HBA-SEB H.B. 2521 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 2521
By: Greenberg
Pensions and Investments
3/22/1999
Introduced



BACKGROUND AND PURPOSE 

Currently, the Texas Public School Employees Group Insurance program
governs health insurance for public school employees.  H.B. 2521 repeals
that program and creates the Texas School Employees Uniform Health
Insurance Benefits Act to provide a statewide group health insurance
program for active and retired teachers.  Under this Act, the Teacher
Retirement System administers the health insurance program.  School
districts are required to participate beginning with the 20012002 school
year.  H.B. 2521 sets forth coverage requirements, creates a fund for use
by the program created by this Act, and establishes contribution
requirements for the state, school districts, and program participants.   

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the Teacher Retirement System of Texas
in SECTION 1 (Article 3.50-7, Insurance Code) of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Subchapter E, Chapter 3, Insurance Code, by adding
Article 3.50-7, as follows: 

Art. 3.50-7.  TEXAS SCHOOL EMPLOYEES UNIFORM GROUP HEALTH 
INSURANCE BENEFITS ACT

Sec. 1.  SHORT TITLE.  Authorizes this article to be cited as the Texas
School Employees Uniform Group Health Insurance Benefits Act. 

Sec. 2.  DEFINITIONS.  Defines "administering firm," "basic coverage,"
"cafeteria plan," "employee," "health benefits plan," "participating school
district," "retiree," and "trustee." 

Sec. 3.  ADMINISTRATION.  (a)  Requires the Teacher Retirement System of
Texas (TRS, trustee) to implement and administer the statewide uniform
group insurance program described by this article (program).   

(b)  Authorizes the trustee to hire and compensate employees.  

(c)  Authorizes the trustee, on a competitive bid basis, to contract with a
qualified, experienced firm of group insurance specialists or an
administering firm who will act for the trustee in the capacity of
independent administrators and managers of the program. Requires the
selected administrator, who is paid by the trustee, to assist the trustee
to ensure the proper administration of this article and its coverages,
services, and benefits.  
 
(d)  Authorizes the trustee to enter into interagency contracts with any
agency of the state, including the Employees Retirement System of Texas
(ERS), for the purpose of assistance in implementing the program.   

(e)  Provides that the trustee has the powers with regard to administering
the program that  ERS has in administering the Texas Employees Uniform
Group Insurance Benefits Act, including the power to adjudicate claims,
expel participants from the program for cause, and adopt rules to
administer this article.   

Sec. 4.  PARTICIPATION IN PROGRAM.  Requires each public school district to
participate in the program unless the district is participating in the
group insurance program under the Texas Employees Uniform Group Insurance
Benefits Act.  Provides that each fulltime employee or retiree of a
participating school district is automatically covered by the basic plan
for employees or retirees, as applicable, unless the employee or retiree
specifically waives coverage or is expelled from the program.  Establishes
that each part-time employee of a participating school district is eligible
to participate in the program on application in the manner provided by the
trustee, unless the employee has been expelled from the program. Requires a
participating school district to notify each of its part-time employees of
their eligibility for participation in the program. 

Sec. 5.  GROUP COVERAGES.  (a)  Requires the trustee to establish plans of
group coverages for employees and retirees of participating school
districts and their dependants. Requires the coverages to be comparable in
scope and in cost to the coverages provided under the Texas Employees
Uniform Group Insurance Benefits Act, to the greatest extent possible.
Authorizes the coverages to include group life coverages, health benefit
plans, accidental death and dismemberment coverages, coverages against
short-term or long-term loss of salary, and other coverages considered
advisable by the trustee.  Requires the trustee to divide the state into
four regions for the purpose of offering and administering plans of
coverages.  Provides that comparable plans of each type of coverage
established must be offered to employees and retirees of all participating
school districts.   

(b)  Authorizes the trustee, by rule, to define the basic coverage in which
each full-time employee or retiree participates unless specifically waived.
Provides that basic coverage must include a health benefits plan.
Authorizes the trustee, by rule, to define optional or voluntary coverage. 

(c)  Authorizes the trustee to provide a cafeteria plan for employees of
participating school districts.   

(d)  Authorizes the trustee to determine that plans of coverages be
provided directly from the fund rather than through the purchase of
insurance.  Exempts any self-funded plan of coverages from any other
insurance law unless the law specifically applies to the plan or this
article. 

Sec. 6.  PAYMENT OF CONTRIBUTIONS.  Requires the state to contribute an
amount provided by the General Appropriations Act for each employee covered
by the program. Requires the state to pay 100 percent of the cost of the
basic coverage for retirees who are covered by the program and who retired
with at least 20 years of service credit in TRS. Requires the state to pay
one-half of the cost of basic coverage for other retirees participating in
the program.  Requires the participant and the school district to pay the
remaining portion of the cost of basic coverage that exceeds the amount of
state contributions, with the participant paying 20 percent and the school
district paying 80 percent.  Provides that an employee or retiree
participating in the program is responsible for paying the full cost of
optional or voluntary coverage selected. 

Sec. 7.  TEXAS SCHOOL EMPLOYEES UNIFORM GROUP INSURANCE TRUST FUND.
Creates the Texas school employees uniform group insurance trust fund
(fund) as a trust fund outside the state treasury to be held by the Texas
Treasury Safekeeping Trust Company and administered by the trustee on
behalf of the participants in the plans of insurance coverage provided
under this article.  Requires premiums, amounts recovered under contracts
for the program's implementation, and investment and depository income to
be credited to the fund.  Authorizes money in the fund to be used only for
the purpose of providing the program of insurance coverage, including
administrative expenses.  Authorizes the trustee to invest assets of the
fund in the manner provided by Section 67(a)(3), Article  XVI, Texas
Constitution (regarding the investment of funds of state and local
retirement systems).   

SECTION 2.  Amends Article 3.51, Insurance Code, as follows:

Art. 3.51.  New title:  GROUP INSURANCE FOR EMPLOYEES OF STATE AND ITS
SUBDIVISIONS AND COLLEGES.  Deletes existing text which prohibits premiums
for an insurance policy of employees of an independent school district from
being paid by the State of Texas.  Makes conforming changes.   

SECTION 3.  Repealer:  Article 3.50-4, Insurance Code (Texas Public School
Employees Group Insurance Program).   

SECTION 4.  Requires TRS to begin enrollment in the program effective
beginning with the 20012002 school year.    Requires TRS to transfer all
assets and liabilities of the program under Article 3.50-4, Insurance Code,
all coverages provided under that program, and all records pertaining to
that program provided under Article 3.50-7, Insurance Code, as added by
this Act, not later than the date the program of coverages provided under
Article 3.50-7 is implemented. 

SECTION 5.  Effective date: September 1, 1999, except that Sections 2 and 3
take effect September 1, 2001. 

SECTION 6.  Emergency clause.