TITLE 34. PUBLIC FINANCE

PART 4. EMPLOYEES RETIREMENT SYSTEM OF TEXAS

CHAPTER 71. CREDITABLE SERVICE

34 TAC §§71.14, 71.29, 71.31

The Employees Retirement System of Texas (ERS) proposes amendments to 34 Texas Administrative Code (TAC) Chapter 71, concerning Creditable Service, by amending §71.14 (Payments to Establish or Reestablish Service Credit), §71.29 (Purchase of Additional Service Credit), and §71.31 (Credit Purchase Option for Certain Waiting Period Service).

Effective September 1, 2017, Chapter 530 (S.B. 301), Acts of the 85th Legislature, Regular Session, 2017, amended §815.105, Texas Government Code, to require the ERS Board of Trustees to adopt new actuarial factor tables at least once every four years. This change in law was a recommendation from the Texas Sunset Advisory Commission following the Sunset review of ERS. On August 23, 2017, the ERS Board of Trustees (Board) adopted a new set of actuarial assumptions, which serve as the basis for new actuarial factor tables effective September 1, 2018.

Section 71.29 (Purchase of Additional Service Credit), and §71.31 (Credit Purchase Option for Certain Waiting Period Service) are proposed to be amended to add language that actuarial factor tables concerning certain purchases of service credit by ERS members will be subject to the factor tables, as adjusted from time to time, adopted under §815.105, Texas Government Code.

Additionally, §71.14 (Payments to Establish or Reestablish Service Credit) is proposed to be amended to repeal subsections (c), (d) and (e) regarding purchasing service through payroll deduction, which are obsolete since that is no longer permitted by the retirement system.

GOVERNMENT GROWTH IMPACT STATEMENT

ERS has determined that during the first five years the amended rules will be in effect:

(1) the proposed rules will not create or eliminate a government program;

(2) implementation of the rules will not require the creation or elimination of employee positions;

(3) implementation of the rules will not require an increase or decrease in future legislative appropriations to the agency;

(4) the rules will not require an increase or decrease in fees paid to the agency;

(5) the rules will not create a new rule;

(6) the rules do not expand or limit an existing rule, but do partially repeal three subsections that are obsolete; and

(7) the rules will not increase or decrease the number of individuals subject to the rules.

Ms. Robin Hardaway, Director of Customer Benefits, has determined that for the first five-year period the rules are in effect, there will be no fiscal implication for state or local government as a result of enforcing or administering the rules. To Ms. Hardaway's knowledge, the anticipated economic costs to persons who are required to comply with the rules as proposed include the potential change in the cost of service purchases by ERS members, as well as actuarial changes in reduction factors for annuities, due to the adoption of updated actuarial assumptions used for calculation of benefits. To her knowledge, small businesses or rural communities should not be affected by the rules.

Ms. Hardaway has also determined that for each year of the first five years the rules are in effect the public benefit anticipated as a result of enforcing the rules would be to use the most up-to-date actuarial assumptions in order to accurately determine the cost of benefits payable to members and retirees of the retirement plans.

Comments on the proposed amendments may be submitted to Paula A. Jones, Deputy Executive Director and General Counsel, Employees Retirement System of Texas, P.O. Box 13207, Austin, Texas 78711-3207, or you may email Ms. Jones at paula.jones@ers.texas.gov. The deadline for receiving comments is February 19, 2018.

The amendments are proposed under the Texas Government Code §§815.102, 815.105, 835.002, 840.002, and 840.005, which provide authorization for the ERS Board of Trustees to adopt mortality, service and other tables necessary for the retirement system and to adopt rules for the retirement system.

No other statutes are affected by the proposed amendments.

§71.14.Payments to Establish or Reestablish Service Credit.

(a) A member or contributing member may purchase eligible service creditable in the retirement system in accordance with the Government Code, Chapter 813. The retirement system shall grant the applicable amount of service credit after each payment made under this section is equal to the amount required to establish one or more months of creditable service.

(b) Service credit that may be established or reestablished includes military service credit, service credit previously cancelled, and service credit not previously established.

[(c) A contributing member of the Employees Retirement System of Texas (ERS) may file with the member's state employer, a contract to establish or reestablish service credit through a monthly payroll deduction installment plan. The state agency shall provide the ERS a signed copy of the contract not later than the date the service purchase contribution is reported to the ERS. Members with payroll deductions that will result in less than the amount required to establish one month of creditable service by fiscal year end will be provided written notice at the time the contract is received by the ERS, that a balloon payment will be due at fiscal year end; otherwise additional interest will accrue on the service cost.]

[(d) The contributing member shall designate the amount to be deducted from the member's salary and deposited each month with the ERS. The total amount deducted in any one fiscal year must equal or exceed the cost to establish one month of service credit. Excess payments of $5.00 or greater will be applied to the next fiscal year service purchase contract, if eligible. In the event the member does not negotiate a new contract within 60 days of a new fiscal year or there is no remaining service for purchase, any overpayment of $5.00 or greater will be refunded to the member. Any remaining credit of less than $5.00 will be deposited as interest toward the last purchase period established and will not be subject to refund.]

[(e) A member who ceases to hold a position or who withdraws authority for payroll deduction while making payments through payroll deduction may contract with the ERS for an alternative method of continuing the payment in accordance with procedures developed by the ERS.]

(c) [(f)] The ERS shall develop procedures and forms to be used in connection with this section.

(d) [(g)] A member who has contributed to both the Law Enforcement and Custodial Officer Supplemental Retirement (LECOS) fund and the ERS defined benefit plan will be allowed to purchase previously refunded Commissioned Peace Officer and Custodial Officer (CPO/CO) service and/or employee class service within the defined benefit plan. If a member purchases employee class service only and decides later to retire as a CPO/CO, the member must purchase the unpaid portion of service credit attributable to CPO/CO service, which will include any additional contribution to the LECOS fund plus interest, in order to receive creditable service and retire as a CPO/CO. If the member does not purchase the unpaid portion of the service credit attributable to CPO/CO service, then the service shall only be creditable for the employee class of membership.

§71.29.Purchase of Additional Service Credit.

(a) An eligible member may establish equivalent membership service credit authorized by §813.513, Texas Government Code, as provided in this section. The provisions of §71.14 of this title (relating to Payments to Establish or Reestablish Service Credit) do not apply to credit established under this section.

(b) A member is eligible to establish credit under this section in the membership class in which the member holds a position if the member:

(1) has 120 months of service credit for one or more periods of time during which the member held a position in a membership class and the required contributions were made;

(2) is actively contributing to the system at the time credit is established; and

(3) is not eligible to establish other credit or service.

