TITLE 34.PUBLIC FINANCE

Part 4. EMPLOYEES RETIREMENT SYSTEM OF TEXAS

Chapter 65. EXECUTIVE DIRECTOR

34 TAC §65.3

The Employees Retirement System of Texas (System) proposes amendments to §65.3, concerning Records of the System. The amendments are being proposed in order for the amount of the charges allowed for providing public information and copies of public information in the possession of the System to conform with statewide standards.

Paula A. Jones, General Counsel, has determined that the first five years the amendments are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the amended rule because the changes conform to established statewide standards.

Ms. Jones has also determined that for each year of the first five years the amendments are in effect the public benefit anticipated as a result of enforcing the amended rule will be continued understanding by the public of how costs are calculated when the System responds to Public Information Act requests. There will be no effect on small businesses. The anticipated economic cost to persons who are required to comply with the amendments as proposed will vary according to the amount and type of copies requested.

Comments on the proposed rule amendments may be submitted to Paula A. Jones, General Counsel, Employees Retirement System of Texas, P.O. Box 13207, Austin, Texas 78711-3207, or e-mail Ms. Jones at paula.jones@ers.state.tx.us. The deadline for receiving comments is 10:00 a.m. on Monday, April 10, 2006.

The amendments are proposed under Texas Government Code §815.102, which provides authorization for the Board of Trustees to adopt rules for the transaction of any other business of the board.

No other statutes are affected by the proposed amendments.

§65.3.Records of the System.

(a) The executive director or her designee is the custodian of records of the Employees Retirement System of Texas .

(b) (No change.)

(c) The following guidelines are established for charges to be made for providing public information and copies of public information in the possession of the system.

(1) Standard paper copy [ Standard-size paper copy ]--$.10 per page.

(2) Nonstandard-size [ paper ] copy : [ -- ]

(A) Diskette : [ -- ]$1.00 ; [ each. ]

(B) Magnetic tape: actual cost;

[(i) 4 mm.--$13.50 each;]

[(ii) 8 mm.--$12 each;]

[(iii) 9-track--$11 each;]

(C) Data cartridge: actual cost; [ VHS video cassette--$2.50 each. ]

(D) Tape cartridge: actual cost; [ Audio cassette--$1.00 each. ]

(E) Rewritable CD (CD-RW)--$1.00; [ Oversized paper copy--$.50 each. ]

(F) Non-rewritable CD (CD-R)--$1.00 [ Tape Cartridge: ]

[(i) 250 MB--$38 each;]

[(ii) 525 MB--$45 each.]

(G) Digital video disc (DVD)--$3.00; [ Mylar (36-inch, 42-inch, and 48-inch): ]

[(i) 3 mil.--$.85/linear foot;]

[(ii) 4 mil.--$1.10/linear foot;]

[(iii) 5 mil.--$1.35/linear foot.]

(H) JAZ drive--actual cost; [ Other--actual cost. ]

(I) Other electronic media--actual cost;

(J) VHS video cassette--$2.50;

(K) Audio cassette--$1.00;

(L) Oversize paper copy (e.g.: 11 inches by 17 inches, greenbar, bluebar, not including maps and photographs using specialty paper)--$.50;

(M) Specialty paper (e.g.: Mylar, blueprint, blueline, map photographic)--actual cost.

(3) Labor [ Personnel ] charge:

(A) For programming--$28.50 per hour; [ Programming personnel--$26 per hour. ]

(B) For locating, compiling, and reproducing [ Other personnel ]--$15 per hour.

(4) Overhead charge--20% of labor [ personnel ] charge.

(5) Microfiche or microfilm charge : [ -- ]

(A) Paper copy--$.10 per page ; [ . ]

(B) (No change.)

(6) (No change.)

(7) Computer resource charge : [ -- ]

(A) Mainframe--$10 per CPU minute ; [ . ]

(B) Midsize--$1.50 per CPU minute ; [ . ]

(C) Client/server system --$2.20 per clock hour ; [ . ]

(D) PC or LAN--$1.00 per clock hour.

(8) - (9) (No change.)

(10) Photographs--actual cost as calculated in accordance with 1 TAC §111.69(5) [ Access to information in other than standard-size form where no copies are made and the information is not readily available-$15 per hour/personnel cost. ]

(11) Maps--actual cost as calculated in accordance with 1 TAC §111.69(4) [ Outsourced/contracted services--actual cost. ]

(12) Other costs--actual cost. [ No Sales Tax--No Sales Tax shall be applied to copies of public information. ]

(13) Outsourced/Contracted Services--actual cost for the copy or services. May not include development costs. [ Other costs--actual cost. ]

(14) No Sales Tax--no Sales Tax shall be applied to copies of public information.

(d) No charge shall be made for one copy of any public record requested by members of the Legislature [ legislature ] in the performance of their legislative duties or if the system determines that furnishing the records without cost can be considered as primarily benefiting the trust fund [ general public ].

(e) (No change.)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 24, 2006.

TRD-200601017

Paula A. Jones

General Counsel

Employees Retirement System of Texas

Earliest possible date of adoption: April 9, 2006

For further information, please call: (512) 867-7421


Chapter 73. BENEFITS

34 TAC §73.17

The Employees Retirement System of Texas (ERS) proposes amendments to 34 TAC Chapter 73, §73.17, concerning Disability Retirement--Eligibility. The proposed amendment to 34 TAC §73.17 clarifies the executive director's authority to request medical and other information in connection with Texas Government Code §814.208 and related statutes from ERS disability retirees to determine whether such retirees continue to meet the eligibility requirements for disability retirement and associated health insurance benefits as provided in Texas Government Code §§814.201 - 814.211 and Texas Insurance Code Chapter 1551. The amendment also defines the term "comparable pay" and affirms ERS staff's authority and practice in calculating and adjusting comparable pay to reflect changes in state pay that a disability retiree would likely have realized if he or she had not retired.

Paula A. Jones, General Counsel, has determined for the first five-year period the amendments are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the amended rule.

Ms. Jones has also determined that for each year of the first five years the proposed amendments are in effect, the public benefit anticipated as a result of enforcing the amended rule will be that the ERS trust fund will be protected through enforcement of the eligibility requirements for continuation of ERS disability retirement benefits and associated health insurance benefits. There will be no affect on small business. The anticipated economic cost to persons who are required to comply with the amendments as proposed will vary among individual ERS members or retirees according to the results of periodic medical examinations and/or other information that may be requested by ERS in order to determine whether or not the member or retiree is or remains incapacitated for the further performance of duty.

Comments on the proposed amendments may be submitted to Paula A. Jones, General Counsel, P.O. Box 13207, Austin, Texas 78711-3207, or e-mail Ms. Jones at paula.jones@ers.state.tx.us. The deadline for receiving comments is 10:00 a.m. on Monday, April 10, 2006.

The amendments are proposed under Texas Government Code, §815.102 which provides authorization for the Board of Trustees to adopt rules relating to the administration of the funds of the retirement system and for the transaction of other business of the Board.

No other statutes are affected by the proposed amendments.

§73.17.Disability Retirement--Eligibility.

(a) Incapacity from the further performance of duty means that the member has demonstrably sought and been denied workplace accommodation of the disability in accordance with applicable law, and that the member is physically or mentally unable to continue to hold the position occupied and to hold any other position offering comparable pay. The education, training, and experience of the employee are to be considered when making this determination. "Comparable pay" means eighty (80) percent or more of the member's final state base pay prior to deductions for taxes or deferred compensation as provided or allowed by state and federal law; and it includes longevity and hazardous duty pay. Comparable pay may be adjusted by retirement system staff to account for realized state pay rate changes over time. The term excludes the monetary value of insurance and retirement benefits.

