    INSURANCE CODE
    TITLE 8. HEALTH INSURANCE AND OTHER HEALTH COVERAGES
    SUBTITLE H. HEALTH BENEFITS AND OTHER COVERAGES FOR GOVERNMENTAL EMPLOYEES
    CHAPTER 1551. TEXAS EMPLOYEES GROUP BENEFITS ACT
    SUBCHAPTER A. GENERAL PROVISIONS
    Sec. 1551.001.  SHORT TITLE.  This chapter may be cited as the Texas Employees Group Benefits Act.
    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.  Amended by Acts 2003, 78th Leg., ch. 1030, Sec. 1.01, eff. Sept. 1, 2003.

    Sec. 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 30 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.(10-a)  "Participant" means an eligible individual who participates in the group benefits program.(11)  "Part-time employee" means an employee designated by the employer as working less than 30 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 1355.001.(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.(15)  "Usual and customary rate" means the relevant allowable amount as described by the applicable master benefit plan document or policy.
    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 3, eff. June 1, 2003.  Amended by Acts 2003, 78th Leg., ch. 366, Sec. 2.01, eff. Sept. 1, 2003.Amended by: Acts 2005, 79th Leg., Ch. 347 (S.B. 1176), Sec. 24, eff. September 1, 2005.Acts 2007, 80th Leg., R.S., Ch. 730 (H.B. 2636), Sec. 2G.018, eff. April 1, 2009.Acts 2009, 81st Leg., R.S., Ch. 1308 (H.B. 2559), Sec. 31, eff. September 1, 2009.Acts 2013, 83rd Leg., R.S., Ch. 618 (S.B. 1459), Sec. 21, eff. September 1, 2013.Acts 2019, 86th Leg., R.S., Ch. 1342 (S.B. 1264), Sec. 1.10, eff. September 1, 2019.

    Sec. 1551.004.  DEFINITION OF DEPENDENT.  (a)  In this chapter, "dependent" with respect to an individual eligible to participate in the group benefits program means the individual's:(1)  spouse;(2)  unmarried child younger than 26 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  the child is mentally 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;(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; and(5)  ward, as that term is defined by Chapter 1002, Estates Code, who is 26 years of age or younger.(b)  In this section, "child" includes:(1)  a natural child, adopted child, stepchild, foster child, or child in the possession of a participant who is designated as managing conservator of the child under an irrevocable or unrevoked affidavit of relinquishment under Chapter 161, Family Code; or(2)  a child who is related by blood or marriage and was claimed as a dependent on the federal income tax return of an individual who is eligible to participate in the group benefits program under Section 1551.101 or 1551.102 for the calendar year preceding the plan year in which the child is first enrolled as a dependent under Subchapter D, and for each subsequent year in which the child is enrolled as a dependent.(c)  The requirement in Subsection (b)(2) that a child must be claimed as a dependent on a federal income tax return in the calendar year preceding the child's enrollment does not apply if:(1)  the child is born in the year in which the child is first enrolled; or(2)  the participant can demonstrate good cause for not claiming the child as a dependent in the preceding calendar year.
    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 3, eff. June 1, 2003.  Amended by Acts 2003, 78th Leg., ch. 1276, Sec. 10A.401(a), eff. Sept. 1, 2003.Amended by: Acts 2009, 81st Leg., R.S., Ch. 1308 (H.B. 2559), Sec. 32, eff. September 1, 2009.Acts 2011, 82nd Leg., R.S., Ch. 109 (H.B. 755), Sec. 1, eff. September 1, 2011.Acts 2011, 82nd Leg., R.S., Ch. 1249 (S.B. 1664), Sec. 17, eff. September 1, 2011.Acts 2013, 83rd Leg., R.S., Ch. 618 (S.B. 1459), Sec. 22, eff. September 1, 2013.Acts 2013, 83rd Leg., R.S., Ch. 1285 (H.B. 2155), Sec. 1, eff. June 14, 2013.Acts 2017, 85th Leg., R.S., Ch. 324 (S.B. 1488), Sec. 22.049, eff. September 1, 2017.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.  Amended by Acts 2003, 78th Leg., ch. 366, Sec. 2.02, eff. Sept. 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.  Amended by Acts 2003, 78th Leg., ch. 1276, Sec. 10A.402, eff. Sept. 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 10A.403(a), eff. Sept. 1, 2003.

    Sec. 1551.015.  BALANCE BILLING PROHIBITION NOTICE.  (a)  The administrator of a managed care plan provided under the group benefits program shall provide written notice in accordance with this section in an explanation of benefits provided to the participant and the physician or health care provider in connection with a health care or medical service or supply provided by an out-of-network provider.  The notice must include:(1)  a statement of the billing prohibition under Section 1551.228, 1551.229, or 1551.230, as applicable;(2)  the total amount the physician or provider may bill the participant under the participant's managed care plan and an itemization of copayments, coinsurance, deductibles, and other amounts included in that total; and(3)  for an explanation of benefits provided to the physician or provider, information required by commissioner rule advising the physician or provider of the availability of mediation or arbitration, as applicable, under Chapter 1467.(b)  The administrator shall provide the explanation of benefits with the notice required by this section to a physician or health care provider not later than the date the administrator makes a payment under Section 1551.228, 1551.229, or 1551.230, as applicable.
    Added by Acts 2019, 86th Leg., R.S., Ch. 1342 (S.B. 1264), Sec. 1.11, eff. September 1, 2019.Amended by: Acts 2023, 88th Leg., R.S., Ch. 981 (S.B. 2476), Sec. 9(a), eff. September 1, 2023.Acts 2023, 88th Leg., R.S., Ch. 981 (S.B. 2476), Sec. 9(b), eff. September 1, 2025.

    SUBCHAPTER B. ADMINISTRATION AND IMPLEMENTATION
    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.  Amended by Acts 2003, 78th Leg., ch. 1276, Sec. 10A.406(a), eff. Sept. 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 1551.061.  ANNUAL REPORT.  The board of trustees shall submit a written report not later than February 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:(1)  information about the effectiveness and efficiency of:(A)  managed care cost containment practices; and(B)  fraud detection and prevention procedures;(2)  basic information about each group coverage plan provided under this chapter, including the number of participants in each plan and the claims amounts and administrative expenses incurred under each plan;(3)  a summary of recent changes to the benefits provided under this chapter that highlights any key benefits the board of trustees evaluated but did not implement;(4)  a discussion of trends in claims under group coverage plans as well as other areas of interest identified by the board of trustees;(5)  recommendations for any statutory changes the board of trustees determines necessary to achieve its goals for the group benefits program; and(6)  any other information the board of trustees determines appropriate.
    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 3, eff. June 1, 2003.Amended by: Acts 2017, 85th Leg., R.S., Ch. 530 (S.B. 301), Sec. 10, eff. September 1, 2017.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 1551.063.  CONFIDENTIALITY OF CERTAIN RECORDS.  (a)  The records of a participant in the group benefits program in the custody of the Employees Retirement System of Texas, or of an administering firm, carrier, or another governmental entity acting on behalf of the retirement system, are confidential and not subject to disclosure, and the retirement system, administering firm, carrier, or governmental entity 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 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 administering firm, 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.(d-1)  A record released or received by the Employees Retirement System of Texas under this section may be transmitted electronically, including through the use of an electronic signature or certification in a form acceptable to the retirement system.  An unintentional disclosure to, or unauthorized access by, a third party related to the transmission or receipt of information under this section is not a violation by the retirement system of any law, including a law or rule relating to the protection of confidential information.(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.(f)  The Employees Retirement System of Texas has sole discretion in determining if a record is subject to this section.  For purposes of this section, a record includes any identifying information about a person, living or deceased, who is or was an employee, annuitant, dependent, or participant in the group benefits program.
    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 3, eff. June 1, 2003.  Amended by Acts 2003, 78th Leg., ch. 1111, Sec. 33, eff. Sept. 1, 2003;  Acts 2003, 78th Leg., ch. 1276, Sec. 10A.404(a), eff. Sept. 1, 2003.Amended by: Acts 2005, 79th Leg., Ch. 347 (S.B. 1176), Sec. 25, eff. September 1, 2005.Acts 2009, 81st Leg., R.S., Ch. 1308 (H.B. 2559), Sec. 33, eff. September 1, 2009.

