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PRINTER'S NO. 2215
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
1398
Session of
2015
INTRODUCED BY ARGALL, MENSCH, FOLMER, AUMENT, BARTOLOTTA,
RAFFERTY AND BROWNE, OCTOBER 26, 2016
REFERRED TO EDUCATION, OCTOBER 26, 2016
AN ACT
Amending Title 24 (Education) of the Pennsylvania Consolidated
Statutes, establishing the Public School Employees' Benefit
Board and providing for its powers and duties; requiring a
school employee health benefits evaluation; providing for a
health benefits program for public school employees; and
establishing the Public School Employees' Benefit Trust Fund.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Title 24 of the Pennsylvania Consolidated
Statutes is amended by adding a chapter to read:
CHAPTER 3
SCHOOL EMPLOYEE BENEFITS
Subchapter
A. Preliminary Provisions
B. Public School Employees' Benefit Board
C. School Employee Health Benefits Evaluation
D. Health Benefits Program
E. (Reserved)
F. Retirement Health Savings Plan
SUBCHAPTER A
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PRELIMINARY PROVISIONS
Sec.
301. Short title of chapter.
302. Definitions.
§ 301. Short title of chapter.
This chapter shall be known and may be cited as the Public
School Employees' Benefit Act.
§ 302. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Annuitant." Any "annuitant" or "disability annuitant" as
defined in section 8102 (relating to definitions).
"Best practices." Standards of criteria, measures and
results developed by the Public School Employees' Benefit Board
that may be reflective of such standards developed by broadly
accepted organizations such as the National Committee for
Quality Assurance (NCQA) and the Centers for Medicare and
Medicaid Services (CMS), consulting firm benchmarks and medical
and industry journals that promote the precisions of efficient
delivery and design of employee benefits.
"Board." The Public School Employees' Benefit Board created
in section 311 (relating to Public School Employees' Benefit
Board).
"Board member." A person designated or appointed to the
Public School Employees' Benefit Board under section 311(a)
(relating to Public School Employees' Benefit Board).
"Consortium." A coalition of two or more geographically
defined public school entities, or a coalition of one or more
geographically defined public school entities and one or more
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political subdivisions as defined by 61 Pa. Code § 315.2
(relating to definitions), formed for the purpose of pooling
combined purchasing of the individual participants in order to
increase bargaining power to obtain health care benefits.
"Contribution rate." The rate established by the Public
School Employees' Benefit Board in accordance with section
334(b) and (c) (relating to partnership for stable benefits
funding) used to determine contributions by the Commonwealth and
public school entities for the funding of the benefit package
for eligible individuals in each health care region.
"Cost-sharing." The fee paid by the member that covers a
share of the cost of providing group health benefits under the
health benefits program or the fee paid by a school employee or
annuitant that covers a share of the cost of providing health
care coverage in a plan sponsored by the public school entity.
The term shall not include:
(1) any fee paid by the member, school employee or
annuitant at the time of service, such as copayments or
deductibles, in order to obtain prescription drugs or other
specific health care services; or
(2) any additional cost paid by the member, school
employee or annuitant for optional benefit packages.
"Eligible individual." An individual who is a member or the
health care dependent of a member.
"Employee benefits account." A ledger account of the Public
School Employees' Benefit Trust Fund created in section 336(a)
(1) (relating to Public School Employees' Benefit Trust Fund).
"Employer contribution account." A ledger account of the
Public School Employees' Benefit Trust Fund created in section
336(a)(3) (relating to Public School Employees' Benefit Trust
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Fund).
"Health care dependent." An individual who is eligible to
receive health care coverage under the health benefits program
due to the individual's relation to the member, as determined by
the Public School Employees' Benefit Board.
"Health care region." The geographic regions determined by
the Public School Employees' Benefit Board to be appropriate for
providing health benefits for eligible individuals based on the
availability of insurance carriers, benefit administrators,
health care providers, health care provider networks, costs and
any other factors related to health care or the financing of the
benefits.
"IRC." The Internal Revenue Code of 1986, as designated and
referred to in section 2 of the Tax Reform Act of 1986 (Public
Law 99-514, 100 Stat. 2085, 2095). A reference in this chapter
to "IRC § " shall be deemed to refer to the identically numbered
section and subsection or other subdivision of such section in
26 United States Code (relating to Internal Revenue Code).
"Long-term substitute." A school employee who is
substituting for an officer, administrator or employee of a
public school entity for a qualifying period of time to be
determined by the Public School Employees' Benefit Board.
"Medicare." The programs established by Title XVIII of the
Social Security Act (49 Stat. 620, 42 U.S.C. § 1395 et seq.)
which include:
(1) Part A, Hospital Insurance Benefits for the Aged and
Disabled;
(2) Part B, Supplementary Medical Insurance Benefits for
the Aged and Disabled;
(3) Part C, Medicare+ Choice Program; and
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(4) Part D, Voluntary Prescription Drug Benefit Program;
and
including any subsequent changes or additions to those programs.
"Member." An eligible individual who is specified as such
for enrollment in the health benefits program and in whose name
the identification card is issued. A member can be:
(1) A school employee.
(2) An annuitant.
(3) A transfer employee.
(4) An individual separated from employment with a
public school entity who the Public School Employees' Benefit
Board determines is eligible to purchase continuation of
coverage in the health benefits program.
(5) Others as approved by the Public School Employees'
Benefit Board.
"Optional benefit package." A plan or plan design
established by the Public School Employees' Benefit Board under
section 331(f)(2) (relating to health benefits program) which
includes specific health care services that are not part of the
benefit package.
"Participant account holder." A school employee
participating in a retirement health savings plan or a school
employee who retires or otherwise terminates employment with a
public school entity and becomes eligible to be reimbursed from
the employee's retirement health savings plan account for the
Internal Revenue Code of 1986 qualified health-related expenses.
The term shall also include the health care dependent of a
school employee who succeeds in interest to a deceased school
employee and becomes eligible to be reimbursed for health-
related expenses from the school employee's account.
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"Phase-in period." The period of program operation in any
health care region from the time the Public School Employees'
Benefit Board begins implementation of mandatory participation
under section 332 (relating to mandatory participation and
optional membership) until the commencement of the first plan
year in which 75% of school districts in that region are
participating in the program.
"Program." The health benefits program sponsored by the
Public School Employees' Benefit Board in accordance with the
provisions of Subchapter D (relating to health benefits
program).
"Public School Code." The act of March 10, 1949 (P.L.30,
No.14), known as the Public School Code of 1949.
"Public school entity." A school district of any class,
intermediate unit, area vocational-technical school, charter
school or other school, as provided for under the act of March
10, 1949 (P.L.30, No.14), known as the Public School Code of
1949. The term shall also include the Scotland School for
Veterans' Children and the Scranton State School for the Deaf.
"Qualified majority vote." A vote by the Public School
Employees' Benefit Board requiring the support of three-fourths
of all board members.
"Qualifying event." A change in marital status, death of a
member or the change in a health care dependent's status,
subsequent to the commencement of coverage under this chapter,
or the involuntary termination of health plan coverage that was
obtained through a health care dependent.
"Reserve account." A ledger account of the Public School
Employees' Benefit Trust Fund created in section 336(a)(2)
(relating to Public School Employees' Benefit Trust Fund).
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"Retirement system." The Public School Employees' Retirement
System of Pennsylvania or "system" as defined in section 8102
(relating to definitions).
"School employee." Any person regularly employed by or in a
public school entity for which work the person is receiving
regular remuneration as an officer, administrator, employee or
long-term substitute. The term excludes any independent
contractor, person compensated on a fee basis or, unless
otherwise determined by the Public School Employees' Benefit
Board, any part-time hourly school employee. The term includes
any employee of a public school entity who has a position for
which eligibility in a health care plan sponsored by the public
school entity is in effect as of the effective date of this
chapter.
"Supplemental benefits." Dental care, vision care and
employee assistance program benefits that may be offered in
addition to medical and hospital services and prescription drug
benefits.
"Transfer employee." A person who is not a school employee
who is regularly employed at a worksite in a public school
entity, regardless of who actually employs the person, if the
person is performing services previously performed by a school
employee.
"Trust fund." The Public School Employees' Benefit Trust
Fund created in section 336 (relating to Public School
Employees' Benefit Trust Fund).
SUBCHAPTER B
PUBLIC SCHOOL EMPLOYEES' BENEFIT BOARD
Sec.
311. Public School Employees' Benefit Board.
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312. Administrative duties of board.
§ 311. Public School Employees' Benefit Board.