(b) In addition to the periodic medical examinations provided for in Texas Government Code §814.208(a), the executive director may direct a disability retiree to undergo additional medical examinations and to provide additional information satisfactory to the retirement system relevant to determining whether or not the retiree remains incapacitated for the further performance of duty. Absent a showing of good cause, a disability retiree who fails to respond to the request in a timely manner may have his or her disability retirement benefits and associated health insurance benefits suspended until the retiree has fully complied with the request. If the retiree fails to comply with the request for one year from the date the information was first requested by the retirement system, then all disability retirement benefits shall be terminated.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 24, 2006.

TRD-200601018

Paula A. Jones

General Counsel

Employees Retirement System of Texas

Earliest possible date of adoption: April 9, 2006

For further information, please call: (512) 867-7421


Chapter 81. INSURANCE

34 TAC §§81.1, 81.3, 81.5, 81.7 - 81.9, 81.11

The Employees Retirement System of Texas (ERS) proposes amendments to Texas Administrative Code, Title 34, Chapter 81, §§81.1, 81.3, 81.5, 81.7, 81.9, and 81.11, and new §81.8.

New §81.8 and amendments to §§81.1, 81.3, 81.7, and 81.9 concern the establishment of an incentive credit to waive health coverage, an optional TRICARE Supplemental health plan under the Texas Employees Group Benefits Program (GBP), and non-substantive administrative modifications of the rules. The TRICARE Supplemental health plan is contingent upon the selection of a qualified Carrier by the ERS Board of Trustees. The new rule and amendments are needed to update and clarify the rules and to comply with and conform to House Bill 417 and Senate Bill 1863, 79th Legislature, Regular Session, as they may be harmonized in light of changes made to the same section of the law. Both bills authorize a TRICARE Supplement for those eligible participants who waive health coverage, and Senate Bill 1863 creates an incentive credit to be applied toward the premium of either optional coverage or the TRICARE Supplement for those eligible participants who waive health coverage.

Section 81.1 is amended to add definitions for TRICARE and the TRICARE Supplement. This amendment defines TRICARE as the United States Department of Defense health care program for active and retired members of the uniformed services and their dependents, and the TRICARE Supplement as the plan of health care coverage designed to be secondary coverage to the TRICARE program. This section is further amended to clarify that TRICARE Supplement premiums are included in the definition of Insurance premium expense.

Section 81.3 is amended by adding subsection (c) to provide statutory references for board approval of one or more TRICARE Supplement Carrier(s) to offer supplemental health benefits to eligible GBP participants who waive health coverage.

Section 81.7 is amended to: (1) reference new §81.8 regarding the participation and enrollment requirements for those new employees and retirees who are eligible to waive health coverage and receive an incentive credit; (2) allow an annual opportunity to waive health coverage; (3) add the TRICARE Supplement as an optional coverage; and (4) make conforming reference changes.

Section 81.7(g)(1) is amended to remove a reference to the cancellation of health coverage by a participant who is assigned to active military duty. This provision is no longer needed because a GBP participant may apply for, elect, or continue enrollment in optional coverage without concurrent enrollment in health coverage.

Section 81.7(h)(8)(C) is amended to remove a reference that allowed an employee to re-enroll after the close of the annual enrollment opportunity. This provision is no longer needed due to the automation of the annual enrollment opportunity.

New §81.8(a) is added to establish who is eligible to waive health coverage and the events that permit an election to waive health coverage.

New §81.8(b) is added to clarify that an individual who waives health coverage and later elects to apply for health coverage is subject to the applicable provisions of this chapter.

New §81.8(c) is added to clarify the amount of and the eligibility requirements to receive the incentive credit, and to delineate that: (1) the incentive credit may only be used for optional coverage specified by the system or the TRICARE Supplement; (2) coverage under the TRICARE Supplement ends when the participant attains age 65; however, the incentive credit will be applied toward eligible optional coverage; and (3) optional coverage is not considered voluntary coverage for the purposes of the incentive credit.

New §81.8(d) is added to clarify that the offering of a TRICARE Supplement is contingent upon the selection of a qualified Carrier by the ERS Board of Trustees.

Section 81.9(a) is amended to include those enrolled in the TRICARE Supplement plan as an exempted group under the ERS grievance procedures. This section is further amended to add the terms "carrier" and "administering firm" as entities that may formally deny an insurance claim and mail notice of the denial and right of appeal to a person. These changes are needed to update and clarify the rules with regard to grievance procedures. The section is also amended to clarify that the grievance procedures apply to both a denial of benefits and other adverse decisions by an insurance carrier or administering firm.

Section 81.9(d) is amended to clarify existing practice that a notice of appeal to the Board regarding a decision by the Executive Director must be in writing and filed with ERS within the specified time period.

Throughout Chapter 81, including §81.5 and §81.11, the words "legislature" and "program" have been capitalized, and the word "State" in State of Texas has been changed to lower case. These changes are needed for consistency in the rules, and these words are either proper nouns or refer to definitions. The word "title" has been changed to "chapter" for correct reference purposes.

Paula A. Jones, General Counsel, has determined that for the first five-year period the new and amended rules are in effect, a positive fiscal implication has been forecast for the state. There will be no fiscal implication for local government as a result of enforcing or administering the new and amended rules; and small businesses and individuals will not be affected.

Ms. Jones also determined that for each year of the first five years the new and amended rules are in effect the public benefit anticipated as a result of enforcing the new and amended rules will be new options for participants in the GBP, including an incentive credit for waiving health coverage and the availability of an optional TRICARE Supplemental health plan upon selection of a Carrier by the Board. There are no known anticipated economic costs to persons who are required to comply with the new and amended rules as proposed.

Comments on the proposed new and amended rules may be submitted to Paula A. Jones, General Counsel, Employees Retirement System of Texas, P.O. Box 13207, Austin, Texas 78711-3207, or e-mail Ms. Jones at paula.jones@ers.state.tx.us. The deadline for receiving comments is 10:00 a.m. on Monday, April 10, 2006.

The new rule and rule amendments are proposed under Texas Insurance Code, §§1551.009, 1551.052, and 1551.221.

No other statutes beyond Chapter 1551, Insurance Code, are affected by these amendments.

§81.1.Definitions.

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) - (2) (No change.)

(3) Active duty--The expenditure of time and energy in the service of the state [ State ] of Texas. An employee will be considered to be on active duty on each day of a regular paid vacation or regular paid sick leave or on a non-working day, if the employee was on active duty on the last preceding working day.

(4) - (9) (No change.)

(10) Department--Commission, board, agency, division, institution of higher education, or department of the state [ State ] of Texas created as such by the constitution or statutes of this state, or other governmental entity whose employees or retirees are authorized by the Act to participate in the Program [ program ].

(11) - (12) (No change.)

(13) Employee--A person authorized by the Act to participate in the Program [ program ] as an employee.

(14) Employing office--For a retiree covered by this Program [ program ], the office of the Employees Retirement System of Texas in Austin, Texas or the retiree's last employing department; for an active employee, the employee's employing department.

(15) Evidence of insurability--Such evidence required by a qualified carrier for approval of coverage or changes in coverage pursuant to the rules of §81.7(h) of this chapter [ title ] (relating to Enrollment and Participation).

(16) - (17) (No change.)

(18) HMO--A health maintenance organization approved by the board to provide health care benefits to eligible participants in the Program [ program ] in lieu of participation in the Program's [ program's ] HealthSelect of Texas plan.

(19) Insurance premium expenses--Any out-of-pocket premium incurred by a participant, or by a spouse or dependent of such participant, as payment for coverage provided under the Program [ program ] that exceeds the state's or institution's contributions offered as an employee benefit by the employer. The types of premium expense covered by the premium conversion plan include out-of-pocket premium for group term life, health (including HMO and TRICARE Supplement premiums), AD&D, and dental, but do not include out-of-pocket premium for long or short term disability or dependent term life.

(20) - (22) (No change.)

