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2005 Texas Insurance Code CHAPTER 1551. TEXAS EMPLOYEES GROUP BENEFITS ACT
INSURANCE CODE SUBTITLE H. HEALTH BENEFITS AND OTHER COVERAGES FOR GOVERNMENTAL EMPLOYEES CHAPTER 1551. TEXAS EMPLOYEES GROUP BENEFITS ACT SUBCHAPTER A. GENERAL PROVISIONS § 1551.001. SHORT TITLE. This chapter may be cited as the Texas Employees Group Benefits Act. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.002. PURPOSES. The purposes of this chapter are to: (1) provide uniformity in life, accident, and health benefit coverages for all state officers and employees and their dependents; (2) enable the state to attract and retain competent and able employees by providing employees and their dependents with life, accident, and health benefit coverages at least equal to those commonly provided in private industry; (3) foster, promote, and encourage employment by and service to the state as a career profession for individuals of high standards of competence and ability; (4) recognize and protect the state's investment in each permanent employee by promoting and preserving economic security and good health among employees and their dependents; (5) foster and develop high standards of employer-employee relationships between the state and its employees; (6) recognize the long and faithful service and dedication of state officers and employees and encourage them to remain in state service until eligible for retirement by providing health benefits for them and their dependents; and (7) recognize the service to the state by employees and retired employees of community supervision and corrections departments by extending to them and their dependents the same life, accident, and health benefit coverages as those provided under this chapter to state employees, retired state employees, and their dependents. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 1030, § 1.01, eff. Sept. 1, 2003. § 1551.003. GENERAL DEFINITIONS. In this chapter: (1) "Administering firm" means a firm designated by the board of trustees to administer coverages, services, benefits, or requirements in accordance with this chapter and the rules adopted by the board of trustees under this chapter. (2) "Annuitant" means an individual eligible to participate in the group benefits program under Section 1551.102. (3) "Basic coverage" means the group coverage plans determined by the board of trustees in which each eligible full-time employee and annuitant participates automatically unless participation is specifically waived. (4) "Board of trustees" means the board of trustees established under Chapter 815, Government Code, to administer the Employees Retirement System of Texas. (5) "Cafeteria plan" means a plan defined and authorized by Section 125, Internal Revenue Code of 1986. (6) "Employee" means an individual eligible to participate in the group benefits program under Section 1551.101. (7) "Employer" means this state and its agencies. (8) "Executive director" means the executive director of the Employees Retirement System of Texas. (9) "Full-time employee" means an employee designated as a full-time employee under Section 1551.319(c) or (d) or an employee designated by the employer as working 40 or more hours a week. (9-a) "Good cause" means that a person's failure to act was not because of a lack of due diligence the exercise of which would have caused a reasonable person to take prompt and timely action. A failure to act based on ignorance of the law or facts reasonably discoverable through the exercise of due diligence does not constitute good cause. (10) "Group benefits program" means the state employees group benefits program provided by this chapter. (11) "Part-time employee" means an employee designated by the employer as working less than 40 hours a week. For purposes of this chapter, an individual described by Section 1551.101(e)(2) is considered a part-time employee. (12) "Serious mental illness" has the meaning assigned by Section 1, Article 3.51-14. (13) "Service" means personal service to the state creditable in accordance with rules adopted by the board of trustees. (14) "State agency" means a commission, board, department, division, institution of higher education, or other agency of this state created by the constitution or statutes of this state. The term also includes the Texas Municipal Retirement System and the Texas County and District Retirement System. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 366, § 2.01, eff. Sept. 1, 2003; Acts 2005, 79th Leg., ch. 347, § 24, eff. Sept. 1, 2005. § 1551.004. DEFINITION OF DEPENDENT. (a) In this chapter, "dependent" with respect to an individual eligible to participate in the group benefits program under Section 1551.101 or 1551.102 means the individual's: (1) spouse; (2) unmarried child younger than 25 years of age; (3) child of any age who the board of trustees determines lives with or has the child's care provided by the individual on a regular basis if: (A) the child is mentally retarded or physically incapacitated to the extent that the child is dependent on the individual for care or support, as determined by the board of trustees; (B) the child's coverage under this chapter has not lapsed; and (C) the child is at least 25 years old and was enrolled as a participant in the health benefits coverage under the group benefits program on the date of the child's 25th birthday; and (4) child of any age who is unmarried, for purposes of health benefit coverage under this chapter, on expiration of the child's continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (Pub. L. No. 99-272) and its subsequent amendments. (b) In this section, "child" includes an adopted child and a stepchild, foster child, or other child who is in a parent-child relationship with an individual who is eligible to participate in the group benefits program under Section 1551.101 or 1551.102. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 1276, § 10A.401(a), eff. Sept. 1, 2003. § 1551.005. DEFINITION OF HEALTH BENEFIT PLAN. (a) In this chapter, "health benefit plan" means a plan that provides, pays for, or reimburses expenses for health care services, including comparable health care services for participants who rely solely on spiritual means through prayer for healing in accordance with the teaching of a well-recognized church or denomination. (b) A health benefit plan shall be provided on a group basis through: (1) a policy or contract; (2) a medical, dental, or hospital service agreement; (3) a membership or subscription contract; (4) a salary continuation plan; (5) a health maintenance organization agreement; (6) a preferred provider arrangement; or (7) any other similar group arrangement or a combination of policies, plans, contracts, agreements, or arrangements described by this subsection. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.006. DEFINITION OF INSTITUTION OF HIGHER EDUCATION. (a) In this chapter, except as provided by Subsection (b), "institution of higher education" means a public junior college, a senior college or university, or any other agency of higher education within the meaning and jurisdiction of Chapter 61, Education Code. (b) In this chapter, "institution of higher education" does not include: (1) an entity in The University of Texas System, as described by Section 65.02, Education Code; and (2) an entity in The Texas A&M University System, as described by Subtitle D, Title 3, Education Code, including the Texas Veterinary Medical Diagnostic Laboratory. (c) Notwithstanding Subsection (b), The Texas A&M University System, including the Texas Veterinary Medical Diagnostic Laboratory, participates in the group benefits program if, not later than November 1, 2004, the system notifies the board of trustees of the system's election to participate. If notice is provided as required by this subsection, the employees and annuitants of the system, including the veterinary medical laboratory, and the dependents of those employees and annuitants, participate in the group benefits program effective not later than September 1, 2005. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 366, § 2.02, eff. Sept. 1, 2003. § 1551.007. DEFINITION OF CARRIER. In this chapter, "carrier" means: (1) an insurance company that is authorized by the department under this code or another insurance law of this state to provide any of the types of insurance coverages, benefits, or services provided for in this chapter and that: (A) has a surplus of $1 million; (B) has a successful operating history; and (C) has had successful experience, as determined by the department, in providing and servicing any of the types of group coverage provided for in this chapter; (2) a corporation operating under Chapter 842 or 843 that provides any of the types of coverage, benefits, or services provided for in this chapter and that: (A) has a successful operating history; and (B) has had successful experience, as determined by the department, in providing and servicing any of the types of group coverage provided for in this chapter; or (3) any combination of carriers described by Subdivisions (1) and (2) on terms the board of trustees prescribes. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 1276, § 10A.402, eff. Sept. 1, 2003. § 1551.008. APPLICABILITY OF DEFINITIONS. The definition of a term defined by this subchapter and the use of the terms "employee" and "annuitant" to refer to individuals eligible to participate in the group benefits program under Sections 1551.101 and 1551.102 apply to this chapter unless a different meaning is plainly required by the context in which the term appears. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.009. BOARD OF TRUSTEES MAY DEFINE OTHER WORDS. The board of trustees may define by rule a word in terms necessary in the administration of this chapter. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.010. BOARD OF TRUSTEES APPROVAL FOR PAYROLL DEDUCTIONS OR REDUCTIONS. A state agency may not establish, continue, or authorize payroll deductions or reductions for any benefit or coverage as provided by this chapter without the express approval of the board of trustees. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.011. EXEMPTION FROM EXECUTION. All benefit payments, contributions of employees and annuitants, and optional benefit payments, any rights, benefits, or payments accruing to a person under this chapter, and all money in a fund created by this chapter: (1) are exempt from execution, attachment, garnishment, or any other process; and (2) may not be assigned, except: (A) for direct payment that a participant may assign to a provider of health care services; and (B) as specifically provided by this chapter. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.012. EXEMPTION FROM STATE TAXES AND FEES. Any coverage established under this chapter, including a policy, an insurance contract, a certificate of coverage, an evidence of coverage, and an agreement with a health maintenance organization or a plan administrator, is not subject to any state tax, regulatory fee, or surcharge, including a premium or maintenance tax or fee. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.013. COMBINING OF CARRIERS NOT RESTRAINT OF TRADE. Carriers combining to bid, underwrite, or both bid and underwrite for the group benefits program are not in violation of Chapter 15, Business & Commerce Code. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.014. EXCLUSIVE REMEDIES. The remedies provided under this chapter are the exclusive remedies available to an employee, participant, annuitant, or dependent. Added by Acts 2003, 78th Leg., ch. 1276, § 10A.403(a), eff. Sept. 1, 2003.SUBCHAPTER B. ADMINISTRATION AND IMPLEMENTATION § 1551.051. ADMINISTRATION AND IMPLEMENTATION. The administration and implementation of this chapter are vested solely in the board of trustees. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.052. AUTHORITY FOR RULES, PLANS, PROCEDURES, AND ORDERS. (a) The board of trustees may adopt rules consistent with this chapter as it considers necessary to implement this chapter and its purposes, including rules that provide standards for determining eligibility for participation in the group benefits program, including standards for determining disability. (b) The board of trustees may adopt a plan, procedure, or order reasonably necessary to implement this chapter and its purposes. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.053. AUTHORITY TO HIRE EMPLOYEES. (a) The board of trustees may hire employees as the board considers necessary to ensure the proper administration of this chapter and the coverages, services, and benefits provided for or authorized by this chapter. (b) The board of trustees shall determine and assign the compensation and duties of the employees. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.055. GENERAL POWERS OF BOARD OF TRUSTEES REGARDING COVERAGE PLANS. The board of trustees may: (1) prepare specifications for a coverage provided under this chapter; (2) prescribe the time and conditions under which an employee, annuitant, or dependent is eligible for a coverage provided under this chapter; (3) determine the methods and procedures of claims administration; (4) determine the amount of payroll deductions and reductions applicable to employees and annuitants and establish procedures to implement those deductions and reductions; (5) establish procedures for the board of trustees to decide contested cases arising from a coverage provided under this chapter; (6) study, on an ongoing basis, the operation of all coverages provided under this chapter, including gross and net costs, administration costs, benefits, utilization of benefits, and claims administration; (7) administer the employees life, accident, and health insurance and benefits fund; (8) provide the beginning and ending dates of coverages of participants under all benefit plans; (9) develop basic group coverage plans applicable to all individuals eligible to participate in the group benefits program under Sections 1551.101 and 1551.102; (10) provide for optional group coverage plans in addition to the basic group coverage plans; (11) provide, as the board of trustees determines is appropriate, either additional statewide optional coverage plans or individual agency coverage plans; (12) develop health benefit plans that permit access to high-quality, cost-effective health care; (13) design, implement, and monitor health benefit plan features intended to discourage excessive utilization, promote efficiency, and contain costs; (14) develop and refine, on an ongoing basis, a health benefit strategy consistent with evolving benefit delivery systems; (15) develop a funding strategy that efficiently uses employer contributions to achieve the purposes of this chapter and that is reasonable and ensures participants a fair choice among health benefit plans as provided by Section 1551.302; and (16) appoint an advisory committee for the group benefits program under the terms provided by Section 815.509, Government Code. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 1276, § 10A.406(a), eff. Sept. 1, 2003. § 1551.056. INDEPENDENT ADMINISTRATOR. (a) The board of trustees may, on a competitive bid basis, contract with an entity to act for the board as an independent administrator or manager of the coverages, services, and benefits authorized under this chapter. (b) The entity must be a qualified, experienced firm of group insurance specialists or an administering firm and shall assist the board of trustees in ensuring the proper administration of this chapter and the coverages, services, and benefits provided for or authorized by this chapter. (c) The board of trustees shall pay an independent administrator selected under this section. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.057. COMPENSATION OF PERSON EMPLOYED BY BOARD OF TRUSTEES. The board of trustees shall pay the compensation and expenses of a person employed by the board at the rate or in the amount approved by the board. The rate or amount may not exceed the rate or amount paid for similar services. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.058. ELECTRONIC AUTHORIZATIONS. (a) The board of trustees may develop a system for a participant to electronically authorize: (1) enrollment in a coverage or benefit; (2) contributions to a coverage or benefit; and (3) deductions or reductions to the participant's compensation or annuity for participation in a coverage or benefit. (b) Notwithstanding any other law, the board of trustees may permit or require an authorization covered by Subsection (a) to be made electronically. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.059. CERTIFICATE OF COVERAGE. The board of trustees shall provide for issuance to each employee or annuitant participating in the group benefits program a certificate of coverage that states: (1) the benefits to which the participant is entitled; (2) to whom the benefits are payable; (3) to whom a claim must be submitted; and (4) the provisions of the plan document, in summary form, that principally affect the participant. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.060. IDENTIFICATION CARDS. (a) The board of trustees may issue a single identification card to a participant in a health benefit plan and separately administered coverage under this chapter that offers pharmacy benefits. (b) The card may contain information regarding both health and pharmacy benefits. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.061. ANNUAL REPORT. The board of trustees shall submit a written report not later than January 1 of each year to the governor, lieutenant governor, speaker of the house of representatives, and Legislative Budget Board concerning the coverages provided and the benefits and services being received by all participants under this chapter. The report must include information about the effectiveness and efficiency of: (1) managed care cost containment practices; and (2) fraud detection and prevention procedures. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.062. INFORMATION ON OPERATION AND ADMINISTRATION OF CHAPTER. (a) The board of trustees shall: (1) conduct a continuing study of the operation and administration of this chapter, including: (A) conducting surveys and preparing reports on group coverages and benefits available to participants; and (B) studying experience relating to group coverages and benefits available to participants; and (2) maintain statistics on the number, type, and disposition of fraudulent claims for benefits under this chapter. (b) A contract entered into under this chapter must require a carrier to: (1) furnish any reasonable report the board of trustees determines is necessary to enable the board to perform its functions under this chapter; and (2) permit the board and a representative of the state auditor to examine records of the carrier as necessary to accomplish the purposes of this chapter. (c) Each state agency shall keep records, make certifications, and furnish the board of trustees with information and reports necessary to enable the board to perform its functions under this chapter. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.063. CONFIDENTIALITY OF CERTAIN RECORDS. (a) The records of a participant in the group benefits program in the custody of the board of trustees, or of an administrator or carrier acting on behalf of the board, are confidential and not subject to disclosure, and the board is not required to accept or comply with a request for a record or information about a record or to seek an opinion from the attorney general, because the records are exempt from the public access provisions of Chapter 552, Government Code, except as provided by this section. (b) The records may be released to a participant or to an authorized attorney, family member, or representative acting on behalf of the participant. (c) To accomplish the purposes of this chapter, the board of trustees may release the records to: (1) an administrator, carrier, agent, or attorney acting on behalf of the board; (2) another governmental entity having a legitimate need for the information to perform a function of the board of trustees; (3) an authorized medical provider of the participant; or (4) a party in response to a subpoena issued under applicable law. (d) The records of a participant remain confidential after release to a person as authorized by this section. (e) The records of a participant may become part of the public record of an administrative or judicial proceeding related to a contested case under this chapter unless the records are closed to public access by a protective order issued under applicable law. If a participant's records have become part of the public record of a proceeding and the records are not the subject of a protective order, the participant is considered to have waived the privacy of the participant's records. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 1111, § 33, eff. Sept. 1, 2003; Acts 2003, 78th Leg., ch. 1276, § 10A.404(a), eff. Sept. 1, 2003; Acts 2005, 79th Leg., ch. 347, § 25, eff. Sept. 1, 2005. § 1551.064. CERTAIN GROUP HEALTH AND ACCIDENT POLICIES OR CONTRACTS. (a) This section applies only to a group policy or contract described by section 3B(a), Article 3.51-6. A policy or contract executed under this chapter must provide that: (1) premium payments must be: (A) paid directly to the Employees Retirement System of Texas; and (B) postmarked or received not later than the 10th day of the month for which the premium is due; (2) the premium for group continuation coverage under Section 3B, Article 3.51-6, may not exceed the level established for other surviving dependents of deceased employees and annuitants; (3) at the time the group policy or contract is delivered, issued for delivery, renewed, amended, or extended, the Employees Retirement System of Texas shall give notice of the continuation option to each state agency covered by the group benefits program; and (4) each state agency shall give written notice of the continuation option to each employee and dependent of an employee who is covered by the group benefits program. (b) A group policy or contract executed under this chapter must provide that, not later than the 15th day after the date of any severance of the family relationship that might activate the continuation option under Section 3B, Article 3.51-6, the group member shall give written notice of the severance to the employing state agency. (c) On receipt of notice under Subsection (b) or on the death of an employee, the employing state agency shall give written notice of the continuation option to each affected dependent. The notice must state the amount of the premium to be charged and must be accompanied by any necessary enrollment forms. (d) A covered dependent must exercise the continuation option not later than the 45th day after the date of: (1) the severance of the family relationship; or (2) the retirement or death of the group member. (e) A covered dependent must provide written notice of the exercise of the continuation option to the employing state agency within the time prescribed by Subsection (d). Coverage under the policy or contract remains in effect during the period prescribed by Subsection (d) if the premiums are paid. (f) Any period of previous coverage under the policy or contract must be used in full or partial satisfaction of any required probationary or waiting periods provided in the policy or contract for dependent coverage. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.065. DISCLOSURE OF SOCIAL SECURITY NUMBER. The board of trustees may require an individual to disclose the individual's social security number as the board considers necessary to properly administer this chapter and any coverage, service, or benefit authorized by this chapter or as otherwise required by state or federal law. Added by Acts 2003, 78th Leg., ch. 1276, § 10A.404(b), eff. Sept. 1, 2003. § 1551.066. INFORMATION RELATING TO MISCONDUCT. (a) This section applies to: (1) the Employees Retirement System of Texas; (2) a carrier or other insurance company or health maintenance organization; (3) an administering firm or other insurance support organization that provides information or services to the group benefits program or the Employees Retirement System of Texas; (4) an agent or third-party administrator authorized under this chapter or licensed under this code; (5) a regulatory authority or department; and (6) a board member, executive director, employee, auditor, or actuary of an entity described by this section. (b) A person may collect from, furnish to, or exchange with another person information, including medical records or other confidential information, to the extent the person considers necessary to detect or to impose a sanction for a criminal act, a misrepresentation, or nondisclosure that is related to an attempt to obtain coverage, payment, reimbursement, or a benefit under this chapter. (c) A person who acts under Subsection (b) is immune from suit and criminal or civil liability unless the person acts with malice or intent to defraud. Added by Acts 2003, 78th Leg., ch. 1276, § 10A.405(a), eff. Sept. 1, 2003.SUBCHAPTER C. COVERAGE AND PARTICIPATION § 1551.101. PARTICIPATION ELIGIBILITY: STATE OFFICERS AND EMPLOYEES. (a) An elected or appointed officer or employee who performs service, other than as an independent contractor, for this state, including an institution of higher education, and who is described by this section is eligible to participate in the group benefits program as an employee on the date specified by Section 1551.1055. (b) An individual is eligible to participate in the group benefits program as provided by Subsection (a) if the individual receives compensation for service performed for this state pursuant to a payroll certified by a state agency, other than an institution of higher education, or by an elected or appointed officer of this state, including a payment made from: (1) an amount appropriated by the legislature from a state fund; (2) a trust fund held by the comptroller; or (3) money paid under the official budget of a state agency, other than money appropriated under a general appropriations act. (c), (d) Repealed by Acts 2003, 78th Leg., ch. 366, § 2.14. (e) An individual is eligible to participate in the group benefits program as provided by Subsection (a) if the individual receives compensation for service performed for an institution of higher education pursuant to a payroll certified by an institution of higher education or by an elected or appointed officer of this state and either: (1) is eligible to become a member of the Teacher Retirement System of Texas after any waiting period provided by law before membership in that retirement system; or (2) is employed at least 20 hours a week and is not permitted to be a member of the Teacher Retirement System of Texas because the individual is employed by an institution of higher education only in a position that as a condition of employment requires the individual to be enrolled as a student in the institution in graduate-level courses. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 366, § 2.03, 2.14, eff. Sept. 1, 2003; Acts 2005, 79th Leg., ch. 347, § 26, eff. Sept. 1, 2005. § 1551.102. PARTICIPATION ELIGIBILITY: ANNUITANTS. (a) An individual who has at least 10 years of service credit, as determined by the board of trustees, for which the individual was eligible to participate in the group benefits program under Section 1551.101 or who has at least five years of membership and five years of military service credited in the Employees Retirement System of Texas and who retires in a manner described by this section is eligible, subject to Section 1551.1055, to participate as an annuitant in the group benefits program. (b) An individual is eligible to participate in the group benefits program as provided by Subsection (a) if: (1) the individual retires under the jurisdiction of the Employees Retirement System of Texas; and (2) the individual: (A) receives or is eligible to receive an annuity under Section 814.104(a)(2), Government Code, and has at least 10 years of eligible service credit; (B) receives or is eligible to receive an annuity under Chapter 803 or Section 814.104(a)(1), Government Code, has at least 10 years of eligible service credit, and is at least 65 years of age; or (C) receives or is eligible to receive an annuity that is based on eligibility under Section 814.002, 814.102, 814.104(b), 814.107(a), 834.101, or 839.101, Government Code. (c) An individual is eligible to participate in the group benefits program as provided by Subsection (a) if: (1) the individual retires under the jurisdiction of the Teacher Retirement System of Texas and has at least 10 years of eligible service credit, including not more than five years of military service credited in the Employees Retirement System of Texas, or has five years of eligible service credit and is the sole surviving spouse of military personnel who was killed in action; (2) the individual: (A) has accumulated eligible service credit in an amount so that the sum of the person's age and amount of service credit, including months of age and credit, equals or exceeds the number 80; or (B) is at least 65 years of age; and (3) the individual was employed, as the last state employment before retirement, including employment by a public junior college, by a state agency whose employees are authorized to participate in the group benefits program. (d) An individual is eligible to participate in the group benefits program as provided by Subsection (a) if the individual: (1) retires under the optional retirement program established by Chapter 830, Government Code, with at least 10 years of eligible service credit; and (2) receives or is eligible to receive an annuity under that program and the individual: (A) is at least 65 years of age, or would have been eligible to retire and receive a service or disability retirement annuity from the Teacher Retirement System of Texas or the Employees Retirement System of Texas in an amount such that the sum of the person's age and amount of service credit, including months of age and credit, equals or exceeds the number 