    Sec. 1551.064.  CERTAIN GROUP HEALTH AND ACCIDENT POLICIES OR CONTRACTS.  (a)  This section applies only to a group policy or contract described by Section 1251.301.  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 Subchapter G, Chapter 1251, 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 Subchapter G, Chapter 1251, 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, Sec. 3, eff. June 1, 2003.Amended by: Acts 2007, 80th Leg., R.S., Ch. 730 (H.B. 2636), Sec. 2G.019, eff. April 1, 2009.

    Sec. 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, Sec. 10A.404(b), eff. Sept. 1, 2003.

    Sec. 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, Sec. 10A.405(a), eff. Sept. 1, 2003.

    Sec. 1551.067.  PHARMACY BENEFIT MANAGER CONTRACTS.  (a)  In awarding a contract to provide pharmacy benefit manager services under this chapter, the board of trustees is not required to select the lowest bid but must select a contract that meets the criteria established by this section.(b)  The contract must state that:(1)  the board of trustees is entitled to audit the pharmacy benefit manager to verify costs and discounts associated with drug claims, pharmacy benefit manager compliance with contract requirements, and services provided by subcontractors;(2)  the audit must be conducted by an independent auditor in accordance with established auditing standards; and(3)  to conduct the audit, the board of trustees and the independent auditor are entitled access to information related to the services and the costs associated with the services performed under the contract, including access to the pharmacy benefit manager's facilities, records, contracts, medical records, and agreements with subcontractors.(c)  The contract must define the information that the pharmacy benefit manager is required to provide to the board of trustees concerning the audit of the retail, independent, and mail order pharmacies performing services under the contract and describe how the results of these audits must be reported to the board of trustees, including how often the results must be reported.  The contract must state whether the pharmacy benefit manager is required to return recovered overpayments to the board of trustees.(d)  The contract must state that any audit of a mail order pharmacy owned by the pharmacy benefit manager must be conducted by an independent auditor selected by the board of trustees in accordance with established auditing standards.
    Added by Acts 2009, 81st Leg., R.S., Ch. 1207 (S.B. 704), Sec. 3, eff. September 1, 2009.

    Sec. 1551.068.  QUALIFICATION OF GROUP BENEFITS PROGRAM.  Notwithstanding any provision of this chapter or any other law, it is intended that the provisions of this chapter be construed and administered in a manner that coverages under the group benefits program will be considered in compliance with applicable federal law.  The board of trustees may adopt rules that modify the coverage provided under the program by adding, deleting, or changing a provision of the program, including rules that modify eligibility and enrollment requirements and the benefits available under the program.
    Added by Acts 2011, 82nd Leg., R.S., Ch. 1249 (S.B. 1664), Sec. 18, eff. September 1, 2011.

    SUBCHAPTER C. COVERAGE AND PARTICIPATION
    Sec. 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, Sec. 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, Sec. 3, eff. June 1, 2003.  Amended by Acts 2003, 78th Leg., ch. 366, Sec. 2.03, 2.14, eff. Sept. 1, 2003.Amended by: Acts 2005, 79th Leg., Ch. 347 (S.B. 1176), Sec. 26, eff. September 1, 2005.

    Sec. 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;(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 or Subchapter B, Chapter 840A, Government Code; or(D)  receives or is eligible to receive an annuity under Subchapter B, Chapter 820, Government Code, and has at least 10 years of eligible service credit.(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.(c-1)  An individual is eligible to participate in the group benefits program as provided by Subsection (a) if:(1)  the individual meets the minimum requirements under Subsection (c) except that the individual does not have at least 10 years of eligible service credit as described by Subsection (c)(1);(2)  the individual has at least 10 years of combined service in a position for which the individual was eligible to participate in the group benefits program or in the uniform program under Section 1601.101; and(3)  either:(A)  the individual's greatest number of years of state employment was in a position for which the individual was eligible to participate in the group benefits program; or(B)  if the individual's years of employment in positions eligible to participate in the group benefits program and the uniform program are equal, the individual's last state employment before retirement was in a position for which the individual was eligible to participate in the group benefits program.(c-2)  An individual is eligible to participate in the group benefits program as provided by Subsection (a) if the individual:(1)  was employed for at least 10 years by a school district established as specified by Section 19.002, Education Code, as the individual's last position of employment before retirement;(2)  has at least:(A)  10 years of eligible service credit, including not more than five years of military service credited in the Employees Retirement System of Texas; or(B)  five years of eligible service credit and is the sole surviving spouse of military personnel who was killed in action; and(3)  retires under the jurisdiction of the Teacher Retirement System of Texas and:(A)  has accumulated membership service credit as provided by Section 823.201(a), Government Code, in an amount so that the sum of the person's age and amount of membership service credit, including months of age and credit, equals or exceeds the number 80; or(B)  is at least 65 years of age.(d)  An individual is eligible to participate in the group benefits program as provided by Subsection (a) if:(1)  the individual retires under the optional retirement program established by Chapter 830, Government Code;(2)  the individual has at least 10 years of eligible service credit; and(3)  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, and is eligible to receive an annuity or periodic distribution of funds from an account under 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, and is receiving an annuity or periodic distribution of funds from an account under the optional retirement program.(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, 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, Sec. 3, eff. June 1, 2003.  Amended by Acts 2003, 78th Leg., ch. 366, Sec. 2.04, 2.05, eff. Sept. 1, 2003;  Acts 2003, 78th Leg., ch. 1111, Sec. 34, eff. Sept. 1, 2003;  Acts 2003, 78th Leg., ch. 1276, Sec. 10A.401(b), eff. Sept. 1, 2003;  Acts 2003, 78th Leg., 3rd C.S., ch. 3, Sec. 16.01, eff. Jan. 11, 2004.Amended by: Acts 2009, 81st Leg., R.S., Ch. 1308 (H.B. 2559), Sec. 34, eff. September 1, 2009.Acts 2017, 85th Leg., R.S., Ch. 1106 (H.B. 4035), Sec. 2, eff. June 15, 2017.Acts 2019, 86th Leg., R.S., Ch. 1121 (H.B. 2384), Sec. 33, eff. September 1, 2019.Acts 2021, 87th Leg., R.S., Ch. 940 (S.B. 321), Sec. 22, eff. September 1, 2021.Acts 2023, 88th Leg., R.S., Ch. 748 (H.B. 3813), Sec. 1, eff. September 1, 2023.Acts 2023, 88th Leg., R.S., Ch. 1092 (S.B. 1245), Sec. 17, eff. June 18, 2023.

