Emergency Sections 
 An agency may adopt a new or amended section or repeal an existing section on 
an emergency basis if it determines that such action is necessary for the public 
health, safety, or welfare of this state. The section may become effective 
immediately upon filing with the Texas Register, or on a stated date less than 
20 days after filing, for no more than 120 days. The emergency action is 
renewable once for no more than 60 days. 
 Symbology in amended emergency sections. New language added to an existing 
section is indicated by the use of bold text. [Brackets] indicate deletion of 
existing material within a section. 
 
   
  TITLE 34. PUBLIC FINANCE 
 Part IV. Employees Retirement System of Texas 
  Chapter 83. Texas Public School District Insurance Plan 
  
  34 TAC sec.sec.83.1, 83.3, 83.5, 83.7, 83.9, 83.11 
 
  The Employees Retirement System of Texas (ERS) adopts on an emergency basis 
new Chapter 83 consisting of sec.sec.83.1, 83.3, 83.5, 83.7, 83.9, and 83.11, 
concerning group health insurance coverage for public school district employees. 
 As a result of House Bill 2885, Acts of the 72nd Legislature, Regular Session, 
1991, public school districts are required to make group health insurance 
coverage available to their employees. The districts may make such coverage 
available and certify to ERS that such coverage is comparable to that provided 
to state employees under the Texas Employees Uniform Group Insurance Program 
(UGIP), or they may participate in a statewide insurance program administered by 
ERS. 
 The Board of Trustees of ERS has determined that the participation of public 
school district employees in the UGIP would have a significant adverse impact on 
that program, so it is necessary to adopt these rules to establish a separate 
group health insurance program for such employees on an emergency basis. 
 An emergency results from the fact that although the great majority of public 
school districts have certified that they make health insurance coverage 
available to their employees which is comparable to that of the UGIP, there are 
still public school district employees in Texas for whom health insurance 
coverage is not available through their employers. 
 The rule provisions are adopted on an emergency basis under the Insurance Code, 
Article 3.50-2, sec.4A, which provides ERS with the authority to adopt rules 
that provide standards for determining eligibility for participation in the 
program. 
 
 
  sec.583.1. Definitions.  The following words and terms, when used in this 
chapter, shall have the following meanings, unless the context clearly indicates 
otherwise. 
   
   Act-The Texas Employees Uniform Group Insurance Benefits Act, Chapter 79, 
Acts of the 64th Legislature, 1975, as amended (Texas Insurance Code, Article 
3.50-2). 
   
   Active duty-An employee participating in the Texas Public School District 
Insurance Plan will be considered on active duty on each day of a paid vacation 
or paid sick leave or on a non-work day, if the employee was on active duty on 
the preceding work day. 
   
   Board or trustee -The Board of Trustees of the Employees Retirement System of 
Texas. 
   
   Contract year-A contract year begins on the first day of October and ends on 
the last day of the following September. 
   
   Dependent-The spouse of an employee and unmarried children under 25 years of 
age, including: 
 
  (A)  the natural child of an employee; 
   
  (B) a legally adopted child (including a child living with the adopting 
parents during the period of probation); 
   
  (C) a stepchild or foster child whose primary place of residence is the 
employee's household; 
   
  (D) a child whose primary place of residence is the employee's household and 
whose legal guardian is the employee; 
   
  (E) a child who is in a parent-child relationship to the employee, provided 
the child's primary place of residence is the household of the employee, the 
employee provides the necessary care and support for the child, and if the 
natural parent of the child is 21 years of age or older, the natural parent does 
not reside in the same household; 
   
  (F) a child who is considered a dependent of the employee for federal income 
tax purposes and who is a child of the employee's child; and 
   
  (G) any such child, regardless of age, who lives with or whose care is 
provided by an employee on a regular basis if such child is mentally retarded or 
physically incapacitated to such an extent as to be dependent upon the employee 
for care or support, as the Trustee shall determine. Mentally retarded or 
physically incapacitated means any medically determinable physical or mental 
condition which prevents the child from engaging in self-sustaining employment, 
provided that the condition commences prior to such child's attainment of age 
25, the child was eligible and covered under the plan immediately prior to 
reaching age 25, and that satisfactory proof of such condition and dependency is 
submitted by the employee within 31 days following such child's attainment of 
age 25. As a condition to the continued coverage of a child as a mentally 
retarded or physically incapacitated dependent beyond the age of 25, the 
insurance carrier or health maintenance organization shall have the right to 
require periodic certification of the child's physical or mental condition but 
not more frequently than annually after the two-year period following the 
child's attainment of age 25. 
     
