TITLE 34.PUBLIC FINANCE

Part 3. TEACHER RETIREMENT SYSTEM OF TEXAS

Subchapter C. TEXAS SCHOOL EMPLOYEES GROUP HEALTH

The Teacher Retirement System of Texas (TRS) proposes new §§41.33 - 41.35 concerning the Texas School Employees Uniform Group Health Coverage Program ("Program"). The proposed sections set forth definitions applicable to the Program, describe eligibility requirements, establish coverage plans and set forth requirements of the coverage plans and tiers of coverage. The proposed sections were adopted on an emergency basis and published in the March 15, 2002 issue of the Texas Register .

In accordance with Insurance Code article 3.50-7, the proposed sections set forth definitions, coverage plans and eligibility criteria. The purposes of the proposed sections are to provide notice to participating entities and their employees of the eligibility and other requirements and to provide rules in accordance with Insurance Code article 3.50-7. Insurance Code article 3.50-7 authorizes TRS to adopt rules relating to the Program as it considers necessary, authorizes TRS to adopt rules to administer the Program, and requires TRS to adopt rules relating to coverage plans.

Ronnie Jung, Deputy Director, has determined that for each year of the first five-year period the sections are in effect there will be no foreseeable fiscal implications to state and local governments as a result of enforcing or administering the sections. There is no foreseeable effect on local employment or local economies as a result of the proposed sections. There is no anticipated adverse economic effect on small businesses or micro-businesses as a result of compliance with the proposed new sections.

Mr. Jung has also determined that for each year of the first five years the new sections are in effect the public benefit anticipated is that participating entities and their employees will have notice of eligibility requirements and the coverage plan information. In addition, the sections will comply with the statutory requirements for adoption of rules relating to coverage plans. Mr. Jung has determined that there are no anticipated economic costs to persons required to comply with the proposed sections.

Comments on the proposal may be submitted to Charles L. Dunlap, executive Director, 1000 Red River, Austin, Texas 78701. To be considered, written comments must be received by TRS no later than 30 days after publication of the sections for proposal.

The new sections are proposed under the Government Code, Chapter 825, §825.102, which authorizes the Board of Trustees of the Teacher Retirement System to adopt rules for, among other things, the transaction of business of the board. The new section is also adopted under House Bill 3343, which was passed by the 77th Legislature, 2001, including Insurance Code article 3.50-7, which authorizes TRS to adopt rules to administer the Program, and requires TRS to adopt rules relating to coverage plans. Insurance Code article 3.50-7, §3(c) further authorizes TRS, as trustee, to "adopt rules relating to the program as considered necessary by the trustee."

There are no other codes affected.

§41.33. Definitions Applicable to the Texas School Employees Uniform Group Health Coverage Program.

The following words and terms when used in subchapter C or in connection with the administration of Insurance Code §3.50-7 shall have the following meanings unless the context clearly indicates otherwise.

(1) Dependent -- All individuals described by Insurance Code 3.50-7, section 2(3), including an unmarried child under 25 years of age ("child") who is described by any one of the following subparagraphs at all times during which the child is receiving coverage under the TRS-ActiveCare Program.

(A) A child under the legal guardianship of a full-time or part-time employee;

(B) A full-time or part-time employee's grandchild whose primary residence is the household of that full-time or part-time employee if the child is a dependent of the full-time or part-time employee for federal income tax purposes; or

(C) A child in a regular parent-child relationship with a full-time or part-time employee, meaning that the child's primary residence is the household of that full-time or part-time employee, the full-time or part-time employee provides at least 50% of the child's support, neither of the child's natural parents reside in that household, and the full-time or part-time employee has the legal right to make decisions regarding the child's medical care.

