CORRECTIVE REPRINT
PRIOR PRINTER'S NOS. 2593, 3173 PRINTER'S NO. 3199
No. 1841 Session of 2007
INTRODUCED BY SURRA, NICKOL, SHIMKUS, McILVAINE SMITH, WANSACZ,
DePASQUALE, McILHATTAN, McCALL, ARGALL, BELFANTI,
BENNINGHOFF, BEYER, BIANCUCCI, BUXTON, CAPPELLI, COSTA, CRUZ,
DeWEESE, FREEMAN, GIBBONS, GILLESPIE, GINGRICH, GODSHALL,
GRUCELA, HARKINS, JAMES, JOSEPHS, KING, KORTZ, KOTIK, LENTZ,
MACKERETH, MICOZZIE, R. MILLER, MOUL, PETRONE, RAMALEY,
SAINATO, SAYLOR, SOLOBAY, SONNEY, THOMAS, WALKO, WATSON,
YOUNGBLOOD, YUDICHAK, GERGELY, SCAVELLO, STURLA, SCHRODER,
HORNAMAN, GOODMAN, KESSLER, CUTLER, PAYTON, GEORGE AND
GERBER, OCTOBER 4, 2007
AS REPORTED FROM COMMITTEE ON EDUCATION, HOUSE OF
REPRESENTATIVES, AS AMENDED, FEBRUARY 4, 2008
AN ACT
1 Amending Title 24 (Education) of the Pennsylvania Consolidated
2 Statutes, further providing for taxation, attachment and
3 assignment of funds; establishing the Public School
4 Employees' Benefit Board and providing for its powers and
5 duties; requiring a school employee benefits study and
6 evaluation; providing for a Statewide health benefits program
7 for public school employees, for alternative measures for
8 cost reduction and for a retirement health savings plan; and
9 establishing the Public School Employees' Benefit Trust Fund.
10 The General Assembly of the Commonwealth of Pennsylvania
11 hereby enacts as follows:
12 Section 1. Section 8533(a) of Title 24 of the Pennsylvania
13 Consolidated Statutes is amended to read:
14 § 8533. Taxation, attachment and assignment of funds.
15 (a) General rule.--Except as provided in subsections (b),
16 (c) and (d)[,] and section 9337(c) (relating to
1 misrepresentation, refusal to cooperate and fraud), the right of
2 a person to a member's annuity, a State annuity, or retirement
3 allowance, to the return of contributions, any benefit or right
4 accrued or accruing to any person under the provisions of this
5 part, and the moneys in the fund are hereby exempt from any
6 State or municipal tax, and exempt from levy and sale,
7 garnishment, attachment, or any other process whatsoever, and
8 shall be unassignable.
9 * * *
10 Section 2. Title 24 is amended by adding a chapter to read:
11 CHAPTER 93
12 SCHOOL EMPLOYEE BENEFITS
13 Subchapter
14 A. Preliminary Provisions
15 B. Public School Employees' Benefit Board
16 C. Study and Options Election
17 D. Statewide Health Benefits Program
18 E. Alternative Measures for Cost Reduction
19 F. Retirement Health Savings Plan
20 SUBCHAPTER A
21 PRELIMINARY PROVISIONS
22 Sec.
23 9301. Short title of chapter.
24 9302. Definitions.
25 § 9301. Short title of chapter.
26 This chapter shall be known and may be cited as the Public
27 School Employees' Benefit Act.
28 § 9302. Definitions.
29 The following words and phrases when used in this chapter
30 shall have the meanings given to them in this section unless the
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1 context clearly indicates otherwise:
2 "Alternate health care plan." A plan or plan design
3 established by the Public School Employees' Benefit Board
4 pursuant to section 9331(f)(2)(ii) (relating to health benefits
5 program) which the board in its exclusive authority determines
6 to contain benefits equivalent to the standard benefit package.
7 "Alternative measures program." A program created by the
8 Public School Employees' Benefit Board in accordance with the
9 provisions of Subchapter E (relating to alternative measures for
10 cost reduction).
11 "Annuitant." Any "annuitant" or "disability annuitant" as
12 defined in section 8102 (relating to definitions).
13 "Best practices." Standards of criteria, measures and
14 results developed by the Public School Employees' Benefit Board
15 that may be reflective of such standards developed by broadly
16 accepted organizations such as the National Committee for
17 Quality Assurance (NCQA) and the Centers for Medicare and
18 Medicaid Services (CMS), consulting firm benchmarks and medical
19 and industry journals that promote the precisions of efficient
20 delivery and design of employee benefits.
21 "Board." The Public School Employees' Benefit Board created
22 in section 9311 (relating to Public School Employees' Benefit
23 Board).
24 "Board member." A person designated or appointed to the
25 Public School Employees' Benefit Board pursuant to section
26 9311(a) (relating to Public School Employees' Benefit Board).
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 9334(b) and (c) (relating to partnership for stable benefits
7 funding) used to determine contributions by the Commonwealth and
8 public school entities for the funding of the standard benefit
9 package for eligible individuals in each health 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
26 9336(a)(1) (relating to Public School Employees' Benefit Trust
27 Fund).
28 "Employer contribution account." A ledger account of the
29 Public School Employees' Benefit Trust Fund created in section
30 9336(a)(3) (relating to Public School Employees' Benefit Trust
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1 Fund).
2 "Health care dependent." An individual who is eligible to
3 receive health care coverage under the Statewide health benefits
4 program due to the individual's relation to the member, as
5 determined by the Public School Employees' Benefit Board.
6 "Health care region." The geographic regions determined by
7 the Public School Employees' Benefit Board to be appropriate for
8 providing health benefits for eligible individuals based on the
9 availability of insurance carriers, benefit administrators,
10 health care providers, health care provider networks, costs and
11 any other factors related to health care or the financing of the
12 benefits.
13 "IRC." The Internal Revenue Code of 1986, as designated and
14 referred to in section 2 of the Tax Reform Act of 1986 (Public
15 Law 99-514, 100 Stat. 2085, 2095). A reference in this chapter
16 to "IRC § " shall be deemed to refer to the identically numbered
17 section and subsection or other subdivision of such section in
18 26 United States Code (relating to Internal Revenue Code).
19 "Long-term substitute." A school employee who is
20 substituting for a professional or temporary professional AN <--
21 OFFICER, ADMINISTRATOR OR employee of a public school entity for
22 a qualifying period of time to be determined by the Public
23 School Employees' Benefit Board.
24 "Medicare." The programs established by Title XVIII of the
25 Social Security Act (49 Stat. 620, 42 U.S.C. § 1395 et seq.)
26 which include: Part A, Hospital Insurance Benefits for the Aged
27 and Disabled; Part B, Supplementary Medical Insurance Benefits
28 for the Aged and Disabled; Part C, Medicare+ Choice Program; and
29 Part D, Voluntary Prescription Drug Benefit Program; and
30 including any subsequent changes or additions to those programs.
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1 "Member." An eligible individual who is so specified for
2 enrollment in the Statewide health benefits program and in whose
3 name the identification card is issued. A member can be:
4 (1) A school employee.
5 (2) An annuitant.
6 (3) A transfer employee.
7 (4) An individual separated from employment with a
8 public school entity who the Public School Employees' Benefit
9 Board determines is eligible to purchase continuation of
10 coverage in the Statewide health benefits program.
11 (5) Others as approved by the Public School Employees'
12 Benefit Board.
13 "Optional benefit package." A plan or plan design
14 established by the Public School Employees' Benefit Board
15 pursuant to section 9331(f)(2)(iii) (relating to health benefits
16 program) which includes specific health care services that are
17 not part of the standard benefit package.
18 "Participant account holder." A school employee
19 participating in a retirement health savings plan or a school
20 employee who retires or otherwise terminates employment with a
21 public school entity and becomes eligible to be reimbursed from
22 the employee's retirement health savings plan account for the
23 Internal Revenue Code of 1986 qualified health-related expenses.
24 The term shall also include the health care dependent of a
25 school employee who succeeds in interest to a deceased school
26 employee and becomes eligible to be reimbursed for health-
27 related expenses from the school employee's account.
28 "Phase-in period." The period of program operation in any
29 health care region from the time the Public School Employees'
30 Benefit Board begins implementation of mandatory participation
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1 under section 9332 (relating to mandatory participation and
2 optional membership) until the commencement of the first plan
3 year in which 75% of school districts in that region are
4 participating in the program.
5 "Program." The Statewide health benefits program sponsored
6 by the Public School Employees' Benefit Board in accordance with
7 the provisions of Subchapter D (relating to Statewide health
8 benefits program).
9 "Public School Code." The act of March 10, 1949 (P.L.30,
10 No.14), known as the Public School Code of 1949.
11 "Public school entity." A school district of any class,
12 intermediate unit, area vocational-technical school, charter
13 school or other school, as provided for under the act of March
14 10, 1949 (P.L.30, No.14), known as the Public School Code of
15 1949. The term shall also include the Scotland School for
16 Veterans' Children and the Scranton State School for the Deaf.
17 "Qualified majority vote." A vote by the Public School
18 Employees' Benefit Board requiring the support of a majority of <--
19 the members of the board present and voting, with the support of
20 at least two board members described in section 9311(a)(1)
21 (relating to Public School Employees' Benefit Board), at least
22 two board members appointed under section 9311(a)(2) and at
23 least two board members appointed under section 9311(a)(3) to
24 pass. THREE-FOURTHS OF ALL THE MEMBERS THEREOF. <--
25 "Qualifying event." A change in marital status, death of a
26 member or the change in a health care dependent's status,
27 subsequent to the commencement of coverage under this chapter,
28 or the involuntary termination of health plan coverage that was
29 obtained through a health care dependent.
30 "Reserve account." A ledger account of the Public School
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1 Employees' Benefit Trust Fund created in section 9336(a)(2)
2 (relating to Public School Employees' Benefit Trust Fund).
3 "Retirement system." The Public School Employees' Retirement
4 System of Pennsylvania as established by the act of July 18,
5 1917 (P.L.1043, No.343).