(23) Preexisting condition--Any injury or sickness, for which the employee received medical treatment, or services, or took prescribed drugs or medicines during the three-month period immediately prior to the effective date of such coverage. However, if the evidence of insurability requirements set forth in §81.7(h) of this chapter [ title ] must first be satisfied, the three-month period for purposes of determining the preexisting conditions exclusion will be the three-month period immediately preceding the date of the employee's completed application for coverage.

(24) - (25) (No change.)

(26) Retiree--An employee who retires or is retired and who:

(A) is authorized by the Act to participate in the Program [ program ] as a retiree;

(B) (No change.)

(C) on the date of retirement, meets the service credit requirements of the Act for participation in the Program [ program ] as an annuitant; and

(i) on August 31, 2001, was an eligible employee with a department whose employees are authorized to participate in the Program [ program ] and, on the date of retirement has three years of service with such a department;

(ii) on August 31, 2001, had three years of service as an eligible employee with a department whose employees are authorized to participate in the Program [ program ]; or

(iii) (No change.)

(27) Salary--The salary to be used for determining optional term life and disability income limitations will be the employee's regular salary, including longevity, shift differential, hazardous duty pay, and benefit replacement pay, received by the employee as of the employee's first day of active duty within a contract year. No other component of compensation shall be included. Non-salaried elective and appointive officials and members of the Legislature [ legislature ] may use the salary of a state district judge or their actual salary as of September 1 of each year.

(28) (No change.)

(29) TRICARE--(formally call CHAMPUS)--The United States Department of Defense (DOD) military health system program for eligible active duty and retired members of the uniformed services, their families, and survivors.

(30) TRICARE Supplement--A supplemental health care coverage plan designed specifically to be secondary coverage to the TRICARE program.

(31) [ (29) ] TRS--The Teacher Retirement System of Texas.

§81.3.Administration.

(a) Health maintenance organizations.

(1) (No change.)

(2) In order to seek approval, an HMO must:

(A) submit an application to provide health benefits in the areas within the state [ State ] of Texas determined by the board to be non-bidding areas;

(B) - (C) (No change.)

(3) An HMO seeking board approval in response to a request for bid in one or more of the RBAs, must satisfy the following conditions:

(A) The HMO must be licensed by the Texas Department of Insurance to operate in the state [ State ] of Texas.

(B) - (G) (No change.)

(4) An HMO, seeking board approval in response to an application in one or more of the non-bidding areas, must satisfy the following conditions:

(A) The HMO must be licensed by the Texas Department of Insurance to operate in the state [ State ] of Texas.

(B) - (G) (No change.)

(b) Payment of Premiums.

(1) Premiums for coverage provided under the Program [ program ] are funded from three sources: state contributions, system contributions, and participant contributions. The Legislature [ legislature ] appropriates monies to fund group insurance benefits for all employees as defined in the Act. Monies for employees compensated from funds other than the General Appropriations Act are appropriated from the official operating budget of the respective department. In addition, the system may contribute an additional amount, as determined by the trustee, for payment of premiums for participants. A participant who applies for coverage for which the monthly premium exceeds the state's or employing department's and the system's contribution must pay the excess amount.

(2) A participant's share of premiums shall be paid through deductions from monthly compensation or annuities or by direct payment, as provided in this paragraph.

(A) An employee or annuitant who applies for coverage for which the monthly premium exceeds the state or employing department and the system contributions must authorize on a form prescribed by the system a deduction from his or her monthly compensation or annuity to pay the difference. If the compensation or annuity is insufficient to provide for the appropriate deduction, the participant must pay premiums directly as provided in subparagraph (B)(i) of this paragraph. Failure to make the required payment of premiums by the due date will result in the cancellation of all coverages not fully funded by the state contribution. A participant entitled to the state contribution will retain member only health and basic life coverage provided the state contribution is sufficient to cover the premium for such coverage. If the state contribution is not sufficient for member only coverage in the health plan selected, the participant will be enrolled in the basic plan except as provided for in §81.7(l)(2)(B) of this chapter [ title ].

(B) A participant shall pay premiums directly, as provided in this subparagraph, if the participant is not on a payroll or is in a leave without pay status, is not receiving an annuity from a state retirement system from which the appropriate premiums may be deducted, or is not receiving a salary or annuity sufficient to allow for a full required premium deduction.

(i) An employee whose salary is insufficient, or who is a non-salaried board member, shall pay monthly premiums in advance through the employing department. Any other participant to whom this subparagraph applies shall pay monthly premiums in advance to the system. Premium payments are due on the first day of the month covered and must be postmarked or received by the system or the employing department, whichever is appropriate, within 30 days of the due date to avoid cancellation of coverage. Failure to make the required premium payment by the due date will result in cancellation of all coverages not fully funded by the state contribution, if applicable. A person entitled to the state contribution will retain member only health and basic life coverage provided the state contribution is sufficient to cover the premium for such coverage. If the state contribution is not sufficient for member only coverage in the health plan selected by the employee or retiree, the employee or retiree will be enrolled in the basic plan except as provided for in §81.7(l)(2)(B) of this chapter [ title ].

(ii) A person who continues group health and dental benefits as provided in §81.5(k) of this chapter [ title ] (relating to Eligibility) must pay premiums in advance on a monthly basis. Premiums for such a person will be 102% of the rates charged for other participants in the same coverage category and with the same plan. All premiums due for the election/enrollment period must be postmarked or received by the Employees Retirement System of Texas on or before the date indicated on the continuation of coverage enrollment form. Subsequent premiums are due on the first day of the month covered and must be postmarked or received by the Employees Retirement System of Texas within 30 days of the due date to avoid cancellation of coverage.

(iii) A person who continues group health and dental benefits as provided in §81.5(k)(3) of this chapter [ title ] (relating to Eligibility) must pay premiums in advance on a monthly basis. Premiums for such a person for each month of coverage after the 18th month of coverage will be 150% of the rates charged for other participants in the same coverage category and with the same plan. All premiums are due on the first day of the coverage month and must be postmarked or received by the Employees Retirement System of Texas within 30 days of the due date to avoid cancellation of coverage.

(3) (No change.)

(c) TRICARE Supplement. In accordance with §1551.221 of the Act, the Board may contract for one or more Carriers as that term is defined under §1551.007 of the Act to offer a TRICARE supplemental health coverage plan to eligible program participants who waive health coverage as described in §81.8 of this chapter.

§81.5.Eligibility.

(a) Full-time employees. A full-time employee, elected officer, or appointed officer of the state [ State ] of Texas is eligible for automatic coverage upon completion of the waiting period established in §1551.1055 [ Section 1551.1055 ] of the Act. A rehired full-time employee, reelected officer, or reappointed officer of the state [ State ] of Texas, including a new full-time employee, each with existing, current, and continuous GBP health coverage as of the date the employee begins active duty or is qualified for and begins to hold office, is eligible for automatic coverage without a waiting period provided there has been no break in coverage in the GBP. However, an employee of an institution of higher education and the employee's eligible dependents are eligible for coverage on the first day that an employee performs services as an employee of an institution of higher education only if:

(1) - (3) (No change.)

(b) Part-time employees. A part-time employee or other employee who is not eligible for automatic coverage becomes eligible for coverage upon completion of the waiting period established in §1551.1055 [ Section 1551.1055 ] of the Act and upon application to participate in the Program [ program ], subject to the provisions of §81.7(b) of this chapter [ title ] (relating to Enrollment). A rehired part-time employee, reelected part-time officer, or reappointed part-time officer of the state [ State ] of Texas, including a new part-time employee, each with existing, current, and continuous GBP health coverage as of the date the employee begins active duty or is qualified for and begins to hold office, who is not eligible for automatic coverage is eligible for coverage without a waiting period provided there has been no break in coverage.

(1) - (2) (No change.)

(c) Retirees.

(1) - (6) (No change.)