(c) An eligible member shall deposit with the system in a lump sum a contribution in the amount determined by the system to be the actuarial present value of the benefit attributable to the credit established under this section. The tables recommended by the actuaries and adopted by the board shall be used by the system to determine the actuarial present value. The additional service credit tables are adopted by reference and made a part of this rule for all purposes. The 2009 additional service credit tables apply to service purchase calculations performed on or after September 1, 2009, and are those tables adopted by the board on February 24, 2009, based on assumptions adopted by the board on May 13, 2008. The 2010 additional service credit tables apply only to those employees hired by the state of Texas on or after September 1, 2009, as defined in §73.2(c) of this title (relating to Determination of Date of Hire for Retirement Benefit Eligibility). The 2010 additional service credit tables apply to service purchase calculations performed on or after September 1, 2010, and are those tables adopted by the board on February 23, 2010, based on legislative changes to the retirement plan effective September 1, 2009. The 2014 additional service credit tables apply to service purchase calculations performed on or after September 1, 2014, but before September 1, 2018, and are those tables adopted by the board on February 25, 2014, based on assumptions adopted by the board on February 26, 2013, and on legislative changes to the retirement plan effective September 1, 2013. For service purchase calculations performed prior to September 1, 2014, the previously adopted tables apply. Copies of these tables are available from the System's executive director, Employees Retirement System of Texas at 200 E. 18th Street, P.O. Box 13207, Austin, Texas 78711-3207. The actuarial present value shall be based on:

(1) the member's age on the date of the deposit required by this subsection;

(2) the earliest date on which the member will become eligible to retire and receive a service retirement annuity after establishing credit under this section; and

(3) the future employment, compensation, investment and retirement benefit assumptions recommended by the actuaries and adopted by the board.

(d) Credit shall be established in increments of 12 months of credit, except that a member who may become eligible to retire by establishing fewer than 12 months of credit may establish the minimum number of months of credit necessary for the member to meet retirement eligibility.

(e) A member who establishes credit under this section shall certify that the member is not eligible to establish other credit or service and shall waive any and all right to establish such credit or service that the member had on the date of the deposit required by subsection (c) of this section. This subsection does not apply to service credit transferred as authorized by Chapter 805, Texas Government Code.

(f) Credit established under this section may not be used to determine average monthly compensation for the purpose of computing an annuity.

(g) A member who withdraws contributions and cancels credit established under this section may not reestablish such credit under §813.102, Texas Government Code, but may again establish credit as provided in this section.

(h) The provisions of §813.503, Texas Government Code, do not apply to credit established under this section.

(i) For a member establishing equivalent membership service credit authorized by §813.513, Texas Government Code, on or after September 1, 2018, the tables used to determine the actuarial present value of the service credit are those adopted by the board, and as adjusted from time to time as required by §815.105, Texas Government Code, in effect on the date the service credit is established. Copies of these tables are available from the System's executive director, Employees Retirement System of Texas at 200 E. 18th Street, P.O. Box 13207, Austin, Texas 78711-3207.

§71.31Credit Purchase Option for Certain Waiting Period Service

(a) An eligible employee class member may establish service credit for service performed during the waiting period as authorized by §813.514, Texas Government Code, and as provided in this section. The provisions of §71.14 of this title (relating to Payments to Establish or Reestablish Service Credit) do not apply to service credit established under this section.

(b) An employee class member is eligible to establish service credit under this section if the member:

(1) has completed the waiting period;

(2) has made a retirement contribution in accordance with §813.201, Texas Government Code; and

(3) makes application for the establishment of service credit and payment of the required contributions in accordance with procedures developed by ERS.

(c) An eligible member shall deposit with the system in a lump sum a contribution in the amount determined by the system to be the actuarial present value of the benefit attributable to the service credit established under this section. The tables recommended by the system's actuary and adopted by the board shall be used to determine the actuarial present value. The waiting period service credit tables are adopted by reference and made a part of this rule for all purposes. The 2009 waiting period service credit tables apply to service purchase calculations performed on or after September 1, 2009, and are those tables adopted by the board on February 24, 2009, based on assumptions adopted by the board on May 13, 2008. The 2010 waiting period service credit tables apply only to those employees hired by the state of Texas on or after September 1, 2009, as defined in §73.2(c) of this title (relating to Determination of Date of Hire for Retirement Benefit Eligibility). The 2010 waiting period service credit tables apply to service purchase calculations performed on or after September 1, 2010, and are those tables adopted by the board on February 23, 2010, based on legislative changes to the retirement plan effective September 1, 2009. The 2014 waiting period service credit tables apply to service purchase calculations performed on or after September 1, 2014, but before September 1, 2018, and are those tables adopted by the board on February 25, 2014, based on assumptions adopted by the board on February 26, 2013, and on legislative changes to the retirement plan effective September 1, 2013. For service purchase calculations performed prior to September 1, 2014, the previously adopted tables apply. Copies of these tables are available from the System's executive director, Employees Retirement System of Texas at 200 E. 18th Street, P.O. Box 13207, Austin, Texas 78711-3207.

(d) Actuarial present value shall be based on:

(1) the member's age on the date of the deposit required by this subsection;

(2) the earliest date on which the member will become eligible to retire and receive a service retirement annuity after establishing service credit under this section; and

(3) the future employment, compensation, investment and retirement benefit assumptions recommended by the system's actuary and adopted by the board.

(e) Waiting period service credit shall be established in increments of one month.

(f) This section does not apply to service credit transferred as authorized by Texas Government Code, Chapter 805.

(g) A member who withdraws contributions and cancels service credit established under this section may not reestablish such credit under §813.102, Texas Government Code, but may again establish credit only as provided by this section.

(h) Credit established under this section may not be used to determine average monthly compensation for the purpose of computing an annuity.

(i) For a member establishing service credit for service performed during the waiting period as authorized by §813.514, Texas Government Code, on or after September 1, 2018, the tables used to determine the actuarial present value of the service credit are those adopted by the board, and as adjusted from time to time as required by §815.105, Texas Government Code, in effect on the date the service credit is established. Copies of these tables are available from the System's executive director, Employees Retirement System of Texas at 200 E. 18th Street, P.O. Box 13207, Austin, Texas 78711-3207.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on January 5, 2018.

TRD-201800036

Paula A. Jones

Deputy Executive Director and General Counsel

Employees Retirement System of Texas

Earliest possible date of adoption: February 18, 2018

For further information, please call: (877) 275-4377


CHAPTER 73. BENEFITS

34 TAC §73.21

The Employees Retirement System of Texas (ERS) proposes amendments to 34 Texas Administrative Code (TAC) Chapter 73, concerning Benefits, by amending §73.21 (Reduction Factor for Age and Retirement Option).