80 or would have been eligible to retire and receive a disability retirement annuity from the Teacher Retirement System of Texas or the Employees Retirement System of Texas, if the individual had not elected to participate in the optional retirement program; or (B) is disabled as determined by the Employees Retirement System of Texas based on at least 10 years of eligible service credit. (e) An individual is eligible to participate in the group benefits program as provided by Subsection (a) if the individual retired under Subtitle C, Title 8, Government Code, before September 1, 1991, with at least five and less than 10 years of service credit. (f) An individual is eligible to participate in the group benefits program if the individual is certified and qualified as disabled and receives or is eligible to receive an annuity under Section 814.202, 814.207, 824.302, only as to higher education, 834.201, or 839.201, Government Code. (g) An individual is eligible to participate in the group benefits program as provided by Subsection (a) if the individual is at least 65 years of age and retires under a federal or state statutory retirement program not described by another provision of this section, to which an institution of higher education has made employer contributions, and the individual has met service requirements, age requirements, and other applicable requirements comparable to the requirements for retirement under the Teacher Retirement System of Texas, based on at least 10 years of service credit. (h) A person eligible to participate and participating in the group benefits program as an annuitant on September 1, 2003, may continue to participate in the program as an annuitant if a lapse in coverage has not occurred. (i) Subject to Section 1551.323, an individual and the individual's dependents are eligible to participate in the group benefits program as an annuitant and the dependents of an annuitant if the individual: (1) served in a position for which the individual was eligible to participate in the group benefits program under Section 1551.101 on or before August 31, 2003; and (2) at the time of retirement meets the requirements for eligibility for participation in the program as an annuitant as those requirements existed on August 31, 2003. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 366, § 2.04, 2.05, eff. Sept. 1, 2003; Acts 2003, 78th Leg., ch. 1111, § 34, eff. Sept. 1, 2003; Acts 2003, 78th Leg., ch. 1276, § 10A.401(b), eff. Sept. 1, 2003; Acts 2003, 78th Leg., 3rd C.S., ch. 3, § 16.01, eff. Jan. 11, 2004. § 1551.1021. PARTICIPATION ELIGIBILITY: CERTAIN FACULTY OF INSTITUTIONS OF HIGHER EDUCATION. (a) An adjunct faculty member at a public institution of higher education is eligible to participate in the group benefits program as an employee if the faculty member: (1) receives compensation for services rendered to a public institution of higher education as an adjunct faculty member; (2) has been employed as a faculty member by the same public institution of higher education and has taught at least one course in each regular fall and spring semester at the public institution of higher education in each of the preceding three academic years; and (3) is under contract or is scheduled to teach at least 12 semester credit hours in the academic year of coverage or, if the person is also employed by the public institution of higher education to perform nonteaching duties, is under contract or is scheduled to teach at least six semester credit hours in the academic year of coverage and has been approved by the public institution of higher education to participate in the group benefits program. (b) From money appropriated from a fund other than the general revenue fund or from money available from local sources, a public institution of higher education may, for an adjunct faculty member eligible to receive benefits under this section, contribute: (1) not more than 50 percent of the cost of basic coverage for the employee; and (2) not more than 25 percent of the cost of dependent coverage. (c) Subsection (b) does not prohibit a public institution of higher education from contributing, from money other than money appropriated from the general revenue fund, amounts that exceed the amount specified in Subsection (b) to provide coverage for a person employed by a public institution of higher education who meets the criteria for eligibility under Subsection (a). Added by Acts 2003, 78th Leg., ch. 366, § 4.04, eff. Sept. 1, 2003. § 1551.103. RIGHT TO COVERAGE. Subject to Section 1551.351, an individual eligible to participate in the group benefits program under Section 1551.101 or 1551.102 may not be denied any group coverage under this chapter. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.104. AUTOMATIC COVERAGE. (a) Subject to Sections 1551.101 and 1551.102, each full-time employee is covered automatically by the basic coverage plan for employees and each annuitant is covered by the basic coverage plan for annuitants unless: (1) participation is specifically waived as provided by Section 1551.1045; (2) the employee or annuitant is expelled from the program under Section 1551.351; or (3) eligibility is otherwise limited by this chapter. (b) This section does not apply to an employee described by Section 1551.101(e)(2). Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 366, § 2.06, eff. Sept. 1, 2003; Acts 2005, 79th Leg., ch. 899, § 4.01, eff. Aug. 29, 2005. § 1551.1045. WAIVER. (a) Subject to Subsections (b) and (c), an employee or annuitant may waive in writing any coverage provided under this chapter. (b) To waive coverage under the basic coverage plan for employees, a full-time employee must demonstrate, in the manner required by the board of trustees, that the employee is: (1) covered by another health benefit plan that provides substantially equivalent coverage, as determined by the board of trustees, to the coverage provided to employees by the basic coverage plan; or (2) eligible for benefits under the TRICARE Military Health System. (c) To waive coverage under the basic coverage plan for annuitants for the purpose of eligibility for an incentive payment under Section 1551.222, an annuitant must demonstrate, in the manner required by the board of trustees, that the annuitant is: (1) covered by another health benefit plan that provides substantially equivalent coverage, as determined by the board of trustees, to the coverage provided to annuitants by the basic coverage plan; or (2) eligible for benefits under the TRICARE Military Health System. Added by Acts 2005, 79th Leg., ch. 899, § 4.02, eff. Aug. 29, 2005. § 1551.105. DATE AUTOMATIC COVERAGE BEGINS. Automatic coverage under this subchapter begins on the date an employee or annuitant becomes eligible for coverage. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.1055. DATE ELIGIBILITY BEGINS; WAITING PERIOD. (a) Except as provided by Subsection (c) or (d), eligibility under Section 1551.101 begins on the first day of the calendar month that begins after the 90th day after the date the employee performs services for a state agency or is qualified for and begins to hold elected or appointed office. (b) Except as provided by Subsection (c), eligibility under Section 1551.102, for an individual who does not retire at the end of the last month for which the individual is on the payroll of a state agency before retirement, begins on the first day of the calendar month that begins after the 90th day after the date the individual retires. (c) The waiting period established by Subsections (a) and (b) applies only to the determination of initial eligibility to participate in the group benefits program and does not apply to the determination of initial eligibility to participate in optional and voluntary insurance coverages under the group benefits program. (d) This subsection applies only to an employee of an institution of higher education or a dependent of the employee. Notwithstanding Subsection (a), eligibility under Section 1551.101 may not begin earlier than the first day that an employee performs services for an institution of higher education if any amount paid for premium incurred before the date specified under Subsection (a) for the employee and any dependents of the employee is paid from money not appropriated from the general revenue fund, in accordance with policies and procedures established by the governing body of the institution of higher education. Added by Acts 2003, 78th Leg., ch. 366, § 2.07, eff. Sept. 1, 2003. § 1551.106. GROUP COVERAGE PLAN PURCHASED TO PROVIDE FOR AUTOMATIC COVERAGE. A group coverage plan purchased by the board of trustees must provide for the automatic coverage described by this subchapter. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.107. CONTINGENT COVERAGE. (a) Each part-time employee or employee eligible to participate in the group benefits program under Section 1551.101(e)(2) may participate in the program on execution of an appropriate application for coverage unless the employee is: (1) ineligible for the group benefits program under Section 1551.110; or (2) expelled from the group benefits program under Section 1551.351. (b) An institution of higher education shall, at the time of employment, notify each of the institution's employees eligible to participate in the group benefits program under Section 1551.101(e)(2) of the employee's eligibility to participate. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.108. CONTINUING ELIGIBILITY OF CERTAIN PERSONS WITH LEGISLATIVE SERVICE OR EMPLOYMENT. Subject to Section 1551.351, on application to the board of trustees and on arrangement for payment of contributions and postage: (1) an individual who has at least eight years of service credit in the Employees Retirement System of Texas for service as a member of the legislature, on ending the individual's service in the legislature, remains eligible for participation in the group benefits program; and (2) an individual who has at least 10 years of service credit in the Employees Retirement System of Texas as an employee of the legislature, on ending the individual's service for the legislature, remains eligible for participation in the group benefits program. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.109. CONTINUING ELIGIBILITY OF CERTAIN MEMBERS OF BOARDS, COMMISSIONS, AND INSTITUTIONS OF HIGHER EDUCATION. (a) Subject to Section 1551.351, on application to the board of trustees and arrangement for payment of contributions, an individual participating in the group benefits program on August 31, 2003, as a current or former member of a governing body with administrative responsibility over a state agency created under a statute of this state that has statewide jurisdiction and whose employees are covered by this chapter or as a current or former member of the State Board of Education or the governing body of an institution of higher education remains eligible for participation in a health benefit plan offered under this chapter if a lapse in coverage has not occurred. (b) A participant described by this section may not receive a state contribution for premiums. The governing body of an institution of higher education may pay from local funds part or all of the contributions the state would pay for similar coverage of other participants in the group benefits program. (c) The participant's contribution for coverage under a health benefit plan may not be greater than the contribution for continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (Pub. L. No. 99-272). Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 366, § 2.09, eff. Sept. 1, 2003. § 1551.110. INELIGIBILITY OF CERTAIN JUNIOR COLLEGE EMPLOYEES. (a) Except as provided by Subsections (c) and (d), an employee of a public junior college who is employed to perform services outside this state is not eligible to participate in the group benefits program unless the college elects, under procedures adopted by the board of trustees, to permit the employee to participate in the group benefits program. (b) For purposes of this section, an employee is employed to perform services outside this state if 75 percent or more of the services performed by the employee are performed outside this state. (c) This section does not apply to an individual employed by a public junior college on August 31, 1999. That individual remains eligible to participate in the group benefits program in the same manner as other employees of the college even if the individual's employment by the college is not continuous. (d) An employee of a public junior college who is employed to perform services outside this state and who is employed after June 18, 1999, is eligible to participate in a group coverage provided under this chapter if the coverage is provided under an insurance policy, contract, or other agreement that: (1) is in effect on June 18, 1999; and (2) requires that the employee be eligible to participate in the coverage provided under the agreement. (e) Eligibility to participate in a coverage under Subsection (d) ends on the date the insurance policy, contract, or other agreement is terminated or renewed. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.111. PARTICIPATION BY CERTAIN RETIREMENT SYSTEMS. (a) The Texas Municipal Retirement System and the Texas County and District Retirement System shall participate in the group benefits program in the manner described by this section. (b) Participation is limited to: (1) an officer or employee of either system who has been an officer or employee of either system following completion of the waiting period described by Section 1551.1055; (2) an eligible dependent of an officer or employee of either system described by Subdivision (1); (3) an individual who: (A) was an officer or employee of either system; (B) has retired from either system, subject to Section 1551.1055; (C) receives or is eligible to receive an annuity from either system or under Chapter 803, Government Code, based on at least 10 years of service credit and is at least 65 years of age; and (D) has at least 10 years of service credit with a state agency whose employees are authorized to participate in the group benefits program; and (4) an eligible dependent of a retired officer or employee described by Subdivision (3). (c) Except as provided by Section 1551.114, participation in the group benefits program does not extend to: (1) the governing body of either system; (2) a municipality or subdivision participating in either system; or (3) a trustee, officer, or employee, or a dependent of a trustee, officer, or employee, of a participating municipality or subdivision. (d) A participant described by this section may not receive a state contribution for premiums. (e) Subject to Section 1551.323, an individual and the individual's dependents are eligible to participate in the group benefits program as an annuitant and the dependents of an annuitant as described under this section if the individual: (1) served as an officer or employee as described by Subsection (b)(1) on or before August 31, 2003; and (2) at the time of retirement meets the requirements for eligibility for participation in the program as an annuitant as those requirements existed on August 31, 2003. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 366, § 2.10, eff. Sept. 1, 2003; Acts 2003, 78th Leg., ch. 1030, § 1.02, eff. Sept. 1, 2003; Acts 2003, 78th Leg., 3rd C.S., ch. 3, § 16.02, eff. Jan. 11, 2004. § 1551.112. PARTICIPATION BY TEXAS TURNPIKE AUTHORITY. (a) An individual may participate in the group benefits program as an annuitant, subject to Section 1551.1055, and may obtain coverage for the individual's dependents as any other participating annuitant if the individual: (1) began employment with, or became an officer of, the Texas Turnpike Authority within the three-year period preceding August 31, 1997; (2) was an officer or employee of the Texas Turnpike Authority on August 31, 1997; (3) became an officer or employee of the North Texas Tollway Authority on September 1, 1997; and (4) retires or is eligible to retire with at least 10 years of service credit under the proportionate retirement program established by Chapter 803, Government Code, or under a public retirement system to which Chapter 803 applies and is at least 65 years of age. (b) The North Texas Tollway Authority is responsible for payment of the contributions the state would make if the annuitant were a state employee. (c) Subject to Section 1551.323, an individual and the individual's dependents are eligible to participate in the group benefits program as an annuitant and the dependents of an annuitant as described under this section if the individual: (1) served in a position described by Subsection (a) on or before August 31, 2003; and (2) at the time of retirement meets the requirements for eligibility for participation in the program as an annuitant as those requirements existed on August 31, 2003. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 366, § 2.11, eff. Sept. 1, 2003; Acts 2003, 78th Leg., 3rd C.S., ch. 3, § 16.03, eff. Jan. 11, 2004. § 1551.113. PARTICIPATION BY CERTAIN EMPLOYEES WHOSE POSITIONS ARE PRIVATIZED OR ELIMINATED. (a) An individual described by Subsection (b) is entitled to receive state contributions required to provide health benefit plan coverage under the group benefits program for two months after the effective date of the individual's separation from state service. (b) This section applies only to an individual who separates from state service and receives a cash payment under an incentive program implemented by the Texas Department of Human Services or the Texas Department of Health for certain employees whose positions are eliminated as a result of privatization or other reductions in services provided by those agencies. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.114. PARTICIPATION BY COMMUNITY SUPERVISION AND CORRECTIONS DEPARTMENTS. (a) In this section, "employee of a community supervision and corrections department" means an employee of a department established under Chapter 76, Government Code. (b) An employee or retired employee of a community supervision and corrections department shall be treated as an employee or annuitant, as applicable, for purposes of this chapter only as provided by this section. (c) A community supervision and corrections department of this state participates in the group benefits program administered by the board of trustees under this chapter. Participation under this section is limited to: (1) active employees of a community supervision and corrections department; (2) retired employees of a community supervision and corrections department who retire on or after September 1, 2004, and who: (A) have been employed by one or more community supervision and corrections departments for a total of at least 10 years of creditable service; and (B) meet all the requirements for retirement benefits prescribed by the Texas County and District Retirement System; and (3) eligible dependents of the active employees and retired employees described by Subdivisions (1) and (2). (d) Each full-time active employee of a community supervision and corrections department is automatically covered by the basic coverage for employees unless the employee specifically waives coverage or unless the employee is expelled from the program. Each part-time active employee of a community supervision and corrections department is eligible to participate in the group benefits program on application in the manner provided by the board of trustees, unless the employee has been expelled from the program. Each community supervision and corrections department shall notify each of its part-time employees of the employee's eligibility for participation. (e) An active employee described by Subsection (d) is not eligible to receive a state contribution under Subchapter G for premiums. The community justice assistance division of the Texas Department of Criminal Justice is responsible for payment of the contributions for each of a department's participating active employees and the employees' dependents that the state would make under Subchapter G if the employees were state employees. Each covered active employee shall pay that portion of the cost of group coverages selected by the employee that exceeds the amount of division contributions. (f) A retired employee is eligible to participate in the group benefits program on application to the board of trustees. On application, a retired employee is automatically covered by the basic coverage for annuitants unless the retired employee specifically waives coverage or unless the retired employee is expelled from the program. A retired employee is not eligible to receive a state contribution under Subchapter G for premiums. The community justice assistance division of the Texas Department of Criminal Justice is responsible for payment of the contributions for each of a department's retired employees and the retired employees' participating dependents that the state would make under Subchapter G if the retired employees were retired state employees. Each participating retired employee shall pay that portion of the cost of group coverage selected by the retired employee that exceeds the amount of division contributions. The retired employee shall pay contributions required from the retired employee in the manner prescribed by the board of trustees. Each community supervision and corrections department shall notify each of its retired employees of the eligibility for participation and the costs associated with participation. (g) All contributions received under this section from the community justice assistance division of the Texas Department of Criminal Justice, active employees of community supervision and corrections departments, and retired employees of community supervision and corrections departments for basic, optional, and voluntary coverages under the group benefits program shall be paid into the employees life, accident, and health insurance and benefits fund and shall be used by the board of trustees to provide those coverages as provided by this chapter. Added by Acts 2003, 78th Leg., ch. 1030, § 1.03, eff. Sept. 1, 2003.SUBCHAPTER D. COVERAGE FOR DEPENDENTS § 1551.151. ENTITLEMENT TO COVERAGE. An individual who is eligible to participate in the group benefits program under Section 1551.101 or 1551.102 is entitled to secure for a dependent of the individual any group coverages provided under this chapter, as determined by the board of trustees and subject to the exceptions provided by this subchapter. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.152. ELIGIBILITY OF FOSTER CHILD. A foster child is eligible for health benefit plan coverage only if the child is not covered by another governmental health program. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.153. PARTICIPANT RESIDING OUTSIDE OF SERVICE AREA. An individual who is eligible to participate in the group benefits program under Section 1551.101 or 1551.102 and who resides outside of a health maintenance organization service area is entitled to group coverages for a dependent of the individual without evidence of insurability if the individual applies for the coverage for the dependent during the annual enrollment period. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.154. EMPLOYEE PAYMENTS. In the manner and form the board of trustees determines, payments required of an employee in excess of employer contributions shall be made by: (1) a deduction from the employee's monthly pay or retirement benefits; or (2) a reduction of the employee's salary. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.155. COVERAGE OPTIONS FOR SURVIVING SPOUSE. (a) A surviving spouse of an individual who is eligible to participate in the group benefits program under Section 1551.101 or 1551.102 and who is entitled to monthly benefits paid by a retirement system named in this chapter may, following the death of the individual, elect to retain: (1) the spouse's authorized coverages; and (2) authorized coverages for any dependent of the spouse. (b) The coverage is at the group rate for other participants if: (1) the coverage was previously secured by the deceased participant for the surviving spouse or dependent; and (2) the surviving spouse directs the applicable retirement system to deduct required contributions from the monthly benefits paid to the spouse by the retirement system. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.156. COVERAGE OPTIONS FOR DEPENDENT WHEN THERE IS NO SURVIVING SPOUSE. (a) A surviving dependent of an annuitant who was receiving monthly benefits paid by a retirement system named in this chapter may, following the death of the annuitant if there is not a surviving spouse, elect to retain any coverage previously secured by the annuitant until the dependent becomes ineligible for coverage for a reason other than the death of the member of the group. (b) The coverage is at the group rate for other participants. (c) A dependent who elects to retain coverage under this section and who is entitled to monthly benefits from a retirement system named in this chapter based on the service of the deceased annuitant must direct the retirement system to deduct required contributions for the coverage from the monthly benefits paid the surviving dependent by the retirement system. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.157. COVERAGE OPTIONS AFTER EXPIRATION OF ANNUITY OPTION. The surviving spouse or dependent of an employee or annuitant may retain authorized coverages after expiration of a time-certain annuity option selected by the employee or annuitant. To retain the coverages, the surviving spouse or dependent must make advance payment of contributions to the Employees Retirement System of Texas under rules adopted by the board of trustees. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.158. REINSTATEMENT OF HEALTH BENEFIT PLAN COVERAGE BY CERTAIN DEPENDENTS. (a) A dependent child who is unmarried and whose coverage under this chapter ends when the child becomes 25 years of age may, on expiration of continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (Pub. L. No. 99-272), reinstate health benefit plan coverage under this chapter if the child, or the child's participating parent, pays the full cost of the health benefit plan coverage. (b) A state contribution is not payable for coverage under this section. (c) Coverage under this section terminates at the end of the month in which the child marries. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.159. COVERAGE FOR CERTAIN DEPENDENT CHILDREN OF EMPLOYEES. (a) Subject to any applicable limit in the General Appropriations Act, the board of trustees shall use money appropriated for employer contributions to fund 80 percent of the cost of basic coverage for a child who: (1) is a dependent of an employee; (2) would be eligible, if the child were not the dependent of the employee, for benefits under the state child health plan established under Chapter 62, Health and Safety Code; and (3) is not eligible for the state Medicaid program. (b) The board of trustees shall notify employees that: (1) they may be eligible for dependent child coverage under Subsection (a); and (2) an employee may apply for the coverage as provided by Subsection (c). (c) To obtain dependent child coverage under Subsection (a), the employee must apply to the Texas Department of Human Services or other agency designated by the Health and Human Services Commission to perform eligibility screening under this section. The eligibility screening shall be coordinated with eligibility screening for the state Medicaid program. The agency that performs the eligibility screening shall certify to the board of trustees in writing whether a child is eligible for dependent child coverage under Subsection (a). (d) If an employee does not obtain dependent child coverage under this section at the time the individual begins service to the state, the employee may apply for the coverage during the annual open enrollment period applicable to the employee's coverage under this chapter. The board of trustees may: (1) continue the coverage until the next annual open enrollment period applicable to the employee's coverage, without regard to any change in status of the child; or (2) adopt rules requiring an employee, during the period the coverage is in effect, to report a change in status that would make the dependent child ineligible for coverage and may terminate the coverage on receipt of the report of a change in status. (e) The board of trustees may require an employee to reapply for dependent child coverage under this section during each annual open enrollment period applicable to the employee's coverage. The board of trustees and the Texas Department of Human Services or other agency designated by the Health and Human Services Commission to perform eligibility screening under this section shall cooperate to develop a cost-effective method for annual reevaluation of eligibility determinations for dependent child coverage under this section. (f) The board of trustees may pay a higher percentage of the cost of basic coverage for a child described by Subsection (a) than the percentage required by Subsection (a) if money becomes available for that purpose. (g) If the program established under Chapter 62, Health and Safety Code, using federal funding under Title XXI, Social Security Act (42 U.S.C. Section 1397aa et seq.), as amended, is terminated, state contributions for benefits for those eligible under Subsection (a) also terminates. (h) A child enrolled in dependent child coverage under this section is subject to the same requirements and restrictions relating to income eligibility, continuous coverage, and enrollment, including applicable waiting periods, as a child enrolled in the state child health plan under Chapter 62, Health and Safety Code. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 198, § 2.135(a), eff. Sept. 1, 2003.SUBCHAPTER E. GROUP COVERAGES § 1551.201. ESTABLISHMENT. (a) The board of trustees by rule shall establish group coverage plans for individuals eligible to participate in the group benefits program. (b) The group coverage plans may, in the board of trustees' discretion, include: (1) life coverage; (2) accidental death and dismemberment coverage; (3) health benefit coverage, including coverage for: (A) hospital care and benefits; (B) surgical care and treatment; (C) medical care and treatment; (D) dental care; (E) obstetrical benefits; (F) prescribed drugs, medicines, and prosthetic devices; and (G) supplemental benefits, supplies, and services in accordance with this chapter; (4) coverage providing protection against either long-term or short-term loss of salary; and (5) any other group coverage that the board of trustees, in consultation with the advisory committee, considers advisable. (c) The group coverage plans for annuitants may, at the discretion of the board of trustees, be separate or a part of the group coverage plans for employees. If the trustee establishes separate group coverage plans for annuitants, the separate group coverage plans must include both full benefits and supplemental coverage options. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 1276, § 10A.412(b), eff. Sept. 1, 2003. § 1551.202. AUTHORITY TO DEFINE BASIC COVERAGES. (a) The board of trustees may define the basic coverage applicable to each individual for whom coverage is automatic unless participation is specifically waived. (b) The board of trustees may define different basic coverage plans for individuals eligible to participate in the uniform program under Section 1551.101 and for individuals eligible to participate in the group benefits program under Section 1551.102. (c) Basic coverage must include basic health coverage. The coverage may be offered through any health benefit plan. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.203. AUTHORITY TO DEFINE OPTIONAL COVERAGES. The board of trustees may define optional coverages for which the board may make available employer contributions under Section 1551.303. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.204. AUTHORITY TO DEFINE VOLUNTARY COVERAGES. Subject to Section 1551.304, the board of trustees may define voluntary coverages. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.205. LIMITATIONS. The board of trustees may not contract for or provide a coverage plan that: (1) excludes or limits coverage or services for acquired immune deficiency syndrome, as defined by the Centers for Disease Control and Prevention of the United States Public Health Service, or human immunodeficiency virus infection; (2) provides coverage for serious mental illness that is less extensive than the coverage provided for any physical illness; or (3) may provide coverage for prescription drugs to assist in stopping smoking at a lower benefit level than is provided for other prescription drugs. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 213, § 1, eff. Sept. 1, 2003. § 1551.206. CAFETERIA PLAN. (a) The board of trustees may develop, implement, and administer a cafeteria plan if the board determines that establishment of the plan: (1) is feasible; (2) would be beneficial to the state and to employees who would be eligible to participate in the plan; and (3) would not adversely affect the coverage plans provided under the group benefits program. (b) The board of trustees may include in the cafeteria plan any benefit that may be included in a cafeteria plan under federal law. (c) The board of trustees may enter into a contract or agreement with an independent and qualified agency, individual, or entity to: (1) develop, implement, or administer a cafeteria plan; or (2) assist in those activities. (d) The board of trustees may adopt an order terminating the cafeteria plan and providing a procedure for the orderly withdrawal of the state and its employees from the plan if the board determines that a cafeteria plan established under this section is no longer advantageous to the state or its employees. (e) The board of trustees may adopt rules for the use of a debit card or other similar technology for claims administration under this section. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 1276, § 10A.408(a), eff. Sept. 1, 2003. § 1551.207. PREMIUM CONVERSION BENEFIT PORTION OF CAFETERIA PLAN. Each employee must be enrolled in the premium conversion benefit portion of a cafeteria plan established under Section 1551.206. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.208. DETERMINATION TO SELF-FUND. (a) The board of trustees, in the board's sole discretion, shall determine those coverage plans that the board does not intend to purchase but intends to provide directly from the employees life, accident, and health insurance and benefits fund. (b) The board of trustees, in the board's sole discretion and under conditions the board approves, may reinsure any coverage the board determines will be provided directly from the employees life, accident, and health insurance and benefits fund under Subsection (a). Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.209. COVERAGE EXEMPT FROM INSURANCE LAW. A coverage plan provided under this chapter is exempt from any other insurance law, including common law, that does not expressly apply to the plan or this chapter. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 1111, § 35, eff. Sept. 1, 2003. § 1551.210. ACTUARIAL ADVICE FOR SELF-FUNDED COVERAGE. A qualified actuary selected by the board of trustees shall advise the board regarding an actuarially sound level of contributions required to provide coverage directly from the employees life, accident, and health insurance and benefits fund. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.211. CONTINGENCY RESERVE FUND FOR SELF-FUNDED COVERAGE. (a) Before the first day of each state fiscal biennium, the board of trustees shall estimate for an average 60-day period during the biennium the expenditures from the employees life, accident, and health insurance and benefits fund anticipated for self-funded coverage plans, considering projected claims and administrative expenses for those plans. (b) The board of trustees shall place the estimated amount in a contingency reserve fund to provide for adverse fluctuations in claims or administrative expenses. (c) The board of trustees shall include in each request for legislative appropriations to the group benefits program the amount the board determines to be necessary to maintain the contingency reserve fund at the level required by this section. (d) The board of trustees may invest and reinvest any portion of the contingency reserve fund under the standard of care provided by Section 815.307, Government Code, considering the functional need to provide for adverse fluctuations in claims or administrative expenses. (e) The interest on, earnings of, and proceeds from the sale of investments of assets in the contingency reserve fund shall be credited to the fund. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.212. FIRMS TO ADMINISTER SELF-FUNDED COVERAGE. (a) For those coverage plans that the board of trustees funds from the employees life, accident, and health insurance and benefits fund, the board may contract with one or more qualified and experienced administering firms to administer the plans in the best interest of the participants in the group benefits program. (b) The contract may be awarded only after a competitive bid process. The board of trustees is not required to select the lowest bid but shall take into consideration other relevant criteria, including ability to service large group programs and past experience. (c) If the board of trustees selects a firm whose bid was not the lowest or whose bid differs from that specified, the board shall fully justify and explain the reasons for the action in the minutes of the next meeting of the board. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.213. BIDS FOR PURCHASED COVERAGE. (a) For those coverage plans for which the board of trustees determines to purchase coverage, the board shall notify eligible carriers: (1) that competitive bidding will be conducted; and (2) of the date by which an eligible carrier must submit a bid on the contract to the board. (b) The board of trustees shall submit the group coverages provided by the group benefits program for competitive bidding at least every six years. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.214. SELECTION OF BIDS FOR PURCHASED COVERAGE. (a) An actuary selected by the board of trustees shall advise the board as to the actuarial soundness of the bids received under Section 1551.213. (b) The board of trustees: (1) shall select carriers to provide services that will be in the best interest of participants; and (2) is not required to select the lowest bid but shall take into consideration other relevant criteria, including ability to service contracts, past experience, and financial ability. (c) If the board of trustees selects a carrier whose bid differs from that advertised, the board shall record the deviation and shall fully justify and explain the reasons for the deviation in the minutes of the next meeting of the board. (d) The board of trustees shall notify the carriers that submitted bids of the results of the bidding. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.215. ACCOUNTING BY CARRIER PROVIDING PURCHASED COVERAGE. (a) A carrier providing a coverage purchased under this chapter shall provide an accounting to the board of trustees not later than the 90th day after the end of each plan year. (b) The accounting must be in a form approved by the board of trustees. (c) The accounting must state for the period from the coverage's date of issue to the end of the plan year: (1) the amounts of contributions accrued under the coverage; (2) the total of mortality and other claims, charges, losses, and expenses incurred; and (3) the amounts of the carrier's allowance for a reasonable profit and contingencies. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.216. SPECIAL CONTINGENCY RESERVE. (a) A carrier issuing a group coverage plan under this chapter shall hold as a special contingency reserve an amount that equals the amount by which the amount described by Section 1551.215(c)(1) exceeds the sum of the amounts described by Sections 1551.215(c)(2) and (3). (b) The carrier may use the special contingency reserve only for charges, claims, and expenses under the plan. (c) The special contingency reserve earns interest at a rate determined before each plan year by the carrier and approved by the board of trustees as consistent with the rates generally used by the carrier for similar funds held under other group coverage plans. (d) On a determination by the board of trustees that the special contingency reserve has attained an amount estimated by the board to make satisfactory provision for adverse fluctuations in future charges, claims, or expenses under the plan, any further excess shall be deposited to the credit of the employees life, accident, and health insurance and benefits fund. (e) On discontinuation of a plan, any balance remaining in the special contingency reserve after all charges have been made shall be deposited to the credit of the employees life, accident, and health insurance and benefits fund. The carrier may make the deposit in equal monthly installments over a period of not more than two years. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.217. USE OF EMPLOYEE'S SALARY IN COMPUTATION OF PREMIUM OR COVERAGE. (a) If the board of trustees establishes a group coverage plan that protects against either long-term or short-term loss of salary, the board may use an employee's annual salary in computing the amount of the employee's premium or coverage, or both, under the plan. (b) In this section, an employee's annual salary includes benefit replacement pay under Subchapter H, Chapter 659, Government Code, as added by Chapter 417, Acts of the 74th Legislature, Regular Session, 1995. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.218. PRIOR AUTHORIZATION FOR CERTAIN DRUGS. (a) In this section, "drug formulary" means a list of drugs preferred for use and eligible for coverage under a health benefit plan. (b) A health benefit plan provided under this chapter that uses a drug formulary in providing a prescription drug benefit must require prior authorization for coverage of the following categories of prescribed drugs if the specific drug prescribed is not included in the formulary: (1) a gastrointestinal drug; (2) a cholesterol-lowering drug; (3) an anti-inflammatory drug; (4) an antihistamine drug; and (5) an antidepressant drug. (c) Every six months the board of trustees shall submit to the comptroller and Legislative Budget Board a report regarding any cost savings achieved in the group benefits program through implementation of the prior authorization requirement of this section. A report must cover the previous six-month period. Added by Acts 2003, 78th Leg., ch. 213, § 2, eff. Sept. 1, 2003. § 1551.219. MAIL ORDER REQUIREMENT FOR PRESCRIPTION DRUG COVERAGE PROHIBITED.Text of section as added by Acts 2003, 78th Leg., ch. 213, § 2 The board of trustees or a health benefit plan under this chapter that provides benefits for prescription drugs may not require a participant in the group benefits program to purchase a prescription drug through a mail order program. The board or health benefit plan shall require that a participant who chooses to obtain a prescription drug through a retail pharmacy or other method other than by mail order pay a deductible, copayment, coinsurance, or other cost-sharing obligation to cover the additional cost of obtaining a prescription drug through that method rather than by mail order. Added by Acts 2003, 78th Leg., ch. 213, § 2, eff. Sept. 1, 2003. For text of section as added by Acts 2003, 78th Leg., ch. 589, § 3, see § 1551.219, post § 1551.219. DISEASE MANAGEMENT SERVICES.Text of section as added by Acts 2003, 78th Leg., ch. 589, § 3 (a) In this section, " disease management services" means services to assist an individual manage a disease or other chronic health condition, such as heart disease, diabetes, respiratory illness, end-stage renal disease, HIV infection, or AIDS, and with respect to which the board of trustees identifies populations requiring disease management. (b) A group health benefit plan offered under the group benefits program must provide disease management services or coverage for disease management services in the manner required by the board of trustees, including: (1) patient self-management education; (2) provider education; (3) evidence-based models and minimum standards of care; (4) standardized protocols and participation criteria; and (5) physician-directed or physician-supervised care. Added by Acts 2003, 78th Leg., ch. 589, § 3, eff. June 20, 2003. For text of section as added by Acts 2003, 78th Leg., ch. 213, § 2, see § 1551.219, ante. § 1551.220. BENEFICIARY CAUSING DEATH OF PARTICIPANT OR BENEFICIARY OF PARTICIPANT. (a) A benefit payable on the death of a participant or the beneficiary of a participant in the group benefits program may not be paid to a person convicted of causing that death but instead is payable as if the convicted person had predeceased the decedent. (b) The Employees Retirement System of Texas is not required to change the recipient