ADOPTED RULES An agency may take final action on a section 30 days after a proposal has been published in the Texas Register. The section becomes effective 20 days after the agency files the correct document with the Texas Register, unless a later date is specified or unless a federal statute or regulation requires implementation of the action on shorter notice. If an agency adopts the section without any changes to the proposed text, only the preamble of the notice and statement of legal authority will be published. If an agency adopts the section with changes to the proposed text, the proposal will be republished with the changes. TITLE 34. PUBLIC FINANCE Part I. Comptroller of Public Accounts Chapter 3. Tax Administration Subchapter A. General Rules 34 TAC sec.3.9 The Comptroller of Public Accounts adopts an amendment to sec.3.9, concerning electronic filing of returns and reports; electronic transfer of certain payments by certain taxpayers, without changes to the proposed text as published in the October 7, 1994, issue of the Texas Register (19 TexReg 8001). The amendment provides notice to taxpayers who pay by means of electronic funds transfer about the requirements for making protested tax payments. No comments were received regarding adoption of the amendment. This amendment is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on January 3, 1995. TRD-9500036 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: January 24, 1995 Proposal publication date: October 7, 1994 For further information, please call: (512) 463-4028 Part IV. Employees Retirement System of Texas Chapter 73. Benefits 34 TAC sec.73.35 The Employees Retirement System of Texas adopts new rule sec.73.35 concerning benefits, without changes to the proposed text as published in the October 18, 1994, issue of the Texas Register (19 TexReg 8284). This new rule will authorize a supplemental one-time payment in the fiscal year ending August 31, 1995 for Employees Retirement System of Texas (ERS) annuitants as described in the Government Code, sec.814.603. The new rule will allow ERS annuitants to whom the section applies to receive a supplemental one-time payment in the current fiscal year. No comments were received regarding adoption of the new rule. The new rule is adopted under the Government Code, sec.814.603 which provides the Board of Trustees with the authority to implement the supplemental one-time payment. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on January 4, 1995. TRD-9500069 Charles D. Travis Executive Director Employees Retirement System of Texas Effective date: January 25, 1995 Proposal publication date: October 18, 1994 For further information, please call: (512) 867-3336 Chapter 81. Insurance 34 TAC sec.sec.81.1, 81.3, 81.5, 81.7 The Employees Retirement System of Texas adopts amendments to sec.81.1, 81. 3, 81.5, and 81.7 concerning insurance with changes to the proposed text as published in the November 15, 1994, issue of the Texas Register (19 TexReg 8946). The amendments will clarify eligibility and coverage areas for participants, including retirees, coverage availability for surviving dependents of retirees and slain law officers, and former employees and dependents eligible under COBRA; clarify direct premium payment procedures and effects of nonpayment, and application of the state benefits contribution to coverages; clarify insurance coverage procedures for returning employees after Family and Medical Leave Act and military active duty leave. The amendments will streamline procedures for enrollment and processing of insurance coverage, improved communication of benefits availability and cost savings. No comments were received regarding the adoption of the amendments. The amendments are adopted under the Insurance Code, Article 3.50-2, sec.4, which provides the board of trustees with the authority to promulgate all rules, regulations, plans, procedures, and orders reasonably necessary to implement and carry out the purposes and provisions of the Texas Employees Group Insurance Benefits Act. sec.81.1. Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Age of employee -The age to be used for determining optional term life and voluntary AD&D insurance premiums will be the employee's attained age as of the employee's first day of active duty within a contract year. Annuitant-A person as defined in the Act. Dependent-The spouse of an employee or retiree and unmarried children under 25 years of age, including: (A)-(F) (No change.) (G) an eligible child, as defined in this subsection, for whom the employee/retiree must provide medical support pursuant to a valid order from a court of competent jurisdiction; or (H) any such child, regardless of age, who lives with or whose care is provided by an employee or retiree on a regular basis if such child is mentally retarded or physically incapacitated to such an extent as to be dependent upon the employee or retiree for care or support, as the trustee shall determine. Mentally retarded or physically incapacitated means any medically determinable physical or mental condition which prevents the child from engaging in self- sustaining employment, provided that the condition commences prior to such child's attainment of age 25, the child was eligible and covered under the plan immediately prior to reaching age 25, and that satisfactory proof of such condition and dependency is submitted by the employee/retiree within 31 days following such child's attainment of age 25. As a condition to the continued coverage of a child as a mentally retarded or physically incapacitated dependent beyond the age of 25, the carrier or health maintenance organization shall have the right to require periodic certification of the child's physical or mental condition but not more frequently than annually following the child's attainment of age 25. Leave without pay-The status of an employee who is certified by a department administrator to be absent from duty who has not received compensation or a refund of retirement contributions based upon the most recent term of employment. sec.81.3. Administration. (a)-(b) (No change.) (c) Health maintenance organizations. (1) (No change.) (2) An HMO seeking board approval must satisfy the following conditions. (A)-(B) (No change.) (C) The HMO must have