Effective September 1, 2017, Chapter 530 (S.B. 301), Acts of the 85th Legislature, Regular Session, 2017, amended §815.105, Texas Government Code, to require the ERS Board of Trustees to adopt new actuarial factor tables at least once every four years. This change in law was a recommendation from the Texas Sunset Advisory Commission following the Sunset review of ERS. On August 23, 2017, the ERS Board of Trustees (Board) adopted a new set of actuarial assumptions, which serve as the basis for new actuarial factor tables effective September 1, 2018.

Section 73.21 (Reduction Factor for Age and Retirement Option) is proposed to be amended to add language that actuarial assumptions, mortality tables, and reduction factors used for calculation of benefits will be subject to the factor tables, as adjusted from time to time, adopted under §815.105, Texas Government Code. Section 73.21 is also amended to include the current street address of ERS.

GOVERNMENT GROWTH IMPACT STATEMENT

ERS has determined that for the first five years the amended rule is in effect:

(1) the proposed rules will not create or eliminate a government program;

(2) implementation of the rules will not require the creation or elimination of employee positions;

(3) implementation of the rules will not require an increase or decrease in future legislative appropriations to the agency;

(4) the rules will not require an increase or decrease in fees paid to the agency;

(5) the rules will not create a new rule;

(6) the rules do not expand, limit, or repeal an existing rule; and

(7) the rules will not increase or decrease the number of individuals subject to the rules.

Ms. Robin Hardaway, Director of Customer Benefits, has determined that for the first five-year period the rule is in effect, there will be no fiscal implication for state or local government as a result of enforcing or administering the rule. Ms. Hardaway has also determined that, to her knowledge, the anticipated economic costs to persons who are required to comply with the rule as proposed include the potential change in the cost of service purchases by ERS members, as well as changes in reduction factors, due to the adoption of updated actuarial assumptions used for calculation of benefits. And, to her knowledge, small businesses or rural communities should not be affected by the rule.

Ms. Hardaway has also determined that for each year of the first five years the rule is in effect the public benefit anticipated as a result of enforcing the rule would be to use the most up-to-date actuarial assumptions in order to accurately determine the cost of benefits payable to members and retirees of the retirement plans.

Comments on the proposed amendment may be submitted to Paula A. Jones, Deputy Executive Director and General Counsel, Employees Retirement System of Texas, P.O. Box 13207, Austin, Texas 78711-3207, or you may email Ms. Jones at paula.jones@ers.texas.gov. The deadline for receiving comments is February 19, 2018.

The amendment is proposed under the Texas Government Code, §815.102 and §815.105 which provides authorization for the ERS Board of Trustees to adopt rules for the retirement system and to adopt mortality, service and other tables necessary for the retirement system.

No other statutes are affected by the proposed amendment.

§73.21.Reduction Factor for Age and Retirement Option.

(a) Actuarial assumptions, mortality tables, and reduction factors used for calculation of benefits first payable on or after September 1, 2018 are those adopted by the board, as adjusted from time to time as required by §815.105, Texas Government Code, and apply to forms and effective dates of annuities specified by the board. Such assumptions, tables, and factors are incorporated in this rule by reference and are a part of this rule for all purposes. Copies of the tables are available from the executive director of the Employees Retirement System of Texas at 200 E. 18th Street, P.O. Box 13207, Austin, Texas 78711-3207.

(b) The 1999 reduction factors for optional forms of retirement annuities apply to retirements effective on or after September 30, 1999 and prior to September 30, 2009, and are those factors adopted by the board December 8, 1999, based on assumptions adopted by the board December 9, 1998. The factors apply to annuities first payable January 1, 2000 through August 31, 2009. The 2009 reduction factors for optional forms of retirement annuities apply to retirements effective on or after September 30, 2009, and are those factors adopted by the board on February 24, 2009, based on assumptions adopted by the board on May 13, 2008. The 2009 reduction factors apply to retirements first effective on or after September 30, 2009, and before September 1, 2014. The 2014 reduction factors for optional forms of retirement annuities apply to retirements effective on or after September 1, 2014, but before September 1, 2018, and are those tables adopted by the board on February 25, 2014, based on assumptions adopted by the board on February 26, 2013, and further based on legislative changes to the retirement plan effective September 1, 2013. For retirements prior to September 1, 2014, the previously adopted factors apply.

(c) The actuaries have developed reduction factors for early retirement or death in accordance with the mortality tables adopted by the board. The 2009 reduction factors for early retirement or death apply to retirements effective on or after September 30, 2009, and apply to deaths first reported to ERS on or after September 1, 2009, and are those factors adopted by the board on February 24, 2009, based on assumptions adopted by the board on May 13, 2008. The 2010 reduction factors for early retirement or death apply only to those employees hired by the state of Texas on or after September 1, 2009, as defined in §73.2(c) of this chapter (relating to Determination of Date of Hire for Retirement Benefit Eligibility). The 2010 reduction factors apply to retirements effective on or after September 30, 2010, and apply to deaths first reported to ERS on or after September 1, 2010, and are those factors adopted by the board on February 23, 2010, based on legislative changes to the retirement plan effective September 1, 2009. The 2014 reduction factors for early retirement or death apply to retirements effective on or after September 1, 2014, but before September 1, 2018, and deaths first reported to ERS on or after September 1, 2014, and are those tables adopted by the board on February 25, 2014, based on assumptions adopted by the board on February 26, 2013, and on legislative changes to the retirement plan effective September 1, 2013. For retirements prior to September 1, 2014 and deaths first reported to ERS prior to September 1, 2014, the previously adopted factors apply.

(d) The 2000 reduction factors for the partial lump sum option apply to retirements effective on or after January 1, 2000 through August 31, 2009, and are those factors adopted by the board December 8, 1999, based on assumptions adopted by the board December 9, 1998. The 2009 reduction factors for the partial lump sum option apply to retirements effective on or after September 30, 2009 and deaths first reported to ERS on or after September 1, 2009, and are those factors adopted by the board on February 24, 2009, based on assumptions adopted by the board on May 13, 2008. The 2014 reduction factors for partial lump sum option apply to a retirement effective on or after September 1, 2014,but before September 1, 2018, and are those tables adopted by the board on February 25, 2014, based on assumptions adopted by the board on February 26, 2013, and on legislative changes to the retirement plan effective September 1, 2013. For retirements occurring prior to September 1, 2014 and deaths first reported to ERS prior to September 1, 2014, the previously adopted factors apply.

