By: King of Hemphill H.B. No. 4076

A BILL TO BE ENTITLED

AN ACT

relating to benefits administered by the Teacher Retirement System of Texas.

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

ARTICLE 1. TEACHER RETIREMENT SYSTEM COST-OF-LIVING ADJUSTMENT

SECTION 1.01. Subchapter H, Chapter 824, Government Code, is amended by adding Section 824.703 to read as follows:

Sec. 824.703. ADDITIONAL COST-OF-LIVING ADJUSTMENT. (a) Notwithstanding Section 824.702 and subject to Section 821.006, the retirement system shall make a one-time cost-of-living adjustment payable to annuitants receiving a monthly death or retirement benefit annuity, as provided by this section.

(b) Subject to Subsections (c) and (d), to be eligible for the adjustment, a person must be, on the effective date of the adjustment and disregarding any forfeiture of benefits under Section 824.601, an annuitant eligible to receive:

(1) a standard service or disability retirement annuity payment;

(2) an optional service or disability retirement annuity payment as either a retiree or beneficiary;

(3) an annuity payment under Section 824.402(a)(3) or (4);

(4) an annuity payment under Section 824.502; or

(5) an alternate payee annuity payment under Section 804.005.

(c) If the annuitant:

(1) is a retiree or is a beneficiary under an optional retirement payment plan, to be eligible for the adjustment under this section:

(A) the annuitant must be living on the effective date of the adjustment; and

(B) the effective date of the retirement of the member of the retirement system must have been on or before August 31, 2019;

(2) is a beneficiary under Section 824.402(a)(3) or (4) or 824.502, to be eligible for the adjustment:

(A) the annuitant must be living on the effective date of the adjustment; and

(B) the date of death of the member of the retirement system must have been on or before August 31, 2019; or

(3) is an alternate payee under Section 804.005, the annuitant is eligible for the adjustment only if the effective date of the election to receive the annuity payment was on or before August 31, 2019.

(d) An adjustment made under this section does not apply to payments under:

(1) Section 824.203(d), relating to retirees who receive a standard service retirement annuity in an amount fixed by statute;

(2) Section 824.304(a), relating to disability retirees with less than 10 years of service credit;

(3) Section 824.304(b)(2), relating to disability retirees who receive a disability annuity in an amount fixed by statute;

(4) Section 824.404(a), relating to active member survivor beneficiaries who receive a survivor annuity in an amount fixed by statute;

(5) Section 824.501(a), relating to retiree survivor beneficiaries who receive a survivor annuity in an amount fixed by statute; or

(6) Section 824.804(b), relating to participants in the deferred retirement option plan with regard to payments from their deferred retirement option plan accounts.

(e) An adjustment under this section:

(1) must be made beginning with an annuity payable for the month of December 2019; and

(2) is limited to an amount equal to 20 percent of the monthly benefit subject to the increase.

(f) The board of trustees shall determine the eligibility for and the amount of any adjustment in monthly annuities in accordance with this section.

ARTICLE 2. TRANSFERRING COVERAGE PROVIDED TO ACTIVE EDUCATION

EMPLOYEES FROM TEXAS SCHOOL EMPLOYEES UNIFORM GROUP HEALTH COVERAGE

ACT TO TEXAS EMPLOYEES GROUP BENEFITS ACT

SECTION 2.01. Section 1551.004(b), Insurance Code, is amended to read as follows:

(b) In this section, "child" includes:

(1) a natural child, adopted child, stepchild, foster child, or child in the possession of a participant who is designated as managing conservator of the child under an irrevocable or unrevoked affidavit of relinquishment under Chapter 161, Family Code; or

(2) a child who is related by blood or marriage and was claimed as a dependent on the federal income tax return of an individual who is eligible to participate in the group benefits program under Section 1551.101 or 1551.102 or as an education employee under Subchapter D-1 for the calendar year preceding the plan year in which the child is first enrolled as a dependent under Subchapter D, and for each subsequent year in which the child is enrolled as a dependent.