6 "School employee." Any person regularly employed by or in a
7 public school entity for which work the person is receiving
8 regular remuneration as an officer, administrator, employee or
9 long-term substitute. The term excludes any independent
10 contractor, person compensated on a fee basis or, unless
11 otherwise determined by the Public School Employees' Benefit
12 Board, any part-time hourly school employee. The term includes
13 any employee of a public school entity who has a position for
14 which eligibility in a health care plan sponsored by the public
15 school entity is in effect as of the effective date of this
16 chapter.
17 "Standard benefit package." The benefit package established
18 by the Public School Employees' Benefit Board pursuant to
19 section 9331(f)(1) (relating to health benefits program).
20 "SUPPLEMENTAL BENEFITS." DENTAL CARE, VISION CARE AND <--
21 EMPLOYEE ASSISTANCE PROGRAM BENEFITS THAT MAY BE OFFERED IN
22 ADDITION TO MEDICAL AND HOSPITAL SERVICES AND PRESCRIPTION DRUG
23 BENEFITS.
24 "Transfer employee." A person who is not a school employee
25 who is regularly employed at a worksite in a public school
26 entity, regardless of who actually employs the person, if the
27 person is performing services previously performed by a school
28 employee.
29 "Trust fund." The Public School Employees' Benefit Trust
30 Fund created in section 9336 (relating to Public School
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1 Employees' Benefit Trust Fund).
2 SUBCHAPTER B
3 PUBLIC SCHOOL EMPLOYEES' BENEFIT BOARD
4 Sec.
5 9311. Public School Employees' Benefit Board.
6 9312. Administrative duties of board.
7 § 9311. Public School Employees' Benefit Board.
8 (a) Status and membership.--The board shall be an
9 independent administrative board and shall consist of the
10 following board members:
11 (1) The Secretary of the Budget, the Secretary of <--
12 Education, the Secretary of Administration and the Insurance
13 Commissioner, all of whom shall serve ex officio.
14 (2) Four persons representing school employees who are <--
15 covered by the program in an approximate proportion to the
16 percentage of actual members of those unions working as
17 school employees in public school entities that will be
18 covered by the program when it is fully operational,
19 appointed by the Governor and chosen from a list of
20 candidates submitted by those school employee unions. The
21 proportional calculation of membership under this paragraph
22 shall not include members of those unions working as school
23 employees in a school district of the first class, as
24 classified pursuant to section 202 of the Public School Code,
25 until such school district opts to participate in the program
26 under the terms provided pursuant to section 9332(d)
27 (relating to mandatory participation and optional
28 membership).
29 (2) THE PRESIDENT PRO TEMPORE OF THE SENATE OR HIS <--
30 DESIGNEE, THE MINORITY LEADER OF THE SENATE OR HIS DESIGNEE,
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1 THE MAJORITY LEADER OF THE HOUSE OF REPRESENTATIVES OR HIS
2 DESIGNEE AND THE MINORITY LEADER OF THE HOUSE OF
3 REPRESENTATIVES OR HIS DESIGNEE.
4 (3) TEN PERSONS REPRESENTING SCHOOL EMPLOYEES WHO ARE
5 COVERED BY THE PROGRAM APPOINTED IN THE FOLLOWING MANNER:
6 (I) EIGHT 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, APPOINTED BY
12 THE GOVERNOR AND CHOSEN FROM A LIST OF CANDIDATES
13 SUBMITTED BY THOSE SCHOOL EMPLOYEE UNIONS; PROVIDED THAT
14 NO LESS THAN ONE PERSON SHALL BE APPOINTED BY THE
15 GOVERNOR FROM A LIST OF CANDIDATES SUBMITTED BY ANY
16 SCHOOL EMPLOYEE UNION THAT ON THE EFFECTIVE DATE OF THIS
17 CHAPTER REPRESENTS IN COLLECTIVE BARGAINING MORE THAN
18 4,000 PROFESSIONAL EMPLOYEES WORKING IN PUBLIC SCHOOL
19 ENTITIES THAT WILL BE COVERED BY THE PROGRAM WHEN IT IS
20 FULLY OPERATIONAL. THE PROPORTIONAL CALCULATION OF
21 MEMBERSHIP UNDER THIS PARAGRAPH SHALL NOT INCLUDE
22 PROFESSIONAL EMPLOYEES REPRESENTED IN COLLECTIVE
23 BARGAINING BY SCHOOL EMPLOYEE UNIONS WORKING IN A SCHOOL
24 DISTRICT OF THE FIRST CLASS, AS CLASSIFIED PURSUANT TO
25 SECTION 202 OF THE PUBLIC SCHOOL CODE, UNTIL SUCH SCHOOL
26 DISTRICT OPTS TO PARTICIPATE IN THE PROGRAM UNDER THE
27 TERMS PROVIDED PURSUANT TO SECTION 9332(D) (RELATING TO
28 MANDATORY PARTICIPATION AND OPTIONAL MEMBERSHIP).
29 (II) TWO PERSONS REPRESENTING SCHOOL EMPLOYEES WHO
30 ARE COVERED BY THE PROGRAM REPRESENTED IN COLLECTIVE
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1 BARGAINING BY SCHOOL EMPLOYEE UNIONS OTHER THAN SCHOOL
2 EMPLOYEE UNIONS WITHIN SUBPARAGRAPH (I) APPOINTED BY THE
3 GOVERNOR AND CHOSEN FROM A LIST OF CANDIDATES SUBMITTED
4 BY THOSE SCHOOL EMPLOYEE UNIONS OTHER THAN SCHOOL
5 EMPLOYEE UNIONS WITHIN SUBPARAGRAPH (I).
6 (III) FOR PURPOSES OF THIS SECTION "SCHOOL EMPLOYEE
7 UNIONS" SHALL INCLUDE A STATEWIDE AFFILIATE OF SUCH
8 SCHOOL EMPLOYEE UNIONS.
9 (3) (4) Four persons representing public school entity <--
10 employers appointed by the Governor and chosen from a list of
11 candidates submitted by the Pennsylvania School Boards
12 Association. At least one of the school entity employer
13 representatives initially named to the board shall be a
14 member of a consortium board.
15 The school employee unions and the Pennsylvania School Boards
16 Association shall provide the Governor with their respective
17 lists of candidates within 15 days following the effective date
18 of this section. The Governor shall make his appointments within
19 45 days following receipt of the lists.
20 (b) Terms.--
21 (1) Two board members appointed under subsection (a)(2),
22 as designated by the Governor, shall serve a term of two
23 years, and two board members appointed under subsection
24 (a)(2), as designated by the Governor, shall serve a term of
25 four years.
26 (2) Two board members appointed under subsection (a)(3),
27 as designated by the Governor, shall serve a term of two
28 years, and two board members appointed under subsection
29 (a)(3), as designated by the Governor, shall serve a term of
30 four years, except that the Pennsylvania School Boards
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1 Association shall designate for which initial term the
2 representative who is a member of a consortium board shall
3 serve.
4 (3) Successors for all board members shall be appointed
5 for terms of four years, except as provided in subsection
6 (d). Board members shall be eligible for reappointment.
7 (c) Meetings.--The board shall meet as needed to fulfill its
8 duties, and seven board members shall constitute a quorum. Board
9 members shall elect the chairman of the board. Except in
10 instances where a qualified majority is required under this
11 chapter, a majority of the board members present and voting
12 shall have authority to act upon any matter. The board is
13 authorized to establish rules of its operation, including a
14 provision for the removal of board members for nonattendance.
15 (d) Vacancies.--A vacancy occurring during the term of any
16 board member shall be filled for the unexpired term by a
17 successor appointed in the same manner as his predecessor. The
18 school employee unions and the Pennsylvania School Boards
19 Association shall provide the Governor with their respective
20 lists of candidates within 60 days of the end of a member's term
21 or within 15 days of any other vacancy.
22 (e) Oath of office.--Each board member shall take an oath of
23 office that the member will, so far as it devolves upon the
24 member, diligently and honestly administer the affairs of the
25 board and that the member will not knowingly violate or
26 willfully permit to be violated any of the provisions of law
27 applicable to this chapter. The oath shall be subscribed by the
28 board member making it and certified by the officer before whom
29 it is taken and shall be immediately filed in the office of the
30 Secretary of the Commonwealth.
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1 (f) Compensation and expenses.--Board members who are
2 members of the retirement system or the State Employees'
3 Retirement System shall serve without compensation. Board
4 members who are members of the retirement system and who are
5 employed by a public school entity shall not suffer loss of
6 salary or wages through serving on the board. The board, on
7 request of the employer of any board member who is an active
8 professional or nonprofessional member of the retirement system,
9 may reimburse the employer for the salary or wages of the member
10 or for the cost of employing a substitute for the board member
11 while the board member is necessarily absent from employment to
12 execute the duties of the board. The board members who are not
13 members of either the retirement system or the State Employees'
14 Retirement System may be paid $100 per day when attending
15 meetings, and all board members shall be reimbursed for any
16 necessary expenses. When, however, the duties of the board as
17 mandated are not executed, no compensation or reimbursement for
18 expenses of board members shall be paid or payable during the
19 period in which the duties are not executed.
20 (g) Corporate power and legal advisor.--For the purposes of
21 this chapter, the board shall possess the power and privileges
22 of a corporation. The Office of General Counsel shall be the
23 legal advisor of the board.
24 (h) Duties of the board.--The board shall have the power and
25 authority to carry out the duties established by this chapter,
26 including the design, implementation and administration of the
27 school employee health benefits study pursuant to Subchapter C
28 (relating to study and options election) and either the
29 Statewide health benefits program if approved pursuant to
30 section 9323 (relating to plan adoption) or the alternative
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1 measures program if created pursuant to section 9351 (relating
2 to alternative measures program).
3 § 9312. Administrative duties of board.
4 (a) Employees.--The compensation of all officers and
5 employees of the board who are not covered by a collective
6 bargaining agreement shall be established by the board
7 consistent with the standards of compensation established by the
8 Executive Board.
9 (b) Secretary.--The board shall select a secretary, who
10 shall not be a board member. The secretary shall act as chief
11 administrative officer for the board. In addition to other
12 powers and duties conferred upon and delegated to the secretary
13 by the board, the secretary shall:
14 (1) Serve as the administrative agent of the board and
15 as liaison between the board and applicable legislative
16 committees.