(e) The 2005 reduction factors for a standard nonoccupational disability retirement annuity apply to a disability retirement application received by the System on or after September 1, 2005, and are those factors adopted by the board on August 24, 2005, based on assumptions adopted by the board on December 10, 2003. The 2009 reduction factors for a standard nonoccupational disability retirement annuity apply to a disability retirement based on the effective date of a retirement that is effective on or after September 30, 2009, and are those factors adopted by the board on February 24, 2009, based on assumptions adopted by the board on May 13, 2008. The 2010 reduction factors for a standard nonoccupational disability retirement annuity apply only to those employees hired by the state of Texas on or after September 1, 2009, as defined in §73.2(c) of this chapter. The 2010 reduction factors apply to a disability retirement based on the effective date of a retirement that is effective on or after September 30, 2010, and are those factors adopted by the board on February 23, 2010, based on legislative changes to the retirement plan effective September 1, 2009. The 2014 reduction factors for a standard nonoccupational disability retirement annuity apply to a disability retirement based on the effective date of a retirement that is on or after September 1, 2014, but before September 1, 2018, and are those tables adopted by the board on February 25, 2014, based on assumptions adopted by the board on February 26, 2013, and on legislative changes to the retirement plan effective September 1, 2013. For disability retirements based on an effective date of retirement that is effective prior to September 1, 2014, the previously adopted factors apply.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on January 5, 2018.

TRD-201800037

Paula A. Jones

Deputy Executive Director and General Counsel

Employees Retirement System of Texas

Earliest possible date of adoption: February 18, 2018

For further information, please call: (877) 275-4377


CHAPTER 77. JUDICIAL RETIREMENT

34 TAC §§77.1, 77.11, 77.15, 77.21

The Employees Retirement System of Texas (ERS) proposes amendments to 34 Texas Administrative Code (TAC) Chapter 77 by amending §77.1 (Reduction Factors for Death before Age 65), §77.11 (Reduction Factors for Age and Retirement Options--Judicial Retirement System of Texas Plan One (JRS-I) and Judicial Retirement System of Texas Plan Two (JRS-II)), §77.15 (Payments To Establish or Reestablish Service Credit), and §77.21 (Purchase of Additional Service Credit).

Effective September 1, 2017, Chapter 530 (S.B. 301), Acts of the 85th Legislature, Regular Session, 2017, amended §815.105 and §840.005, Texas Government Code, to require the ERS Board of Trustees to adopt new actuarial factor tables at least once every four years. This change in law was a recommendation from the Texas Sunset Advisory Commission following the Sunset review of ERS. On August 23, 2017, the ERS Board of Trustees (Board) adopted a new set of actuarial assumptions, which serve as the basis for new actuarial factor tables effective September 1, 2018.

Sections 77.1, 77.11, and 77.21 are also amended to update the address provided for ERS to include the current street address.

Section 77.11 and §77.21 are proposed to be amended to add language that reductions and service purchases will be subject to the factor tables, as adjusted from time to time, adopted under §815.105 and §840.005, Texas Government Code.

Additionally, §77.15 is proposed to be amended to repeal subsections (c), (d) and (e) regarding purchasing service through payroll deduction, which are obsolete since that is no longer permitted by the retirement system.

GOVERNMENT GROWTH IMPACT STATEMENT

ERS has determined that for the first five years the amended rule is in effect:

(1) the proposed rules will not create or eliminate a government program;

(2) implementation of the rules will not require the creation or elimination of employee positions;

(3) implementation of the rules will not require an increase or decrease in future legislative appropriations to the agency;

(4) the rules will not require an increase or decrease in fees paid to the agency;

(5) the rules will not create a new rule;

(6) the rules do not expand or limit an existing rule, but do partially repeal three subsections that are obsolete; and

(7) the rules will not increase or decrease the number of individuals subject to the rules.

Ms. Robin Hardaway, Director of Customer Benefits, has determined that for the first five-year period the rule is in effect, there will be no fiscal implication for state or local government as a result of enforcing or administering the rule. Ms. Hardaway has also determined, that to her knowledge, the anticipated economic costs to persons who are required to comply with the rules as proposed include the potential change in the cost of service purchases by ERS members, as well as changes in reduction factors, due to the adoption of updated actuarial assumptions used for calculation of benefits. And, to her knowledge, small businesses or rural communities should not be affected by the rules.

Ms. Hardaway also determined that for each year of the first five years the rules are in effect the public benefit anticipated as a result of enforcing the rules would be to use the most up-to-date actuarial assumptions in order to accurately determine the cost of benefits payable to members and retirees of the retirement plans.

Comments on the proposed amendments may be submitted to Paula A. Jones, Deputy Executive Director and General Counsel, Employees Retirement System of Texas, P.O. Box 13207, Austin, Texas 78711-3207, or you may email Ms. Jones at paula.jones@ers.texas.gov. The deadline for receiving comments is February 19, 2018.

The amendments are proposed under the Texas Government Code §§835.002, 840.002, and 840.005, which provide authorization for the ERS Board of Trustees to adopt mortality, service and other tables and factors necessary for the retirement system and to adopt rules for the retirement system.

No other statutes are affected by the proposed amendments.

§77.1.Reduction Factors for Death before Age 65.

If a member of the Judicial Retirement System of Texas Plan One who is eligible to select a death benefit plan dies prior to age 65, the annuity will be reduced by the factors developed by the actuaries. Those factors are adopted by reference and are made a part of this section for all purposes. Copies of the factors may be obtained from the executive director of the Employees Retirement System of Texas at 200 E. 18th Street [18th and Brazos Streets]; P.O. Box 13207, Austin, Texas 78711-3207. The reduction factors that apply to deaths of members prior to age 65 and that occur on or after September 1, 2009, are those factors adopted by the board on February 24, 2009, based on assumptions adopted by the board on May 13, 2008. For deaths occurring prior to September 1, 2009, the previously adopted factors apply.

§77.11.Reduction Factors for Age and Retirement Options--Judicial Retirement System of Texas Plan One (JRS-I) and Judicial Retirement System of Texas Plan Two (JRS-II).

(a) Tables for calculation of optional factors.

(1) The 1981 reduction factors for optional forms of retirement annuities are independent of the gender of the member and of the beneficiary and are based on the GA-51 male mortality table projected with Scale C to 1970 with an age set forward of one year for retiring members and an age set back of four years for beneficiaries. The interest assumption is 5.0%.

(2) The 1992 reduction factors for optional forms of retirement annuities are independent of the gender of the member and the beneficiary and are based on the 1983 group annuity mortality table. The interest rate assumption is 8.5%.

(3) The reduction factors adopted by the board on February 24, 2009, based on assumptions adopted by the board on May 13, 2008, for optional forms of retirement annuities are independent of the gender of the member and the beneficiary and apply to retirements effective on or after September 30, 2009. For retirements first effective prior to September 1, 2009, the previously adopted factors apply.

