HBA-SEB H.B. 1294 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1294 By: Ehrhardt Pensions and Investments 2/19/1999 Introduced BACKGROUND AND PURPOSE Current law requires school districts to offer their employees a health insurance plan that is comparable to the plan the state provides to state employees. In 1997 the Teacher Retirement System of Texas conducted a study designed to assess compliance with this law, and the study revealed that 60 percent of teachers do not have health coverage comparable to a state employee's coverage. The availability of better benefits in the private sector is one factor contributing to the state's difficulties in attracting and retaining teachers. H.B. 1294 creates a uniform statewide group health insurance plan for all public school employees, active and retired. The uniform plan mirrors that of the Employees Retirement System of Texas, the administrator of the plan, and the contributions to the plan remain in a separate fund with the comptroller. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Employees 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 Employees Retirement System of Texas (trustee) to implement and administer the statewide uniform group insurance program described by this article. (b) Authorizes the trustee to hire and compensate employees. (c) Authorizes the trustee to contract with a qualified, experienced firm of group insurance specialists or an administering firm on a competitive bid basis in order for the firm to act for the trustee in the capacity of independent administrators and managers of the programs authorized under this article. Requires the selected independent administrator to assist the trustee to ensure the proper administration of this article and the coverages, services, and benefits provided for or authorized by this article. Requires the trustee to pay the independent administrator. (d) Authorizes the trustee to enter into interagency contracts with any agency of the state, including the Teacher Retirement System of Texas, for the purpose of assistance in implementing the program provided by this article. (e) Provides that the trustee has the same powers in administering the program described by this article that the trustee has in administering the Texas Employees Uniform Group Insurance Benefits Act (Article 3.50-2, V.T.C.S.), 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. (a) Requires a public school district to participate in the program provided by this article unless the executive director of the trustee determines under Section 22.004(h), Education Code, that the district's coverage is comparable to the coverage provided under this article. (b) Establishes that each full-time 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. (c) Provides that each part-time employee of a participating school district is eligible to participate in the program provided by this article 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 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 dependents. Requires the coverages to be comparable in scope and in cost to the coverages provided under the Texas Employees Uniform Group Insurance Benefits Act. 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. 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 coverage for which the trustee may make available state contributions and voluntary coverage for which the employee or retiree is responsible for all contributions. (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. Provides that any selffunded plan of coverages is exempt 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 for each employee and retiree covered by the program an amount equal to the amount the state contributes for participants in the program provided under the Texas Employees Uniform Group Insurance Benefits Act. Requires each employee and retiree covered by the program to pay that portion of the cost of coverage selected by the employee or retiree that exceeds the amount of state contributions. Sec. 7. FUND. Requires that contributions collected under Section 6 of this article and any amounts appropriated by the legislature for contingency reserves or administrative expenses be deposited in the Texas school employees uniform group insurance trust fund, created with the comptroller. Authorizes the trustee to use amounts in the fund only to provide group coverages under this article and to pay the expenses of administering the program. Authorizes the trustee to invest assets of the fund in the manner provided by Section 67(a)(3), Article XVI, Texas Constitution (regarding state and local retirement systems). SECTION 2. Amends Article 3.50-4, Insurance Code, by adding Section 3A, as follows: Sec. 3A. TERMINATION OF PROGRAM AND TRANSFER OF PROPERTY. Requires the Teacher Retirement System of Texas to transfer to the Employees Retirement System of Texas all assets and liabilities of the program, all coverages provided under the program, and all records pertaining to the program before the date the program of coverages provided under Article 3.50-7 of this code is implemented. Establishes that on the transfer of property described by this section, the program provided by this article is terminated. SECTION 3. Amends Section 22.004, Education Code, by adding Subsection (h), as follows: (h) Establishes that without regard to Subsections (a), (b), and (d) (relating to group health benefits for school employees), group health insurance coverage provided by a district must be comparable to the basic health coverage provided under Article 3.50-7, Insurance Code, if that program of coverages has been implemented, rather than to the basic coverage provided under the Texas Employees Uniform Group Insurance Benefits Act. Provides that if the program of coverages has been implemented under Article 3.50-7, Insurance Code, the board of trustees and the executive director of the Employees Retirement System of Texas have the powers and duties granted by this section to the board of trustees and the executive director of the Teacher Retirement System of Texas. Prohibits the executive director from certifying a district's coverage as comparable unless the executive director determines that the district's coverage results in a lower average cost to participants that the basic coverage provided under Article 3.50-7, Insurance Code. Requires the district to begin participating in the program provided by Article 3.50-7, Insurance Code, at the beginning of the next school year or on the expiration of the district's contract for group health insurance coverage, whichever is later, if the executive director determines that a district's coverage is not comparable. SECTION 4. Requires the Employees Retirement System of Texas to begin enrollment in the program provided under Article 3.50-7, Insurance Code, as added by this Act, to be effective beginning with the first school year for which the legislature makes appropriations of contributions required by Section 6(a) of that article. SECTION 5. Emergency clause.