(2) Full-time employee -- A participating member who:

(A) is currently employed by a participating entity;

(B) is eligible for membership in the Teacher Retirement System of Texas based on current full-time service as described by §25.1 of this title (relating to Full-Time Service), or based on current employment as a bus driver as described by §25.2 of this title (relating to Bus Drivers); and

(C) is not receiving coverage as an employee or retiree from a uniform group insurance program under the Texas Employees Uniform Group Insurance Benefits Act (Insurance Code article 3.50-2) or the Texas State College and University Employees Uniform Group Insurance Benefits Act (Insurance Code article 3.50-3) or the Texas Public School Employees Group Insurance Program established under Insurance Code article 3.50-4 (TRS-Care).

(3) Participating entity -- An entity participating in the TRS-ActiveCare program including a school district; another educational district whose employees are members of the retirement system; a regional education service center; and a charter school that meets the requirements of Insurance Code article 3.50-7. An entity is considered to be participating in the TRS-ActiveCare program on and after the first date coverage becomes effective for its employees.

(4) Participating member -- A person defined by Government Code §§ 822.001 and 822.002 whose membership in the retirement system has not been terminated as described by Government Code §§822.003 - 822.006 and who is currently contributing to the Teacher Retirement System of Texas pension trust fund in accordance with Government Code §825.403.

(5) Part-time employee -- An individual who is currently employed by a participating entity for 10 hours or more each week; and:

(A) is not a full-time employee;

(B) is not a retiree who waived coverage under the Texas Public School Employees Group Insurance Program established under Insurance Code article 3.50-4 (TRS-Care); and

(6) Plan year -- A plan year begins on the first day of September and ends on the last day of the following August.

(7) TRS-ActiveCare program -- The Texas School Employees Uniform Group Health Coverage Program established by Insurance Code article 3.50-7.

(8) Trustee or TRS -- The Teacher Retirement System of Texas acting in its capacity as trustee under Insurance Code article 3.50-7.

§41.34. Eligibility for Coverage under the Texas School Employees Uniform Group Health Coverage Program.

The following persons are eligible to be enrolled in the TRS-ActiveCare program under terms, conditions and limitations established by the trustee unless expelled from the program under provisions of Insurance Code article 3.50-7.

(1) A full-time employee as defined in §41.33 of this title (relating to Definitions Applicable to the Texas School Employees Uniform Group Health Coverage Program).

(2) A part-time employee as defined in §41.33 of this title (relating to Definitions Applicable to the Texas School Employees Uniform Group Health Coverage Program).

(3) Dependents, as defined under Insurance Code article 3.50-7, section 2(3)(A), (B) or (C), of either a full-time employee or a part-time employee. A child defined in Insurance Code article 3.50-7, section 2(3)(C) is eligible for coverage only if, and only for so long as, such child's mental retardation or physical incapacity is a medically determinable condition that prevents the child from engaging in self-sustaining employment as determined by TRS.

(4) Individuals employed or formerly employed by a participating entity, and their dependents, who are eligible for, or participating in, continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (Pub. L. 99-272), through a group health benefit plan sponsored by the individual's employer on the first day that employer becomes a participating entity if such individuals or their dependents would have met the requirements for eligibility in paragraphs (1), (2), or (3) of this section on the individual's last day of employment with the participating entity.

(5) Individuals who become eligible as determined by TRS for continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (Pub. L. No. 99-272), through their participation in the TRS-ActiveCare program.

(6) Individuals who become eligible for coverage under provisions of the Health Insurance Portability and Accountability Act of 1996 (Pub. L. No. 104-191, 110 Stat. 1936 (1996)) (HIPAA), except for any provisions of HIPAA from which TRS has elected to be exempt in accordance with its status as a self-insured non-Federal governmental plan.

(7) Any other individuals who are required to be covered under applicable law.

§41.35.Coverage Plans.

(a) The TRS-ActiveCare program shall include at least three coverage plans including a catastrophic care coverage plan and a primary care coverage plan, in accordance with Insurance Code article 3.50-7. The coverages provided for eligible persons under the three plans will include, but are not limited to, basic medical expense coverage and prescription drug coverage, in accordance with terms, conditions, and limitations adopted by resolution of the trustee.

