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Personal Assistance 2


Recommendations

A. Texas should continue state-paid health insurance contributions for employees called to active military duty.

B. The State Auditor’s Office should review federal laws to determine if Texas is in compliance with laws established after the Gulf War. The office should review state benefit policies to determine if updates or policy interpretations are recommended, and report on both issues to the Texas Legislature.

C. The Employees Retirement System should review federal laws regarding employee benefits to determine if Texas is in compliance and report to the Texas Legislature.

D. Texas should determine if state agencies should pay the employee’s share of health care contributions paid for military family or spouse coverage.

E. Texas should examine other benefit policies, such as retirement benefits, dental insurance, life insurance, disability insurance, or contributions to Health or Child Care Reimbursement Accounts to determine if changes should be made to assist military reservists continue those benefits.


Summary

Insurance benefits paid by the state are suspended when a state employee is called to extended active duty from military reserve forces by the president and goes on leave without pay. Texas state law should be revised to allow employees’ families to maintain their health care coverage and continue seeing their current doctors.

Leave for Military Reservists Called to Active Duty

Texas state law provides for a leave of absence of up to 15 days per annual federal fiscal year for training and active duty purposes.[1] Texas law also provides an unpaid leave of absence for military reservists after the 15 days of paid leave have been exhausted.[2] An employee may also use accrued vacation time after the 15 days of paid leave have been used.[3]

Texas agencies do not continue state contributions for employees’ health insurance or retirement benefits for employees who are on leaves of absence without pay. The employee either loses health benefit coverage during the first full month that they go on leave without pay, or they may choose to pay the full costs of coverage for themselves and their families.[4]

Health Insurance Implications

Purchasing health insurance without state contributions is expensive. The current cost of purchasing health insurance under HealthSelect, the most expensive option for a family, is $801.70 per month. This is the cost that employees would have to pay to continue current health insurance coverage for their families while they are on active military duty and on leave without pay from the state. The state contribution for that employee had been $538.86 per month and the employee paid $262.84 per month for their portion of the family’s health premium cost. Employee and state contributions vary for other health plans and levels of coverages.

Military health benefits are available to reservists who are called to active duty for more than 30 days.[5] Reservists’ families may receive health care in military treatment centers at military bases or they may enroll in Tricare, the military insurance program. Family members may have to travel to receive health care at military treatment centers. For families in Austin, the nearest treatment facilities are in San Antonio and Killeen.

Tricare Standard is the basic insurance plan for active military and reservists’ families. Health care is provided by doctors who accept Tricare coverage and reimbursement. However, not all doctors accept Tricare coverage, just as they may not accept all other insurance coverage. The families may be forced to change doctors if their current doctor does not accept Tricare. This would be an interruption in their health care and may seriously affect families whose members have chronic illnesses or disabilities and who are more likely to need continuing medical care.

Options to Continue State Insurance Benefits

State agencies may consider several options to assist families whose members are called to active military duty.

  • Differential Pay/Emergency Leave. State agencies may initiate differential pay each month (see Financial Assistance 1) so that reservists can retain their state insurance benefits.
  • Other Leave Options. Agencies may allow reservists to take intermittent periods of annual leave so that the reservist may continue insurance benefits.
  • Leave without Pay. State law may be changed so that reservists can go on leave without pay and the state could still contribute to their health insurance.
  • Paying for Family Cost. The Texas Legislature should consider paying for the employee’s share of family insurance coverage while the employee is on active military duty.

Other States’ Actions

Virginia and Maryland have recently taken action to continue state benefits for employees called to active duty military reserves. Virginia’s new policy allows the state to continue making the same contribution to health insurance premiums, with he/she continuing to pay the same amount he/she paid before being called to active military duty. The health insurance is offered under Extended Leave Coverage, which is generally referred to as coverage under the Consolidated Omnibus Budget Reconciliation Act of 1986, or COBRA coverage. This coverage lasts for 18 months.[6] Virginia waived the 2 percent administrative fee that normally applies to COBRA coverage.

Maryland arranged for the state to continue to pay state contributions to health, prescription and dental plans when a reservist is called to active duty and goes on leave without pay. In addition, Maryland will pick up the employee’s share of the costs.[7]

A survey of other state statutes shows that they provide from 15 to 30 days of paid military leave, with most providing 15 days. California, Arizona, Iowa, West Virginia and Wisconsin provide 30 days of leave. A few states, such as Illinois and Wisconsin, pay the difference between the employee’s state pay and military pay for at least a portion of the military leave. Arkansas continues to contribute its portion of any life or disability insurance premiums, if requested by the employee.[8]

Private Sector Military Leave and Benefit Policies

Private sector companies are reviewing and modifying leave and benefit policies for employees called to active duty. Lockheed Martin will extend supplemental pay to make up for the difference between military and private-sector pay for six months. Coca-Cola will pay full pay for the first 90 days of active duty, with supplemental pay for another 90 days.[9]

Human resources consultants at Watson Wyatt Worldwide surveyed 51 employers with about 500,000 employees to find out how employers are handling compensation and medical benefits for affected employees and their families. The survey showed that :

  • 50 percent of employers are considering revising their existing policy;
  • 60 percent of the employers planned to institute differential pay policies to make up the difference between regular pay and military pay;
  • 47 percent will exceed COBRA statutory minimum coverage for reservists and their dependents by providing full medical benefits for some period of time—from five months to more than nine months.

