HBA-GUM C.S.H.B. 3178 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 3178 By: Lewis, Glenn Pensions & Investments 5/6/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE In April 1, 1992, the University of Houston System and Texas Tech University, having been given the option, elected to join the Employee Retirement System (ERS) Insurance Program. Current law, however, does not reflect this election. C.S.H.B. 3178 adds and clarifies definitions of terms to include these institutions in the ERS insurance program. Under current law, an individual who has five or more years of service under the Teacher Retirement System as a public school teacher can work at the University of Texas (UT) or Texas A & M University (A&M) for one day and retire as a UT or A&M retiree under the medical plan with entitlement to premium sharing funds, which the individual would otherwise not receive. Each case would cost the state over 50,000 dollars. This bill redefines and clarifies definitions of terms to close the loophole. UT believes that having an option to select and consider a health maintenance organization (HMO) as the basic plan for the institution may provide more diverse opportunities to UT employees and retirees. Allowing an HMO to be the basic plan may save plan members, the state, and the university money without losing quality service. This bill establishes program participant eligibility for retired employees; recognizes that a number of HMOs no longer seek federal approval; authorizes the specified institutions to select and consider an HMO as the basic health plan; and authorizes the design, development, and offering of cafeteria plans. A number of plans are now self-funded. This bill includes a plan description, which is used by both an insured and a self-funded plan, among the documents issued to an insured employee or retired employee under Article 3.50-3, Insurance Code (Texas State College and University Employees Uniform Insurance Benefits Act). C.S.H.B. 3178 also clarifies employee entitlement to automatic coverage; allows electronic authorization for premium cost deduction from employee compensation; and establishes surviving spouse or dependant entitlements to continuing health plan coverages provided those persons pay the full cost of coverage. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 3(a), Article 3.50-3, Insurance Code, to redefine "administering carrier," "retired employee," "employee," "employer," "institution," and "qualified carrier." Deletes "Texas Tech University" and "University of Houston System." Defines "basic coverage" and "optional coverage." Makes conforming and nonsubstantive changes. SECTION 2. Amends Section 4, Article 3.50-3, Insurance Code, to include retired employees under this section (Texas State College and University Employees Uniform Insurance Benefits Program). Provides that the services an institution is authorized to select and contract be performed by a health maintenance organization approved by the State of Texas, rather than by the federal government or the State of Texas if available. Exempts a plan of coverages for which the institution does not purchase insurance, but provides coverage, under this Act on a self-insured basis, from any other insurance law unless the law expressly applies to this plan or this Act. Deletes existing text relating to the requirements imposed on a health maintenance organization, and the feasibility of the establishment of a cafeteria plan. Makes conforming changes. SECTION 3. Amends Section 5, Article 3.50-3, Insurance Code, to include a plan description among the documents issued to an insured employee or retired employee under this Act and a summary of the provisions of a contract among the items included in the certificate of insurance or plan description. Makes conforming changes. SECTION 4. Amends Section 8, Article 3.50-3, Insurance Code, to make conforming changes. SECTION 5. Amends Section 9, Article 3.50-3, Insurance Code, to make a conforming change. SECTION 6. Amends Section 10, Article 3.50-3, Insurance Code, to make conforming changes. SECTION 7. Amends Section 11, Article 3.50-3, Insurance Code, to delete existing text requiring each policy of insurance to provide for automatic coverage on the date the employee becomes eligible for insurance. Provides that other coverages provided under this Act for which an employee or retired employee may make application under this section are provided within applicable standards, rather than within institutional and administrative council standards. Makes conforming and nonsubstantive changes. SECTION 8. Amends Section 12, Article 3.50-3, Insurance Code, to provide that an employee and retired employee may electronically authorize a certain specified deduction. Requires a retired employee to execute agreements and make appropriate contributions in a manner analogous to the requirements adopted under this section (Payment of Premiums) for an active employee. Makes conforming changes. SECTION 9. Amends Section 17, Article 3.50-3, Insurance Code, by adding Subsection (b), to authorize a surviving spouse of an employee or retired employee, who meets specified conditions, to elect to retain the spouse's authorized coverages and retain authorized coverage for an eligible dependent, at the group rate for employees, following the death of the employee or retired employee, provided that at the time of death such coverage was in effect for the spouse or dependent(s). Makes a conforming change. SECTION 10. Effective date: September 1, 1999. Provides that this Act applies only to a group coverage that is delivered, issued for delivery, or renewed under Article 3.50-3 (Texas State College and University Employees Uniform Insurance Benefits Act), V.T.C.S., on or after January 1, 2000. SECTION 11. Effective date: September 1, 1999. SECTION 12. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute modifies the original to conform to Legislative Council format. The substitute modifies SECTION 8 (Section 12, Article 3.50-3, V.T.C.S.) of the original to require a retired employee to execute agreements and make appropriate contributions in a manner analogous to the requirements adopted under Section 12 (Payment of Premiums) for an active employee. The substitute adds a new SECTION 10 to provide that the effective date of this Act is September 1, 1999, and that this Act applies only to a group coverage that is delivered, issued for delivery, or renewed under Article 3.50-3 (Texas State College and University Employees Uniform Insurance Benefits Act), V.T.C.S., on or after January 1, 2000. SECTION 10 of the original is redesignated to SECTION 12 (emergency clause). The substitute adds SECTION 11 to provide that this Act takes effect September 1, 1999.