SECTION 2.02. Section 1551.151, Insurance Code, is amended to read as follows:

Sec. 1551.151. ENTITLEMENT TO COVERAGE. An individual who is eligible to participate in the group benefits program under Section 1551.101, 1551.102, [or] 1551.1022, or 1551.167 is entitled to secure for a dependent of the individual any group coverages provided under this chapter, as determined by the board of trustees and subject to the exceptions provided by this subchapter.

SECTION 2.03. Chapter 1551, Insurance Code, is amended by adding Subchapter D-1 to read as follows:

SUBCHAPTER D-1. COVERAGE AND PARTICIPATION OF EDUCATION EMPLOYEES

Sec. 1551.161. DEFINITIONS. In this subchapter:

(1) "Charter school" means an open-enrollment charter school established under Subchapter D, Chapter 12, Education Code.

(2) "Education employee" means a participating member of the Teacher Retirement System of Texas who is employed by a participating education entity and who is not receiving coverage from a program under Chapter 1575 or 1601. The term does not include an individual performing personal services as an independent contractor.

(3) "Full-time education employee" and "part-time education employee" have the meanings assigned by rules adopted by the board of trustees.

(4) "Participating education entity" means an entity that elects or is required to participate under this subchapter in the group benefits program established under this chapter. The term includes:

(A) a school district;

(B) another educational district whose employees are members of the Teacher Retirement System of Texas;

(C) a regional education service center; and

(D) a charter school that meets the requirements of Section 1551.166.

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

Sec. 1551.162. REFERENCES TO COVERAGE PLAN. A reference in this code to a "primary care coverage plan" or "health benefit plan" under former Chapter 1579 means a basic coverage plan provided to eligible education employees under this subchapter.

SECTION 2.04. Sections 1579.151, 1579.152, 1579.153, and 1579.154, Insurance Code, are transferred to Subchapter D-1, Insurance Code, as added by this Act, redesignated as Sections 1551.163, 1551.164, 1551.165, and 1551.166, Insurance Code, and amended to read as follows:

Sec. 1551.163 [1579.151]. REQUIRED PARTICIPATION OF SCHOOL DISTRICTS WITH 500 OR FEWER EDUCATION EMPLOYEES. (a) Each school district with 500 or fewer education employees and each regional education service center is required to participate in the group benefits program.

(b) Notwithstanding Subsection (a), a school district otherwise subject to Subsection (a) that, on January 1, 2001, was individually self-funded for the provision of health coverage to its education employees may elect not to participate in the group benefits program.

(c) An educational district described by Section 1551.161(4)(B) [1579.002(5)(B)] that, on January 1, 2001, had 500 or fewer education employees may elect not to participate in the group benefits program.

Sec. 1551.164 [1579.152]. PARTICIPATION OF OTHER SCHOOL DISTRICTS. A [Effective September 1, 2005, a] school district with more than 500 education employees may elect to participate in the group benefits program. A school district that elects to participate under this section shall apply for participation in the manner prescribed by the board of trustees [trustee] by rule.

Sec. 1551.165 [1579.153]. PARTICIPATION BY CERTAIN RISK POOLS. (a) In determining the number of education employees of a school district for purposes of Sections 1551.163 [1579.151] and 1551.164 [1579.152], school districts that, on January 1, 2001, were members of a risk pool established under the authority of Chapter 172, Local Government Code, as provided by Section 22.004, Education Code, are [may elect to be] treated as a single unit if an appropriate election was made[. A school district shall elect whether to be considered as a member of a risk pool under this section] by notifying the Teacher Retirement System of Texas [trustee] not later than September 1, 2001.

(b) A risk pool in existence on January 1, 2001, that, as of that date, provided group health coverage to 500 or fewer school district education employees may elect to participate in the group benefits program.