17 (2) Review and analyze proposed legislation and
18 legislative developments affecting the program and present
19 findings to the board, legislative committees and other
20 interested groups or individuals.
21 (3) Receive inquiries and requests for information
22 concerning the program from the press, Commonwealth
23 officials, public school entities, school employees and the
24 general public and provide information as authorized by the
25 board.
26 (c) Professional personnel.--The board may employ or
27 contract with consultants and other professional personnel as
28 needed TO CONDUCT THE SCHOOL EMPLOYEE HEALTH BENEFITS STUDY AND <--
29 EVALUATION PURSUANT TO SUBCHAPTER C (RELATING TO STUDY AND
30 OPTIONS ELECTION) AND to operate the program, including third-
20070H1841B3199 - 14 -
1 party administrators, managed care managers, chief medical
2 examiners, actuaries, investment advisors and managers, legal
3 counsel and other professional personnel as it deems advisable.
4 The board may also contract for the services of any national or
5 State banking corporation or association having trust powers,
6 with respect to carrying out the business and other matters of
7 the program.
8 (d) Expenses.--The board shall, through the Governor, submit
9 to the General Assembly annually a budget covering the
10 administrative expenses of this chapter. The expenses, as
11 approved by the General Assembly in an appropriation bill, shall
12 be paid:
13 (1) from the General Fund; or
14 (2) starting in the first fiscal year after the
15 transition period is complete and every fiscal year
16 thereafter, from reserves and investment earnings of the
17 trust fund.
18 (e) Meetings.--The board shall hold at least four regular
19 meetings annually and other meetings as it may deem necessary.
20 (f) Records.--The board shall keep a record of all its
21 proceedings which shall be open to inspection by the public.
22 (g) Procurement.--The board shall not be subject to 62
23 Pa.C.S. Pt. I (relating to Commonwealth Procurement Code).
24 (h) Temporary regulations.--
25 (1) Notwithstanding any other provision of law to the
26 contrary and in order to facilitate the prompt implementation
27 of this chapter, regulations promulgated by the board during
28 the two years following the effective date of this chapter
29 shall be deemed temporary regulations which shall expire no
30 later than three years following the effective date of this
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1 chapter or upon promulgation of regulations as generally
2 provided by law. The temporary regulations shall not be
3 subject to:
4 (i) Sections 201, 202, 203, 204 and 205 of the act
5 of July 31, 1968 (P.L.769, No.240), referred to as the
6 Commonwealth Documents Law.
7 (ii) The act of June 25, 1982 (P.L.633, No.181),
8 known as the Regulatory Review Act.
9 (2) The authority provided to the board to adopt
10 temporary regulations in this subsection shall expire two
11 years from the effect date of this chapter. Regulations
12 adopted after the two-year period shall be promulgated as
13 provided by law.
14 (i) Postretirement benefits study.--The board shall conduct
15 an assessment of public school entity postretirement health care
16 liability in this Commonwealth and publish a report providing
17 generalized data regarding the scope of the liability to be
18 borne by public school entities and measures implemented by
19 public school entities to prepare for this liability. This
20 assessment may be conducted in conjunction with the study
21 required by section 9321 (relating to school employee health
22 benefits study and evaluation).
23 SUBCHAPTER C
24 STUDY AND OPTIONS ELECTION
25 Sec.
26 9321. School employee health benefits study and evaluation.
27 9322. Board review and election.
28 9323. Plan adoption.
29 § 9321. School employee health benefits study and evaluation.
30 (a) Study.--The board shall conduct a thorough evaluation of
20070H1841B3199 - 16 -
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
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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
20070H1841B3199 - 19 -
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.
20070H1841B3199 - 20 -
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 93-
7 406, 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,
20070H1841B3199 - 21 -
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
20070H1841B3199 - 22 -
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 June 21, 1957 (P.L.390,
8 No.212), referred to as the Right-to-Know Law, or any successor
9 statute.
10 (l) Liability.--Notwithstanding any other provision of law,
11 no person or entity providing any documents, materials or
12 information to the board, any department or other entity on the
13 board's behalf shall be held by reason of having provided the
14 documents, materials or information to have violated any
15 criminal law, or to be civilly liable under any law, unless the
16 information is false and the person providing the information
17 knew or had reason to believe that the information was false and
18 was motivated by malice toward any person directly affected by
19 the action.
20 § 9322. Board review and election.
21 (a) Options assessment.--Upon collection of the necessary
22 information, the board shall evaluate existing public school
23 entity health care arrangements, examine options that would
24 aggregate, either Statewide or regionally, health care coverage
25 for public school employees, assess possible cost-management
26 improvements and solicit input from public school entities and
27 consortia identified with best practice standards. The board
28 shall investigate the creation of a Statewide health benefits
29 program as provided for in section 9331 (relating to health
30 benefits program) with the goal of improving the overall
20070H1841B3199 - 23 -
1 affordability of providing health care coverage for public
2 school employees. The cost projections shall be predicated on a
3 plan that provides quality health care benefits at a level
4 consistent with those now provided to most school employees
5 through existing collective bargaining contracts and offers
6 coverage to school employees and other eligible individuals.
7 (b) Election to proceed with program.--No later than ten
8 months after the board is constituted, unless a request by the
9 board for an extension is granted by the Governor, the board
10 shall decide whether to implement a Statewide health benefits
11 program, as provided for in section 9331, or to implement an
12 alternative measures program, as provided for in section 9351
13 (relating to alternative measures program), to reduce health
14 coverage costs for public school entities. The board's election
15 to implement a Statewide health benefits program OR TO IMPLEMENT <--
16 AN ALTERNATIVE MEASURES PROGRAM shall require approval by a
17 qualified majority vote. Upon election to proceed with a
18 Statewide health benefits program, the board shall develop a
19 plan for adoption, pursuant to section 9323 (relating to plan
20 adoption).
21 (c) Alternative election.--If the board decides that a
22 Statewide health benefits program cannot be created in
23 accordance with subsection (a), or the board fails to achieve
24 agreement and approve a plan for implementing a Statewide health
25 benefits program, the board will proceed with consideration of
26 an alternative measures program that will reduce long-term costs
27 or the rate of growth of such costs in the aggregate for public
28 school entities in accordance with Subchapter E (relating to
29 alternative measures for cost reduction).
30 § 9323. Plan adoption.
20070H1841B3199 - 24 -
1 (a) Statewide health benefits program adoption.--Within
2 three months of electing to proceed with the Statewide health
3 benefits program, pursuant to section 9322(b) (relating to board
4 review and election), the board shall verify that implementation
5 of a Statewide health care program will result in reduction in
6 the Statewide aggregate cost of the purchase of benefits or the
7 rate of growth of such costs and adopt a proposed plan for the
8 implementation of the program. The proposed plan shall be in
9 writing and shall include a detailed description of the program
10 and the transition procedures necessary to phase in and
11 implement the program. The board's adoption of a proposed plan
12 shall require approval by a qualified majority vote.
13 (b) Parameters of program.--The description of the Statewide
14 health benefits program shall at minimum include:
15 (1) The eligibility requirements for a school employee
16 and the employee's health care dependents to qualify for
17 participation in the program.
18 (2) The identification of the benefits to be included as
19 part of the standard benefit package.
20 (3) Disclosure of any member cost-sharing contributions,
21 whether expressed as a target percentage of overall program
22 costs or individually determined as a flat fee or a <--
23 percentage of salary and whether the cost-sharing is uniform
24 on a Statewide basis or varies by health care region.
25 (4) The designation of health care regions.
26 (5) The design of the Statewide pool or regional pools
27 that would be established to aggregate public school entities
28 for the purpose of purchasing services and managing health
29 insurance risks.
30 (6) The requirements for electronic eligibility
20070H1841B3199 - 25 -
1 transmission between the board and other participating
2 entities, including public school entities, consortia and the
3 retirement system.
4 (7) Financial and accounting plans, including the
5 establishment of any necessary reserves or escrow accounts
6 with carriers.
7 (c) Transition procedures.--The description of the steps to
8 phase in and implement the Statewide health benefits program
9 shall at minimum include:
10 (1) A determination of when the standard benefit package
11 shall become the mandatory program offering for eligible
12 individuals in a public school entity as health care benefits
13 for school employees are normalized on a Statewide basis.
14 (2) A determination, based on the size and structure of
15 any risk pool established within a health care region, as to
16 when the program would be phased in within that region.
17 (3) The interim steps to aggregate public school
18 entities into a Statewide pool or regional pools, including
19 any best practice standards and benchmarks to be applied to
20 new or existing consortia, or public school entities, or in
21 any selection process to build a Statewide or regional pool.
22 (4) Transition rules on member cost-sharing
23 responsibility until any member cost-sharing is required for
24 all members Statewide, or within any region.
25 (5) Transition rules to limit any negative financial
26 impact on a public school entity required to purchase health
27 care coverage through a Statewide or regional pool and to
28 normalize contribution rates for all participating public
29 school entities within the same health care region.
