Bill Text: PA HB2080 | 2011-2012 | Regular Session | Introduced


Bill Title: Establishing the Public School Employees' Benefit Board and providing for its powers and duties; requiring a school employee benefits study and evaluation; providing for a Statewide health benefits program for public school employees, for alternative measures for cost reduction and for a retirement health savings plan; and establishing the Public School Employees' Benefit Trust Fund.

Spectrum: Bipartisan Bill

Status: (Introduced - Dead) 2011-12-15 - Referred to EDUCATION [HB2080 Detail]

Download: Pennsylvania-2011-HB2080-Introduced.html

  

 

    

PRINTER'S NO.  2904

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

HOUSE BILL

 

No.

2080

Session of

2011

  

  

INTRODUCED BY O'NEILL, HANNA, BARBIN, BOYD, CALTAGIRONE, D. COSTA, DALEY, GEIST, GINGRICH, GOODMAN, GRELL, HALUSKA, HARKINS, HESS, HORNAMAN, JOSEPHS, MURT, SANTONI, SWANGER AND VULAKOVICH, DECEMBER 15, 2011

  

  

REFERRED TO COMMITTEE ON EDUCATION, DECEMBER 15, 2011  

  

  

  

AN ACT

  

1

Establishing the Public School Employees' Benefit Board and

2

providing for its powers and duties; requiring a school

3

employee benefits study and evaluation; providing for a

4

Statewide health benefits program for public school

5

employees, for alternative measures for cost reduction and

6

for a retirement health savings plan; and establishing the

7

Public School Employees' Benefit Trust Fund.

8

TABLE OF CONTENTS

9

Chapter 1.  Preliminary Provisions

10

Section 101.  Short title.

11

Chapter 3.  Administration of Benefits

12

Subchapter A.  Definitions

13

Section 301.  Definitions.

14

Subchapter B.  Public School Employees' Benefit Board

15

Section 311.  Public School Employees' Benefit Board.

16

Section 312.  Administrative duties of board.

17

Subchapter C.  Study and Options Election

18

Section 321.  School employee health benefits study and

19

evaluation.

 


1

Section 322.  Board review and election.

2

Section 323.  Plan adoption.

3

Subchapter D.  Statewide Health Benefits Program

4

Section 331.  Health benefits program.

5

Section 332.  Participation.

6

Section 333.  Continuation of coverage and transfer employees.

7

Section 334.  Partnership for stable benefits funding.

8

Section 335.  Powers and duties of board.

9

Section 336.  Public School Employees' Benefit Trust Fund.

10

Section 337.  Misrepresentation, refusal to cooperate and fraud.

11

Section 338.  Miscellaneous provisions.

12

Subchapter E.  Alternative Measures for Cost Reduction

13

Section 351.  Alternative measures program.

14

Subchapter F.  Retirement Health Savings Plan

15

Section 361.  Retirement health savings plan.

16

Chapter 5.  Miscellaneous Provisions

17

Section 501.  Feasibility report.

18

Section 502.  Effective date.

19

The General Assembly of the Commonwealth of Pennsylvania

20

hereby enacts as follows:

21

CHAPTER 1

22

PRELIMINARY PROVISIONS

23

Section 101.  Short title.

24

This act shall be known and may be cited as the Public School

25

Employees' Benefit Act.

26

CHAPTER 3

27

ADMINISTRATION OF BENEFITS

28

SUBCHAPTER A

29

DEFINITIONS

30

Section 301.  Definitions.

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1

The following words and phrases when used in this chapter

2

shall have the meanings given to them in this section unless the

3

context clearly indicates otherwise:

4

"Alternate health care plan."  A plan or plan design

5

established by the Public School Employees' Benefit Board

6

pursuant to section 331(f)(2)(ii) which the board in its

7

exclusive authority determines to contain benefits equivalent to

8

the standard benefit package.

9

"Alternative measures program."  A program created by the

10

Public School Employees' Benefit Board in accordance with the

11

provisions of Subchapter E.

12

"Annuitant."  Any "annuitant" or "disability annuitant" as

13

defined in 24 Pa.C.S. § 8102 (relating to definitions).

14

"Best practices."  Standards of criteria, measures and

15

results developed by the Public School Employees' Benefit Board

16

that may be reflective of such standards developed by broadly

17

accepted organizations such as the National Committee for

18

Quality Assurance (NCQA) and the Centers for Medicare and

19

Medicaid Services (CMS), consulting firm benchmarks and medical

20

and industry journals that promote the precisions of efficient

21

delivery and design of employee benefits.

22

"Board."  The Public School Employees' Benefit Board created

23

in section 311.

24

"Board member."  A person designated or appointed to the

25

Public School Employees' Benefit Board pursuant to section

26

311(a).

27

"Consortium."  A coalition of two or more geographically

28

defined public school entities, or a coalition of one or more

29

geographically defined public school entities and one or more

30

political subdivisions as defined by 61 Pa. Code § 315.2

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1

(relating to definitions), formed for the purpose of pooling

2

combined purchasing of the individual participants in order to

3

increase bargaining power to obtain health care benefits.

4

"Contribution rate."  The rate established by the Public

5

School Employees' Benefit Board in accordance with section

6

334(b) and (c) used to determine contributions by the

7

Commonwealth and public school entities for the funding of the

8

standard benefit package for eligible individuals in each health

9

care region.

10

"Cost-sharing."  The fee paid by the member that covers a

11

share of the cost of providing group health benefits under the

12

Statewide health benefits program or the fee paid by a school

13

employee or annuitant that covers a share of the cost of

14

providing health care coverage in a plan sponsored by the public

15

school entity. The term shall not include:

16

(1)  any fee paid by the member, school employee or

17

annuitant at the time of service, such as copayments or

18

deductibles, in order to obtain prescription drugs or other

19

specific health care services; or

20

(2)  any additional cost paid by the member, school

21

employee or annuitant for optional benefit packages.

22

"Eligible individual."  An individual who is a member or the

23

health care dependent of a member.

24

"Employee benefits account."  A ledger account of the Public

25

School Employees' Benefit Trust Fund created in section 336(a)

26

(1).

27

"Employer contribution account."  A ledger account of the

28

Public School Employees' Benefit Trust Fund created in section

29

336(a)(3).

30

"Health care dependent."  An individual who is eligible to

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1

receive health care coverage under the Statewide health benefits

2

program due to the individual's relation to the member, as

3

determined by the Public School Employees' Benefit Board.

4

"Health care region."  The geographic regions determined by

5

the Public School Employees' Benefit Board to be appropriate for

6

providing health benefits for eligible individuals based on the

7

availability of insurance carriers, benefit administrators,

8

health care providers, health care provider networks, costs and

9

any other factors related to health care or the financing of the

10

benefits.

11

"IRC."  The Internal Revenue Code of 1986, as designated and

12

referred to in section 2 of the Tax Reform Act of 1986 (Public

13

Law 99-514, 100 Stat. 2085, 2095). A reference in this chapter

14

to "IRC § " shall be deemed to refer to the identically numbered

15

section and subsection or other subdivision of such section in

16

26 U.S.C. (relating to Internal Revenue Code).

17

"Long-term substitute."  A school employee who is

18

substituting for an officer, administrator or employee of a

19

public school entity for a qualifying period of time to be

20

determined by the Public School Employees' Benefit Board.

21

"Medicare."  The programs established by Title XVIII of the

22

Social Security Act (49 Stat. 620, 42 U.S.C. § 1395 et seq.)

23

which include: Part A, Hospital Insurance Benefits for the Aged

24

and Disabled; Part B, Supplementary Medical Insurance Benefits

25

for the Aged and Disabled; Part C, Medicare+ Choice Program; and

26

Part D, Voluntary Prescription Drug Benefit Program; and

27

including any subsequent changes or additions to those programs.

28

"Member."  An eligible individual who is so specified for

29

enrollment in the Statewide health benefits program and in whose

30

name the identification card is issued. A member can be:

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1

(1)  A school employee.

2

(2)  An annuitant.

3

(3)  A transfer employee.

4

(4)  An individual separated from employment with a

5

public school entity who the Public School Employees' Benefit

6

Board determines is eligible to purchase continuation of

7

coverage in the Statewide health benefits program.

8

(5)  Others as approved by the Public School Employees'

9

Benefit Board.

10

"Optional benefit package."  A plan or plan design

11

established by the Public School Employees' Benefit Board

12

pursuant to section 331(f)(2)(iii) which includes specific

13

health care services that are not part of the standard benefit

14

package.

15

"Participant account holder."  A school employee

16

participating in a retirement health savings plan or a school

17

employee who retires or otherwise terminates employment with a

18

public school entity and becomes eligible to be reimbursed from

19

the employee's retirement health savings plan account for the

20

I.R.C.-qualified health-related expenses. The term shall also

21

include the health care dependent of a school employee who

22

succeeds in interest to a deceased school employee and becomes

23

eligible to be reimbursed for health-related expenses from the

24

school employee's account.

25

"Phase-in period."  The period of program operation in any

26

health care region from the time the Public School Employees'

27

Benefit Board begins implementation of mandatory participation

28

under section 332 until the commencement of the first plan year

29

in which 75% of school districts in that region are

30

participating in the program.

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1

"Program."  The Statewide health benefits program sponsored

2

by the Public School Employees' Benefit Board in accordance with

3

the provisions of Subchapter D.

4

"Public School Code."  The act of March 10, 1949 (P.L.30,

5

No.14), known as the Public School Code of 1949.

6

"Public school entity."  A school district of any class,

7

intermediate unit, area vocational-technical school, charter

8

school or other school, as provided for under the act of March

9

10, 1949 (P.L.30, No.14), known as the Public School Code of

10

1949. The term shall also include the former Scotland School for

11

Veterans' Children and the former Scranton State School for the

12

Deaf.

13

"Qualified majority vote."  A vote by the Public School

14

Employees' Benefit Board requiring the support of a majority of

15

the members of the board present and voting, with the support of

16

at least two board members described in section 311(a)(1), at

17

least two board members appointed under section 311(a)(3) and at

18

least four board members appointed under section 311(a)(2), of

19

whom at least two board members must be appointed under section

20

311(a)(2)(i)(A), to pass.

21

"Qualifying event."  A change in marital status, death of a

22

member or the change in a health care dependent's status,

23

subsequent to the commencement of coverage under this chapter,

24

or the involuntary termination of health plan coverage that was

25

obtained through a health care dependent.

26

"Reserve account."  A ledger account of the Public School

27

Employees' Benefit Trust Fund created in section 336(a)(2).

28

"Retirement system."  The term shall have the same meaning as

29

"system" in 24 Pa.C.S. § 8102 (relating to definitions).

30

"School employee."  Any person regularly employed by or in a

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1

public school entity for which work the person is receiving

2

regular remuneration as an officer, administrator, employee or

3

long-term substitute. The term excludes any independent

4

contractor, person compensated on a fee basis or, unless

5

otherwise determined by the Public School Employees' Benefit

6

Board, any part-time hourly school employee. The term includes

7

any employee of a public school entity who has a position for

8

which eligibility in a health care plan sponsored by the public

9

school entity is in effect as of the effective date of this

10

chapter.

11

"Standard benefit package."  The benefit package established

12

by the Public School Employees' Benefit Board pursuant to

13

section 331(f)(1).

14

"Supplemental benefits."  Dental care, vision care and

15

employee assistance program benefits that may be offered in

16

addition to medical and hospital services and prescription drug

17

benefits.

