89R8733 KFF-F
By: Menéndez S.B. No. 2318
A BILL TO BE ENTITLED
AN ACT
relating to the administration of a retirement health care plan for
firefighters and police officers in certain municipalities.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 1.02, Chapter 1332 (S.B. 1568), Acts of
the 75th Legislature, Regular Session, 1997 (Article 6243q,
Vernon's Texas Civil Statutes), is amended by amending Subdivisions
(3), (8), and (8-a) and adding Subdivisions (4-a) and (6-b-1) to
read as follows:
(3) "Beneficiary" means a retiree, or the spouse or
other eligible dependent of a retiree, who is entitled to receive
retiree health benefits under Section 5.01 [5.01(a)] of this Act.
(4-a) "Default rate" means the actuarial assumed rate
of return as determined by the fund's actuary.
(6-b-1) "Months of service" means the number of full
months of service beginning on the date the firefighter or police
officer becomes a member of the fund until the date the firefighter
or police officer retires or otherwise terminates employment as a
firefighter or police officer, less the number of full months of
service during which the member:
(A) was engaged in active service with any
uniformed service of the United States and did not purchase credit
for that service in accordance with Section 4.023 of this Act; and
(B) took other unpaid leave, including unpaid
leave described by Section 4.024 of this Act, and did not purchase
credit for that leave in accordance with applicable law.
(8) "Retiree" means an individual who was a
firefighter or police officer who retired under the pension act
[whose retirement date is] after September 30, 1989.
(8-a) "Retiree health plan" means the group family
health plan for retirees and other beneficiaries:
(A) established under this Act; and
(B) in effect on October 1, 2025 [by the
collective bargaining agreements and the master contract
document].
SECTION 2. Section 1.05, Chapter 1332 (S.B. 1568), Acts of
the 75th Legislature, Regular Session, 1997 (Article 6243q,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 1.05. EXEMPTIONS. (a) The health benefits paid or
payable by the fund are exempt from garnishment, assignment,
attachment, judgments, other legal processes, and inheritance or
other taxes established by this state.
(b) Fund assets are exempt from attachment, execution,
alienation, and forced sale. A judgment lien or abstract of
judgment may not be filed or perfected against the fund on fund
assets. A judgment lien or abstract of judgment filed against the
fund on fund assets is void.
SECTION 3. Article 1, Chapter 1332 (S.B. 1568), Acts of the
75th Legislature, Regular Session, 1997 (Article 6243q, Vernon's
Texas Civil Statutes), is amended by adding Section 1.06 to read as
follows:
Sec. 1.06. CONSTRUCTION OF ACT. This Act does not provide
any benefit that is not specifically provided by this Act.
SECTION 4. Sections 2.01(a) and (c), Chapter 1332 (S.B.
1568), Acts of the 75th Legislature, Regular Session, 1997 (Article
6243q, Vernon's Texas Civil Statutes), are amended to read as
follows:
(a) The [firefighters' and police officers' retiree health
care] fund [of a municipality] is governed by a board of trustees
consisting of the following nine members:
(1) the mayor of the municipality to which this Act
applies or the mayor's designee;
(2) two members of the [municipal] governing body of
the municipality to which this Act applies, appointed by that
governing body;
(3) two members of the fund who are firefighters below
the rank of fire chief, elected by secret ballot by a majority of
the votes cast by the members of the fund who are firefighters;
(4) two members of the fund who are police officers
below the rank of police chief, elected by secret ballot by a
majority of the votes cast by the members of the fund who are police
officers;
(5) a retiree representative of the fire department,
elected by secret ballot by a majority of the votes cast by the
retirees of the fire department who are beneficiaries of the fund
and the surviving spouses of deceased firefighters who are
beneficiaries of the fund; and
(6) a retiree representative of the police department,
elected by secret ballot by a majority of the votes cast by the
retirees of the police department who are beneficiaries of the fund
and the surviving spouses of deceased police officers who are
beneficiaries of the fund.
(c) The fund is independent of the control of the
municipality to which this Act applies.
SECTION 5. Sections 2.02(b), (c), and (d), Chapter 1332
(S.B. 1568), Acts of the 75th Legislature, Regular Session, 1997
(Article 6243q, Vernon's Texas Civil Statutes), are amended to read
as follows:
(b) The two members of the [municipal] governing body of the
municipality to which this Act applies serve on the board for the
term of the office to which they were elected or appointed, provided
that the term of the member on the board expires on the day the
member ceases to be a member of the governing body for any reason.
(c) The two members of the board [fund] who are firefighters
below the rank of fire chief serve on the board for staggered
four-year terms, with one member's term expiring every two years.
