Subchapter A. SERVICE ELIGIBLE FOR MEMBERSHIP

As part of the rule review of 34 TAC Chapter 25 (Membership Credit) conducted pursuant to §2001.039 of the Government Code and the related rules of the Secretary of State, the Teacher Retirement System of Texas (TRS or system) adopts amendments to §§25.33, 25.41 - 25.43, 25.45, 25.46, 25.75, 25.113, 25.121, 25.123, 25.131, 25.184, 25.201, and 25.301 without changes to the proposed text as published in the November 10, 2006, issue of the Texas Register (31 TexReg 9215). TRS also adopts amendments to §§25.1, 25.21, 25.82, 25.161, and 25.164. The adopted amendments to those sections are published elsewhere in this issue of the Texas Register. Also as a result of the rule review, TRS adopts the repeal of §25.44 without changes to the proposal as published in the November 10, 2006, issue of the Texas Register (31 TexReg 9219) and adopts new §25.302 without changes to the proposed text as published in the November 10, 2006, issue of the Texas Register (31 TexReg 9225). TRS has withdrawn the amendments proposed for §25.31 concerning percentage limits on compensation increases as published in the November 10, 2006, issue of the Texas Register (31 TexReg 9213); notice of the withdrawn proposed amendments to §25.31 is published in the February 16, 2007, issue of the Texas Register (32 TexReg 661). Further, the related Notice of Readoption (Adopted Review) of Chapter 25 is published elsewhere in this issue of the Texas Register

Subchapter A, Service Eligible for Membership: This subchapter contains six rules addressing service that will make a Texas public education employee eligible for TRS pension plan membership. Changes are adopted for one rule in the subchapter, §25.1, but as noted above, notice of the changes is provided elsewhere in this issue of the Texas Register.

Subchapter B, Compensation: This subchapter contains eleven rules addressing the compensation on which member deposits are required for public education employees eligible for membership. Changes are adopted for two rules in the subchapter--§25.21 and §25.33. As noted above, notice of the adopted changes to §25.21 is provided elsewhere in this issue of the Texas Register. Also as noted above, TRS has withdrawn the proposed amendments for §25.31 concerning percentage limits on compensation increases.

Section 25.33 concerns contribution limitation based on compensation. Because federal tax law limits the voluntary contributions a member may make to a qualified retirement plan on an annual basis, this rule describes that the limitation will be based on compensation for a member. The amended section clarifies that the limit is applied on a plan year basis (September 1 through August 31), even if a member has a non-standard school year for reporting and service credit purposes.

Subchapter C, Unreported Service or Compensation: This subchapter contains six rules addressing service or compensation that should have been reported to TRS by a Texas public education employer but was not reported. TRS adopts amendments to five of the rules in the subchapter--§§25.41 - 25.43, 25.45, and 25.46. In addition, TRS repeals §25.44.

Section 25.41 concerns required deposits for unreported service or compensation. TRS amends the section by changing the name of the section to distinguish it from §25.25, which concerns the required deposit of 6.4% of TRS-eligible compensation; clarifying that the rule applies to unreported compensation as well as to unreported service; and emphasizing that the fee specified in §25.43 is applicable.

Section 25.42 concerns payment of benefits contingent on deposit. This rule provides that benefits will not be paid unless all deposits that are due are paid. TRS adopts amendments to clarify that all deposits, whether for unreported service or unreported compensation, must be paid.

Section 25.43 concerns deposits for unreported service. This rule addresses the statutory fee on deposits for unreported service or compensation. TRS adopts amendments to clarify the title of the section and to clarify that it applies to unreported compensation as well as to unreported service.

Section 25.44 concerns service eligibility. TRS repeals this obsolete rule because it applied only to teachers and auxiliary employees and, based on the dates given in the rule, its application to a member of the retirement system is unlikely.

Section 25.45 concerns verification of unreported compensation or service. This rule addresses how unreported service or compensation must be verified. The amended section clarifies applicability of the rule to unreported compensation as well as to unreported service. Adopted minor wording changes more accurately describe the types of documents that TRS may accept as verification. TRS also adopts new language clarifying that unreported compensation or service cannot be verified after payment of a death benefit.

Section 25.46 concerns determination of compensation subject to deposit and credit. This rule explains how deposits on unreported service will be calculated. TRS adopts amendments to clarify that unreported compensation, as well as unreported deposits, are subject to the method of calculation specified.

Subchapter F, Veteran's (USERRA) Service Credit: This subchapter contains six rules addressing the purchase of TRS service credit based on certain military service in accordance with the Uniformed Services Employment and Re-Employment Rights Act of 1994 (USERRA), 38 U.S.C. §4301 et seq. TRS adopts amendments to one rule in the subchapter, §25.75.