18

"Transfer employee."  A person who is not a school employee

19

who is regularly employed at a worksite in a public school

20

entity, regardless of who actually employs the person, if the

21

person is performing services previously performed by a school

22

employee.

23

"Trust fund."  The Public School Employees' Benefit Trust

24

Fund established in section 336.

25

SUBCHAPTER B

26

PUBLIC SCHOOL EMPLOYEES' BENEFIT BOARD

27

Section 311.  Public School Employees' Benefit Board.

28

(a)  Status and membership.--The board shall be an

29

independent administrative board and shall consist of the

30

following board members:

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1

(1)  The Secretary of the Budget, the Secretary of

2

Education, the Secretary of Administration and the Insurance

3

Commissioner, who shall serve ex officio.

4

(2)  Eight persons representing school employees who are

5

covered by the program appointed in the following manner:

6

(i)  Six persons representing school employees who

7

are covered by the program in an approximate proportion

8

to the percentage of professional employees represented

9

in collective bargaining by school employee unions

10

working in public school entities that will be covered by

11

the program when it is fully operational and based on

12

full participation by all school entities, appointed by

13

the Governor and chosen from a list of candidates

14

submitted by those school employee unions; provided that

15

all of the following shall occur:

16

(A)  no fewer than five persons shall be

17

appointed from a list of candidates submitted by the

18

school employee union that on the effective date of

19

this chapter represents in collective bargaining the

20

greatest proportion of all professional employees

21

working in public school entities that will be

22

covered by the program when it is fully operational

23

based on full participation by all school entities;

24

(B)  no less than one person shall be appointed

25

from a list of candidates submitted by any school

26

employee union that on the effective date of this

27

chapter represents in collective bargaining more than

28

4,000 professional employees working in public school

29

entities that will be covered by the program when it

30

is fully operational; and

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1

(ii)  Two persons representing school employees who

2

are covered by the program represented in collective

3

bargaining by school employee unions other than school

4

employee unions within subparagraph (i) appointed by the

5

Governor and chosen from a list of candidates submitted

6

by those school employee unions other than school

7

employee unions within subparagraph (i).

8

(iii)  For purposes of this section "school employee

9

unions" shall include a Statewide affiliate of such

10

school employee unions.

11

(3)  Four persons representing public school entity

12

employers appointed by the Governor and chosen from a list of

13

candidates submitted by the Pennsylvania School Boards

14

Association. At least one of the school entity employer

15

representatives initially named to the board shall be a

16

member of a consortium board.

17

The school employee unions and the Pennsylvania School Boards

18

Association shall provide the Governor with their respective

19

lists of candidates within 15 days following the effective date

20

of this section. The Governor shall make his appointments within

21

45 days following receipt of the lists.

22

(b)  Terms.--

23

(1)  Three board members appointed under subsection (a)

24

(2)(i), as designated by the Governor, shall serve a term of

25

two years, and three board members appointed under subsection

26

(a)(2)(i), as designated by the Governor, shall serve a term

27

of four years.

28

(2)  One board member appointed under subsection (a)(2)

29

(ii), as designated by the Governor, shall serve a term of

30

two years, and one board member appointed under subsection

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1

(a)(2)(ii), as designated by the Governor, shall serve a term

2

of four years.

3

(3)  Two board members appointed under subsection (a)(3),

4

as designated by the Governor, shall serve a term of two

5

years, and two board members appointed under subsection (a)

6

(3), as designated by the Governor, shall serve a term of

7

four years, except that the Pennsylvania School Boards

8

Association shall designate for which initial term the

9

representative who is a member of a consortium board shall

10

serve.

11

(4)  Successors for all board members shall be appointed

12

for terms of four years, except as provided in subsection

13

(d). Board members shall be eligible for reappointment.

14

(c)  Meetings.--The board shall meet as needed to fulfill its

15

duties, and nine board members shall constitute a quorum. Board

16

members shall elect the chairman of the board. Except in

17

instances where a qualified majority is required under this

18

chapter, a majority of the board members present and voting

19

shall have authority to act upon any matter. The board is

20

authorized to establish rules of its operation, including a

21

provision for the removal of board members for nonattendance.

22

(d)  Vacancies.--A vacancy occurring during the term of any

23

board member shall be filled for the unexpired term by a

24

successor appointed in the same manner as his predecessor. The

25

school employee unions and the Pennsylvania School Boards

26

Association shall provide the Governor with their respective

27

lists of candidates within 60 days prior to the end of a

28

member's term or within 15 days of any other vacancy.

29

(e)  Oath of office.--Each board member shall take an oath of

30

office that the member will, so far as it devolves upon the

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1

member, diligently and honestly administer the affairs of the

2

board and that the member will not knowingly violate or

3

willfully permit to be violated any of the provisions of law

4

applicable to this chapter. The oath shall be subscribed by the

5

board member making it and certified by the officer before whom

6

it is taken and shall be immediately filed in the office of the

7

Secretary of the Commonwealth.

8

(f)  Compensation and expenses.--Board members who are

9

members of the retirement system or the State Employees'

10

Retirement System shall serve without compensation. Board

11

members who are members of the retirement system and who are

12

employed by a public school entity shall not suffer loss of

13

salary or wages through serving on the board. The board, on

14

request of the employer of any board member who is an active

15

professional or nonprofessional member of the retirement system,

16

may reimburse the employer for the salary or wages of the member

17

or for the cost of employing a substitute for the board member

18

while the board member is necessarily absent from employment to

19

execute the duties of the board. The board members who are not

20

members of either the retirement system or the State Employees'

21

Retirement System may be paid $100 per day when attending

22

meetings, and all board members shall be reimbursed for any

23

necessary expenses. When, however, the duties of the board as

24

mandated are not executed, no compensation or reimbursement for

25

expenses of board members shall be paid or payable during the

26

period in which the duties are not executed.

27

(g)  Corporate power and legal advisor.--For the purposes of

28

this chapter, the board shall possess the power and privileges

29

of a corporation. The Office of General Counsel shall be the

30

legal advisor of the board.

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1

(h)  Duties of the board.--The board shall have the power and

2

authority to carry out the duties established by this chapter,

3

including the design, implementation and administration of the

4

school employee health benefits study pursuant to Subchapter C

5

and either the Statewide health benefits program if approved

6

pursuant to section 323 or the alternative measures program if

7

created pursuant to section 351.

8

Section 312.  Administrative duties of board.

9

(a)  Employees.--The compensation of all officers and

10

employees of the board who are not covered by a collective

11

bargaining agreement shall be established by the board

12

consistent with the standards of compensation established by the

13

Executive Board.

14

(b)  Secretary.--The board shall select a secretary, who

15

shall not be a board member. The secretary shall act as chief

16

administrative officer for the board. In addition to other

17

powers and duties conferred upon and delegated to the secretary

18

by the board, the secretary shall:

19

(1)  Serve as the administrative agent of the board and

20

as liaison between the board and applicable legislative

21

committees.

22

(2)  Review and analyze proposed legislation and

23

legislative developments affecting the program and present

24

findings to the board, legislative committees and other

25

interested groups or individuals.

26

(3)  Receive inquiries and requests for information

27

concerning the program from the press, Commonwealth

28

officials, public school entities, school employees and the

29

general public and provide information as authorized by the

30

board.

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1

(c)  Professional personnel.--The board may employ or

2

contract with consultants and other professional personnel as

3

needed to conduct the school employee health benefits study and

4

evaluation pursuant to Subchapter C and to operate the program,

5

including third-party administrators, managed care managers,

6

chief medical examiners, actuaries, investment advisors and

7

managers, legal counsel and other professional personnel as it

8

deems advisable. The board may also contract for the services of

9

any national or State banking corporation or association having

10

trust powers, with respect to carrying out the business and

11

other matters of the program.

12

(d)  Expenses.--The board shall, through the Governor, submit

13

to the General Assembly annually a budget covering the

14

administrative expenses of this chapter. The expenses, as

15

approved by the General Assembly in an appropriation bill, shall

16

be paid:

17

(1)  from the General Fund; or

18

(2)  starting in the first fiscal year after the

19

transition period is complete and every fiscal year

20

thereafter, from reserves and investment earnings of the

21

trust fund.

22

(e)  Meetings.--The board shall hold at least four regular

23

meetings annually and other meetings as it may deem necessary.

24

(f)  Records.--The board shall keep a record of all its

25

proceedings which shall be open to inspection by the public.

26

(g)  Procurement.--The board shall not be subject to 62

27

Pa.C.S. Pt. I (relating to Commonwealth Procurement Code).

28

(h)  Temporary regulations.--

29

(1)  Notwithstanding any other provision of law to the

30

contrary and in order to facilitate the prompt implementation

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1

of this chapter, regulations promulgated by the board during

2

the two years following the effective date of this chapter

3

shall be deemed temporary regulations which shall expire no

4

later than three years following the effective date of this

5

chapter or upon promulgation of regulations as generally

6

provided by law. The temporary regulations shall not be

7

subject to:

8

(i)  Sections 201, 202, 203, 204 and 205 of the act

9

of July 31, 1968 (P.L.769, No.240), referred to as the

10

Commonwealth Documents Law.

11

(ii)  The act of June 25, 1982 (P.L.633, No.181),

12

known as the Regulatory Review Act.

13

(2)  The authority provided to the board to adopt

14

temporary regulations in this subsection shall expire two

15

years from the effect date of this chapter. Regulations

16

adopted after the two-year period shall be promulgated as

17

provided by law.

18

(i)  Postretirement benefits study.--The board shall conduct

19

an assessment of public school entity postretirement health care

20

liability in this Commonwealth and publish a report providing

21

generalized data regarding the scope of the liability to be

22

borne by public school entities and measures implemented by

23

public school entities to prepare for this liability. This

24

assessment may be conducted in conjunction with the study

25

required by section 321.

26

SUBCHAPTER C

27

STUDY AND OPTIONS ELECTION

28

Section 321.  School employee health benefits study and

29

evaluation.

30

(a)  Study.--The board shall conduct a thorough evaluation of

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1

existing health care arrangements covering school employees in

2

this Commonwealth, examine future cost forecasts and collect

3

data necessary to determine if the board could construct and

4

sponsor a health care benefit program that would reduce long-

5

term costs or the rate of growth of long-term costs in the

6

aggregate for public school entities while maintaining a

7

comprehensive package of quality health care benefits for school

8

employees. The board shall conduct the study as provided under

9

this section.

10

(b)  Data elements.--No later than 60 days after the board is

11

constituted, the board shall determine the information necessary

12

to evaluate the existing health care arrangements covering

13

school employees in this Commonwealth and begin to collect the

14

data, including, but not limited to:

15

(1)  The total cost of providing medical/hospital and

16

prescription drug coverage.

17

(2)  The types and levels of coverage currently made

18

available to school employees.

19

(3)  The nature of health care purchasing arrangements.

20

(4)  An explanation and estimate of any financial

21

obligation of or funds owed to a public school entity related

22

to the termination of coverage under a school district-

23

sponsored health benefits plan.

24

(5)  An estimate of the amount of and basis for claims

25

which may be outstanding during the transition for public

26

school entities which self-fund their coverage and the status

27

of any reserves established for such outstanding claims.

28

(6)  The term and effect of collective bargaining

29

agreements governing health benefits.

30

(7)  The amount and basis of any school employee cost-

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1

sharing, both individual and in aggregate.

2

(8)  The total amount of employer-paid costs in

3

aggregate.

4

(9)  An assessment of any postretirement health care

5

benefit liabilities and claims experience data.