(d) The two members of the board [fund] who are police
officers below the rank of police chief serve on the board for
staggered four-year terms, with one member's term expiring every
two years.
SECTION 6. Section 2.04(b), Chapter 1332 (S.B. 1568), Acts
of the 75th Legislature, Regular Session, 1997 (Article 6243q,
Vernon's Texas Civil Statutes), is amended to read as follows:
(b) The board in its discretion may elect other officers of
the board. [An officer may be, but is not required to be, a
trustee.]
SECTION 7. Section 3.01(a), Chapter 1332 (S.B. 1568), Acts
of the 75th Legislature, Regular Session, 1997 (Article 6243q,
Vernon's Texas Civil Statutes), is amended to read as follows:
(a) The board has complete authority and power to:
(1) administer the fund for the exclusive benefit of
the beneficiaries of the fund;
(2) disburse benefits or otherwise order payments from
the fund;
(3) independently control the fund; and
(4) conduct all litigation on behalf of the fund.
SECTION 8. Section 4.02, Chapter 1332 (S.B. 1568), Acts of
the 75th Legislature, Regular Session, 1997 (Article 6243q,
Vernon's Texas Civil Statutes), is amended by amending Subsections
(c), (d), and (e) and adding Subsections (d-1), (d-2), (d-3), and
(d-4) to read as follows:
(c) Subject to Subsection (d-2) or (e) of this section, to
be eligible for health benefits under Section 5.01 of this Act, a
service retiree or disability retiree who retired or retires with
less than 360 months [30 years] of service, or the retiree's
surviving spouse in the case of a deceased retiree, shall continue
to make monthly contributions in accordance with Subsections
[Subsection] (d) and (d-1) of this section to the fund after the
date of the retiree's retirement for the lesser of:
(1) the period in full months preceding the date the
retiree becomes or would have become eligible for federal Medicare
coverage; or
(2) the period equal to 360 months [30 years] less the
retiree's months [years] of service achieved on the date of the
retiree's retirement.
(d) The monthly [pension fund shall deduct the]
contribution amount required under Subsection (c) of this section
[from the monthly retirement benefit payment or death benefit
payment paid to each retiree or retiree's spouse required to make
the contributions, excluding payments made by the pension fund
under Section 6.12 of the pension act. The pension fund shall
deduct an amount equal to the retiree contribution amount
applicable to the fiscal year in which the benefit payment occurs.
The retiree contribution amount] applicable to a fiscal year equals
an [the] amount obtained by:
(1) multiplying the average member salary for the
preceding fiscal year by a percentage equal to 100 percent plus the
estimated percentage increase in the annual member payroll from the
preceding fiscal year to the fiscal year as determined by the
actuary;
(2) multiplying the product computed under
Subdivision (1) of this subsection by the percentage applicable to
the fiscal year as provided by Subsection (b) of this section; and
(3) dividing the product computed under Subdivision
(2) of this subsection by 12.
(d-1) Monthly contributions under Subsection (c) of this
section shall be made on or before the last day of each month during
the period the contributions are required to be made, beginning on
the first month immediately following the month in which the
retiree retires. Any required contribution that is not made to the
fund on or before the due date shall bear interest at the default
rate in effect on the first day of the month in which the
contribution is due until the contribution is paid.
(d-2) Instead of the monthly contributions required under
Subsection (c) of this section, a retiree, or the retiree's
surviving spouse in the case of a deceased retiree, may elect to pay
to the fund a lump-sum payment equal to the monthly retiree
contribution amount under Subsection (d) of this section in effect
on the date of the retiree's retirement multiplied by the lesser of:
(1) the number of full months in the period:
(A) beginning on the retiree's date of
retirement; and
(B) ending on the date the retiree will attain or
would have attained 65 years of age; or
(2) the number of full months following the date of the
retiree's retirement which, when added to the retiree's months of
service as of the date of retirement, equals:
(A) 360 months; or
(B) if subject to Subsection (e) of this section,
120 months.
(d-3) An election under Subsection (d-2) of this section:
(1) must be:
(A) in writing and made in the form and manner
prescribed by the board; and
(B) made before making a lump-sum payment under
that subsection; and
(2) is irrevocable.
(d-4) A lump-sum payment to the fund under Subsection (d-2)
of this section:
(1) must be made in full on or before the 30th day
after the date of the retiree's retirement; and
(2) is not partially or wholly refundable.
(e) A retiree who retired under the pension act as a result
of a disability, or the disability retiree's surviving spouse in
the case of a deceased disability retiree, is not required to make
contributions under Subsection (c) of this section for more than
120 months [10 years] following the date of the disability
retiree's retirement.
