retirement system at a competitive disadvantage in the market [in a private investment fund]; or

(2) the purchase, holding, or disposal of restricted securities or a private investment fund's investment in restricted securities if, under Section 552.143, the information discussed would be confidential and excepted from the requirements of Section 552.021 if the information was included in the records of a governmental body.

SECTION 19. Section 825.306, Government Code, is amended to read as follows:

Sec. 825.306. CREDITING SYSTEM ASSETS. (a) The assets of the retirement system shall be maintained and reported in a manner that reflects the source of the assets or the purpose for which the assets are held, using appropriate ledgers and subledgers, in accordance with generally accepted accounting principles prescribed by the Governmental Accounting Standards Board or its successor. In addition, the maintenance and reporting of the assets must be in compliance with applicable tax law and consistent with any fiduciary duty owed with respect to the trust. In the alternative, the assets may be credited, according to the purpose for which they are held, to one of the following accounts:

(1) member savings account;

(2) state contribution account;

(3) retired reserve account;

(4) interest account;

(5) expense account; or

(6) deferred retirement option account.

(b) Notwithstanding any other law, a requirement to deposit in or transfer assets from one of the accounts described under Subsection (a) is satisfied by maintaining and reporting the assets in accordance with that subsection.

SECTION 20. Section 825.312(a), Government Code, is amended to read as follows:

(a) The retirement system shall deposit in the expense account:

(1) money transferred from the interest account under Section 825.313(d); and

(2) money received from the Texas Public School Retired Employees Group Benefits [Insurance] Program for service performed for the program by the retirement system.

SECTION 21. Section 825.403, Government Code, is amended by amending Subsections (h) and (j) and adding Subsections (h-1), (h-2), (h-3), and (h-4) to read as follows:

(h) Subject to Subsections (h-1), (h-2), (h-3), and (h-4), if [If] deductions were previously required but not paid, the retirement system may not provide benefits based on the service or compensation unless the deposits required by this section have been fully paid.

(h-1) If, due to an error, an employer does not report to the retirement system all service rendered or compensation paid as required by this section and the error relates to service rendered or compensation paid in:

(1) the current school year, the error may be corrected by submitting to the retirement system in the manner prescribed by the retirement system:

(A) a corrected report; and

(B) contributions on the unreported service or compensation, plus interest at the rate provided under Section 825.408, computed from the report month the service or compensation should have been reported to the retirement system to the date the contributions related to that service or compensation are submitted to the retirement system; or

(2) the preceding school year, the error may be corrected if the following requirements are met:

(A) the person for whom contributions are due is employed by the employer and the employer owes the person compensation payable in the current year;

(B) the employer requests from the retirement system a waiver of the documentation requirements under Section 825.408(a) and the request is granted by the retirement system;

(C) the employer, in the manner prescribed by the retirement system:

(i) submits to the retirement system member contributions on the unreported service or compensation in the manner provided by Section 825.409 by making the corresponding reduction in the compensation owed to the person;

(ii) submits to the retirement system any employer contributions due on the compensation;

(iii) pays the interest on the contributions described by Subparagraphs (i) and (ii) at the rate provided by Section 825.408; and

(iv) corrects the records relating to the report months in which the service or compensation are at issue; and

(D) the error is corrected in accordance with this subsection not later than the final day of the school year following the school year in which the service or compensation at issue was rendered or paid, as applicable.

(h-2) On receipt of the member and employer contributions and the corrected reports under Subsection (h-1), the retirement system shall credit the service or compensation, as applicable, to the person.

(h-3) The retirement system may not credit service or compensation to a person in the manner provided by Subsections (h-1) and (h-2) for service rendered or compensation received by the person in any school year before the preceding school year. If service is rendered or compensation paid by a person in a school year before the preceding school year, the [The] person's employer at the time the unreported service was rendered or compensation was paid must verify the service or compensation as required by Subsection (j) and the person must submit the verification to the retirement system not later than five years after the end of the school year in which the service was rendered or compensation was paid. To establish the service or compensation credit, the person must deposit with the retirement system the actuarial present value, at the time of deposit, of the additional standard retirement annuity benefits that would be attributable to the purchase of service or compensation credit under this section, based on rates and tables recommended by the retirement system's actuary and adopted by the board of trustees.

(h-4) The board of trustees shall:

(1) prescribe terms for payments under Subsections (h-1), (h-2), and (h-3) [this subsection]; and

(2) credit the person for prior service and compensation to which the person is entitled under this subtitle.