6

(c)  Data sources.--All entities providing health benefit

7

coverage for eligible individuals or administering coverage for

8

health benefits under this chapter shall provide information on

9

coverage, benefits, plan design, claims data, premiums, cost-

10

sharing and financial arrangements as the board shall specify to

11

meet the requirements of subsection (b). Notwithstanding any law

12

to the contrary, any agency, authority, board, commission,

13

council, department or office under the jurisdiction of the

14

Governor shall cooperate with the board in its collection of

15

health insurance or health care coverage data as specified by

16

the board to effectuate this section in accordance with this

17

section.

18

(d)  Public school entities.--The Secretary of Education

19

shall assist the board in obtaining the necessary data for the

20

study from public school entities and consortia. In the event it

21

is necessary to facilitate the collection of data from a

22

noncooperating public school entity or consortium, the Secretary

23

of Education may request the State Treasurer to cause the

24

suspension of any payment of moneys due to the noncooperating

25

public school entity or public school entities that are

26

participants in a noncooperating consortium on account of any

27

appropriation for schools or other purposes until the necessary

28

information is properly provided. A public school entity shall

29

be notified before any payments are suspended and may appeal to

30

the secretary and request an extension of time if there have

- 17 -

 


1

been extenuating circumstances preventing the timely submission

2

of all necessary information. In considering an appeal, the

3

secretary may grant an extension of time for the public school

4

entity or consortium to provide the necessary information before

5

the suspension is instituted. The board is authorized and shall

6

authorize school entities and consortia to enter into agreements

7

with entities providing or administering coverage for health

8

care benefits under this chapter for the purpose of carrying out

9

the provisions of this section.

10

(e)  Health benefit entities.--

11

(1)  An entity providing or administering health

12

insurance or health care coverage for public school

13

employees, with the exception of public school entities or

14

consortia as provided for in subsection (d), shall, upon the

15

written request of the board, public school entities,

16

consortium or insured, provide claims and loss information

17

within 60 days of the request or sooner, if so determined by

18

the board.

19

(2)  The Insurance Commissioner, the Department of Health

20

and any other agency, authority, board, commission, council,

21

department or office under the jurisdiction of the Governor

22

having regulatory authority over any entity charged under

23

paragraph (1), hereafter known as "regulating authority,"

24

shall cooperate with the board, if necessary, to obtain

25

information from any insurance company, third-party

26

administrator or other administrator or provider of health

27

insurance benefits for school employees, other than a public

28

school entity or consortium. Following notice and hearing,

29

the board may impose an order assessing a penalty of up to

30

$1,000 per day upon any entity, other than a public school

- 18 -

 


1

entity or consortium, that willfully fails to comply with the

2

obligations imposed by this section. If the entity does not

3

comply with the obligations imposed by this section within 15

4

days of an order being imposed, the board shall notify the

5

regulating authority of the failure of an entity under its

6

jurisdiction to provide data as set forth in this section.

7

Upon notification, the regulating authority shall suspend or

8

revoke the license of the entity or otherwise suspend or

9

revoke the entity's ability to operate until such time as the

10

board notifies the regulating authority that the entity is in

11

compliance. The board shall have standing to petition the

12

Commonwealth Court to seek enforcement of the order.

13

(3)  This subsection shall apply to every entity

14

providing or administering group health coverage in

15

connection with providing health care benefits to school

16

employees within this Commonwealth, including plans,

17

policies, contracts or certificates issued by:

18

(i)  A stock insurance company incorporated for any

19

of the purposes set forth in section 202(c) of the act of

20

May 17, 1921 (P.L.682, No.284), known as The Insurance

21

Company Law of 1921.

22

(ii)  A mutual insurance company incorporated for any

23

of the purposes set forth in section 202(d) of The

24

Insurance Company Law of 1921.

25

(iii)  A professional health services plan

26

corporation as defined in 40 Pa.C.S. Ch. 63 (relating to

27

professional health services plan corporations).

28

(iv)  A health maintenance organization as defined in

29

the act of December 29, 1972 (P.L.1701, No.364), known as

30

the Health Maintenance Organization Act.

- 19 -

 


1

(v)  A fraternal benefit society as defined in

2

section 2403 of The Insurance Company Law of 1921.

3

(vi)  A hospital plan corporation as defined in 40

4

Pa.C.S. Ch. 61 (relating to hospital plan corporations).

5

(vii)  Health care plans subject to the Employee

6

Retirement Income Security Act of 1974 (Public Law

7

93-406, 88 Stat. 829), to the maximum extent permitted by

8

Federal law.

9

(viii)  An administrator as defined in section 1002

10

of the act of May 17, 1921 (P.L.789, No.285), known as

11

The Insurance Department Act of 1921.

12

(ix)  A person licensed pursuant to Article VI-A of

13

The Insurance Department Act of 1921.

14

(x)  Any other person providing or administering

15

group health care coverage on behalf of a public school

16

entity, or accepting charges or premiums from a public

17

school entity, in connection with providing health care

18

coverage for school employees, including, but not limited

19

to, multiple employer welfare arrangements, self-insured

20

public school entities and third-party administrators.

21

(f)  Confidentiality.--Any data requested by or provided to

22

the board pursuant to this section shall comply with the

23

standards for privacy established pursuant to the Health

24

Insurance Portability and Accountability Act of 1996 (Public Law

25

104-191, 110 Stat. 1936).

26

(g)  Prepared materials.--Any documents, materials or

27

information solely prepared or created for the purpose of

28

implementation of subsection (b) are confidential and shall not

29

be discoverable or admissible as evidence in any civil or

30

administrative action or proceeding. Any documents, materials,

- 20 -

 


1

records or information that would otherwise be available from

2

original sources shall not be construed as immune from discovery

3

or use in any civil or administrative action or proceeding

4

merely because they were presented to the board. Nothing in this

5

subsection shall be construed to prevent publication or

6

dissemination of the aggregate study findings.

7

(h)  Received materials.--Any documents, materials or

8

information received by the board or by a department under the

9

jurisdiction of the Governor on the board's behalf for the

10

purpose of implementation of subsection (b) shall not be

11

discoverable from the board, any department or the submitting

12

entity, nor shall they be admissible as evidence in any civil or

13

administrative action or proceeding. Any documents, materials,

14

records or information that would otherwise be available from

15

original sources shall not be construed as immune from discovery

16

or use in any civil or administrative action or proceeding

17

merely because they were received by the board or any

18

department.

19

(i)  Document review.--No current or former member or

20

employee of the board or any department shall be allowed to

21

testify as to any matters by reason of the member's or

22

employee's review of documents, materials, records or

23

information submitted to the board by the entity providing

24

health insurance or health care coverage pursuant to subsection

25

(b). The enjoinment of testimony does not apply to findings or

26

actions by the board or any department that are public records.

27

(j)  Original source document.--In the event an original

28

source document as set forth in subsection (g) is determined by

29

a court of competent jurisdiction to be unavailable from the

30

entity providing health insurance or health care coverage in a

- 21 -

 


1

civil action or proceeding, then, in that circumstance alone,

2

the board may be required pursuant to a court order to release

3

that original source document to the party identified in the

4

court order.

5

(k)  Right-to-know requests.--Any documents, materials or

6

information made confidential by subsection (f) shall not be

7

subject to requests under the act of February 14, 2008 (P.L.6,

8

No.3), known as the Right-to-Know Law, or any successor statute.

9

(l)  Liability.--Notwithstanding any other provision of law,

10

no person or entity providing any documents, materials or

11

information to the board, any department or other entity on the

12

board's behalf shall be held by reason of having provided the

13

documents, materials or information to have violated any

14

criminal law, or to be civilly liable under any law, unless the

15

information is false and the person providing the information

16

knew or had reason to believe that the information was false and

17

was motivated by malice toward any person directly affected by

18

the action.

19

Section 322.  Board review and election.

20

(a)  Options assessment.--Upon collection of the necessary

21

information, the board shall evaluate existing public school

22

entity health care arrangements, examine options that would

23

aggregate, either Statewide or regionally, health care coverage

24

for public school employees, assess possible cost-management

25

improvements and solicit input from public school entities and

26

consortia identified with best practice standards. The board

27

shall investigate the creation of a Statewide health benefits

28

program as provided for in section 331 with the goal of

29

improving the overall affordability of providing health care

30

coverage for public school employees. The cost projections shall

- 22 -

 


1

be predicated on a plan that provides quality health care

2

benefits at a level consistent with those now provided to most

3

school employees through existing collective bargaining

4

contracts and offers coverage to school employees and other

5

eligible individuals.

6

(b)  Election to proceed with program.--No later than ten

7

months after the board is constituted, unless a request by the

8

board for an extension is granted by the Governor, the board

9

shall decide whether to implement a Statewide health benefits

10

program, as provided for in section 331, or to implement an

11

alternative measures program, as provided for in section 351, to

12

reduce health coverage costs for public school entities. The

13

board's election to implement a Statewide health benefits

14

program or to implement an alternative measures program shall

15

require approval by a qualified majority vote. Upon election to

16

proceed with a Statewide health benefits program, the board

17

shall develop a plan for adoption, pursuant to section 323.

18

(c)  Alternative election.--If the board decides that a

19

Statewide health benefits program cannot be created in

20

accordance with subsection (a), or the board fails to achieve

21

agreement and approve a plan for implementing a Statewide health

22

benefits program, the board will proceed with consideration of

23

an alternative measures program that will reduce long-term costs

24

or the rate of growth of such costs in the aggregate for public

25

school entities in accordance with Subchapter E.

26

Section 323.  Plan adoption.

27

(a)  Statewide health benefits program adoption.--Within

28

three months of electing to proceed with the Statewide health

29

benefits program, pursuant to section 322(b), the board shall

30

verify that implementation of a Statewide health care program

- 23 -

 


1

will result in reduction in the Statewide aggregate cost of the

2

purchase of benefits or the rate of growth of such costs and

3

adopt a proposed plan for the implementation of the program. The

4

proposed plan shall be in writing and shall include a detailed

5

description of the program and the transition procedures

6

necessary to phase in and implement the program. The board's

7

adoption of a proposed plan shall require approval by a

8

qualified majority vote.

9

(b)  Parameters of program.--The description of the Statewide

10

health benefits program shall at minimum include:

11

(1)  The eligibility requirements for a school employee

12

and the employee's health care dependents to qualify for

13

participation in the program.

14

(2)  The identification of the benefits to be included as

15

part of the standard benefit package.

16

(3)  Disclosure of any member cost-sharing contributions,

17

whether expressed as a target percentage of overall program

18

costs or individually determined as a percentage of salary

19

and whether the cost-sharing is uniform on a Statewide basis

20

or varies by health care region.

21

(4)  The designation of health care regions.

22

(5)  The design of the Statewide pool or regional pools

23

that would be established to aggregate public school entities

24

for the purpose of purchasing services and managing health

25

insurance risks.

26

(6)  The requirements for electronic eligibility

27

transmission between the board and other participating

28

entities, including public school entities, consortia and the

29

retirement system.

30

(7)  Financial and accounting plans, including the

- 24 -

 


1

establishment of any necessary reserves or escrow accounts

2

with carriers.

3

(8)  The method to be used to compare costs and levels of

4

health care benefits pursuant to section 332(d)(2).

5

(c)  Transition procedures.--The description of the steps to

6

phase in and implement the Statewide health benefits program

7

shall at minimum include:

8

(1)  A determination of when the standard benefit package

9

shall become the mandatory program offering for eligible

10

individuals in a public school entity as health care benefits

11

for school employees are normalized on a Statewide basis.