    Sec. 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)  was employed as a faculty member by the same public institution of higher education and taught at least one course in the regular fall and spring semester at the public institution of higher education in the preceding academic year; 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.(a-1)  Notwithstanding Subsection (a)(3), an adjunct faculty member at a public institution of higher education who is a professional librarian is eligible to participate in the group benefits program as an employee if the faculty member receives compensation for services rendered to a public institution of higher education as an adjunct faculty member.(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, Sec. 4.04, eff. Sept. 1, 2003.Amended by: Acts 2013, 83rd Leg., R.S., Ch. 343 (H.B. 2127), Sec. 1, eff. September 1, 2013.

    Sec. 1551.1022.  PARTICIPATION ELIGIBILITY:  CERTAIN POSTDOCTORAL FELLOWS AND GRADUATE STUDENTS.  (a)  An individual who is not eligible to participate in the group benefits program under Section 1551.101 is eligible to participate in the group benefits program under this section if the individual, at an institution of higher education:(1)  holds:(A)  a postdoctoral fellowship; or(B)  one or more graduate student fellowships awarded to the individual on a competitive basis that, either singly or in combination, are valued at not less than $10,000 per year; and(2)  is currently receiving a stipend from an applicable fellowship.(b)  An individual who is eligible to participate in the group benefits program under this section shall pay all contributions required under this chapter for the coverage selected by the individual, except that an institution of higher education may make contributions for the individual from available funds other than money appropriated to the institution from the general revenue fund.(c)  An institution of higher education shall determine which individuals are eligible to participate in the group benefits program under this section and, at the time of initial eligibility, shall notify each individual of the individual's eligibility to participate in the program.(d)  An individual who participates in the group benefits program under this section is not considered an employee of an institution of higher education solely as a result of the individual's participation in the program.
    Added by Acts 2011, 82nd Leg., R.S., Ch. 1198 (S.B. 29), Sec. 1, eff. September 1, 2011.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.  Amended by Acts 2003, 78th Leg., ch. 366, Sec. 2.06, eff. Sept. 1, 2003.Amended by: Acts 2005, 79th Leg., Ch. 899 (S.B. 1863), Sec. 4.01, eff. August 29, 2005.

    Sec. 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 (S.B. 1863), Sec. 4.02, eff. August 29, 2005.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 1551.1055.  DATE ELIGIBILITY BEGINS;  WAITING PERIOD.  (a)  Except as provided by Subsection (c), (d), or (e), eligibility under Section 1551.101 begins not later than 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 not later than 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.(e)  Eligibility under Section 1551.101 for an employee reemployed under Chapter 613, Government Code, begins on the first day of reemployment on which the employee performs services for a state agency.
    Added by Acts 2003, 78th Leg., ch. 366, Sec. 2.07, eff. Sept. 1, 2003.Amended by: Acts 2013, 83rd Leg., R.S., Ch. 618 (S.B. 1459), Sec. 23, eff. September 1, 2014.Acts 2015, 84th Leg., R.S., Ch. 150 (H.B. 437), Sec. 1, eff. September 1, 2015.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.  Amended by Acts 2003, 78th Leg., ch. 366, Sec. 2.09, eff. Sept. 1, 2003.

    Sec. 1551.1095.  ELIGIBILITY OF STATE BOARD OF EDUCATION MEMBERS.  (a) Subject to Section 1551.351, on application to the board of trustees and arrangement for payment of contributions, an individual who is a member of the State Board of Education and not otherwise eligible under Section 1551.109 and the individual's dependents are eligible under this section to participate in the group benefits program offered under this chapter.(b)  A participant described by this section may not receive a state contribution for premiums.
    Added by Acts 2025, 89th Leg., R.S., Ch. 619 (H.B. 3254), Sec. 1, eff. September 1, 2025.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.  Amended by Acts 2003, 78th Leg., ch. 366, Sec. 2.10, eff. Sept. 1, 2003;  Acts 2003, 78th Leg., ch. 1030, Sec. 1.02, eff. Sept. 1, 2003;  Acts 2003, 78th Leg., 3rd C.S., ch. 3, Sec. 16.02, eff. Jan. 11, 2004.

    Sec. 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, Sec. 3, eff. June 1, 2003.  Amended by Acts 2003, 78th Leg., ch. 366, Sec. 2.11, eff. Sept. 1, 2003;  Acts 2003, 78th Leg., 3rd C.S., ch. 3, Sec. 16.03, eff. Jan. 11, 2004.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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)  The state is responsible for payment of the contributions for each of a department's participating active employees and the employees' dependents under Subchapter G.(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. The state is responsible for payment of the contributions for each of a department's retired employees and the retired employees' participating dependents under Subchapter G. 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 state, 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, Sec. 1.03, eff. Sept. 1, 2003.Amended by: Acts 2017, 85th Leg., R.S., Ch. 346 (H.B. 1526), Sec. 2, eff. September 1, 2017.

    Sec. 1551.115.  PARTICIPATION BY WRONGFULLY IMPRISONED PERSONS.  Subject to Section 103.001, Civil Practice and Remedies Code, a person who is entitled to compensation under Chapter 103, Civil Practice and Remedies Code, is eligible to obtain health benefit plan coverage under the group benefits program in the manner and to the extent that an employee of the Texas Department of Criminal Justice would be entitled to coverage. The person's spouse and dependents may be included in the person's coverage as if the person were an employee of the Texas Department of Criminal Justice.
    Added by Acts 2011, 82nd Leg., R.S., Ch. 698 (H.B. 417), Sec. 9, eff. June 17, 2011.Added by Acts 2011, 82nd Leg., R.S., Ch. 1107 (S.B. 1686), Sec. 4, eff. September 1, 2011.Amended by: Acts 2023, 88th Leg., R.S., Ch. 315 (H.B. 1455), Sec. 2, eff. September 1, 2023.

    SUBCHAPTER D. COVERAGE FOR DEPENDENTS
    Sec. 1551.151.  ENTITLEMENT TO COVERAGE.  An individual who is eligible to participate in the group benefits program under Section 1551.101, 1551.102, or 1551.1022 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, Sec. 3, eff. June 1, 2003.Amended by: Acts 2011, 82nd Leg., R.S., Ch. 1198 (S.B. 29), Sec. 2, eff. September 1, 2011.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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.(c)  A person who is the surviving spouse of an individual described by Subsection (a) may secure group health coverage without evidence of the person's insurability if the individual was eligible to participate in the group benefits program under Section 1551.101 or 1551.102 but was not participating at the time of the individual's death.(d)  A surviving spouse seeking group coverage under Subsection (c):(1)  must apply for the coverage not later than the 30th day after the date on which the individual who was eligible to participate in the group benefits program dies; and(2)  shall pay for the coverage at the group rate as provided by Subsection (b).
    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 3, eff. June 1, 2003.Amended by: Acts 2009, 81st Leg., R.S., Ch. 1308 (H.B. 2559), Sec. 35, eff. September 1, 2009.