30 (d) Alternative measures program adoption.--Within three
20070H1841B3199 - 26 -
1 months of proceeding with consideration of an alternative
2 measures program pursuant to section 9322(c) (relating to board
3 review and election), the board shall adopt a proposed plan for
4 the implementation of an alternative measures program, pursuant
5 to Subchapter E (relating to alternative measures for cost
6 reduction), that will result in reduction in the Statewide
7 aggregate cost of the purchase of benefits or the rate of growth
8 of such costs. The proposed plan shall be in writing and shall
9 include a detailed description and the transition procedures
10 necessary to phase in and implement the alternative measures
11 program. THE BOARD'S ADOPTION OF A PROPOSED PLAN FOR <--
12 IMPLEMENTATION OF AN ALTERNATIVE MEASURES PROGRAM SHALL REQUIRE
13 APPROVAL BY A QUALIFIED MAJORITY VOTE.
14 (e) Legislative and public review.--
15 (1) The board shall publish the provisions of any
16 proposed plan adopted pursuant to this section in the
17 Pennsylvania Bulletin and make it available on the board's
18 Internet website. Following publication, the board shall
19 schedule at least three public hearings to be conducted in <--
20 geographically diverse areas of this Commonwealth to solicit
21 public input on the plan. EIGHT PUBLIC HEARINGS TO SOLICIT <--
22 PUBLIC INPUT ON THE PLAN. THE HEARINGS SHALL BE CONDUCTED IN
23 PHILADELPHIA COUNTY; ALLEGHENY COUNTY; AND THE NORTHEAST,
24 NORTHWEST, SOUTHEAST, SOUTHWEST, NORTH CENTRAL AND SOUTH
25 CENTRAL REGIONS OF THIS COMMONWEALTH.
26 (2) The board shall submit the provisions of any
27 proposed plan adopted pursuant to this section to the
28 chairman and minority chairman of the Education Committee of
29 the Senate and the chairman and minority chairman of the
30 Education Committee of the House of Representatives. The
20070H1841B3199 - 27 -
1 committees shall have 45 days to review the proposed plan and
2 submit comments to the board.
3 (f) Final plan adoption.--Upon completion of the public
4 hearings pursuant to subsection (e)(1) and expiration of the
5 committee review pursuant to subsection (e)(2), the board shall
6 review all the testimony and comments received regarding the
7 proposed plan. The board may, subject to a qualified majority
8 vote, make changes and adjustments to the plan to effectuate
9 this chapter. Within 90 days of publishing the proposed plan,
10 pursuant to subsection (e)(1), the board shall publish the final
11 plan, as adopted by the board, in the Pennsylvania Bulletin AND <--
12 ON THE INTERNET WEBSITE OF THE DEPARTMENT OF EDUCATION.
13 (g) Failure to reach consensus.--If the board fails to
14 achieve agreement and approve a plan for implementing a
15 Statewide health benefits program by a qualified majority vote
16 or if the board fails to achieve agreement and approve a plan
17 for implementing an alternative measures program BY A QUALIFIED <--
18 MAJORITY VOTE, the board shall report as to its findings and
19 reasons preventing agreement on a plan to the Governor, the
20 President pro tempore of the Senate and the Speaker of the House
21 of Representatives.
22 SUBCHAPTER D
23 STATEWIDE HEALTH BENEFITS PROGRAM
24 Sec.
25 9331. Health benefits program.
26 9332. Mandatory participation and optional membership.
27 9333. Continuation of coverage and transfer employees.
28 9334. Partnership for stable benefits funding.
29 9335. Powers and duties of board.
30 9336. Public School Employees' Benefit Trust Fund.
20070H1841B3199 - 28 -
1 9337. Misrepresentation, refusal to cooperate and fraud.
2 9338. Miscellaneous provisions.
3 § 9331. Health benefits program.
4 (a) Creation.--Upon adoption of a Statewide health plan
5 under section 9323(f) (relating to plan adoption), the board
6 shall proceed to initiate and sponsor an employee benefits
7 program for eligible individuals.
8 (b) Program design.--The board shall design a program which
9 follows the parameters of the plan and transition procedures as
10 established in section 9323. The board may develop and
11 administer the program itself or operate through any legal
12 entity authorized by law to do so, including consortia, and the
13 program may be developed and administered differently within
14 each health care region as long as a standard benefit package
15 that is substantially equivalent in coverage, as determined by
16 the board, is available to eligible individuals. The program may
17 also be administered in whole or in part on a fully insured or
18 self-funded basis at the board's sole discretion.
19 (c) Implementation.--The board may:
20 (1) Establish pools for selected areas of coverage, such
21 as pharmacy services, transplants, stop-loss insurance,
22 health care management or other possible areas that in the
23 board's judgment can be offered Statewide or regionally on a
24 more stable and cost-effective basis. The board may offer
25 separate plans to public school entities and consortia prior
26 to the phase-in of the standard benefit package.
27 (2) Make the program available in some health care
28 regions before it is made available within all regions.
29 (d) Eligibility requirements.--The board shall have full
30 authority to determine eligibility requirements for benefits and
20070H1841B3199 - 29 -
1 to adopt rules and regulations setting forth the same which will
2 be binding on all eligible individuals. No coverage shall be
3 provided for eligible individuals without payment being made,
4 except under circumstances as may be established by the board
5 under reasonable guidelines.
6 (e) Coverage and plan selection.--The board shall have full
7 authority to select and contract with insurance carriers, health
8 maintenance organizations, pharmacy benefit managers, third-
9 party administrators, reinsurers and any other entities
10 necessary to provide a range of benefit packages to eligible
11 individuals through the program. The board shall have full
12 authority to determine the nature, amount and duration and
13 discontinuation of coverage to be provided.
14 (f) Standard and optional benefits.--
15 (1) A standard benefit package shall be established by
16 the board that shall include coverage for medical and
17 hospital services, prescription drugs and MAY INCLUDE <--
18 SUPPLEMENTAL AND other benefits in amounts to be determined
19 by the board.
20 (2) Within each health care region, the board shall
21 approve and make available to each eligible individual
22 affiliated with a public school entity which is participating
23 in the program the following:
24 (i) A health care plan that includes coverage the
25 board determines to be the equivalent of the standard
26 benefit package established in paragraph (1).
27 (ii) One or more alternate health care plans or plan
28 designs which in the board's judgment contain benefits
29 equivalent to the standard benefit package in paragraph
30 (1). The deductibles and copayments for each alternate
20070H1841B3199 - 30 -
1 health care plan shall be set and annually adjusted so
2 that the cost of providing the coverage for the
3 Commonwealth and a public school entity is no greater
4 than the cost incurred for the health plan in
5 subparagraph (i).
6 (iii) One or more optional benefit plans, as
7 approved by the board, which allow an eligible individual
8 to purchase coverage that is not included in the standard
9 benefit package, provided that any cost over and above
10 the cost of the health care plan in subparagraph (i) is
11 to be paid by the member EXCEPT AS OTHERWISE PROVIDED IN <--
12 SECTION 9338(F)(2) (RELATING TO MISCELLANEOUS
13 PROVISIONS).
14 (3) The detailed basis on which payment of benefits is
15 to be made shall be specified in writing. The benefits
16 provided in this chapter are subject to change or
17 modification by the board from time to time as the board, in
18 its discretion, may determine. All changes or modifications
19 shall be specified in writing and communicated to members
20 within a reasonable period of time.
21 § 9332. Mandatory participation and optional membership.
22 (a) Mandatory participation.--The board shall have the
23 authority to require public school entities to participate in
24 the program on a Statewide basis or may phase in and require
25 participation on a regional basis. Except as provided under
26 subsections (c), (d), (e) and (f), public school entities in any
27 health care region designated by the board shall be required to
28 participate in the program.
29 (b) Transition plan.--When the board determines pursuant to
30 subsection (a) that a public school entity shall be required to
20070H1841B3199 - 31 -
1 participate in the program, the public school entity or
2 consortium in which the public school entity is a participant
3 shall, within a reasonable period of time as determined by the
4 board, present to the board a transition plan with a schedule
5 for the eventual migration of school employees into the program.
6 The board shall review the transition plan with the public
7 school entity or consortium and make any necessary modifications
8 before granting approval of the plan. A public school entity or
9 consortium shall be subject to adherence to the transition plan
10 approved by the board.
11 (c) Extensions of time.--The board shall give due
12 consideration to a transition plan submitted pursuant to
13 subsection (b) that includes a request for an extension of time.
14 Requests may be submitted by, but shall not be limited to, any
15 of the following:
16 (1) A public school entity that participates in a
17 consortium where an extension of time is necessary for the
18 rundown and proper termination of the consortium's health
19 care program.
20 (2) A public school entity that participates in a
21 consortium where the withdrawal of the public school entity
22 may undermine the financial stability of the consortium.
23 (3) A public school entity or a consortium which will
24 incur a significant financial penalty under terms of a
25 contract with an insurance carrier or other provider of
26 health care coverage for a contract in existence on or before
27 January 1, 2008.
28 (4) A public school entity or consortium which will
29 incur a significant financial cost, including fees, penalties
30 or other contractual financial obligations, related to the
20070H1841B3199 - 32 -
1 termination of coverage under a contract of insurance or, in
2 the case of a public school entity that self-insures,
3 insufficient reserves to pay claims incurred during the
4 previous coverage year, if the obligation relates to a plan
5 of coverage that was in existence on or before January 1,
6 2008, and the public school entity or consortium provides the
7 board with a financial plan for meeting these obligations.
8 (d) Optional membership.--No school district of the first
9 class, as classified pursuant to section 202 of the Public
10 School Code, shall be required to participate in the program,
11 except as may be agreed upon under terms of a collective
12 bargaining agreement covering a majority of employees of a
13 school district of the first class. Upon a school district of
14 the first class entering participation in the program pursuant
15 to a collective bargaining agreement, continued participation in
16 the program shall become mandatory.
17 (e) Prohibited membership.--A public school entity that, on
18 the effective date of this chapter, participates in the
19 Pennsylvania Employees' Benefit Trust Fund shall be prohibited
20 from participating in the program, and employees of the public
21 school entity shall not have the right to elect membership in
22 the program.
23 (f) Transition of employees.--A public school entity that
24 provides some or all of its employees with health benefits
25 through another health care plan by virtue of one or more
26 collective bargaining agreements, entered into prior to the
27 effective date of this chapter, shall not be required to join
28 the program until expiration of the collective bargaining
29 agreements. The public school entity and some or all of its
30 employees or bargaining representatives of its employees may by
20070H1841B3199 - 33 -
1 mutual agreement and approval of the board join the program at
2 an earlier date. Renewal or extension of a collective bargaining
3 agreement shall constitute its expiration for the purpose of
4 this subsection.
5 § 9333. Continuation of coverage and transfer employees.