(7) A retiree who returns to work for a department may continue coverages for which he is eligible as a retiree, or, subject to subsection (a) or subsection (b) of this section, elect to participate in the Program [ program ] as a full-time or part-time employee. Time spent in an eligible position as a return to work retiree may not be used to meet eligibility requirements for retiree health insurance coverage. A return to work retiree may elect retiree coverages for which he is eligible at the time of separation from department service.

(8) (No change.)

(d) Dependents of employees and retirees.

(1) (No change.)

(2) Except as otherwise provided in this paragraph, double coverage is not permitted for any participant in the Program [ program ].

(A) - (B) (No change.)

(e) (No change.)

(f) Surviving dependents.

(1) (No change.)

(2) Dependent children of a deceased active employee or retiree are eligible to continue coverage in the health and dental benefits plans in which the dependent children were enrolled on the day of death of the employee/retiree provided, however, the deceased active employee must have had, at the time of death, at least 10 years of service credit, including at least 3 years on August 31, 2001 or at least 10 years after August 31, 2001 of service as an eligible employee with a Program participating department, as long as the surviving spouse is eligible and continues to participate in the Program [ program ]. A deceased active employee described by §1551.114 of the Act must have had at least 10 years of eligible service credit, as determined by ERS, before his or her dependent children are eligible to continue coverage. Dependent children of deceased employees or retirees will be considered as dependents of the deceased employee's or retiree's surviving spouse for purposes of the Program [ program ]. Participants continuing coverage as surviving dependents are not eligible for life insurance coverage.

(3) If an active employee/retiree does not have a spouse covered in the Program [ program ] at the time of his or her death, dependent children of the deceased active employee/retiree are eligible to continue coverage in the health and dental benefits plans in which the dependent children were enrolled on the day of death of the employee/retiree provided, however, the deceased active employee must have had at least 10 years of service credit, including at least 3 years on August 31, 2001 or at least 10 years after August 31, 2001 of service as an eligible employee with a Program participating department, at the time of death. A deceased active employee described by §1551.114 of the Act must have had at least 10 years of eligible service credit, as determined by ERS, before his or her dependent children are eligible to continue coverage. A surviving dependent child may continue such coverage until the dependent child becomes ineligible as defined in §81.1 of this chapter [ title ] (relating to Definitions). Participants continuing coverage as surviving dependents are not eligible for life insurance coverage.

(4) - (5) (No change.)

(g) Retiree under ORP.

(1) A member of the ORP is eligible for health coverage on the day he or she receives or is eligible to receive an annuity under the ORP program or would have been eligible to receive an annuity had his or her membership been in the Teacher Retirement System rather than the ORP, and meets the age, length-of-service, and other requirements as provided in §81.5(c) of this chapter [ title ] (relating to Eligibility).

(2) A member of the ORP is eligible for additional coverages and plans which include optional and voluntary coverages in the Program [ program ] as long as he or she receives or is eligible to receive an annuity under the ORP program or would have been eligible to receive an annuity had his or her membership been in the Teacher Retirement System rather than the ORP.

(h) Disability retirement. An applicant who is approved for disability retirement is entitled to retiree insurance coverages as provided in §81.7(c) of this chapter [ title ] (relating to Enrollment and Participation). An ORP participant authorized by the Act with at least 10 years of eligible service credit, and granted ORP disabled retiree status in the Program, as established by the disability test used by the system, is eligible to participate in the Program. Initial or continued eligibility for insurance coverage for an ORP disabled retiree will be determined by the system under the following provisions.

(1) An ORP participant is eligible for ORP disabled retiree status in the Program [ program ] if the ORP participant is not otherwise eligible to participate in the Program [ program ] as an employee or retiree and is certified by a licensed physician designated by the system as disabled as provided in paragraph (2) of this subsection. An ORP participant may apply for disabled retiree status in the Program [ program ] by filing a written application for ORP disabled retiree status in the Program [ program ] or having an application filed with the system by the ORP participant's spouse, employer, or legal representative. In addition to an application for ORP disabled retiree status in the Program [ program ], an ORP participant must file with the system the results of a medical examination of the ORP participant. After an ORP participant applies for ORP disabled retiree status in the Program [ program ], the system may require the ORP participant to submit additional information about the disability. The system will prescribe forms for the information required by this section.

(2) If a licensed physician designated by the system finds that the ORP participant is mentally or physically disabled from the further performance of duty and that the disability is probably permanent, the physician will certify the disability. The Executive Director is authorized to approve ORP disabled retiree status in the Program [ program ] after a certification of disability is made. Once each year during the first five years after an ORP participant enrolls in the Program [ program ] as an ORP disabled retiree, and once in each three-year period after that, the system may require an ORP disabled retiree to undergo a medical examination by a physician the system designates. If an ORP disabled retiree refuses to submit to a medical examination as provided by this section, the system will suspend the ORP disabled retiree's enrollment in the Program [ program ] until the ORP disabled retiree submits to an examination. The system will terminate the ORP disabled retiree's coverage in the Program [ program ] and notify the ORP participant in writing if:

(A) - (B) (No change.)

(3) The effective date of coverage for an ORP disabled retiree in the Program [ program ] is the first of the month following the date the application for ORP disabled retiree status in the Program [ program ] is received by the system, or the first of the month following the date employment is terminated, whichever is later.

(i) Former members of the Legislature [ legislature ]. A former member of the Legislature [ legislature ] authorized by the Act to continue to participate in the Program [ program ] is eligible for the coverage, other than disability income insurance coverage, in effect on the day before the member leaves office.

(j) Former employees of the Legislature [ legislature ]. A former employee of the Legislature [ legislature ] authorized by the Act to continue to participate in the Program [ program ] is eligible for the coverage, other than disability income insurance coverage, in effect on the day before the employee terminates employment.

(k) Continuation of health and dental coverages only for certain spouses and dependent children of employee/retirees, and for certain terminating employees, their spouses, and dependent children (as provided by the Consolidated Omnibus Budget Reconciliation Act, Public Law 99-272).

(1) (No change.)

(2) An employee whose employment has been terminated voluntarily or involuntarily (other than for gross misconduct), whose work hours have been reduced such that the employee is no longer eligible for the Program [ program ] as an employee, or whose coverage has ended following the maximum period of leave without pay as provided for in §81.7(1)(2)(A) of this chapter [ title ], except for those persons not eligible pursuant to §81.11(c) of this chapter [ title ] (relating to Termination of Coverage), and/or his or her spouse and/or dependent child/children who are not eligible to continue coverage under the provisions of the Act or subsection (h) or (i) of this section, who are not entitled to benefits under the Social Security Act, Title XVIII, who are not covered under any other group health plan, or who were covered by a plan that subjects them to a preexisting conditions limitation or exclusion that was not satisfied by the service credit provisions of Public Law 104-91 (HIPAA), may continue for up to 18 months the health and dental coverages only without the basic term life that were in effect immediately prior to the date of the loss of coverage. A formal election must be made to continue coverage by the employee and/or his or her spouse and/or dependent child/children. The formal election must be postmarked or received by the system within 60 days of the date of notice contained in the notice of right to continue coverage form or by the date coverage terminated, whichever is later.

(3) - (9) (No change.)

(l) (No change.)

§81.7.Enrollment and Participation.

(a) Full-time employees and their dependents.

(1) A new employee:

(A) who is not subject to the health insurance waiting period and is eligible under the Act and as provided for in §81.5(a) of this chapter [ title ] (relating to Eligibility) for automatic insurance coverage, shall be enrolled in the basic plan of health and life insurance unless the employee completes an enrollment form to elect other coverages or to waive [ decline ] health coverage as provided in §81.8 of this chapter (relating to Waiver of Health Coverage) . Coverage of an employee under the basic plan, and other coverages selected as provided in this paragraph, become effective on the date on which the employee begins active duty.