12

(2)  A determination, based on the size and structure of

13

any risk pool established within a health care region, as to

14

when the program would be phased in within that region.

15

(3)  The interim steps to aggregate public school

16

entities into a Statewide pool or regional pools, including

17

any best practice standards and benchmarks to be applied to

18

new or existing consortia, or public school entities, or in

19

any selection process to build a Statewide or regional pool.

20

(4)  Transition rules on member cost-sharing

21

responsibility until any member cost-sharing is required for

22

all members Statewide, or within any region.

23

(5)  Transition rules to limit any negative financial

24

impact on a public school entity required to purchase health

25

care coverage through a Statewide or regional pool and to

26

normalize contribution rates for all participating public

27

school entities within the same health care region.

28

(d)  Alternative measures program adoption.--Within three

29

months of proceeding with consideration of an alternative

30

measures program pursuant to section 322(c), the board shall

- 25 -

 


1

adopt a proposed plan for the implementation of an alternative

2

measures program, pursuant to Subchapter E, that will result in

3

reduction in the Statewide aggregate cost of the purchase of

4

benefits or the rate of growth of such costs. The proposed plan

5

shall be in writing and shall include a detailed description and

6

the transition procedures necessary to phase in and implement

7

the alternative measures program. The board's adoption of a

8

proposed plan for implementation of an alternative measures

9

program shall require approval by a qualified majority vote.

10

(e)  Legislative and public review.--

11

(1)  The board shall publish the provisions of any

12

proposed plan adopted pursuant to this section in the

13

Pennsylvania Bulletin and make it available on the board's

14

Internet website. Following publication, the board shall

15

schedule at least eight public hearings to solicit public

16

input on the plan. The hearings shall be conducted in

17

Philadelphia County; Allegheny County; and the Northeast,

18

Northwest, Southeast, Southwest, North Central and South

19

Central regions of this Commonwealth.

20

(2)  The board shall submit the provisions of any

21

proposed plan adopted pursuant to this section to the

22

chairman and minority chairman of the Education Committee of

23

the Senate and the chairman and minority chairman of the

24

Education Committee of the House of Representatives. The

25

committees shall have 45 days to review the proposed plan and

26

submit comments to the board.

27

(f)  Final plan adoption.--Upon completion of the public

28

hearings pursuant to subsection (e)(1) and expiration of the

29

committee review pursuant to subsection (e)(2), the board shall

30

review all the testimony and comments received regarding the

- 26 -

 


1

proposed plan. The board may, subject to a qualified majority

2

vote, make changes and adjustments to the plan to effectuate

3

this chapter. Within 90 days of publishing the proposed plan,

4

pursuant to subsection (e)(1), the board shall publish the final

5

plan, as adopted by the board, in the Pennsylvania Bulletin and

6

on the Internet website of the Department of Education.

7

(g)  Legislative oversight.--The board shall proceed with

8

implementation unless a resolution to the contrary has been

9

adopted within 45 days after publication of the plan, in

10

accordance with this subsection. Upon publication of the final

11

adopted plan in the Pennsylvania Bulletin, the board shall

12

submit the plan to the Education Committee of the Senate and the

13

Education Committee of the House of Representatives. Either

14

committee may recommend to its respective chamber whether the

15

board shall be prevented from implementing the plan. If the

16

committee recommends the plan not be implemented, the Secretary

17

of the Senate or the Chief Clerk of the House of Representatives

18

shall place on the calendar for the next legislative day the

19

question, in the form of a resolution, of whether the board

20

shall proceed with implementation. If the resolution is adopted

21

in either chamber, it shall be referred to the Education

22

Committee in the opposite chamber which may recommend the board

23

not implement the plan. Upon the recommendation, the resolution

24

shall be placed on the calendar of the chamber. If a majority of

25

the members elected to each House approve the resolution, the

26

resolution shall be presented to the Governor for approval or

27

disapproval in accordance with section 9 of Article III of the

28

Constitution of Pennsylvania.

29

(h)  Failure to reach consensus.--If the board fails to

30

achieve agreement and approve a plan for implementing a

- 27 -

 


1

Statewide health benefits program by a qualified majority vote

2

or if the board fails to achieve agreement and approve a plan

3

for implementing an alternative measures program by a qualified

4

majority vote, the board shall report as to its findings and

5

reasons preventing agreement on a plan to the Governor, the

6

President pro tempore of the Senate and the Speaker of the House

7

of Representatives.

8

SUBCHAPTER D

9

STATEWIDE HEALTH BENEFITS PROGRAM

10

Section 331.  Health benefits program.

11

(a)  Creation.--Upon adoption of a Statewide health plan

12

under section 323(f), the board shall proceed to initiate and

13

sponsor an employee benefits program for eligible individuals.

14

(b)  Program design.--The board shall design a program which

15

follows the parameters of the plan and transition procedures as

16

established in section 323. The board may develop and administer

17

the program itself or operate through any legal entity

18

authorized by law to do so, including consortia, and the program

19

may be developed and administered differently within each health

20

care region as long as a standard benefit package that is

21

substantially equivalent in coverage, as determined by the

22

board, is available to eligible individuals. The program may

23

also be administered in whole or in part on a fully insured or

24

self-funded basis at the board's sole discretion. The board

25

shall seek no fewer than three proposals for the administration

26

of the program.

27

(c)  Implementation.--The board may:

28

(1)  Establish pools for selected areas of coverage, such

29

as pharmacy services, transplants, stop-loss insurance,

30

health care management or other possible areas that in the

- 28 -

 


1

board's judgment can be offered Statewide or regionally on a

2

more stable and cost-effective basis. The board may offer

3

separate plans to public school entities and consortia prior

4

to the phase-in of the standard benefit package.

5

(2)  Make the program available in some health care

6

regions before it is made available within all regions.

7

(d)  Eligibility requirements.--The board shall have full

8

authority to determine eligibility requirements for benefits and

9

to adopt rules and regulations setting forth the same which will

10

be binding on all eligible individuals. No coverage shall be

11

provided for eligible individuals without payment being made,

12

except under circumstances as may be established by the board

13

under reasonable guidelines.

14

(e)  Coverage and plan selection.--The board shall have full

15

authority to select and contract with insurance carriers, health

16

maintenance organizations, pharmacy benefit managers, third-

17

party administrators, reinsurers and any other entities

18

necessary to provide a range of benefit packages to eligible

19

individuals through the program. The board shall have full

20

authority to determine the nature, amount and duration and

21

discontinuation of coverage to be provided.

22

(f)  Standard and optional benefits.--

23

(1)  A standard benefit package shall be established by

24

the board that shall include coverage for medical and

25

hospital services, prescription drugs and may include

26

supplemental and other benefits in amounts to be determined

27

by the board.

28

(2)  Within each health care region, the board shall

29

approve and make available to each eligible individual

30

affiliated with a public school entity which is participating

- 29 -

 


1

in the program the following:

2

(i)  A health care plan that includes coverage the

3

board determines to be the equivalent of the standard

4

benefit package established in paragraph (1).

5

(ii)  One or more alternate health care plans or plan

6

designs which in the board's judgment contain benefits

7

equivalent to the standard benefit package in paragraph

8

(1). The deductibles and copayments for each alternate

9

health care plan shall be set and annually adjusted so

10

that the cost of providing the coverage for the

11

Commonwealth and a public school entity is no greater

12

than the cost incurred for the health plan in

13

subparagraph (i).

14

(iii)  One or more optional benefit plans, as

15

approved by the board, which allow an eligible individual

16

to purchase coverage that is not included in the standard

17

benefit package, provided that any cost over and above

18

the cost of the health care plan in subparagraph (i) is

19

to be paid by the member except as otherwise provided in

20

section 338(f)(1)(ii).

21

(3)  The detailed basis on which payment of benefits is

22

to be made shall be specified in writing. The benefits

23

provided in this chapter are subject to change or

24

modification by the board from time to time as the board, in

25

its discretion, may determine. All changes or modifications

26

shall be specified in writing and communicated to members

27

within a reasonable period of time.

28

Section 332.  Participation.

29

(a)  Mandatory participation.--The board shall have the

30

authority to require public school entities to participate in

- 30 -

 


1

the program on a Statewide basis or may phase in and require

2

participation on a regional basis. Except as provided under

3

subsections (c), (d), (e) and (f), public school entities in any

4

health care region designated by the board shall be required to

5

participate in the program.

6

(b)  Transition plan.--When the board determines pursuant to

7

subsection (a) that a public school entity shall be required to

8

participate in the program, the public school entity or

9

consortium in which the public school entity is a participant

10

shall, within a reasonable period of time as determined by the

11

board, present to the board a transition plan with a schedule

12

for the eventual migration of school employees into the program.

13

The board shall review the transition plan with the public

14

school entity or consortium and make any necessary modifications

15

before granting approval of the plan. A public school entity or

16

consortium shall be subject to adherence to the transition plan

17

approved by the board.

18

(c)  Extensions of time.--The board shall give due

19

consideration to a transition plan submitted pursuant to

20

subsection (b) that includes a request for an extension of time.

21

Requests may be submitted by, but shall not be limited to, any

22

of the following:

23

(1)  A public school entity that participates in a

24

consortium where an extension of time is necessary for the

25

rundown and proper termination of the consortium's health

26

care program.

27

(2)  A public school entity that participates in a

28

consortium where the withdrawal of the public school entity

29

may undermine the financial stability of the consortium.

30

(3)  A public school entity or a consortium which will

- 31 -

 


1

incur a significant financial penalty under terms of a

2

contract with an insurance carrier or other provider of

3

health care coverage for a contract in existence on or before

4

January 1, 2010.

5

(4)  A public school entity or consortium which will

6

incur a significant financial cost, including fees, penalties

7

or other contractual financial obligations, related to the

8

termination of coverage under a contract of insurance or, in

9

the case of a public school entity that self-insures,

10

insufficient reserves to pay claims incurred during the

11

previous coverage year, if the obligation relates to a plan

12

of coverage that was in existence on or before January 1,

13

2010, and the public school entity or consortium provides the

14

board with a financial plan for meeting these obligations.

15

(d)  Rejection of participation.--Within 60 days of creation

16

of the health benefits program under section 331(a), a public

17

school entity may reject participation in the program under the

18

following conditions:

19

(1)  the governing body of the school entity and the

20

school employee union representing the greatest number of

21

school employees in the school entity that would be covered

22

by the program when it is fully operational execute a

23

memorandum of understanding rejecting participation in the

24

program that is approved by a majority of the members of the

25

governing body and a majority of the employees that would be

26

covered by the program; and

27

(2)  the memorandum of understanding demonstrates that

28

participation in the program would result in:

29

(i)  payment by the school entity on behalf of school

30

employees and their eligible health care dependents that

- 32 -

 


1

would exceed the cost, excluding any employee cost-

2

sharing, of providing, purchasing and administering

3

health care benefits to members who are school employees

4

and their eligible health care dependents in the year

5

before implementation of the program;

6

(ii)  a reduction in the coverage of health care

7

benefits for school employees; provided that, if more

8

than one plan is available to school employees in the

9

school entity, this comparison shall be with the health

10

care plan that covers the greatest number of bargaining

11

unit members; or

12

(iii)  both (i) and (ii).