(c) A school district with 500 or fewer education employees that is a member of a risk pool described by Subsection (a) that provides group health coverage to more than 500 school district education employees is [must elect, not later than September 1, 2001, whether to be] treated as a school district with 500 or fewer education employees or as part of a unit with more than 500 education employees in accordance with the election made by notification to[. The school district must notify] the Teacher Retirement System of Texas [trustee of the election, in the manner prescribed by the trustee,] not later than September 1, 2001.

(d) For purposes of this section, participation in the group benefits program by school districts covered by a risk pool is limited to school districts covered by the risk pool as of January 1, 2001.

Sec. 1551.166 [1579.154]. PARTICIPATION BY CHARTER SCHOOLS; ELIGIBILITY. (a) A charter school is eligible to participate in the group benefits program if the school agrees:

(1) that all records of the school relating to participation in the group benefits program are open to inspection by the board of trustees [trustee], the administering firm, the commissioner of education, or a designee of any of those entities; and

(2) to have the school's accounts relating to participation in the group benefits program annually audited by a certified public accountant at the school's expense.

(b) A charter school must notify the board of trustees [trustee] of the school's intent to participate in the group benefits program in the manner and within the time required by rules adopted by the board of trustees [trustee].

SECTION 2.05. Sections 1579.202, 1579.203, 1579.204, and 1579.205, Insurance Code, are transferred to Subchapter D-1, Insurance Code, as added by this Act, redesignated as Sections 1551.167, 1551.168, 1551.169, and 1551.170, Insurance Code, and amended to read as follows:

Sec. 1551.167 [1579.202]. ELIGIBLE EDUCATION EMPLOYEES. (a) Except as provided by Section 1551.169 [1579.204], participation under this subchapter in the group benefits program is limited to education employees of participating education entities who are full-time employees and to part-time employees who are participating members in the Teacher Retirement System of Texas.

(b) An education employee described by Subsection (a) who applies for coverage during an open enrollment period prescribed by the board of trustees [trustee] is automatically covered by the basic [catastrophic care] coverage plan for employees unless the employee:

(1) specifically waives coverage under this chapter; or

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

[(3)] is expelled from the program.

Sec. 1551.168 [1579.203]. SELECTION OF COVERAGE. (a) A participating education employee may select coverage in any coverage plan offered by the board of trustees [trustee].

(b) The education employee is not required to continue participation in the coverage plan initially selected and may select a different [higher or lower tier] coverage plan than the plan initially selected by the employee in the manner provided by rules adopted by the board of trustees [trustee].

(c) If the combined contributions received from the state and the employing participating education entity under this subchapter [Subchapter F] exceed the cost of a coverage plan selected by the education employee, the employee may use the excess amount of contributions to obtain optional coverages provided [coverage] under this chapter [a higher tier coverage plan] or to pay all or part of the cost of coverage for the employee's dependents.

(d) A married couple, both of whom are eligible for coverage under this subchapter under the group benefits program, may pool the amount of contributions to which the couple are entitled under this subchapter [the program] to obtain coverage for themselves and dependent coverage.

Sec. 1551.169 [1579.204]. CERTAIN PART-TIME EDUCATION EMPLOYEES. A part-time education employee of a participating education 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 by the employee.

Sec. 1551.170 [1579.205]. PAYMENT BY PARTICIPATING EDUCATION ENTITY. Notwithstanding Section 1551.169 [1579.204], a participating education entity may pay any portion of what otherwise would be the employee share of premiums and other costs associated with the coverage selected by the education employee.

SECTION 2.06. Sections 1579.251, 1579.252, 1579.253, 1579.254, and 1579.255, Insurance Code, are transferred to Subchapter D-1, Insurance Code, as added by this Act, redesignated as Sections 1551.171, 1551.172, 1551.173, 1551.174, and 1551.175, Insurance Code, and amended to read as follows:

Sec. 1551.171 [1579.251]. STATE ASSISTANCE. (a) The state shall assist education employees of participating school districts and charter schools in the purchase of group health coverage under this chapter by providing for each covered education employee the amount of $900 each state fiscal year or a greater amount as provided by the General Appropriations Act. The state contribution shall be distributed through the school finance formulas under Chapters 41 and 42, Education Code, and used by school districts and charter schools as provided by Section 42.260, Education Code.