(b) The TRS-ActiveCare program may also include additional plans for health-care coverage under terms, conditions and limitations adopted by resolution of the trustee.

(c) The coverage plans offered under the TRS-ActiveCare program will each include at least two of the following rating tiers:

(1) Employee only;

(2) Employee and spouse;

(3) Employee and children;

(4) Employee and family.

(d) TRS may offer optional coverages that may include but are not limited to life, dental care, eye care, long-term care, disability, or other coverages considered advisable to eligible persons in accordance with terms, conditions and limitations adopted by resolution of the trustee.

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 June 3, 2002.

TRD-200203440

Charles L. Dunlap

Executive Director

Teacher Retirement System of Texas

Proposed date of adoption: July 26, 2002

For further information, please call: (512) 542-6115

34 TAC §§41.36 - 41.39

The Teacher Retirement System of Texas (TRS) proposes new §§41.36, 41.37, 41.38 and 41.39, concerning the Texas School Employees Uniform Group Health Coverage Program ("Program"). In accordance with Insurance Code article 3.50-7, the proposed sections set forth enrollment timelines, effective dates and termination dates of coverage, and requirements for individuals who change employment from one participating entity to another.

The purpose of the proposed sections is to provide notice to participating entities and their employees of enrollment deadlines, dates that coverage will become effective or terminate, and requirements for individuals who change employers. Insurance Code article 3.50-7 authorizes TRS to adopt rules relating to the Program as it considers necessary and authorizes TRS to adopt rules to administer the Program.

Mr. Jung has also determined that for each year of the first five years the new sections are in effect the public benefit anticipated is that participating entities and their employees will have notice of enrollment deadlines, dates that coverage will become effective or terminate, and requirements for individuals who change employers. Mr. Jung has determined that there are no anticipated economic costs to persons required to comply with the proposed sections.

Comments on the proposal may be submitted to Charles L. Dunlap, Executive Director, 1000 Red River, Austin, Texas 78701. To be considered, written comments must be received by TRS no later than 30 days after publication of the sections for proposal.

The new sections are proposed under the Government Code, Chapter 825, §825.102, which authorizes the Board of Trustees of the Teacher Retirement System to adopt rules for, among other things, the transaction of business of the board. The new sections are also proposed under House Bill 3343, which was passed by the 77th Legislature, 2001, including Insurance Code article 3.50-7, which authorizes TRS to adopt rules to administer the Program. Insurance Code article 3.50-7, §3(c) further authorizes TRS, as trustee, to "adopt rules relating to the program as considered necessary by the trustee."

There are no other codes affected.

§41.36.Enrollment Periods for the TRS-ActiveCare Program.

(a) The initial enrollment period for an eligible full-time or part-time employee shall begin on the date the full-time or part-time employee first becomes eligible to enroll in the TRS-ActiveCare program and shall end at 11:59 p.m. Central Time on the 31st day after the date that full-time or part-time employee first became eligible to enroll in the TRS-ActiveCare program. The date a full-time or part-time employee is first eligible to enroll in the TRS-ActiveCare program shall be the later of the following dates:

(1) The first day a full-time or part-time employee's employer becomes a participating entity; or

(2) The first day a full-time or part-time employee becomes employed in an eligible capacity with a participating entity.

(b) A full-time or part-time employee's eligible dependents, if covered, must be enrolled in the same coverage plan as the full-time or part-time employee under whom they qualify as a dependent. Except as otherwise provided under applicable state or federal law, an eligible full-time or part-time employee may not change coverage plans or add dependents during a plan year.

(c) The enrollment period for an individual who becomes eligible for coverage due to a special enrollment event shall be as defined under provisions of the Health Insurance Portability and Accountability Act of 1996 (Pub. L. No. 104-191, 110 Stat. 1936 (1996)) (HIPAA). During a special enrollment period as defined by HIPAA an individual who is already covered under a plan offered under TRS-ActiveCare may not elect a different plan, for himself or any eligible dependents, for the remainder of the existing plan year but may only add eligible dependents for coverage under the employee's existing plan selection.