(B) who is subject to the health insurance waiting period and is eligible under the Act and as provided for in §81.5(a) of this chapter [ title ] (relating to Eligibility) for automatic insurance coverage, shall be enrolled in the basic plan of health and life insurance beginning on the first day of the calendar month following 90 days of employment unless, before this date, the employee completes an enrollment form to elect other coverages or to waive [ decline ] health coverage as provided in §81.8 of this chapter (relating to Waiver of Health Coverage) .

(2) - (4) (No change.)

(5) An eligible employee who enrolls in the Program [ program ] is eligible to participate in premium conversion and shall be automatically enrolled in the premium conversion plan. The employee shall be automatically enrolled in the plan for subsequent plan years as long as the employee remains on active duty.

(6) - (11) (No change.)

(b) (No change.)

(c) Retirees and their dependents.

(1) Provided the required premiums are paid or deducted, an employee's health, dental and term life insurance coverage (including eligible dependent coverages) may be continued upon retirement as provided in §81.5(c) of this chapter [ title ] (relating to Eligibility). The life insurance will be reduced to the maximum amount which the retiree is permitted to retain under the insurance contract as a retiree. All other coverages in force for the active employee, but not available to a retiree, will automatically be discontinued concurrently with the commencement of retirement status. If a retiree retires directly from department service and is not covered as an active employee on the day before becoming an annuitant, the retiree will be enrolled in the basic plan.

(2) A retiree may enroll in health, dental, and life insurance coverages for which the retiree is eligible as provided in §81.5(c) of this chapter [ title ] (relating to Eligibility), including dependent coverages, by completing an enrollment form as specified in paragraph (2)(A) - (2)(C) of this subsection. For the purposes of this paragraph, the effective date of retirement of a retiree who is eligible to receive, but who is not actually receiving, an annuity is the date on which the system receives written notice of the retirement. An application/enrollment form received after the initial period for enrollment as provided in this paragraph is subject to the provisions of subsection (h) of this section.

(A) A retiree who is not subject to the health insurance waiting period on the effective date of retirement as provided in §81.5(c) of this chapter [ title (relating to Eligibility), may enroll in health, dental, and life insurance coverages or waive health coverage as provided in §81.8 of this chapter (relating to Waiver of Health Coverage) for which the retiree is eligible, including dependent coverage, by completing an enrollment form or waiver of coverage as applicable before, on, or within 30 days after, the retiree's effective date of retirement.

(B) A retiree who is subject to the health insurance waiting period on the effective date of retirement as provided in §81.5(c) of this chapter [ title ] (relating to Eligibility), may enroll in health coverage or waive health coverage as provided in §81.8 of this chapter (relating to Waiver of Health Coverage) for which the retiree is eligible, including dependent coverage, by completing an enrollment form or waiver of coverage as applicable, before the first day of the calendar month following 90 days after the date of retirement or before the first day of the calendar month after the retiree's 65th birthday, whichever is later as appropriate. The effective date for such coverages shall be the first day of the calendar month following 90 days after the date of retirement or the first day of the calendar month following the retiree's 65th birthday, whichever is later as appropriate.

(C) A retiree who is ineligible for health insurance on the effective date of retirement as provided in §81.5(c) of this chapter [ title ] (relating to Eligibility), may enroll in health coverage or waive health coverage as provided in §81.8 of this chapter (relating to Waiver of Health Coverage) for which the retiree is eligible, including dependent coverage, by completing an enrollment form or waiver of coverage as applicable, before the first day of the calendar month after the retiree's 65th birthday. The effective date for such coverages shall be the first day of the calendar month following 90 days after the date of retirement or the first day of the calendar month following the retiree's 65th birthday, whichever is later.

(3) A retiree who becomes eligible for minimum retiree optional life insurance coverage or dependent life insurance coverage as provided in §81.5(c)(5) of this chapter [ title ] (relating to Eligibility), may apply for approval of such coverage by providing evidence of insurability acceptable to the system.

(4) Enrollments and applications to change coverage become effective as provided in paragraph (2) of this subsection unless other coverages are in effect at that time. If other coverages are in effect at that time, coverage or waiver of coverage becomes effective on the first day of the month following the date of approval of retirement by the Employees Retirement System of Texas; or, if cancellation of the other coverages preceded the date of approval of retirement, the first day of the month following the date the other coverages were canceled.

(5) (No change.)

(d) Surviving dependents

(1) Provided that the required premiums are paid or deducted, the health and dental insurance coverages of a surviving dependent may be continued on the death of the deceased employee or retiree if the dependent is eligible for such coverage as provided by §81.5(f) of this chapter [ title ] (relating to Eligibility).

(2) A surviving spouse who is receiving an annuity shall make premium payments by deductions from the annuity as provided in §81.3(b)(2)(A) of this chapter [ title ] (relating to Administration). A surviving spouse who is not receiving an annuity may make payments as provided in §81.3(b)(2)(B) of this chapter [ title ].

(e) Former COBRA unmarried children. A former COBRA unmarried child must provide an application to continue health and dental insurance coverage within 30 days after the date the notice of eligibility is mailed by the system. Coverage becomes effective on the first day of the month following the month in which continuation coverage ends. Premium payments may be made as provided in §81.3(b)(2)(B) of this chapter (relating to Administration).

(f) Premium conversion plans.

(1) An eligible employee participating in the Program [ program ] is deemed to have elected to participate in the premium conversion plan and to pay insurance premium expenses with pre-tax dollars as long as the employee remains on active duty. The plan is intended to be qualified under the Internal Revenue Code, §79 and §106.

(2) (No change.)

(g) Special rules for additional coverages and plans which include optional and voluntary coverages.

(1) Only an employee or retiree or a former officer or employee specifically authorized to join the Program [ program ] may apply for additional coverages and plans. An employee/retiree may apply for or elect additional coverages and plans without concurrent enrollment in health coverage provided by the Program. [ program. A member of the Texas National Guard or any of the reserve components of the United States armed forces who is assigned to active military duty and who is enrolled in additional coverages and plans may cancel health coverage and retain all other coverages and plans during the period of such assignment. ] Additional coverages and plans, as determined by the board, may include:

(A) - (E) (No change.)

(F) long-term care; [ or ]

(G) health care and dependent care reimbursement ; or [ . ]

(H) TRICARE Supplement.

(2) An eligible participant in the Program [ program ] and eligible dependents may participate in an approved HMO if they reside in the approved service area of the HMO and are otherwise eligible under the terms of the contract with the HMO.

(3) - (5) (No change.)

(h) Changes in coverage after the initial period for enrollment.

(1) - (3) (No change.)

(4) The evidence of insurability provision applies only to:

(A) - (B) (No change.)

(C) employees, retirees, or eligible dependents who wish to enroll in HealthSelect of Texas after the initial period for enrollment, except as provided in subsections (a), (g)(4)-(5), and (h)(6)-(9) of this section and §81.3(b)(3)(B) of this chapter [ title ] (relating to Administration);

(D) employees enrolled in the Program [ program ] whose coverage was waived, dropped or canceled, except as otherwise provided in subsection (k) of this section; and

(E) (No change.)

(5) (No change.)

(6) A participant who is enrolled in an [ a ] approved HMO and who permanently moves out of the HMO service area shall make one of the following elections, to become effective on the first day of the month following the date on which the participant moves out of the HMO service area:

(A) (No change.)

(B) if the participant and all covered dependents are not eligible to enroll in an approved HMO; either:

(i) (No change.)

(ii) enroll in an approved HMO if the participant is eligible, and drop any ineligible covered dependent, unless not in compliance with §81.11(a)(2) of this chapter [ title ] (relating to Termination of Coverage).

(7) When a covered dependent of a participant permanently moves out of the participant's HMO service area, the participant shall make one of the following elections, to become effective on the first day of the month following the date on which the dependent moves out of the HMO service area:

(A) drop the ineligible dependent, unless not in compliance with §81.11(a)(2) of this chapter (relating to Termination of Coverage);

(B) - (C) (No change.)

(8) An eligible participant will be allowed an annual opportunity to make changes in coverages.