   Employee-An employee of a Texas Public School District which participates in 
the Texas Public School District Insurance Plan and who is eligible to 
participate in the Teacher Retirement System of Texas. 
   
   Leave without pay-The status of an employee who is certified monthly by his 
or her employing school district as not on active duty who has not received a 
refund of retirement contributions from the Teacher Retirement System of Texas 
based upon the most recent term of employment. For purposes of eligibility to 
continue participation in the Texas Public School District Insurance Plan, such 
a leave is limited to a maximum period of 12 continuous months. 
   
   Participating school district-A school district that participates in the 
plan. 
   
   Plan-The Texas Public School District Insurance Plan of coverage for 
participating school districts as determined by the Board of Trustees. 
   
   Pre-existing condition -Any physical or mental condition, including 
pregnancy, for which the employee or dependent received medical advice or was 
treated by a practitioner during the six-month period immediately preceding the 
effective date of coverage, but shall not include treatment of a medical 
condition resulting from congenital or birth defects; provided, however, if the 
evidence of insurability requirements must first be satisfied, the six-month 
period for purposes of determining excluded conditions will be the six-month 
period immediately preceding the date of the employee's completed application 
for coverage. 
   
   School district -In accordance with the Act, a Texas public school district 
eligible to participate in the Texas Public School District Insurance Plan. 
 
   
  sec.83.3. Administration. 
 
  (a) Participation. 
 
  (1)  Application to participate. Unless otherwise authorized by the Employees 
Retirement System of Texas, a Texas public school district that wants to 
participate in the plan must apply to do so no less than 120 days prior to the 
start of the contract year. The Employees Retirement System of Texas may charge 
an application fee if it is determined by the Employees Retirement System of 
Texas that such a fee is necessary to defray the cost of processing the 
application. Such a fee must accompany a school district's application. Upon 
receipt, Employees Retirement System of Texas will process the school district's 
application and will establish a schedule of administrative fees and develop the 
contribution rates that will be applicable to that school district for the next 
contract year should it elect to participate in the plan. 
   
  (2) Notification of election to participate. Unless otherwise authorized by 
the Employees Retirement System of Texas, notification of a school district's 
election to participate in the plan must be made by the school district no less 
than 60 days prior to the start of a contract year. 
   
  (3) Administrative fees and contribution rates. A school district that elects 
to participate in the plan must accept the schedule of administrative fees and 
contribution rates adopted by the board. Contribution rates will be established 
on an actuarially sound basis and will be revised as necessary. 
   
  (4) Fund maintenance. The Employees Retirement System of Texas will establish 
and maintain a separate fund in which are deposited all contributions received 
under the plan and from which are made all payments of expenses and claims 
incurred in connection with the plan. Plan benefits must be paid exclusively 
from the school district fund and only as long as that fund is adequate to do 
so. At least monthly, the Employees Retirement System of Texas will determine 
the balance of the fund. The balance will reflect, at all times, appropriate 
reserves for all unpaid liabilities including claims which have been incurred 
but are not yet paid. Such liabilities will be determined by the Employees 
Retirement System of Texas consulting actuary for insurance matters. In the 
event the Employees Retirement System of Texas determines at any time that the 
fund does not have a positive balance, the following policies and procedures 
will go into effect. 
 