(a) Status and membership.--The board shall be an
independent administrative board and shall consist of the
following board members:
(1) The Secretary of the Budget , the Secretary of
Education and the Insurance Commissioner or their designees.
(2) The Majority Leader of the Senate, the Minority
Leader of the Senate, the Majority Leader of the House of
Representatives and the Minority Leader of the House of
Representatives or their designees.
(3) One person appointed by the President pro tempore of
the Senate and one person appointed by the Speaker of the
House of Representatives.
(b) Designee and appointee terms.--
(1) A person may be a designee for a term of four years
and is eligible for reappointment.
(2) The members appointed under subsection (a)(3) shall
serve for a term of four years and are eligible for
reappointment.
(c) Meetings.--The board shall meet as needed to fulfill its
duties, and five board members shall constitute a quorum. Board
members shall elect the chairman of the board. Except in
instances where a qualified majority is required under this
chapter, a majority of the board members present and voting
shall have authority to act upon any matter. The board is
authorized to establish rules of its operation, including a
provision for the removal of board members for nonattendance.
(d) (Reserved).
(e) Oath of office.--Each board member shall take an oath of
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office that the member will, so far as it devolves upon the
member, diligently and honestly administer the affairs of the
board and that the member will not knowingly violate or
willfully permit to be violated any of the provisions of law
applicable to this chapter. The oath shall be subscribed by the
board member making it and certified by the officer before whom
it is taken and shall be immediately filed in the office of the
Secretary of the Commonwealth.
(f) Compensation and expenses.--Board members and designees
who are members of the retirement system or the State Employees'
Retirement System shall serve without compensation. Board
members and designees who are members of the retirement system
and who are employed by a public school entity shall not suffer
loss of salary or wages through serving on the board. The board,
on request of the employer of any board member or a board
member's designee who is an active professional or
nonprofessional member of the retirement system, may reimburse
the employer for the salary or wages of the member or designee
or for the cost of employing a substitute for the board member
or designee while the board member or designee is necessarily
absent from employment to execute the duties of the board. An
appointed board member or board member's designee who is not a
legislator, the Insurance Commissioner, the Secretary of the
Budget or the Secretary of Education may be paid $100 per day
when attending meetings, and all board members and designees
shall be reimbursed for any necessary expenses. When, however,
the duties of the board as mandated are not executed, no
compensation or reimbursement for expenses of board members and
designees shall be paid or payable during the period in which
the duties are not executed.
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(g) Corporate power and legal advisor.--For the purposes of
this chapter, the board shall possess the power and privileges
of a corporation. The Office of General Counsel shall be the
legal advisor of the board.
(h) Duties of the board.--The board shall have the power and
authority to carry out the duties established by this chapter,
including the design, implementation and administration of the
school employee health benefits study under Subchapter C
(relating to school employee health benefits evaluation) and the
health benefits program approved under section 323 (relating to
plan adoption).
§ 312. Administrative duties of board.
(a) Secretary.--The board shall select a secretary, who
shall not be a board member. The secretary shall act as chief
administrative officer for the board. In addition to other
powers and duties conferred upon and delegated to the secretary
by the board, the secretary shall:
(1) Serve as the administrative agent of the board and
as liaison between the board and applicable legislative
committees.
(2) Review and analyze proposed legislation and
legislative developments affecting the program and present
findings to the board, legislative committees and other
interested groups or individuals.
(3) Receive inquiries and requests for information
concerning the program from the press, Commonwealth
officials, public school entities, school employees and the
general public and provide information as authorized by the
board.
(b) Professional personnel.--The board may employ or
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contract with consultants and other professional personnel as
needed to operate the program, including third-party
administrators, managed care managers, chief medical examiners,
actuaries, investment advisors and managers, legal counsel and
other professional personnel as it deems advisable. The board
may also contract for the services of any national or State
banking corporation or association having trust powers, with
respect to carrying out the business and other matters of the
program.
(c) Expenses.--The board shall, through the Governor,
annually submit to the General Assembly a budget covering the
administrative expenses of this chapter. The expenses, as
approved by the General Assembly in an appropriation bill, shall
be paid:
(1) from the General Fund; or
(2) starting in the first fiscal year after the
transition period is complete and every fiscal year
thereafter, from reserves and investment earnings of the
trust fund.
(d) Meetings.--The board shall hold at least four regular
meetings annually and other meetings as it may deem necessary.
(e) Records.--The board shall keep a record of all its
proceedings which shall be open to inspection by the public.
(f) Procurement.--The board shall not be subject to 62
Pa.C.S. Pt. I (relating to Commonwealth Procurement Code).
(g) Temporary regulations.--
(1) Notwithstanding any other provision of law to the
contrary and in order to facilitate the prompt implementation
of this chapter, regulations promulgated by the board during
the two years following the effective date of this chapter
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shall be deemed temporary regulations which shall expire no
later than three years following the effective date of this
chapter or upon promulgation of regulations as generally
provided by law. The temporary regulations shall not be
subject to:
(i) Sections 201, 202, 203, 204 and 205 of the act
of July 31, 1968 (P.L.769, No.240), referred to as the
Commonwealth Documents Law.
(ii) The act of June 25, 1982 (P.L.633, No.181),
known as the Regulatory Review Act.
(2) The authority provided to the board to adopt
temporary regulations in this subsection shall expire two
years from the effective date of this chapter. Regulations
adopted after the two-year period shall be promulgated as
provided by law.
SUBCHAPTER C
SCHOOL EMPLOYEE HEALTH BENEFITS EVALUTAION
Sec.
321. School employee health benefits evaluation.
322. Board review.
323. Plan adoption.
§ 321. School employee health benefits evaluation.
(a) Duty to conduct.--The board shall conduct a thorough
evaluation of existing health care arrangements covering school
employees in this Commonwealth, examine future cost forecasts
and collect data necessary to determine the manner in which the
board may construct and sponsor a health benefits program to
reduce long-term costs or the rate of growth of long-term costs
in the aggregate for public school entities while maintaining
packages of quality health care benefits for school employees.
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The board shall use the Legislative Budget and Finance Committee
report from December 2015, as directed by Senate Resolution
No.250 of 2013-2014.
(b) Data elements.--No later than 60 days after the board is
constituted, the board shall determine the information necessary
to evaluate the existing health care arrangements covering
school employees in this Commonwealth and begin to collect the
data, including, but not limited to:
(1) The total cost of providing medical/hospital and
prescription drug coverage.
(2) The types and levels of coverage currently made
available to school employees.
(3) The nature of health care purchasing arrangements.
(4) An explanation and estimate of any financial
obligation of or funds owed to a public school entity related
to the termination of coverage under a school district-
sponsored health benefits plan.
(5) An estimate of the amount of and basis for claims
which may be outstanding during the transition for public
school entities which self-fund their coverage and the status
of any reserves established for such outstanding claims.
(6) The term and effect of collective bargaining
agreements governing health benefits.
(7) The amount and basis of any school employee cost-
sharing, both individual and in aggregate.
(8) The total amount of employer-paid costs in
aggregate.
(9) An assessment of any postretirement health care
benefit liabilities and claims experience data.
(c) Data sources.--
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(1) All entities providing health benefit coverage for
eligible individuals or administering coverage for health
benefits under this chapter shall provide information on
coverage, benefits, plan design, claims data, premiums, cost-
sharing and financial arrangements as the board shall specify
to meet the requirements of subsection (b).
(2) Notwithstanding any law to the contrary, any agency,
authority, board, commission, council, department or office
under the jurisdiction of the Governor shall consult with the
Legislative Budget and Finance Committee and cooperate with
the board in the collection of health insurance or health
care coverage data as specified by the board to effectuate
this section in accordance with this section.
(d) Public school entities.--
(1) The Secretary of Education shall assist the board in
obtaining the necessary data for the evaluation of public
school entities and consortia.
(2) In the event it is necessary to facilitate the
collection of data from a noncooperating public school entity
or consortium, the Secretary of Education may request the
State Treasurer to cause the suspension of any payment of
money due to the noncooperating public school entity or
public school entities that are participants in a
noncooperating consortium on account of any appropriation for
schools or other purposes until the necessary information is
properly provided.
(3) A public school entity shall be notified before any
payments are suspended and may appeal to the secretary and
request an extension of time if there have been extenuating
circumstances preventing the timely submission of all
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necessary information.
(4) In considering an appeal, the secretary may grant an
extension of time for the public school entity or consortium
to provide the necessary information before the suspension is
instituted.