been providing services in the area for which application is made for at least 12 months prior to the date the application is filed with the system and must demonstrate the capacity to provide adequate services, as determined by the system, to the program participants. For a request for an expansion of a contiguous service area, the HMO must be providing services in the expanded area on the date the application is filed with the system and must demonstrate the capacity to provide adequate services, as determined by the system, to the program participants in the expanded area. (D)-(G) (No change.) (3)-(5) (No change.) (d) Funding. (1) Contributions. Premiums for coverage provided under the program are funded from three sources: state contributions, system contributions, employee and retiree contributions. The 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 employees and retirees. An employee or retiree 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) Payment of premiums. Deductions from monthly compensation or annuities and direct payment of premiums are two methods of payments used for the employee's, retiree's, or other participant's share of premiums. (A) Employee deductions. An employee or retiree who applies for coverage for which the monthly premium exceeds the state or employing department and the system contributions must authorize in writing on a form prescribed by the system a deduction from his or her monthly compensation or annuity to pay the difference. If an employee's monthly compensation or retiree's annuity is insufficient to provide for the appropriate deduction, the employee or retiree must pay premiums directly as explained 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 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 sec.81. 7(i)(2)(B) of this title (relating to Enrollment and Participation). (B) Direct payment of premiums. Persons who are eligible participants in the program and who are not on a payroll or who are not receiving an annuity from a state retirement system from which the appropriate premiums may be deducted or whose salary or annuity are insufficient to allow for a full required deduction must pay premiums directly as indicated in the following. (i) A person who is eligible to receive but is not actually receiving a TRS annuity, a retiree who is eligible to receive an annuity whose benefit is assigned to an alternate payee, a person whose retirement annuity is temporarily suspended, a person whose annuity is insufficient, a person who is receiving or eligible to receive an annuity under the ORP, a former elected official, a former employee of the legislature, and a surviving spouse and/or dependent child/children of a deceased employee or retiree must pay monthly premiums in advance directly to the system. A person in a leave without pay status, a person whose salary is insufficient, and a non-salaried board member must pay monthly premiums in advance through the employee's employing department. 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 sec.81.7(i)(2)(B) of this title. (ii)-(iii) (No change.) sec.81.5. Eligibility. (a)-(b) (No change.) (c) Retirees. A retiree is eligible for health and dental coverage on the day he or she becomes an annuitant. A retiree is eligible for optional life insurance coverage only if the retiree was enrolled in optional life insurance coverage on the day before becoming an annuitant. A retiree is eligible for dependent life insurance coverage only if the retiree was enrolled in dependent life insurance coverage on the day before becoming an annuitant. Retirees may not increase the amount of life insurance for which they have been enrolled, but may cancel life coverage at any time. Canceled life insurance coverages may never be reinstated. A retiree is not eligible for disability or accidental death and dismemberment coverage. (1)-(2) (No change.) (d) (No change.) (e) Surviving dependents. (1)-(2) (No change.) (3) A surviving dependent child of a retiree may, after the death of the retiree and if the retiree leaves no surviving spouse, elect to continue coverage in the health and dental benefits plans in which the retiree was enrolled on the day of death of the retiree. A surviving dependent child may continue such coverage until the dependent child becomes ineligible as defined in sec.81.1 of this title (relating to Definitions). (4) A surviving spouse or a dependent child of a paid law enforcement officer employed by the state or a custodial employee of the institutional division of the Texas Department of Criminal Justice who suffers a violent death in the course of performance of duty is eligible to continue or enroll in health and dental coverages. A surviving spouse or natural or adopted children eligible under this section may enroll within 90 days from the date of death. Other eligible dependent children may continue health and dental coverages in effect on the date of death. (f)-(i) (No change.) (j) Continuation of health and dental coverages only for certain spouses and dependent children of employees/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) The surviving spouse and/or dependent child/children of a deceased employee or retiree who are not eligible to continue coverage under the provisions of the Act or subsection (e) 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, may continue for up to 36 months the health and dental coverages only that were in effect immediately prior to the date of death of the employee/retiree. A formal election must be made to continue coverage by the surviving spouse and/or the 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. (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 as an employee, or whose coverage has ended following the maximum period of leave without pay as provided for in sec.81.7(i)(2)(A) of this title (relating to Enrollment and Participation), except for those persons not eligible pursuant to sec.81.11(c) of this 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 (g) or (h) 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, 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) (No change.) (4) A spouse who is divorced from an employee/retiree and/or the spouse's dependent child/children who are not otherwise eligible to continue