Section 25.75 concerns application for eligible active military duty under USERRA. This rule establishes procedures and deadlines for the purchase of USERRA service credit. TRS adopts an amendment that retains the five-year deadline but also provides for any additional time allowed under USERRA or federal regulations enacted to implement USERRA.

Subchapter G, Purchase of Credit for Out-of-State Service: This subchapter contains six rules addressing the purchase of TRS service credit for out-of-state public education service. TRS adopts amendments to one rule in the subchapter, §25.82, but as noted above, notice of the changes to §25.82 is provided elsewhere in this issue of the Texas Register.

Subchapter H, Joint Service with Employees Retirement System: TRS adopts amendments to the single rule in this subchapter, §25.113, which implements the service transfer between TRS and the Employees Retirement System of Texas (ERS) as provided for in Chapter 805 of the Government Code.

Section 25.113 concerns the transfer of credit between TRS and ERS. The rule describes specific steps and requirements to transfer service between the two state systems. TRS adopts several amendments to clarify the salary average that will be used in a transfer, in light of the recent statutory change from a three-year average to a five-year average for TRS members who are not grandfathered to use a three-year average. Other wording clarifications also are adopted, including clarification for working after retirement when a member has transferred service credit.

Subchapter I, Verification of Service: This subchapter contains three rules addressing the verification of compensation or service that is required to be reported but that was not reported. Changes are adopted to two rules in this subchapter, §25.121 and §25.123.

Section 25.121 concerns employer verification. This rule provides the general methods of verifying unreported service. TRS adopts amendments to clarify that the rule also applies to unreported compensation and to require that an employer must provide copies of documents supporting the verification of service or compensation upon request by TRS.

Section 25.123 concerns certification. This rule further specifies the procedures for verification of service or compensation. TRS adopts an amendment to expressly state that TRS determines whether the verified service or compensation is eligible for TRS purposes.

Subchapter J, Creditable Time and School Year: This subchapter contains four rules addressing the amount of service required in a school year in order for a member to accrue a year of TRS membership service credit. TRS adopts changes to one rule in the subchapter, §25.131.

Section 25.131 concerns required service. This rule establishes the basic length of service requirement to obtain a year of TRS membership credit. TRS adopts non- substantive amendments reorganizing the section to make it easier to read.

Subchapter L, Other Special Credit Service: This subchapter contains four rules addressing the purchase of TRS service credit. TRS adopts changes to two rules in this subchapter, §25.161 and §25.164, but as noted above, notice of the adopted changes to these rules is provided elsewhere in this issue of the Texas Register.

Subchapter N, Installment Payments: This subchapter contains nine rules addressing the use of an installment payment plan for the purchase of service credit, when eligible. TRS adopts changes to one rule in the subchapter, §25.184.

Section 25.184 concerns refund for nonpayment. This rule provides for TRS to terminate an installment payment agreement if a participant is late with payments or does not make payments as agreed upon. A member whose installment agreement is terminated cannot use this method for three years. TRS adopts amendments to expressly state that if an installment agreement for the purchase of equivalent membership service credit under §25.163 is terminated, the member will not be able to purchase this service credit because the statute providing the opportunity to do so, §823.405 of the Government Code, was repealed effective January 1, 2006.

Subchapter O, Rollover Distributions and Transfers to TRS: This subchapter contains one rule addressing the use of rollovers or trustee-to-trustee transfers for the purchase of TRS service credit. TRS adopts changes to the rule in this subchapter, §25.201.

Section 25.201 concerns acceptance of rollovers and transfers for purchase of TRS credit. This rule explains that TRS will accept an eligible rollover distribution from another eligible retirement plan, such as another qualified defined benefit plan, a 401(k) plan, or an IRA. The rule identifies, consistent with the federal tax code, what kinds of payments are not considered eligible rollovers. For example, under the rule prior to amendment, the portion of a distribution that is not includible in gross income (i.e., after tax amounts) was not considered eligible for rollover. However, the recently enacted Pension Protection Act of 2006 amends the federal tax code to permit defined benefit plans to accept rollovers of after-tax money. To permit the rollover of after-tax money to the extent provided for under the new federal law, TRS amends the rule to authorize this option.

Subchapter P, Calculation of Fees: Before amendment, this subchapter contained one rule addressing calculation of fees when the cost to purchase a type of service credit or to reinstate service credit includes a fee. TRS adopts changes to the existing rule in the subchapter, §25.301, and adopts new rule §25.302, which adds provisions relating to the calculation of the actuarial cost to purchase or to reinstate eligible service credit. TRS also amends the title of the subchapter to "Calculation of Fees and Costs" to reflect the adoption of new §25.302.