(4) The reduction factors adopted by the board on February 25, 2014, based on assumptions adopted by the board on February 26, 2013, and on legislative changes to the retirement plan effective September 1, 2013, are independent of the gender of the member and the beneficiary and apply to retirements effective on or after September 1, 2014, but before September 1, 2018. For retirements first effective prior to September 1, 2014, the previously adopted factors apply.

(5) Copies of these tables are available from the executive director of the Employees Retirement System of Texas at 200 E. 18th Street [18th and Brazos Streets], P.O. Box 13207, Austin, Texas 78711-3207. The option tables, along with the adjustments described in this subsection are adopted by reference and made a part of this rule for all purposes.

(b) Option factors. The 2009 reduction factors for optional annuities for service retirement, disability retirement, and death benefit plans under the JRS-I and JRS-II plans apply to retirements effective on or after September 1, 2009, and are those factors adopted by the board on February 24, 2009, based on assumptions adopted by the board on May 13, 2008. For retirements first effective prior to September 1, 2009, the previously adopted factors apply. The 2014 reduction factors for optional annuities for service retirement, disability retirement, and death benefit plans under the JRS-I and JRS-II plans apply to retirements effective on or after September 1, 2014, but before September 1, 2018, and are those tables adopted by the board on February 25, 2014, based on assumptions adopted by the board on February 26, 2013, and on legislative changes to the retirement plan effective September 1, 2013. For retirements first effective prior to September 1, 2014, the previously adopted factors apply. All option factors have been developed by the actuaries and are adopted by reference subject to the limitations of this subsection. The reduction factors are available from the executive director of the Employees Retirement System of Texas at 200 E. 18th Street [18th and Brazos Streets], P.O. Box 13207, Austin, Texas 78711-3207.

(c) Formula for JRS-II reduction factors for death before age 65.

(1) A death benefit annuity of the Judicial Retirement System of Texas Plan Two on behalf of a member dying before age 65 while not eligible for an unreduced service retirement benefit is reduced for each whole or partial calendar month that occurs during the period from the date of death to the 65th birthday, including the months that contain the dates of death and birthday. For the first 120 months (ages 55-64), the annuity is reduced by one-third of 1.0% per month. For the next 60 months (ages 50-54), the annuity is reduced by one-fourth of 1.0% per month. For the next 60 months (ages 45-49), the annuity is reduced by one-sixth of 1.0% per month. For the next 120 months (ages 35-44), the annuity is reduced by one-twelfth of 1.0% per month.

(2) A death benefit annuity on behalf of a member dying before age 65 while eligible for an unreduced service retirement benefit shall not be reduced for age.

(3) JRS-II reduction factors for death before age 65 have been developed by the actuaries and are adopted by reference subject to the limitations of this subsection. The reduction factors that apply to deaths of members prior to age 65 and that occur on or after September 1, 2009, are those factors adopted by the board on February 24, 2009, based on assumptions adopted by the board on May 13, 2008. For deaths occurring prior to September 1, 2009, the previously adopted factors apply. The reduction factors that apply to deaths of members prior to age 65 and that occur on or after September 1, 2014, but before September 1, 2018, are those factors adopted by the board on February 25, 2014, based on assumptions adopted by the board on February 26, 2013, and on legislative changes to the retirement plan effective September 1, 2013. For deaths occurring prior to September 1, 2014, the previously adopted factors apply. The set of reduction factors is available from the executive director of the Employees Retirement System of Texas at 200 E. 18th Street [18th and Brazos Streets], P.O. Box 13207, Austin, Texas 78711-3207.

(d) Reserve factors. The reserve factors for JRS-II are adopted by reference and made a part of this rule for all purposes. The reserve factors apply to periods beginning on or after September 1, 2009, and are those factors adopted by the board on February 24, 2009, based on assumptions adopted by the board on May 13, 2008. For periods occurring prior to September 1, 2009, the previously adopted factors apply. Copies of these tables are available from the executive director of the Employees Retirement System of Texas at 200 E. 18th Street [18th and Brazos Streets], P.O. Box 13207, Austin, Texas 78711-3207.

(e) Dollar limitations for maximum annual benefit. Service retirement annuities shall conform to dollar limitations and applicable adjustments under the Internal Revenue Code of 1986, §415 (26 United States Code §415) as determined by the federal commissioner of internal revenue.

(f) For a member subject to a reduction factor under this section on or after September 1, 2018, the factors are those adopted by the board, and as adjusted from time to time as required by §815.105 and §840.005, Texas Government Code, in effect on the date the reduction factor occurs. Copies of these factors are available from the System's executive director, Employees Retirement System of Texas at 200 E. 18th Street, P.O. Box 13207, Austin, Texas 78711-3207.

§77.15.Payments To Establish or Reestablish Service Credit.

(a) A member or contributing member of the Judicial Retirement System of Texas Plan One or Plan Two may purchase eligible service creditable in the member's respective retirement system in accordance with the Government Code, Chapter 833 and Chapter 838, respectively. Subject to §77.23, the retirement system shall grant the applicable amount of service credit after each payment made under this section is equal to the amount required to establish one or more months of creditable service.

(b) Service credit that may be established or reestablished includes military service credit, service credit previously cancelled, and service credit not previously established, and calendar year service credit.

[(c) A contributing member of the Judicial Retirement System of Texas Plan One or Plan Two may file with the member's state payroll officer, a contract to establish or reestablish service credit through a monthly payroll deduction installment plan. The state agency shall provide the Employees Retirement System of Texas (ERS) a signed copy of the contract not later than the date the service purchase contribution is reported to the ERS. Plan Two members with payroll deductions that will result in less than the amount required to establish one month of creditable service by fiscal year end will be provided written notice at the time the contract is received by the ERS, that a balloon payment will be due at fiscal year end; otherwise additional penalty interest will accrue on the service cost.]

[(d) The contributing member shall designate the amount to be deducted from the member's salary and deposited each month with the ERS. The total amount deducted in any one fiscal year must equal or exceed the cost to establish one month of service credit. Excess payments of $5.00 or greater will be applied to the next fiscal year service purchase contract, if eligible. In the event the member does not negotiate a new contract within 60 days of a new fiscal year or there is no remaining service for purchase, any overpayment of $5.00 or greater will be refunded to the member. Any remaining credit of less than $5.00 for Plan One members will be deposited to the retirement system's state accumulation account and will not be subject to refund. Any remaining credit of less than $5.00 for Plan Two members will be deposited as penalty interest toward the last purchase established and will not be subject to refund.]

[(e) A member who ceases to hold a position or who withdraws authority for payroll deduction while making payments through payroll deduction may contract with the ERS for an alternative method of continuing the payment in accordance with procedures developed by the ERS.]

(c) [(f)] The ERS shall develop procedures and forms to be used in connection with this section.

