An Audit Report on the Teacher Retirement System's Implementation of TRS-ActiveCare, the Health Care Plan for Active School District Employees
March 2004
Report Number 04-025
Overall Conclusion
The Teacher Retirement System (System) implemented TRS-ActiveCare, the health insurance program covering active school district employees and their dependents, as required by statute. As the Texas Insurance Code requires, TRS-ActiveCare offers a catastrophic coverage health plan and a health plan (ActiveCare 3) with benefits that are comparable to the benefits offered to state employees through HealthSelect. TRS-ActiveCare is funded solely through employees' premium payments and state and school district contributions.
To further evaluate the System's implementation of TRS-ActiveCare, we surveyed school district and other participating entity administrators. We found that most of them were satisfied with the System's implementation of TRS-ActiveCare.
We also identified related supplemental information and potential risks regarding the coverage resulting from having multiple TRS-ActiveCare plans. For example, it appears that supplemental insurance compensation levels and the existence of other less costly TRS-ActiveCare plans have contributed to employees' moving away from enrollment in TRS-ActiveCare 3 (referred to as adverse selection). This movement away from TRS-ActiveCare 3 may significantly increase the cost for those individuals who remain in the plan and reduce the health care coverage levels of active school district employees in general.
Our review of the System's procedures and controls also indicated that the System generally implemented TRS-ActiveCare in a manner that adequately protects program resources. The provisions of the System's contracts with TRS-ActiveCare contractors appear adequate. The System's routine business operations include frequent interactions with its contractors and reviewing and responding to information in various contractor reports. However, the System has not formalized a comprehensive plan to monitor contractor performance.
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