SCHOOL EMPLOYEE INSURANCE PROGRAMS

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AN ACT
RELATING TO INSURANCE; AMENDING THE GROUP INSURANCE
CONTRIBUTIONS FOR SCHOOL DISTRICTS AND CHARTER SCHOOLS;
ELIMINATING WAIVERS FOR SCHOOL DISTRICT AND CHARTER SCHOOL
PARTICIPATION IN PUBLIC SCHOOL INSURANCE AUTHORITY HEALTH,
DISABILITY INCOME AND TERM LIFE PLANS; REQUIRING REFERENCE-
BASED PRICING; REQUIRING A STUDY OF THE SUSTAINABILITY OF
INSURANCE PROGRAMS FOR PUBLIC SCHOOL EMPLOYEES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 10-7-4 NMSA 1978 (being Laws 1941,
Chapter 188, Section 1, as amended) is amended to read:
"10-7-4. GROUP INSURANCE--CAFETERIA PLAN--CONTRIBUTIONS
FROM PUBLIC FUNDS.--
A. All state departments and institutions and all
political subdivisions of the state, excluding
municipalities, counties and political subdivisions of the
state with twenty-five employees or fewer, shall cooperate in
providing group term life, medical or disability income
insurance for the benefit of eligible employees or salaried
officers of the respective departments, institutions and
political subdivisions.
B. The group insurance contributions of the state
or any of its departments or institutions, including
institutions of higher education, shall be made as follows:
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(1) at least seventy-five percent of the
cost of the insurance of an employee whose annual salary is
less than fifteen thousand dollars ($15,000);
(2) at least seventy percent of the cost of
the insurance of an employee whose annual salary is fifteen
thousand dollars ($15,000) or more but less than twenty
thousand dollars ($20,000);
(3) at least sixty-five percent of the cost
of the insurance of an employee whose annual salary is twenty
thousand dollars ($20,000) or more but less than twenty-five
thousand dollars ($25,000); and
(4) at least sixty percent of the cost of
the insurance of an employee whose annual salary is twenty-
five thousand dollars ($25,000) or more.
C. The group insurance contributions of school
districts and charter schools shall be at least eighty
percent of the cost of the insurance.
D. Effective July 1, 2004, the group insurance
contributions of the state or any of its executive, judicial
or legislative departments, including agencies, boards or
commissions, shall be made as follows; provided that the
contribution percentage shall be the same for all affected
public employees in a given salary bracket:
(1) up to eighty percent of the cost of the
insurance of an employee whose annual salary is less than
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thirty thousand dollars ($30,000);
(2) up to seventy percent of the cost of the
insurance of an employee whose annual salary is thirty
thousand dollars ($30,000) or more but less than forty
thousand dollars ($40,000); and
(3) up to sixty percent of the cost of the
insurance of an employee whose annual salary is forty
thousand dollars ($40,000) or more.
E. Except as provided in Subsection H of this
section, effective July 1, 2025, the group insurance
contributions of the state or any of its executive, judicial
or legislative departments, including agencies, boards or
commissions, shall be eighty percent of the cost of the
insurance.
F. Effective July 1, 2013, the employer shall pay
one hundred percent of basic life insurance premiums for
employees, and employees who choose to carry disability
insurance shall pay one hundred percent of the premium.
G. The state shall not make any group insurance
contributions for legislators. A legislator shall be
eligible for group benefits only if the legislator
contributes one hundred percent of the cost of the insurance.
H. An employer shall pay one hundred percent of
the employee group insurance contributions due and payable on
or after July 1, 2016 for an employee who is injured while
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performing a public safety function or duty and, as a result
of the injury, is placed on approved workers' compensation
leave.
I. As used in this section, "cost of the
insurance" means the premium required to be paid to provide
coverages. Any contributions of the political subdivisions
of the state, except the public schools and political
subdivisions of the state with twenty-five employees or
fewer, shall not exceed sixty percent of the cost of the
insurance.
J. When a public employee elects to participate in
a cafeteria plan as authorized by the Cafeteria Plan Act and
enters into a salary reduction agreement with the
governmental employer, the provisions of Subsections B
through G of this section with respect to the maximum
contributions that can be made by the employer are not
violated and will still apply. The employer percentage or
dollar contributions as provided in Subsections B through E
of this section shall be determined by the employee's gross
salary prior to any salary reduction agreement.
K. Any group medical insurance plan offered
pursuant to this section shall include effective cost-
containment measures to control the growth of health care
costs and maximize benefits for the least cost. A state
agency that is responsible for providing state employee
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health benefits under the Health Care Purchasing Act shall
establish a reference-based pricing program for in-network or
out-of-network hospital services. Hospitals subject to the
program shall not charge or collect from a member of the
health benefit plan an amount in addition to the maximum
payment established by the secretary of health care
authority, except that a hospital may charge an amount for
cost-sharing that is authorized by the terms of the member's
health benefit plan. The responsible public body that
administers a plan offered pursuant to this section shall
report annually by September 1 to appropriate interim
legislative committees on the effectiveness of the cost-
containment measures required by this subsection.