§77.21.Purchase of Additional Service Credit.

(a) The provisions of this section apply only to the Judicial Retirement System of Texas Plan Two (JRS-II).

(b) An eligible member may establish equivalent membership service credit authorized by §838.108, Texas Government Code, as provided in this section. The provisions of §77.15 of this title (relating to Payments to Establish or Reestablish Service Credit) do not apply to service credit established under this section.

(c) A member is eligible to establish service credit under this section in the membership class in which the member holds a position if the member:

(1) has 180 months of service credit for one or more periods of time during which the member held a position as a judge and the required contributions were made;

(2) is a member of the system at the time credit is established; and

(3) is not eligible to establish other credit or service.

(d) An eligible member shall deposit with the system in a lump sum a contribution in the amount determined by the system to be the actuarial present value of the benefit attributable to the credit established under this section. The tables recommended by the system's actuary and adopted by the board shall be used by the system to determine the actuarial present value. The 2009 additional service credit tables for JRS-II are adopted by reference and made a part of this rule for all purposes. The additional service credit tables apply to service purchase calculations performed on or after September 1, 2009, and are those tables adopted by the board on February 24, 2009, based on assumptions adopted by the board on May 13, 2008. The 2014 additional service credit tables apply to service purchase calculations performed on or after September 1, 2014, but before September 1, 2018, and are those tables adopted by the board on February 25, 2014, based on assumptions adopted by the board on February 26, 2013, and on legislative changes to the retirement plan effective September 1, 2013. For service purchase calculations performed prior to September 1, 2014, the previously adopted tables apply. Copies of these tables are available from the executive director of the Employees Retirement System of Texas at 200 E. 18th Street [18th and Brazos Streets], P.O. Box 13207, Austin, Texas 78711-3207.

(e) Actuarial present value shall be based on:

(1) the member's age on the date of the deposit required by this subsection;

(2) the earliest date on which the member will become eligible to retire and receive a service retirement annuity after establishing credit under this section; and

(3) the future employment, compensation, investment and retirement benefit assumptions recommended by the actuaries and adopted by the board.

(f) Credit shall be established in whole year increments of credit.

(g) A member who establishes credit under this section shall certify that the member is not eligible to establish other credit or service and shall waive any and all right to establish such credit or service that the member had on the date of the deposit required by subsection (d) of this section.

(h) Credit established under this section may not be used to compute the amount of a disability retirement annuity.

(i) A member who withdraws contributions and cancels credit established under this section may not reestablish such credit under §838.102, Texas Government Code, but may again establish credit as provided in this section.

(j) For a member establishing equivalent membership service credit authorized by §838.108, Texas Government Code, on or after September 1, 2018, the tables used to determine the actuarial present value of the service credit are those adopted by the board, and as adjusted from time to time as required by §840.005, Texas Government Code, in effect on the date the service credit is established. Copies of these tables are available from the System's executive director, Employees Retirement System of Texas at 200 E. 18th Street, P.O. Box 13207, Austin, Texas 78711-3207.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on January 5, 2018.

TRD-201800038

Paula A. Jones

Deputy Executive Director and General Counsel

Employees Retirement System of Texas

Earliest possible date of adoption: February 18, 2018

For further information, please call: (877) 275-4377


CHAPTER 81. INSURANCE

34 TAC §§81.1, 81.8, 81.9

The Employees Retirement System of Texas (ERS) proposes amendments to 34 Texas Administrative Code (TAC) Chapter 81, concerning Insurance, by amending §81.1 (Definitions), §81.8 (Waiver of Health Coverage) and §81.9 (Grievance Procedures).

Section 81.1, concerning Definitions, is amended to clarify the amount of compensation used for non-salaried elected and appointed officials and members of the Legislature for purposes of determining optional term life insurance and disability income limitations.

Section 81.8, concerning Waiver of Health Coverage, is amended to allow a member receiving an incentive credit to apply that credit toward the recently established State of Texas Vision plan within the Group Benefits Program (GBP).

Section 81.9, concerning Grievance Procedures, is amended to reflect that the State of Texas Vision plan is a self-funded plan, and clarifies that the vision plan's grievance procedures are set forth in the Master Benefit Plan Document for that plan and are subject to applicable federal statutes and rules and §1551.356 of the Texas Employees Group Benefits Act, Insurance Code.

GOVERNMENT GROWTH IMPACT STATEMENT

ERS has determined that during the first five years the amended rules will be in effect:

(1) the proposed rules will not create or eliminate a government program;

(2) implementation of the rules will not require the creation or elimination of employee positions;

(3) implementation of the rules will not require an increase or decrease in future legislative appropriations to the agency;

(4) the rules will not require an increase or decrease in fees paid to the agency;

(5) the rules will not create a new rule;

(6) the rules expand an existing rule; and

(7) the rules will not increase or decrease the number of individuals subject to the rules.

Ms. Robin Hardaway, Director of Customer Benefits, has determined that for the first five year period the rules are in effect, there will be no fiscal implication for state or local government as a result of enforcing or administering the rules. To Ms. Hardaway's knowledge, there are no known anticipated economic effects to persons who are required to comply with the rules as proposed, and small businesses or rural communities should not be affected.

Ms. Hardaway also determined that for each year of the first five years the rules are in effect the public benefit anticipated as a result of enforcing the rules would be to provide the most accurate salary basis for life insurance and disability benefits for elected and appointed officials and members of the Legislature. In addition, the rule is expanded to provide members with an additional choice, the State of Texas Vision Plan, to apply an incentive credit for a reduction in cost of certain GBP benefit plans when health insurance is waived.

Comments on the proposed rule amendments may be submitted to Paula A. Jones, Deputy Executive Director and General Counsel, Employees Retirement System of Texas, P.O. Box 13207, Austin, Texas 78711-3207, or you may email Ms. Jones at paula.jones@ers.texas.gov. The deadline for receiving comments is February 19, 2018, at 10:00 a.m.

The amendments are proposed under the Texas Insurance Code, §1551.052 which provides authorization for the ERS Board of Trustees to adopt rules necessary to carry out its statutory duties and responsibilities.

No other statutes are affected by the proposed amendments.

§81.1.Definitions.

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Accelerated life benefit--A term life insurance benefit to be paid in advance of the death of an insured member or dependent, as requested by the insured member and approved by the carrier or administering firm, in accordance with the terms of the group term life insurance plan as permitted by §1551.254 of the Act. An accelerated life benefit payment may be requested only if the insured person is diagnosed with a terminal condition and only once during the lifetime of the insured person. For purposes of this definition, a terminal condition is an incurable health condition that the administering firm or carrier determines with reasonable medical certainty will result in the death of the insured within 12 months.

