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.