(5) School entities and consortia may enter into
agreements with entities providing or administering coverage
for health care benefits under this chapter for the purpose
of carrying out the provisions of this section.
(e) Health benefit entities.--
(1) An entity providing or administering health
insurance or health care coverage for public school
employees, with the exception of public school entities or
consortia as provided for in subsection (d), shall, upon the
written request of the board, public school entities,
consortium or insured, provide claims and loss information
within 60 days of the request or sooner, if so determined by
the board.
(2) (i) The Insurance Commissioner, the Department of
Health and any other agency, authority, board,
commission, council, department or office under the
jurisdiction of the Governor having regulatory authority
over any entity charged under paragraph (1), hereafter
known as "regulating authority," shall cooperate with the
board, if necessary, to obtain information from any
insurance company, third-party administrator or other
administrator or provider of health insurance benefits
for school employees, other than a public school entity
or consortium.
(ii) Following notice and hearing, the board may
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impose an order assessing a penalty of up to $1,000 per
day upon any entity, other than a public school entity or
consortium, that willfully fails to comply with the
obligations imposed by this section.
(iii) If the entity does not comply with the
obligations imposed by this section within 15 days of an
order being imposed, the board shall notify the
regulating authority of the failure of an entity under
its jurisdiction to provide data as set forth in this
section.
(iv) Upon notification, the regulating authority
shall suspend or revoke the license of the entity or
otherwise suspend or revoke the entity's ability to
operate until such time as the board notifies the
regulating authority that the entity is in compliance.
(v) The board shall have standing to petition the
Commonwealth Court to seek enforcement of the order.
(3) This subsection shall apply to every entity
providing or administering group health coverage in
connection with providing health care benefits to school
employees within this Commonwealth, including plans,
policies, contracts or certificates issued by:
(i) A stock insurance company incorporated for any
of the purposes set forth in section 202(c) of the act of
May 17, 1921 (P.L.682, No.284), known as The Insurance
Company Law of 1921.
(ii) A mutual insurance company incorporated for any
of the purposes set forth in section 202(d) of The
Insurance Company Law of 1921.
(iii) A professional health services plan
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corporation as defined in 40 Pa.C.S. Ch. 63 (relating to
professional health services plan corporations).
(iv) A health maintenance organization as defined in
the act of December 29, 1972 (P.L.1701, No.364), known as
the Health Maintenance Organization Act.
(v) A fraternal benefit society as defined in
section 2403 of The Insurance Company Law of 1921.
(vi) A hospital plan corporation as defined in 40
Pa.C.S. Ch. 61 (relating to hospital plan corporations).
(vii) Health care plans subject to the Employee
Retirement Income Security Act of 1974 (Public Law 93-
406, 88 Stat. 829), to the maximum extent permitted by
Federal law.
(viii) An administrator as defined in section 1002
of the act of May 17, 1921 (P.L.789, No.285), known as
The Insurance Department Act of 1921.
(ix) A person licensed under Article VI-A of The
Insurance Department Act of 1921.
(x) Any other person providing or administering
group health care coverage on behalf of a public school
entity, or accepting charges or premiums from a public
school entity, in connection with providing health care
coverage for school employees, including, but not limited
to, multiple employer welfare arrangements, self-insured
public school entities and third-party administrators.
(f) Confidentiality.--Any data requested by or provided to
the board under this section shall comply with the standards for
privacy established under the Health Insurance Portability and
Accountability Act of 1996 (Public Law 104-191, 110 Stat. 1936).
(g) Prepared materials.--
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(1) Any documents, materials or information solely
prepared or created for the purpose of implementation of
subsection (b) are confidential and shall not be discoverable
or admissible as evidence in any civil or administrative
action or proceeding.
(2) Any documents, materials, records or information
that would otherwise be available from original sources shall
not be construed as immune from discovery or use in any civil
or administrative action or proceeding merely because they
were presented to the board.
(3) Nothing in this subsection shall be construed to
prevent publication or dissemination of the aggregate study
findings.
(h) Received materials.--
(1) Any documents, materials or information received by
the board or by a department under the jurisdiction of the
Governor on the board's behalf for the purpose of
implementation of subsection (b) shall not be discoverable
from the board, any department or the submitting entity, nor
shall they be admissible as evidence in any civil or
administrative action or proceeding.
(2) Any documents, materials, records or information
that would otherwise be available from original sources shall
not be construed as immune from discovery or use in any civil
or administrative action or proceeding merely because they
were received by the board or any department.
(i) Document review.--
(1) No current or former member or employee of the board
or any department shall be allowed to testify as to any
matters by reason of the member's or employee's review of
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documents, materials, records or information submitted to the
board by the entity providing health insurance or health care
coverage under subsection (b).
(2) The enjoinment of testimony does not apply to
findings or actions by the board or any department that are
public records.
(j) Original source document.--In the event an original
source document as specified in subsection (g) is determined by
a court of competent jurisdiction to be unavailable from the
entity providing health insurance or health care coverage in a
civil action or proceeding, then, in that circumstance alone,
the board may be required pursuant to a court order to release
that original source document to the party identified in the
court order.
(k) Right-to-know requests.--Any documents, materials or
information made confidential by subsection (f) shall not be
subject to requests under the act of February 14, 2008 (P.L.6,
No.3), known as the Right-to-Know Law, or any successor statute.
(l) Liability.--Notwithstanding any other provision of law,
no person or entity providing any documents, materials or
information to the board, any department or other entity on the
board's behalf shall be held by reason of having provided the
documents, materials or information to have violated any
criminal law, or to be civilly liable under any law, unless the
information is false and the person providing the information
knew or had reason to believe that the information was false and
was motivated by malice toward any person directly affected by
the action.
§ 322. Board review.
(a) Duties.--
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(1) Upon collection of the necessary information, the
board shall evaluate existing public school entity health
care arrangements, examine options that would aggregate
health care coverage for public school employees, assess
possible cost-management improvements, solicit input from
public school entities and consortia identified with best
practice standards and establish geographic regions of this
Commonwealth to include all public school entities and
consortia.
(2) The board shall establish a program as provided for
in section 331 (relating to health benefits program) with the
goal of improving the overall affordability of providing
health care coverage for public school employees in all
geographic regions of this Commonwealth.
(3) The cost projections shall be predicated on a plan
that provides quality health care benefits at a level
consistent with those now provided to most school employees
through existing collective bargaining contracts and offers
coverage to school employees and other eligible individuals.
(b) Program.--No later than 10 months after the board is
constituted, unless a request by the board for an extension is
granted by the Governor, the board shall decide to implement a
program as provided for in section 331.
§ 323. Plan adoption.
(a) Health benefits program adoption.--
(1) Within three months of its decision to proceed with
the program under section 322(b) (relating to board review),
the board shall verify that implementation of a program will
result in reduction in the Statewide aggregate cost of the
purchase of benefits or the rate of growth of such costs and
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adopt a proposed plan for the implementation of the program.
(2) The proposed plan shall be in writing and shall
include a detailed description of the program and the
transition procedures necessary to phase in and implement the
program. The board's adoption of a proposed plan shall
require approval by a qualified majority vote.
(b) Parameters of program.--The description of the program
shall at minimum include:
(1) The designation of the health care regions of this
Commonwealth in which each public school entity shall
participate in the program.
(2) The eligibility requirements for a school employee
and the employee's health care dependents to qualify for
participation in the program.
(3) The identification of the benefits and supplemental
benefits to be included as part of a benefit package in each
health care region.
(4) Disclosure of any member cost-sharing contributions,
whether expressed as a target percentage of overall program
costs or individually determined as a percentage of salary
and whether the cost-sharing is uniform with the health care
region.
(5) The procedure by which the board will select an
administrator for the program in each health care region.
(6) The design of the pool or pools in each health care
region that would be established to aggregate public school
entities for the purpose of purchasing services and managing
health insurance risks.
(7) The requirements for electronic eligibility
transmission between the board and other participating
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entities, including public school entities, consortia and the
retirement system.
(8) Financial and accounting plans, including the
establishment of any necessary reserves or escrow accounts
with carriers.
(c) Transition procedures.--The description of the steps to
phase in and implement the program shall at minimum include:
(1) A determination of when benefit packages in the
health care regions shall become the mandatory program
offering for eligible individuals in a public school entity
as health care benefits for school employees are normalized
on a Statewide basis.
(2) A determination, based on the size and structure of
any risk pool established within a health care region, as to
when the program would be phased in within that health care
region.