SECTION 9. Section 4.022, Chapter 1332 (S.B. 1568), Acts of
the 75th Legislature, Regular Session, 1997 (Article 6243q,
Vernon's Texas Civil Statutes), is amended by adding Subsection (d)
to read as follows:
(d) The increases in maximum deductibles and maximum
out-of-pocket payments required under Subsection (a)(2) of this
section are in addition to the increases required under Section
5.01 of this Act.
SECTION 10. Sections 4.023(a), (b), (c), (d), and (f),
Chapter 1332 (S.B. 1568), Acts of the 75th Legislature, Regular
Session, 1997 (Article 6243q, Vernon's Texas Civil Statutes), are
amended to read as follows:
(a) A member of the fund who enters any uniformed service of
the United States may not:
(1) be required to make the contributions [monthly
payments into the fund as] required by Section 4.02(a) of this Act
while the member is engaged in active service with the uniformed
service; or
(2) lose any seniority rights or retirement benefits
provided by this Act because of that service.
(b) A [Not later than the 90th day after the date of the
member's reinstatement to an active status in a fire or police
department, the] member may establish credit for service not
established during the period the member was in active service with
the uniformed service by paying [shall file with the secretary of
the board a written statement of intent to pay] into the fund an
amount equal to the amount the member would have paid during that
period if the member had remained on active status in the fire or
police department [during the period of the member's absence while
in the uniformed service].
(c) The member shall make the payment described by
Subsection (b) of this section in full within a period after the
member's return to active status in the fire or police department
that is equal to three times the amount of time the member was
engaged in active service with the uniformed service [absent],
except that the maximum period for payment may not exceed five
years.
(d) If the member does not comply with Subsections (b) and
(c) of this section, the member loses all credit toward the member's
months [years] of service for the length of time the member was
engaged in active service in any uniformed service.
(f) If the member complies with this section and makes all
required payments, a municipality to which this Act applies shall
make payment to the fund in an amount equal to the amount the
municipality would have paid if the member had remained on active
status in the fire or police department during the member's absence
while in the uniformed service.
SECTION 11. Article 4, Chapter 1332 (S.B. 1568), Acts of the
75th Legislature, Regular Session, 1997 (Article 6243q, Vernon's
Texas Civil Statutes), is amended by adding Sections 4.024 and
4.025 to read as follows:
Sec. 4.024. FAMILY AND MEDICAL LEAVE. (a) If a member
takes unpaid leave as provided by the Family and Medical Leave Act
of 1993 (29 U.S.C. Section 2601 et seq.), that member may elect to
establish credit for the leave by making voluntary member
contributions to the fund for the entire period the member is on
leave in an amount equal to the amount the member would have paid
had the member not taken the leave. The contributions must be paid
to the fund not later than the 30th day after the date the member
returns from that leave.
(b) If a member elects to make voluntary member
contributions under Subsection (a) of this section, the fund shall
notify the municipality and the municipality shall make payment to
the fund in an amount equal to the total municipal contribution
amount the municipality would have paid if the member had not taken
the leave, and that payment must be made not later than the 60th day
after the date the member returns from leave.
(c) If a member does not make the member contributions
required within the time prescribed under Subsection (a) of this
section, the member may not receive credit toward the member's
months of service for the period the member was on unpaid leave.
Sec. 4.025. MEMBERS WHO ARE MARRIED: CONDITIONAL WAIVER OF
ELIGIBILITY. (a) If spouses are formally married to each other
under Chapter 2, Family Code, and are both members of the fund, on
the retirement under the pension act of the first of the couple to
retire, that retiree may, not later than the 30th day after the
retiree's retirement date, elect to conditionally waive
eligibility for health and medical benefits under this Act by
submitting to the fund written confirmation of that election in the
form and manner prescribed by the board.
(b) Subject to Subsection (c) of this section, a retiree who
conditionally waives eligibility under Subsection (a) of this
section is not required to make contributions to the fund under
Section 4.02(c) of this Act following the date the election under
Subsection (a) of this section is submitted to and accepted by the
fund.
(c) Subject to Subsection (d) of this section, if the
marriage of a retiree who has conditionally waived eligibility for
benefits under Subsection (a) of this section is dissolved, the
retiree may, not later than the 30th day after the date of the
dissolution of the marriage, elect to reinstate eligibility for
health and medical benefits under this Act by submitting to the fund
written confirmation of the election in the form and manner
prescribed by the board.
(d) A retiree who makes an election to reinstate eligibility
for health and medical benefits under Subsection (c) of this
section is only eligible for those benefits if the retiree makes the
monthly contributions required under Section 4.02(c) of this Act in
the amount applicable under Section 4.02(d) of this Act in the
fiscal year in which the contribution is made. The initial
contribution is due on the last day of the month immediately
following the month in which the election is submitted to and
accepted by the fund.