6 (a) Annuitants.--Upon retirement, an annuitant eligible
7 under paragraph (1) or (2) shall have the option to elect
8 coverage in the program, including coverage for any eligible
9 health care dependent. The annuitant shall be responsible to pay
10 the full cost of the coverage, unless a public school entity has
11 agreed, separate from any requirements of the program, to pay
12 toward the coverage pursuant to an award of health benefits
13 under a written policy or agreement collectively bargained or
14 otherwise entered into by the public school entity. The board
15 shall annually determine the cost of coverage as follows:
16 (1) For an annuitant who is enrolled in the program
17 pursuant to section 513 of the Public School Code or an
18 annuitant who pursuant to any award of health benefits for
19 annuitants under a written policy or agreement collectively
20 bargained or otherwise entered into by the public school
21 entity prior to the effective date of this section, payments
22 shall be based on the total contribution rate established
23 pursuant to section 9334(b) and (c) (relating to partnership
24 for stable benefits funding) for a school employee in the
25 same health care region, plus a 2% administrative fee.
26 (2) For an annuitant, other than an annuitant qualified
27 for coverage under paragraph (1), payments shall be made on
28 the same basis as an annuitant qualified for coverage under
29 paragraph (1), except as determined as follows:
30 (i) The board shall periodically have the actuary
20070H1841B3199 - 34 -
1 review and determine the separate cost of providing
2 continuation of coverage to annuitants under this
3 paragraph, along with an assessment of its impact on the
4 cost of providing coverage to members who are school
5 employees and annuitants qualified for coverage under
6 paragraph (1). The review and assessment shall first
7 occur as part of the school employee health benefits
8 study and evaluation conducted pursuant to section 9321
9 (relating to school employee health benefits study and
10 evaluation) and its results shall be considered in the
11 development of parameters under section 9323(b) (relating
12 to plan adoption).
13 (ii) The board shall consider the findings of the
14 actuary in subparagraph (i) to determine if there is a
15 substantial impact on the cost of providing coverage to
16 members who are school employees and annuitants qualified
17 for coverage under paragraph (1). If there is a
18 substantial cost impact, the board shall require payments
19 for an annuitant qualified to elect coverage in the
20 program under this paragraph to be separately determined
21 and the contribution rate to be based on the
22 disaggregated cost of providing the coverage, plus a 2%
23 administrative fee.
24 (b) Separation from service.--The board shall determine the
25 eligibility of members, other than annuitants covered by
26 subsection (a), to elect continuation of coverage in the program
27 upon separation from service as a school employee. The member
28 shall be responsible to pay the full cost of the coverage in the
29 member's health care region, plus an administrative fee to be
30 set by the board. The board shall, at minimum, provide
20070H1841B3199 - 35 -
1 continuation of coverage eligibility that meets the requirements
2 of Title X of the Employee Retirement Income Security Act of
3 1974 (Public Law 99-272, 29 U.S.C. § 1161 et seq.) and provide
4 the continuation of coverage options required pursuant to 51
5 Pa.C.S. § 7309 (relating to employment discrimination for
6 military membership or duty) for members on military leave.
7 (c) Transfer employees.--The board may, in its discretion,
8 approve the participation of transfer employees in the program,
9 provided that any position for which a transfer employee who is
10 provided health benefits in a health care plan sponsored by a
11 public school entity through an agreement that was in existence
12 on or before January 1, 2008, with the transfer employee's
13 employer shall be allowed to participate in the program. The
14 board shall set the terms and conditions necessary for
15 participation in the program, including the cost of coverage to
16 be paid by the third-party entity which shall be based on the
17 full cost of coverage in the health care region as determined by
18 the board, plus an administrative fee. The sponsoring public
19 school entity shall be responsible to the board for the
20 collection of the payments for transfer employees from the
21 third-party entity.
22 § 9334. Partnership for stable benefits funding.
23 (a) Basis of partnership.--In recognition that the long-term
24 viability and stability of the program will require public
25 school entity employers, members and the Commonwealth to be
26 partners both in sustaining the health benefits program as well
27 as managing the costs of a reasonable and appropriate standard
28 benefit package, the board shall determine for each plan year
29 and in each region the payments due from public school entities,
30 from members and from the Commonwealth.
20070H1841B3199 - 36 -
1 (b) Determination of contribution rate.--The board shall
2 determine for each plan year the total amount of the
3 contributions by the Commonwealth, public school entities and
4 school employees required to provide projected benefits for that
5 plan year under the standard benefit package on behalf of each
6 school employee member and the employee's eligible health care
7 dependents. The contribution rate shall consist of the amount
8 required to provide the standard benefit package, including
9 appropriate reserves and administrative expenses, and shall be
10 adjusted for each health care region to reflect the cost of
11 benefits in that region. The contribution rates may
12 differentiate between single coverage for members only and types
13 of family coverage, as determined by the board.
14 (c) Certification of rate.--The board shall certify the
15 contribution rate for each health care region to the
16 Commonwealth and public school entities, including the payments
17 that shall be due from public school entities, from members and
18 from the Commonwealth. The certifications shall be regarded as
19 final and not subject to modification by the Secretary of the
20 Budget.
21 (d) Commonwealth cost share.--The Commonwealth shall make a
22 contribution to offset a portion of the cost increase consistent
23 with subsections (e) and (f). For FOR any plan year in which the <--
24 board determines that the aggregate cost of providing the
25 standard benefit package on behalf of members who are school
26 employees and their eligible health care dependents exceeds the
27 sum of:
28 (1) the projected carry-over balance for the plan year
29 in the employer contribution account after all required
30 transfers have been made to the employee benefits account for
20070H1841B3199 - 37 -
1 the prior year; and
2 (2) any employee cost-sharing for the plan year.
3 (e) Budget submission and appropriation.--If the board
4 determines that the requirements of subsection (d) have been
5 met, all of the following shall occur:
6 (1) The board shall submit to the Secretary of the
7 Budget an itemized budget specifying the amount necessary to
8 be appropriated by the Commonwealth consistent with
9 subsection (f). The budget submission shall be on a form and
10 in a manner determined by the Secretary of the Budget and
11 shall occur no later than November 1 of the fiscal year
12 preceding the plan year for which funds are requested.
13 (2) Upon appropriation by the General Assembly to
14 provide for the obligations of the Commonwealth, the amount
15 shall be paid by the State Treasurer through the Department
16 of Revenue into the employer contribution account within 30
17 days of receipt of the requisition presented each month by
18 the board.
19 (f) Limitation on Commonwealth contribution.--
20 (1) The Commonwealth shall not be obligated to pay any
21 amount beyond that which is appropriated by the General
22 Assembly. The amount requested by the board pursuant to
23 subsection (e)(1) shall not exceed the sum of any amount paid
24 by the Commonwealth for the fiscal year preceding the plan
25 year for which funds are requested and the lesser of:
26 (i) 50% of the amount that the board determines is
27 necessary to meet the increase in the contribution rate
28 on behalf of members who are school employees determined
29 pursuant to subsection (b); and
30 (ii) the product of the total revenue transferred in
20070H1841B3199 - 38 -
1 the prior plan year from the employer contribution
2 account to the employee benefits account and the most
3 recent annual percent change in the per enrollee private
4 health insurance premium for all benefits, as defined in
5 the National Health Expenditure Data published by the
6 Centers for Medicare and Medicaid Services, Department of
7 Health and Human Services.
8 (2) If any excess revenue in the employer contribution
9 account is to be applied to payments for the plan year, then
10 the excess revenue shall be used to reduce the calculation
11 under this subsection in proportion to the Commonwealth's
12 share of the total increase in the contribution rate on
13 behalf of active members for the plan year.
14 (g) Additional optional contribution.--Notwithstanding the
15 limitation in subsection (f), the General Assembly may
16 appropriate additional revenue to the employer contribution
17 account in any fiscal year.
18 (h) Allocation of Commonwealth contribution.--Any
19 contribution made by the Commonwealth under this section shall
20 be used to offset an increase in the contribution rate paid in a
21 health care region by public school entities on behalf of
22 members who are school employees and their eligible health care
23 dependents and to maintain any offset that was paid in a prior
24 year. The Commonwealth contribution shall be allocated to offset
25 a portion of each participating public school entity's cost of
26 coverage on a per-member basis, for members who are school
27 employees and their eligible health care dependents, based on
28 the public school entity's market value/income aid ratio using
29 the most recent data provided by the Department of Education.
30 For any public school entity that is not assigned a market
20070H1841B3199 - 39 -
1 value/income aid ratio by the Department of Education, the
2 Commonwealth contribution shall not be adjusted based on a
3 market value/income aid ratio. For the purpose of this
4 subsection, "market value/income aid ratio" shall have the same
5 meaning given to it in the Public School Code.
6 (i) Contributions on behalf of school employees.--Consistent
7 with any transition procedure pursuant to section 9323(c)(5)
8 (relating to plan adoption), each public school entity shall be
9 required to make payments to the trust fund on behalf of members
10 who are school employees and their eligible health care
11 dependents based on the contribution rate certified by the board
12 in subsection (c). The increase in payments made from one year
13 to the next by public school entities on behalf of school
14 employees shall be equal to or greater than the increase in
15 payment from one year to the next made pursuant to subsection
16 (d), excluding any additional optional contribution made by the
17 Commonwealth pursuant to subsection (g).
18 (j) Deduction from appropriations.--In the event a public
19 school entity does not make the required payment in the time
20 allotted, as determined by the board, the Secretary of Education
21 and the State Treasurer shall cause to be deducted and paid into
22 the trust fund from the amount of any moneys due to any public
23 school entity on account of any appropriation for schools or
24 other purposes the amount due to the trust fund as certified by
25 the board and as remains unpaid on the date such appropriations
26 would otherwise be paid to the public school entity by the
27 Department of Education, and the amount shall be credited to the
28 public school entity's account in the trust fund.
29 (k) Transition.--Until any transition pursuant to section
30 9323(c)(5) has been completed, the payments made by each public
20070H1841B3199 - 40 -
1 school entity shall be no less than the total amount paid by the
2 public school entity to provide, purchase and administer health
3 care benefits to members who are school employees and their
4 eligible health care dependents in the year before
5 implementation of the program. Any contributions received by the
6 public school entity from school employees in the form of cost-
7 sharing payments for health care coverage shall be excluded from
8 the amount.