(j) Except as otherwise provided by this section, if [If] deductions were previously required but not paid, proof of service satisfactory to the retirement system must be made before service credit is granted or payment for the credit is required. Proof of service is sufficient if the person's employer documents that the employer has records made at or near the time of service that establish the amount of time worked and salary earned. An affidavit based on memory without written records made at or near the time of service is not sufficient documentation for the establishment of service credit. The retirement system may audit records used for documentation under this subsection. A person who does not obtain proof of service as required by this section may not establish the service or compensation credit.

SECTION 22. Section 825.408(a), Government Code, is amended to read as follows:

(a) An employer that fails to remit, before the seventh day after the last day of a month, all member and employer deposits and documentation of the deposits required by this subchapter to be remitted by the employer for the month shall pay to the retirement system, in addition to the deposits, interest on the unpaid [or undocumented] amounts at an annual rate prescribed by this subsection and a late fee in an amount determined by the retirement system, which may include an amount for each day the documentation is submitted after the deadline imposed by this subsection [compounded monthly]. The rate of interest is the rate established under Section 825.313(b)(1), plus two percent. Interest required under this subsection [section] is creditable to the interest account. The [On request, the] retirement system may grant a waiver of the deadline imposed by this subsection based on an employer's financial or technological resources.

SECTION 23. Section 825.4092(c), Government Code, is amended to read as follows:

(c) Except as provided by Subsection (e), each payroll period, for each retiree who is enrolled in the Texas Public School Employees Group Insurance Program under Chapter 1575, Insurance Code, the employer who reports the employment of a retiree shall contribute to the trust fund established under that chapter an amount established by the retirement system. In determining the amount to be contributed by the employer under this subsection, the retirement system shall consider [any difference between] the amount a [the] retiree is required to pay for the retiree and any enrolled dependents to participate in the group program and the [full] cost of the retiree's and enrolled dependents' participation in the group program[, as determined by the retirement system]. If more than one employer reports the retiree to the retirement system during a month, the amount of the required payment shall be prorated among the employers.

SECTION 24. Section 825.410(a), Government Code, is amended to read as follows:

(a) Payments to establish special service credit as authorized under this subtitle, other than service credit that may only be determined and paid for at the time of retirement such as unused leave as authorized by Section 823.403, may be made in a lump sum by a monthly payroll deduction in an amount not less than one-twelfth of the contribution required to establish at least one year of service credit, or in equal monthly installments over a period not to exceed the lesser of the number of years of credit to be purchased or 60 months. Installment and payroll deduction payments are due on the first day of each calendar month in the payment period. If an installment or payroll deduction payment is not made in full within 60 days after the due date, the retirement system may refund all installment or payroll deduction payments less fees paid on the lump sum due when installment or payroll deduction payments began. Partial payment of an installment or payroll deduction payment may be treated as nonpayment. A check returned for insufficient funds or a closed account shall be treated as nonpayment. When two or more consecutive monthly payments have a returned check, a refund may be made. [If the retirement system refunds payments pursuant to this subsection, the member is not permitted to use the installment method of payment or the payroll deduction method, as applicable, for the same service for three years after the date of the refund. A member who requests and receives a refund of installment or payroll deduction payments also is not permitted to use the same method of payment for the same service for three years after the date of the refund.]

SECTION 25. Section 825.504, Government Code, is amended by amending Subsection (c) and adding Subsection (d) to read as follows:

(c) Each reporting district shall cooperate with the retirement system in ascertaining:

(1) a member's eligibility for membership in the retirement system;

(2) a member's annual earnings, employment status, and hours and days worked during any year; and

(3) any other information the retirement system requires from the employer to administer the retirement system's benefit plan.

(d) The board of trustees by rule may prescribe the form of and procedures for filing certifications required by this section.

SECTION 26. Section 825.505, Government Code, is amended to read as follows:

Sec. 825.505. AUDITS. For the purpose of determining the propriety of employer reports, including demographic data, and contributions or credits, the records of an employer concerning the employment and compensation of all its personnel are subject to audit and examination, in the offices of the employer during regular working hours, by representatives of the retirement system designated to conduct the audit and examination.

SECTION 27. Section 825.508(b), Government Code, is amended to read as follows:

(b) The system must honor a power of attorney executed in accordance with Chapter 752, Estates [Chapter XII, Section 490, Texas Probate] Code.

