HBA-MPM H.B. 523 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 523 By: Tillery Teacher Health Insurance, Select 2/5/2001 Introduced BACKGROUND AND PURPOSE Since 1991, state law has required Texas school districts to offer employees a health benefit plan that is comparable to that offered to state employees through the Employee Retirement System of Texas (ERS). There is no requirement for the state or the district to pay the premium, hence some districts pay all the cost while others pay little or none, sometimes creating in such cases additional financial hardship for district employees. House Bill 523 requires Texas school districts to participate in a statewide health benefit program through the Teacher Retirement System of Texas (TRS) comparable to that administered by ERS, fully funded by the school district and the state, that provides health insurance benefits for active public school employees. The bill also requires TRS to pay sliding scale percentages of the health benefit premium for a retired public school employee based on an employee's years of creditable service. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Teachers Retirement System of Texas in SECTION 6 (Section 7A, Article 3.50-4, Insurance Code) of this bill. ANALYSIS House Bill 326 amends the Insurance and Education codes to require the Teacher Retirement System of Texas (TRS) to provide basic group health benefits coverage for each active employee through a statewide group insurance program (program) and requires each school district to participate in the program (Sec. 7A, Art. 3.50-4, Insurance Code and Sec. 22.004, Education Code). The bill amends the Insurance Code to authorize TRS to provide optional group health benefits coverage for each active employee. The bill provides that the coverages must be the same as those provided to retired school district employees. The bill specifies that the plan must be comparable to that provided by the Employees Retirement System of Texas (ERS) to state employees and include coverage for prescribed drugs, medicines, and prosthetic devices. In addition to the required basic health benefits coverage required, the coverage under the plan or plans may include life insurance, accidental death and dismemberment, long-term care, other supplemental benefits, supplies and services, protection against the loss of salary, and other coverages considered advisable by TRS. TRS is required to consult with ERS in making coverage determinations (Sec. 7A, Art. 3.50-4 and Sec. 8, Art. 3.50-4, Insurance Code). The bill amends the Education Code to authorize a district to make available to employees optional group coverages in addition to the basic plan, in whole or in part, through a risk pool established through one or more school districts, or under a policy or insurance or group contract issued by an insurer, a group hospital service, or a health maintenance organization. The bill requires the cost for such optional coverage to be shared by the employees and the district without contribution by the state (Sec. 22.004, Education Code). The bill amends the Insurance Code to require the state to contribute an amount equal to 50 percent of the cost for employee-only coverage for active employees. The bill requires each participating district to contribute the remaining 50 percent. The bill provides that unless a district makes additional contributions to provide dependent or optional coverage, each active employee is required to pay 100 percent of the cost for dependent or optional coverage through a deduction from the employee's salary. The bill requires each active employee in a participating district to participate in the basic coverage unless the employee specifically waives participation in writing (Sec. 7A, Art. 3.50-4, Insurance Code). The bill modifies the amount TRS is required to contribute toward the cost of the basic plan covering retired school district employees by requiring a sliding scale for TRS contributions as follows: _100 percent of the cost of basic group health benefits coverage for a retiree with at least 30 years of actual service credit; _75 percent of the cost of basic group health benefits coverage for a retiree with at least 20 but less than 30 years of actual service credit; and _ 50 percent of the cost of basic group health benefits coverage for a retiree with at least 10 but less than 20 years of actual service credit. The bill requires a retiree to pay 100 percent of the optional or dependent coverage cost (Sec. 7, Art. 3.50-4, Insurance Code). The bill transfers the requirement to assist TRS in carrying out the provisions regarding the providing of group insurance coverages and health benefit plans from the State Board of Insurance to the commissioner of insurance, and also requires TRS to make a written report to the commissioner rather than the board (Secs. 10 and 19, Art. 3.50-4, Insurance Code). The bill changes the name of the Retirees Advisory Committee currently in existence to the Health Benefit Advisory Committee (committee). The bill specifies that the committee is exempt from provisions in the Government Code that limit the existence of an advisory committee (Sec. 6, Art. 3.50-4, Insurance Code). The bill requires TRS, by rule, to define the requirements of the basic coverage and to establish minimum benefit standards for the program and other requirements for districts as determined by TRS to be necessary for the operation of the program. The bill requires TRS to pay the administrative costs in extending the program to active employees, and authorizes TRS to use for that purpose any unexpended balance from the fees collected to study potential coverage under and participation in a statewide program (Sec. 7A, Art. 3.50-4, Insurance Code). The bill requires TRS to begin enrollment in the program for active employees and retirees to be effective beginning with the 2002-2003 school year (SECTION 18). The bill repeals provisions authorizing a district to establish a health care fund to provide for a health care plan for employees of the district and dependents of employees and requires a district that, before September 1, 2001, established a health care fund to abolish the fund no later than September 1, 2002, and to distribute any unexpended balance in the fund attributable to deductions made from district employees' salaries to the employees in shares proportionate to the employees' contributions no later than December 1, 2002 (SECTIONS 17 and 19). EFFECTIVE DATE September 1, 2001.