Health Insurance in Texas School Districts
Health Insurance in Texas School Districts Long before the Affordable Care Act was passed, Texas law required school districts to provide employees with access to health insurance and to contribute to premiums. The majority of Texas districts participate in a state-run insurance program. Mandatory Benefits: State law mandates that Texas school districts provide health insurance to employees.1 Districts with 500 or fewer employees are required to participate in TRS-ActiveCare, the group health insurance program operated by the Texas Teacher Retirement System (TRS) for active employees.2 Notwithstanding this rule, a district that was individually self-funded on January 1, 2001, may elect not to participate in TRS-ActiveCare. 3 Districts with more than 500 employees may participate in TRS-ActiveCare or may elect to provide comparable coverage through other means.4 KEY POINTS State law requires every Texas school district to offer health insurance to employees o About 90% of districts participate in TRS-ActiveCare Every employee who is an active, contributing member of TRS is entitled to a premium contribution of at least $225 per month if the employee enrolls in insurance through the district o The state contributes $75 per month; a district must contribute at least $150 per month o State law does not require a district, or the state, to contribute toward the premiums of employees who are not TRS members Mandatory Contribution Levels: State law also mandates minimum contribution levels. Each district must contribute at least $150 per month ($1,800 per year) toward the monthly insurance premiums for each employee who participates in the district’s insurance plan and who is a member of the TRS retirement program.5 In addition, the state pays $75 per month for each qualifying employee.6 Thus, the combined state and district contributions to each employee’s health insurance premiums are at least $225 per month ($2,700 per year) for employees who are members of TRS. Many districts pay more than $225 per month. State law does not require districts to contribute to the premiums of employees who are not TRS members. 1 2 3 4 5 6 Tex. Educ. Code § 22.004. Tex. Educ. Code § 22.004; Tex. Ins. Code §§ 1579.051, .151. Tex. Ins. Code § 1579.151(b). Tex. Ins. Code § 1579.152. Tex. Ins. Code §§ 1579.204, 1581.052(a). Tex. Ins. Code § 1579.251; Contributions to TRS-ActiveCare (Feb. 18, 2011), available at www.trs.state.tx.us/TRS_activecare/documents/contributions_to_trsactivecare.pdf. © 2014. Texas Association of School Boards, Inc. All rights reserved. TASB Legal Services Page 2 TRS-ActiveCare: Currently, over 900 independent school districts—about 90% of the districts in the state—participate in TRS-ActiveCare.7 A person is eligible to enroll in TRS-ActiveCare if the person is employed by a district that participates in the program and:8 The person is an active contributing member of the TRS retirement program; or The person is employed by the participating district for 10 or more regularly scheduled hours per week An employee who is not a participating member in TRS is eligible to participate in TRSActiveCare only if the employee pays all of the premiums and other associated costs.9 Plan sponsor: School districts that participate in TRS-ActiveCare are employers, but they probably are not plan sponsors. The term plan sponsor is generally understood to mean an entity that sets up a healthcare plan for the benefit of the entity’s employees. Plan sponsors determine which employees can participate in the plan and what the plan will cover. Texas school districts that participate in TRS-ActiveCare do not set up the plans. Rather, the plans are controlled by TRS, as trustee of the state-established TRS-ActiveCare program. Similarly, state law and TRS rules, not the individual districts, determine who is eligible to participate.10 The distinction between plan sponsor and employer is important for Texas school districts. The legal responsibilities that the Affordable Care Act (ACA) confers on plan sponsors will generally fall to TRS, whereas the responsibilities conferred on employers will generally fall to districts. Thus, for those districts that participate in TRS-ActiveCare, TRS will manage the plan changes required by the ACA. About ten percent of Texas districts do not participate in TRS-ActiveCare. Districts that do not participate in TRS-ActiveCare should work with their third-party administrators and benefits counsel to ensure that their plans are in compliance with the ACA. Grandfather status: Some of the changes mandated by the ACA are required for all plans. Others apply only to plans that are not grandfathered. In the simplest terms, a grandfathered plan is one that was in existence when the ACA was adopted on March 23, 2010.11 A plan loses its grandfather status if material changes are made to the plan structure or premiums.12 Due to changes in the structure of its plans and to premium increases, TRS-ActiveCare lost grandfather status as of the 2011-12 plan year. 7 8 9 10 11 12 TRS-ActiveCare Participating Entities - 2012-2013, www.trs.state.tx.us/TRS_activecare/documents/trs_activecare_participation_list.pdf. 34 Tex. Admin. Code §§ 41.33(2), (6), .34; TRS-ActiveCare Enrollment Guide: 2013-2014 Health Plans, available at www.bcbstx.com/trs/pdf/1314_trs_enroll.pdf; TRS Affordable Care Act Clarifications, available at www.trs.state.tx.us/global.jsp?page_id=/TRS_activecare/affordable_care_act. Tex. Ins. Code § 1579.204; 34 Tex. Admin. Code § 41.33 (6). See 19 Tex. Admin. Code § 41.34. Hinda Chaikind et al., Cong. Research Serv., R 40942, Private Health Insurance Provisions in PPACA (P.L. 111-148) 5 (2010). See Interim Final Rules for Group Health Plans and Health Insurance Coverage Relating to Status as a Grandfathered Health Plan Under the Patient Protection and Affordable Care Act, 75 Fed. Reg. 34538-570 (June 17, 2010). © 2014. Texas Association of School Boards, Inc. All rights reserved. TASB Legal Services Page 3 Plan year: The TRS-ActiveCare plan year runs from September 1 to August 31.13 Thus, ACA requirements that apply on a plan year basis will take effect for TRS-ActiveCare districts in September 1 of the applicable year. For example, some ACA requirements applied to “plan years beginning on or after six months” from the date of enactment.14 The ACA was enacted on March 23, 2010, and six months after that was September 23, 2010. TRS-ActiveCare’s first plan year beginning after September 23, 2010, was September 1, 2011, a year and a half after the law took effect. Opting out: Districts that participate in TRS-ActiveCare occasionally ask whether they can opt out of the program. TRS rules provide that an entity that participates in TRS-ActiveCare may not discontinue participation unless authorized by Texas Insurance Code chapter 1579 and by appropriate rule or resolution adopted by the TRS Board of Trustees.15 Chapter 1579 does not currently address withdrawal from participation. For more information on this and other school law topics, visit TASB School Law eSource online at schoollawesource.tasb.org. This document is provided for educational purposes only and contains information to facilitate a general understanding of the law. It is not an exhaustive treatment of the law on this subject nor is it intended to substitute for the advice of an attorney. Consult with your own attorneys to apply these legal principles to specific fact situations. Updated October 2014 13 14 15 TRS-ActiveCare Enrollment Guide: 2013-2014 Health Plans, available at www.bcbstx.com/trs/pdf/1314_trs_enroll.pdf. One example is the requirement to provide coverage for preventive health services. Hinda Chaikind et al., Cong. Research Serv., R 40942, Private Health Insurance Provisions in PPACA (P.L. 111-148) 34 (2010). 34 Tex. Admin. Code § 41.30(a)(4). © 2014. Texas Association of School Boards, Inc. All rights reserved. TASB Legal Services
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