(2) Act--The Texas Employees Group Benefits Act, Insurance Code, Chapter 1551, as amended.

(3) Active duty--An employee's expenditure of time and energy in the service of his/her employer, including elected officials of the state of Texas who are eligible for coverage under the Act. An employee is on active duty on each day of a regular paid vacation or regular paid sick leave or on a non-working day, if the employee was on active duty on the last preceding workday.

(4) AD&D--Voluntary accidental death and dismemberment coverage.

(5) Age of employee--The age to be used for determining optional term life and AD&D insurance required contributions. For these purposes, the age of the employee is the employee's attained age on September 1.

(6) Annuitant--A retired person who is eligible under §1551.102 of the Act to participate in the GBP and meets all requirements for retirement from a state retirement program or the Optional Retirement Program.

(7) Basic plan--The plan of group insurance, including prescription drug coverage, determined by the Board of Trustees, currently HealthSelect or HealthSelect Medicare Advantage participant-only, as applicable, and basic term life insurance coverage, in which every eligible full-time employee and annuitant, is automatically enrolled after meeting any applicable waiting period or unless participation is expressly waived.

(8) Benefits Coordinator--A person employed by an employer to provide assistance to its employees and their dependents with all aspects of GBP participation. The benefits coordinator for all other GBP participants is ERS.

(9) Board of Trustees or Board--The Board of Trustees of the Employees Retirement System of Texas.

(10) CHIP--Children's Health Insurance Program.

(11) CMS--Centers for Medicare and Medicaid Services or its successor agency.

(12) COBRA--Consolidated Omnibus Budget Reconciliation Act of 1985, Public Law 99-272, and any subsequent amendments.

(13) Consumer Directed HealthSelectSM --The self-funded high deductible health benefit plan offered through the GBP and administered by the Employees Retirement System of Texas and qualified carriers or administering firms.

(14) Dependent--With respect to an eligible member, means the member's:

(A) spouse, as recognized by applicable law, which includes only a married spouse as evidenced by a properly issued and completed marriage license or an informally married spouse whose marriage is memorialized by a Declaration of Informal Marriage and filed of record with an appropriate governmental authority. Absent clear and compelling evidence of an informal marriage existing at the time of enrollment and deemed sufficient by ERS, it is a plan design requirement that the licensed marriage or Declaration of Informal Marriage must occur, or be filed, as applicable, prior to the effective date of the dependent spouse's enrollment in the GBP;

(B) child under 26 years of age;

(C) child age 26 and older whom the Board of Trustees or its designee determines is certified by an approved practitioner to be mentally or physically incapacitated from gainful employment, and earns less than the monthly wage standard for enrolling in CHIP in Texas for a family of one at the time of application or reevaluation. If the child earns more than this wage standard for a period of six months or longer in any calendar year, then the child must demonstrate to ERS his/her continued eligibility for dependent coverage by proving he/she is dependent on the member for care or support and either lives with the member or has care provided by the member on a regular basis; and

(D) child under age 26 who is the member's ward, as that term is defined by §1002.030, Texas Estates Code.

(E) In this section, "child" includes:

(i) a natural child, adopted child, stepchild, foster child; or a child in the possession of a participant who is designated as managing conservator of the child under an irrevocable or unrevoked affidavit of relinquishment under Texas Family Code, Chapter 161; or

(ii) a child who is related to the member by blood or marriage and was claimed as the member's dependent on his/her federal income tax return for the tax year preceding the plan year in which the child is first enrolled as the member's dependent in the GBP, and for each subsequent year in which the child is enrolled as the member's dependent. The federal income tax return must have been filed when first due or before any timely extensions expired.

(F) The requirement in subparagraph (E)(ii) of this paragraph that a child must be claimed as the member's dependent on his/her federal income tax return preceding the child's enrollment does not apply if:

(i) the child is born in the year in which the child is first enrolled; or

(ii) the member can demonstrate good cause for not claiming the child as a dependent in the preceding tax year.

(15) Employee--A person eligible to participate in the GBP under §1551.101 of the Act, which includes an appointed or elected state officer, judicial officer, or employee in the service of the state of Texas. The term also includes an eligible employee of an institution of higher education and any persons required or permitted by the Act to enroll as members.

(16) Employer--State of Texas and its agencies, institutions of higher education, and other governmental or quasi-governmental employers within the state whose employees or annuitants are authorized by the Act to participate in the GBP.

(17) ERS--Employees Retirement System of Texas.

(18) Evidence of insurability--Evidence required by ERS, an administering firm, or a qualified carrier for approval of coverage or changes in coverage other than GBP health coverage pursuant to the enrollment and participation provisions in this chapter.

(19) Executive director--The executive director of the Employees Retirement System of Texas. All references to the executive director also include the person or position designated by the executive director or Board of Trustees to perform the relevant function of the executive director.

(20) Former COBRA unmarried child--A member's unmarried child who is at least 26 years of age, who had GBP coverage as a dependent until the child became ineligible, who had continuation coverage under COBRA until that coverage expired, and who reinstates GBP coverage pursuant to §1551.158 of the Act.

(21) GBP (Group Benefits Program)--The Texas Employees Group Benefits Program as established and administered by the Board of Trustees pursuant to the Act.

(22) GBP health coverage--Includes HealthSelectSM of Texas, Consumer Directed HealthSelectSM, HMOs and Medicare Advantage plans, as applicable.

(23) Health insurance waiting period--The applicable waiting period defined in §1551.1055 of the Act.

(24) HealthSelectSM of Texas--The self-funded health benefit plan offered in the GBP and administered by the Employees Retirement System of Texas and a qualified carrier or administering firm. HealthSelect of Texas also includes a Prescription Drug Plan administered by a Pharmacy Benefit Manager approved by the Board.

(25) HealthSelectSM Medicare Rx--A plan, approved by the Board of Trustees, that provides prescription drug coverage designed for participants who are eligible for Medicare-primary coverage in the GBP as permitted by CMS.

(26) HMO--A health maintenance organization, as defined by §1551.007 of the Act, and approved by the Board of Trustees to provide health care coverage to eligible participants in the GBP.

(27) Insurance required contribution--Any out-of-pocket charge incurred by a member or by a member's dependent as payment for coverage provided under the GBP that exceeds the state's or employer's contributions made on behalf of the member.

(28) LWOP (Leave without pay)--The leave status of an employee who is certified by his/her employer to be absent from active duty for an entire calendar month, who does not receive any compensation for time absent from active duty, and who has not received a refund of retirement contributions based upon the most recent term of employment.