  (A) The Employees Retirement System of Texas will notify the participating 
school districts of the deficiency in the fund and will assess each 
participating school district for its pro rata share of the deficiency as 
determined by the Employees Retirement System of Texas. Each school district's 
share of the assessment will be due and payable within 20 days of the date of 
the Employees Retirement System of Texas notice. All benefit payments from the 
fund may be suspended until all such assessments have been received by the 
Employees Retirement System of Texas. 
   
  (B) A school district which fails to submit the required assessment within 20 
days of notice from the Employees Retirement System of Texas will have its 
participation in the plan terminated and no further claims will be processed for 
such school district's employees regardless of the date of service of such 
claims. Such claims will be returned to the school district and will be the 
school district's responsibility. 
   
  (C) Following collection of an assessment, the Employees Retirement System of 
Texas will make a determination of the fund's status taking into consideration 
the amount of assessment received as compared with that which was required. The 
Employees Retirement System of Texas will then make a determination as to the 
continued viability of the plan. In the event that the plan is determined not to 
be viable, to the extent funds are available, the Employees Retirement System of 
Texas will process claims for services rendered on or before the date that the 
Employees Retirement System of Texas has made such determination. Such claims 
will be processed in the order received. Once funds are exhausted, the Employees 
Retirement System of Texas will no longer process claims and will return all 
remaining claims to the respective districts; and those districts will be 
responsible for such claims as they relate to their employees. 
     
  (5) Enrollment rate requirements. A participating school district must 
maintain at least a 75% employee enrollment rate in the plan. If a school 
district's employee enrollment rate drops below 75%, that school district may 
not continue participation in the plan unless it continues to make required 
contributions on behalf of at least 75% of its eligible employees. 
   
  (6) Termination of participation. A participating school district that 
voluntarily terminates participation may not participate in the plan for a 
period of five subsequent contract years. 
   
  (7) Indemnification of the Employees Retirement System of Texas. Prior to 
participation in the plan, each school district will acknowledge that the 
Employees Retirement System of Texas serves only as an administrator for the 
plan and does not guarantee the adequacy of the fund supporting such plan nor 
does it provide any guarantees concerning the payment of claims incurred under 
the plan. Each district will further acknowledge that it will pay any 
assessments required as described in paragraph (4)(A) of this subsection and 
will hold harmless and indemnify the Employees Retirement System of Texas 
against any claims from the district, its employees, their dependents, and any 
providers who have rendered services to the school district's employees and 
their dependents in the event the fund is inadequate to pay claims incurred 
under the plan. Such acknowledgment, hold harmless and indemnification will be 
executed in such form as may be determined by the Employees Retirement System of 
Texas. 
     
  (b) Funding. 
 
  (1) Initial contribution. A school district which elects to participate in the 
plan must pay required contributions for the first month of coverage as 
determined by the Employees Retirement System of Texas in advance of the first 
day of the first calendar month for which coverage is to be in force for the 
school district employees. In the event that the contribution is not received by 
the Employees Retirement System of Texas prior to the first day of the calendar 
month for which coverage is to be in force, coverage of the school district's 
employees will be deferred until the first day of the first calendar month 
following receipt of the contribution by the Employees Retirement System of 
Texas. 
   
  (2)  Subsequent contribution. Subsequent monthly contributions as determined 
by the Employees Retirement System of Texas will be paid by the participating 
school district prior to the first day of each subsequent calendar month of 
coverage. Coverage will not be in force for any month until the applicable 
contribution for such month has been received by the Employees Retirement System 
of Texas. The Employees Retirement System of Texas will not process claims that 
include dates of service which occur after the last date for which the school 
district has paid the required contribution. 
   
  (3) Source of funds. In accordance with the Act, each participating school 
district will contribute for each employee covered by the plan an amount equal 
to the employee-only cost of the plan, provided, however, the school district's 
contribution may not exceed the amount contributed by the state for employees of 
the state and institutions of higher education. A school district employee who 
applies for coverage for which the monthly contribution exceeds the school 
district's contribution must pay the excess amount. It is the responsibility of 
the participating school district to remit to the Employees Retirement System of 
Texas on a timely basis all contributions required under the plan, including 
employees' share of contributions. It is the responsibility of the participating 
school district to establish procedures for collecting the employees' share of 
contributions and for the collection and submission of those contributions. 
Coverage will be canceled for any employee for whom the district fails to make 
the required contribution, including the employee share of such contribution, 
within 30 days of the due date of such contribution. 
 
       
  sec.83.5. Eligibility. 
 