coverage under the provisions of the Act or subsection (d) 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 are covered by a plan that subjects them to a preexisting conditions limitation or exclusion, may continue for up to 36 months the health and dental coverages only that were in effect immediately prior to the date the divorce decree is signed. The employee/retiree or the divorced spouse or the divorced spouse's dependent child/children must notify the system through the employing department or retiree benefits coordinator of the divorce within 60 days from the date the divorce decree is signed. A formal election must be made to continue coverage by the divorced spouse and/or the 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 is terminated, whichever is later. (5) A dependent child under 25 years of age who marries, who is not entitled to benefits under the Social Security Act, Title XVIII, who is not covered under any other group health plan, or who are covered by a plan that subjects the child to a preexisting conditions limitation or exclusion, may continue for up to 36 months the health and dental coverages only that were in effect immediately prior to the date of the marriage. The married child or the employee/retiree must notify the system through the employing department or retiree benefits coordinator of the marriage within 60 days from the date of the marriage. A formal election must be made by the married child to continue coverage. 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 is terminated, whichever is later. (6) A dependent child who has attained 25 years of age, who is not otherwise eligible to continue coverage indefinitely under the provisions of the Act or subsection (d) of this section, who is not entitled to benefits under the Social Security Act, Title XVIII, who is not covered under any other group health plan, or who is covered by a plan that subjects the child to a preexisting conditions limitation or exclusion, may continue for up to 36 months the health and dental coverages only that were in effect immediately prior to the date of the child's 25th birthday. The child or employee/retiree must notify the system through the employing department or retiree benefits coordinator within 60 days of the child's 25th birthday. A formal election must be made by the 25-year-old child to continue coverage. 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 is terminated, whichever is later. (7)-(9) (No change.) sec.81.7. Enrollment and Participation. (a) Full-time employees and their dependents. (1) A new employee, other than a part-time state agency employee, will automatically be enrolled in the basic plan of health and life insurance, effective on his or her first day of active duty. To enroll eligible dependents, elect to enroll in an approved HMO and/or elect optional coverages, the employee must complete a form on the first day of active duty or within 30 days from that date. The employee may decline any and all coverages in the program by completing a form on or before the first day of active duty. (2) Applications for coverages to be effective on the day the employee begins active duty must be completed and signed on or before that day. Coverages for which the application is completed and signed after the first day of active duty and within 30 days after that day will be effective on the first day of the month following the date of application. Applications completed and signed after the first 31 days will be governed by subsection (f) of this section. (3) Coverages for dependents of an employee will be effective on the same day the employee's coverage becomes effective if an application is completed and signed on or before the effective date of the employee's coverage. If the application is completed and signed within 30 days after the employee's effective date, the dependent's coverage will be effective on the first day of the month following the date of application. Coverage for a newly eligible dependent, other than a dependent referred to in paragraph (4) of this subsection, will be effective on the date the person becomes a dependent if an application is completed and signed on or within 30 days after the date the dependent first becomes eligible. If the application is completed and signed more than 30 days after the employee's effective date or the date the dependent is first eligible, as the case may be, the application will be governed by the rules in subsection (f) of this section. The requirement that an application must be completed and signed within 30 days after a dependent first becomes eligible is waived if the level of health, dental, and/or life coverages were in effect prior to the acquisition of the newly eligible dependent; however, an application must be completed before verification of coverage will be provided to the carrier(s). (4) Unless not in compliance with Chapter 85 of this title (relating to Flexible Benefits), a newborn natural child or eligible newborn grandchild will be covered immediately and automatically from the date of birth in the health plan in effect for the employee or retiree. (A) (No change.) (B) If health, dental, and/or life coverages for dependent children were already in effect, an application to add a subsequent newborn natural child or eligible newborn grandchild must be completed before verification of coverage for the newborn dependent will be provided to the carrier. (5) -(6) (No change.) (b)-(c) (No change.) (d) Surviving dependents. A surviving spouse and dependents of a deceased employee who, at the time of death, met the age and service requirements to qualify for a retirement benefit or survivor's annuity and who met the program eligibility requirements in accordance with the Act may continue coverage as provided in sec.81.5(e) of this title (relating to Eligibility). A surviving spouse and dependents of a deceased retiree may continue coverage as provided in sec.81. 