(29) Medicare Advantage Plan--A plan, approved by the Board of Trustees, that provides health coverage for participants who are eligible for Medicare-primary coverage. The plan is administered as a Medicare Advantage Plan as permitted by CMS through:

(A) a health maintenance organization; or

(B) any other plan, organization, carrier or administering firm approved by the Board of Trustees to provide the coverage.

(30) Medicare-eligible--The status of a participant who is eligible for primary coverage under Medicare Part A and/or Part B. Eligibility may extend to a dependent that is qualified to receive Medicare benefits as his/her primary coverage as permitted by CMS.

(31) Member--For purposes of this chapter only regarding insurance plan participation in the GBP, a member is a participant who is an employee, retiree, or other person eligible to participate in the GBP as provided under the Act and who is not a dependent.

(32) Minimum retiree optional life--A standard $10,000 term life insurance policy whose insurance required contribution is set solely on the basis of the benefit rather than on the retiree's age. It is available for retirees at any time during their retirement. If a retiree does not have life insurance, the retiree may apply for this coverage with evidence of insurability. If the retiree has Election 1 or Election 2 optional life, the retiree may elect to reduce the life coverage to this coverage by requesting the change without an application or evidence of insurability.

(33) Optional Coverage--Coverage established by the Board of Trustees in the GBP and as set forth in §81.7(c)(1)(A) - (K).

(34) ORP--The Optional Retirement Program as provided in the Government Code, Chapter 830.

(35) Participant--An employee, annuitant, or dependent, as defined in the Act, a surviving spouse or child of a deceased member, or any other person eligible for coverage under the Act and enrolled in any coverage offered under the GBP.

(36) Placement for adoption--The legal status of a child under which a person assumes and retains the legal obligation for total or partial support of the child in anticipation of the person's adoption of such child.

(37) Preexisting condition--Any injury or medical condition for which a participant received medical treatment or services, or was prescribed drugs or medicines during the three-month period immediately prior to the effective date of such coverage. However, if the evidence of insurability requirements set forth in §81.7(d) of this chapter must first be satisfied, the three-month period for purposes of determining the preexisting conditions exclusion will be the three-month period immediately preceding the date of the employee's completed application for coverage.

(38) Premium conversion plan--A separate plan, under the Internal Revenue Code, §79 and §106, adopted by the Board of Trustees and designed to provide premium conversion as described in §81.7(b) of this chapter.

(39) Retiree--An employee who retires or is retired and who:

(A) is authorized by the Act to participate in the GBP as an annuitant;

(B) on August 31, 1992, was a participant in a group insurance program administered by an institution of higher education; or

(C) on the date of retirement, meets the service credit requirements of the Act for participation in the GBP as an annuitant; and

(i) on August 31, 2001, was an eligible employee with an employer whose employees are authorized to participate in the GBP and, on the date of retirement has three years of service with such an employer;

(ii) on August 31, 2001, had three years of service as an eligible employee with an employer whose employees are authorized to participate in the GBP; or

(iii) is determined by ERS to be eligible as described by §1551.102 and §1551.114 of the Act.

(40) Salary--The amount of compensation, which includes the employee's regular salary, longevity, shift differential, hazardous duty pay, and benefit replacement pay, received by an employee as of the employee's first day of active duty and as of September 1, for an existing or rehired employee. This amount is used for determining optional term life and disability income limitations. Non-salaried appointed officials, state-wide elected [and appointed] officials and members of the Legislature may use the salary of a state district judge or their actual salary as of September 1 of each year for determining their optional term life. For members of the Legislature, disability income limitations will be based on their actual monthly salary.

(41) TRS--The Teacher Retirement System of Texas.

§81.8.Waiver of Health Coverage.

(a) Eligibility for waiver. An eligible member may elect to waive GBP health coverage by the method and form specified by ERS:

(1) during the initial period of eligibility;

(2) after a qualifying life event; or

(3) during annual enrollment.

(b) Enrollment in GBP health coverage after waiver. An eligible member who previously waived GBP health coverage, may enroll in GBP health coverage subject to the provisions of §81.7 of this chapter (relating to Enrollment and Participation).

(c) Incentive Credit based on a waiver.

(1) An eligible member, except for a survivor under Chapter 615, Texas Government Code who waives GBP health coverage is eligible for an incentive credit in lieu of the state contribution up to the amount specified in the General Appropriations Act if the member:

(A) would otherwise have been eligible for the state contribution to be made on his/her behalf; and

(B) demonstrates, in a manner specified by ERS, that the member has other health coverage substantially equivalent to the GBP health coverage.

(2) The incentive credit may be applied only toward the cost of certain dental plans, vision coverage or AD&D coverage offered within the GBP.

§81.9.Grievance Procedures.

(a) Grievance procedures regarding the denial of claims by administering firms for HealthSelect of Texas, Consumer Directed HealthSelect, State of Texas Vision and the Dental Choice Plans are set forth in the Master Benefit Plan Documents for those plans. Internal and external reviews of claims are subject to applicable federal statutes and rules and §1551.356, of the Act.

(b) The review procedures for a participant in an HMO, dental health maintenance organization[, vision plan,] or a Medicare Advantage Plan who is denied payment of insurance benefits, or otherwise receives an adverse decision, are set forth in the applicable plan documents. Those decisions are not appealable to ERS.

(c) Grievance procedures regarding the denial of a claim, denial of eligibility for coverage other than dependent eligibility, or other adverse decisions by a carrier or an administering firm for all GBP coverage other than those subject to subsections (a) and (b) are set forth in this subsection. A participant must request the carrier or administering firm to reconsider the denial or other adverse decision prior to seeking grievance review by ERS. Any additional documentation in support of the claim may be submitted to the carrier or administering firm with the request for reconsideration. If the claim is again denied, the claim, accompanied by all related documents and copies of correspondence with the carrier or administering firm, may be submitted by the participant to the executive director for review. A request for grievance review must be filed with ERS by the participant in writing within 90 days from the date the carrier or administering firm formally denies the claim, or provides notice of other adverse decision, and mails notice of the denial and grievance right of appeal to the participant.

(d) When the executive director reviews any matter arising under this section, information available to ERS will be considered. When the executive director completes the review and makes a determination, all parties involved will be notified in writing of the decision.

(e) To the extent allowed by statute, appeals of ERS' determination will be conducted under the provisions of Chapter 67 of this title (relating to Hearings on Disputed Claims) and the Act. A notice of appeal must be in writing and filed with ERS within 30 days from the date ERS' determination is served on the participant.

(f) Matters initiated or referred to ERS concerning misrepresentations or fraud are not subject to grievance procedures under this rule.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on January 5, 2018.

TRD-201800035

Paula A. Jones

Deputy Executive Director and General Counsel

Employees Retirement System of Texas

Earliest possible date of adoption: February 18, 2018

For further information, please call: (877) 275-4377