L. Within available revenue, school districts,
charter schools and participating entities pursuant to the
Public School Insurance Authority Act may contribute up to
one hundred percent of the cost of the insurance of all
employees and institutions of higher education may contribute
up to eighty percent of the cost of the insurance of all
employees.
M. When the secretary of health care authority
submits the health care authority's annual budget request to
the legislature, the secretary shall include a budget request
for purchasing state employee health benefits that has
actuarially sound rates for the following fiscal year.
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Beginning July 1, 2025, the secretary shall set actuarially
sound rates sufficient to cover projected claims, subject to
legislative appropriation. By September 1 of each year, the
projected actuarially sound rate adjustment for the following
fiscal year, subject to legislative appropriation, shall be
communicated to the local public bodies that are part of the
state employee health benefit program.
N. The secretary of health care authority shall
establish a program to make state health benefit premiums
more affordable for certain employees using appropriations
from the health care affordability fund. The secretary shall
establish a system for determining eligibility for the
program and may annually update program eligibility and
contribution criteria.
O. By July 1, 2026, the health care authority
shall ensure that state employees are provided the
opportunity to purchase a variety of health benefit plans
with varying plan designs and cost-sharing options."
SECTION 2. Section 13-7-3 NMSA 1978 (being Laws 1997,
Chapter 74, Section 3, as amended) is amended to read:
"13-7-3. DEFINITIONS.--As used in the Health Care
Purchasing Act:
A. "consolidated purchasing" means a single
process for the procurement of and contracting for all health
care benefits by the publicly funded insurance agencies in
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compliance with the Procurement Code and includes associated
activities related to the procurement such as actuarial, cost
containment, benefits consultation and analysis; and
B. "publicly funded health care agency" means the:
(1) state health benefits division and the
group benefits committee of the health care authority;
(2) retiree health care authority; and
(3) public school insurance authority."
SECTION 3. Section 22-29-3 NMSA 1978 (being Laws 1986,
Chapter 94, Section 3, as amended by Laws 2007, Chapter 41,
Section 1 and by Laws 2007, Chapter 236, Section 1) is
amended to read:
"22-29-3. DEFINITIONS.--As used in the Public School
Insurance Authority Act:
A. "authority" means the public school insurance
authority;
B. "board" means the board of directors of the
authority;
C. "charter school" means a school organized as a
charter school pursuant to the provisions of the Charter
Schools Act;
D. "director" means the director of the authority;
E. "due process reimbursement" means the
reimbursement of a school district's or charter school's
expenses for attorney fees, hearing officer fees and other
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reasonable expenses incurred as a result of a due process
hearing conducted pursuant to the federal Individuals with
Disabilities Education Improvement Act;
F. "educational entities" means state educational
institutions as enumerated in Article 12, Section 11 of the
constitution of New Mexico and other state diploma,
degree-granting and certificate-granting post-secondary
educational institutions, regional education cooperatives and
nonprofit organizations dedicated to the improvement of
public education and whose membership is composed exclusively
of public school employees, public schools or school
districts;
G. "fund" means the public school insurance fund;
H. "group health insurance" means coverage that
includes life insurance, accidental death and dismemberment,
medical care and treatment, dental care, eye care and other
coverages as determined by the authority;
I. "risk-related coverage" means coverage that
includes property and casualty, general liability, auto and
fleet, workers' compensation and other casualty insurance;
and
J. "school district" means a school district as
defined in Subsection R of Section 22-1-2 NMSA 1978."
SECTION 4. Section 22-29-9 NMSA 1978 (being Laws 1986,
Chapter 94, Section 9, as amended) is amended to read:
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"22-29-9. PARTICIPATION--WAIVERS.--
A. School districts and charter schools shall
participate in the authority, unless the school district or
charter school is granted a waiver by the board; provided
that beginning July 1, 2027, the board shall not grant a
waiver for health, disability income or term life insurance.
B. In determining whether a waiver should be
granted, the board shall establish minimum benefit and
financial standards for the desired line of coverage. These
minimum benefit and financial standards and the proposed time
schedule for responsive offers shall be sent to all school
districts and charter schools at the time the request for
proposals for the desired line of coverage is issued. Any
school district or charter school seeking a waiver of
coverage shall match the minimum benefit and financial
standards set forth in the request for proposals for the
desired line of coverage. School districts and charter
schools shall submit documentation of their proposals
matching the board's minimum benefit and financial
requirements prior to the deadline established by the board.