SECTION 28. Section 825.509(b-1), Government Code, is amended to read as follows:

(b-1) Notwithstanding Subsection (b)(3), with respect to a distribution made on or after January 1, 2002, an otherwise eligible portion of a rollover distribution that consists of after-tax employee contributions not includable in gross income is an eligible rollover distribution for purposes of this section. The eligible portion may be transferred only:

(1) to an individual retirement account or annuity described by Section 408(a) or (b), Internal Revenue Code of 1986;

(2) to a qualified plan described by Section 403(a), Internal Revenue Code of 1986;

(3) for distributions occurring on or after January 1, 2007, to a qualified plan described by Section 401(a), Internal Revenue Code of 1986, if the plan separately accounts for:

(A) the amounts transferred and the earnings on amounts transferred; and

(B) the portion of the distribution that is includable in gross income and the portion of the distribution that is not includable in gross income; or

(4) to an annuity contract described by Section 403(b), Internal Revenue Code of 1986, that agrees to separately account for amounts transferred and earnings on amounts transferred, including for the portion of the distribution that is includable in gross income and the portion of the distribution that is not includable in gross income.

SECTION 29. Section 825.515(a), Government Code, is amended to read as follows:

(a) At least annually, the retirement system shall acquire and maintain records identifying members and specifying the types of positions they hold as members. Employers shall provide to the retirement system information specifying the type of position held by each member as Administrative/Professional, Teacher/Full-Time Librarian, Support, Bus Driver, Food Service Worker, or Peace Officer. Employers shall also provide to the retirement system the work e-mail address for each member. For each member identified as a Peace Officer, the records must specify whether the member is an employee of an institution of higher education or of a public school that is not an institution of higher education. An employer shall provide the information required by this section in the form and manner specified by the retirement system.

SECTION 30. Section 830.201(h), Government Code, is amended to read as follows:

(h) Before November 2 of each even-numbered year, the Texas Higher Education Coordinating Board [board of trustees], in coordination with the Legislative Budget Board, shall certify to the comptroller for review and adoption an estimate of the amount necessary to pay the state's contributions to the retirement system for the following biennium. For qualifying employees under Subsection (g)(1), the Texas Higher Education Coordinating Board [board of trustees] shall include only the amount payable by the state under Subsection (g)(1) in determining the amount to be certified.

SECTION 31. The heading to Chapter 1575, Insurance Code, is amended to read as follows:

CHAPTER 1575. TEXAS PUBLIC SCHOOL RETIRED EMPLOYEES GROUP BENEFITS

PROGRAM

SECTION 32. Section 1575.002(4), Insurance Code, is amended to read as follows:

(4) "Group program" means the Texas Public School Retired Employees Group Benefits [Insurance] Program authorized by this chapter.

SECTION 33. Section 1575.004(a), Insurance Code, is amended to read as follows:

(a) In this chapter, "retiree" means:

(1) an individual not eligible, at the time of the individual's retirement, for coverage under a plan provided under Chapter 1551 or 1601 who:

(A) has taken a service retirement under the Teacher Retirement System of Texas after September 1, 2005, with at least 10 years of service credit in the system, which may include up to five years of military service credit, but which may not include any other service credit purchased for equivalent or special service credit, and either:

(i) the sum of the retiree's age and years of service credit in the retirement system equals or exceeds 80 at the time of retirement, regardless of whether the retiree had a reduction in the retirement annuity for early age; or

(ii) the retiree has 30 or more years of service credit in the retirement system at the time of retirement;

(B) has taken a service retirement under the Teacher Retirement System of Texas after September 1, 2004, but on or before August 31, 2005, and on September 1, 2005, either:

(i) meets the requirements for eligibility for the group program for coverage as a retiree as those requirements existed on August 31, 2004;

(ii) meets the requirements of Paragraph (A); or

(iii) is enrolled in the group program and was enrolled in the group program on August 31, 2005; or

(C) has taken a service retirement under the Teacher Retirement System of Texas on or before August 31, 2004, and who is enrolled in the group program on August 31, 2005;

(2) an individual who:

(A) has taken a disability retirement under the Teacher Retirement System of Texas; and

(B) is entitled to receive monthly benefits from the Teacher Retirement System of Texas; or

(3) an individual who:

(A) has taken a disability retirement under the Teacher Retirement System of Texas;

(B) has at least 10 years of service credit in the Teacher Retirement System of Texas on the date of disability retirement, as determined under Section 824.304, Government Code; and

(C) is not entitled to receive monthly benefits from the Teacher Retirement System of Texas because those benefits have been suspended in accordance with Section 824.310, Government Code.