5(e) of this title. A surviving spouse, who is receiving an annuity, shall make premium payments by deductions from the annuity as provided in sec.81.3(d) (2)(A) of this title (relating to Administration). A surviving spouse, who is not receiving an annuity, may make payments as provided in sec.81.3(d)(2)(B) of this title. The surviving spouse or eligible dependents must apply to continue coverage for himself or herself and dependents within 30 days after notification in writing of eligibility to make application. (e) Special rules for additional or alternative coverages. (1) An employee/retiree must be enrolled in health coverage provided by the program to apply for any optional coverages. Only an employee or retiree or a former officer or employee specifically authorized to join the program may apply for optional coverages. (2) (No change.) (3) A participant electing optional additional coverage and/or HMO coverage in lieu of the basic plan of insurance is obligated for the full payment of premiums. If the premiums are not paid, all coverages not fully funded by the state contribution will be canceled. A person entitled to the state contribution will retain member only health 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 sec.81.7(i)(2)(B). (4)-(5) (No change.) (f) Changes in coverages beyond the first 31 days of eligibility. (1) An employee or retiree who wishes to add or increase coverage, add eligible dependents to the self-insured health plan, or change coverage from an HMO to the self-insured health plan more than 30 days after the initial date of eligibility must make application for approval by providing evidence of insurability acceptable to the system. Unless not in compliance with Chapter 85 of this title, coverage will become effective on the first day of the month following the date approval is received by the employee's benefits coordinator or by the system, if the applicant is a retiree or an individual in a direct pay status. If the applicant is an employee in a leave without pay status, the approved change in coverage will become effective on the date the employee returns to active duty if the employee returns to active duty within 30 days of the approval letter. If the date the employee returns to active duty is more than 30 days after the date on the approval letter, the approval is null and void; and a new application shall be required. An employee or retiree may withdraw the application at any time prior to the effective date of coverage by submitting a written notice of withdrawal. (2)-(4) (No change.) (5) An employee, retiree, or other participant, who is enrolled in an approved HMO and permanently moves his or her place of residence out of that HMO's service area to a location where the participant is no longer eligible to be enrolled in any approved HMO, will be allowed to enroll in the self-insured health plan and other optional coverages held immediately prior to the date of change in residence. Coverage in the HMO will be canceled on the last day of the month in which the previously described employee, retiree, or other participant moved from the service area, and the coverages in the self-insured health plan will become effective on the day following the day HMO coverage is canceled. The evidence of insurability rule shall not apply in these cases. The preexisting conditions exclusion shall apply if the return to the self-insured health plan occurs within 12 months of the initial date of coverage under the current term of employment, as defined in subsection (g)(3) of this section. (6) (No change.) (7) Persons wishing to change from one HMO to another HMO in the same service area, change from the self-insured health plan to an HMO, enroll in a dental plan, or change dental plans will be allowed an annual opportunity to do so. Such opportunity will be scheduled prior to September 1 of each year at times announced by the system. Persons in a declined or canceled status may apply for coverages in an HMO for which they are eligible and a dental plan during the annual enrollment period. Coverage in the HMO 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. (8)-(9) (No change.) (10) An eligible dependent spouse or child who has health coverage as an employee under the program becomes eligible for coverage as a dependent on the day following termination of employment. Eligible dependent children who have health coverage in the program as dependents of an employee who terminates employment also become eligible for coverage on the day following termination of employment. In order to be eligible for coverage, dependents must meet the definition of dependent contained in sec.81.1 of this title (relating to Definitions) and be enrolled for coverage by the employee of whom they are the eligible dependent and who is enrolled for health coverage under the program. The effective date of coverage will be the first day of the month following termination of employment if an application is completed and signed on or within 30 days following the date the dependent(s) become eligible under this rule. (11) Notwithstanding the effective dates of coverages, as defined in paragraphs (1)-(9) of this subsection, an employee, retiree or other eligible participant in the program may complete an application or applications during the annual enrollment period to make coverage changes, as determined by the trustee, to be effective September 1. (g) (No change.) (h) Reinstatement in the program. (1) (No change.) (2) An employee who is a member of the Texas National Guard or any of the reserve components of the United States Armed Forces and who is in a military leave without pay status or who must terminate employment as the result of an assignment to active military duty may, upon return to active employment, reinstate all program coverages that were in effect immediately prior to the commencement of active military duty, as long as the return to active employment occurs within 90 days of the release from active military duty. An employee may also reinstate the coverage of the employee's dependent, who is a member of the Texas National Guard or any of the reserve components of the United States Armed Forces and whose coverage is terminated as the result of an assignment to active military duty. To reinstate canceled coverages, submission of evidence of insurability acceptable to the carrier will not apply. Provided all applicable preexisting conditions exclusions were satisfied at the time coverages were canceled, no additional preexisting conditions exclusions will apply upon reinstatement of coverages. If not, any remaining period