(d) The trustee by resolution may prescribe open-enrollment periods and the conditions under which an eligible full-time or part-time employee and his eligible dependents may enroll during an open enrollment.

§41.37.Effective Date of Coverage.

(a) For eligible full-time employees, eligible part-time employees, and their eligible dependents, coverage shall become effective September 1, 2002, provided that they enroll before August 31, 2002.

(b) Except as otherwise provided by §41.39 of this title (relating to Coverage for Individuals Changing Employers) coverage shall become effective as described in this subsection for eligible full-time employees and eligible part-time employees whose employer first becomes a participating entity after September 1, 2002, and who enroll no later than the 31st day after the date their employer first becomes a participating entity. Coverage shall become effective for such individuals and their eligible dependents on the date the employer first became a participating entity.

(c) Except as otherwise provided by §41.39 of this title (relating to Coverage for Individuals Changing Employers) coverage shall become effective as described in this subsection for eligible full-time employees and eligible part-time employees who begin working for a participating entity in an eligible capacity after August 31, 2002 and who enroll no later than the 31st day after the first date they become eligible to enroll, ("Individuals"). Coverage shall become effective for such Individuals and their eligible dependents on either of the following dates as specified by the Individual on the application for coverage:

(1) The first day the eligible Individual, or the Individual under whom a dependent qualifies for eligibility, is employed in an eligible capacity with the participating entity; or

(2) The first day of the calendar month following the month in which the eligible Individual, or the Individual under whom a dependent qualifies for eligibility, is employed in an eligible capacity with the participating entity.

(d) For eligible full-time employees, eligible part-time employees and their eligible dependents who enroll during an open-enrollment period established by resolution of the trustee, coverage shall become effective on the date specified by resolution of the trustee.

§41.38.Termination Date of Coverage.

Coverage shall terminate at the earliest of:

(1) 11:59 p.m. Central Time on the last calendar day of the month in which the covered individual's employer, or the employer of the individual under whom a dependent qualified for coverage, ceases to be a participating entity;

(2) 11:59 p.m. Central Time on the last calendar day of the month in which a covered individual, or the individual under whom a dependent qualified for coverage, terminates employment as determined by the participating entity, except as otherwise provided under §41.39 of this title (relating to Coverage for Individuals Changing Employers);

(3) 11:59 p.m. Central Time on the last calendar day of the month in which a covered individual, or the individual under whom a dependent qualified for coverage, is no longer eligible for coverage under the TRS-ActiveCare program under §41.34 of this title (relating to Eligibility for Coverage under the Texas School Employees Uniform Group Health Coverage Program); or

(4) 11:59 p.m. Central Time on the date specified by the trustee if the covered individual, or the individual under whom a dependent qualified for coverage, is expelled from the program.

§41.39.Coverage for Individuals Changing Employers.

(a) A full-time or part-time employee enrolled in the TRS-ActiveCare program who changes employment from one participating entity to another participating entity within the same plan year may not change coverage plans or add dependents unless:

(1) changes are authorized due to a special enrollment event under provisions of the Health Insurance Portability and Accountability Act of 1996 (Pub. L. No. 104-191);

(2) an open-enrollment period exists on the first day of the new employment and the full-time or part-time employee makes such changes in compliance with open-enrollment conditions prescribed by the trustee; or

(3) the new employment is with a participating entity that does not make available the option under which the individual was covered on the last date of previous employment, provided that options are offered under the TRS-ActiveCare program that are not applicable to all participating entities.

(b) No break in coverage will occur for a full-time or part-time employee enrolled in the TRS-ActiveCare program who changes employment from one participating entity to another participating entity within the same plan year if all the criteria set forth in paragraphs (1) - (3) of this subsection are met. The former employer participating entity shall determine the last date of employment for purposes of this subsection.