    Sec. 1551.156.  COVERAGE OPTIONS FOR SURVIVING DEPENDENT.  (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.(d)  A person who is a surviving dependent of an annuitant may secure group health coverage after the death of the annuitant without evidence of the person's insurability if the annuitant was eligible to participate in the group benefits program of a retirement system named in this chapter but was not participating at the time of the individual's death.(e)  A surviving dependent seeking group coverage under Subsection (d):(1)  must apply for the coverage not later than the 30th day after the date on which the individual who was eligible to participate in the group benefits program dies; and(2)  shall pay for the coverage at the group rate as provided by Subsection (b).
    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 3, eff. June 1, 2003.Amended by: Acts 2009, 81st Leg., R.S., Ch. 1308 (H.B. 2559), Sec. 36, eff. September 1, 2009.Acts 2009, 81st Leg., R.S., Ch. 1308 (H.B. 2559), Sec. 37, eff. September 1, 2009.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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 26 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, Sec. 3, eff. June 1, 2003.Amended by: Acts 2013, 83rd Leg., R.S., Ch. 618 (S.B. 1459), Sec. 24, eff. September 1, 2013.

    SUBCHAPTER E. GROUP COVERAGES
    Sec. 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, Sec. 3, eff. June 1, 2003.  Amended by Acts 2003, 78th Leg., ch. 1276, Sec. 10A.412(b), eff. Sept. 1, 2003.

    Sec. 1551.2011.  EMPLOYEE AWARENESS AND EDUCATION.  (a)  The board of trustees by rule shall ensure that employees receive information about life coverage, accidental death and dismemberment coverage, and long-term and short-term loss of salary coverage, if those coverages are included in a group coverage plan established under Section 1551.201.(b)  The information must contain descriptions of:(1)  probabilities of death and disability; and(2)  policy exclusions and limitations, including:(A)  limitations based on multiple sources of benefits;(B)  preexisting condition exclusions; and(C)  required waiting periods for benefits.(c)  The board of trustees by rule may provide the information described by Subsections (a) and (b) in printed materials for new employees distributed on the first day of employment.  The board of trustees may consider using printed materials, online presentations, and educational presentations to ensure the information described by Subsections (a) and (b) is provided to employees.(d)  If applicable, the board of trustees shall annually review the materials and presentations described by Subsection (c) to determine if changes to the contents of the materials or presentations are necessary.  If applicable, the department shall adopt rules necessary for considering and making changes to the materials or presentations.(e)  The board of trustees shall publish the information described by Subsections (a) and (b) on the Employees Retirement System of Texas website.
    Added by Acts 2013, 83rd Leg., R.S., Ch. 296 (H.B. 1265), Sec. 1, eff. June 14, 2013.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.  Amended by Acts 2003, 78th Leg., ch. 213, Sec. 1, eff. Sept. 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.  Amended by Acts 2003, 78th Leg., ch. 1276, Sec. 10A.408(a), eff. Sept. 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.  Amended by Acts 2003, 78th Leg., ch. 1111, Sec. 35, eff. Sept. 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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)  Repealed by Acts 2009, 81st Leg., R.S., Ch. 1308, Sec. 41(8), eff. September 1, 2009.
    Added by Acts 2003, 78th Leg., ch. 213, Sec. 2, eff. Sept. 1, 2003.Amended by: Acts 2009, 81st Leg., R.S., Ch. 1308 (H.B. 2559), Sec. 41(8), eff. September 1, 2009.

    Sec. 1551.2181.  EXEMPTION FROM PREAUTHORIZATION REQUIREMENTS FOR PHYSICIANS AND HEALTH CARE PROVIDERS PROVIDING CERTAIN HEALTH CARE SERVICES.  A preauthorization process used by a health benefit plan provided under this chapter is subject to the same limitations and requirements provided by Subchapter N, Chapter 4201, for a preauthorization process used by an insurer.
    Added by Acts 2021, 87th Leg., R.S., Ch. 1018 (H.B. 3459), Sec. 1, eff. September 1, 2021.

    Sec. 1551.219.  DISEASE MANAGEMENT SERVICES.  (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, Sec. 3, eff. June 20, 2003.

    Sec. 1551.220.  BENEFICIARY CAUSING DEATH OF PARTICIPANT OR BENEFICIARY OF PARTICIPANT.  (a)  Any benefits, funds, or account balances 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 or adjudicated as having caused that death but instead are 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 any benefits, funds, or account balances under this section unless it receives actual notice of the conviction or adjudication of a beneficiary.  However, the retirement system may delay payment of any benefits, funds, or account balances payable on the death of a participant or beneficiary of a participant pending the results of a criminal investigation or civil proceeding and other legal proceedings relating to the cause of death.(c)  For the purposes of this section, a person has been convicted of or adjudicated as having caused 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 or jury in a criminal proceeding of, causing the death of the participant or beneficiary of a participant, regardless of whether sentence is imposed or probated, and no appeal of the conviction is pending and the time provided for appeal has expired; or(2)  is found liable by a court or jury in a civil proceeding for causing the death of the member or annuitant and no appeal of the judgment is pending and the time provided for appeal has expired.
    Added by Acts 2005, 79th Leg., Ch. 347 (S.B. 1176), Sec. 27, eff. September 1, 2005.Amended by: Acts 2011, 82nd Leg., R.S., Ch. 1249 (S.B. 1664), Sec. 19, eff. September 1, 2011.

    Sec. 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 (S.B. 1863), Sec. 4.03, eff. August 29, 2005.

    Sec. 1551.224.  MAIL ORDER REQUIREMENT FOR PRESCRIPTION DRUG COVERAGE PROHIBITED.  (a)  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.(b)  Except as provided by Subsection (c), the board of trustees or a 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.(c)  The board of trustees or a health benefit plan may not require a participant who obtains a multiple-month supply of a prescription drug from a retail pharmacy under Section 1560.003 to pay a deductible, copayment, coinsurance, or other cost-sharing obligation that differs from the amount the participant pays for a multiple-month supply of that drug through a mail order program.
    Added by Acts 2003, 78th Leg., ch. 213, Sec. 2, eff. Sept. 1, 2003.Renumbered from Insurance Code, Section 1551.219 by Acts 2007, 80th Leg., R.S., Ch. 921 (H.B. 3167), Sec. 17.001(52), eff. September 1, 2007.Amended by: Acts 2009, 81st Leg., R.S., Ch. 1207 (S.B. 704), Sec. 4, eff. September 1, 2009.