Section 25.301 concerns calculation of fees. This rule explains how fees are calculated. TRS adopts an amendment to clarify that fees are calculated from the end of the school year to the beginning date of the school year in which payment is received or installment payment commences. The amendments conform to current practice, based on prior administrative interpretation of the rule.

Adopted new §25.302 concerns the calculation of actuarial cost. In amending three other rules that are published elsewhere in this issue of the Texas Register --§25.82 relating to the purchase of out-of-state service credit, §25.161 relating to the purchase of work experience service credit, and §25.164 relating to the purchase of membership waiting period service credit--TRS moves the detailed explanation of actuarial cost and the accompanying tables in those three rules to one consolidated new rule for actuarial cost calculations, new §25.302. The adopted new section replaces the language deleted from those other three rules explaining the actuarial cost calculations and the graphics accompanying those explanations. No substantive changes are made by this consolidation of the actuarial-cost provisions in the three amended rules mentioned into new §25.302.

No comments on the proposals were received.

Subchapter B. COMPENSATION

As part of the rule review of 34 TAC Chapter 25 (Membership Credit) conducted pursuant to §2001.039 of the Government Code and the related rules of the Secretary of State, the Teacher Retirement System of Texas (TRS or system) adopts amendments to §§25.82, 25.161, and 25.164 without changes to the proposed text as published in the November 10, 2006, issue of the Texas Register (31 TexReg 9226). The related Notice of Readoption (Adopted Review) of Chapter 25 is published elsewhere in this issue of the Texas Register .

Subchapter G. Purchase of Credit for Out-of-State Service.

Section 25.82 concerns the cost of purchasing out-of-state service. This rule provides the methods of calculating costs for the purchase of out-of-state service. One method is the actuarial cost method, which is described in detail in the rule, with attached actuarial tables showing the cost factors. TRS adopts amendments to delete all provisions generically describing the calculation of actuarial cost, which also appear in the work experience service credit rule, §25.161, and the membership waiting period service credit rule, §25.164, as well as in the tables attached as graphics in these rules. TRS has moved the cost description and tables to a new §25.302, relating to Calculation of Actuarial Cost, in Subchapter P, relating to Calculation of Fees and Costs. That new rule will apply to the purchase of any of these three types of service credit (i.e., credit for out-of-state, work experience, or membership waiting period service). This change would consolidate tables for each of the types of service credit, since the factors are the same. No substantive change would result from this re-organization. TRS also adopts amendments to clarify the cost method applicable to out-of-state service beginning before January 1, 2006, for the 2005-2006 school year. Finally, TRS adopts amendments to provide that any member deposits made during a year for which out-of-state service credit is sought to be purchased will not be credited to the cost.

Subchapter L. Other Special Service Credit.

Section 25.161 concerns work experience service credit. The rule describes the purchase of up to two years of work experience service credit by eligible members. The service may be purchased for the actuarial cost. TRS adopts amendments similar to those adopted for §25.82, relating to out-of-state service credit cost, to consolidate the description of actuarial cost and the tables into an adopted new rule, §25.302. TRS also adopts amendments to clarify that any member deposits made during a year for which work experience service credit is sought to be purchased will not be credited to the cost.

Section 25.164 concerns credit for service during a school year with a membership waiting period. The rule describes the eligibility for, and cost of, purchasing membership waiting period service credit, if a member was affected by the waiting period in effect during the September 1, 2003, through August 31, 2005, time period. TRS adopts amendments similar to those adopted for §25.82, relating to out-of-state service credit cost, to consolidate the description of actuarial cost and the tables into one adopted new rule, §25.302. TRS also adopts amendments to clarify that any member deposits made during a year for which membership waiting period service credit is sought to be purchased will not be credited to the cost.

No comments on the proposal were received.

Subchapter G. PURCHASE OF CREDIT FOR OUT-OF-STATE SERVICE

As part of the rule review of 34 TAC Chapter 29 relating to benefits conducted pursuant to §2001.039 of the Government Code and the related rules of the Secretary of State, the Teacher Retirement System of Texas (TRS or system) adopts amendments to 34 TAC §§29.15, 29.26, 29.50 - 29.52, 29.55, 29.61, 29.70 and the repeal of §29.53 without changes to the proposed text as published in the November 10, 2006, issue of the Texas Register (31 TexReg 9232). TRS has withdrawn the proposed amendments to §29.34 relating to limitations as published in the November 10, 2006, issue of the Texas Register (31 TexReg 9232). The withdrawal notice for the proposed amendments to §29.34 was published in the December 15, 2006, issue of the Texas Register (31 TexReg 10091). The related Notice of Readoption (Adopted Review) of Chapter 29 is published elsewhere in this issue of the Texas Register .