(1) The new employer makes available the same coverage option under which the full-time or part-time employee was enrolled on the last day of employment with the former employer;

(2) The individual is employed by the new participating entity no later than the last day of the next calendar month after the last date of employment with the former participating entity employer; and

(3) The individual promptly files an election to continue coverage with the new participating entity employer with coverage to be effective in the calendar month in which the individual is first employed with the new participating entity.

(c) Full-time or part-time employees who initially waive coverage under the TRS-ActiveCare program may enroll during any open enrollment as prescribed by resolution of the trustee; however, they may not enroll due to a change in employment from one participating entity to another during the same plan year unless the change occurs during a concurrent open enrollment.

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 June 10, 2002.

TRD-200203584

Charles L. Dunlap

Executive Director

Teacher Retirement System of Texas

Proposed date of adoption: July 26, 2002

For further information, please call: (512) 542-6115

34 TAC §§41.41 - 41.43

The Teacher Retirement System of Texas (TRS) proposes new §§41.41, 41.42, and 41.43, concerning the Texas School Employees Uniform Group Health Coverage Program ("Program"). In accordance with Insurance Code articles 3.50-7, 3.50-8 and 3.50-9, the proposed sections set forth deadlines and other requirements for participating entities to submit premium payments, and the deadlines and other requirements that must be met for eligible entities to receive funding authorized under Insurance Code articles 3.50-8 and 3.50-9.

The purpose of the proposed sections is to provide notice to eligible entities of the requirements for submitting required premiums, the requirements for TRS payment of the $1,000 supplemental compensation, and the requirements for TRS payment of minimum effort funds. Insurance Code article 3.50-7 authorizes TRS to adopt rules relating to the Program as it considers necessary and authorizes TRS to adopt rules to administer the Program.

Mr. Jung has also determined that for each year of the first five years the new sections are in effect the public benefit anticipated is that participating entities and their employees will have notice of the procedures and requirements for submitting premium payments, procedures and requirements for TRS payment of the $1,000 supplemental compensation, and procedures and requirements for payment of the minimum effort funds as authorized by law. Mr. Jung has determined that there are no anticipated economic costs to persons required to comply with the proposed sections.

The new sections are proposed under the Government Code, Chapter 825, §825.102, which authorizes the Board of Trustees of the Teacher Retirement System to adopt rules for, among other things, the transaction of business of the board. The new sections are also proposed under House Bill 3343, which was passed by the 77th Legislature, 2001, including Insurance Code articles 3.50-7, 3.50-8 and 3.50-9. Insurance Code 3.50-7 authorizes TRS to adopt rules to administer the Program. Insurance Code article 3.50-7,§3(c) further authorizes TRS, as trustee, to "adopt rules relating to the program as considered necessary by the trustee." Insurance Code article 3.50-8, §4, also authorizes TRS to adopt rules to implement the article.

There are no other codes affected.

§41.41.Premium Payments.

(a) Each participating entity shall remit to TRS the amount on each bill directed to the participating entity by TRS or the administering firm. The participating entity shall remit payment on or before the sixth day after the last day of each month in which TRS or the administering firm issued a bill. Payment shall be delivered in the same manner (e.g., currently, TEXNET) in which the participating entity delivers retirement contributions. Any waiver granted to a participating entity under Government Code §825.408(a) does not apply to amounts billed under this section or to amounts otherwise owed to TRS for the TRS-ActiveCare program.

(b) A participating entity will be billed for all full-time and part-time employees enrolled in the TRS-ActiveCare program who were employed by the participating entity on the first day of the billing month as reported by the participating entity. In addition, a participating entity will be billed retroactively for all full-time and part-time employees who enroll after the first day of a month and choose coverage for that month. Further, a participating entity will be billed for any individuals formerly employed by the participating entity who are enrolled in the TRS-ActiveCare program under the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 (Pub. L. 99-272). Participating entities are responsible for collecting all applicable premiums and other costs that are required to be paid by its full-time employees, part-time employees, and any former employees participating in the TRS-ActiveCare program under the Consolidated Omnibus Budget Reconciliation Act of 1985 (Pub. L. 99-272). A participating entity shall remit the full amount billed each month.

