Part 4. EMPLOYEES RETIREMENT SYSTEM OF TEXAS

Chapter 79. SOCIAL SECURITY

34 TAC §§79.1, 79.3 - 79.5, 79.9, 79.11, 79.13, 79.15, 79.23

The Employees Retirement System of Texas (ERS) proposes amendments to §§79.1, 79.3 - 79.5, 79.9, 79.11, and 79.13. The amended sections concern Administrative Costs, Reporting Procedures, Reporting Periods, Examination of Records, Reporting Official, State Holidays, and Sick Pay Adjustments to Covered Wages. ERS also proposes new §79.15 and §79.23. Section 79.15 concerns Reporting Errors. Section 79.23 concerns Expenses Incurred Establishing Social Security Coverage. The sections are added or amended to comply with and conform to the Texas Government Code, Chapter 606.

Section 79.1 is amended to include "of Texas," which is the legal name of the Employees Retirement System of Texas and is amended to define the abbreviated name, "ERS."

Section 79.3 amended to clarify reporting procedures for collection of Social Security taxes prior to January 1, 1987 by ERS and payment and reporting responsibility for Social Security taxes beginning January 1, 1987 to the IRS.

Section 79.4 and §79.13 are amended by replacing "The Employees Retirement System of Texas" with the abbreviated name "ERS."

Section 79.5 and §79.11 are amended to correctly cite the applicable law.

Section 79.9 is amended by providing the appropriate entity responsible for receiving reports and clarifying the guidelines for reporting.

Section 79.15 is added to establish guidelines to resolve reporting errors.

Section 79.23 is added to indemnify ERS from all costs associated with entering into a social security coverage agreement.

Paula A. Jones, General Counsel, has determined that for the first five-year period the amendments and new sections are in effect, there will be no fiscal implications for state or local government as a result of enforcing or administering the amendments and new sections, and small businesses and individuals will not be affected.

Ms. Jones also determined that for each year of the first five years the amendments and new sections are in effect the public benefit anticipated as a result of enforcing the amendments and new sections will be simplified and clarified administration of the Texas Social Security Program in accordance with Texas Government Code, Chapter 606. There are no known anticipated economic costs to persons who are required to comply with the amendments and new sections as proposed.

Comments on the proposal 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 pjones@ers.state.tx.us. The deadline for receiving comments is June 7, 2004 at 12:00 p.m.

The amendments and new sections are proposed under Texas Government Code, §606.023, which provide authorization for the Board of Trustees to adopt rules necessary to govern the application for and the eligibility of employees of a political subdivision to obtain social security coverage.

No other statutes are affected by these proposed amendments and new sections.

§79.1.Administrative Costs.

The costs to the Employees Retirement System of Texas (ERS) for administering the program for state employees shall be paid by state appropriation. The costs of administering the program for participating counties, municipalities, and other political subdivisions shall be payable by the covered entities. The amount of the fee is to be determined by the board based upon available funds and projected expenses.

§79.3.Reporting Procedures.

Each reporting entity shall make reports and payment in such manner and form as the executive director may require for periods prior to January 1, 1987, regular reports to ERS are required. On and after January 1, 1987, only such reports to ERS as may be requested by the executive director or designee are required. On and after January 1, 1987, including retroactive periods, all employing entities also have payment and reporting responsibilities directly to the Internal Revenue Service (IRS) .

§79.4.Reporting Periods.

Social Security covered wages actually paid during a reporting period and the contributions due from those payments are to be reported as follows.

(1) For reporting periods beginning the first day of the month and ending the 15th day of the month, reports and contributions shall be received by ERS [ the Employees Retirement System of Texas ] by 5 p.m. on the sixth working day following the 15th of the month.

(2) For reporting periods beginning the 16th day of the month and ending the last day of the month, reports and contributions shall be received by ERS [ the Employees Retirement System of Texas ] by 5 p.m. on the sixth working day of the following month.

§79.5.Examination of Records.

The executive director or his or her representative is authorized to physically examine all records of a governmental unit which has entered into an agreement under the terms of Texas Government Code, Chapter 606 [ Texas Civil Statutes, Article 695g ], as amended.

§79.9.Reporting Official.

The official title and address of the person who will be charged with the duty to make assessments, collections, and reports shall be specified in the application for coverage. Any change in this information prior to completion of the referendum process is to be reported to the State Social Security Administrator, ERS, [ Social Security Division of the Employees Retirement System ] within 30 days.

§79.11.State Holidays.

When determining the date reports are due to ERS [ the Social Security Division ], a "state holiday" is one defined in Texas Government Code, Chapter 606 [ Texas Civil Statutes, Article 4591 ], as it is amended from time to time.

§79.13.Sick Pay Adjustments to Covered Wages.

(a) (No change.)

(b) To receive adjustments to exclude payments on account of sickness from covered wages, a governmental entity must:

(1) obtain approval of the ERS [ Social Security Division of the Employees Retirement System of Texas ] of all aspects of the governmental entity's sick pay plan. Submissions received at ERS' [ the Employees Retirement System of Texas ] office after 5 p.m. on February 1, 1985, will not be considered.

(2) file a report of adjustments (Form SSA 3964 or its successor) with ERS [ the Social Security Division of the Employees Retirement System of Texas ]. All reports must be submitted in accordance with the federal Social Security Administration's requirements as to form and content. Reports of adjustments will not be considered if they are received at ERS' [ the Employees Retirement System ] office after the later of:

(A) (No change.)

(B) 5 p.m. on the 10th working day after approval of the sick pay plan was issued by ERS [ the Employees Retirement System of Texas ].

(3) (No change.)

(c) (No change.)

(d) If the executive director of ERS [ the Employees Retirement System of Texas ] determines that the Social Security Administration has relaxed or repealed any of the requirements contained in this rule, the executive director may make a corresponding change in the retirement system's requirements.