(3) The interim steps to aggregate public school
entities into a health care regional pool, including any best
practice standards and benchmarks to be applied to new or
existing consortia, or public school entities, or in any
selection process to build a health care regional pool.
(4) Transition rules on member cost-sharing
responsibility until any member cost-sharing is required
within a health care region.
(5) Transition rules to limit any negative financial
impact on a public school entity required to purchase health
care coverage through a health care regional pool and to
normalize contribution rates for all participating public
school entities within the same health care region.
(d) Legislative and public review.--
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(1) The board shall publish the provisions of any
proposed plan adopted under this section in the Pennsylvania
Bulletin and make it available on the board's publicly
accessible Internet website. Following publication, the board
shall schedule at least eight public hearings to solicit
public input on the plan. The hearings shall be conducted in
Philadelphia County, Allegheny County and the Northeast,
Northwest, Southeast, Southwest, North Central and South
Central regions of this Commonwealth.
(2) The board shall submit the provisions of any
proposed plan adopted under this section to the chairperson
and minority chairperson of the Education Committee of the
Senate and the chairperson and minority chairperson of the
Education Committee of the House of Representatives. The
committees shall have 45 days to review the proposed plan and
submit comments to the board.
(e) Final plan adoption.--
(1) Upon completion of the public hearings under
subsection (d)(1) and expiration of the committee review
under subsection (d)(2), the board shall review all testimony
and comments received regarding the proposed plan. The board
may, subject to a qualified majority vote, make changes and
adjustments to the plan to effectuate this chapter.
(2) Within 90 days of publishing the proposed plan,
under subsection (d)(1), the board shall publish the final
plan, as adopted by the board, in the Pennsylvania Bulletin
and on the publicly accessible Internet website of the
Department of Education.
(f) Failure to reach consensus.--If the board fails to
achieve agreement and approve a plan for implementing a program
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by a qualified majority vote, the board shall report as to its
findings and reasons preventing agreement on a plan to the
Governor, the President pro tempore of the Senate and the
Speaker of the House of Representatives.
SUBCHAPTER D
HEALTH BENEFITS PROGRAM
Sec.
331. Health benefits program.
332. Mandatory participation and optional membership.
333. Continuation of coverage and transfer employees.
334. Partnership for stable benefits funding.
335. Powers and duties of board.
336. Public School Employees' Benefit Trust Fund.
337. Misrepresentation, refusal to cooperate and fraud.
338. Miscellaneous provisions.
§ 331. Health benefits program.
(a) Creation.--Upon adoption of a health plan under section
323(e) (relating to plan adoption), the board shall proceed to
initiate and sponsor an employee benefits program for eligible
individuals.
(b) Program design.--The board shall design a program which
follows the parameters of the plan and transition procedures as
established in section 323. The board may develop and administer
the program itself or operate through any legal entity
authorized by law to do so, including consortia selected through
a competitive process as administrators, and the program may be
developed and administered differently within each health care
region as long as a benefit package, as determined by the board,
is available to eligible individuals. The program may also be
administered in whole or in part on a fully insured or self-
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funded basis at the board's sole discretion.
(c) Implementation.--The board may:
(1) Establish pools for selected areas of coverage, such
as pharmacy services, transplants, stop-loss insurance,
health care management or other possible areas that in the
board's judgment can be offered to health care regions on a
more stable and cost-effective basis. The board may offer
separate plans to public school entities and consortia prior
to the phase-in of the benefit package.
(2) Make the program available in some health care
regions before it is made available within all health care
regions.
(d) Eligibility requirements.--The board may determine
eligibility requirements for benefits and adopt rules and
regulations to bind all eligible individuals. No coverage shall
be provided for eligible individuals without payment being made,
except under circumstances as may be established by the board
under reasonable guidelines.
(e) Coverage and plan selection.--The board may select and
contract with insurance carriers, health maintenance
organizations, pharmacy benefit managers, third-party
administrators, reinsurers and any other entities necessary to
provide a range of benefit packages to eligible individuals
through the program. The board may determine the nature, amount
and duration and discontinuation of coverage to be provided.
(f) Benefits.--
(1) A benefit package shall be established by the board
that shall include coverage for medical and hospital
services, prescription drugs and may include supplemental
benefits in amounts to be determined by the board.
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(2) Within each health care region, the board shall
approve and make available to each eligible individual
affiliated with a public school entity which is participating
in the program the following:
(i) A health care plan that includes coverage
determined by the board.
(ii) Any optional benefit plan, as approved by the
board, which allows an eligible individual to purchase
coverage that is not included in the benefit package,
provided that any cost over and above the cost of the
health care plan in subparagraph (i) must be paid by the
member except as otherwise provided in section 338(f)(2)
(relating to miscellaneous provisions).
(3) The detailed basis on which payment of benefits is
to be made shall be specified in writing. The benefits
provided in this chapter are subject to change or
modification by the board from time to time as the board, in
its discretion, may determine. All changes or modifications
shall be specified in writing and communicated to members
within a reasonable period of time.
§ 332. Mandatory participation and optional membership.
(a) Mandatory participation.--All public school entities
shall participate in the program on a health care regional
basis.
(b) Transition plan.--
(1) When the board determines under subsection (a) that
a public school entity shall be required to participate in
the program, the public school entity or consortium in which
the public school entity is a participant shall, within a
reasonable period of time as determined by the board, present
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to the board a transition plan with a schedule for the
eventual migration of school employees into the program.
(2) The board shall review the transition plan with the
public school entity or consortium and make any necessary
modifications before granting approval of the plan.
(3) A public school entity or consortium shall be
subject to adherence to the transition plan approved by the
board.
(c) Extensions of time.--The board shall give due
consideration to a transition plan submitted under subsection
(b) that includes a request for an extension of time. Requests
may be submitted by, but shall not be limited to, any of the
following:
(1) A public school entity that participates in a
consortium where an extension of time is necessary for the
rundown and proper termination of the consortium's program.
(2) A public school entity that participates in a
consortium where the withdrawal of the public school entity
may undermine the financial stability of the consortium.
(3) A public school entity or a consortium which will
incur a significant financial penalty under terms of a
contract with an insurance carrier or other provider of
health care coverage for a contract in existence on or before
January 1, 2017.
(4) A public school entity or consortium which will
incur a significant financial cost, including fees, penalties
or other contractual financial obligations, related to the
termination of coverage under a contract of insurance or, in
the case of a public school entity that self-insures,
insufficient reserves to pay claims incurred during the
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previous coverage year, if the obligation relates to a plan
of coverage that was in existence on or before January 1,
2017, and the public school entity or consortium provides the
board with a financial plan for meeting these obligations.
(d) Optional membership.--No school district of the first
class, as classified under section 202 of the Public School
Code, shall be required to participate in the program, except as
may be agreed upon under terms of a collective bargaining
agreement covering a majority of employees of a school district
of the first class. Upon a school district of the first class
entering participation in the program pursuant to a collective
bargaining agreement, continued participation in the program
shall become mandatory.
(e) Prohibited membership.--A public school entity that, on
the effective date of this section, participates in the
Pennsylvania Employees' Benefit Trust Fund shall be prohibited
from participating in the program, and employees of the public
school entity may not be members of the program.
(f) Transition of employees.--
(1) A public school entity that provides some or all of
its employees with health benefits through another health
care plan by virtue of one or more collective bargaining
agreements, entered into prior to the effective date of this
section, shall not be required to join the program until
expiration of the collective bargaining agreements.
(2) The public school entity and some or all of its
employees or bargaining representatives of its employees may
by mutual agreement and approval of the board join the
program at an earlier date.
(3) Renewal or extension of a collective bargaining
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agreement shall constitute its expiration for the purpose of
this subsection.
§ 333. Continuation of coverage and transfer employees.
(a) Annuitants.--
(1) Upon retirement, an annuitant eligible under
paragraph (1) or (2) shall have the option to elect coverage
in the program, including coverage for any eligible health
care dependent.
(2) The annuitant must pay the full cost of the
coverage, unless a public school entity has agreed, separate
from any requirements of the program, to pay toward the
coverage pursuant to an award of health benefits under a
written policy or agreement collectively bargained or
otherwise entered into by the public school entity.
(3) The board shall annually determine the cost of
coverage as follows:
(i) For an annuitant who is enrolled in the program
under section 513 of the Public School Code or an
annuitant who pursuant to any award of health benefits
for annuitants under a written policy or agreement
collectively bargained or otherwise entered into by the
public school entity prior to the effective date of this
section, payments shall be based on the total
contribution rate established under section 334(b) and
(c) (relating to partnership for stable benefits funding)
for a school employee in the same health care region,
plus a 2% administrative fee.