(c) Participating entities shall not modify the amount of any bill or remit any amount different from the amount billed. A participating entity shall report proposed adjustments, including those seeking credit for terminated employees, to the administering firm no later than the 90th day after the billing date. TRS may reject any inappropriate proposed adjustments, including those reported later than 90 days after the billing date. Approved adjustments will be reflected on a subsequent bill.

(d) TRS may take corrective action against a participating entity that fails to remit payment in accordance with the timelines and other requirements of this section, including but not limited to placement of a warrant hold with the Comptroller of Public Accounts.

§41.42.Payment of $1,000 Supplemental Compensation.

(a) Effective September 2002, entities eligible to receive, and to hold in trust, supplemental compensation under Insurance Code article 3.50-8 ("entity" or "entities") shall report to the Texas Education Agency (TEA), in the manner prescribed by TRS, the number of participating members of the Teacher Retirement System of Texas employed by the entity for the designated report month. TEA must receive each monthly report by 5:00 p.m. Central Time on the 10th calendar day of each month, or if that date is not a business day, by 5:00 p.m. Central Time on the first business day after the 10th calendar day of the month. TEA or TRS may dispute or seek verification of the reported number of participating members at any time after receiving the report.

(b) If TEA receives the report on or before the deadline and neither TRS nor TEA seeks verification of, or otherwise disputes, information in the report upon initial review, TRS will remit to the entity an amount equal to the number of participating members of the Teacher Retirement System of Texas reported by the entity for the reporting month divided by 12 and multiplied by $1,000. If a report is submitted after the deadline under this section, remittance to the reporting entity will be delayed by at least one month even if neither TEA nor TRS disputes or seeks verification of the numbers reported. In September 2002, or in the first month an individual becomes eligible for the supplement, all entities must begin a monthly $83.33 distribution to each eligible individual employed by the entity, regardless of whether reports are submitted in accordance with the deadlines and other requirements of this section. Entities must continue to make the $83.33 monthly distribution to eligible individuals for so long as such individuals are employed, as determined by the entity, for at least one day of the applicable month, provided that the individual did not receive the $83.33 from another entity for the same month. Entities may submit proposed adjustments to previously reported numbers through October 31 of the fiscal year following the reporting month. TRS or TEA may make adjustments to previously reported numbers, and may make a corresponding increase or decrease in funds that would otherwise be remitted to an entity, at any time after receipt of a report.

§41.43.Payment of State Assistance for Meeting Minimum Effort.

School districts and participating charter schools eligible for state assistance under Insurance Code article 3.50-9 §4 ("eligible entities") shall report monthly, in the same manner described under §41.42 of this title (relating to Payment of $1,000 Supplemental Compensation), the number of employed participating members who are covered by a group health plan. TRS and TEA will periodically calculate the monthly amount an eligible entity may be entitled to receive as described in Insurance Code article 3.50-9 §4 ("projected amount"). If TEA receives an eligible entity's report on or before the deadline established by §41.42 of this title (relating to Payment of $1,000 Supplemental Compensation) and if none of the information submitted by the eligible entity is disputed or requires verification, TRS will begin remitting the projected amount to the eligible entity on a monthly basis no earlier than October 2002. TRS and TEA may periodically revise the projected amount and TRS may make a corresponding increase or decrease in funds that would otherwise be remitted to an eligible entity. After the end of each fiscal year, TRS and TEA will make a final determination of the amounts eligible entities were entitled to receive for that fiscal year under Insurance Code article 3.50-9 §4 and will make any corresponding increase or decrease in funds that would otherwise be remitted to an eligible entity. If necessary, TRS may institute other action to recover amounts an eligible entity was not entitled to receive.

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 June 10, 2002.

TRD-200203583

Charles L. Dunlap

Executive Director

Teacher Retirement System of Texas

Proposed date of adoption: July 26, 2002

For further information, please call: (512) 542-6115