of preexisting conditions exclusions must be satisfied upon reinstatement. The application to reinstate such coverages must be completed and signed during the 30 days following the day the employee returns to active employment. In the case of the dependents, the application to reinstate such coverages must be completed and signed within 30 days following the release from active duty. Applications for coverages to be effective on the day the employee returns to active employment must be completed and signed on or before the first day of the return to active employment. Coverages for which the application is completed and signed after the first day of the return to active state employment and within 30 days after that day will be effective on the first day of the month following the date of application. (3) Employees whose coverages were canceled during a period of leave without pay due to a certified work-related disability may, upon return to active duty status, reinstate all coverages that were in effect on the day immediately prior to entering the leave without pay status, except as provided in sec.81.11(c)(4) of this title (relating to Termination of Coverage), and provided application to reinstate such coverages is made within 30 days of the return to active duty. Evidence of insurability will not apply. Provided all applicable preexisting conditions exclusions were satisfied at the time coverages were canceled, no additional preexisting conditions exclusions will apply upon reinstatement of coverages. If not, any remaining period of preexisting conditions exclusions must be satisfied upon reinstatement. Coverages applied for on the first day of return to active duty will be effective on that day unless the employee completes and signs the application indicating coverages are to be effective on the first day of the month following the date the employee returns to active duty. Coverages applied for after the first day of return to active duty and within 30 days after that day will be effective on the first day of the month following the date of application. (4) Employees whose coverages were cancelled during a period of leave without pay as a result of the Family and Medical Leave Act of 1993 may, upon return to active duty, reinstate all coverages that were in effect on the day immediately prior to entering the leave without pay status, provided application to reinstate such coverages is made within 30 days of the return to active duty. To reinstate cancelled coverages, submission of evidence of insurability acceptable to the carrier will not apply. Provided all applicable preexisting conditions exclusions were satisfied at the time coverages were cancelled, no additional preexisting conditions exclusions will apply upon reinstatement of coverages. If not, any remaining period of preexisting conditions exclusions must be satisfied upon reinstatement. (i) Continuing coverage in special circumstances. (1) (No change.) (2) Continuation of health, dental, and life coverages for employees in a leave without pay status. (A) An employee in a leave without pay status may continue the types and amounts of health, life, and dental coverages in effect on the date the employee entered that status for a maximum period of up to 12 months. The maximum period may be extended for up to 12 additional months for a total of 24 continuous months, provided the extension is certified by the department to be for educational purposes. Disability income coverage for an employee in a leave without pay status will be suspended beginning on the first day of the month in which the employee enters the leave without pay status and continuing for those months in which the employee remains in that status. Suspended disability income coverage for an employee returning to active duty from a leave without pay status will be reactivated effective on the first day the employee returns to active duty if the entire period of unpaid leave was certified by the department as approved leave without pay. (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 sec.81.3(d)(2)(B)(i) of this 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)-(4) (No change.) (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 sec.81.5(j)(1) of this 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 as an employee, or whose coverage has ended following the maximum period of leave without pay as provided in sec.81.7(i)(2)(A) of this title. An employee, his or her spouse and/or dependent child/children, who, in accordance with sec.81.5(j)(2) of this 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 sec.81.5(a) of this title of an employee/retiree who, in accordance with sec.81.5(j)(4) of this 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 sec.81.5(j)(5) of this 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 sec.81.5(d) of this title of an employee/retiree who, in accordance with sec.81.5(j)(6) of this 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) (No change.) (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) 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, the last day of the 18th calendar month of the continuation period; (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 sec.81.5(j)(3) of this title, the last day of the 29th calendar month of the continuation period; (iii) in any case other than loss of coverage due to termination of an employee's employment, reduction in work hours, or end of maximum period of leave without pay, the last day of the 36th calendar month of the continuation period; (iv)-(vi) (No change.) (vii) the date on which the participant, covered under any other group health plan that subjects him or her to a preexisting conditions limitation or exclusion, is no longer subject to the preexisting conditions limitation or exclusion in the other plan; (viii) the date on which the participant, after the date of election, becomes entitled to benefits under the Social Security Act, Title XVIII. (C)-(E) (No change.) This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on January 4, 1995. TRD-9500068 Charles D. Travis Executive Director Employee Retirement System of Texas Effective date: January 25, 1995 Proposal publication date: November 15, 1994 For further information, please call: (512) 867-3336