of benefits under this section unless it receives actual notice of the conviction of a beneficiary. However, the retirement system may delay payment of a benefit payable on the death of a participant or beneficiary of a participant pending the results of a criminal investigation and of legal proceedings relating to the cause of death. (c) For the purposes of this section, a person has been convicted of causing the death of a participant or beneficiary of a participant if the person: (1) pleads guilty or nolo contendere to, or is found guilty by a court of, causing the death of the participant or beneficiary of a participant, regardless of whether sentence is imposed or probated; and (2) has no appeal of the conviction pending and the time provided for appeal has expired. Added by Acts 2005, 79th Leg., ch. 347, § 27, eff. Sept. 1, 2005. § 1551.221. VOLUNTARY SUPPLEMENTAL HEALTH COVERAGE FOR INDIVIDUALS ELIGIBLE UNDER TRICARE MILITARY HEALTH SYSTEM.Text of section as added by Acts 2005, 79th Leg., ch. 178, § 1. (a) The board of trustees may offer a voluntary supplemental health coverage program under this section. (b) Under the supplemental health coverage program, an individual who is eligible to participate in the group benefits program and who is also eligible for benefits under the TRICARE Military Health System may elect to receive primary coverage under the TRICARE Military Health System. An individual participating in the supplemental health coverage program does not receive basic coverage through the group benefits program, but receives supplemental health coverage under this section. (c) The cost of supplemental health coverage provided under this section shall be paid from state, employer, and employee contributions in the same manner that the cost of basic coverage is paid under Subchapter G. (d) The board of trustees may purchase the supplemental health coverage in accordance with Sections 1551.213-1551.216, or, if the board of trustees determines that it would be cost-effective, may provide the supplemental health coverage directly from the employees life, accident, and health insurance benefits fund in accordance with Sections 1551.208-1551.212. (e) The board of trustees may not implement a supplemental health coverage program under this section if the board finds that the program would not be cost-effective or would otherwise not be advantageous to the state or program participants. (f) The board of trustees may coordinate purchasing, contracting, or administrative functions relating to the supplemental health coverage program with: (1) an agency or a political subdivision of this state; or (2) a retirement system that provides benefits to retired employees of this state or a political subdivision of this state. (g) The board of trustees may enter into a contract to implement Subsection (f), including an interagency contract with an agency of this state. (h) The board of trustees may adopt rules to implement this section. Added by Acts 2005, 79th Leg., ch. 178, § 1, eff. May 27, 2005. For text of section as added by Acts 2005, 79th Leg., ch. 899, § 4.03, see § 1551.221, post. § 1551.221. OPTIONAL SUPPLEMENTAL HEALTH COVERAGE FOR INDIVIDUALS ELIGIBLE UNDER TRICARE MILITARY HEALTH SYSTEM.Text of section as added by Acts 2005, 79th Leg., ch. 899, § 4.03 (a) The board of trustees shall offer, as an optional coverage under the group benefits program, a supplemental health coverage program. (b) Under the supplemental health coverage program, an employee or annuitant who is eligible to participate in the group benefits program and who is also eligible for benefits under the TRICARE Military Health System may elect to receive primary coverage under the TRICARE Military Health System. An employee or annuitant participating in the supplemental health coverage program must waive basic coverage through the group benefits program, but receives supplemental health coverage under this section. (c) The cost of supplemental health coverage provided under this section may be paid in the same manner as the cost of other optional coverage is paid under Subchapter G. (d) The board of trustees shall contract to purchase the supplemental health coverage in accordance with Sections 1551.213-1551.216. (e) The board of trustees may adopt rules to implement this section. Added by Acts 2005, 79th Leg., ch. 899, § 4.03, eff. Aug. 29, 2005. For text of section as added by Acts 2005, 79th Leg., ch. 178, § 1, see § 1551.221, ante. § 1551.222. INCENTIVE PAYMENTS. (a) The board of trustees may allow an incentive payment under this section to an employee or annuitant who elects to waive coverage under the basic coverage plan for employees or annuitants as provided by Section 1551.1045(b) or (c). (b) The incentive payment authorized by this section is in the amount authorized by the General Appropriations Act and may be used by the employee or annuitant, in the manner prescribed by the board of trustees, only to pay for other group coverage plans provided under the group benefits program, including the supplemental health coverage offered under Section 1551.221. (c) The board of trustees, at the time of initial enrollment in the group benefits program and during subsequent open-enrollment periods, shall inform employees and annuitants that they may make an election described by Subsection (a), if eligible, and receive any authorized incentive payment. Added by Acts 2005, 79th Leg., ch. 899, § 4.03, eff. Aug. 29, 2005.SUBCHAPTER F. GROUP LIFE AND ACCIDENTAL DEATH AND DISMEMBERMENT INSURANCE COVERAGE PLAN § 1551.251. GROUP LIFE INSURANCE COVERAGE PLAN. (a) The board of trustees shall administer a group life insurance coverage plan to provide each individual eligible to participate in the group benefits program under Section 1551.101 or 1551.102 group life coverages that provide payments and benefits in an amount and manner the board determines. (b) The group life insurance coverage plan is subject to the conditions and limitations of: (1) this chapter and rules adopted under this chapter; and (2) the policy or policies purchased by the board of trustees. (c) The board of trustees may include the dependents of individuals eligible to participate in the group benefits program under Section 1551.101 or 1551.102 in the group life insurance coverage plan. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.252. ADDITIONAL TERM LIFE INSURANCE. Notwithstanding any other provision of this code, the board of trustees may authorize: (1) dependent term life insurance in an amount equal to the term life insurance provided under the basic coverage; and (2) optional term life insurance in an amount equal to four times the employee's annual salary plus the amount of term life insurance provided under the basic coverage. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.253. DETERMINATION OF ANNUAL SALARY. (a) To implement this subchapter, the board of trustees shall: (1) adopt rules for the conversion of other than annual rates of salary; and (2) specify the types of pay included in annual salary and any other matter necessary to implement this subchapter. (b) For the purpose of determining the amount of an employee's optional term life insurance coverage, an employee's annual salary includes benefit replacement pay under Subchapter H, Chapter 659, Government Code, as added by Chapter 417, Acts of the 74th Legislature, Regular Session, 1995. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.254. ACCELERATED LIFE INSURANCE BENEFITS. (a) In addition to exercising the authority granted under Subchapter B, Chapter 1111, the board of trustees may adopt rules to provide for payment of accelerated life insurance benefits to a terminally ill, terminally injured, or permanently disabled participant, including an annuitant participating in optional term life insurance coverage, in amounts that benefit the participant without increasing the cost of providing the benefits. (b) The amount of any payment of an accelerated benefit under a rule adopted under this section must be deducted from the amount that would otherwise be payable as a death benefit. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.255. INCLUSION OF PROVISIONS FOR VIATICAL SETTLEMENTS. (a) In this section, "viatical settlement" has the meaning assigned by Section 1111.001. (b) The board of trustees shall adopt rules that require a group life insurance coverage plan established under this chapter to allow a participant in the plan to make, in conjunction with receipt of a viatical settlement, an irrevocable designation of beneficiary for part or all of the group life coverage benefits. (c) A viatical settlement is not valid for any coverage under the group benefits program unless the participant has a terminal illness or terminal injury, as defined by rules adopted by the board of trustees, at the time application for benefits is made. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.256. OPTIONAL TERM LIFE INSURANCE COVERAGE AFTER RETIREMENT. (a) A participant in the optional group term life insurance coverage plan may maintain optional term life insurance coverage after retirement in addition to basic term life insurance coverage after retirement. (b) The board of trustees may adopt rules to implement and administer Subsection (a). (c) Under Subsection (a), the participant may maintain an amount of optional term life insurance coverage on the participant's life on the date of retirement, not to exceed two times the participant's annual salary on the last September 1 before retirement and subject to benefit reduction factors based on age as determined by the board of trustees. (d) The board of trustees shall determine the premium rate for optional term life insurance coverage for annuitants under Subsection (a). The rate must be comparable to the premium rate for optional term life insurance coverage for employees of the same age. (e) As an alternative to the optional term life insurance coverage plan, an annuitant may choose a minimum optional term life insurance coverage amount not subject to benefit reduction factors based on age, with a coverage amount and premium rate determined by the board of trustees. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.257. ELIGIBILITY OF ANNUITANT FOR EXTENDED INSURANCE BENEFITS. An annuitant participating in optional term life insurance coverage is not eligible for premium-waived extended insurance benefits if the total disability begins after the date of retirement. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.258. TERMINATION OF ACCIDENTAL DEATH AND DISMEMBERMENT INSURANCE COVERAGE ON RETIREMENT. Without regard to the employee's age, accidental death and dismemberment insurance coverage ends on the employee's date of retirement. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.259. ORDER OF PRECEDENCE OF PAYMENT TO SURVIVORS. (a) The amount of group life coverage and group accidental death and dismemberment coverage in force for a participant on the date the participant dies shall be paid, on the establishment of a valid claim, to a person surviving the death in the following order of precedence: (1) to the beneficiary designated by the participant in a signed and witnessed document mailed before the death of the participant; (2) if a beneficiary is not designated, to the spouse of the participant; (3) if Subdivisions (1) and (2) do not apply, to the children of the participant and descendants of the deceased children by representation; (4) if Subdivisions (1)-(3) do not apply, to the parents of the participant or the survivor of the parents; (5) if Subdivisions (1)-(4) do not apply, to the executor or administrator of the estate of the participant; or (6) if Subdivisions (1)-(5) do not apply, to other relatives of the participant entitled under applicable laws of the participant's domicile on the date of the participant's death. (b) If before the first anniversary of the date of death of the participant a claim for payment has not been filed by a person entitled under the order of precedence in Subsection (a), or if payment to the person within that period is prohibited by any statute or rule, payment may be made in the order of precedence as if the person had predeceased the participant. (c) If before the second anniversary of the date of death of the participant a claim for payment has not been filed by a person entitled under the order of precedence in Subsection (a), and neither the board of trustees nor the office established by the administering carrier has received notice that the claim will be made, payment may be to a claimant equitably entitled to the payment as determined by the board. (d) If before the fourth anniversary of the date of death of the participant payment has not been made under this section and a claim for payment by a person entitled under this section is not pending, the amount payable escheats to the credit of the employees life, accident, and health insurance and benefits fund. (e) The board of trustees shall give effect to a full or partial disclaimer of benefits executed in accordance with Section 37A, Texas Probate Code. (f) Payment under Subsection (b) or (c) bars recovery by any other person. (g) For purposes of Subsection (a)(1), a designation, change, or cancellation of a beneficiary in a document, including a will, that is not executed and filed in the manner described by that subsection is not valid. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. Amended by Acts 2005, 79th Leg., ch. 347, § 28, eff. Sept. 1, 2005.SUBCHAPTER G. CONTRIBUTIONS AND COSTS § 1551.301. FUNDING OF BASIC COVERAGE. The board of trustees shall use the amount appropriated for employer contributions in the manner provided by this subchapter to fund the basic coverage. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.3015. COST ASSESSMENT FOR CERTAIN PARTICIPANTS. Notwithstanding any other provision of law, the board of trustees may impose against an employer whose employees are not paid salaries from amounts appropriated by the General Appropriations Act and whose participation in the group benefits program begins after August 31, 2003, as a condition for participation in the program, a one-time assessment of administrative costs for participation of the employees and annuitants in the program, which may include the actuarial costs of including the group in the program and a participation premium determined by the board. The board of trustees shall deposit all amounts recovered under this section in the employees life, accident, and health insurance and benefits fund. Added by Acts 2003, 78th Leg., ch. 366, § 2.08, eff. Sept. 1, 2003. § 1551.302. ALLOCATION OF EMPLOYER CONTRIBUTIONS. (a) The board of trustees may equitably allocate to each health benefit plan the employer contributions that would be required to fund basic health coverage for participants in the plans to the extent funds are available. (b) In allocating the employer contributions among plans, the board of trustees shall consider the relevant risk characteristics of each plan's enrollment, including: (1) demographic variations in the use and cost of health care; and (2) prevailing cost patterns in the area in which the plan operates. (c) The allocation must be reasonable and set in a manner that ensures participants a fair choice among health benefit plans providing a basic plan. (d) The contribution set for each participant must be within the total amount appropriated in the General Appropriations Act. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.303. FUNDING OF OPTIONAL COVERAGES. The board of trustees may allocate any employer contributions remaining after the basic coverage has been funded to fund optional coverages in any manner the board determines is appropriate. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.304. FUNDING OF VOLUNTARY COVERAGES. The board of trustees may not allocate any employer contributions to fund voluntary coverages. Voluntary coverages may be funded only by participant contributions. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.305. COST OF BASIC COVERAGE EXCEEDING EMPLOYER CONTRIBUTIONS. If the cost of the basic coverage for an individual eligible to participate in the group benefits program under Section 1551.101 or 1551.102 exceeds the amount of employer contributions allocated to fund the basic coverage, the state shall deduct from or reduce the monthly compensation of the participant or deduct from the retirement benefits of the participant, as applicable, an amount sufficient to pay the cost of the basic coverage. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.306. PAYMENT OF EXCESS COST OVER BASIC COVERAGE CONTRIBUTION. (a) The board of trustees shall apply the amount of any employer contribution for optional coverages to the excess of the cost of the basic and optional coverages for which an individual eligible to participate in the group benefits program under Section 1551.101 or 1551.102 applies over the basic coverage contribution. (b) Except as provided by Section 1551.309, if a participant applies for basic and optional coverages for which the cost exceeds the employer contributions for those coverages under this chapter, the participant shall authorize in a form and manner satisfactory to the board of trustees a deduction from the participant's monthly compensation or monthly annuity equal to the difference between: (1) the cost of basic and optional coverages for which the participant applies; and (2) the employer contributions for basic and optional coverages. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.307. PAYMENT FOR VOLUNTARY COVERAGES. Except as provided by Section 1551.309, if an individual eligible to participate in the group benefits program under Section 1551.101 or 1551.102 applies for voluntary coverages, the participant shall authorize in a form and manner satisfactory to the board of trustees a deduction from the participant's monthly compensation or monthly annuity equal to the cost of the voluntary coverages. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.308. NO CONTRIBUTION ON REFUSAL OF COVERAGE. The state and a state agency may not make any contribution to the cost of any coverages or benefits provided under this chapter for an individual who refuses the coverages or benefits in a form and manner satisfactory to the board of trustees. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.309. EMPLOYEE PAYMENTS FOR PARTICIPATION IN CAFETERIA PLAN. (a) If an employee elects to participate in the cafeteria plan, the employee must execute a salary reduction agreement under which the employee's monthly compensation will be reduced in an amount equal to the difference between: (1) the employer contributions for basic and optional coverages; and (2) the cost of the cafeteria plan coverages the board of trustees identifies as comparable to the basic and optional coverages for which the employee is eligible. (b) The salary reduction agreement must also provide for an additional reduction in the employee's compensation equal to the cost of voluntary coverages for which the employee has applied. (c) An employee who executes a salary reduction agreement for a group coverage plan included in the cafeteria plan elects to participate in the cafeteria plan and agrees to a salary reduction for the coverages for subsequent plan years unless the employee, during an annual enrollment period specified by the board of trustees, elects in a form and manner satisfactory to the board not to participate for the next plan year in the coverages. (d) An employee who elects not to participate in the cafeteria plan group coverage plans may reenroll by executing a new salary reduction agreement during a subsequent annual enrollment period. (e) A salary reduction agreement for cafeteria plan benefits, other than a group coverage plan, must be executed annually during the annual enrollment period. (f) The employee shall pay any remaining portion of the cost of benefits that is not covered by the contributions for basic and optional coverages and the salary reduction under the cafeteria plan by executing a payroll deduction agreement. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.310. STATE CONTRIBUTION REQUIRED. The state shall contribute to the cost of each participant's group coverages, including dependents' group coverages, the amounts appropriated for the coverages in the General Appropriations Act. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.311. AMOUNT OF STATE CONTRIBUTION. (a) Not later than November 1 preceding each regular session of the legislature, the board of trustees shall certify to the Legislative Budget Board and the budget division of the governor's office for information and review the amount necessary to pay the contributions of the state to the board for the coverages provided under this chapter during the following biennium. (b) The governor shall include the amount in the budget that the governor submits to the legislature. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.312. AMOUNT OF STATE CONTRIBUTION FOR CERTAIN DEPENDENT CHILDREN. The state may contribute a greater amount for coverage for dependent children described by Section 1551.159(a) than the amount the state contributes for group coverages for other dependent children. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.313. AMOUNT OF STATE CONTRIBUTION FOR CERTAIN SURVIVING DEPENDENTS. If funds are specifically appropriated for the purpose, this state shall pay the same portion of the cost of the required contributions for a deceased annuitant's surviving spouse or other surviving dependent who elects to retain coverage under Section 1551.156 as this state pays for similar dependent coverage for an employee or annuitant participating in the program. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.314. CERTAIN STATE CONTRIBUTIONS PROHIBITED. A state contribution may not be made for coverages under this chapter selected by an individual who receives a state contribution, other than as a spouse, dependent, or beneficiary, for coverages under a group benefits program provided by an institution of higher education, as defined by Section 61.003, Education Code. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.315. REQUIRED CONTRIBUTIONS BY STATE AGENCIES. (a) The governing board of each state agency participating in the group benefits program shall pay to the board of trustees an amount equal to the amount appropriated by the legislature for each employee's individual group coverages or dependents' group coverages for the agency's employees who are, and annuitants who were, compensated from funds not appropriated in the General Appropriations Act. (b) The state agency shall: (1) include the required contributions from funds not appropriated in the General Appropriations Act in its annual operating budget; (2) ensure current participant coverages based on the records of the board of trustees; (3) make timely payments of amounts due the board of trustees from all fund sources under the state agency's control; and (4) each month reconcile board of trustees and state agency records of coverages and payments. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.316. ALLOCATION TO BOARD OF TRUSTEES OF EMPLOYER CONTRIBUTIONS. From the several funds from which employees receive their respective salaries, all employer contributions computed in accordance with this chapter and rules adopted under this chapter are allocated to the board of trustees as provided by this chapter. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.317. PAYMENT OF EMPLOYER CONTRIBUTIONS ALLOCATED BY THE STATE. (a) All money allocated by this state, including by institutions of higher education, to the board of trustees under this chapter shall be paid to the board in monthly installments based on the annual estimate by the board of the contributions to be received for all employees during the year. (b) At the end of each fiscal year, the board of trustees shall make any adjustments required to cover the difference between: (1) the annual estimate; and (2) the actual amount of the employer contributions during the year. (c) Each monthly installment shall be paid to the appropriate fund created by this chapter in the amount certified by the board of trustees. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.318. PAYMENT OF EMPLOYER CONTRIBUTIONS NOT ALLOCATED BY THE STATE. (a) The board of trustees shall certify to the governing board of each state agency participating in the group benefits program that provides contributions for its employees' group coverages and dependents' group coverages from operating budgets provided from sources other than the General Appropriations Act the proportionate amounts required to pay its contributions. (b) The board of trustees shall make the certification not later than the 30th day before the date of the meeting at which the governing board of the state agency adopts its operating budget. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.319. AMOUNT OF CONTRIBUTION FOR FULL-TIME AND PART-TIME EMPLOYEES. (a) A full-time employee receives the benefits of a full state contribution for coverage under this chapter. (b) A part-time employee receives the benefits of one-half of the amount of the state contribution received by a full-time employee. (c) The superintendent of the Texas School for the Deaf and the superintendent of the Texas School for the Blind and Visually Impaired shall determine whether an educational professional employee under contract with the school under Section 30.024 or 30.055, Education Code, as applicable, is a full-time employee for purposes of this chapter. (d) The executive head of the Windham School District shall determine whether an educational professional employee of the school is a full-time employee for purposes of this chapter. (e) This section does not prohibit an institution of higher education from contributing, from money not appropriated from the general revenue fund, amounts in excess of the state contribution for a part-time employee described by Section 1551.101(e)(2). (f) Notwithstanding any other provision of this section, if the board of trustees establishes a supplemental health coverage program under Section 1551.221, the amount of the contribution made for an individual who elects to receive supplemental health coverage under the program may be reduced, as provided in the General Appropriations Act, to reflect the reduced cost of the supplemental health coverage. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 366, § 2.12, eff. Sept. 1, 2003; Acts 2005, 79th Leg., ch. 178, § 2, eff. May 27, 2005. § 1551.3195. AMOUNT OF CONTRIBUTION FOR ANNUITANTS WHO WERE PART-TIME EMPLOYEES. An annuitant who as an employee received the benefits of a state contribution under Section 1551.319(b) for coverage during any portion of the annuitant's last employment by a state agency is not eligible to receive more than the state contribution provided under Section 1551.319(b) unless the annuitant was designated by the annuitant's employer as a full-time employee during the three-consecutive-month period before retirement. Added by Acts 2005, 79th Leg., ch. 347, § 29, eff. Jan. 1, 2006. § 1551.320. CERTAIN COSTS. The Texas Higher Education Coordinating Board shall pay all costs incurred in determining whether an individual is disabled if: (1) the individual is an annuitant under the optional retirement program established by Chapter 830, Government Code; and (2) the individual's last state employment was as an officer or employee of the coordinating board. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.321. REQUIRED REPORTS OF COMMUNITY SUPERVISION AND CORRECTIONS DEPARTMENTS. (a) Not later than June 1 of each year, a community supervision and corrections department participating in the group benefits program under Section 1551.114 shall submit to the board of trustees an estimated number of active employees, retired employees, and dependents of active or retired employees to be enrolled in the group benefits program for the following fiscal year. (b) Each month, a community supervision and corrections department shall reconcile the department records of requested participation in the group benefits plan and board of trustees records of coverage. Added by Acts 2003, 78th Leg., ch. 1030, § 1.04, eff. Sept. 1, 2003. § 1551.322. REQUIRED CONTRIBUTIONS BY TEXAS DEPARTMENT OF CRIMINAL JUSTICE. (a) Not later than August 1 of each year, the board of trustees shall notify the community justice assistance division of the Texas Department of Criminal Justice of: (1) the estimated number of community supervision and corrections department active employees, retired employees, and dependents of active or retired employees to be covered under the group benefits program for the following fiscal year; and (2) administrative costs incurred by the board of trustees that are specifically attributable to processing this population. (b) The community justice assistance division of the Texas Department of Criminal Justice, on receipt of the notification described by Subsection (a), shall: (1) make timely payments of amounts due the board of trustees, including the administrative costs incurred by the board of trustees; and (2) reconcile, each month, the board of trustees records and the division records of coverage and payments. Added by Acts 2003, 78th Leg., ch. 1030, § 1.04, eff. Sept. 1, 2003. § 1551.323. COST OF CERTAIN ANNUITANTS. (a) An annuitant eligible to participate under Section 1551.102(i), 1551.111(e), or 1551.112(c) is, except as provided by this subsection, required to pay the total cost, as determined by the board, attributable to the participation of that individual and the dependents of that individual until the date the individual is 65 years of age. If the General Appropriations Act or other similar legislation addresses the payment of those costs, those costs shall be paid in the manner specified by that legislation. (b) This section applies only to an individual who is eligible to participate as an annuitant under Section 1551.102(i), 1551.111(e), or 1551.112(c) and who is not eligible to participate under another provision of Section 1551.102, 1551.111, or 1551.112. Added by Acts 2003, 78th Leg., 3rd C.S., ch. 3, § 16.04, eff. Jan. 11, 