  (a) Employees. Employees of a participating school district are eligible for 
coverage on their first active duty day. 
   
  (b) Dependents. Employees must be enrolled before their dependents are 
eligible for coverage. Newly-acquired dependents are eligible for coverage on 
the date they become dependents of covered employees. Newborn dependents of an 
enrolled employee are covered automatically on the newborn's date of birth. A 
dependent may not be covered by more than one employee of a participating school 
district. A spouse or child of an employee may not be covered in the plan both 
as an employee and as a dependent of an employee. Employees and dependents 
enrolled in the plan may not be enrolled in any other plan of coverages 
administered by the Employees Retirement System of Texas. 
 
     
  sec.83.7. Enrollment and Participation. 
 
  (a) Employees and their dependents. 
 
  (1) Employees. An application for coverage to be effective on the day the 
employee begins active duty must be submitted to the school district benefits 
coordinator on or before that day. Coverage for which the application is 
submitted after the first day of active duty and within 30 days after that day 
will be effective on the first day of the month following the date of 
application. Applications submitted after the first 31 days will be governed by 
subsection (b) of this section. 
   
  (2) Dependents. Coverage for dependents of an employee will be effective on 
the same day the employee's coverage becomes effective if an application is 
submitted on or before the effective date of the employee's coverage. If the 
application is submitted within 30 days after the employee's effective date, the 
dependent's coverage will be effective on the first day of the month following 
the date of application. 
   
  (3) Newly acquired dependents. Coverage for dependents who are acquired after 
the employee's first day of coverage will be effective on the date the person 
becomes a dependent if an application is submitted on or within 30 days after 
the date the dependent first becomes eligible. Applications for dependent 
coverage submitted more than 30 days after a dependent is first eligible will be 
governed by the rules in subsection (b) of this section. 
   
  (4) Newborn dependents. If an employee has a dependent child enrolled in the 
plan, a newborn dependent will be covered immediately and automatically from the 
date of birth. An application to add the newborn dependent must be submitted 
before verification of coverage for the newborn dependent will be provided to 
the carrier. If there is no dependent child enrolled in the plan at the time of 
birth, the newborn dependent will be automatically covered on the date of birth. 
To continue such newborn dependent's coverage for more than 30 days after the 
date of birth, an application must be submitted within 30 days after the date of 
birth. 
   
  (5)  The effective date for dependent coverage will be as stated previously, 
unless the dependent is confined in a hospital or other institution for medical 
care at the date of eligibility; in which case, the coverage will be effective 
on the day after the day the dependent is released from the hospital or 
institution. 
     
  (b) Changes in coverage beyond the first 31 days of eligibility. 
 
  (1) Employees and dependents. Employees who want to enroll more than 30 days 
after their initial date of eligibility and employees who want to enroll 
dependents more than 30 days after their dependent's initial date of eligibility 
must complete an insurance carrier's application for each applicant. Approval of 
the application is contingent upon the employee providing acceptable evidence of 
insurability to the carrier for each applicant. Upon review of the application, 
the carrier may require additional information or a medical examination provided 
at the employee's expense. If approved, coverage is effective on the first day 
of the month following the date approval is received by the employee's benefits 
coordinator or by the Employees Retirement System of Texas. If the employee is 
in a leave-without-pay status on the date of approval, coverage will be 
effective on the date the employee returns to active duty provided the employee 
returns to active duty within 30 days of the date on the approval letter from 
the carrier. If the date the employee returns to active duty is more than 30 
days after the date on the approval letter, the approval is null and void and a 
new application will be required. An employee may withdraw the application at 
any time prior to the effective date of coverage by submitting a written notice 
of withdrawal. 
   