Subchapter A, Retirement: This subchapter contains seventeen rules describing processes and benefits for retiring or retired participants and their beneficiaries. Changes are adopted for two rules in the subchapter, §29.15 and §29.26.

Section 29.15 concerns termination of employment. TRS adopts amendments to this rule to expressly state that a contract or work agreement for post-retirement employment that does not qualify for one of the exceptions in §824.602, Government Code, cannot be negotiated until after the required break in service following retirement, or the person's retirement would be revoked. This amendment expressly describes how the statutory provisions are administered.

Section 29.26 concerns discontinuance of disability benefits. TRS adopts amendments to this rule to clarify the meaning of "restored to active service" for the purpose of discontinuing disability retirement benefits. The amendments also expressly describe the effect on service credit and accumulated contributions when a person returns to active service after disability retirement benefits are discontinued.

Subchapter D, Plan Limitations: This subchapter contains five rules addressing federal tax law limitations for governmental defined benefit plans such as the TRS retirement plan. TRS adopts amendments to four of the rules in the subchapter--§§29.50 - 29.52, and 29.55. TRS also adopts the repeal one rule in the subchapter, §29.53.

Section 29.50 concerns definitions. The amendments adopted for this rule bring the language of the rule into conformity with the federal tax code and regulations, including deleting provisions no longer applicable and clarifying how member contributions that are "picked up" by employers are treated for purposes of the applicable tax limitations.

Section 29.51 concerns plan limitations on retirement benefits. This rule provides information about the applicability of the federal law limit on benefits payable for a plan year. TRS adopts amendments to delete provisions no longer applicable to a governmental plan.

Section 29.52 concerns adjustment to annual benefit limit. This rule addresses the considerations that affect the calculation of the federal law limit on benefits payable for a plan year. TRS adopts amendments to delete obsolete language corresponding to the amendments adopted in §25.51.

Section 29.53 concerns limitation for participants in defined contribution plans. This rule incorporates former federal tax code provisions imposing limits on members who participate in both a defined benefit and a defined contribution plan. The limit is no longer applicable; therefore, TRS adopts the repeal of the rule.

Section 29.55 concerns limitation on contributions. This rule addresses the federal tax law limit on contributions made to TRS for the purchase of service credit. TRS adopts an amendment to expressly state that the limits are applied on a plan year basis (September 1 through August 31).

Subchapter E, Deferred Retirement Option Plan: This subchapter contains three rules implementing the deferred retirement option plan ("DROP"). TRS adopts amendments to one of the rules in the subchapter, §29.61.

Section 29.61 concerns distribution of a DROP account. TRS adopts the amended section to clarify the distribution of any remaining DROP amounts after the death of the participant by clarifying which beneficiary would be entitled to the distribution.

Subchapter F, Partial Lump Sum Option: This subchapter contains three rules implementing the partial lump sum option ("PLSO"). TRS adopts amendments to one of the rules in the subchapter, §29.70.

Section 29.70 concerns distribution of a PLSO payment. TRS adopts the amended section to clarify the distribution of any remaining PLSO amounts after the death of the participant by clarifying which beneficiary would be entitle to distribution.

No comments on the proposals were received.

Subchapter A. RETIREMENT

As part of the rule review of 34 TAC Chapter 31 (Employment After Retirement) conducted pursuant to §2001.039 of the Government Code and the related rules of the Secretary of State, the Teacher Retirement System of Texas (TRS or system) adopts amendments to §§31.12 - 31.17, 31.19, 31.34, and 31.41 of 34 TAC Chapter 31 without changes to the proposed text as published in the November 10, 2006, issue of the Texas Register (31 TexReg 9239). The related Notice of Readoption (Adopted Review) of Chapter 31 is published elsewhere in this issue of the Texas Register .

Subchapter B, Employment After Service Retirement. This subchapter contains nine rules addressing the general rule of forfeiture of annuities resulting from employment after retirement with a TRS covered employer and the exceptions to that general rule. Changes are adopted for seven rules in the subchapter--§§31.12 - 31.17, and 31.19.

Section 31.12 concerns exceptions to the general rule of forfeiture of service retirement annuity for employment after retirement. The rule describes the general rule of forfeiture for retirees who retired after January 1, 2001, and lists the exceptions to the general rule available for these retirees. The amended rule adds a reference to the exception for faculty members of professional nursing programs. See §824.602(a)(8), Government Code.