(ii) For an annuitant, other than an annuitant
qualified for coverage under subparagraph (i), payments
shall be made on the same basis as an annuitant qualified
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for coverage under subparagraph (i), except as determined
as follows:
(A) The board's actuary shall periodically
review and determine the separate cost of providing
continuation of coverage to annuitants under this
subparagraph, along with an assessment of its impact
on the cost of providing coverage to members who are
school employees and annuitants qualified for
coverage under subparagraph (i). The review and
assessment shall first occur as part of the school
employee health benefits evaluation conducted under
section 321 (relating to school employee health
benefits evaluation) and its results shall be
considered in the development of parameters under
section 323(b) (relating to plan adoption).
(B) The board shall consider the findings of the
actuary in clause (A) to determine if there is a
substantial impact on the cost of providing coverage
to members who are school employees and annuitants
qualified for coverage under subparagraph (i). If
there is a substantial cost impact, the board shall
require payments for an annuitant qualified to elect
coverage in the program under this subparagraph to be
separately determined and the contribution rate to be
based on the disaggregated cost of providing the
coverage, plus a 2% administrative fee.
(b) Separation from service.--
(1) The board shall determine the eligibility of
members, other than annuitants covered by subsection (a), to
elect continuation of coverage in the program upon separation
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from service as a school employee.
(2) The member must pay the full cost of the coverage in
the member's health care region, plus an administrative fee
to be set by the board.
(3) The board shall, at minimum, provide continuation of
coverage eligibility that meets the requirements of Title X
of the Employee Retirement Income Security Act of 1974
(Public Law 93-406, 88 Stat. 829) and provide the
continuation of coverage options required under 51 Pa.C.S. §
7309 (relating to employment discrimination for military
membership or duty) for members on military leave.
(c) Transfer employees.--
(1) The board may approve the participation of transfer
employees in the program, provided that any position for
which a transfer employee who is provided health benefits in
a health care plan sponsored by a public school entity
through an agreement that was in existence on or before
January 1, 2017, with the transfer employee's employer shall
be allowed to participate in the program.
(2) The board shall establish the terms and conditions
necessary for participation in the program, including the
cost of coverage to be paid by the third-party entity which
shall be based on the full cost of coverage in the health
care region as determined by the board, plus an
administrative fee.
(3) The sponsoring public school entity shall, on behalf
of the board, collect the payments for transfer employees
from the third-party entity.
§ 334. Partnership for stable benefits funding.
(a) Basis of partnership.--In recognition that the long-term
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viability and stability of the program will require public
school entity employers, members and the Commonwealth to be
partners both in sustaining the program as well as managing the
costs of reasonable and appropriate benefit packages, the board
shall determine for each plan year and in each region the
payments due from public school entities, from members and from
the Commonwealth.
(b) Determination of contribution rate.--The board shall
determine for each plan year the total amount of the
contributions by the Commonwealth, public school entities and
school employees required to provide projected benefits for that
plan year under the benefit packages on behalf of each school
employee member and the employee's eligible health care
dependents. The contribution rate shall consist of the amount
required to provide the benefit packages, including appropriate
reserves and administrative expenses, and shall be adjusted for
each health care region to reflect the cost of benefits in that
health care region. The contribution rates may differentiate
between single coverage for members only and types of family
coverage, as determined by the board.
(c) Certification of rate.--The board shall certify the
contribution rate for each health care region to the
Commonwealth and public school entities, including the payments
that shall be due from public school entities, from members and
from the Commonwealth. The certifications shall be regarded as
final and not subject to modification by the Secretary of the
Budget.
(d) Commonwealth cost share.--The Commonwealth shall make a
contribution to offset a portion of the cost increase consistent
with subsections (e) and (f) for any plan year in which the
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board determines that the aggregate cost of providing the
benefit packages on behalf of members who are school employees
and their eligible health care dependents exceeds the sum of:
(1) the projected carry-over balance for the plan year
in the employer contribution account after all required
transfers have been made to the employee benefits account for
the prior year; and
(2) any employee cost-sharing for the plan year.
(e) Budget submission and appropriation.--If the board
determines that the requirements of subsection (d) have been
met, all of the following shall occur:
(1) The board shall submit to the Secretary of the
Budget an itemized budget specifying the amount necessary to
be appropriated by the Commonwealth consistent with
subsection (f). The budget submission shall be on a form and
in a manner determined by the Secretary of the Budget and
shall occur no later than November 1 of the fiscal year
preceding the plan year for which funds are requested.
(2) Upon appropriation by the General Assembly to
provide for the obligations of the Commonwealth, the amount
shall be paid by the State Treasurer through the Department
of Revenue into the employer contribution account within 30
days of receipt of the requisition presented each month by
the board.
(f) Limitation on Commonwealth contribution.--
(1) The Commonwealth shall not be obligated to pay any
amount beyond that which is appropriated by the General
Assembly. The amount requested by the board under subsection
(e)(1) shall not exceed the sum of any amount paid by the
Commonwealth for the fiscal year preceding the plan year for
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which funds are requested and the lesser of:
(i) fifty percent of the amount that the board
determines is necessary to meet the increase in the
contribution rate on behalf of members who are school
employees determined under subsection (b); and
(ii) the product of the total revenue transferred in
the prior plan year from the employer contribution
account to the employee benefits account and the most
recent annual percent change in the per enrollee private
health insurance premium for all benefits, as defined in
the National Health Expenditure Data published by the
Centers for Medicare and Medicaid Services, Department of
Health and Human Services.
(2) If any excess revenue in the employer contribution
account will be applied to payments for the plan year, then
the excess revenue shall be used to reduce the calculation
under this subsection in proportion to the Commonwealth's
share of the total increase in the contribution rate on
behalf of active members for the plan year.
(g) Additional optional contribution.--Notwithstanding the
limitation in subsection (f), the General Assembly may
appropriate additional revenue to the employer contribution
account in any fiscal year.
(h) Allocation of Commonwealth contribution.--
(1) Any contribution made by the Commonwealth under this
section shall be used to offset an increase in the
contribution rate paid in a health care region by public
school entities on behalf of members who are school employees
and their eligible health care dependents and to maintain any
offset that was paid in a prior year.
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(2) The Commonwealth contribution shall be allocated to
offset a portion of each participating public school entity's
cost of coverage on a per-member basis, for members who are
school employees and their eligible health care dependents,
based on the public school entity's market value/income aid
ratio using the most recent data provided by the Department
of Education.
(3) For any public school entity that is not assigned a
market value/income aid ratio by the Department of Education,
the Commonwealth contribution shall not be adjusted based on
a market value/income aid ratio.
(4) For the purpose of this subsection, "market
value/income aid ratio" shall have the same meaning given to
it in the Public School Code.
(i) Contributions on behalf of school employees.--
(1) Consistent with any transition procedure under
section 323(c)(5) (relating to plan adoption), each public
school entity shall be required to make payments to the trust
fund on behalf of members who are school employees and their
eligible health care dependents based on the contribution
rate certified by the board in subsection (c).
(2) The increase in payments made from one year to the
next by public school entities on behalf of school employees
shall be equal to or greater than the increase in payment
from one year to the next made under subsection (d),
excluding any additional optional contribution made by the
Commonwealth under subsection (g).
(j) Deduction from appropriations.--In the event a public
school entity does not make the required payment in the time
allotted as determined by the board, the Secretary of Education
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and the State Treasurer shall deduct and pay into the trust fund
from the amount of any money due to any public school entity on
account of any appropriation for schools or other purposes the
amount due to the trust fund as certified by the board and as
remains unpaid on the date such appropriations would otherwise
be paid to the public school entity by the Department of
Education, and the amount shall be credited to the public school
entity's account in the trust fund.
(k) Transition.--
(1) Until any transition under section 323(c)(5) has
been completed, the payments made by each public school
entity shall be no less than the total amount paid by the
public school entity to provide, purchase and administer
health care benefits to members who are school employees and
their eligible health care dependents in the year before
implementation of the program.
(2) Any contributions received by the public school
entity from school employees in the form of cost-sharing
payments for health care coverage shall be excluded from the
amount.
§ 335. Powers and duties of board.
(a) Powers.--In addition to the powers granted by other
provisions of this chapter, the board shall have the powers
necessary or convenient to carry out this subchapter, including,
but not limited to, the power to:
(1) Determine appropriate geographic health care regions
for the administration of the program and make changes to the
regions as necessary.