9 (l) Applicability.--Any expenditures necessary to fund <--
10 participation in this program shall qualify as costs incurred
11 under section 333(f)(2)(ix) of the act of June 27, 2006 (1st
12 Sp.Sess., P.L.1873, No.1), known as the Taxpayer Relief Act.
13 (L) REFERENDUM EXCEPTION.-- <--
14 (1) IN ADDITION TO THE EXCEPTIONS PROVIDED FOR IN
15 SECTION 333(F) OF THE ACT OF JUNE 27, 2006 (1ST SP.SESS.,
16 P.L.1873, NO.1), KNOWN AS THE TAXPAYER RELIEF ACT, THE COSTS
17 SPECIFIED IN PARAGRAPH (2) SHALL CONSTITUTE AN EXCEPTION TO
18 THE REFERENDUM REQUIREMENTS OF SECTION 333(C) OF THE TAXPAYER
19 RELIEF ACT SUBJECT TO DEPARTMENT APPROVAL PURSUANT TO SECTION
20 333(J) OF THE TAXPAYER RELIEF ACT.
21 (2) COSTS INCURRED BY A SCHOOL DISTRICT IN PROVIDING
22 HEALTH CARE-RELATED BENEFITS WHICH ARE ATTRIBUTABLE TO THE
23 SCHOOL DISTRICT'S PARTICIPATION IN THE PROGRAM SHALL
24 CONSTITUTE AN EXPENDITURE FOR PURPOSES OF SECTION 333(F)(1)
25 AND (2) OF THE TAXPAYER RELIEF ACT TO THE EXTENT THE
26 ANTICIPATED INCREASE IN SUCH COSTS BETWEEN THE CURRENT YEAR
27 AND THE UPCOMING YEAR IS GREATER THAN THE INDEX ESTABLISHED
28 FOR THE SCHOOL DISTRICT PURSUANT TO SECTION 313(1)(II) OF THE
29 TAXPAYER RELIEF ACT. THE DOLLAR AMOUNT OF THIS EXCEPTION
30 SHALL BE EQUAL TO THE PORTION OF THE INCREASE WHICH EXCEEDS
20070H1841B3199 - 41 -
1 THE INDEX ESTABLISHED FOR THE SCHOOL DISTRICT PURSUANT TO
2 SECTION 313(1)(II) OF THE TAXPAYER RELIEF ACT.
3 § 9335. Powers and duties of board.
4 (a) Powers.--In addition to the powers granted by other
5 provisions of this chapter, the board shall have the powers
6 necessary or convenient to carry out this subchapter, including,
7 but not limited to, the power to:
8 (1) Determine appropriate geographic health care regions
9 for the administration of the program and make changes to the
10 regions as necessary.
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 flat fee or a percentage of <--
28 salary. The board shall determine whether member cost-sharing
29 shall be uniform on a Statewide basis or shall vary by health
30 care region.
20070H1841B3199 - 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 Chapter 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
20070H1841B3199 - 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
20070H1841B3199 - 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
20070H1841B3199 - 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
20070H1841B3199 - 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 9323(f) (relating to plan adoption).
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
20070H1841B3199 - 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 9351(A) (RELATING TO ALTERNATIVE MEASURES
17 PROGRAM).
18 (11) APPROVE EMPLOYMENT OF AND CONTRACTS WITH
19 CONSULTANTS AND PROFESSIONAL PERSONNEL.
20 (l) Duties conferred upon secretary.--The secretary of the
21 board shall supervise a staff of administrative, technical and
22 clerical employees engaged in recordkeeping and clerical
23 processing activities in maintaining files of members,
24 accounting for contributions, processing payments, preparing
25 required reports and counseling.
26 § 9336. Public School Employees' Benefit Trust Fund.
27 (a) Establishment of trust fund.--The Public School
28 Employees' Benefit Trust Fund is established in the State
29 Treasury. The moneys of the trust fund are appropriated on a
30 continuing basis and shall be used exclusively for the purposes
20070H1841B3199 - 48 -
1 set forth in this chapter. All of the assets of the trust fund
2 shall be maintained and accounted for, separate from all other
3 funds and moneys of the Commonwealth. The Treasury Department
4 shall credit to the trust fund all moneys received from the
5 Department of Revenue arising from the contributions required
6 under this chapter and all earnings from investments or moneys
7 of the trust fund. There shall be established and maintained by
8 the board the several ledger accounts, including:
9 (1) The employee benefits account shall be the ledger
10 account to which shall be credited the payments from section
11 9333(a),(b) and (c) (relating to continuation of coverage and
12 transfer employees), payments from members for cost sharing
13 and any additional member-paid cost associated with optional
14 benefit packages elected by members and transfers from the
15 employer contribution account as provided in paragraph (3).
16 All earnings derived from investment of the assets of the
17 employee benefits account shall be credited to this account.
18 The board is authorized to separately invest the amounts in
19 the employee benefits account in a prudent manner intended to
20 maximize the safety of the capital contained in the employee
21 benefits account. Payments for member health care benefits
22 and the direct administrative expenses of the board related
23 to the administration of the employee benefits program, as
24 provided in section 9312(d) (relating to administrative
25 duties of board), shall be charged to this account.
26 (2) Reserve account.
27 (i) A restricted reserve account, or more than one
28 account if the board determines it necessary to have
29 segregated accounts, is established within the trust fund
30 for the purpose of establishing and maintaining a reserve
20070H1841B3199 - 49 -
1 or separate reserves sufficient:
2 (A) to pay the expected claims experience of the
3 program in the event the board elects to self-fund
4 all or a portion of the program for any plan years;
5 (B) to prefund the accrued liability for any
6 postretirement health care benefits earned by
7 employees enrolled in the program pursuant to section
8 9333(a)(1) (relating to continuation of coverage and
9 transfer employees) as the benefit is earned by the
10 employees; and
11 (C) to amortize the unfunded actuarial accrued
12 liability for postretirement health care benefits
13 already earned by employees and annuitants pursuant
14 to section 9333(a)(1) in the event the board elects
15 to assume all or a portion of the liability. The
16 board shall use an amortization period that does not
17 exceed 30 years for this purpose.
18 (ii) The board shall annually establish through an
19 actuary retained by the board the amount necessary, if
20 any, to establish and maintain a reserve or separate
21 reserves sufficient for the purposes of this paragraph.
22 Any moneys needed to maintain the reserve or separate
23 reserves established under this paragraph shall be
24 collected through the adjustment of the contribution rate
25 established pursuant to section 9334(b) and (c) (relating
26 to partnership for stable benefits funding) or through
27 other available sources.
28 (iii) The moneys in any reserve account may be
29 invested by the board separate from other moneys of the
30 trust fund. All earnings derived from investment of the
20070H1841B3199 - 50 -
1 assets of any reserve account shall be credited to the
2 reserve account.
3 (3) The employer contribution account shall be the
4 ledger account to which shall be credited all contributions
5 made by the Commonwealth as determined in accordance with
6 section 9334(e) and payments from public school entities as
7 determined in accordance with section 9334(i), as well as all
8 earnings derived from the investment of the assets of the
9 employer contribution account. The total amount of the
10 Commonwealth and public school entity contributions required
11 to provide the standard benefit package on behalf of all
12 members who are school employees and their eligible health
13 care dependents shall be transferred on a monthly basis to
14 the employee benefits account.
15 (b) Composition.--The trust fund shall consist of:
16 (1) All payments made by members or received from the
17 Commonwealth and public school entities and all interest,
18 earnings and additions thereto.
19 (2) Any other money, public or private, appropriated or
20 made available to the board for the trust fund or any reserve
21 account from any source and all interest, earnings and
22 additions thereto.
23 (c) Administration of trust and associated funds.--The
24 assets of the trust fund shall be preserved, invested and
25 expended solely pursuant to and for the purposes set forth in
26 this chapter.
27 (d) Control and management of trust fund.--
28 (1) The board shall have exclusive control and
29 management of the trust fund and full power to invest and
30 manage the assets of each account of the trust fund as a
20070H1841B3199 - 51 -
1 prudent investor would, by considering the purposes, terms
2 and other circumstances of each account and by pursuing an
3 overall investment strategy reasonably suited to the trust
4 fund.
5 (2) The board may invest in every kind of property and
6 type of investment, including, but not limited to, mutual
7 funds and similar investments, consistent with this
8 subsection.
9 (3) In making investment and management decisions, the
10 board shall consider, among other things, to the extent
11 relevant to the decision or action:
12 (i) the size and nature of the account;
13 (ii) the liquidity and payment requirements of the
14 account;
15 (iii) the role that each investment or course of
16 action plays in the overall investment strategy;
17 (iv) to the extent reasonably known to the board,
18 the needs for present and future payments; and
19 (v) the reasonable diversification of assets, taking
20 into account the purposes, terms and other circumstances
21 of the trust fund and the requirements of this section.
22 (e) Custodian of trust fund.--The State Treasurer shall be
23 the custodian of the trust fund.
24 (f) Name for transacting business.--By the name of "The
25 Public School Employees' Benefit Trust Fund," all of the
26 business of the trust fund shall be transacted, its fund
27 invested, all requisitions for money drawn and payments made and
28 all of its cash and securities and other property shall be held,
29 except that, any other law to the contrary notwithstanding, the
30 board may establish a nominee registration procedure for the
20070H1841B3199 - 52 -
1 purpose of registering securities in order to facilitate the
2 purchase, sale or other disposition of securities.
3 (g) Payment from trust fund.--All payments from the trust
4 fund shall be made by the State Treasurer in accordance with
5 requisitions signed by the secretary of the board or the
6 secretary's designee. The board shall reimburse the State
7 Treasurer for the cost of making disbursements from the trust
8 fund.
9 (h) Fiduciary status of board.--Board members, employees of
10 the board and agents thereof shall stand in a fiduciary
11 relationship to the members regarding the investments and
12 disbursements of any of the moneys of the trust fund and shall
13 not profit either directly or indirectly with respect thereto.