Other Benefit Implications

Retirement benefits paid by the state are discontinued when a state employee is called to extended active duty from military reserve forces by the president and goes on leave without pay. Texas appropriates an amount equal to six percent of each employee’s gross monthly salary to the Employees Retirement System (ERS) for retirement benefits. Employees contribute another six percent.[10] For retirement benefits, no credit for service is granted when the employee’s contribution to his retirement account stops. When military reservists are called to active duty and go on leave without pay from their state jobs, the state stops contributing to their retirement fund.

Current law allows members to purchase up to 60 months of retirement credit for active duty military service. Reservists who return to state government after active duty may purchase retirement credit for active duty service. Recently, ERS determined that the Uniformed Services Employment and Reemployment Rights Act of 1994 will allow reservists who have already purchased the maximum of 60 months of retirement credit to purchase additional credit.[11] Further reviews may be necessary to determine if additional state actions are needed to allow military reservists to purchase military service retirement credit.

If an employee chooses to use differential pay (see Financial Assistance 1), the state will continue to contribute to retirement. However, there may be other leave options that result in an employee’s loss of retirement contributions. Every employee called to active military duty should be able to receive state retirement contributions.

State employees who have dental insurance, life insurance, disability insurance or make contributions to Health or Child Care Reimbursement Accounts will also be affected when called to active military duty. ERS has determined that life insurance is not affected by acts of war or military duty. However, ERS is examining options for payments for life insurance coverage for employees who are called to military duty.[12] After the Gulf War, the U.S. Congress enacted a law that guides the actions of employers in providing health and retirement benefits, plus rehiring policies. The Uniformed Services Employment and Reemployment Rights Act of 1994 should be reviewed because the current operations in Afghanistan are the first extensive active call-up for military reservists since the law went into effect. Existing Texas laws and policies may need to be changed to comply with the provisions of the federal law.


Legislative Changes Required

  1. State law should be changed to require state agencies to continue health insurance benefits and state contributions for military reservists called to active duty. State agencies should be allowed to retain any lapsed salary funding and full-time equivalent employee counts, which are otherwise limited, as if the reservists were still at their jobs. Policies regarding vacant positions should be reviewed so that agencies do not lose the positions held by employees on active military duty.
  1. The State Auditor’s Office should review federal laws such as the Uniformed Services Employment and Reemployment Rights Act of 1994 to determine if further changes need to be made to bring state law into compliance with federal provisions.
  1. ERS should review federal laws to determine if further changes regarding employee benefits need to be made to bring state law into compliance with federal provisions.
  1. The Texas Legislature should determine if state law should be changed to require state agencies to pay the employee’s share of health care contributions for the employee’s family coverage.
  1. The Texas Legislature should examine other benefit policies, such as retirement benefits, dental insurance, life insurance, disability insurance, or contributions to Health or Child Care Reimbursement Accounts to determine if changes should be made to assist military reservists in continuing those benefits.


Fiscal Impact

There would be no additional costs to the General Revenue Fund or other funds to implement these recommendations. The Texas Legislature has appropriated funds for employee benefits. Additional amounts are not required, since these funds are already appropriated and budgeted for all qualifying state employees. Lapsed salary funds resulting from the vacant positions could be used to pay the share of the employee’s costs for health care.

Some agencies, such as the Texas Department of Criminal Justice, may be disproportionately affected by this recommendation and may need to replace essential employees. The new employees would also qualify for health insurance. These agencies may need sufficient appropriations to pay for continuing health care costs for military reservists called to active duty, or use existing budgetary flexibility to transfer current funding from other budget items.


[1] TEX. GOV’T CODE ANN. §431.005.

[2] TEX. GOV’T CODE ANN. §661.904.

[3] State Auditor’s Office, “Leave Interpretation Letter 79-01”: http://www.hr.state.tx.us/GenInfo/LeaveInter/7901.html.

[4] State Auditor’s Office, “Military Leave Issues and References”: http://www.hr.state.tx.us/HotTopic/MilitaryLeave.htm.

[5] Telephone interview with Cmdr. Connie McDonald, U.S. Department of Defense, October 3, 2001.

[6] Virginia Department of Human Resource Management, Office of Health Benefits, “State Health Benefits Program, Military Leave Fact Sheet for Employees”: http://www.dpt.state.va.us/nationalemerg.htm.

[7] Maryland Department of Budget and Management, Office of Personnel Services and Benefits, “State Employees Health Benefits Program Military Reserves – Active Duty Continuation of Benefits,” Annapolis, Maryland, October 9, 2001.

[8] E-mail from Mike Esparza, General Counsel’s Office, Texas Comptroller of Public Accounts, Austin, Texas, October 9 and 10, 2001.

[9] Michael Greenspon and Carrie Johnson, “Easing the Reservist’s Burden,” Washington Post (October 3, 2001), p. E-03.

[10] E-mail from Eva Martinez, Budget and Internal Accounting Division, Texas Comptroller of Public Accounts, Austin, Texas, October 9, 2001.

[11] E-mail from Employees Retirement System of Texas Customer Service to state agency benefit coordinators, September 24, 2001.

[12] Telephone interview with William Nail, deputy executive director, Employees Retirement System of Texas, Austin, Texas, October 8, 2001.