SECTION 12. Section 5.01, Chapter 1332 (S.B. 1568), Acts of
the 75th Legislature, Regular Session, 1997 (Article 6243q,
Vernon's Texas Civil Statutes), is amended by amending Subsections
(d) and (e) and adding Subsections (d-1), (i), (j), (k), and (l) to
read as follows:
(d) Except as provided by Subsection (d-1) of this section,
the [The] board as it considers appropriate may modify the retiree
health plan if the modifications adopted at any regular or special
meeting of the board do not, in the aggregate, increase the fund's
total actuarial unfunded liability, as determined by the actuary.
The board has exclusive authority to modify the retiree health
plan.
(d-1) The board may modify the retiree health plan to allow
a surviving spouse of a deceased retiree to continue to be eligible
for coverage under the retiree health plan after the spouse's
remarriage regardless of whether that modification increases the
fund's total actuarial unfunded liability.
(e) The board may discontinue benefits under this section
for any person who does not make the monthly contributions required
by Section 4.02(c) or (e) [Section 4.02] of this Act, as applicable,
within the time prescribed by Section 4.02(d-1) of this Act.
(i) Increases in maximum deductibles and maximum
out-of-pocket payments required under this section are in addition
to the increases required under Section 4.022(a)(2) of this Act.
(j) The board may require the payment of a premium for
coverage of dependent children under the retiree health plan.
(k) Any person entitled to receive health and medical
benefits under this Act may unconditionally waive their rights to
receive those benefits by executing and delivering to the fund a
waiver of their rights in the form and manner prescribed by the
board. A person who waives their rights to receive benefits under
this subsection is no longer under any circumstances entitled to
receive benefits under this Act.
(l) Health and medical benefits provided by the fund under
this Act or which may be provided by the fund under this Act do not
constitute divisible marital property.
SECTION 13. Section 6.04(c), Chapter 1332 (S.B. 1568), Acts
of the 75th Legislature, Regular Session, 1997 (Article 6243q,
Vernon's Texas Civil Statutes), is amended to read as follows:
(c) The board may directly manage investments of the reserve
funds or may choose to contract for professional management
services. If the fund owns or anticipates owning [funds own] real
estate, the board may, at its discretion, establish an organization
described by Section 501(c)(2) or 501(c)(25), Internal Revenue Code
of 1986, as amended, to hold title to the real estate.
SECTION 14. Section 6.05(a), Chapter 1332 (S.B. 1568), Acts
of the 75th Legislature, Regular Session, 1997 (Article 6243q,
Vernon's Texas Civil Statutes), is amended to read as follows:
(a) The board may authorize and direct one or more board
members or officers of the fund to enter into contracts on behalf of
the fund for the provision of professional services, including
contracts with [contract for] professional investment managers
[management services], financial consultants, independent
auditors, third-party administrators, preferred providers, health
maintenance organizations, attorneys, and actuaries. The [Only
the] board has the exclusive power to authorize the execution of the
[may enter into those] contracts and[. The board] may establish a
reasonable fee for compensation under the [those] contracts.
SECTION 15. Section 7.01(b), Chapter 1332 (S.B. 1568), Acts
of the 75th Legislature, Regular Session, 1997 (Article 6243q,
Vernon's Texas Civil Statutes), is amended to read as follows:
(b) To implement Subsection (a) of this section and to
strengthen the faith and confidence of the members and
beneficiaries of the fund, the board shall develop standards of
conduct and financial disclosure requirements to be observed by
each member of the board [trustee] and by the executive director in
the performance of the board members' [board's] and executive
director's official duties.
SECTION 16. Sections 1.02(4), (6-a), and (10) and 5.01(c),
Chapter 1332 (S.B. 1568), Acts of the 75th Legislature, Regular
Session, 1997 (Article 6243q, Vernon's Texas Civil Statutes), are
repealed.
SECTION 17. Section 4.02(d-2), Chapter 1332 (S.B. 1568),
Acts of the 75th Legislature, Regular Session, 1997 (Article 6243q,
Vernon's Texas Civil Statutes), as added by this Act, applies only
to or with respect to a member who retires on or after October 1,
2025.
SECTION 18. Section 5.01(d-1), Chapter 1332 (S.B. 1568),
Acts of the 75th Legislature, Regular Session, 1997 (Article 6243q,
Vernon's Texas Civil Statutes), as added by this Act, applies only
to a surviving spouse whose remarriage occurs on or after October 1,
2025.
SECTION 19. This Act takes effect October 1, 2025.