13

(e)  Optional membership.--No school district of the first

14

class, as classified pursuant to section 202 of the Public

15

School Code, shall be required to participate in the program,

16

except as may be agreed upon under terms of a collective

17

bargaining agreement covering a majority of employees of a

18

school district of the first class. Upon a school district of

19

the first class entering participation in the program pursuant

20

to a collective bargaining agreement, continued participation in

21

the program shall become mandatory.

22

(f)  Prohibited membership.--A public school entity that, on

23

the effective date of this chapter, participates in the

24

Pennsylvania Employees' Benefit Trust Fund shall be prohibited

25

from participating in the program, and employees of the public

26

school entity shall not have the right to elect membership in

27

the program.

28

(g)  Transition of employees.--A public school entity that

29

provides some or all of its employees with health benefits

30

through another health care plan by virtue of one or more

- 33 -

 


1

collective bargaining agreements, entered into prior to the

2

effective date of this chapter, shall not be required to join

3

the program until expiration of the collective bargaining

4

agreements. The public school entity and some or all of its

5

employees or bargaining representatives of its employees may by

6

mutual agreement and approval of the board join the program at

7

an earlier date. Renewal or extension of a collective bargaining

8

agreement shall constitute its expiration for the purpose of

9

this subsection.

10

Section 333.  Continuation of coverage and transfer employees.

11

(a)  Annuitants.--Upon retirement, an annuitant eligible

12

under paragraph (1) or (2) shall have the option to elect

13

coverage in the program, including coverage for any eligible

14

health care dependent. The annuitant shall be responsible to pay

15

the full cost of the coverage, unless a public school entity has

16

agreed, separate from any requirements of the program, to pay

17

toward the coverage pursuant to an award of health benefits

18

under a written policy or agreement collectively bargained or

19

otherwise entered into by the public school entity. The board

20

shall annually determine the cost of coverage as follows:

21

(1)  For an annuitant who is enrolled in the program

22

pursuant to section 513 of the Public School Code or an

23

annuitant who pursuant to any award of health benefits for

24

annuitants under a written policy or agreement collectively

25

bargained or otherwise entered into by the public school

26

entity prior to the effective date of this section, payments

27

shall be based on the total contribution rate established

28

pursuant to section 334(b) and (c) for a school employee in

29

the same health care region, plus a 2% administrative fee.

30

(2)  For an annuitant, other than an annuitant qualified

- 34 -

 


1

for coverage under paragraph (1), payments shall be made on

2

the same basis as an annuitant qualified for coverage under

3

paragraph (1), except as determined as follows:

4

(i)  The board shall periodically have the actuary

5

review and determine the separate cost of providing

6

continuation of coverage to annuitants under this

7

paragraph, along with an assessment of its impact on the

8

cost of providing coverage to members who are school

9

employees and annuitants qualified for coverage under

10

paragraph (1). The review and assessment shall first

11

occur as part of the school employee health benefits

12

study and evaluation conducted pursuant to section 321

13

and its results shall be considered in the development of

14

parameters under section 323(b).

15

(ii)  The board shall consider the findings of the

16

actuary in subparagraph (i) to determine if there is a

17

substantial impact on the cost of providing coverage to

18

members who are school employees and annuitants qualified

19

for coverage under paragraph (1). If there is a

20

substantial cost impact, the board shall require payments

21

for an annuitant qualified to elect coverage in the

22

program under this paragraph to be separately determined

23

and the contribution rate to be based on the

24

disaggregated cost of providing the coverage, plus a 2%

25

administrative fee.

26

(b)  Separation from service.--The board shall determine the

27

eligibility of members, other than annuitants covered by

28

subsection (a), to elect continuation of coverage in the program

29

upon separation from service as a school employee. The member

30

shall be responsible to pay the full cost of the coverage in the

- 35 -

 


1

member's health care region, plus an administrative fee to be

2

set by the board. The board shall, at minimum, provide

3

continuation of coverage eligibility that meets the requirements

4

of Title X of the Employee Retirement Income Security Act of

5

1974 (Public Law 99-272, 29 U.S.C. § 1161 et seq.) and provide

6

the continuation of coverage options required pursuant to 51

7

Pa.C.S. § 7309 (relating to employment discrimination for

8

military membership or duty) for members on military leave.

9

(c)  Transfer employees.--The board may, in its discretion,

10

approve the participation of transfer employees in the program,

11

provided that any position for which a transfer employee who is

12

provided health benefits in a health care plan sponsored by a

13

public school entity through an agreement that was in existence

14

on or before January 1, 2010, with the transfer employee's

15

employer shall be allowed to participate in the program. The

16

board shall set the terms and conditions necessary for

17

participation in the program, including the cost of coverage to

18

be paid by the third-party entity which shall be based on the

19

full cost of coverage in the health care region as determined by

20

the board, plus an administrative fee. The sponsoring public

21

school entity shall be responsible to the board for the

22

collection of the payments for transfer employees from the

23

third-party entity.

24

Section 334.  Partnership for stable benefits funding.

25

(a)  Basis of partnership.--In recognition that the long-term

26

viability and stability of the program will require public

27

school entity employers, members and the Commonwealth to be

28

partners both in sustaining the health benefits program as well

29

as managing the costs of a reasonable and appropriate standard

30

benefit package, the board shall determine for each plan year

- 36 -

 


1

and in each region the payments due from public school entities,

2

from members and from the Commonwealth.

3

(b)  Determination of contribution rate.--The board shall

4

determine for each plan year the total amount of the

5

contributions by the Commonwealth, public school entities and

6

school employees required to provide projected benefits for that

7

plan year under the standard benefit package on behalf of each

8

school employee member and the employee's eligible health care

9

dependents. The contribution rate shall consist of the amount

10

required to provide the standard benefit package, including

11

appropriate reserves and administrative expenses, and shall be

12

adjusted for each health care region to reflect the cost of

13

benefits in that region. The contribution rates may

14

differentiate between single coverage for members only and types

15

of family coverage, as determined by the board.

16

(c)  Certification of rate.--The board shall certify the

17

contribution rate for each health care region to the

18

Commonwealth and public school entities, including the payments

19

that shall be due from public school entities, from members and

20

from the Commonwealth. The certifications shall be regarded as

21

final and not subject to modification by the Secretary of the

22

Budget.

23

(d)  Commonwealth cost share.--The Commonwealth shall make a

24

contribution to offset a portion of the cost increase consistent

25

with subsections (e) and (f) for any plan year in which the

26

board determines that the aggregate cost of providing the

27

standard benefit package on behalf of members who are school

28

employees and their eligible health care dependents exceeds the

29

sum of:

30

(1)  the projected carry-over balance for the plan year

- 37 -

 


1

in the employer contribution account after all required

2

transfers have been made to the employee benefits account for

3

the prior year; and

4

(2)  any employee cost-sharing for the plan year.

5

(e)  Budget submission and appropriation.--If the board

6

determines that the requirements of subsection (d) have been

7

met, all of the following shall occur:

8

(1)  The board shall submit to the Secretary of the

9

Budget an itemized budget specifying the amount necessary to

10

be appropriated by the Commonwealth consistent with

11

subsection (f). The budget submission shall be on a form and

12

in a manner determined by the Secretary of the Budget and

13

shall occur no later than November 1 of the fiscal year

14

preceding the plan year for which funds are requested.

15

(2)  Upon appropriation by the General Assembly to

16

provide for the obligations of the Commonwealth, the amount

17

shall be paid by the State Treasurer through the Department

18

of Revenue into the employer contribution account within 30

19

days of receipt of the requisition presented each month by

20

the board.

21

(f)  Limitation on Commonwealth contribution.--

22

(1)  The Commonwealth shall not be obligated to pay any

23

amount beyond that which is appropriated by the General

24

Assembly. The amount requested by the board pursuant to

25

subsection (e)(1) shall not exceed the sum of any amount paid

26

by the Commonwealth for the fiscal year preceding the plan

27

year for which funds are requested and the lesser of:

28

(i)  50% of the amount that the board determines is

29

necessary to meet the increase in the contribution rate

30

on behalf of members who are school employees determined

- 38 -

 


1

pursuant to subsection (b); and

2

(ii)  the product of the total revenue transferred in

3

the prior plan year from the employer contribution

4

account to the employee benefits account and the most

5

recent annual percent change in the per enrollee private

6

health insurance premium for all benefits, as defined in

7

the National Health Expenditure Data published by the

8

Centers for Medicare and Medicaid Services, Department of

9

Health and Human Services.

10

(2)  If any excess revenue in the employer contribution

11

account is to be applied to payments for the plan year, then

12

the excess revenue shall be used to reduce the calculation

13

under this subsection in proportion to the Commonwealth's

14

share of the total increase in the contribution rate on

15

behalf of active members for the plan year.

16

(g)  Additional optional contribution.--Notwithstanding the

17

limitation in subsection (f), the General Assembly may

18

appropriate additional revenue to the employer contribution

19

account in any fiscal year.

20

(h)  Allocation of Commonwealth contribution.--Any

21

contribution made by the Commonwealth under this section shall

22

be used to offset an increase in the contribution rate paid in a

23

health care region by public school entities on behalf of

24

members who are school employees and their eligible health care

25

dependents and to maintain any offset that was paid in a prior

26

year. The Commonwealth contribution shall be allocated to offset

27

a portion of each participating public school entity's cost of

28

coverage on a per-member basis, for members who are school

29

employees and their eligible health care dependents, based on

30

the public school entity's market value/income aid ratio using

- 39 -

 


1

the most recent data provided by the Department of Education.

2

For any public school entity that is not assigned a market

3

value/income aid ratio by the Department of Education, the

4

Commonwealth contribution shall not be adjusted based on a

5

market value/income aid ratio. For the purpose of this

6

subsection, "market value/income aid ratio" shall have the same

7

meaning given to it in the Public School Code.

8

(i)  Contributions on behalf of school employees.--Consistent

9

with any transition procedure pursuant to section 323(c)(5),

10

each public school entity shall be required to make payments to

11

the trust fund on behalf of members who are school employees and

12

their eligible health care dependents based on the contribution

13

rate certified by the board in subsection (c). The increase in

14

payments made from one year to the next by public school

15

entities on behalf of school employees shall be equal to or

16

greater than the increase in payment from one year to the next

17

made pursuant to subsection (d), excluding any additional

18

optional contribution made by the Commonwealth pursuant to

19

subsection (g).

20

(j)  Deduction from appropriations.--In the event a public

21

school entity does not make the required payment in the time

22

allotted, as determined by the board, the Secretary of Education

23

and the State Treasurer shall cause to be deducted and paid into

24

the trust fund from the amount of any moneys due to any public

25

school entity on account of any appropriation for schools or

26

other purposes the amount due to the trust fund as certified by

27

the board and as remains unpaid on the date such appropriations

28

would otherwise be paid to the public school entity by the

29

Department of Education, and the amount shall be credited to the

30

public school entity's account in the trust fund.

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1

(k)  Transition.--Until any transition pursuant to section

2

323(c)(5) has been completed, the payments made by each public

3

school entity shall be no less than the total amount paid by the

4

public school entity to provide, purchase and administer health

5

care benefits to members who are school employees and their

6

eligible health care dependents in the year before

7

implementation of the program. Any contributions received by the

8

public school entity from school employees in the form of cost-

9

sharing payments for health care coverage shall be excluded from

10

the amount.

11

(l)  Referendum exception.--

12

(1)  In addition to the exceptions provided for in

13

section 333(f) of the act of June 27, 2006 (1st Sp.Sess.,

14

P.L.1873, No.1), known as the Taxpayer Relief Act, the costs

15

specified in paragraph (2) shall constitute an exception to

16

the referendum requirements of section 333(c) of the Taxpayer

17

Relief Act subject to department approval pursuant to section

18

333(j) of the Taxpayer Relief Act.

