Court Opinion

ID: 4129384
Source: CourtListenerOpinion
Date Created: 2017-02-18 00:51:22.933104+00
Date Added: 2024-06-11T08:33:04.795872
License: Public Domain

OFPlCE   OF THE   ATTORNEY   GENERAL.   STATE   OF TEXAS

    JOHN        CORNYN

                                                        October 24,200O

The Honorable Delma Rios                                        Opinion No. JC-0297
Kleberg County Attorney
700 East Kleberg                                                Re: Whether a county is authorized to pay one
P.O. Box 1411                                                   half of the health premiums of county retirees and
Kingsville, Texas 78364                                         their dependents for an indefinite period of time
                                                                and related questions (RQ-0244-JC)

Dear Ms. Rios:

         You ask whether a county that does not include retirees in its group health plan is authorized
to pay one half of the health premiums of county retirees and their dependents for an indefinite
period of time. You also ask whether the continuing health coverage requirements of the Federal
Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA,’ apply to county employees
and, if so, whether a county may extend health benefits to retirees and their dependents past the time
limits set forth in COBRA.

         We conclude that COBRA does not require or authorize a county to pay any portion of a
retiree’s health insurance premiums or to make health insurance coverage available beyond that
statute’s mandatory time periods for continued coverage and that a county may not agree to pay half
of county retirees’ health insurance premiums unless the retirement plan is authorized by state law
and the agreement is consistent with article III, section 53 of the Texas Constitution. Article III,
section 53 precludes a county from agreeing to pay half of a county retiree’s health insurance
premiums if that payment would constitute unbargained-for, retroactive compensation.

         You provide the following background information:           There are presently ten retired
employees of your county who have continued their health insurance coverage with the county,
either for themselves or their eligible dependents, by paying their monthly premiums. This year, due
to an increase in coverage, the premiums increased in cost. The retirees have asked the county to

        ‘ConsolidatedOmnibusBudgetReconciliationActof 1985,Pub.L.No.99-272,100Stat.82(1986)(continued
healthcoverage provisions codified at 29 U.S.C. $5 1161-69and 42 U.S.C. $5 300bb-1 to 3OObb.8(1994 & Supp.IV
1998)).
The Honorable    Delma Rios - Page 2                (JC-0297)

pay halfofthe premiums for them and their dependents for an indefinite period.* We understand that
the county offers a group health plan to its employees but does not offer the plan to its retirees.
Retirees of the county continue their health insurance coverage by paying for their premiums under
COBRA, but the county allows them to continue to pay for coverage past the COBRA time limits,
until they qualify for Medicare.3

         First, you ask whether a county is authorized to pay one half of the health premiums of
county retirees and their dependents by state law. You indicate that article 3.5 l-2 of the Insurance
Code authorizes the county to do so. That provision expressly authorizes a county to procure
contracts insuring its officials, employees, and retirees and their dependents under a group health
policy. See TEX. INS. CODE ANN. art. 3.5 1-2(a) (Vernon Supp. 2000). In addition, a county may pay
all or any portion of the premiums on group health insurance coverage for officials, employees,
retirees, and their dependents. Id. art. 3.51-2(b). Finally, a county may establish a fund to provide
health and other insurance to its officials, employees, their dependents, and retirees. Id. art. 3.51-
2(c). The provisions of article 3.5 l-2 contemplate that a county will officially include retirees in its
group health plan. We gather, however, that your county has not included retirees within its group
health plan or established a health and insurance fund that covers retirees. Therefore, the article
3.51-2 provisions authorizing a county to provide group health insurance to retirees permit your
county to provide health insurance benefits to persons who retire from the county in the future, but
do not govern the relationship between the county and its existing retirees, who are not included in
the county’s group health plan.

        Other statutes authorize counties to provide health insurance to retirees, but do not appear
to apply here. Section 157.002 of the Local Government Code authorizes a commissioners court to
provide various kinds of insurance to retirees, but it must do so by rule and the rule must be included
in the person’s employment contract. See TEX. LOC. GOV’T CODE ANN. 5 157.002 (Vernon 1999).
Based on the information you have provided, it does not appear that a right to section 157.002
insurance upon retirement is included in your county’s employment contracts. Chapter 175 of the
Local Government Code, which provides a person who retires from a county with a population of
75,000 ormore with a right to purchase continued health benefits coverage, see id. $5 175.001, ,002,
does not apply to your county due to its population, which is less than 75,000.4

         Significantly, this office has long construed article 3.51-2 of the Insurance Code and other
statutes granting counties express powers to provide health insurance to be the exclusive means by
which counties may provide health insurance and to foreclose counties from providing health
insurance to employees, retirees, or their dependents by other means:

        ‘Letter from the Honorable DelmaRios, Kleberg CountyAttorney, to Honorable JohnComyn, Texas Attorney
General at 1 (June 6,200O) (on tile with Opinion Committee) [hereinafterRequest Letter].

