SCHOOL EMPLOYEE INSURANCE CONTRIBUTIONS

SB0125

SENATE BILL 125

57th legislature - STATE OF NEW MEXICO - second session, 2026

INTRODUCED BY

Roberto "Bobby" J. Gonzales

FOR THE LEGISLATIVE FINANCE COMMITTEE

AN ACT

RELATING TO STATE EMPLOYEE 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.

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:

(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 [
made as follows:

(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
]
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
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 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
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. [
If
] A state agency
that is responsible for providing state employee health
benefits under the Health Care Purchasing Act [
establishes
]

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.
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 [
who
]
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
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 [
and

(4) publicly funded health care program of any
public school district with a student enrollment in excess of
sixty thousand students
]."

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
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 [
excluding
any school district with a student enrollment in excess of
sixty thousand students
]."

SECTION 4.
Section 22-29-9 NMSA 1978 (being Laws 1986,
Chapter 94, Section 9, as amended) is amended to read:

"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 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. [
Any
]
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 [
which
]
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 [
which
]
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
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 [
which
]
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. [
The local
] 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 [
and participating entities in
the authority
] shall be [
made as follows:

(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.
]
at least eighty percent of the
cost of the insurance.

B. Group insurance contributions for state
educational institutions as enumerated in Article 12, Section
11 of the constitution of New Mexico shall be at a rate set by
the board of regents of the state educational institution.

Group insurance contributions for other state diploma, degree-granting and certificate-granting post-secondary educational
institutions shall be at a rate set by the governing board of
the institution.

C. Group insurance contributions for nonprofit
organizations eligible for participation in the authority shall
be at a rate determined by the organization.

[
C.
]
D.
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 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
. EFFECTIVE DATE.--

A. The effective date of the provisions of Sections
1, 4 and 5 of this act is July 1, 2026.

B. The effective date of the provisions of Sections
2 and 3 of this act is July 1, 2027.

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