  (2) The evidence of insurability requirement applies only to employees or 
dependents who: 
 
  (A) did not enroll on or within 30 days after the initial date of eligibility; 
or 
   
  (B) enrolled and later dropped or were canceled from coverage, except as 
provided in subsection (d)(1) and (2) of this section. 
     
  (3) An employee who wants to cancel coverage may do so at any time. Coverage 
will continue through the last day of the month following the date of 
application. 
   
  (4) An employee's spouse or child who is enrolled as an employee under the 
plan may become eligible as a dependent on the day following termination of the 
spouse or child's school district employment. The effective date of coverage as 
a dependent will be the first day of the month following termination of such 
employment if an application is submitted on or within 30 days following the 
date the dependent becomes eligible under this rule. 
     
  (c) Pre-existing condition exclusion. A pre-existing condition exclusion shall 
apply to employees and dependents who are enrolled in the plan. The exclusion 
limits benefit payments to $0 for a full 12 months from the effective date of 
coverage for a pre-existing condition, as defined in sec.83.1 of this title 
(relating to Definitions). The pre-existing condition exclusion will not apply 
to: 
 
  (1)  a newborn dependent; 
   
  (2) a medical condition resulting from congenital or birth defects; or 
   
  (3) an individual returning to school district employment in accordance with 
the conditions described in subsection (d)(1) of this section. 
     
  (d) Reinstatement in the plan. 
 
  (1)  An employee who is a member of the Texas National Guard or any of the 
reserve components of the United States Armed Forces and who is in a military 
leave-without-pay status or who must terminate employment as the result of an 
assignment to active military duty may, upon return to school district 
employment, reinstate coverage that was in effect immediately prior to the 
commencement of active military duty, as long as the return to school district 
employment occurs within 90 days of the release from active military duty. An 
employee may also reinstate the coverage of the employee's dependent who is a 
member of the Texas National Guard or any of the reserve components of the 
United States Armed Forces and whose coverage is terminated as the result of an 
assignment to active military duty. To reinstate canceled coverage, submission 
of evidence of insurability acceptable to the insurance carrier and the pre-
existing condition exclusion will not apply. The application to reinstate such 
coverage must be submitted during the 30 days following the day the employee 
returns to active school district employment. In the case of dependents, the 
application to reinstate such coverage must be submitted within 30 days 
following the dependent's release from active duty. Applications for coverage to 
be effective on the day the employee returns to active school district 
employment must be submitted to the school district benefits coordinator on or 
before the first day of the return to active school district employment. 
Coverage for which the application is submitted after the first day of the 
return to active school district employment and within 30 days after that day 
will be effective on the first day of the month following the date of 
application. 
   
  (2) Employees whose coverage was canceled during a period of leave-without-pay 
due to a certified work-related disability may, upon return to active duty 
status, reinstate coverage that was in effect on the day immediately prior to 
entering the leave-without-pay status, except as provided in sec.83.11(c)(4) of 
this title (relating to Termination of Coverage), and provided application to 
reinstate such coverage is made within 30 days of the return to active duty. 
Evidence of insurability shall not apply. Coverage applied for on the first day 
of return to active duty will be effective on that day unless the employee 
completes the application indicating coverage effective on the first day of the 
month following the date the employee returns to active duty. Coverage applied 
for after the first day of return to active duty and within 30 days after that 
day will be effective on the first day of the month following the date of 
application. 
     
  (e) Continuing coverage in special circumstances. 
 
  (1) A terminating employee is eligible to continue coverage through the last 
day of the month in which employment is terminated. 
   
  (2) An employee in a leave-without-pay status is eligible to continue coverage 
in effect on the date the employee entered leave-without-pay status. An employee 
in a leave without pay status may continue coverage for no more than 12 
continuous months. The maximum period may be extended for up to 12 additional 
months for a total of 24 continuous months, provided the extension is certified 
by the school district to be for educational purposes. 
 
       
  sec.83.9. Grievance Procedure. 
 