(A) A participant will be allowed to:

(i) - (viii) (No change.)

(ix) enroll themselves and their eligible dependents in an eligible HMO and in a dental plan from a waived [ declined ] or canceled status;

(x) add, decrease or cancel eligible coverage, unless prohibited by §81.11(a)(2) of this chapter (relating to Termination of Coverage); [ and ]

(xi) apply for coverage for which evidence of insurability is required as provided in paragraph (3) of this subsection ; and [ . ]

(xii) waive health coverage as provided in §81.8 of this chapter (relating to Waiver of Health Coverage).

(B) Surviving dependents and former COBRA unmarried children are not eligible for the provisions in subparagraph (A)(iv), (vii), [ or ] (viii) , (ix), or (xii) of this paragraph, except that a surviving dependent or former COBRA unmarried child may enroll an eligible dependent in dental insurance coverage if the dependent is enrolled in health insurance coverage.

(C) Such opportunity will be scheduled prior to September 1 of each year at times announced by the system. Coverage selected during the annual enrollment period will be effective September 1. [ An employee who re-enrolled after the close of the annual opportunity but prior to September 1 of the same calendar year shall have until August 31 of that calendar year to make changes as allowed above to be effective September 1. ]

(9) (No change.)

(i) Preexisting conditions exclusion. The preexisting conditions exclusion shall apply to employees who enroll in disability coverage. The exclusion for benefit payments shall not apply after the first six consecutive months that the employee has been actively at work or after the employee's disability coverage has been continuously in force for 12 months for a preexisting condition, as defined in §81.1 of this chapter [ title ] (relating to Definitions). The preexisting conditions exclusion will not apply to a medical condition resulting from congenital or birth defects.

(j) (No change.)

(k) Re-enrollment in the Program [ program ].

(1) - (3) (No change.)

(l) Continuing coverage in special circumstances.

(1) (No change.)

(2) Continuation of coverages for employees in a leave without pay status.

(A) An employee in a leave without pay status may continue the coverages in effect on the date the employee entered that status for the period of leave, but not more than 12 months. The employee must pay premiums directly as provided in §81.3(b)(2)(B)(i) of this chapter [ title ] (relating to Administration).

(B) An employee whose leave without pay is a result of the Family and Medical Leave Act of 1993 will continue to receive the state contribution during such period of leave without pay. The employee must pay premiums directly as defined in §81.3(b)(2)(B)(i) of this chapter [ title ]. Failure to make the required payment of premiums by the due date will result in the cancellation of all coverages except for member only health and basic life coverage. The employee will continue in the health plan in which he or she was enrolled immediately prior to the cancellation of all other coverages. If a premium beyond the state contribution for member only health and basic life coverage is owed, the employee must make the required payment of premiums directly to the employing department upon return to active duty.

(3) Continuation of coverages for a former member or employee of the Legislature [ legislature ]. Provided that the required premiums are paid, the health, dental, and life insurance coverages of a former member or employee of the Legislature [ legislature ] may be continued on conclusion of the term of office or employment.

(4) Continuation of coverages for a former judge. A former state [ State ] of Texas judge, who is eligible for judicial assignments and who does not serve on judicial assignments during a period of one calendar month or longer, may continue the coverages that were in effect during the calendar month immediately prior to the month in which the former judge did not serve on judicial assignments. These coverages may continue for no more than 12 continuous months during which the former judge does not serve on judicial assignments as long as, during the period, the former judge continues to be eligible for assignment.

(5) Continuation of health and dental coverage for a surviving spouse and/or dependent child/children of a deceased employee or retiree. The surviving spouse and/or dependent child/children of a deceased employee/retiree, who, in accordance with §81.5(k)(1) of this chapter [ title ], elects to continue coverage may do so by submitting the required election notification and enrollment forms to the system. The enrollment form, including all premiums due for the election/enrollment period, must be postmarked or received by the system on or before the date indicated on the continuation of coverage enrollment form. Continuing coverage will begin on the first day of the month following the month in which the employee/retiree dies, provided all group insurance premiums due for the month in which the employee/retiree died and for the election/enrollment period have been paid in full.

(6) Continuation of health and dental coverage for a covered employee whose employment has been terminated, voluntarily or involuntarily (other than for gross misconduct), whose work hours have been reduced such that the employee is no longer eligible for the Program [ program ] as an employee, or whose coverage has ended following the maximum period of leave without pay as provided in paragraph (2)(A) of this section. An employee, his or her spouse and/or dependent child/children, who, in accordance with §81.5(k)(2) of this chapter [ title ], elects to continue health and dental coverages may do so by submitting the required election notification and enrollment forms to the system. The enrollment form, including all premiums due for the election/enrollment period, must be postmarked or received by the system on or before the date indicated on the continuation of coverage enrollment form. Continuing coverage will begin on the first day of the month following the month in which the employee's coverage ends, provided all group insurance premiums due for the month in which the coverage ends and for the election/enrollment period have been paid in full.

(7) Continuation of health and dental coverage for a spouse who is divorced from an employee/retiree and/or the spouse's dependent child/children. The divorced spouse and/or the spouse's dependent child/children (not provided for by §81.5(a) of this chapter [ title ]) of an employee/retiree who, in accordance with §81.5(k)(4) of this chapter [ title ], elects to continue coverage may do so by submitting the required election notification and enrollment forms to the system. The enrollment form, including all premiums due for the election/enrollment period, must be postmarked or received by the system on or before the date indicated on the continuation of coverage enrollment form. Continuing coverage will begin on the first day of the month following the month in which the divorce decree is signed, provided all group insurance premiums due for the month in which the divorce decree is signed and for the election/enrollment period have been paid in full.

(8) Continuation of health and dental coverage for a dependent child under 25 years of age who marries. A dependent child under 25 years of age who marries and who, in accordance with §81.5(k)(5) of this chapter [ title ], elects to continue coverage may do so by submitting the required election notification and enrollment forms to the system. The enrollment form, including all premiums due for the election/enrollment period, must be postmarked or received by the system on or before the date indicated on the continuation of coverage enrollment form. Continuing coverage will begin on the first day of the month following the month in which the dependent child's marriage occurred, provided all group insurance premiums due for the month in which the dependent child's marriage occurred and for the election/enrollment period have been paid in full.

(9) Continuation of health and dental coverage for a dependent child who has attained 25 years of age. A 25-year-old dependent child (not provided for by §81.5(d) of this chapter [ title ] of an employee/retiree who, in accordance with §81.5(k)(6) of this chapter [ title ], elects to continue coverage may do so by submitting the required election notification and enrollment forms to the system. The enrollment form, including all premiums due for the election/enrollment period, must be postmarked or received by the system on or before the date indicated on the continuation of coverage enrollment form. Continuing coverage will begin on the first day of the month following the month in which the dependent child of the employee/retiree attains 25 years of age, provided all group insurance premiums due for the month in which the dependent child attained age 25 and for the election/enrollment period have been paid in full.

(10) Extension of continuation of health and dental coverages for certain spouses and/or dependent child/children of former employees who are continuing coverage under the provisions of paragraph (6) of this subsection.

(A) The surviving spouse and/or dependent child/children of a deceased former employee, who, in accordance with §81.5(k)(7)(A) of this chapter [ title ] (relating to Eligibility), elects to extend continuation coverage may do so by submitting the required election notification and enrollment forms to the Employees Retirement System of Texas. The enrollment form, including all premiums due for the election/enrollment period, must be postmarked or received by the Employees Retirement System of Texas on or before the date indicated on the continuation enrollment form. The election/enrollment period begins on the first day of the month following the month in which the former employee died.

(B) A spouse who is divorced from a former employee and/or the divorced spouse's dependent child/children, who, in accordance with §81.5(k)(7)(B) of this chapter [ title ] (relating to Eligibility), elects to extend continuation coverage may do so by submitting the required election notification and enrollment forms to the Employees Retirement System of Texas. The enrollment form, including all premiums due for the election/enrollment period, must be postmarked or received by the Employees Retirement System of Texas on or before the date indicated on the continuation enrollment form. The election/enrollment period begins on the first day of the month following the month in which the divorce decree was signed.