19

(2)  Costs incurred by a school district in providing

20

health care-related benefits which are attributable to the

21

school district's participation in the program shall

22

constitute an expenditure for purposes of section 333(f)(1)

23

and (2) of the Taxpayer Relief Act to the extent the

24

anticipated increase in such costs between the current year

25

and the upcoming year is greater than the index established

26

for the school district pursuant to section 313(1)(ii) of the

27

Taxpayer Relief Act. The dollar amount of this exception

28

shall be equal to the portion of the increase which exceeds

29

the index established for the school district pursuant to

30

section 313(1)(ii) of the Taxpayer Relief Act.

- 41 -

 


1

Section 335.  Powers and duties of board.

2

(a)  Powers.--In addition to the powers granted by other

3

provisions of this chapter, the board shall have the powers

4

necessary or convenient to carry out this subchapter, including,

5

but not limited to, the power to:

6

(1)  Determine appropriate geographic health care regions

7

for the administration of the program and make changes to the

8

regions as necessary; provided, that a school district of the

9

first class shall be designated as its own health care

10

region.

11

(2)  Formulate and establish the conditions of

12

eligibility, including eligibility for health care dependent

13

coverage for members, to include consideration if a member or

14

health care dependent is covered, or eligible for coverage,

15

under another employer-sponsored group health insurance plan;

16

provisions for payment of benefits; and all other provisions

17

that may be required or necessary to carry out the intent and

18

purpose of the program.

19

(3)  Determine and make necessary changes to the standard

20

benefit package and benefit structure of the program.

21

(4)  Establish copayments, annual deductibles,

22

coinsurance levels, exclusions, formularies and other

23

coverage limitations and payment responsibilities of members

24

incurred at the time of service.

25

(5)  Set and adjust member cost-sharing contributions to

26

be expressed as a target percentage of overall program costs

27

or individually determined as a percentage of salary. The

28

board shall determine whether member cost-sharing shall be

29

uniform on a Statewide basis or shall vary by health care

30

region.

- 42 -

 


1

(6)  Impose and collect necessary fees and charges.

2

(7)  Determine enrollment procedures.

3

(8)  Establish procedures for coordination of benefits

4

with other plans and third-party payers, including

5

coordinating benefits or contracting directly with Medicare.

6

(9)  Establish a plan with the retirement system to

7

coordinate health care coverage for annuitants between the

8

program established by this chapter and the group health

9

insurance program sponsored by the retirement system under

10

the provisions of 24 Pa.C.S. Ch. 89 (relating to group health

11

insurance program) and to coordinate the sharing of

12

information pertaining to premium assistance payment

13

transfers.

14

(10)  Set and adjust contribution rates sufficient to

15

maintain the adequacy of any reserves established by this

16

chapter and to fully fund the benefits offered by and to pay

17

for the administrative expenses related to the program.

18

(11)  Set and adjust costs for members electing to

19

continue coverage upon retirement or separation from

20

employment. The board may establish different cost rates to

21

be charged for different categories of members electing to

22

continue coverage.

23

(12)  Purchase insurance or employ self-insurance, alone

24

or in combination, to provide benefits as shall be determined

25

by the board.

26

(13)  Establish appropriate reserves based on generally

27

accepted standards as applied by Federal and State regulators

28

to similar types of plans.

29

(14)  Issue self-liquidating debt or borrow against

30

contributions, payments or other accounts receivable for the

- 43 -

 


1

purposes of prepaying any health benefits, establishing

2

reserves or otherwise lowering the cost of coverage.

3

(15)  Establish procedures to verify the accuracy of

4

statements and information submitted by eligible individuals

5

on enrollment forms, claim forms or other forms.

6

(16)  Receive and collect all contributions due and

7

payable to the accounts or delegate to a public school entity

8

or claims processor the right to receive contributions,

9

payments or perform ministerial functions required to assert

10

the board's rights. In so doing, the board shall have the

11

right to:

12

(i)  maintain any and all actions and legal

13

proceedings necessary for the collection of

14

contributions; and

15

(ii)  prosecute, defend, compound, compromise,

16

settle, abandon or adjust any actions, suits,

17

proceedings, disputes, claims, details and things related

18

to the accounts and program.

19

(17)  Establish procedures to hear and determine any

20

claims and controversies under this chapter.

21

(18)  Promulgate rules and regulations regarding the

22

administration of the program, including the establishment of

23

the plan year.

24

(19)  Ensure that a public school entity provides

25

detailed information about the program to eligible employees

26

at least 90 days before program coverage begins to be offered

27

to school employees.

28

(20)  Seek and take all necessary steps to retain

29

eligibility for the members, public school entities and the

30

Commonwealth to receive tax-preferred or tax-free treatment

- 44 -

 


1

under the IRC for contributions to and earnings of the trust

2

fund.

3

(21)  Enter into agreements with entities providing or

4

administering coverage for health benefits under this chapter

5

for the electronic exchange of data between the parties at a

6

frequency as determined by the board.

7

(22)  Perform and do any and all such actions and things

8

that may be properly incidental to the exercising of powers,

9

rights, duties and responsibilities of the board.

10

(23)  Determine best practice standards and benchmarks

11

for consortia in any selection process to build a Statewide

12

pool or regional pools, including the power to require a

13

consortium to merge with another consortium. The board shall

14

have the power to require consortia, as a condition of

15

continued participation in the program, to accept any public

16

school entity applying to join and participate in a

17

consortium.

18

(24)  Enter into agreements with any public school entity

19

or consortium to implement the program developed pursuant to

20

this chapter and delegate powers necessary to administer

21

coverage for health benefits.

22

(b)  Administrative duties of board.--In addition to other

23

duties of the board provided in this chapter, the following

24

duties shall be afforded to the board for the implementation of

25

this section.

26

(c)  Regulations and procedures.--The board shall, with the

27

advice of the Office of General Counsel and the actuary, adopt

28

and promulgate rules and regulations for the uniform

29

administration of the program. The actuary shall approve in

30

writing all computational procedures used in the calculation of

- 45 -

 


1

contributions and the cost of benefits, and the board shall by

2

resolution adopt the computational procedures prior to their

3

application by the board. The rules, regulations and

4

computational procedures as so adopted from time to time and as

5

in force and effect at any time, together with tables that are

6

adopted as necessary for the calculation of contributions and

7

the cost of benefits, shall be effective as if fully set forth

8

in this chapter.

9

(d)  Data.--The board shall keep in electronic format records

10

of claims, eligibility and other data as are stipulated by the

11

actuary in order that an annual contribution rate determination

12

for each health care region and various program options can be

13

completed within six months of the close of each plan year. The

14

board shall have final authority over the means by which data is

15

collected, maintained and stored and in so doing shall protect

16

the rights of its membership as to privacy and confidentiality.

17

(e)  Annual financial statement.--The board shall prepare and

18

have published within six months following the end of each plan

19

year a financial statement showing the condition of the trust

20

fund as of the end of the previous plan year. The board shall

21

submit said financial statement to the Governor and shall make

22

copies available to public school entities for the use of the

23

school employees and the public.

24

(f)  Independent audit.--The board shall provide for an

25

annual audit of the trust fund by an independent certified

26

public accounting firm.

27

(g)  Manual of regulations.--The board shall, with the advice

28

of the Office of General Counsel and the actuary, prepare within

29

six months of the commencement of a program adopted under this

30

chapter a manual incorporating rules and regulations consistent

- 46 -

 


1

with the provisions of this chapter for each participating

2

public school entity that shall make information contained in

3

the manual available to school employees. The board shall

4

thereafter advise public school entities within 90 days of any

5

changes in rules and regulations due to changes in the law or

6

due to changes in administrative policies.

7

(h)  Annual budget.--The board shall establish an annual

8

budget for the program and make disbursements from the trust

9

fund that are consistent with the budget.

10

(i)  Program assistance.--The board may solicit and accept

11

grants, loans and other aid from any person, corporation or

12

other legal entity or from the Federal, State or local

13

government and participate in any Federal, State or local

14

government program if necessary for prudent management of the

15

program.

16

(j)  Functions.--The board shall perform other functions as

17

are required for the execution of this chapter and shall have

18

the right to inspect employment records of public school

19

entities.

20

(k)  Qualified majority voting provision.--A qualified

21

majority vote shall be required on any matter voted upon by the

22

board affecting the development of or any change in:

23

(1)  The plan to implement the program adopted pursuant

24

to section 323(f).

25

(2)  The standard benefit package, benefit options or

26

plan design offered by the program to covered employees.

27

(3)  Membership eligibility criteria.

28

(4)  The addition, deletion or significant change in

29

status of an insurance carrier, benefits administrator or

30

other major contractor in the administration of benefits, or

- 47 -

 


1

the addition, deletion or significant change in status of a

2

health care provider network.

3

(5)  Any determination on the use of excess fund

4

payments.

5

(6)  The overall per-employee cost of the standard

6

benefit package to the trust fund and any public school

7

entity funding and member cost-sharing responsibilities.

8

(7)  Cost containment measures such as managed care,

9

wellness centers and large case management.

10

(8)  Contracts valued at more than $25,000,000.

11

(9)  Changes in trust document, bylaws or any major

12

internal operating policies or procedures, such as claims

13

appeal procedures, not to include routine ministerial

14

functions.

15

(10)  The alternative measures program created pursuant

16

to section 351(a).

17

(11)  Approve employment of and contracts with

18

consultants and professional personnel.

19

(l)  Duties conferred upon secretary.--The secretary of the

20

board shall supervise a staff of administrative, technical and

21

clerical employees engaged in recordkeeping and clerical

22

processing activities in maintaining files of members,

23

accounting for contributions, processing payments, preparing

24

required reports and counseling.

25

Section 336.  Public School Employees' Benefit Trust Fund.

26

(a)  Establishment of trust fund.--The Public School

27

Employees' Benefit Trust Fund is established in the State

28

Treasury. The moneys of the trust fund are appropriated on a

29

continuing basis and shall be used exclusively for the purposes

30

set forth in this chapter. All of the assets of the trust fund

- 48 -

 


1

shall be maintained and accounted for, separate from all other

2

funds and moneys of the Commonwealth. The Treasury Department

3

shall credit to the trust fund all moneys received from the

4

Department of Revenue arising from the contributions required

5

under this chapter and all earnings from investments or moneys

6

of the trust fund. There shall be established and maintained by

7

the board the several ledger accounts, including:

8

(1)  The employee benefits account shall be the ledger

9

account to which shall be credited the payments from section

10

333(a),(b) and (c), payments from members for cost sharing

11

and any additional member-paid cost associated with optional

12

benefit packages elected by members and transfers from the

13

employer contribution account as provided in paragraph (3).

14

All earnings derived from investment of the assets of the

15

employee benefits account shall be credited to this account.

16

The board is authorized to separately invest the amounts in

17

the employee benefits account in a prudent manner intended to

18

maximize the safety of the capital contained in the employee

19

benefits account. Payments for member health care benefits

20

and the direct administrative expenses of the board related

21

to the administration of the employee benefits program, as

22

provided in section 312(d), shall be charged to this account.

23

(2)  Reserve account.