14 (i) Transfers.--The board may transfer moneys among the
15 various accounts of the trust fund, including any reserve
16 accounts established under subsection (a)(2), as may be
17 necessary to satisfy the provisions of this chapter. Transfers
18 from funds retained in the reserve account pursuant to
19 subsection (a)(2)(i)(A) may be made only for the payment of
20 claims or expected claims as determined by the actuary retained
21 by the board. Transfers from funds retained in the reserve
22 account pursuant to subsection (a)(2)(i)(B) or (C) may be made
23 only for paying toward the cost of providing health care
24 benefits to annuitants enrolled in the program pursuant to
25 section 9333(a)(1).
26 (j) Additional powers of board.--The board may:
27 (1) Adopt, from time to time, appropriate investment
28 policy guidelines and convey the same to those fiduciaries
29 who have the responsibility for the investment of funds.
30 (2) Retain such portion of the moneys of the accounts in
20070H1841B3199 - 53 -
1 cash or cash balances as the board may deem desirable,
2 without any liability or interest thereon.
3 (3) Settle, compromise or submit to arbitration all
4 claims or damages due from or to the accounts, commence or
5 defend any legal, equitable or administrative proceedings
6 brought in connection with the program and represent the
7 trust fund in all proceedings under this paragraph.
8 (k) Additional duties of secretary.--The secretary of the
9 board shall serve as liaison to the Treasury Department, the
10 Department of the Auditor General and between the board and the
11 investment counsel and the mortgage supervisor in arranging for
12 investments to secure maximum returns to the trust fund.
13 § 9337. Misrepresentation, refusal to cooperate and fraud.
14 (a) Misrepresentation.--If the eligible individual or anyone
15 acting on behalf of an eligible individual makes a false
16 statement or withholds information on the application for
17 enrollment with intent to deceive or affect the acceptance of
18 the enrollment application or the risks assumed by the program
19 or otherwise misleads the board, the board shall be entitled to
20 recover its damages, including legal fees, from the eligible
21 individual or from any other person responsible for misleading
22 the board and from the person for whom the benefits were
23 provided. Any material misrepresentation on the part of the
24 eligible individual in making application for coverage or any
25 application for reclassification thereof or for service
26 thereunder shall render the coverage under the program null and
27 void.
28 (b) Refusal to cooperate.--The board may refuse to pay
29 benefits, or cease to pay benefits, on behalf of an eligible
30 individual who fails to sign any document deemed by the board to
20070H1841B3199 - 54 -
1 be relevant to protecting its subrogation rights or certifying
2 eligibility or who fails to provide relevant information when
3 requested. As used in this subsection, the term "information"
4 includes any documents, insurance policies, police reports or
5 any reasonable request by the claims processor to enforce the
6 board's rights.
7 (c) Penalty for fraud.--In any case in which the board finds
8 that an eligible individual is receiving benefits based on false
9 information, the additional amounts received predicated on the
10 false information, together with interest doubled and compounded
11 and legal fees, shall be due from the member. To secure payment
12 of funds, the board shall have the right to garnish or attach
13 all or a portion of any compensation payable to the party by the
14 party's employer, any annuity payable to the party by the
15 retirement system, any accumulated deductions held by the
16 retirement system in the party's account or any process
17 whatsoever.
18 § 9338. Miscellaneous provisions.
19 (a) Construction of chapter.--
20 (1) Any termination or other modifications of the
21 program, including, but not limited to, a change in rates,
22 benefits options or structure of the provision of health care
23 benefits, shall not give rise to any contractual rights or
24 claims by any eligible individuals or any other person
25 claiming an interest, either directly or indirectly, in the
26 program. No provisions of this chapter, nor any rule or
27 regulation adopted pursuant to this chapter, shall create in
28 any person a contractual right in that provision.
29 (2) The provisions of this chapter are severable and if
30 any of its provisions shall be held to be unconstitutional,
20070H1841B3199 - 55 -
1 the decision of the court shall not affect or impair any of
2 the remaining provisions. It is hereby declared to be the
3 legislative intent that this chapter would have been adopted
4 had the unconstitutional provisions not been included.
5 (3) THIS SUBSECTION SHALL NOT APPLY TO POLICIES DESIGNED <--
6 PRIMARILY TO PROVIDE COVERAGE PAYABLE ON A PER DIEM, FIXED
7 INDEMNITY OR NONEXPENSE INCURRED BASIS, OR POLICIES THAT
8 PROVIDE ACCIDENT ONLY COVERAGE, WHERE PAYMENT FOR SUCH POLICY
9 IS MADE SOLELY BY THE SCHOOL EMPLOYEE.
10 (b) Hold harmless.--Neither the Commonwealth nor the board,
11 including their respective officers, directors and employees,
12 shall be liable for any claims, demands, actions or liability of
13 any nature, including, but not limited to, attorney fees and
14 court costs, based upon or arising out of the operations of the
15 program, whether incurred directly or indirectly. The eligible
16 individuals who enroll and participate in the program shall be
17 deemed to agree, on behalf of themselves and their heirs,
18 successors and assigns, to hold harmless the Commonwealth and
19 the board, including their respective officers, directors and
20 employees, from any claims, demands, actions or liability of any
21 nature, whether directly or indirectly, including attorney fees
22 and court costs, based upon or arising out of the operation of
23 the program.
24 (c) No recourse.--Under no circumstances shall the assets of
25 the Commonwealth be liable for or its assets be used to pay any
26 claims, demands, actions or liability of any nature, whether
27 directly or indirectly, including, but not limited to, attorney
28 fees and court costs, based upon or arising out of the operation
29 of the program.
30 (d) Reservation of immunities.--Nothing contained in this
20070H1841B3199 - 56 -
1 chapter shall be construed as a waiver of the Commonwealth's or
2 board's immunities, defenses, rights or actions arising out of
3 their sovereign status or from the 11th amendment to the
4 Constitution of the United States.
5 (e) Collective bargaining, mediation and binding
6 arbitration.--Nothing EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION <--
7 (F), NOTHING in this chapter or in any other law shall be
8 construed to permit, authorize or require collective bargaining,
9 mediation or binding arbitration to create, alter or modify
10 health benefits set forth in this chapter or administered by the
11 board for school employees and their health care dependents.
12 Further, EXCEPT AS OTHERWISE PROVIDED IN SUBSECTION (F), nothing <--
13 in this chapter or in any other law shall be construed to
14 permit, authorize or require a public school entity, through
15 collective bargaining, mediation or binding arbitration, or
16 otherwise, to establish, create, alter or modify a health
17 benefits plan or pay health benefits set forth in this chapter
18 or administered by the board that modify or supplement in any
19 way the health benefits set forth in this chapter for school
20 employees and their health care dependents. Notwithstanding the <--
21 provisions of this subsection, the parties may:
22 (1) Continue to engage in collective bargaining with
23 (F) EXCEPTIONS.-- <--
24 (1) THE PARTIES MAY:
25 (I) CONTINUE TO ENGAGE IN COLLECTIVE BARGAINING WITH
26 regard to health benefits until such time as the board-
27 sponsored program, pursuant to this subchapter, is
28 released and the standard benefit package is made
29 available to employees of a public school entity.
30 However, any health benefits provided under a collective
20070H1841B3199 - 57 -
1 bargaining agreement entered into on or after the
2 effective date of this chapter shall contain a provision
3 that school employees covered by the agreement must join
4 the board-sponsored program as required by section 9332
5 (relating to mandatory participation and optional
6 membership) as a condition of continuing to receive
7 health benefits. The board shall determine the
8 appropriate timing and phase-in of the program in any
9 public school entity taking into consideration the need
10 for the public school entity to properly terminate any
11 existing health benefits arrangements.
12 (2) Negotiate or otherwise agree to provide benefits <--
13 (II) NEGOTIATE OR OTHERWISE AGREE TO PROVIDE OR MAKE <--
14 PAYMENT FOR SUPPLEMENTAL BENEFITS that have not been
15 included as part of the standard benefit package so long <--
16 as they do not increase or diminish the level of any
17 benefit provided as part of the standard benefit package
18 or any alternate health care plan or any optional benefit
19 packages. Nothing contained in this section shall
20 PACKAGE. <--
21 (2) NOTHING CONTAINED IN THIS CHAPTER SHALL restrict a
22 public school entity from negotiating or otherwise agreeing
23 to make payment for postretirement health benefits for
24 members or as may be provided for in Subchapter F (relating
25 to retirement health savings plan).
26 (G) INITIAL QUALIFIED MAJORITY VOTE REQUIREMENT.--A <--
27 QUALIFIED MAJORITY VOTE OF THE BOARD THAT OCCURS ON OR BEFORE
28 DECEMBER 31, 2010, MUST INCLUDE THE SUPPORT OF EITHER THE
29 SECRETARY OF THE BUDGET OR THE INSURANCE COMMISSIONER.
30 SUBCHAPTER E
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1 ALTERNATIVE MEASURES FOR COST REDUCTION
2 Sec.
3 9351. Alternative measures program.
4 § 9351. Alternative measures program.
5 (a) Creation.--Upon completing the study required under
6 section 9321 (relating to school employee health benefits study
7 and evaluation) with either a negative recommendation to proceed
8 with implementation of a Statewide health care program or if the
9 board fails to achieve agreement and approve a plan for
10 implementing a Statewide health benefits program by a qualified
11 majority vote, the board shall proceed to initiate and sponsor
12 an alternative measures program to reduce the costs for public
13 school entities in providing health care coverage to employees
14 and other eligible individuals.
15 (b) Program design.--In designing an alternative measures
16 program, the board may consider all of the following:
17 (1) Establishment of pools for selected areas of
18 coverage, such as pharmacy services, transplants, stop-loss
19 insurance, health care management or other possible areas
20 that in the board's judgment can be offered Statewide or
21 regionally on a more stable and cost-effective basis.
22 (2) Assistance in the formation of consortia to serve
23 public school entities that do not have the option of joining
24 an existing consortium.