The authority has the power to approve or disapprove a waiver
of participation based on the documentation submitted by the
school district or charter school regarding the benefit and
financial standards established by the board. The board
shall grant a waiver to a school district or charter school
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that requests a waiver and that has met the minimum benefit
and financial standards within the time schedule established
by the board. Once the board awards the insurance contract,
no school district or charter school shall be granted a
waiver for the entire term of the contract.
C. Prior to July 1, 2027, a school district or
charter school granted a waiver of participation for health
insurance shall be required to petition for participation in
other kinds of group insurance coverage and shall be required
to meet the requirements established by the authority prior
to participation in other kinds of group insurance coverage.
A school district or charter school that has been granted a
waiver shall be prohibited from participating in the coverage
for which a waiver was granted for the entire term of the
authority's insurance contract. Provided, however, that if
the authority contracts for a line or lines of coverage for a
period of eight years, the board may establish procedures and
preconditions for authorizing a school district or charter
school that has been granted a waiver to again participate in
the coverage after the expiration of the first four years of
coverage. A waiver of health, disability income or term life
insurance shall not be effective after June 30, 2027.
D. Any school district or charter school granted a
waiver of participation for workers' compensation shall be
required to petition for participation in other risk-related
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coverages and shall be required to meet the requirements
established by the authority prior to participation in other
kinds of risk-related coverages. A school district or
charter school that has been granted a waiver shall be
prohibited from participating in the coverage for which a
waiver was granted for the entire term of the authority's
insurance contract.
E. Educational entities may petition the authority
for permission to participate in the insurance coverage
provided by the authority. To protect the stability of the
fund, the authority shall establish reasonable terms and
conditions for participation by educational entities.
F. A participating school district or charter
school may separately provide for coverage additional to that
offered by the authority.
G. School districts, charter schools or the
authority, as appropriate, may provide for marketing and
servicing to be done by licensed insurance agents or brokers
who should receive reasonable compensation for their
services."
SECTION 5. Section 22-29-10 NMSA 1978 (being Laws 1989,
Chapter 373, Section 5, as amended) is amended to read:
"22-29-10. GROUP INSURANCE CONTRIBUTIONS.--
A. Group insurance contributions for school
districts and charter schools shall be at least eighty
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percent of the cost of the insurance. Group insurance
contributions for all other participating entities in the
authority shall be:
(1) at least eighty percent of the cost of
the insurance of an employee whose annual salary is less than
fifty thousand dollars ($50,000);
(2) at least seventy percent of the cost of
the insurance of an employee whose annual salary is fifty
thousand dollars ($50,000) or more but less than sixty
thousand dollars ($60,000); and
(3) at least sixty percent of the cost of
the insurance of an employee whose annual salary is sixty
thousand dollars ($60,000) or more.
B. Within available revenue, school districts,
charter schools and participating entities in the authority
may contribute up to one hundred percent of the cost of the
insurance of all employees.
C. Whenever a school district, charter school or
participating entity in the authority offers to its employees
alternative health plan benefit options, including health
maintenance organizations, preferred provider organizations
or panel doctor plans, the school district, charter school or
participating entity may pay an amount on behalf of the
employee and family member for the indemnity health insurance
plan sufficient to result in equal employee monthly costs to
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the cost of the health maintenance organization plans,
preferred provider organization plans or panel doctor plans,
regardless of the percentage limitations in the Public School
Insurance Authority Act. School districts, charter schools
and participating entities in the authority may pay up to one
hundred percent of the first fifty thousand dollars ($50,000)
of term life insurance."
SECTION 6. TEMPORARY PROVISION--STUDY AND REPORT
REQUIRED.--
A. The legislative education study committee, in
collaboration with the legislative finance committee, the
public school insurance authority, the Albuquerque public
school district, the public education department and the
health care authority, shall conduct a comprehensive study
and produce a final report regarding the sustainability of
insurance programs for public school employees.
B. The study required pursuant to this section
shall evaluate the anticipated future needs of public school
employee insurance programs, including assessing:
(1) the impacts of combining public school
employee insurance programs with other existing public group
health insurance programs;
(2) the necessary agency actions required to
integrate the group health insurance and alternative plans of
the public school insurance authority, the health care
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authority and the Albuquerque public school district by June
30, 2029; and
(3) the necessary legislative action
required during the 2027 legislative session to integrate the
group health insurance and alternative plans of the public
school insurance authority, the health care authority and the
Albuquerque public school district by June 30, 2029.
C. The final report required pursuant to this
section shall be completed no later than October 1, 2026 and
shall be provided to the governor, the legislative finance
committee and the public education department.
SECTION 7. EFFECTIVE DATE.--
A. The effective date of the provisions of
Sections 1 and 4 through 6 of this act is July 1, 2026.
B. The effective date of the provision of Sections
2 and 3 of this act is July 1, 2027.