    Sec. 1551.225.  BARIATRIC SURGERY COVERAGE.  (a)  The board of trustees shall develop a cost-neutral or cost-positive plan for providing under the group benefits program bariatric surgery coverage for employees eligible to participate in the program under Section 1551.101.(b)  The board of trustees may adopt rules as necessary to implement this section.
    Added by Acts 2009, 81st Leg., R.S., Ch. 1270 (H.B. 1290), Sec. 2, eff. September 1, 2009.Added by Acts 2009, 81st Leg., R.S., Ch. 1399 (S.B. 2577), Sec. 1, eff. September 1, 2009.

    Sec. 1551.226.  TOBACCO CESSATION COVERAGE.  (a)  The board of trustees shall develop a plan for providing under any health benefit plan provided under the group benefits program tobacco cessation coverage for participants.(b)  The plan developed under Subsection (a) must include coverage for prescription drugs that aid participants in ceasing the use of tobacco products.
    Added by Acts 2011, 82nd Leg., R.S., Ch. 1249 (S.B. 1664), Sec. 20, eff. September 1, 2011.

    Sec. 1551.227.  TRICARE MILITARY HEALTH SYSTEM SUPPLEMENTAL PLAN.  (a)  The board of trustees shall make available a TRICARE Military Health System supplemental plan to an employee or annuitant who waives coverage under the basic coverage plan under Section 1551.1045 and is eligible for benefits under the TRICARE Military Health System.  The board of trustees may not contribute to the cost of the supplemental plan, including the premium cost.(b)  A plan offered under this section must be considered a permissible offering to TRICARE participants and beneficiaries under 10 U.S.C. Section 1097c.(c)  The board of trustees may adopt rules necessary to implement this section, including rules regarding eligibility for the plan, available insurance products, and enrollment in the plan.
    Added by Acts 2015, 84th Leg., R.S., Ch. 807 (H.B. 3307), Sec. 1, eff. June 17, 2015.

    Sec. 1551.228.  EMERGENCY CARE PAYMENTS.  (a)  In this section, "emergency care" has the meaning assigned by Section 1301.155.(b)  The administrator of a managed care plan provided under the group benefits program shall pay for covered emergency care performed by or a covered supply related to that care provided by an out-of-network provider at the usual and customary rate or at an agreed rate.  The administrator shall make a payment required by this subsection directly to the provider not later than, as applicable:(1)  the 30th day after the date the administrator receives an electronic claim for those services that includes all information necessary for the administrator to pay the claim; or(2)  the 45th day after the date the administrator receives a nonelectronic claim for those services that includes all information necessary for the administrator to pay the claim.(c)  For emergency care subject to this section or a supply related to that care, an out-of-network provider or a person asserting a claim as an agent or assignee of the provider may not bill a participant in, and the participant does not have financial responsibility for, an amount greater than an applicable copayment, coinsurance, and deductible under the participant's managed care plan that:(1)  is based on:(A)  the amount initially determined payable by the administrator; or(B)  if applicable, a modified amount as determined under the administrator's internal appeal process; and(2)  is not based on any additional amount determined to be owed to the provider under Chapter 1467.
    Added by Acts 2019, 86th Leg., R.S., Ch. 1342 (S.B. 1264), Sec. 1.12, eff. September 1, 2019.

    Sec. 1551.229.  OUT-OF-NETWORK FACILITY-BASED PROVIDER PAYMENTS.  (a)  In this section, "facility-based provider" means a physician or health care provider who provides health care or medical services to patients of a health care facility.(b)  Except as provided by Subsection (d), the administrator of a managed care plan provided under the group benefits program shall pay for a covered health care or medical service performed for or a covered supply related to that service provided to a participant by an out-of-network provider who is a facility-based provider at the usual and customary rate or at an agreed rate if the provider performed the service at a health care facility that is a participating provider.  The administrator shall make a payment required by this subsection directly to the provider not later than, as applicable:(1)  the 30th day after the date the administrator receives an electronic claim for those services that includes all information necessary for the administrator to pay the claim; or(2)  the 45th day after the date the administrator receives a nonelectronic claim for those services that includes all information necessary for the administrator to pay the claim.(c)  Except as provided by Subsection (d), an out-of-network provider who is a facility-based provider or a person asserting a claim as an agent or assignee of the provider may not bill a participant receiving a health care or medical service or supply described by Subsection (b) in, and the participant does not have financial responsibility for, an amount greater than an applicable copayment, coinsurance, and deductible under the participant's managed care plan that:(1)  is based on:(A)  the amount initially determined payable by the administrator; or(B)  if applicable, a modified amount as determined under the administrator's internal appeal process; and(2)  is not based on any additional amount determined to be owed to the provider under Chapter 1467.(d)  This section does not apply to a nonemergency health care or medical service:(1)  that a participant elects to receive in writing in advance of the service with respect to each out-of-network provider providing the service; and(2)  for which an out-of-network provider, before providing the service, provides a complete written disclosure to the participant that:(A)  explains that the provider does not have a contract with the participant's managed care plan;(B)  discloses projected amounts for which the participant may be responsible; and(C)  discloses the circumstances under which the participant would be responsible for those amounts.
    Added by Acts 2019, 86th Leg., R.S., Ch. 1342 (S.B. 1264), Sec. 1.12, eff. September 1, 2019.

    Sec. 1551.230.  OUT-OF-NETWORK DIAGNOSTIC IMAGING PROVIDER OR LABORATORY SERVICE PROVIDER PAYMENTS.  (a)  In this section, "diagnostic imaging provider" and "laboratory service provider" have the meanings assigned by Section 1467.001.(b)  Except as provided by Subsection (d), the administrator of a managed care plan provided under the group benefits program shall pay for a covered health care or medical service performed for or a covered supply related to that service provided to a participant by an out-of-network provider who is a diagnostic imaging provider or laboratory service provider at the usual and customary rate or at an agreed rate if the provider performed the service in connection with a health care or medical service performed by a participating provider.  The administrator shall make a payment required by this subsection directly to the provider not later than, as applicable:(1)  the 30th day after the date the administrator receives an electronic claim for those services that includes all information necessary for the administrator to pay the claim; or(2)  the 45th day after the date the administrator receives a nonelectronic claim for those services that includes all information necessary for the administrator to pay the claim.(c)  Except as provided by Subsection (d), an out-of-network provider who is a diagnostic imaging provider or laboratory service provider or a person asserting a claim as an agent or assignee of the provider may not bill a participant receiving a health care or medical service or supply described by Subsection (b) in, and the participant does not have financial responsibility for, an amount greater than an applicable copayment, coinsurance, and deductible under the participant's managed care plan that:(1)  is based on:(A)  the amount initially determined payable by the administrator; or(B)  if applicable, the modified amount as determined under the administrator's internal appeal process; and(2)  is not based on any additional amount determined to be owed to the provider under Chapter 1467.(d)  This section does not apply to a nonemergency health care or medical service:(1)  that a participant elects to receive in writing in advance of the service with respect to each out-of-network provider providing the service; and(2)  for which an out-of-network provider, before providing the service, provides a complete written disclosure to the participant that:(A)  explains that the provider does not have a contract with the participant's managed care plan;(B)  discloses projected amounts for which the participant may be responsible; and(C)  discloses the circumstances under which the participant would be responsible for those amounts.
    Added by Acts 2019, 86th Leg., R.S., Ch. 1342 (S.B. 1264), Sec. 1.12, eff. September 1, 2019.