24

(i)  A restricted reserve account, or more than one

25

account if the board determines it necessary to have

26

segregated accounts, is established within the trust fund

27

for the purpose of establishing and maintaining a reserve

28

or separate reserves sufficient:

29

(A)  to pay the expected claims experience of the

30

program in the event the board elects to self-fund

- 49 -

 


1

all or a portion of the program for any plan years;

2

(B)  to prefund the accrued liability for any

3

postretirement health care benefits earned by

4

employees enrolled in the program pursuant to section

5

333(a)(1) as the benefit is earned by the employees;

6

and

7

(C)  to amortize the unfunded actuarial accrued

8

liability for postretirement health care benefits

9

already earned by employees and annuitants pursuant

10

to section 333(a)(1) in the event the board elects to

11

assume all or a portion of the liability. The board

12

shall use an amortization period that does not exceed

13

30 years for this purpose.

14

(ii)  The board shall annually establish through an

15

actuary retained by the board the amount necessary, if

16

any, to establish and maintain a reserve or separate

17

reserves sufficient for the purposes of this paragraph.

18

Any moneys needed to maintain the reserve or separate

19

reserves established under this paragraph shall be

20

collected through the adjustment of the contribution rate

21

established pursuant to section 334(b) and (c) or through

22

other available sources.

23

(iii)  The moneys in any reserve account may be

24

invested by the board separate from other moneys of the

25

trust fund. All earnings derived from investment of the

26

assets of any reserve account shall be credited to the

27

reserve account.

28

(3)  The employer contribution account shall be the

29

ledger account to which shall be credited all contributions

30

made by the Commonwealth as determined in accordance with

- 50 -

 


1

section 334(e) and payments from public school entities as

2

determined in accordance with section 334(i), as well as all

3

earnings derived from the investment of the assets of the

4

employer contribution account. The total amount of the

5

Commonwealth and public school entity contributions required

6

to provide the standard benefit package on behalf of all

7

members who are school employees and their eligible health

8

care dependents shall be transferred on a monthly basis to

9

the employee benefits account.

10

(b)  Composition.--The trust fund shall consist of:

11

(1)  All payments made by members or received from the

12

Commonwealth and public school entities and all interest,

13

earnings and additions thereto.

14

(2)  Any other money, public or private, appropriated or

15

made available to the board for the trust fund or any reserve

16

account from any source and all interest, earnings and

17

additions thereto.

18

(c)  Administration of trust and associated funds.--The

19

assets of the trust fund shall be preserved, invested and

20

expended solely pursuant to and for the purposes set forth in

21

this chapter.

22

(d)  Control and management of trust fund.--

23

(1)  The board shall have exclusive control and

24

management of the trust fund and full power to invest and

25

manage the assets of each account of the trust fund as a

26

prudent investor would, by considering the purposes, terms

27

and other circumstances of each account and by pursuing an

28

overall investment strategy reasonably suited to the trust

29

fund.

30

(2)  The board may invest in every kind of property and

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1

type of investment, including, but not limited to, mutual

2

funds and similar investments, consistent with this

3

subsection.

4

(3)  In making investment and management decisions, the

5

board shall consider, among other things, to the extent

6

relevant to the decision or action:

7

(i)  the size and nature of the account;

8

(ii)  the liquidity and payment requirements of the

9

account;

10

(iii)  the role that each investment or course of

11

action plays in the overall investment strategy;

12

(iv)  to the extent reasonably known to the board,

13

the needs for present and future payments; and

14

(v)  the reasonable diversification of assets, taking

15

into account the purposes, terms and other circumstances

16

of the trust fund and the requirements of this section.

17

(e)  Custodian of trust fund.--The State Treasurer shall be

18

the custodian of the trust fund.

19

(f)  Name for transacting business.--By the name of "The

20

Public School Employees' Benefit Trust Fund," all of the

21

business of the trust fund shall be transacted, its fund

22

invested, all requisitions for money drawn and payments made and

23

all of its cash and securities and other property shall be held,

24

except that, any other law to the contrary notwithstanding, the

25

board may establish a nominee registration procedure for the

26

purpose of registering securities in order to facilitate the

27

purchase, sale or other disposition of securities.

28

(g)  Payment from trust fund.--All payments from the trust

29

fund shall be made by the State Treasurer in accordance with

30

requisitions signed by the secretary of the board or the

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1

secretary's designee. The board shall reimburse the State

2

Treasurer for the cost of making disbursements from the trust

3

fund.

4

(h)  Fiduciary status of board.--Board members, employees of

5

the board and agents thereof shall stand in a fiduciary

6

relationship to the members regarding the investments and

7

disbursements of any of the moneys of the trust fund and shall

8

not profit either directly or indirectly with respect thereto.

9

(i)  Transfers.--The board may transfer moneys among the

10

various accounts of the trust fund, including any reserve

11

accounts established under subsection (a)(2), as may be

12

necessary to satisfy the provisions of this chapter. Transfers

13

from funds retained in the reserve account pursuant to

14

subsection (a)(2)(i)(A) may be made only for the payment of

15

claims or expected claims as determined by the actuary retained

16

by the board. Transfers from funds retained in the reserve

17

account pursuant to subsection (a)(2)(i)(B) or (C) may be made

18

only for paying toward the cost of providing health care

19

benefits to annuitants enrolled in the program pursuant to

20

section 333(a)(1).

21

(j)  Additional powers of board.--The board may:

22

(1)  Adopt, from time to time, appropriate investment

23

policy guidelines and convey the same to those fiduciaries

24

who have the responsibility for the investment of funds.

25

(2)  Retain such portion of the moneys of the accounts in

26

cash or cash balances as the board may deem desirable,

27

without any liability or interest thereon.

28

(3)  Settle, compromise or submit to arbitration all

29

claims or damages due from or to the accounts, commence or

30

defend any legal, equitable or administrative proceedings

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1

brought in connection with the program and represent the

2

trust fund in all proceedings under this paragraph.

3

(k)  Additional duties of secretary.--The secretary of the

4

board shall serve as liaison to the Treasury Department, the

5

Department of the Auditor General and between the board and the

6

investment counsel and the mortgage supervisor in arranging for

7

investments to secure maximum returns to the trust fund.

8

Section 337.  Misrepresentation, refusal to cooperate and fraud.

9

(a)  Misrepresentation.--If the eligible individual or anyone

10

acting on behalf of an eligible individual makes a false

11

statement or withholds information on the application for

12

enrollment with intent to deceive or affect the acceptance of

13

the enrollment application or the risks assumed by the program

14

or otherwise misleads the board, the board shall be entitled to

15

recover its damages, including legal fees, from the eligible

16

individual or from any other person responsible for misleading

17

the board and from the person for whom the benefits were

18

provided. Any material misrepresentation on the part of the

19

eligible individual in making application for coverage or any

20

application for reclassification thereof or for service

21

thereunder shall render the coverage under the program null and

22

void.

23

(b)  Refusal to cooperate.--The board may refuse to pay

24

benefits, or cease to pay benefits, on behalf of an eligible

25

individual who fails to sign any document deemed by the board to

26

be relevant to protecting its subrogation rights or certifying

27

eligibility or who fails to provide relevant information when

28

requested. As used in this subsection, the term "information"

29

includes any documents, insurance policies, police reports or

30

any reasonable request by the claims processor to enforce the

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1

board's rights.

2

(c)  Penalty for fraud.--In any case in which the board finds

3

that an eligible individual is receiving benefits based on false

4

information, the additional amounts received predicated on the

5

false information, together with interest doubled and compounded

6

and legal fees, shall be due from the member. To secure payment

7

of funds, the board shall have the right to garnish or attach

8

all or a portion of any compensation payable to the party by the

9

party's employer, any annuity payable to the party by the

10

retirement system, any accumulated deductions held by the

11

retirement system in the party's account or any process

12

whatsoever.

13

Section 338.  Miscellaneous provisions.

14

(a)  Construction of chapter.--

15

(1)  Any termination or other modifications of the

16

program, including, but not limited to, a change in rates,

17

benefits options or structure of the provision of health care

18

benefits, shall not give rise to any contractual rights or

19

claims by any eligible individuals or any other person

20

claiming an interest, either directly or indirectly, in the

21

program. No provisions of this chapter, nor any rule or

22

regulation adopted pursuant to this chapter, shall create in

23

any person a contractual right in that provision.

24

(2)  The provisions of this chapter are severable and if

25

any of its provisions shall be held to be unconstitutional,

26

the decision of the court shall not affect or impair any of

27

the remaining provisions. It is hereby declared to be the

28

legislative intent that this chapter would have been adopted

29

had the unconstitutional provisions not been included.

30

(3)  This subsection shall not apply to policies designed

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1

primarily to provide coverage payable on a per diem, fixed

2

indemnity or nonexpense incurred basis, or policies that

3

provide accident only coverage, where payment for such policy

4

is made solely by the school employee.

5

(b)  Hold harmless.--Neither the Commonwealth nor the board,

6

including their respective officers, directors and employees,

7

shall be liable for any claims, demands, actions or liability of

8

any nature, including, but not limited to, attorney fees and

9

court costs, based upon or arising out of the operations of the

10

program, whether incurred directly or indirectly. The eligible

11

individuals who enroll and participate in the program shall be

12

deemed to agree, on behalf of themselves and their heirs,

13

successors and assigns, to hold harmless the Commonwealth and

14

the board, including their respective officers, directors and

15

employees, from any claims, demands, actions or liability of any

16

nature, whether directly or indirectly, including attorney fees

17

and court costs, based upon or arising out of the operation of

18

the program.

19

(c)  No recourse.--Under no circumstances shall the assets of

20

the Commonwealth be liable for or its assets be used to pay any

21

claims, demands, actions or liability of any nature, whether

22

directly or indirectly, including, but not limited to, attorney

23

fees and court costs, based upon or arising out of the operation

24

of the program.

25

(d)  Reservation of immunities.--Nothing contained in this

26

chapter shall be construed as a waiver of the Commonwealth's or

27

board's immunities, defenses, rights or actions arising out of

28

their sovereign status or from the 11th amendment to the

29

Constitution of the United States.

30

(e)  Collective bargaining, mediation and binding

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1

arbitration.--Except as otherwise provided in subsection (f),

2

nothing in this chapter or in any other law shall be construed

3

to permit, authorize or require collective bargaining, mediation

4

or binding arbitration to create, alter or modify health

5

benefits set forth in this chapter or administered by the board

6

for school employees and their health care dependents. Further,

7

except as otherwise provided in subsection (f), nothing in this

8

chapter or in any other law shall be construed to permit,

9

authorize or require a public school entity, through collective

10

bargaining, mediation or binding arbitration, or otherwise, to

11

establish, create, alter or modify a health benefits plan or pay

12

health benefits set forth in this chapter or administered by the

13

board that modify or supplement in any way the health benefits

14

set forth in this chapter for school employees and their health

15

care dependents.

16

(f)  Exceptions.--

17

(1)  The parties may:

18

(i)  Continue to engage in collective bargaining with

19

regard to health benefits until such time as the board-

20

sponsored program, pursuant to this subchapter, is

21

released and the standard benefit package is made

22

available to employees of a public school entity.

23

However, any health benefits provided under a collective

24

bargaining agreement entered into on or after the

25

effective date of this chapter shall contain a provision

26

that school employees covered by the agreement must join

27

the board-sponsored program as required by section 332 as

28

a condition of continuing to receive health benefits. The

29

board shall determine the appropriate timing and phase-in

30

of the program in any public school entity taking into

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1

consideration the need for the public school entity to

2

properly terminate any existing health benefits

3

arrangements.