(C) A dependent child under 25 years of age who marries, who, in accordance with §81.5(k)(7)(C) of this chapter [ title ] (relating to Eligibility), elects to extend continuation coverage may do so by submitting the required election notification and enrollment forms to the Employees Retirement System of Texas. The enrollment form, including all premiums due for the election/enrollment period, must be postmarked or received by the Employees Retirement System of Texas on or before the date indicated on the continuation enrollment form. The election/enrollment period begins on the first day of the month following the month in which the dependent child marries.

(D) A dependent child who has attained 25 years of age, who, in accordance with §81.5(k)(7)(D) of this chapter [ title ] (relating to Eligibility), elects to extend continuation coverage may do so by submitting the required election notification and enrollment forms to the Employees Retirement System of Texas. The enrollment form, including all premiums due for the election/enrollment period, must be postmarked or received by the Employees Retirement System of Texas on or before the date indicated on the continuation enrollment form. The election/enrollment period begins on the first day of the month following the month in which the dependent child attained age 25.

(11) Continuation coverage defined. Continuation coverage as provided for in paragraphs (5)-(10) of this subsection means the continuation of only health and dental coverage benefits which meet the following requirements.

(A) (No change.)

(B) Period of coverage. The coverage shall extend for at least the period beginning on the first day of the month following the date of the cessation of coverage event and ending not earlier than the earliest of the following:

(i) (No change.)

(ii) in the case of loss of coverage due to termination of an employee's employment, reduction in work hours, or end of maximum period of leave without pay, if the employee, spouse, or dependent child has been certified by the Social Security Administration as being disabled as provided in §81.5(k)(3) of this chapter [ title ], the last day of the 29th calendar month of the continuation period;

(iii) - (iv) (No change.)

(v) the date on which coverage ceases under the plan due to failure to make timely payment of any premium required as provided in §81.3(b)(2)(B)(ii) and (iii) of this chapter [ title ] (relating to Administration);

(vi) - (viii) (No change.)

(C) Premium requirements. The premium for a participant during the continuation coverage period will be 102% of the employee's/retiree's health and dental coverages only rate and is payable as provided in §81.3(b)(2)(B)(ii) of this chapter [ title ] (relating to Administration).

(i) The premium for a participant eligible for 36 months of coverage will be 102% of the employee's/retiree's health and dental coverages only rate for the 19th through 36th months of coverage and is payable as provided in §81.3(b(2)(B)(ii) of this chapter [ title ] (relating to Administration).

(ii) The premium for a participant eligible for 29 months of coverage will be 150% of the employee's/retiree's health and dental coverages only rate for the 19th through 29th months of coverage and is payable as provided in §81.3(b)(2)(B)(iii) of this chapter [ title ] (relating to Administration).

(D) No requirement of insurability. No evidence of insurability is required for a participant who elects to continue coverage under the provisions of §81.5(k)(1)-(6) of this chapter [ title ] (relating to Eligibility).

(E) (No change.)

(12) (No change.)

§81.8.Waiver of Health Coverage.

(a) Eligibility. An individual eligible to participate in the Program may elect to waive health coverage in the method and form specified by the System:

(1) during the initial period of eligibility;

(2) after a qualifying life event; or

(3) during annual enrollment.

(b) Re-enrollment in health coverage. An individual who has waived health coverage is subject to the eligibility and enrollment provisions of this chapter, including evidence of insurability requirements, should the individual elect to apply for health coverage in the Program.

(c) Incentive Credit.

(1) An employee or retiree eligible to participate in the Program and who waives health coverage may be eligible for an incentive credit in lieu of the state contribution up to the amount specified in the General Appropriations Act if the individual:

(A) would otherwise have been eligible to receive the state contribution; and

(B) demonstrates, in a manner specified by the System, coverage by another health benefit plan with substantially equivalent coverage to the basic plan; or

(C) is eligible for and enrolled in the TRICARE military health system.

(2) The incentive credit may be applied only toward the cost of:

(A) eligible optional coverage, as determined by the System; or

(B) TRICARE Supplement for participants under age 65.

(3) Coverage under the TRICARE Supplement will be canceled at the end of the month in which the participant reaches the age of 65. A participant whose TRICARE Supplement is canceled will have the incentive credit applied, if applicable, toward eligible optional coverage in which the participant is currently enrolled.

(4) Notwithstanding any other provisions of this chapter, optional coverage is not considered voluntary coverage for purposes of the incentive credit in lieu of the state contribution.

(d) Solely with regard to eligible participants waiving health coverage to enroll in the TRICARE Supplement, this Section shall become effective only after the Board has contracted with one or more Carriers to make a TRICARE Supplement health coverage plan available pursuant to §81.3(c) of this chapter (relating to Administration).

§81.9.Grievance Procedure.

(a) Except for persons enrolled in an HMO or the TRICARE Supplement plan , any person participating in the insurance program, who is denied payment of insurance benefits, or otherwise receives an adverse decision, may request the carrier or administering firm to reconsider the claim. Any additional documentation in support of the claim may be submitted with the request for reconsideration. If the claim is again denied, the claim, accompanied by all related documents and copies of correspondence with the insurance carrier or administering firm [ company ], may be submitted by the person to the Executive Director of the Employees Retirement System of Texas for review. A request for review must be filed by the person in writing within 90 days from the date the insurance carrier or administering firm [ company ] formally denies the claim , or provides notice of other adverse decision, and mails notice of this denial and right of appeal to the person.

(b) Any participant with a grievance regarding eligibility or other matters involving the Program [ program ], including eligibility for participation in the premium conversion plan, may submit a written request to the Executive Director to make a determination on the matter in dispute.

(c) (No change.)

(d) Any participant that does not accept the Executive Director's decision may appeal the decision to the board provided the decision grants a right of appeal. A notice of appeal to the board must be [ filed ] in writing and filed with ERS 30 days from the date the Executive Director's decision is mailed by certified or first class mail.

(e) - (g) (No change.)

§81.11.Termination of Coverage.

(a) Cancellation of coverage.

(1) (No change.)

(2) Court ordered health coverage for a dependent cannot be canceled unless the dependent is no longer eligible as a dependent as defined in §81.1 of this chapter [ title ], the court order is no longer valid, or comparable coverage has been obtained.

(3) - (5) (No change.)

(b) (No change.)

(c) Sanctions for Insurance Program Violations.

(1) (No change.)

(2) Any person with a grievance regarding eligibility or other matters involving the Program [ program ] may submit a written request to the Executive Director to make a determination on the matter in dispute. Any person who disputes a rescission of coverage, a denial of benefits or other sanctions imposed in connection with a determination made under Insurance Code, Chapter 1551, may appeal the determination in accordance with §81.9 of this chapter [ title ] (relating to Grievance Procedure). A timely appeal of a determination made pursuant to Insurance Code, Chapter 1551 shall automatically stay the imposition of sanctions. However, at the time such a determination is made pursuant to Insurance Code, Chapter 1551, no further claims will be paid until the agency decision is final. Upon final agency action, all eligible claims will be processed subject to any offsets for overpayments made by the carrier.

(3) - (6) (No change.)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 24, 2006.

TRD-200601019

Paula A. Jones

General Counsel

Employees Retirement System of Texas

Earliest possible date of adoption: April 9, 2006

For further information, please call: (512) 867-7421


Part 12. STATE EMPLOYEE CHARITABLE CAMPAIGN

Chapter 329. ELIGIBILITY CRITERIA FOR STATEWIDE FEDERATIONS/FUNDS AND AFFILIATED ORGANIZATIONS

34 TAC §329.1

The State Employee Charitable Campaign Policy Committee (SPC) proposes an amendment to §329.1, concerning audit and review requirements. The proposed amendment to §329.1 requires certain charitable organizations to include a copy of an IRS Form 990 with their applications. The SPC requires the IRS Form 990 to assist in determining the percentage of a charitable organization's budget that was used for administrative expenses during the time period being reported in the application.

