HBA-SEB H.B. 2828 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2828 By: Isett Pensions and Investments 3/25/1999 Introduced BACKGROUND AND PURPOSE A medical savings account (MSA) is an untaxed savings account that grows over time while providing health insurance with a high deductible. MSA is used to cover smaller expenses or to pay the deductible of major expenses. In MSA, the employee chooses the type of health care to receive, which gives the employee control over the cost and type of care. Upon retirement or at the end of employment, the employee receives the unspent balance of MSA. Recently, the United States Congress extended the MSA option to the self-employed. Private corporations have used MSAs to bring down health care costs and to provide employees with more health care options. H.B. 2828 establishes an MSA pilot program within the Employees Retirement System of Texas. 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 3.50-2A, Insurance Code) and SECTION 2 of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter E, Chapter 3, Insurance Code, by adding Article 3.50-2A, as follows: Art. 3.50-2A. MEDICAL SAVINGS ACCOUNT PILOT PROGRAM FOR STATE EMPLOYEES. (a) Requires the Employees Retirement System of Texas (ERS), by rule, to adopt a medical savings account pilot program (pilot program) for health care coverage. Provides that the program is to be offered as a health benefits option for state employees in lieu of the health benefits program provided by the Texas Employees Uniform Group Insurance Benefits Act. (b) Provides that participation in the pilot program is limited to not more than five percent of the number of full-time state employees as of March 1, 2000. Requires ERS, by rule, to set guidelines for participation in the pilot program. (c) Requires ERS to solicit at least three bids for the development and establishment of the program. Provides that the program adopted by ERS must provide comparable health benefits to those provided to state employees under the Texas Employees Uniform Group Insurance Benefits Act. Specifies that the program must also establish annual deductibles for participating employees between $1,500 and $3,000 with no copayment required after meeting the annual deductible. (d) Provides that this article expires on August 31, 2005. SECTION 2. (a) Effective date: September 1, 1999. (b) Requires ERS to adopt rules as necessary to implement Article 3.50-2A, Insurance Code, as added by this Act, not later than March 1, 2000. Requires ERS to make the program available for employee participation not later than September 1, 2000. SECTION 3. Emergency clause.