TITLE public-finance

Part 3. TEACHER RETIREMENT SYSTEM OF TEXAS

Chapter 41. INSURANCE PROGRAMS [ HEALTH CARE BENEFITS ] LONG-TERM CARE, DISABILITY AND LIFE INSURANCE

34 TAC §41.15

(Editor's note: The Teacher Retirement System of Texas proposes for permanent adoption the new section it adopts on an emergency basis in this issue. The text of the new section is in the Emergency Rules section of this issue.)

The Teacher Retirement System of Texas (TRS) proposes a new §41.15 concerning the requirements to bid on insurance for school district employees and retirees. The proposed new rule will implement Insurance Code article 3.50-4A, which was passed by the 76th Legislature, 1999 in Senate Bill 1128. In addition, the proposal addresses a change in the title of Chapter 41 from Health Care Benefits to Insurance Programs to more accurately reflect the subject matter of the chapter and the addition of two new subchapter titles. The proposed new rule has been simultaneously adopted on an emergency basis.

In accordance with the new law, the proposed rule sets forth the requirements for the selection of contractors for new insurance plans established by Insurance Code article 3.50-4A, including long-term care insurance, optional permanent life insurance, and short-term and long-term disability insurance. The selection requirements include minimum premium income requirements and minimum capital and surplus requirements. These criteria are necessary to ensure financial stability and integrity of the new programs and are consistent with Insurance Code article 3.50-4A, §2(d), which provides that TRS may consider "ability to service contracts, past experiences, financial stability, and other relevant criteria." The proposed rule also requires contractors to administer enrollment, adjudication of claims and coordination of services for the applicable insurance plans and requires contractors to account for premiums collected and disbursed.

Ronnie Jung, Chief Financial Officer, has determined that for each year of the first five-year period the rule is in effect, there will be no fiscal implications to state or local governments as a result of enforcing or administering the rule.

Mr. Jung has also determined that for each year of the first five years the rule is in effect the public benefit anticipated will be that the insurance plans established by Insurance Code article 3.50-4A will be offered to school district employees and retirees in accordance with the new law. The proposed rule is not regulatory in nature, and applies only to carriers that choose to bid on the insurance plans established under the new law (no carrier is required to bid). Therefore, there are no anticipated economic costs to persons who are required to comply with the section as proposed, or to small businesses.

Comments on the proposal may be submitted to Charles L. Dunlap, Executive Director, 1000 Red River, Austin, Texas 78701.

The new section is proposed under the Government Code, Chapter 825, §825.102, which authorizes the Board of Trustees of the Teacher Retirement System to adopt rules for the administration of the funds of the retirement system. Further, it is adopted under Insurance Code article 3.50-4A, including §2(d), which provides that competitive bidding shall be required under rules adopted by TRS and that the rules may provide criteria to determine qualified carriers. In addition, it is adopted under Insurance Code article 3.50-4A §§3(a) and (b), which provide that TRS shall adopt rules for the selection of contractors, that the rules must require the contractors to perform certain functions and that TRS may adopt other rules necessary to administer the program.

There are no other laws affected by this proposed rule.

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 December 22, 1999.

TRD-9909018

Charles Dunlap

Executive Director

Teacher Retirement System of Texas

Proposed date of adoption: February 25, 2000

For further information, please call: (512) 391-2115