25 (3) Development of best practice standards and
26 benchmarks for public school entities and consortia-
27 sponsoring health care plans for school employees.
28 (4) Requirements that public school entities and
29 consortia aggregate into larger regional pools, with opt-out
30 provisions for public school entities or consortia that meet
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1 best practice standards and benchmarks.
2 (5) Requirements for public disclosure by public school
3 entities and consortia comparing their health benefits
4 purchasing to established best practice standards in their
5 region.
6 (c) Implementation.--The board shall have full authority to
7 select and contract with insurance carriers, health maintenance
8 organizations, pharmacy benefit managers, third-party
9 administrators, reinsurers and any other entities necessary to
10 provide the selected areas of coverage. The board shall have
11 full authority to determine the nature, amount and duration and
12 discontinuation of coverage to be provided.
13 (d) Mandatory and optional participation.--The board shall
14 have the authority to require public school entities and
15 consortia to participate in the alternative measures program.
16 (e) Transition plan.--If the board determines that a public
17 school entity or consortium shall be required to participate in
18 the alternative measures program, the public school entity or
19 consortium shall, within a reasonable period of time as
20 determined by the board, present to the board a transition plan
21 with a schedule for the public school entity or consortium to
22 join the alternative measures program. The board shall review
23 the transition plan with the public school entity or consortium
24 and make any necessary modifications before granting approval of
25 the plan. A public school entity or consortium shall be subject
26 to adherence to the transition plan approved by the board.
27 (f) Extensions of time.--The board shall give due
28 consideration to a transition plan submitted pursuant to
29 subsection (e) that includes a request for an extension of time.
30 Consideration shall be given to a public school entity or
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1 consortium which will incur a significant financial cost or
2 penalty.
3 (g) Prohibited membership.--A public school entity that
4 participates in the Pennsylvania Employees' Benefit Trust Fund
5 shall be prohibited from participating in the alternative
6 measures program.
7 (h) Transition of employees.--A public school entity that
8 provides some or all of its employees with health benefits
9 through another health care plan by virtue of one or more
10 collective bargaining agreements entered into prior to the
11 effective date of this chapter shall not be required to join the
12 alternative measures program until expiration of the collective
13 bargaining agreements. The public school entity and some or all
14 of its employees, or bargaining representatives of its
15 employees, may, by mutual agreement and approval of the board,
16 join the program at an earlier date. Renewal or extension of a
17 collective bargaining agreement shall constitute its expiration
18 for the purposes of this subsection.
19 (i) Optional membership.--No school district of the first
20 class, as classified pursuant to section 202 of the Public
21 School Code, shall be required to participate in the alternative
22 measures program, except as may be agreed upon under the terms
23 of a collective bargaining agreement covering a majority of
24 employees of the school district. Upon a school district of the
25 first class entering participation in the alternative measures
26 program pursuant to a collective bargaining agreement, continued
27 participation in the alternative measures program shall become
28 mandatory.
29 SUBCHAPTER F
30 RETIREMENT HEALTH SAVINGS PLAN
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1 Sec.
2 9361. Retirement health savings plan.
3 § 9361. Retirement health savings plan.
4 (a) Plan created.--The board shall establish a retirement
5 health savings plan through which school employees can save to
6 cover health-related expenses following retirement. For this
7 purpose the board shall make available one or more trusts
8 including a governmental trust or governmental trusts authorized
9 under the IRC as eligible for tax-preferred or tax-free
10 treatment. The board may promulgate regulations regarding the
11 prudent and efficient operation of the retirement health savings
12 plan, including, but not limited to:
13 (1) Establishment of an annual administrative budget and
14 disbursements in accordance with the budget.
15 (2) Determination of the structure of the retirement
16 health savings accounts available to eligible school
17 employees.
18 (3) Determination of enrollment procedures.
19 (b) Contracting authorized.--The board is authorized to
20 administer the retirement health savings plan and to contract
21 with any lawfully authorized entities to provide investment
22 services, recordkeeping, benefit payments and other functions
23 necessary for the administration of the retirement health
24 savings plan. The board may contract with the retirement system
25 to invest funds in an account that shall be maintained and
26 accounted for separately from the funds of the retirement system
27 and invested in a prudent manner intended to maximize the safety
28 of the capital, with all earnings derived from investment of the
29 assets to be credited to the retirement health savings plan.
30 Costs and expenses incurred by the retirement system in
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1 administering the investment option shall be paid by the
2 retirement health savings plan.
3 (c) Separate account.--All funds related to the retirement
4 health savings plan shall be maintained and accounted for
5 separately from the health benefits program sponsored by the
6 board. The assets of the retirement health savings plan shall
7 not be liable or utilized for payment of any expenses or claims
8 incurred by the health benefits program other than as may be
9 directed by the participant account holder for reimbursement of
10 an IRC-qualifying health-related expense.
11 (d) Enrollment.--The board shall establish eligibility
12 guidelines consistent with the IRC for school employees to
13 participate in the retirement health savings plan.
14 (e) Contributions.--
15 (1) The board shall determine what contributions are
16 eligible under the IRC for tax-preferred or tax-free
17 treatment and may be made into a retirement health savings
18 plan by a school employee. The board shall authorize and
19 allow contributions, subject to appropriate limits as may be
20 established by the board, to be paid by a school employee
21 electing participation in the retirement health savings plan
22 subject to the following conditions:
23 (i) A mandatory school employee contribution
24 established as a fixed percentage of compensation may be
25 established through a collective bargaining agreement
26 between a public school entity and a bargaining group
27 representing school employees. The retirement health
28 savings plan contribution rate does not have to be
29 uniform for all groups of school employees.
30 (ii) An optional employee contribution at a fixed
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1 percentage of compensation may be elected by a school
2 employee during an annual election window that, once
3 elected, shall continue in effect, except to the extent
4 it may be changed or discontinued at a subsequent annual
5 election window as provided for by the board or
6 supplanted by a mandatory contribution.
7 (iii) An optional school employee contribution of
8 all or any portion of annual leave, vacation pay,
9 personal days or sick leave may be elected by a school
10 employee as so designated by the employee and agreed to
11 by the employee's employer. The board may provide that
12 the election shall be made during an annual election
13 window of no greater than 90 days as determined by the
14 board. Once the election has been made, an employee shall
15 not be allowed to change the amount or discontinue the
16 contributions until the next annual election window.
17 (2) The following contributions shall be made into a
18 retirement health savings plan on behalf of a school
19 employee:
20 (i) For an employee who elects participation in the
21 retirement health savings plan, the employee's employer
22 shall make a contribution to the employee's account equal
23 to the public school entity's savings in Social Security
24 and Medicare taxes resulting from the tax-preferred or
25 tax-free treatment of contributions made by the school
26 employee under this subsection. Additional contributions
27 by a public school entity may be established through a
28 collective bargaining agreement between a public school
29 entity and a bargaining group representing school
30 employees.
20070H1841B3199 - 64 -
1 (ii) Any other payments by the Commonwealth or
2 public school entity, including any set-aside payments to
3 be made to school employee accounts under section 9334
4 (relating to partnership for stable benefits funding) as
5 determined by the board.
6 (3) Contributions to the plan by a school employee or by
7 the Commonwealth or a public school entity on behalf of an
8 employee must be held in trust for reimbursement of employee
9 health-related expenses and the health-related expenses of
10 any health care dependents following retirement of the
11 employee or when otherwise determined to be benefit eligible.
12 The board shall maintain a separate account of the
13 contributions made by or on behalf of each participant and
14 the earnings thereon. The board shall make available a
15 selection of investment options for participants who wish to
16 direct the investment of the accumulations in the
17 participant's account, in addition to a default option for
18 participants to be invested in a prudent manner as determined
19 by the board.
20 (f) Reimbursement for health-related expenses.--
21 (1) Upon retirement or separation from employment with a
22 public school entity, a participant becomes eligible to seek
23 reimbursements for IRC-qualifying health-related expenses
24 from the participant's retirement health savings plan
25 account, including reimbursements for the health-related
26 expenses of the participant's eligible health care
27 dependents.
28 (2) If a school employee dies prior to exhausting the
29 balance in the employee's retirement health savings plan
30 account, the employee's health care dependents are eligible
20070H1841B3199 - 65 -
1 to seek reimbursement for IRC-qualifying health-related
2 expenses from the account.
3 (3) The board shall pay reimbursements from a retirement
4 health savings plan account until the accumulation in the
5 account has been exhausted. If an account balance remains
6 after the death of all participant account holders, the
7 remainder of the account must be paid to the school
8 employee's beneficiaries or, if none, to the employee's
9 estate.
10 (g) Annual financial statement.--Quarterly and annually the
11 board shall prepare summary retirement health savings plan
12 statements for individual participant account holders listing
13 information on contributions, investment earnings and
14 distributions for the account holders' accounts.
15 (h) Fees.--The board is authorized to charge uniform fees to
16 participants to cover the ongoing costs of operating the plan.
17 Any fees not needed must revert to participant accounts or be
18 used to reduce plan fees the following year.
19 (i) Advisory committee.--
20 (1) The board shall establish a participant advisory
21 committee for the retirement health savings plan composed of:
22 (i) One representative appointed by each Statewide
23 union that represents bargaining groups of school
24 employees participating in the plan.
25 (ii) One representative of each Statewide
26 organization representing at least 10% of annuitants.
27 (iii) One representative of the Pennsylvania
28 Association of School Business Officials.
29 (iv) One representative of the Pennsylvania School
30 Boards Association.
20070H1841B3199 - 66 -
1 (2) Each participant group shall be responsible for the
2 expenses of its own representative.
3 (3) The advisory committee shall meet at least two times
4 per year and shall be consulted on plan offerings. By October
5 1 of each year, the board shall give the advisory committee a
6 statement of fees collected and the use of the fees.
7 Section 3. Within 18 months after the Statewide health
8 benefits program or the alternative measures program is fully
9 implemented, the Secretary of Administration shall report to the
10 Governor, the President pro tempore of the Senate and the
11 Speaker of the House of Representatives the feasibility of
12 including community college employees in the program.
13 Section 4. This act shall take effect immediately.
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