SECTION 34. Section 1575.153, Insurance Code, is amended to read as follows:

Sec. 1575.153. BASIC COVERAGE. A retiree who applies for coverage during an enrollment period may not be denied coverage in a basic plan provided under this chapter unless:

(1) the retiree's coverage is suspended under Section 1575.165; or

(2) the trustee finds under Subchapter K that the retiree defrauded or attempted to defraud the group program.

SECTION 35. Section 1575.155(a), Insurance Code, is amended to read as follows:

(a) Subject to Section 1575.165, a [A] retiree participating in the group program is entitled to secure for the retiree's dependents group coverage provided for the retiree under this chapter, as determined by the trustee.

SECTION 36. Section 1575.158(a), Insurance Code, is amended to read as follows:

(a) Subject to Sections [Section] 1575.1581 and 1575.165, the trustee may, in addition to providing a basic plan, contract for and make available an optional group health benefit plan for retirees, dependents, surviving spouses, or surviving dependent children.

SECTION 37. Subchapter D, Chapter 1575, Insurance Code, is amended by adding Section 1575.165 to read as follows:

Sec. 1575.165. SUSPENSION AND REACTIVATION OF COVERAGE UNDER THE GROUP PROGRAM. (a) Coverage under the group program for a retiree and the retiree's dependents shall be suspended during any period the retiree is:

(1) eligible for and elects health benefit coverage under a plan provided under Chapter 1551 or 1601; or

(2) employed by a public school and is, as a result of that employment, eligible for health benefit coverage offered by the public school.

(b) During the period a retiree's coverage under the group program is suspended under this section, the retiree and the retiree's dependents shall remain enrolled in the group program.

(c) A retiree and the retiree's eligible dependents whose coverage under the group program is suspended under this section shall be reactivated at the time the retiree:

(1) ceases to be covered under a plan provided under Chapter 1551 or 1601, if the retiree is subject to Subsection (a)(1); or

(2) terminates employment with or ceases to be eligible for health benefit coverage offered by a public school, if the retiree is subject to Subsection (a)(2).

(d) The trustee shall adopt rules necessary to implement this section.

SECTION 38. Section 1575.204(b), Insurance Code, is amended to read as follows:

(b) Each state fiscal year, each employer who reports to the retirement system under Section 824.6022, Government Code, the employment of a retiree who is enrolled in and receiving coverage under the group program shall contribute to the fund an amount established by the trustee. In determining the amount to be contributed by the employer under this subsection, the trustee shall consider the [difference, if any, between the contribution] amount a [that the reported] retiree is required to pay for the retiree and any enrolled dependents to participate in the group program and the [full] cost of all retirees' [the retiree's] and enrolled dependents' participation in the group program [, as determined by the trustee]. If more than one employer reports the retiree to the retirement system during a month, the amount of the contribution required by this subsection shall be prorated among the employers. The amounts required to be paid under this subsection are not required to be paid by a reporting employer for a retiree who retired from the retirement system before September 1, 2005.

SECTION 39. Section 1575.207, Insurance Code, is amended to read as follows:

Sec. 1575.207. INTEREST ASSESSED ON LATE PAYMENT OF DEPOSITS BY EMPLOYING PUBLIC SCHOOLS. (a) An employing public school that does not remit to the trustee all contributions required by this subchapter before the seventh day after the last day of the month shall pay to the fund:

(1) the contributions; and

(2) interest on the unpaid amounts at the annual rate of six percent [compounded monthly].

(b) The [On request, the] trustee may grant a waiver of the deadline imposed by this section [based on an employing public school's financial or technological resources].

SECTION 40. Section 1579.003, Insurance Code, is amended to read as follows:

Sec. 1579.003. DEFINITION OF EMPLOYEE. In this chapter, "employee" means an individual [a participating member of the Teacher Retirement System of Texas] who is regularly employed by a participating entity for an average of at least 10 hours per week and who is not receiving coverage from a program under Chapter 1551, 1575, or 1601. The term does not include an individual performing personal services as an independent contractor.