Section 31.13 concerns the substitute service exception to the general rule of forfeiture of service retirement annuity for employment after retirement. The rule describes the exception for retirees serving as substitutes. TRS adopts additional language clarifying that this exception may be used in the same calendar month as the exception for one-half time employment, but the retiree may not work more than one-half of the total time available for work. Additional language is also adopted that clarifies that this exception may be used in the same school year as the acute shortage area exception and the principal/assistant principal exception, provided that the requirements for those two exceptions are met. Other changes address formatting the rule into subsections for ease in reading and referencing.

Section 31.14 concerns the one-half time employment exception to the general rule of forfeiture of service retirement annuity for employment after retirement. The rule describes the exception for employment that does not exceed one-half time. TRS adopts language clarifying that paid time off is considered employment for the purpose of determining the number of hours available for work in a given calendar month. This language addresses confusion regarding whether only hours actually worked count towards the monthly maximum allowed for one-half time employment or whether paid time off must also be counted. Additional adopted language clarifies that the hours an employer is scheduled to be closed for business are not included in the total number of hours available for work in a given month used to calculate the maximum number of hours available for one-half time employment. For example, if a TRS covered employer is scheduled to be closed for business from December 18-31, 2006, the number of workdays available in the month of December is 11. A retiree working under the one-half time exception for that employer would be limited to working only 5 days in the month of December 2006.

Section 31.15 concerns the six-month exception to the general rule of forfeiture of service retirement annuity for employment after retirement. The rule describes the exception for full-time employment that does not exceed six months. TRS adopts additional language clarifying that working in a full-time position during any month in the school year in which the retiree retires results in the forfeiture of the annuity for that month, without regard to the number of days worked. This language is intended to address primarily the effect of retirees returning to work in full-time positions in August of the same school year in which they retired. (For return to work purposes under TRS's rules, a school year begins on September 1 and ends on August 31.) TRS also adopts additional language that clarifies that paid time off is considered employment for return to work purposes and must be reported as employment in the calendar month in which it is taken. This language addresses attempts to avoid forfeiting the annuity for June by taking paid leave when the retiree's duties require working into June.

Section 31.16 concerns the acute shortage area exception to the general rule of forfeiture of service retirement annuity for employment after retirement. The rule describes the exception for employment on as much as a full-time basis as a classroom teacher in an acute shortage area. TRS adopts additional language that clarifies that work under this exception may be combined in the same school year with work as a substitute without forfeiting any annuity, provided the requirements for working under this exception are met.

Section 31.17 concerns the principal or assistant principal exception to the general rule of forfeiture of service retirement annuity for employment after retirement. The rule describes the exception for employment on as much as a full-time basis as a principal or assistant principal. TRS adopts additional language that clarifies that work under this exception may be combined in the same school year with work as a substitute without forfeiting any annuity, provided the requirements for working under this exception are met.

Section 31.19 concerns the exception for a faculty member of a professional nursing program to the general rule of forfeiture of service retirement annuity for employment after retirement. The rule describes the new exception available beginning September 1, 2005 for retirees employed as faculty members in undergraduate or graduate professional nursing programs and provides the requirements for utilizing the exception. TRS amends the rule only to add the word "Exception" to the section title.

Subchapter C, Employment After Disability Retirement. This subchapter contains four rules addressing the general rule of forfeiture of annuities due to employment with a TRS covered employer after disability retirement and the exceptions to that general rule for disability retirees. In the subchapter, changes are adopted only for §31.34.

Section 31.34 concerns employment up to three months on a one-time only trial basis. The rule describes the exception to the general rule of forfeiture for disability retirees who would like to become employed on a full time basis for a three-month trial period. The amended rule changes the requirement that the three consecutive months must fall in the same school year so that the trial period may span two school years. TRS also adopts language that allows the disability retiree to notify TRS of the election to utilize the trial period any time prior to the end of the trial period, rather than by the end of the first month of the trial employment period.

Subchapter D, Employer Pension Surcharge. This subchapter contains one rule--§31.41--addressing the return to work pension surcharge paid by employers for certain retirees who return to their employment. TRS adopts a minor change to that rule, as described below.

Section 31.41 concerns the return to work pension surcharge. The rule describes the amount of pension surcharge owed by the TRS covered employer for each month a retiree working in a TRS-covered position is reported to TRS. The rule also provides that the surcharge is not owed on retirees who were reported working for that employer on the Employment of Retired Members Report for the report month of January 2005. TRS adopts additional language to clarify that the surcharge is based on the amount paid in a report month to a retiree whose employment is subject to the surcharge. For example, if a retiree who worked during the 2005-2006 school year returns to work in August 2006 for the 2006-2007 school year, the TRS covered employer must report the retiree as working in August. The amount of surcharge owed for August is based on the salary paid in August, even if the salary paid in August was for work performed during the 2005-2006 school year.

No comments on the proposals were received.

