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.
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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).
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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.
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