§79.15.Reporting Errors.

If a reporting error is discovered, the employing entity must comply with all State and Federal requirements to resolve the discrepancy, and must provide all relevant information to ERS regarding such error.

§79.23.Expenses Incurred Establishing Social Security Coverage.

ERS assumes no obligation and is not liable for the cost of any legal services, actuarial studies, professional consultation fees or administrative costs incurred by a political subdivision or a public retirement system coverage group related to entering into a social security coverage agreement.

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 April 26, 2004.

TRD-200402747

Paula A. Jones

General Counsel

Employees Retirement System of Texas

Earliest possible date of adoption: June 6, 2004

For further information, please call: (512) 867-7125

34 TAC §§81.1, 81.5, 81.7

The Employees Retirement System of Texas ("ERS") proposes amendments to Chapter 81, §§81.1, 81.5, and 81.7, concerning eligibility and the administration of the group benefits program.

Section 81.1 changes the definition of a Retiree to include an eligible annuitant of a Community Supervision and Corrections Department as determined by ERS and as described by §1551.102 and §1551.114, Texas Insurance Code, added by Acts of the 78th Legislature, Regular Session.

Section 81.5 adds eligibility for continuing coverage of surviving dependents of a deceased employee of a Community Supervision and Corrections Department as described by §1551.114, Texas Insurance Code, added by Acts of the 78th Legislature, Regular Session. Section 81.5(f)(3) is also amended to clarify continuing coverage of dependents, when the deceased does not have a spouse covered by the plan.

Section 81.7 changes the term "GBP coverage" to "GBP health coverage." This is a conforming change to comport with a previous amendment to this section adopted by the Board on June 11, 2003, that allows participation in additional coverage and plans without concurrent enrollment in health coverage. The use of the term GBP health coverage has a specific meaning as used in this section regarding the 90-day waiting period for health coverage as it relates to a new employee with existing, current, and continuous GBP health coverage.

Paula A. Jones, General Counsel, has determined that 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 amendments, and small businesses and individuals will not be affected.

Ms. Jones 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 amendments will be to maintain uniform GBP coverage for program participants and to provide updated information on the eligibility of Community Supervision and Corrections Department employees and annuitants and their surviving dependents, as determined by ERS, and clarification of the rules regarding references to GBP health coverage. There are no known or anticipated economic costs to persons who are required to comply with the amendments as proposed.

Comments on the proposed amendments may be submitted to Paula A. Jones, General Counsel, Employees Retirement System of Texas, P.O. Box 13207, Austin, Texas 78711-3207, or you may e-mail Ms. Jones at pjones@ers.state.tx.us. The deadline for receiving comments is June 7, 2004, at 12:00 p.m.

The amendments are proposed in accordance with Texas Insurance Code, §1551.052, which provides authorization for the ERS Board of Trustees to adopt rules necessary to implement Chapter 1551 and its purposes, including rules that provide standards for determining eligibility for participation in the GBP.

No other statutes are affected by this proposed 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) - (25) (No change.)

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

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

(C) on the date of retirement, meets the service credit requirements of the Act for participation in the 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 and, on the date of retirement has three years of service with such a department; [ or ]

(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 ; or [ . ]

(iii) is determined by ERS to be eligible as described by §1551.102 and §1551.114 of the Act.

(27) - (29) (No change.)

§81.5.Eligibility.

(a) - (e) (No change.)

(f) Surviving dependents.

(1) The surviving spouse of a retiree or the surviving spouse of an active employee is eligible to continue coverage in the health and dental benefits plans in which the surviving spouse was 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 surviving spouse is eligible to continue coverage. A surviving spouse who is also a state retiree or state employee shall not be eligible for surviving spouse benefits as long as he or she is eligible for coverage as an employee or retiree. Participants continuing coverage as surviving spouses are not eligible for life insurance coverages.

(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. 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. 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 at the time of his or her death, dependent [ Dependent ] children of the [ a ] 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, 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 title (relating to Definitions). Participants continuing coverage as surviving dependents are not eligible for life insurance coverage.

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

(g) - (l) (No change.)

§81.7.Enrollment and Participation.

(a) Full-time employees and their dependents.

(1) (No change.)

(2) A new employee with existing, current, and continuous GBP health coverage as of the date the employee begins active duty is not subject to the health insurance waiting period established in Section 1551.1055 of the Act, and is eligible to enroll as a new employee in health insurance and additional coverages and plans which include optional and voluntary coverages by completing an enrollment form before the first day of the calendar month after the date the employee begins active duty. Health and additional coverages selected before the first day of the calendar month after the date the employee begins active duty are effective the first day of the following month.

(3) - (11) (No change.)

(b) Part-time employees. A part-time employee or other employee who is not automatically covered must complete an application/enrollment form provided by the Employees Retirement System of Texas, authorizing necessary deductions for premium payments for elected coverage. All other rules for enrollment stated in subsection (a) of this section, other than the rule as to automatic coverage, apply to such employee:

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

(3) If the employee has existing, current, and continuous GBP health coverage as of the date the employee begins active duty, the employee is not subject to the health insurance waiting period established in Section 1551.1055 of the Act, and is eligible to enroll as a new employee in health insurance and additional coverages and plans which include optional and voluntary coverages by completing an enrollment form before the first day of the calendar month after the date the employee begins active duty. Health and additional coverages selected before the first day of the calendar month after the date the employee begins active duty are effective the first day of the following month.

(c) - (l) (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 April 26, 2004.

TRD-200402748

Paula A. Jones

General Counsel

Employees Retirement System of Texas

Earliest possible date of adoption: June 6, 2004

For further information, please call: (512) 867-7125