    For expiration of this section, see Subsection (f).
    Sec. 1551.231.  OUT-OF-NETWORK EMERGENCY MEDICAL SERVICES PROVIDER PAYMENTS.  (a)  In this section, "emergency medical services provider" has the meaning assigned by Section 773.003, Health and Safety Code, except that the term does not include an air ambulance.(b)  Except as provided by Subsection (c), the administrator of a managed care plan provided under the group benefits program shall pay for a covered health care or medical service performed for, or a covered supply or covered transport related to that service provided to, a participant by an out-of-network provider who is an emergency medical services provider at:(1)  if the political subdivision has submitted the rate to the department under Section 38.006, the rate set, controlled, or regulated by the political subdivision in which:(A)  the service originated; or(B)  the transport originated if transport is provided; or(2)  if the political subdivision has not submitted the rate to the department, the lesser of:(A)  the provider's billed charge; or(B)  325 percent of the current Medicare rate, including any applicable extenders and modifiers.(c)  A political subdivision may annually adjust a rate submitted under Section 38.006 by not more than the lesser of:(1)  the Medicare Ambulance Inflation Factor; or(2)  10 percent of the provider's previous calendar year rates.(d)  The administrator shall make a payment required by this section directly to the provider not later than, as applicable:(1)  the 30th day after the date the administrator receives an electronic claim for those services that includes all information necessary for the administrator to pay the claim; or(2)  the 45th day after the date the administrator receives a nonelectronic claim for those services that includes all information necessary for the administrator to pay the claim.(e)  An out-of-network provider who is an emergency medical services provider or a person asserting a claim as an agent or assignee of the provider may not bill a participant receiving a health care or medical service or supply or transport described by Subsection (b) in, and the participant does not have financial responsibility for, an amount greater than an applicable copayment, coinsurance, and deductible under the participant's managed care plan that is based on:(1)  the amount initially determined payable by the administrator; or(2)  if applicable, the modified amount as determined under the administrator's internal appeal process.(f)  This section expires September 1, 2027.
    Added by Acts 2023, 88th Leg., R.S., Ch. 981 (S.B. 2476), Sec. 10, eff. September 1, 2023.Amended by: Acts 2025, 89th Leg., R.S., Ch. 784 (S.B. 916), Sec. 6, eff. September 1, 2025.

    SUBCHAPTER F. GROUP LIFE AND ACCIDENTAL DEATH AND DISMEMBERMENT INSURANCE COVERAGE PLAN
    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 1551.255.  INCLUSION OF PROVISIONS FOR VIATICAL SETTLEMENTS.  (a)  In this section, "viatical settlement" has the meaning assigned to "life settlement contract" by Section 1111A.002.(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, Sec. 3, eff. June 1, 2003.Amended by: Acts 2011, 82nd Leg., R.S., Ch. 1156 (H.B. 2277), Sec. 16, eff. September 1, 2011.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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 Chapter 240, Property 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, Sec. 3, eff. June 1, 2003.Amended by: Acts 2005, 79th Leg., Ch. 347 (S.B. 1176), Sec. 28, eff. September 1, 2005.Acts 2015, 84th Leg., R.S., Ch. 562 (H.B. 2428), Sec. 12, eff. September 1, 2015.

    SUBCHAPTER G. CONTRIBUTIONS AND COSTS
    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 2.08, eff. Sept. 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 1551.3075.  TOBACCO USER PREMIUM DIFFERENTIAL.  (a)  The board of trustees shall assess each participant in a health benefit plan provided under the group benefits program who uses one or more tobacco products a tobacco user premium differential, to be paid in monthly installments.  Except as provided by Subsection (b), the board of trustees shall determine the amount of the monthly installments of the premium differential.(b)  If the General Appropriations Act for a state fiscal biennium sets the amount of the monthly installments of the tobacco user premium differential for that biennium, the board of trustees shall assess the premium differential during that biennium in the amount prescribed by the General Appropriations Act.
    Added by Acts 2011, 82nd Leg., R.S., Ch. 1249 (S.B. 1664), Sec. 21, eff. September 1, 2011.

    Sec. 1551.3076.  EMPLOYER ENROLLMENT FEE.  (a)  The board of trustees shall assess each employer whose employees participate in the group benefits program an employer enrollment fee in an amount not to exceed a percentage of the employer's total payroll, as determined by the General Appropriations Act.(b)  The board of trustees shall deposit the enrollment fees to the credit of the employees life, accident, and health insurance and benefits fund to be used for the purposes specified by Section 1551.401.
    Added by Acts 2011, 82nd Leg., R.S., Ch. 1249 (S.B. 1664), Sec. 22, eff. September 1, 2011.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 1551.311.  AMOUNT OF STATE CONTRIBUTION.  (a)  Not later than November 1 preceding each regular session of the legislature, the board of trustees, in coordination with the Legislative Budget Board, shall certify to 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, Sec. 3, eff. June 1, 2003.Amended by: Acts 2013, 83rd Leg., R.S., Ch. 812 (S.B. 1812), Sec. 4, eff. June 14, 2013.

    Sec. 1551.3111.  AMOUNT OF STATE CONTRIBUTION FOR CERTAIN JUNIOR COLLEGE EMPLOYEES.  (a)  In computing the amount to be certified under Section 1551.311, for participants who are employed by public junior colleges or public junior college districts, the board of trustees shall include:(1)  50 percent of the cost associated with eligible employees who:(A)  otherwise are eligible to participate in the group benefits program; and(B)  are instructional or administrative employees whose salaries may be fully paid from funds appropriated under the General Appropriations Act, regardless of whether such salaries are actually paid from appropriated funds; and(2)  none of the cost associated with employees who:(A)  do not meet the requirements of Subdivision (1)(B) but are otherwise eligible to participate in the group benefits program; or(B)  cannot be included as a qualifying employee under Subdivision (1) by application of Subsection (c).(b)  For qualifying employees under Subsection (a)(1), the board of trustees shall include only the amount payable by the state under Subsection (a)(1) in determining the amount to be certified under Section 1551.311.(c)  In determining the amount described by Subsection (b), the number of qualifying employees under Subsection (a)(1) whose group benefits program costs may be included for each public junior college or public junior college district in each biennium may not be adjusted in a proportion greater than the change in student enrollment at each college during the reporting period except that a college that experiences a decline in student enrollment may petition the Legislative Budget Board to maintain the number of eligible employees up to 98 percent of the level of the prior biennium.
    Added by Acts 2013, 83rd Leg., R.S., Ch. 812 (S.B. 1812), Sec. 5, eff. June 14, 2013.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 1551.314.  CERTAIN STATE CONTRIBUTIONS PROHIBITED.  A state contribution may not be:(1)  made for coverages under this chapter selected by an individual who receives a state contribution for coverages under a group benefits program provided by another state health plan or by an institution of higher education, as defined by Section 61.003, Education Code; or(2)  made for or used to pay a tobacco user premium differential assessed under Section 1551.3075.
    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 3, eff. June 1, 2003.Amended by: Acts 2011, 82nd Leg., R.S., Ch. 1249 (S.B. 1664), Sec. 23, eff. September 1, 2011.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.  Amended by Acts 2003, 78th Leg., ch. 366, Sec. 2.12, eff. Sept. 1, 2003.Amended by: Acts 2005, 79th Leg., Ch. 178 (H.B. 417), Sec. 2, eff. May 27, 2005.