(2) Formulate and establish the conditions of
eligibility, including eligibility for health care dependent
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coverage for members, to include consideration if a member or
health care dependent is covered, or eligible for coverage,
under another employer-sponsored group health insurance plan,
provisions for payment of benefits and all other provisions
that may be required or necessary to carry out the intent and
purpose of the program.
(3) Determine and make necessary changes to the benefit
packages and benefit structure of the program.
(4) Establish copayments, annual deductibles,
coinsurance levels, exclusions, formularies and other
coverage limitations and payment responsibilities of members
incurred at the time of service.
(5) Set and adjust member cost-sharing contributions to
be expressed as a target percentage of overall program costs
or individually determined as a percentage of salary. The
board shall determine whether member cost-sharing shall be
uniform across all health care regions or shall vary by
health care region.
(6) Impose and collect necessary fees and charges.
(7) Determine enrollment procedures.
(8) Establish procedures for coordination of benefits
with other plans and third-party payers, including
coordinating benefits or contracting directly with Medicare.
(9) Establish a plan with the retirement system to
coordinate health care coverage for annuitants between the
program established by this chapter and the group health
insurance program sponsored by the retirement system under
the provisions of Chapter 89 (relating to group health
insurance program) and to coordinate the sharing of
information pertaining to premium assistance payment
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transfers.
(10) Set and adjust contribution rates sufficient to
maintain the adequacy of any reserves established by this
chapter and to fully fund the benefits offered by and to pay
for the administrative expenses related to the program.
(11) Set and adjust costs for members electing to
continue coverage upon retirement or separation from
employment. The board may establish different cost rates to
be charged for different categories of members electing to
continue coverage.
(12) Purchase insurance or employ self-insurance, alone
or in combination, to provide benefits as shall be determined
by the board.
(13) Establish appropriate reserves based on generally
accepted standards as applied by Federal and State regulators
to similar types of plans.
(14) Issue self-liquidating debt or borrow against
contributions, payments or other accounts receivable for the
purposes of prepaying any health benefits, establishing
reserves or otherwise lowering the cost of coverage.
(15) Establish procedures to verify the accuracy of
statements and information submitted by eligible individuals
on enrollment forms, claim forms or other forms.
(16) Receive and collect all contributions due and
payable to the accounts or delegate to a public school entity
or claims processor the right to receive contributions,
payments or perform ministerial functions required to assert
the board's rights. In so doing, the board shall have the
right to:
(i) maintain any and all actions and legal
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proceedings necessary for the collection of
contributions; and
(ii) prosecute, defend, compound, compromise,
settle, abandon or adjust any actions, suits,
proceedings, disputes, claims, details and things related
to the accounts and program.
(17) Establish procedures to hear and determine any
claims and controversies under this chapter.
(18) Promulgate rules and regulations regarding the
administration of the program, including the establishment of
the plan year.
(19) Ensure that a public school entity provides
detailed information about the program to eligible employees
at least 90 days before program coverage begins to be offered
to school employees.
(20) Seek and take all necessary steps to retain
eligibility for the members, public school entities and the
Commonwealth to receive tax-preferred or tax-free treatment
under the IRC for contributions to and earnings of the trust
fund.
(21) Enter into agreements with entities providing or
administering coverage for health benefits under this chapter
for the electronic exchange of data between the parties at a
frequency as determined by the board.
(22) Perform and do any and all such actions and things
that may be properly incidental to the exercising of powers,
rights, duties and responsibilities of the board.
(23) Determine best practice standards and benchmarks
for consortia in any selection process to build health care
regional pools, including the power to require a consortium
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to merge with another consortium. The board may require
consortia, as a condition of serving as an administrator for
the program, to accept any public school entity applying to
join and participate in a consortium.
(24) Enter into agreements with any public school entity
or consortium to implement the program developed under this
chapter and delegate powers necessary to administer coverage
for health benefits.
(b) Administrative duties of board.--In addition to other
duties of the board provided in this chapter, the duties
specified in this section shall be afforded to the board for the
implementation of this section.
(c) Regulations and procedures.--The board shall, with the
advice of the Office of General Counsel and the actuary, adopt
and promulgate rules and regulations for the uniform
administration of the program. The actuary shall approve in
writing all computational procedures used in the calculation of
contributions and the cost of benefits, and the board shall by
resolution adopt the computational procedures prior to their
application by the board. The rules, regulations and
computational procedures as so adopted from time to time and as
in force and effect at any time, together with tables that are
adopted as necessary for the calculation of contributions and
the cost of benefits, shall be effective as specified in this
chapter.
(d) Data.--The board shall keep in electronic format records
of claims, eligibility and other data as are stipulated by the
actuary in order that an annual contribution rate determination
for each health care region and various program options can be
completed within six months of the close of each plan year. The
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board shall have final authority over the means by which data is
collected, maintained and stored and in so doing shall protect
the rights of its membership as to privacy and confidentiality.
(e) Annual financial statement.--The board shall prepare and
have published within six months following the end of each plan
year a financial statement showing the condition of the trust
fund as of the end of the previous plan year. The board shall
submit said financial statement to the Governor and shall make
copies available to public school entities for the use of the
school employees and the public.
(f) Independent audit.--The board shall provide for an
annual audit of the trust fund by an independent certified
public accounting firm.
(g) Manual of regulations.--The board shall, with the advice
of the Office of General Counsel and the actuary, prepare within
six months of the commencement of a program adopted under this
chapter a manual incorporating rules and regulations consistent
with the provisions of this chapter for each participating
public school entity that shall make information contained in
the manual available to school employees. The board shall
thereafter advise public school entities within 90 days of any
changes in rules and regulations due to changes in the law or
due to changes in administrative policies.
(h) Annual budget.--The board shall establish an annual
budget for the program and make disbursements from the trust
fund that are consistent with the budget.
(i) Program assistance.--The board may solicit and accept
grants, loans and other aid from any person, corporation or
other legal entity or from the Federal, State or local
government and participate in any Federal, State or local
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government program if necessary for prudent management of the
program.
(j) Functions.--The board shall perform other functions as
are required for the execution of this chapter and shall have
the right to inspect employment records of public school
entities.
(k) Qualified majority voting provision.--A qualified
majority vote shall be required on any matter voted upon by the
board affecting the development of or any change in:
(1) The plan to implement the program adopted under
section 323(e) (relating to plan adoption).
(2) The benefit packages, benefit options or plan
designs offered by the program to covered employees.
(3) Membership eligibility criteria.
(4) The addition, deletion or significant change in
status of an insurance carrier, benefits administrator or
other major contractor in the administration of benefits, or
the addition, deletion or significant change in status of a
health care provider network.
(5) Any determination on the use of excess fund
payments.
(6) The overall per-employee cost of the benefit package
to the trust fund and any public school entity funding and
member cost-sharing responsibilities.
(7) Cost containment measures such as managed care,
wellness centers and large case management.
(8) Contracts valued at more than $25,000,000.
(9) Changes in trust document, bylaws or any major
internal operating policies or procedures, such as claims
appeal procedures, not to include routine ministerial
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functions.
(10) Approve employment of and contracts with
consultants and professional personnel.
(l) Duties conferred upon secretary.--The secretary of the
board shall supervise a staff of administrative, technical and
clerical employees engaged in recordkeeping and clerical
processing activities in maintaining files of members,
accounting for contributions, processing payments, preparing
required reports and counseling.
§ 336. Public School Employees' Benefit Trust Fund.
(a) Establishment of trust fund.--The Public School
Employees' Benefit Trust Fund is established in the State
Treasury. The money in the trust fund is appropriated on a
continuing basis and shall be used exclusively for the purposes
specified in this chapter. All of the assets of the trust fund
shall be maintained and accounted for, separate from all other
funds and money of the Commonwealth. The Treasury Department
shall credit to the trust fund all money received from the
Department of Revenue arising from the contributions required
under this chapter and all earnings from investments or money of
the trust fund. The board shall establish and maintain several
ledger accounts as follows:
(1) The employee benefits account shall be the ledger
account to which shall be credited the payments from section
333 (relating to continuation of coverage and transfer
employees), payments from members for cost sharing and any
additional member-paid cost associated with optional benefit
packages elected by members and transfers from the employer
contribution account as provided in paragraph (3). All
earnings derived from investment of the assets of the
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employee benefits account shall be credited to this account.
The board may separately invest the amounts in the employee
benefits account in a prudent manner intended to maximize the
safety of the capital contained in the employee benefits
account. Payments for member health care benefits and the
direct administrative expenses of the board related to the
administration of the employee benefits program, as provided
in section 312(d) (relating to administrative duties of
board), shall be charged to this account.