2004. § 1551.324. REDUCTION IN CONTRIBUTION FOR CERTAIN ACTIVE EMPLOYEES AND ANNUITANTS; INCENTIVE PAYMENTS. (a) Notwithstanding any other provision of this subchapter, the state contribution for an employee's coverage or an annuitant's coverage under this chapter may be reduced, as provided in the General Appropriations Act, to reflect the reduced cost of coverage for an employee or annuitant who elects to waive basic coverage as provided by Section 1551.1045(b) or (c). (b) Instead of the full state contribution for an employee or annuitant who makes an election described by Subsection (a), the state may contribute, as specified by the General Appropriations Act, an amount for the incentive payment authorized by Section 1551.222. Added by Acts 2005, 79th Leg., ch. 899, § 4.04, eff. Aug. 29, 2005.SUBCHAPTER H. SANCTIONS AND ADJUDICATION OF CLAIMS § 1551.351. ADMINISTRATIVE PROCESS AND SANCTIONS FOR PROGRAM VIOLATIONS. (a) The Employees Retirement System of Texas may impose one or more sanctions described by this section against any employee, participant, annuitant, or dependent who: (1) submits a materially false claim or application for coverage under a group coverage plan offered under the group benefits program; (2) defrauds or attempts to defraud a group coverage plan offered under the group benefits program; (3) obtains or induces the extension of coverage under any program provided under this chapter by a materially negligent or intentional misrepresentation, a failure to disclose material information, or fraud; or (4) induces the extension of coverage under any program provided under this chapter by supplying false information on an application for coverage or in related documentation or in any communication. (b) On receipt of a complaint or on its own motion, if the Employees Retirement System of Texas determines that an employee, participant, annuitant, or dependent has engaged in conduct described by Subsection (a), the retirement system may: (1) expel from the program the employee, participant, annuitant, or dependent; (2) impose limitations on the person's participation in the program; (3) rescind any coverage obtained or extended as a result of the conduct under Subsection (a); (4) deny a claim arising from coverage; or (5) require the person to reimburse the employees life, accident, and health insurance and benefits fund for any benefit obtained as a result of the conduct. (c) An expulsion under Subsection (b) may be permanent or for a specified period. A rescission of coverage under Subsection (b) may be from the date of inception of the coverage or from the date of the prohibited conduct. (d) A person may appeal a determination made under Subsection (a) or (b) or Section 1551.352 only to the board of trustees. A proceeding under this subsection is a contested case under Chapter 2001, Government Code. This subchapter applies to an appeal to the board of trustees under this subsection. The appellant has the burden of proof on all issues, including issues in the nature of an affirmative defense. Any sanction imposed is not stayed during an appeal under this subsection. An appeal of a decision of the board of trustees under this subsection is under the substantial evidence rule. (e) An employee, participant, annuitant, or dependent expelled from the group benefits program may not participate in a coverage plan offered by the program for the period determined by the Employees Retirement System of Texas. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 1111, § 36, eff. Sept. 1, 2003; Acts 2003, 78th Leg., ch. 1276, § 10A.409(b), eff. Sept. 1, 2003; Acts 2005, 79th Leg., ch. 347, § 30, eff. Sept. 1, 2005. § 1551.352. EXECUTIVE DIRECTOR DETERMINES QUESTIONS RELATING TO ENROLLMENT OR PAYMENT OF CLAIMS. The executive director has exclusive authority to determine all questions relating to enrollment in or payment of a claim arising from group coverages or benefits provided under this chapter other than questions relating to payment of a claim by a health maintenance organization. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.354. DOUBLE OR MULTIPLE LIABILITY. (a) The executive director may determine that a claim arising under any group coverage plan administered by the board of trustees may expose the plan to double or multiple liability. (b) The executive director may cause the filing of a suit concerning the claim in a district court in Travis County on behalf of the Employees Retirement System of Texas to protect the group coverage plan from double or multiple liability. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.355. APPEAL OF EXECUTIVE DIRECTOR'S DETERMINATION. (a) Subject to Subsection (b), an appeal of a determination of the executive director under this subchapter is only to the board of trustees. (b) On behalf of the board of trustees and notwithstanding any other law, including Section 2003.021, Government Code, the executive director may: (1) refer an appeal to the State Office of Administrative Hearings for a hearing; or (2) employ, select, or contract for the services of an administrative law judge or other hearing examiner not affiliated with the State Office of Administrative Hearings to conduct the hearing of an appeal. (c) The appeal is a contested case under Chapter 2001, Government Code. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 1111, § 37, eff. Sept. 1, 2003. § 1551.356. STANDING. (a) A person has standing to appeal a determination of the executive director under this subchapter only if the person is: (1) an employee, participant, annuitant, or covered dependent participating in the group benefits program; or (2) after the death of an employee, participant, annuitant, or covered dependent, the person's estate, personal representative, heir at law, or designated beneficiary. (b) A person has no standing to appeal a determination of the executive director under this subchapter or to pursue a private cause of action against the state, the board of trustees, the retirement system, the executive director, an administering firm, or an employee of any of those persons based on a determination or the implementation by the board or executive director of the type or scope of plan design features under the group benefits program. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 1111, § 38, eff. Sept. 1. 2003; Acts 2003, 78th Leg., ch. 1276, § 10A.411(a), eff. Sept. 1, 2003. § 1551.357. DETERMINATION OF APPEAL BY BOARD OF TRUSTEES. (a) Notwithstanding any other law, in a proceeding considered to be a contested case under Chapter 2001, Government Code, the board of trustees in its sole discretion may modify, refuse to accept, or delete any proposed finding of fact or conclusion of law contained in a proposal for decision submitted by an administrative law judge or other hearing examiner, or make alternative findings of fact and conclusions of law. (b) The board of trustees shall state in writing the specific reason for the board's determination. (c) The board of trustees may adopt rules to implement this section. (d) The appellant in a contested case under this subchapter has the burden of proof on all issues, including issues in the nature of an affirmative defense. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 1111, § 39, eff. Sept. 1, 2003. § 1551.358. NEGOTIATION. (a) Notwithstanding any other provision of this subchapter, the board of trustees and a person who has standing to pursue an administrative appeal under this subchapter may at any time informally negotiate an award of benefits. (b) Negotiated benefits may not exceed the maximum benefits otherwise available or required by law. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.359. JUDICIAL REVIEW. A person aggrieved by a final decision of the Employees Retirement System of Texas in a contested case under this subchapter is entitled to judicial review of the decision. Venue of an appeal under this subchapter is only in a district court in Travis County. The standard of review for the appeal of a determination made by the board of trustees under this subchapter is by substantial evidence. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 1111, § 40, eff. Sept. 1, 2003. § 1551.360. DELEGATION. (a) The board of trustees may delegate its duty to hear an appeal to the executive director. (b) The executive director may delegate the director's duty under this subchapter to another employee of the Employees Retirement System of Texas. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.361. DILIGENT PROSECUTION OF SUIT. The plaintiff shall prosecute with reasonable diligence any suit brought under Section 1551.359. If the plaintiff does not secure proper service of process or does not prosecute the suit within one year after it is filed, the court shall presume that the suit has been abandoned. The court shall dismiss the suit on a motion for dismissal made on or behalf of the Employees Retirement System of Texas, unless the plaintiff, after receiving appropriate notice, shows good cause for the delay. Added by Acts 2005, 79th Leg., ch. 347, § 31, eff. Sept. 1, 2005.SUBCHAPTER I. FUNDS § 1551.401. EMPLOYEES LIFE, ACCIDENT, AND HEALTH INSURANCE AND BENEFITS FUND. (a) The employees life, accident, and health insurance and benefits fund is in the state treasury. (b) The board of trustees shall administer the fund. (c) Contributions of participants and the state provided for under this chapter shall be credited to the fund. (d) The fund is available: (1) without fiscal year limitation for all payments for any coverages provided for under this chapter; and (2) for payment of expenses of administering this chapter within the limitations that may be specified annually by the legislature. (e) The board of trustees shall regularly set aside in the fund an amount equal to a percentage of the contributions made by participants and the state that the board determines is reasonably adequate to pay the expenses of administering this chapter. (f) The board of trustees, from time to time and in amounts it considers appropriate, may transfer unused funds for administrative expenses to the contingency reserves to be used by the board only for charges, claims, and expenses under the group benefits program. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.402. STATE EMPLOYEES CAFETERIA PLAN TRUST FUND. (a) The state employees cafeteria plan trust fund is in the state treasury. (b) The board of trustees shall administer the fund. (c) The following shall be credited to the fund: (1) salary reduction payments for benefits included in a cafeteria plan other than group coverage plans under the group benefits program; and (2) appropriations by the state for the administration of a cafeteria plan. (d) The trust fund is available without fiscal year limitation: (1) for all payments for any benefits included in a cafeteria plan other than group coverage plans under the group benefits program; and (2) for payment of expenses of administering a cafeteria plan. (e) The board of trustees may establish accounts for money in the fund as the board considers necessary, including accounts for the administration of a cafeteria plan. The board of trustees may transfer assets from one account to another: (1) to pay benefits if: (A) the transfer is necessary for financial management purposes; and (B) adequate arrangements are made to reimburse the account from which the transfer was made; and (2) to pay administrative expenses. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.403. FEES FOR STATE EMPLOYEES CAFETERIA PLAN TRUST FUND. (a) Subject to Subsection (e), the board of trustees may establish a monthly fee to be paid by each employee who elects to participate in a cafeteria plan for the purpose of paying the expenses of administering the cafeteria plan. (b) The board of trustees shall establish the amount of the monthly fee and may establish a separate fee for each benefit included in a cafeteria plan. (c) If the board of trustees establishes a monthly fee, each employee who participates in the cafeteria plan must authorize payment of the fee by executing a separate payroll deduction agreement or as part of the salary reduction agreement, as determined by the board. (d) The monthly fee shall be paid into the state employees cafeteria plan trust fund. (e) The board of trustees may not establish a fee for administering the premium conversion benefit portion of a cafeteria plan. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.404. INSUFFICIENT EARNINGS FOR EMPLOYEE TO PARTICIPATE IN CAFETERIA FUND. (a) If the earnings of an employee who elects to participate in a cafeteria plan are insufficient to pay the cost of the coverages and benefits selected by the employee, the employee is liable to the board of trustees for an amount equal to the difference between: (1) the amount received by the board; and (2) the cost of the coverages and benefits. (b) If the employee does not pay the difference within the time specified by the board of trustees, the board may: (1) cancel the coverages and benefits retroactive to the last month for which full payment was made; or (2) pursue any other available legal remedy. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.405. EMPLOYEES' HEALTH CARE STABILIZATION TRUST FUND. (a) The employees' health care stabilization trust fund is a fund in the state treasury. (b) The board of trustees shall administer the fund. (c) The following shall be credited to the fund: (1) money transferred to the fund at the direction of the legislature; and (2) gifts and grants contributed to the fund. (d) In administering the fund, the board of trustees shall make investments in a manner that preserves the purchasing power of the fund's assets. (e) Money in the fund may not be spent for any purpose, except that the interest and investment returns of the fund may be appropriated only to stabilize the cost of state and participant contributions for health benefit coverage under this chapter by minimizing to the greatest extent possible increases in those contributions. (f) The fund is exempt from the application of Section 403.095, Government Code. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.406. INVESTMENT OF FUNDS. (a) Under the standard of care provided by Section 815.307, Government Code, the board of trustees may manage and has full power to invest and reinvest the money in: (1) the employees life, accident, and health insurance and benefits fund; (2) the state employees cafeteria plan trust fund; and (3) the employees' health care stabilization trust fund. (b) The earnings, including interest on money in the fund and proceeds from the sale of any investments, become a part of the fund. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003. § 1551.407. MANAGEMENT OF ASSETS. The board of trustees may commingle for investment purposes the assets of a fund created under this chapter with another fund created under this chapter or any other trust fund administered by the board if the board maintains and credits proportionate ownership records. Added by Acts 2001, 77th Leg., ch. 1419, § 3, eff. June 1, 2003.
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