SECTION 41. Section 1579.004, Insurance Code, is amended to read as follows:

Sec. 1579.004. DEFINITION OF DEPENDENT. In this chapter, "dependent" means:

(1) a spouse of an [a full-time employee or part-time] employee;

(2) a child of an [a full-time or part-time] employee if the child is younger than 26 years of age, including:

(A) an adopted child or child who is lawfully placed for adoption;

(B) a foster child, stepchild, or other child who is in a regular parent-child relationship; and

(C) a natural child;

(3) an [a full-time or part-time] employee's natural child, adopted child, foster child, stepchild, or other child who is in a regular parent-child relationship and who lives with or has his or her care provided by the employee or the surviving spouse on a regular basis, regardless of the child's age, if the child has a mental disability or is physically incapacitated to an extent that the child is dependent on the employee or surviving spouse for care or support, as determined by the board of trustees; and

(4) notwithstanding any other provision of this code, any other dependent of an [a full-time or part-time] employee specified by rules adopted by the board of trustees.

SECTION 42. Section 1579.006(a), Insurance Code, is amended to read as follows:

(a) The following are exempt from execution, attachment, garnishment, or any other process:

(1) benefit payments, including optional benefit payments;

(2) contributions of [active] employees, the state, and a participating entity, and any other contributions;

(3) any rights, benefits, or payments accruing to any person under this chapter; and

(4) any money in the Texas school employees uniform group coverage trust fund.

SECTION 43. Section 1579.202, Insurance Code, is amended to read as follows:

Sec. 1579.202. ELIGIBLE EMPLOYEES. (a) Except as provided by Section 1579.204, participation in the program is limited to employees of participating entities who are full-time or [employees and to] part-time employees [who are participating members in the Teacher Retirement System of Texas].

(b) An employee described by Subsection (a) who applies for coverage during an open enrollment period prescribed by the trustee is automatically covered by the catastrophic care coverage plan unless the employee:

(1) [specifically waives coverage under this chapter;

[(2)] selects a higher tier coverage plan; or

(2) [(3)] is expelled from the program.

SECTION 44. Section 1579.204, Insurance Code, is amended to read as follows:

Sec. 1579.204. [CERTAIN] PART-TIME EMPLOYEES. Notwithstanding any other provision of this chapter, a [A] part-time employee of a participating entity [who is not a participating member in the Teacher Retirement System of Texas] is eligible to participate in the program only if the employee pays all of the premiums and other costs associated with the health coverage plan selected for [by] the employee and the employee's dependents.

SECTION 45. Section 1579.255, Insurance Code, is amended to read as follows:

Sec. 1579.255. INTEREST ASSESSED ON LATE PAYMENT OF CONTRIBUTIONS BY PARTICIPATING ENTITIES. (a) A participating entity that does not remit to the trustee all contributions required by this subchapter before the 16th [seventh] day [after the last day] of the month shall pay to the Texas school employees uniform group coverage trust fund:

(1) the contributions; and

(2) interest on the unpaid amounts at the annual rate of six percent [compounded monthly].

(b) The [On request, the] trustee may grant a waiver of the deadline imposed by this section [based on a participating entity's financial or technological resources].

SECTION 46. Section 1581.001(1), Insurance Code, is amended to read as follows:

(1) "Participating employee" means an employee of 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 who participates in a group health coverage plan provided by or through the district, school, or service center, including an employee whose coverage under the group program established under Chapter 1575 has been suspended.

SECTION 47. Subchapter B, Chapter 1581, Insurance Code, is amended by adding Section 1581.055 to read as follows:

Sec. 1581.055. REPORTING REQUIREMENT. Each school district and other educational district whose employees are members of the Teacher Retirement System of Texas, participating charter school, and regional education service center shall annually report to the Teacher Retirement System of Texas, under rules adopted by the retirement system, the monthly amount each contributes toward the payment of health coverage under this chapter.

SECTION 48. The following provisions are repealed:

(1) Section 825.404(b-1), Government Code; and

(2) Section 1579.106(c), Insurance Code.

SECTION 49. Section 821.001(4), Government Code, as amended by this Act, applies only to a member of the Teacher Retirement System of Texas who retires or dies on or after the effective date of this Act.

SECTION 50. Section 825.4092(c), Government Code, as amended by this Act, applies to a retiree of the Teacher Retirement System of Texas regardless of whether the person retired from employment before, on, or after the effective date of this Act.

SECTION 51. The changes in law made by this Act apply only to health benefit plans provided under Chapters 1575, 1579, and 1581, Insurance Code, beginning with the first plan year that begins on or after September 1, 2015. A plan year that begins before September 1, 2015, is governed by the law as it existed immediately before that date and that law is continued in effect for that purpose.

SECTION 52. This Act takes effect September 1, 2015.