Relating to the administration of a retirement health care plan for firefighters and police officers in certain municipalities.

89(R) HB 3594 - Enrolled version - Bill Text

H.B. No. 3594

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;

(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; or

(C)

was placed on unpaid leave by the

municipality to which this Act applies.

(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.

______________________________

______________________________

President of the Senate

Speaker of the House

I certify that H.B. No. 3594 was passed by the House on May 8,

2025, by the following vote: Yeas 146, Nays 0, 2 present, not

voting.

______________________________

Chief Clerk of the House

I certify that H.B. No. 3594 was passed by the Senate on May

19, 2025, by the following vote: Yeas 31, Nays 0.

______________________________

Secretary of the Senate

APPROVED: _____________________

Date

_____________________

Governor