Subchapter B. EMPLOYMENT AFTER SERVICE RETIREMENT

As part of the rule review of 34 TAC Chapter 41 (Health Care and Insurance Programs) conducted pursuant to §2001.039 of the Government Code and the related rules of the Secretary of State, the Teacher Retirement System of Texas (TRS or system) adopts amendments to §§41.15 - 41.19, 41.30 - 41.41, 41.50 - 41.52, and 41.91 without changes to the proposed text as published in the November 10, 2006, issue of the Texas Register (31 TexReg 9246). The related Notice of Readoption (Adopted Review) of Chapter 41 is published elsewhere in this issue of the Texas Register .

Subchapter B, Long-Term Care, Disability and Life Insurance: This subchapter contains six rules addressing the insurance coverage that can be offered pursuant to Chapter 1576 of the Insurance Code. Changes are adopted for five rules in the subchapter, §§41.15 - 41.19.

Section 41.15 concerns requirements to bid on insurance for school district employees and retirees under Chapters 1576 and 1577 of the Insurance Code. The rule establishes the eligibility requirements for contractors or carriers to bid on the insurance coverage that can be offered under Chapter 1576 (Chapter 1577 of the Insurance Code was repealed effective September 1, 2005). All of the amendments adopted for this rule update statutory references to conform with legislative changes; no substantive changes are adopted for this rule.

Section 41.16 concerns coverage offered under the Texas Public School Employees and Retirees Group Long-Term Care Insurance Program. The rule provides that the TRS Board may select or reject any and all coverage options relating to the group long-term care insurance program. The two adopted amendments to this rule update statutory references; no substantive changes are adopted for this rule.

Section 41.17 concerns definitions. The rule contains definitions for terms used in Subchapter B of Chapter 41. All of the amendments adopted for this rule update statutory references; no substantive changes are adopted for this rule.

Section 41.18 concerns eligibility for the Texas Public School Employees and Retirees Group Long-Term Care Insurance Program. The rule describes the individuals that are eligible to participate in the long-term care insurance program. The one adopted amendment to this rule is minor and conforms to similar changes adopted for other rules regarding statutory citation style. No substantive changes are adopted for this rule.

Section 41.19 concerns initial enrollment periods for the Texas Public School Employees and Retirees Group Long-Term Care Insurance Program. This rule establishes the enrollment periods of coverage for long-term care insurance as required by Chapter 1576, Texas Insurance Code. One of the amendments adopted for this rule updates statutory references in conformity with legislative changes. The change from "Central" to "Austin" time is intended to avoid confusion when Texas switches between "Central" time and "Daylight Savings" time during the year. The adopted changes to this rule are not substantive.

Subchapter C, Texas School Employees Group Health (TRS-ActiveCare): This subchapter contains sixteen rules addressing the administration and operation of the TRS-ActiveCare health benefits program. Changes are adopted for all but one of the rules in the subchapter, §§41.30 - 41.41 and §§41.50 - 41.52.

Section 41.30 concerns participation in the health benefits program (TRS-ActiveCare) offered under the Texas School Employees Uniform Group Health Coverage Act by school districts, other educational districts, charter schools, and regional education service centers. The rule describes the manner, form, timing and effect of election by entities eligible to participate in TRS-ActiveCare. State law directs TRS to provide by rule details concerning participation in TRS-ActiveCare by school districts, regional education service centers, educational districts, certain risk pools, and eligible charter schools. The rule clarifies the law by providing details about the election into and participation by those eligible entities. Adopted substantive changes include the following: (i) requiring that a notice of election be received by TRS on or prior to the tenth (10th) business day before the first day of the enrollment period to be established for the entity making the election in order to insure that employees and their dependents are afforded adequate enrollment periods; and (ii) requiring that a notice of revocation be received by TRS no later than the tenth (10th) business day before the first day of the enrollment period to be established for the entity that made an election. The latter adopted requirement will provide sufficient time for the entity to give notice that its employees and their dependents should not attempt to enroll in TRS-ActiveCare. Adopted non-substantive changes include the following: (i) updating statutory references to conform with legislative changes that re-codified some sections of law; (ii) reorganizing certain parts of the rule for purposes of clarification and readability; (iii) updating the rule to address current election procedures and expired deadlines; and (iv) removing subsection (b)(3) of §41.30 because the law upon which this subsection was based has expired.

Section 41.31 concerns eligible bidders. The rule describes eligible bidders for contracts concerning the various services associated with TRS-ActiveCare, including bids from health maintenance organizations. In addition to updating language in the rule to reflect current terminology, the adopted amendments remove references to "proposals" to provide clarity and consistency. The concept of "bids" includes the concept of "proposals" within the context of the statutory scheme of TRS-ActiveCare.