(b) The state shall assist education employees of participating regional education service centers and educational districts described by Section 1551.161(4)(B) [1579.002(5)(B)] in the purchase of group health coverage under this chapter by providing to the employing service center or educational district, for each covered education employee, the amount of $900 each state fiscal year or a greater amount as provided by the General Appropriations Act.

Sec. 1551.172 [1579.252]. CONTRIBUTION BY PARTICIPATING EDUCATION ENTITIES. A participating education entity shall make contributions for the program as provided by Chapter 1581.

Sec. 1551.173 [1579.253]. CONTRIBUTION BY EDUCATION EMPLOYEE. (a) An education employee covered by the group benefits program shall pay that portion of the cost of coverage selected by the employee that exceeds the amount of the state contribution under Section 1551.171 [1579.251] and the participating education entity contribution under Section 1551.172 in the manner required by the board of trustees [1579.252].

(b) The education employee may pay the employee's contribution under this subsection from the amount distributed to the employee under Subchapter D, Chapter 22, Education Code.

(c) Notwithstanding Subsection (a), a participating education entity may pay any portion of what otherwise would be the employee share of premiums and other costs associated with the coverage selected by the education employee.

Sec. 1551.174 [1579.254]. CONTRIBUTIONS HELD IN TRUST FOR FUND. A participating education entity:

(1) shall hold contributions required by this subchapter in trust for the Texas school employees uniform group coverage trust fund and its participants; and

(2) may not divert the contributions for any other purpose.

Sec. 1551.175 [1579.255]. INTEREST ASSESSED ON LATE PAYMENT OF CONTRIBUTIONS BY PARTICIPATING EDUCATION ENTITIES. (a) A participating education entity that does not remit to the board of trustees [trustee] all contributions required by this subchapter before the 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) On request, the board of trustees [trustee] may grant a waiver of the deadline imposed by this section based on a participating education entity's financial or technological resources.

SECTION 2.07. Section 1579.301, Insurance Code, is transferred to Subchapter D-1, Insurance Code, as added by this Act, and redesignated as Section 1551.176, Insurance Code, to read as follows:

Sec. 1551.176 [1579.301]. FUND; ADMINISTRATION. The Texas school employees uniform group coverage trust fund is a trust fund with the comptroller.

SECTION 2.08. Sections 1579.302, 1579.303, and 1579.304, Insurance Code, are transferred to Subchapter D-1, Insurance Code, as added by this Act, redesignated as Sections 1551.177, 1551.178, and 1551.179, Insurance Code, and amended to read as follows:

Sec. 1551.177 [1579.302]. COMPOSITION OF FUND. The Texas school employees uniform group coverage trust fund is composed of:

(1) all contributions made to the fund under this subchapter [chapter] from education employees, participating education entities, and the state;

(2) contributions made by education employees or participating education entities for optional coverages;

(3) investment income;

(4) any additional amounts appropriated by the legislature for contingency reserves, administrative expenses, or other expenses; and

(5) any other money required or authorized to be paid into the fund.

Sec. 1551.178 [1579.303]. PAYMENTS FROM FUND. The board of trustees [trustee] may use amounts in the Texas school employees uniform group coverage trust fund only to provide group coverages to eligible education employees under the group benefits program [this chapter] and to pay the expenses of administering the group benefits program for participating education entities.

Sec. 1551.179 [1579.304]. INVESTMENT OF FUND. The board of trustees [trustee] may invest assets of the Texas school employees uniform group coverage trust fund in the manner provided by Section 67(a)(3), Article XVI, Texas Constitution.