The proposed amendment to §329.1, provides a similar requirement for organizations participating in the statewide SECC campaign that §330.1 provides for the local SECC campaigns and requires an IRS Form 990 from all organizations applying to participate in the statewide SECC campaign. The SPC seeks to adopt rules that allow for consistent campaign practices at the local level and the statewide level to the extent that is feasible. The SPC is charged with ensuring a fair and equitable campaign. The IRS Form 990 is a broadly recognized and accepted form used for determining administrative costs of most non-profit charitable organizations, including those with small budgets and those with larger budgets. The SPC may adopt a requirement that all organizations submit an IRS Form 990 to ensure all organizations are reviewed fairly and consistently and to ensure that organizations that are approved to participate in the SECC spend donations within the statutory limits.

Mr. Kevin Van Oort, designated Certifying Officer for the State Employee Charitable Campaign Policy Committee, has determined that for the first five-year period the rules will be in effect, there will be no significant fiscal impact on the state or units of local government.

Mr. Van Oort also has determined that for each year of the first five years these rules are in effect, the public benefit anticipated as a result of enforcing the rules will be to help ensure that the donations of state employees to participating charitable organizations are going to the programs for which they are intended and not to unreasonably high administrative costs. There will be no effect on small or micro businesses. There are no significant anticipated economic costs to persons who are required to comply with the proposed rules.

Comments on the proposal may be submitted to Kevin Van Oort, c/o SECC State Campaign Manager, United Ways of Texas, 3724 Executive Center Drive, Suite 210, Austin, Texas 78731.

These amendments are proposed under Government Code, §659.139, which provides that the State Employee Charitable Campaign (SECC) must be managed fairly and equitably in accordance with the SECC law and the policies and procedures established by the state policy committee. The SPC interprets this statute to authorize the adoption of rules to the extent that the policies and procedures adopted are of general applicability and affect the rights of third parties, namely charitable organizations, local campaign managers, local employee committees, the state advisory committee, the state campaign manager, and state employees.

The other statute, article, or section affected by the proposed rule is Government Code, §659.146, regarding eligibility criteria for charitable organizations to participate in the state employee charitable campaign and the authority of the SPC to use outside expertise and resources to determine an organization's eligibility to participate in the SECC.

§329.1.Audit and Review Requirements.

(a) To be eligible to participate in the state employee charitable campaign, if the charitable organization's budget:

(1) is not more than $100,000, the organization shall provide a completed Internal Revenue Service (IRS) Form 990 and an accountant's review that offers full and open disclosure of the organization's internal operations; or

(2) is greater than $100,000, the organization shall be audited annually in accordance with generally accepted auditing standards of the American Institute of Certified Public Accountants. A copy of the report of such audit shall be provided with the application along with a completed Internal Revenue Service (IRS) Form 990 .

(b) When a charitable organization submits an audit or accountant's review, a copy of the organization's most recent annual audit or accountant's review must be included with the application. The audit or accountant's review must cover the fiscal year ending not more than 18 months prior to the January of the campaign year in which the organization is applying for participation. The IRS Form 990 and audit or accountant's review must cover the same fiscal period. If the revenue and expenses on these two documents differ, the reconciliation must be included in the IRS Form 990 itself or be included in a letter of reconciliation submitted by the certified public accountant who completed the audit or accountant's review.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 24, 2006.

TRD-200600990

Kevin Van Oort

Certifying Officer, State Policy Committee

State Employee Charitable Campaign

Earliest possible date of adoption: April 9, 2006

For further information, please call: (512) 475-0387


Chapter 330. ELIGIBILITY CRITERIA FOR LOCAL FEDERATIONS/FUNDS, AFFILIATED ORGANIZATIONS, AND LOCAL CHARITABLE ORGANIZATIONS

34 TAC §330.1

The State Employee Charitable Campaign Policy Committee (SPC) proposes an amendment to §330.1, concerning audit and review requirements. The proposed amendment to §330.1 requires certain charitable organizations to include a copy of an IRS Form 990 with their applications. The SPC requires the IRS Form 990 to assist in determining the percentage of a charitable organization's budget that was used for administrative expenses during the time period being reported in the application.

The proposed amendment to §330.1, provides a similar requirement for organizations participating in the local SECC campaigns that §329.1 provides for the statewide campaign and requires an IRS Form 990 from all organizations applying to participate in an SECC campaign. The SPC seeks to adopt rules that allow for consistent campaign practices at the local level and the statewide level to the extent that is feasible. The SPC is charged with ensuring a fair and equitable campaign. The IRS Form 990 is a broadly recognized and accepted form used for determining administrative costs of most non-profit charitable organizations, including those with small budgets and those with larger budgets. The SPC may adopt a requirement that all organizations submit an IRS Form 990 to ensure all organizations are reviewed fairly and consistently and to ensure that organizations that are approved to participate in the SECC spend donations within the statutory limits.

Kevin Van Oort, designated Certifying Officer for the State Employee Charitable Campaign Policy Committee, has determined that for the first five-year period the rules will be in effect, there will be no significant fiscal impact on the state or units of local government.

Mr. Van Oort also has determined that for each year of the first five years these rules are in effect, the public benefit anticipated as a result of enforcing the rules will be to help ensure that the donations of state employees to participating charitable organizations are going to the programs for which they are intended and not to unreasonably high administrative costs. There will be no effect on small or micro businesses. There are no significant anticipated economic costs to persons who are required to comply with the proposed rules.

Comments on the proposal may be submitted to Kevin Van Oort, c/o SECC State Campaign Manager, United Ways of Texas, 3724 Executive Center Drive, Suite 210, Austin, Texas 78731.

These amendments are proposed under Government Code, §659.139, which provides that the State Employee Charitable Campaign (SECC) must be managed fairly and equitably in accordance with the SECC law and the policies and procedures established by the state policy committee. The SPC interprets this statute to authorize the adoption of rules to the extent that the policies and procedures adopted are of general applicability and affect the rights of third parties, namely charitable organizations, local campaign managers, local employee committees, the state advisory committee, the state campaign manager, and state employees.

The other statute, article, or section affected by the proposed rule is Government Code, §659.146, regarding eligibility criteria for charitable organizations to participate in the state employee charitable campaign and the authority of the SPC to use outside expertise and resources to determine an organization's eligibility to participate in the SECC.

§330.1.Audit and Review Requirements.

(a) To be eligible to participate in the state employee charitable campaign, if the charitable organization's budget:

(1) is not more than $100,000, the organization shall provide a completed Internal Revenue Service (IRS) Form 990 and an accountant's review that offers full and open disclosure of the organization's internal operations; or

(2) is greater than $100,000, the organization shall be audited annually in accordance with generally accepted auditing standards of the American Institute of Certified Public Accountants. A copy of the report of such audit shall be provided with the application along with a completed Internal Revenue Service (IRS) Form 990 .

(b) When a charitable organization submits an audit or accountant's review, a copy of the organization's most recent annual audit or accountant's review must be included with the application. The audit or accountant's review must cover the fiscal year ending not more than 18 months prior to the January of the campaign year in which the organization is applying for participation. The IRS Form 990 and audit or accountant's review must cover the same fiscal period. If the revenue and expenses on these two documents differ, the reconciliation must be included in the IRS Form 990 itself or be included in a letter of reconciliation submitted by the certified public accountant who completed the audit or accountant's review.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 24, 2006.

TRD-200600991

Kevin Van Oort

Certifying Officer, State Policy Committee

State Employee Charitable Campaign

Earliest possible date of adoption: April 9, 2006

For further information, please call: (512) 475-0387