Section 41.32 concerns bid procedure. The rule addresses a number of issues associated with bid procedures. Pursuant to §1579.054, Insurance Code, a contract to provide coverage in association with TRS-ActiveCare may be awarded only through competitive bidding under rules adopted by TRS. The one adopted change is to eliminate an existing typographical error.

Section 41.33 concerns definitions applicable to the Texas School Employees Uniform Group Health Coverage Program. This rule contains a number of definitions applicable to TRS-ActiveCare. Many of these definitions provide greater details and clarification regarding definitions that are found in §§1579.002 - 1579.004 of the Insurance Code. An adopted new paragraph (1)(D) of §41.33 contains the only substantive changes. The new paragraph clarifies which individuals are not included in the definition of "Dependent" for purposes of TRS-ActiveCare even though, within the common meaning of the word, the individual may be in a dependent relationship with a full-time or part-time employee. For example, adopted new paragraph (1)(D) clarifies that the definition of "Dependent" does not include a parent or grandparent, nor does the term include a brother or sister except in the limited circumstances noted in the adopted language for this rule. Adopted non-substantive changes include the following: (i) updating statutory references to conform with legislative changes that re-codified some sections of law; and (ii) rewording certain parts of the rule for purposes of clarification and readability.

Section 41.34 concerns eligibility for coverage under the Texas School Employees Uniform Group Health Coverage Program. The rule clarifies the law concerning the persons eligible to be enrolled in TRS-ActiveCare. The adopted changes are non-substantive and include the following: (i) updating statutory references to conform with legislative changes that re-codified some sections of law; and (ii) rewording certain parts of the rule for purposes of clarification and readability.

Section 41.35 concerns coverage plans. As required by state law, the rule defines the types of coverage plans and available tiers of coverage offered by TRS-ActiveCare. Adopted non-substantive changes include the following: (i) updating statutory references to conform with legislative changes that re-codified some sections of law; and (ii) reorganizing certain parts of the rule for purposes of clarification and readability. Adopted substantive changes include: (i) stating that TRS-ActiveCare shall include at least two, not three, coverage plans, which is consistent with §1579.101(b), Insurance Code, relating to plans of group coverage; and (ii) revising subsection (d) of §41.35 in compliance with amendments made to §1579.104, Insurance Code, relating to optional coverages, by specifying the optional coverages to which TRS is limited in offering through TRS-ActiveCare--i.e., only optional permanent life insurance, optional long-term care insurance, and optional disability insurance.

Section 41.36 concerns enrollment periods for the TRS-ActiveCare Program. The rule describes and clarifies the enrollment periods for TRS-ActiveCare. Adopted substantive changes include the following: (i) in subsections (d) - (g) of §41.36, clarifying that a completed enrollment form must be received by a participating entity or the health plan administrator of TRS-ActiveCare during the given enrollment period; (ii) in subsection (d) of the section, providing that the enrollment period associated with a special enrollment event shall be the 31 calendar days immediately after the date of the special enrollment event, which is consistent with the other 31-day enrollment periods noted in this rule (HIPAA requires that this enrollment period last at least 30 days after the special enrollment event); (iii) also in subsection (d) of this section, stating that the enrollment form must be received by a participating entity or the health plan administrator, within the noted 31-calendar-day period, a requirement consistent with other TRS-ActiveCare rules; (iv) in subsection (f) of the rule, stating that the 31-calendar-day period begins, not when notice is received by the employee, but when notice of the contract termination is sent by TRS or its designee to the eligible employee, a date that can be accurately and readily determined by TRS for purposes of administrative efficiency; and (v) in subsections (f) and (g) of §41.36, stating that the enrollment form must be "received" by a participating entity or the health plan administrator, not just "submitted" by the employee, within the noted 31-calendar-day period, receipt of the form being consistent with other TRS-ActiveCare rules and enhancing accurate and ready determination of compliance with the rule. Adopted non-substantive changes include reorganizing certain parts of the rule for purposes of clarification and readability.

Section 41.37 concerns the effective date of coverage. The rule describes the effective dates of coverage in TRS-ActiveCare for eligible full-time and part-time employees and their eligible dependents. The amended rule deletes former subsection (a) of §41.37 because the deadline noted therein has expired and deletes former subsection (c)(3) because the 90 day waiting period for TRS membership no longer exists. The remaining subsections are renumbered accordingly.

Section 41.38 concerns the termination date of coverage. The rule describes when coverage terminates under TRS-ActiveCare. All of the adopted changes are non-substantive and simply clarify this rule. The use of "Austin" time avoids the confusion created by the semiannual switches between "Daylight Savings Time" and regular "Central Time."