(2) A restricted reserve account, or more than one
account if the board determines it necessary to have
segregated accounts, is established within the trust fund for
the purpose of establishing and maintaining a reserve or
separate reserves sufficient:
(i) to pay the expected claims experience of the
program in the event the board elects to self-fund all or
a portion of the program for any plan years;
(ii) to prefund the accrued liability for any
postretirement health care benefits earned by employees
enrolled in the program under section 333(a)(3)(i)
(relating to continuation of coverage and transfer
employees) as the benefit is earned by the employees; and
(iii) to amortize the unfunded actuarial accrued
liability for postretirement health care benefits already
earned by employees and annuitants under section 333(a)
(3)(i) in the event the board elects to assume all or a
portion of the liability. The board shall use an
amortization period that does not exceed 30 years for
this purpose.
The board shall annually establish through an actuary
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retained by the board the amount necessary, if any, to
establish and maintain a reserve or separate reserves
sufficient for the purposes of this paragraph. Any money
needed to maintain the reserve or separate reserves
established under this paragraph shall be collected through
the adjustment of the contribution rate established under
section 334(b) and (c) (relating to partnership for stable
benefits funding) or through other available sources. The
money in any reserve account may be invested by the board
separate from other money of the trust fund. All earnings
derived from investment of the assets of any reserve account
shall be credited to the reserve account.
(3) The employer contribution account shall be the
ledger account to which shall be credited all contributions
made by the Commonwealth as determined in accordance with
section 334(e) and payments from public school entities as
determined in accordance with section 334(i), as well as all
earnings derived from the investment of the assets of the
employer contribution account. The total amount of the
Commonwealth and public school entity contributions required
to provide the benefit packages on behalf of all members who
are school employees and their eligible health care
dependents shall be transferred on a monthly basis to the
employee benefits account.
(b) Composition.--The trust fund shall consist of:
(1) All payments made by members or received from the
Commonwealth and public school entities and all interest,
earnings and additions to the payments.
(2) Any other money, public or private, appropriated or
made available to the board for the trust fund or any reserve
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account from any source and all interest, earnings and
additions thereto.
(c) Administration of trust and associated funds.--The
assets of the trust fund shall be preserved, invested and
expended solely under and for the purposes set forth in this
chapter.
(d) Control and management of trust fund.--
(1) The board shall have exclusive control and
management of the trust fund and full power to invest and
manage the assets of each account of the trust fund as a
prudent investor would, by considering the purposes, terms
and other circumstances of each account and by pursuing an
overall investment strategy reasonably suited to the trust
fund.
(2) The board may invest in every kind of property and
type of investment, including, but not limited to, mutual
funds and similar investments, consistent with this
subsection.
(3) In making investment and management decisions, the
board shall consider, among other things, to the extent
relevant to the decision or action:
(i) the size and nature of the account;
(ii) the liquidity and payment requirements of the
account;
(iii) the role that each investment or course of
action plays in the overall investment strategy;
(iv) to the extent reasonably known to the board,
the needs for present and future payments; and
(v) the reasonable diversification of assets, taking
into account the purposes, terms and other circumstances
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of the trust fund and the requirements of this section.
(e) Custodian of trust fund.--The State Treasurer shall be
the custodian of the trust fund.
(f) Name for transacting business.--By the name of "The
Public School Employees' Benefit Trust Fund," all of the
business of the trust fund shall be transacted, its fund
invested, all requisitions for money drawn and payments made and
all of its cash and securities and other property shall be held,
except that, any other law to the contrary notwithstanding, the
board may establish a nominee registration procedure for the
purpose of registering securities in order to facilitate the
purchase, sale or other disposition of securities.
(g) Payment from trust fund.--All payments from the trust
fund shall be made by the State Treasurer in accordance with
requisitions signed by the secretary of the board or the
secretary's designee. The board shall reimburse the State
Treasurer for the cost of making disbursements from the trust
fund.
(h) Fiduciary status of board.--Board members, employees of
the board and their agents shall stand in a fiduciary
relationship to the members regarding the investments and
disbursements of any of the money of the trust fund and shall
not profit either directly or indirectly with respect thereto.
(i) Transfers.--The board may transfer money among the
various accounts of the trust fund, including any reserve
accounts established under subsection (a)(2), as may be
necessary to satisfy the provisions of this chapter. Transfers
from funds retained in the reserve account under subsection (a)
(2)(i) may be made only for the payment of claims or expected
claims as determined by the actuary retained by the board.
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Transfers from funds retained in the reserve account under
subsection (a)(2)(ii) or (iii) may be made only for paying
toward the cost of providing health care benefits to annuitants
enrolled in the program under section 333(a)(3)(i).
(j) Additional powers of board.--The board may:
(1) Adopt, from time to time, appropriate investment
policy guidelines and convey the same to those fiduciaries
who have the responsibility for the investment of funds.
(2) Retain such portion of the money of the accounts in
cash or cash balances as the board may deem desirable,
without any liability or interest thereon.
(3) Settle, compromise or submit to arbitration all
claims or damages due from or to the accounts, commence or
defend any legal, equitable or administrative proceedings
brought in connection with the program and represent the
trust fund in all proceedings under this paragraph.
(k) Additional duties of secretary.--The secretary of the
board shall serve as liaison to the Treasury Department, the
Department of the Auditor General and between the board and the
investment counsel and the mortgage supervisor in arranging for
investments to secure maximum returns to the trust fund.
§ 337. Misrepresentation, refusal to cooperate and fraud.
(a) Misrepresentation.--If the eligible individual or anyone
acting on behalf of an eligible individual makes a false
statement or withholds information on the application for
enrollment with intent to deceive or affect the acceptance of
the enrollment application or the risks assumed by the program
or otherwise misleads the board, the board shall be entitled to
recover its damages, including legal fees, from the eligible
individual or from any other person responsible for misleading
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the board and from the person for whom the benefits were
provided. Any material misrepresentation on the part of the
eligible individual in making application for coverage or any
application for reclassification or for service under the
program shall render the coverage under the program null and
void.
(b) Refusal to cooperate.--
(1) The board may refuse to pay benefits or cease to pay
benefits on behalf of an eligible individual who fails to
sign any document deemed by the board to be relevant to
protecting its subrogation rights or certifying eligibility
or who fails to provide relevant information when requested.
(2) As used in this subsection, the term "information"
includes any documents, insurance policies, police reports or
any reasonable request by the claims processor to enforce the
board's rights.
(c) Penalty for fraud.--
(1) In any case in which the board finds that an
eligible individual is receiving benefits based on false
information, the additional amounts received predicated on
the false information, together with interest doubled and
compounded and legal fees, shall be due from the member.
(2) To secure payment of funds, the board may garnish or
attach all or a portion of any compensation payable to the
party by the party's employer, any annuity payable to the
party by the retirement system, any accumulated deductions
held by the retirement system in the party's account or any
process whatsoever.
§ 338. Miscellaneous provisions.
(a) Construction of chapter.--
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(1) Any termination or other modifications of the
program, including, but not limited to, a change in rates,
benefits options or structure of the provision of health care
benefits, shall not give rise to any contractual rights or
claims by any eligible individuals or any other person
claiming an interest, either directly or indirectly, in the
program. No provisions of this chapter, nor any rule or
regulation adopted under this chapter, shall create in any
person a contractual right in that provision.
(2) The provisions of this chapter are severable and if
any of its provisions shall be held to be unconstitutional,
the decision of the court shall not affect or impair any of
the remaining provisions. It is hereby declared to be the
legislative intent that this chapter would have been adopted
had the unconstitutional provisions not been included.
(3) This subsection shall not apply to policies designed
primarily to provide coverage payable on a per diem, fixed
indemnity or nonexpense incurred basis, or policies that
provide accident only coverage, where payment for such policy
is made solely by the school employee.
(b) Hold harmless.--
(1) Neither the Commonwealth nor the board, including
their respective officers, directors and employees, shall be
liable for any claims, demands, actions or liability of any
nature, including, but not limited to, attorney fees and
court costs, based upon or arising out of the operations of
the program, whether incurred directly or indirectly.
(2) The eligible individuals who enroll and participate
in the program shall be deemed to agree, on behalf of
themselves and their heirs, successors and assigns, to hold
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harmless the Commonwealth and the board, including their
respective officers, directors and employees, from any
claims, demands, actions or liability of any nature, whether
directly or indirectly, including attorney fees and court
costs, based upon or arising out of the operation of the
program.