    Sec. 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 (S.B. 1176), Sec. 29, eff. January 1, 2006.

    Sec. 1551.3196.  AMOUNT OF CONTRIBUTION FOR CERTAIN ANNUITANTS.  (a)  An annuitant receives the benefits of a state contribution for coverage under this chapter based on the annuitant's eligible service credit, as follows:(1)  for an annuitant with 20 years or more of eligible service credit, a full state contribution;(2)  for an annuitant with at least 15 years but less than 20 years of eligible service credit, 75 percent of a full state contribution; and(3)  for an annuitant with less than 15 years of eligible service credit, 50 percent of a full state contribution.(b)  An annuitant receiving a reduced state contribution under Subsection (a) shall have any state contribution for dependent coverage reduced in an amount proportional to the reduction under Subsection (a).(c)  This section does not apply to an individual who:(1)  receives or is eligible to receive an annuity that is based on eligibility under Section 814.002, 814.102, 834.101, 839.101, or 840A.052, Government Code; or(2)  is eligible to participate in the group benefits program under:(A)  Section 1551.102(d) because of a disability; or(B)  Section 1551.102(f).
    Added by Acts 2013, 83rd Leg., R.S., Ch. 618 (S.B. 1459), Sec. 25, eff. September 1, 2014.Amended by: Acts 2023, 88th Leg., R.S., Ch. 1092 (S.B. 1245), Sec. 18, eff. June 18, 2023.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 16.04, eff. Jan. 11, 2004.

    Sec. 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 (S.B. 1863), Sec. 4.04, eff. August 29, 2005.

    SUBCHAPTER H. SANCTIONS AND ADJUDICATION OF CLAIMS
    Sec. 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, Sec. 3, eff. June 1, 2003.  Amended by Acts 2003, 78th Leg., ch. 1111, Sec. 36, eff. Sept. 1, 2003;  Acts 2003, 78th Leg., ch. 1276, Sec. 10A.409(b), eff. Sept. 1, 2003.Amended by: Acts 2005, 79th Leg., Ch. 347 (S.B. 1176), Sec. 30, eff. September 1, 2005.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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 an action for interpleader 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.(c)  A person may not pursue a counterclaim or other cause of action against the Employees Retirement System of Texas, a trustee, officer, or employee of the retirement system, or a carrier or administering firm for the retirement system in connection with a transaction or occurrence related to the interpleader action.(d)  A person who violates Subsection (c) is liable for the costs and attorney's fees incurred by the Employees Retirement System of Texas, a trustee, officer, or employee of the retirement system, or a carrier or administering firm for the retirement system as a result of the violation.
    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 3, eff. June 1, 2003.Amended by: Acts 2009, 81st Leg., R.S., Ch. 1308 (H.B. 2559), Sec. 38, eff. September 1, 2009.

    Sec. 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.(d)  The board of trustees shall develop and implement a process to allow an employee, participant, annuitant, or covered dependent affected by a determination described by Section 1551.352 to participate directly in the process of appealing the determination.
    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 3, eff. June 1, 2003.  Amended by Acts 2003, 78th Leg., ch. 1111, Sec. 37, eff. Sept. 1, 2003.Amended by: Acts 2017, 85th Leg., R.S., Ch. 530 (S.B. 301), Sec. 11, eff. September 1, 2017.

    Sec. 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, Sec. 3, eff. June 1, 2003.  Amended by Acts 2003, 78th Leg., ch. 1111, Sec. 38, eff. Sept. 1. 2003;  Acts 2003, 78th Leg., ch. 1276, Sec. 10A.411(a), eff. Sept. 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.  Amended by Acts 2003, 78th Leg., ch. 1111, Sec. 39, eff. Sept. 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.  Amended by Acts 2003, 78th Leg., ch. 1111, Sec. 40, eff. Sept. 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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 (S.B. 1176), Sec. 31, eff. September 1, 2005.

    Sec. 1551.362.  SUBPOENA.  Notwithstanding any other law, the Employees Retirement System of Texas may issue a subpoena that conforms to Rule 176, Texas Rules of Civil Procedure, including a preappeal investigative subpoena or any subpoena otherwise authorized by the Texas Rules of Civil Procedure, that the retirement system determines necessary to protect the interests of a program or system administered by the retirement system.
    Added by Acts 2009, 81st Leg., R.S., Ch. 1308 (H.B. 2559), Sec. 39, eff. September 1, 2009.

    Sec. 1551.363.  PRECEDENT MANUAL.  (a)  The board of trustees shall develop and maintain a precedent manual relating to the enrollment and claims determinations under Section 1551.352 and appeals of those determinations.  The precedent manual:(1)  must be composed of precedent-establishing determinations made by the board, executive director, or other staff, initially and on appeal, and include examples of previous determinations that are consistent with the identified precedent; and(2)  may include other information identified by the board.(b)  The board of trustees shall make the precedent manual available to appropriate staff and to employees, participants, annuitants, and covered dependents.(c)  The board of trustees and staff involved in the claims appeal process are not bound by a decision in the manual.
    Added by Acts 2017, 85th Leg., R.S., Ch. 530 (S.B. 301), Sec. 12, eff. September 1, 2017.

    SUBCHAPTER I. FUNDS
    Sec. 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.(g)  Except as provided by Section 1551.259(d), the retirement system may deposit to the credit of the fund any unclaimed money on a finding that a good faith effort has been made to locate the person entitled to the money.
    Added by Acts 2001, 77th Leg., ch. 1419, Sec. 3, eff. June 1, 2003.Amended by: Acts 2009, 81st Leg., R.S., Ch. 1308 (H.B. 2559), Sec. 40, eff. September 1, 2009.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    Sec. 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, Sec. 3, eff. June 1, 2003.

    SUBCHAPTER J.  STATE CONSUMER-DIRECTED HEALTH PLAN
    Sec. 1551.451.  DEFINITIONS.  In this subchapter:(1)  "High deductible health plan" means a health benefit plan that complies with Section 223(c), Internal Revenue Code of 1986, and other federal law.(2)  "Plan enrollee" means an employee or annuitant who is enrolled in the plan established under this subchapter.(3)  "Qualified medical expense" means an expense paid by a plan enrollee for medical care, as defined by Section 213(d), Internal Revenue Code of 1986, for the plan enrollee or the enrollee's dependents as defined by Section 152, Internal Revenue Code of 1986.
    Added by Acts 2015, 84th Leg., R.S., Ch. 1015 (H.B. 966), Sec. 1, eff. September 1, 2015.