SECTION 2.09. Section 1501.009(b), Insurance Code, is amended to read as follows:

(b) An independent school district that is participating in the state employees [uniform] group benefits [coverage] program established under Chapter 1551 [1579] may not participate in the small employer market under this section for health insurance coverage [and may not renew a health insurance contract obtained in accordance with this section after the date on which the program of coverages provided under Chapter 1579 is implemented]. This subsection does not affect a contract for the provision of optional coverages not included in a health benefit plan under this chapter.

SECTION 2.10. Section 1581.001(2), Insurance Code, is amended to read as follows:

(2) "Participating charter school" means an open-enrollment charter school established under Subchapter D, Chapter 12, Education Code, that participates in the [uniform] group benefits [coverage] program established under Chapter 1551 [1579].

SECTION 2.11. Sections 22.004(a), (c), (i), and (j), Education Code, are amended to read as follows:

(a) A district shall participate in the state employees [uniform] group benefits [coverage] program established under Chapter 1551 [1579], Insurance Code, as provided by Subchapter D-1 [D] of that chapter.

(c) The cost of the coverage provided under the program described by Subsection (a) shall be paid by the state, the district, and the employees in the manner provided by Subchapter D-1 [F], Chapter 1551 [1579], Insurance Code. The cost of coverage provided under a plan adopted under Subsection (b) shall be shared by the employees and the district using the contributions by the state described by Subchapter D-1 [F], Chapter 1551 [1579], Insurance Code, or Subchapter D.

(i) Notwithstanding any other provision of this section, a district participating in the state employees [uniform] group benefits [coverage] program established under Chapter 1551 [1579], Insurance Code, may not make group health coverage available to its employees under this section after the date on which the program of coverages provided under Chapter 1551 [1579], Insurance Code, is implemented.

(j) This section does not preclude a district that is participating in the state employees [uniform] group benefits [coverage] program established under Chapter 1551 [1579], Insurance Code, from entering into contracts to provide optional insurance coverages for the employees of the district.

SECTION 2.12. Section 22.101(3), Education Code, is amended to read as follows:

(3) "Participating charter school" means an open-enrollment charter school established under Subchapter D, Chapter 12, that participates in the group benefits program established under Chapter 1551 [1579], Insurance Code.

SECTION 2.13. Sections 42.260(a) and (c), Education Code, are amended to read as follows:

(a) In this section, "participating charter school" means an open-enrollment charter school that participates in the state employees [uniform] group benefits [coverage] program established under Chapter 1551 [1579], Insurance Code.

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

(1) 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 1551.171 [1579.251], 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

(2) the difference between the amount necessary for the district or school to comply with Section 1581.052, 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, for that year.

SECTION 2.14. The following provisions of the Insurance Code are repealed:

(1) Subchapters A, B, and C, Chapter 1579;

(2) the headings to Subchapters D and E, Chapter 1579;

(3) Section 1579.201; and

(4) the headings to Subchapters F and G, Chapter 1579.

SECTION 2.15. (a) In this section, "program" means the uniform group coverage program under Chapter 1579, Insurance Code, as it existed before amendment by this Act.

(b) Effective September 1, 2020:

(1) all functions and activities of the Teacher Retirement System of Texas under Chapter 1579, Insurance Code, before that date are transferred to the Employees Retirement System of Texas;

(2) all rules, fees, policies, procedures, decisions, and forms of the Teacher Retirement System of Texas related to the program become applicable rules, fees, policies, procedures, decisions, and forms of the Employees Retirement System of Texas until changed by the board of trustees of that system;

(3) a complaint, investigation, contested case, or other proceeding related to the program that is pending on September 1, 2020, is transferred without change in status to the Employees Retirement System of Texas;

(4) the management of the Texas school employees uniform group coverage trust fund and all other money, contracts, property, and obligations related to the program are transferred to the Employees Retirement System of Texas; and

(5) the unexpended and unobligated balance of any money appropriated by the legislature for the program for the purpose of administering the program is transferred to the Employees Retirement System of Texas.

(c) The Teacher Retirement System of Texas shall provide to the Employees Retirement System of Texas the records and other information necessary for the Employees Retirement System of Texas to implement its duties under this Act.