(c) No recourse.--Under no circumstances shall the assets of
the Commonwealth be liable for or its assets be used to pay any
claims, demands, actions or liability of any nature, whether
directly or indirectly, including, but not limited to, attorney
fees and court costs, based upon or arising out of the operation
of the program.
(d) Reservation of immunities.--Nothing contained in this
chapter shall be construed as a waiver of the Commonwealth's or
board's immunities, defenses, rights or actions arising out of
their sovereign status or from the 11th amendment to the
Constitution of the United States.
(e) Collective bargaining, mediation and binding
arbitration.--Except as otherwise provided in subsection (f),
nothing in this chapter or in any other law shall be construed:
(1) To permit, authorize or require collective
bargaining, mediation or binding arbitration to create, alter
or modify health benefits set forth in this chapter or
administered by the board for school employees and their
health care dependents.
(2) To permit, authorize or require a public school
entity, through collective bargaining, mediation or binding
arbitration, or otherwise, to establish, create, alter or
modify a health benefits plan or pay health benefits
specified in this chapter or administered by the board that
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modify or supplement in any way the health benefits specified
in this chapter for school employees and their health care
dependents.
(f) Exceptions.--
(1) The parties may:
(i) Continue to engage in collective bargaining with
regard to health benefits until such time as the board-
sponsored program, under this subchapter, is released and
the benefit packages are made available to employees of a
public school entity. However, any health benefits
provided under a collective bargaining agreement entered
into on or after the effective date of this section shall
contain a provision that school employees covered by the
agreement must join the board-sponsored program as
required by section 332 (relating to mandatory
participation and optional membership) as a condition of
continuing to receive health benefits. The board shall
determine the appropriate timing and phase-in of the
program in any public school entity taking into
consideration the need for the public school entity to
properly terminate any existing health benefits
arrangements.
(ii) Negotiate or otherwise agree to provide or make
payment for supplemental benefits that have not been
included as part of the benefit package.
(2) Nothing contained in this chapter shall restrict a
public school entity from negotiating or otherwise agreeing
to make payment for postretirement health benefits for
members or as may be provided for in Subchapter F (relating
to retirement health savings plan).
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(g) Initial qualified majority vote requirement.--A
qualified majority vote of the board that occurs on or before
December 31, 2019, must include the support of either the
Secretary of the Budget or the Insurance Commissioner.
SUBCHAPTER E
(RESERVED)
SUBCHAPTER F
RETIREMENT HEALTH SAVINGS PLAN
Sec.
361. Retirement health savings plan.
§ 361. Retirement health savings plan.
(a) Duty of board to establish.--The board shall establish a
retirement health savings plan through which school employees
can save to cover health-related expenses following retirement.
For this purpose the board shall make available one or more
trusts including a governmental trust or governmental trusts
authorized under the IRC as eligible for tax-preferred or tax-
free treatment. The board may promulgate regulations regarding
the prudent and efficient operation of the retirement health
savings plan, including, but not limited to:
(1) Establishment of an annual administrative budget and
disbursements in accordance with the budget.
(2) Determination of the structure of the retirement
health savings accounts available to eligible school
employees.
(3) Determination of enrollment procedures.
(b) Contracting authorized.--The board may administer the
retirement health savings plan and contract with any lawfully
authorized entities to provide investment services,
recordkeeping, benefit payments and other functions necessary
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for the administration of the retirement health savings plan.
The board may contract with the retirement system to invest
funds in an account that shall be maintained and accounted for
separately from the funds of the retirement system and invested
in a prudent manner intended to maximize the safety of the
capital, with all earnings derived from investment of the assets
to be credited to the retirement health savings plan. Costs and
expenses incurred by the retirement system in administering the
investment option shall be paid by the retirement health savings
plan.
(c) Separate account.--All funds related to the retirement
health savings plan shall be maintained and accounted for
separately from the program sponsored by the board. The assets
of the retirement health savings plan shall not be liable or
utilized for payment of any expenses or claims incurred by the
program other than as may be directed by the participant account
holder for reimbursement of an IRC-qualifying health-related
expense.
(d) Enrollment.--The board shall establish eligibility
guidelines consistent with the IRC for school employees to
participate in the retirement health savings plan.
(e) Contributions.--
(1) The board shall determine what contributions are
eligible under the IRC for tax-preferred or tax-free
treatment and may be made into a retirement health savings
plan by a school employee. The board shall authorize and
allow contributions, subject to appropriate limits as may be
established by the board, to be paid by a school employee
electing participation in the retirement health savings plan
subject to the following conditions:
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(i) A mandatory school employee contribution
established as a fixed percentage of compensation may be
established through a collective bargaining agreement
between a public school entity and a bargaining group
representing school employees. The retirement health
savings plan contribution rate does not have to be
uniform for all groups of school employees.
(ii) An optional employee contribution at a fixed
percentage of compensation may be elected by a school
employee during an annual election window that, once
elected, shall continue in effect, except to the extent
it may be changed or discontinued at a subsequent annual
election window as provided for by the board or
supplanted by a mandatory contribution.
(iii) An optional school employee contribution of
all or any portion of annual leave, vacation pay,
personal days or sick leave may be elected by a school
employee as so designated by the employee and agreed to
by the employee's employer. The board may provide that
the election shall be made during an annual election
window of no greater than 90 days as determined by the
board. Once the election has been made, an employee shall
not be allowed to change the amount or discontinue the
contributions until the next annual election window.
(2) The following contributions shall be made into a
retirement health savings plan on behalf of a school
employee:
(i) For an employee who elects participation in the
retirement health savings plan, the employee's employer
shall make a contribution to the employee's account equal
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to the public school entity's savings in Social Security
and Medicare taxes resulting from the tax-preferred or
tax-free treatment of contributions made by the school
employee under this subsection. Additional contributions
by a public school entity may be established through a
collective bargaining agreement between a public school
entity and a bargaining group representing school
employees.
(ii) Any other payments by the Commonwealth or
public school entity, including any set-aside payments to
be made to school employee accounts under section 334
(relating to partnership for stable benefits funding) as
determined by the board.
(3) Contributions to the plan by a school employee or by
the Commonwealth or a public school entity on behalf of an
employee must be held in trust for reimbursement of employee
health-related expenses and the health-related expenses of
any health care dependents following retirement of the
employee or when otherwise determined to be benefit eligible.
The board shall maintain a separate account of the
contributions made by or on behalf of each participant and
the earnings on the contributions. The board shall make
available a selection of investment options for participants
who wish to direct the investment of the accumulations in the
participant's account, in addition to a default option for
participants to be invested in a prudent manner as determined
by the board.
(f) Reimbursement for health-related expenses.--
(1) Upon retirement or separation from employment with a
public school entity, a participant becomes eligible to seek
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reimbursements for IRC-qualifying health-related expenses
from the participant's retirement health savings plan
account, including reimbursements for the health-related
expenses of the participant's eligible health care
dependents.
(2) If a school employee dies prior to exhausting the
balance in the employee's retirement health savings plan
account, the employee's health care dependents are eligible
to seek reimbursement for IRC-qualifying health-related
expenses from the account.
(3) The board shall pay reimbursements from a retirement
health savings plan account until the accumulation in the
account has been exhausted. If an account balance remains
after the death of all participant account holders, the
remainder of the account must be paid to the school
employee's beneficiaries or, if none, to the employee's
estate.
(g) Annual financial statement.--Quarterly and annually the
board shall prepare summary retirement health savings plan
statements for individual participant account holders listing
information on contributions, investment earnings and
distributions for the account holders' accounts.
(h) Fees.--The board may charge uniform fees to participants
to cover the ongoing costs of operating the plan. Any fees not
needed must revert to participant accounts or be used to reduce
plan fees the following year.
(i) Advisory committee.--
(1) The board shall establish a participant advisory
committee for the retirement health savings plan composed of:
(i) One representative appointed by each Statewide
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union that represents bargaining groups of school
employees participating in the plan.
(ii) One representative of each Statewide
organization representing at least 10% of annuitants.
(iii) One representative of the Pennsylvania
Association of School Business Officials.
(iv) One representative of the Pennsylvania School
Boards Association.
(2) Each participant group shall be responsible for the
expenses of its own representative.
(3) The advisory committee shall meet at least two times
per year and shall be consulted on plan offerings. By October
1 of each year, the board shall give the advisory committee a
statement of fees collected and the use of the fees.
Section 2. This act shall take effect immediately.
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