Section 41.39 concerns coverage for individuals changing employers. The rule addresses various issues that may arise when an employee who changes employers either was enrolled in TRS-ActiveCare or was eligible to enroll in the program at the time of the change. The additional adopted language in subsection (a)(1) of this section clarifies that when an employee changes his or her employer, the employee may add dependents only if a special enrollment event arises under the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA). The remaining adopted changes to the section are non-substantive.

Section 41.40 concerns coverage continuation while on leave without pay. The rule addresses the continuation of coverage under TRS-ActiveCare while the individual is on leave without pay. All of the adopted changes are non-substantive in nature and are adopted for the purpose of clarifying this rule. Consistent with similar changes to other rules in the subchapter, the use of "Austin" time avoids the confusion created by the semiannual switches between "Daylight Savings Time" and regular "Central Time."

Section 41.41 concerns premium payments. The rule addresses issues associated with the payment of premiums by participating entities. All of the adopted changes to the section are non-substantive in nature and are consistent with similar changes to other rules in the subchapter.

Section 41.50 concerns adjudication of claims. The rule addresses appeals relating to claims and other benefits that are made to the TRS Appeal Committee, and possibly thereafter to the Executive Director. Numerous non-substantive changes are adopted for purposes of clarification and readability. Adopted substantive changes include the following: (i) in subsection (a) of §41.50, clarifying that all procedures established by the administering firm be exhausted before an appeal is made to TRS; (ii) providing that the members of the Appeal Committee shall be appointed by and serve at the discretion of the Chief Operating Officer if the position of the Deputy Director is vacant; (iii) providing that the Committee shall apply the TRS-ActiveCare plan design and rules in effect on the date the first of the following events occurs--the date the claim was incurred or the date the benefit was denied by the administering firm; (iv) requiring that a request for an appeal conference be submitted and received by TRS, versus only a requirement that the request be submitted, no later than 45 days after the date of the initial written decision by the Committee; (v) clarifying that while waiting for an appeal conference, the initial denial by the Committee shall stand until the conference is held; (vi) requiring that a request for an appeal to the Executive Director be submitted and received by TRS, versus only a requirement that the request be submitted, no later than 45 days after the date of the initial written decision by the Committee or no later than 30 days after the date of the written decision by the Committee made pursuant to an appeal conference.

Section 41.51 concerns appeals relating to eligibility. The rule addresses appeals relating to eligibility that are made to the TRS Appeal Committee, and possibly thereafter to the Executive Director. Numerous non-substantive changes are adopted for purposes of clarification and readability. More substantive in nature, language found in subsection (c) of this section that incorporates by reference the procedures found in §41.50 is being deleted. In its place, new subsections are added that "mirror" existing or adopted subsections (c) - (g) and (h) of §41.50 of this section. The reasons described above for the adopted changes to §41.50 (above) are equally applicable to the similar language adopted in this section. Subsection (f) of this section contains the most substantive adopted changes in this rule. Amended subsection (f) of this section provides that if TRS finds that extraordinary circumstances constituting "good cause," as defined in this subsection, prevented a petitioner from complying fully with a deadline under TRS-ActiveCare plan design or rules, the appeal may be granted. Amended subsection (f) of this section expressly addresses situations when misinformation concerning an enrollment deadline is provided by TRS, by the TRS-ActiveCare health plan administrator (presently, Blue Cross Blue Shield of Texas), or by a participating entity (e.g., a school district). This adopted amendment to the rule provides that misinformation from any of these three sources may, under certain circumstances, be grounds for a finding of "good cause" to allow an enrollment in TRS-ActiveCare that would otherwise be time-barred.

Section 41.52 concerns expulsion from TRS-ActiveCare Program. The rule addresses various issues associated with the expulsion of a participant in TRS-ActiveCare. All of the adopted changes to §41.52 are non-substantive in nature and are consistent with similar changes in other rules.

Subchapter D, Comparability of Group Health Coverages: This subchapter addresses the efforts of TRS in determining the comparability of a school district's group health coverage to the basic health coverage provided under the Texas Employees Group Benefits Act and contains only one rule, §41.91, which is adopted with amendments.

Section 41.91 concerns certification of insurance coverage. This rule specifically addresses the role of TRS in conducting a comparability study and the factors to be considered in determining comparability to the basic health care coverage offered to state employees. The comparability study only applies to school districts that do not participate in TRS-ActiveCare. Also, this rule addresses the scope of the comparability study and the reporting requirements of the affected school districts. All of the amendments adopted for this rule either update statutory references or make minor, non-substantive changes to the text of the rule.

No comments on the proposal were received.

Subchapter B. LONG-TERM CARE, DISABILITY AND LIFE INSURANCE