4

(ii)  Negotiate or otherwise agree to provide or make

5

payment for supplemental benefits that have not been

6

included as part of the standard benefit package.

7

(2)  Nothing contained in this chapter shall restrict a

8

public school entity from negotiating or otherwise agreeing

9

to make payment for postretirement health benefits for

10

members or as may be provided for in Subchapter F.

11

SUBCHAPTER E

12

ALTERNATIVE MEASURES FOR COST REDUCTION

13

Section 351.  Alternative measures program.

14

(a)  Creation.--Upon completing the study required under

15

section 321 with either a negative recommendation to proceed

16

with implementation of a Statewide health care program or if the

17

board fails to achieve agreement and approve a plan for

18

implementing a Statewide health benefits program by a qualified

19

majority vote, the board shall proceed to initiate and sponsor

20

an alternative measures program to reduce the costs for public

21

school entities in providing health care coverage to employees

22

and other eligible individuals.

23

(b)  Program design.--In designing an alternative measures

24

program, the board may consider all of the following:

25

(1)  Establishment of pools for selected areas of

26

coverage, such as pharmacy services, transplants, stop-loss

27

insurance, health care management or other possible areas

28

that in the board's judgment can be offered Statewide or

29

regionally on a more stable and cost-effective basis.

30

(2)  Assistance in the formation of consortia to serve

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1

public school entities that do not have the option of joining

2

an existing consortium.

3

(3)  Development of best practice standards and

4

benchmarks for public school entities and consortia-

5

sponsoring health care plans for school employees.

6

(4)  Requirements that public school entities and

7

consortia aggregate into larger regional pools, with opt-out

8

provisions for public school entities or consortia that meet

9

best practice standards and benchmarks.

10

(5)  Requirements for public disclosure by public school

11

entities and consortia comparing their health benefits

12

purchasing to established best practice standards in their

13

region.

14

(c)  Implementation.--The board shall have full authority to

15

select and contract with insurance carriers, health maintenance

16

organizations, pharmacy benefit managers, third-party

17

administrators, reinsurers and any other entities necessary to

18

provide the selected areas of coverage. The board shall have

19

full authority to determine the nature, amount and duration and

20

discontinuation of coverage to be provided.

21

(d)  Mandatory and optional participation.--The board shall

22

have the authority to require public school entities and

23

consortia to participate in the alternative measures program.

24

(e)  Transition plan.--If the board determines that a public

25

school entity or consortium shall be required to participate in

26

the alternative measures program, the public school entity or

27

consortium shall, within a reasonable period of time as

28

determined by the board, present to the board a transition plan

29

with a schedule for the public school entity or consortium to

30

join the alternative measures program. The board shall review

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1

the transition plan with the public school entity or consortium

2

and make any necessary modifications before granting approval of

3

the plan. A public school entity or consortium shall be subject

4

to adherence to the transition plan approved by the board.

5

(f)  Extensions of time.--The board shall give due

6

consideration to a transition plan submitted pursuant to

7

subsection (e) that includes a request for an extension of time.

8

Consideration shall be given to a public school entity or

9

consortium which will incur a significant financial cost or

10

penalty.

11

(g)  Prohibited membership.--A public school entity that

12

participates in the Pennsylvania Employees' Benefit Trust Fund

13

shall be prohibited from participating in the alternative

14

measures program.

15

(h)  Transition of employees.--A public school entity that

16

provides some or all of its employees with health benefits

17

through another health care plan by virtue of one or more

18

collective bargaining agreements entered into prior to the

19

effective date of this chapter shall not be required to join the

20

alternative measures program until expiration of the collective

21

bargaining agreements. The public school entity and some or all

22

of its employees, or bargaining representatives of its

23

employees, may, by mutual agreement and approval of the board,

24

join the program at an earlier date. Renewal or extension of a

25

collective bargaining agreement shall constitute its expiration

26

for the purposes of this subsection.

27

(i)  Optional membership.--No school district of the first

28

class, as classified pursuant to section 202 of the Public

29

School Code, shall be required to participate in the alternative

30

measures program, except as may be agreed upon under the terms

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1

of a collective bargaining agreement covering a majority of

2

employees of the school district. Upon a school district of the

3

first class entering participation in the alternative measures

4

program pursuant to a collective bargaining agreement, continued

5

participation in the alternative measures program shall become

6

mandatory.

7

SUBCHAPTER F

8

RETIREMENT HEALTH SAVINGS PLAN

9

Section 361.  Retirement health savings plan.

10

(a)  Plan created.--The board shall establish a retirement

11

health savings plan through which school employees can save to

12

cover health-related expenses following retirement. For this

13

purpose the board shall make available one or more trusts

14

including a governmental trust or governmental trusts authorized

15

under the IRC as eligible for tax-preferred or tax-free

16

treatment. The board may promulgate regulations regarding the

17

prudent and efficient operation of the retirement health savings

18

plan, including, but not limited to:

19

(1)  Establishment of an annual administrative budget and

20

disbursements in accordance with the budget.

21

(2)  Determination of the structure of the retirement

22

health savings accounts available to eligible school

23

employees.

24

(3)  Determination of enrollment procedures.

25

(b)  Contracting authorized.--The board is authorized to

26

administer the retirement health savings plan and to contract

27

with any lawfully authorized entities to provide investment

28

services, recordkeeping, benefit payments and other functions

29

necessary for the administration of the retirement health

30

savings plan. The board may contract with the retirement system

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1

to invest funds in an account that shall be maintained and

2

accounted for separately from the funds of the retirement system

3

and invested in a prudent manner intended to maximize the safety

4

of the capital, with all earnings derived from investment of the

5

assets to be credited to the retirement health savings plan.

6

Costs and expenses incurred by the retirement system in

7

administering the investment option shall be paid by the

8

retirement health savings plan.

9

(c)  Separate account.--All funds related to the retirement

10

health savings plan shall be maintained and accounted for

11

separately from the health benefits program sponsored by the

12

board. The assets of the retirement health savings plan shall

13

not be liable or utilized for payment of any expenses or claims

14

incurred by the health benefits program other than as may be

15

directed by the participant account holder for reimbursement of

16

an IRC-qualifying health-related expense.

17

(d)  Enrollment.--The board shall establish eligibility

18

guidelines consistent with the IRC for school employees to

19

participate in the retirement health savings plan.

20

(e)  Contributions.--

21

(1)  The board shall determine what contributions are

22

eligible under the IRC for tax-preferred or tax-free

23

treatment and may be made into a retirement health savings

24

plan by a school employee. The board shall authorize and

25

allow contributions, subject to appropriate limits as may be

26

established by the board, to be paid by a school employee

27

electing participation in the retirement health savings plan

28

subject to the following conditions:

29

(i)  A mandatory school employee contribution

30

established as a fixed percentage of compensation may be

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1

established through a collective bargaining agreement

2

between a public school entity and a bargaining group

3

representing school employees. The retirement health

4

savings plan contribution rate does not have to be

5

uniform for all groups of school employees.

6

(ii)  An optional employee contribution at a fixed

7

percentage of compensation may be elected by a school

8

employee during an annual election window that, once

9

elected, shall continue in effect, except to the extent

10

it may be changed or discontinued at a subsequent annual

11

election window as provided for by the board or

12

supplanted by a mandatory contribution.

13

(iii)  An optional school employee contribution of

14

all or any portion of annual leave, vacation pay,

15

personal days or sick leave may be elected by a school

16

employee as so designated by the employee and agreed to

17

by the employee's employer. The board may provide that

18

the election shall be made during an annual election

19

window of no greater than 90 days as determined by the

20

board. Once the election has been made, an employee shall

21

not be allowed to change the amount or discontinue the

22

contributions until the next annual election window.

23

(2)  The following contributions shall be made into a

24

retirement health savings plan on behalf of a school

25

employee:

26

(i)  For an employee who elects participation in the

27

retirement health savings plan, the employee's employer

28

shall make a contribution to the employee's account equal

29

to the public school entity's savings in Social Security

30

and Medicare taxes resulting from the tax-preferred or

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1

tax-free treatment of contributions made by the school

2

employee under this subsection. Additional contributions

3

by a public school entity may be established through a

4

collective bargaining agreement between a public school

5

entity and a bargaining group representing school

6

employees.

7

(ii)  Any other payments by the Commonwealth or

8

public school entity, including any set-aside payments to

9

be made to school employee accounts under section 334 as

10

determined by the board.

11

(3)  Contributions to the plan by a school employee or by

12

the Commonwealth or a public school entity on behalf of an

13

employee must be held in trust for reimbursement of employee

14

health-related expenses and the health-related expenses of

15

any health care dependents following retirement of the

16

employee or when otherwise determined to be benefit eligible.

17

The board shall maintain a separate account of the

18

contributions made by or on behalf of each participant and

19

the earnings thereon. The board shall make available a

20

selection of investment options for participants who wish to

21

direct the investment of the accumulations in the

22

participant's account, in addition to a default option for

23

participants to be invested in a prudent manner as determined

24

by the board.

25

(f)  Reimbursement for health-related expenses.--

26

(1)  Upon retirement or separation from employment with a

27

public school entity, a participant becomes eligible to seek

28

reimbursements for IRC-qualifying health-related expenses

29

from the participant's retirement health savings plan

30

account, including reimbursements for the health-related

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1

expenses of the participant's eligible health care

2

dependents.

3

(2)  If a school employee dies prior to exhausting the

4

balance in the employee's retirement health savings plan

5

account, the employee's health care dependents are eligible

6

to seek reimbursement for IRC-qualifying health-related

7

expenses from the account.

8

(3)  The board shall pay reimbursements from a retirement

9

health savings plan account until the accumulation in the

10

account has been exhausted. If an account balance remains

11

after the death of all participant account holders, the

12

remainder of the account must be paid to the school

13

employee's beneficiaries or, if none, to the employee's

14

estate.

15

(g)  Annual financial statement.--Quarterly and annually the

16

board shall prepare summary retirement health savings plan

17

statements for individual participant account holders listing

18

information on contributions, investment earnings and

19

distributions for the account holders' accounts.

20

(h)  Fees.--The board is authorized to charge uniform fees to

21

participants to cover the ongoing costs of operating the plan.

22

Any fees not needed must revert to participant accounts or be

23

used to reduce plan fees the following year.

24

(i)  Advisory committee.--

25

(1)  The board shall establish a participant advisory

26

committee for the retirement health savings plan composed of:

27

(i)  One representative appointed by each Statewide

28

union that represents bargaining groups of school

29

employees participating in the plan.

30

(ii)  One representative of each Statewide

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1

organization representing at least 10% of annuitants.

2

(iii)  One representative of the Pennsylvania

3

Association of School Business Officials.

4

(iv)  One representative of the Pennsylvania School

5

Boards Association.

6

(2)  Each participant group shall be responsible for the

7

expenses of its own representative.

8

(3)  The advisory committee shall meet at least two times

9

per year and shall be consulted on plan offerings. By October

10

1 of each year, the board shall give the advisory committee a

11

statement of fees collected and the use of the fees.

12

CHAPTER 5

13

MISCELLANEOUS PROVISIONS

14

Section 501.  Feasibility Report.

15

Within 18 months after the Statewide health benefits program

16

or the alternative measures program is fully implemented, the

17

Secretary of Administration shall report to the Governor, the

18

President pro tempore of the Senate and the Speaker of the House

19

of Representatives the feasibility of including community

20

college employees in the program.

21

Section 502.  Effective date.

22

This act shall take effect immediately.

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