SECTION 2.16. The changes in law made by this article apply only to group coverage provided under Chapter 1551, Insurance Code, or Chapter 1579, Insurance Code, for a plan year beginning on or after September 1, 2020. A plan year that begins before that date is governed by the law as it existed immediately before the effective date of this Act, and that law is continued in effect for that purpose.

ARTICLE 3. TERMINATION OF TEXAS PUBLIC SCHOOL EMPLOYEES GROUP

INSURANCE PROGRAM FOR RETIREES

SECTION 3.01. Chapter 1575, Insurance Code, is amended by adding Subchapters L and M to read as follows:

SUBCHAPTER L. TERMINATION OF GROUP PROGRAM

Sec. 1575.551. PROGRAM TERMINATION. Subject to Section 1575.552, effective September 1, 2019, the group program is terminated.

Sec. 1575.552. COVERAGE ELIGIBILITY TERMINATES; PHASE-OUT PERIOD. (a) An individual who is not a participant in the group program on August 31, 2019, is not entitled to obtain coverage under the group program after that date.

(b) An individual who is a participant in the group program on August 31, 2019, and who is, on September 1, 2019, eligible to participate in Medicare, is not entitled to continue coverage under the group program after August 31, 2019.

(c) An individual who is a participant in the group program on August 31, 2019, but who is not, on September 1, 2019, eligible to participate in Medicare, may continue coverage under the group program in accordance with this subchapter until the earlier of:

(1) the date the individual first becomes eligible to participate in Medicare; or

(2) September 1, 2029.

Sec. 1575.553. AUTHORIZED COVERAGE. Notwithstanding Section 1575.151, on and after September 1, 2019, the group program may not offer coverage other than health benefit plan coverage.

Sec. 1575.554. EXCESS GROUP INSURANCE FUND MONEY. (a) Not later than December 31, 2019, the trustee shall determine the amount of money required to fund coverage for individuals under Section 1575.552(c) for the 2019-2020 fiscal year and shall certify that amount to the comptroller.

(b) As soon as practicable after January 1, 2020, the trustee shall, notwithstanding Section 1575.206, pay to each retiree participating in the group program on August 31, 2019, an equal share of the amount by which the money in the group insurance fund exceeds the amount of money determined under Subsection (a).

Sec. 1575.555. REDUCTION IN CONTRIBUTIONS. (a) Beginning not later than June 1, 2020, the trustee shall annually determine the amount of money required to fund coverage for individuals under Section 1575.552(c) for the subsequent fiscal year. The trustee shall certify that amount to the comptroller.

(b) The trustee, in consultation with the comptroller, may annually adjust the amounts of contributions to be made under Sections 1575.201, 1575.202, 1575.203, and 1575.204, to the extent that the trustee determines that money otherwise to be contributed under those sections for a fiscal year will exceed the amount determined to be required for that fiscal year under Subsection (a).

Sec. 1575.556. FINAL RECONCILIATION; TERMINATION OF FUND. As soon as practicable after August 31, 2029, the trustee, in consultation with the comptroller, shall determine any unencumbered amount remaining in the group insurance fund. The trustee shall pay that amount in equal shares to individuals participating in the program on August 31, 2029.

Sec. 1575.557. GROUP PROGRAM AND GROUP INSURANCE FUND ABOLISHED. Effective September 1, 2029, the group program and the group insurance fund are abolished.

Sec. 1575.558. DUTIES OF THE TRUSTEE. (a) The trustee shall implement a plan for the orderly termination of the group program in accordance with this subchapter.

(b) The determinations made by the trustee under Sections 1575.554 and 1575.555 must be actuarially justified.

SUBCHAPTER M. EXPIRATION OF CHAPTER

Sec. 1575.601. EXPIRATION OF CHAPTER. This chapter expires September 1, 2030.

ARTICLE 4.

EFFECTIVE DATE

SECTION 4.01. This Act takes effect September 1, 2019.