  (a) Any person participating in the insurance plan, who is denied payment of 
insurance benefits, may request the insurance company to reconsider the claim. 
Any additional documentation in support of the claim may be submitted with the 
request for reconsideration. If the claim is again denied, the claim, 
accompanied by all related documents and copies of correspondence with the 
insurance company, may be submitted by the person to the executive director of 
the Employees Retirement System of Texas for review. A request for review must 
be filed by the person in writing within 90 days from the date the insurance 
company formally denies the claim and mails notice of this denial and right of 
appeal to the person. 
   
  (b) Any person with a grievance regarding eligibility or other matters 
involving the plan may submit a written request to the executive director to 
make a determination on the matter in dispute. 
   
  (c)  When the executive director reviews any matter arising under this 
section, all of the available information will be considered. When the executive 
director completes the review and makes a decision, all parties involved will be 
notified in writing of the decision. 
   
  (d) Any person or insurance company that does not accept the executive 
director's decision may appeal the decision to the board. A notice of appeal to 
the board must be filed in writing 30 days from the date the executive 
director's decision is mailed by certified mail. 
   
  (e) Appeals to the board will be processed under the provisions of Chapter 67 
of this title (relating to Hearings and Disputed Claims) and the Administrative 
Procedures and Texas Register Act, Texas Civil Statutes, Article 6252-13a. 
   
  (f) As used in this section, the term "person" includes any duly authorized 
representative of such person. 
   
  (g)  In computing time under this section, the day after any mailing by the 
insurance company or the executive director shall be counted as the first day of 
the time period. A document is considered to be filed with the executive 
director when it is received by the executive director or when it is postmarked, 
whichever is earlier. 
 
     
  sec.83.11. Termination of Coverage. 
 
  (a) Cancellation of coverage. 
 
  (1) An employee may cancel any coverage in effect by submitting the 
appropriate cancellation notice in writing to the Employees Retirement System of 
Texas. Cancellations will be effective at midnight on the last day of the month 
in which the notice is signed. 
   
  (2) Coverage shall be canceled for non-payment of premium if a premium is not 
paid within 30 days of the date payment is due. Coverage will be canceled 
effective the last day of the month for which timely payment was made. 
   
  (3) Coverage shall be canceled for all employees of a school district whose 
participation is terminated under the provisions of sec.83.3(a) and (b) of this 
title (relating to Participation and Funding). 
     
  (b) Termination of employment. Coverages for employees who terminate 
employment and their dependents shall continue through the last day of the month 
in which employment is terminated. 
   
  (c) Expulsion from the Texas Public School District Insurance Plan. 
 
  (1) The board may expel any person participating in the plan who submits a 
fraudulent claim or otherwise defrauds or attempts to defraud any plan of 
benefits offered under the plan, within the terms of the Texas Insurance Code, 
Article 3.50-2, sec.13A. 
   
  (2)  The executive director is authorized to call a hearing on behalf of the 
board when there is reason to believe that a person may be subject to expulsion 
under this section and the Texas Insurance Code, Article 3.50-2, sec.13A. 
   
  (3) Any hearing called pursuant to this section shall be a contested case 
under Texas Civil Statutes, Article 6252-13a, and conducted in the manner 
prescribed by law and by Chapter 67 of this title (relating to Hearings and 
Disputed Claims). During such hearing, the standard of proof requiring a finding 
against the participant shall be the preponderance of evidence. At the time a 
case is assigned to a hearings examiner, no further claims will be paid until a 
finding has been made. When a finding has been made, all eligible claims will be 
processed subject to any offsets for overpayments made by the carrier. 
   
  (4) Any person expelled from the Texas Public School District Insurance Plan 
may not be insured under any health benefits plan offered by the plan for a 
period of five years from the effective date of the expulsion. 
 
  Issued in Austin, Texas, on October 15, 1992. 
 TRD-9214108 
  Charles D. Travis 
 Executive Director 
 Employees Retirement System of Texas 
    Effective date: October 19, 1992 
 Expiration date: February 16, 1993 
 For further information, please call: (512) 867-3336