    Sec. 1551.452.  ESTABLISHMENT OF STATE CONSUMER-DIRECTED HEALTH PLAN.  (a)  The state consumer-directed health plan is established for the benefit of individuals eligible to participate in the group benefits program and those individuals' eligible dependents.(b)  The board of trustees may adopt rules necessary to administer this subchapter.  In implementing this subchapter the board shall:(1)  establish health savings accounts under this subchapter and administer or select an administrator in accordance with Section 1551.453 for the accounts;(2)  finance a self-funded high deductible health plan that:(A)  is an integral part of the state consumer-directed health plan; and(B)  provides health benefit coverage, including preventive health care, to a plan enrollee in the state consumer-directed health plan and to the dependents of a plan enrollee in accordance with Section 1551.455; and(3)  provide to individuals eligible to participate in the group benefits program information regarding the operation of and option to participate in the state consumer-directed health plan established under this subchapter.(c)  In adopting rules and administering health savings accounts or selecting administrators for health savings accounts under this subchapter, the board of trustees shall ensure that the health savings accounts are qualified for appropriate federal tax exemptions.
    Added by Acts 2015, 84th Leg., R.S., Ch. 1015 (H.B. 966), Sec. 1, eff. September 1, 2015.

    Sec. 1551.453.  ACCOUNT ADMINISTRATOR.  (a)  The account administrator selected to administer a health savings account established under this subchapter must be a person:(1)  qualified to serve as trustee under Section 223(d)(1)(B), Internal Revenue Code of 1986, and the rules adopted under that section; and(2)  experienced in administering health savings accounts or other similar trust accounts.(b)  An account administrator is the fiduciary of a plan enrollee who has a health savings account established under this subchapter.
    Added by Acts 2015, 84th Leg., R.S., Ch. 1015 (H.B. 966), Sec. 1, eff. September 1, 2015.

    Sec. 1551.454.  PARTICIPATION IN PROGRAM.  (a)  Each individual eligible to participate in the basic coverage may choose instead to participate in the state consumer-directed health plan if the plan enrollee is an eligible individual under Section 223(c)(1), Internal Revenue Code of 1986.  The dependents of a plan enrollee may participate in the state consumer-directed health plan in accordance with Section 1551.455.(b)  Participation in the state consumer-directed health plan qualifies a plan enrollee to receive a contribution to a health savings account under Section 1551.456.  An individual who elects not to participate in the plan is not eligible to receive a contribution under that section.(c)  Under this section, the board of trustees has exclusive authority to determine an individual's eligibility to participate in the state consumer-directed health plan and may adopt rules regarding eligibility to participate in the plan.
    Added by Acts 2015, 84th Leg., R.S., Ch. 1015 (H.B. 966), Sec. 1, eff. September 1, 2015.

    Sec. 1551.455.  COVERAGE FOR DEPENDENTS; REQUIRED CONTRIBUTIONS.  (a)  A plan enrollee may obtain for the enrollee's dependents coverage in the state consumer-directed health plan in the manner determined by the board of trustees.(b)  If the plan enrollee elects to obtain dependent coverage under Subsection (a), the plan enrollee shall pay any required contribution for the dependent coverage in the state consumer-directed health plan in the manner prescribed by the board of trustees.(c)  Amounts contributed by a plan enrollee under this section may be:(1)  used to pay the cost of coverage in the high deductible health plan not paid by the state under Section 1551.456(b); or(2)  allocated by the board of trustees to an enrollee's health savings account in the manner described by Section 1551.456(c).
    Added by Acts 2015, 84th Leg., R.S., Ch. 1015 (H.B. 966), Sec. 1, eff. September 1, 2015.

    Sec. 1551.456.  STATE CONTRIBUTION.  (a)  For each plan enrollee, from the state contribution that would otherwise be made for basic coverage for the enrollee, the state shall contribute annually to a high deductible health plan under this subchapter the amount that is necessary to pay the cost of coverage under the high deductible health plan and does not exceed the amount the state annually contributes for a full-time or part-time employee, as applicable, who is covered by the basic coverage.(b)  For each plan enrollee's dependent covered under this subchapter, from the state contribution that would otherwise be made for basic coverage for the dependent, the state shall contribute annually to the high deductible health plan under this subchapter the same percentage of the cost of coverage under the high deductible health plan as the state annually contributes for dependent coverage in the basic coverage.(c)  Before each plan year, the board of trustees may determine the amount of allocation of the state's contribution, if any, to an enrollee's health savings account that would otherwise be made for basic coverage for the enrollee and that remains after payment for coverage under Subsection (a) or (b).(d)  For a calendar year, the amount of any allocations made under Subsection (c) and Section 1551.455(c)(2), in the aggregate, may not exceed the sum of the monthly limitations imposed by federal law for health savings accounts.
    Added by Acts 2015, 84th Leg., R.S., Ch. 1015 (H.B. 966), Sec. 1, eff. September 1, 2015.

    Sec. 1551.457.  PLAN ENROLLEE CONTRIBUTIONS.  (a)  Each plan enrollee, in accordance with Section 1551.305, shall contribute any amount required to cover the selected participation in the high deductible health plan that exceeds the state contribution amount under Section 1551.456.(b)  A plan enrollee may contribute any amount allowed under federal law to the enrollee's health savings account in addition to the state contribution under Section 1551.456.(c)  A plan enrollee shall make contributions under this section in the manner prescribed by the board of trustees.
    Added by Acts 2015, 84th Leg., R.S., Ch. 1015 (H.B. 966), Sec. 1, eff. September 1, 2015.

    Sec. 1551.458.  COORDINATION WITH CAFETERIA PLAN.  (a)  The board of trustees has exclusive authority to determine the eligibility of a plan enrollee to participate in any flexible spending account that is part of a cafeteria plan offered under this chapter.(b)  The board of trustees may adopt rules regarding the eligibility of a plan enrollee to participate in any flexible spending account that is part of a cafeteria plan offered under this chapter.(c)  A plan enrollee may not participate in any flexible spending account that would disqualify the enrollee's health savings account from favorable tax treatment under federal law.
    Added by Acts 2015, 84th Leg., R.S., Ch. 1015 (H.B. 966), Sec. 1, eff. September 1, 2015.

    Sec. 1551.459.  EXEMPTION FROM EXECUTION; UNASSIGNABILITY.  A state contribution to a health savings account or a high deductible health plan is exempt from execution and is unassignable in the same manner and to the same extent as an amount described by Section 1551.011.
    Added by Acts 2015, 84th Leg., R.S., Ch. 1015 (H.B. 966), Sec. 1, eff. September 1, 2015.

    Sec. 1551.460.  SINGLE UNDIVIDED RISK POOL.  In implementing and administering the state consumer-directed health plan established under this subchapter, the board of trustees may not divide the self-funded risk pool of the group benefits program provided under this chapter or create a separate self-funded risk pool for that program.
    Added by Acts 2015, 84th Leg., R.S., Ch. 1015 (H.B. 966), Sec. 1, eff. September 1, 2015.