Legislature Update

Health Insurance and School Finance

Health Insurance

Part I:  Beginning 9/1/02, all districts receive $900 per year per covered employee for health-insurance expenditures.

• Districts with 500 or fewer employees (as of 1/1/01) are required to participate in the state insurance pool

• Districts with 501-1000 employees (on 1/1/01) may participate but must notify TRS of their intentions by 9/30/01.

• Other districts continue tin local insurance plans but may choose to join the pool on 9/1/05.  TRS has the discretion to allow these districts to join sooner if their participation is administratively feasible and cost-effective.

TRS is required to provide a general description of benefits by 7/31/01.

Part II.  Beginning 9/1/02, all eligible employees receive $1000 supplement per year

1. If the employee is covered by a cafeteria plan, the supplement may be placed in a health-care reimbursement account, used for supplemental or dependent covereage, and/or taken as compensation.

2. Contingent on a ruling by the IRS, an employee covered by a cafeteria plan may be able to place the supplement in a medical savings account.

3. If the employee is not covered by a cafeteria plan, the employee must take the supplement as taxable compensation.

The plan is funded through a combination of separate appropriation and formula increases under Chapter 41 and 42.  The $900-per-covered-employee-per-year state contribution is funded through the formulas.  The $1000 supplement is funded outside of the formulas.

School Finance