        ‘Telephone Conversationwith Honorable Delma Rios, Kleberg County Attorney (Aug. 29,200O).

         4l BUREAUOFTHECENSUS,U.S.DEP’TOFCOMMERCE, ~~~OCENSUSOFPOPULATION:
                                                                        GeneralCharacteristics:
Texas 3 (1992) (Kleberg County population:30,274).
The Honorable    Delma Rios - Page 3               (JC-0297)

                A county commissioners court has only the powers conferred either expressly
        or by necessary implication by the constitution and statutes of this state. See Tex.
        Const. art. V, 5 18; Canales v. Laughlin, 214 S.W.2d 451, 453 (Tex. 1948). The
        limited authority granted to local political subdivisions under article 3.5 l-2 of the
        Insurance Code does not encompass your particular arrangement; such authority must
        be found elsewhere.

Tex. Att’y Gen. Op. No. JM-406 (1985) at 1; see also Tex. Att’y Gen. Op. Nos. MW-473 (1982)
(concluding that county could establish a self-insurance fund under former article 2372h to insure
employees, but not their dependents, because statute did not expressly permit inclusion of
dependents); H-535 (1975) (construingprior versionofInsumnce         Code article 3.5 1-2, which didnot
expressly authorize a county to provide health insurance to retirees, to prohibit county from
including retirees within its group insurance plan, even ifretirees paid their own premiums). In other
words, the authority to provide health insurance to employees, retirees or their dependents must be
based on express statutory authority and may not be implied.

         In sum, with respect to state law, we are not aware of any statute that governs the relationship
between your county and its existing retirees with respect to health insurance coverage. Because the
authority of a county to provide health insurance must be expressly granted by statute, the current
arrangement between your county and its retirees appears to be beyond the county’s authority, unless
it is mandated by federal law.

        Next, we address your questions about federal law: whether COBRA’s continuing health
coverage requirements apply to county employees and, if so, whether a county may extend health
benefits to retirees and their dependents past the time limits set forth in COBRA. We conclude that
although COBRA generally applies to county employees and requires covered county group plans
to offer continuing coverage to retirees for a certain period of time, COBRA does not require or
authorize a county to pay any part of a county retiree’s health insurance premiums, nor does it
require or authorize a county to offer coverage for an indefinite period of time.

        Congress passed the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”)
in April 1986.5 In essence, COBRA’s provisions regarding continuation ofhealth coverage enable
employees who leave their jobs to retain, for 18-36 months after their departure, the same health
coverage they enjoyed while working. COBRA’s provisions mandating that group health plans
provide continuation coverage benefits were placed in both the Public Health Services Act (“PHSA”)
and the Employee Retirement Income Security Act (“ERISA”). See 42 U.S.C. $8 300bb-1 to
300bb-8(1994&      Supp. IV 1998)(PHSA);29U.S.C.     $9 1161-69(1994& Supp. IV 1998)(ERISA).
COBRA amended both ERISA and the PHSA by adding essentially identical continuation coverage
and notification provisions. ERISA, however, exempts any “government plan” from its employee
benefit plan provisions.    See 29 USC.    5 1003(b)(l) (1994 & Supp. IV 1998). COBRA’s
The Honorable   Delma Rios - Page 4               (JC-0297)

amendments to the PHSA fill this gap by providing similar protection to beneficiaries losing
coverage under a plan maintained by “any State that receives funds under this chapter, by any
political subdivision of such a State, or by any agency or instrumentality of such a State or political
subdivision.” 42 U.S.C. 5 300bb-l(a) (1994). These amendments do not apply to “any group health
plan for any calendar year if all employers maintaining such plan normally employed fewer than 20
employees on a typical business day during the preceding calendar year.” Id. 5 300bb-l(b)(l).

       The continuing coverage requirements      of the PHSA are triggered by a “qualifying    event,”
which is defined to mean

        with respect to any covered employee, any ofthe following events which, but for the
        continuation coverage required under this subchapter, would result in the loss of
        coverage of a qualified beneficiary:

                (1) The death of the covered employee.

                (2) The termination (other than by reason of such employee’s gross
                misconduct),   or reduction of hours, of the covered employee’s
                employment.

                (3) The divorce or legal separation of the covered employee from the
                employee’s spouse.

                (4) The covered employee becoming entitled to benefits under title
                XVIII of the Social Security Act [42 U.S.C.A. 5 1395 et seq.
                (“Medicare”)].

                (5) A dependent child ceasing to be a dependent       child under the
                generally applicable requirements of the plan.

Id. 5 300bb-3. We note, however, that the PSHA provisions do not require the employer to pay any
part of the continuation coverage. Rather, the employee may be required to pay a premium that
“shall not exceed 102 percent of the applicable premium for such period.” Id. $ 3OObb-2 (1994 &
Supp. IV 1998).

         In answer to your question about COBRA’s application, COBRA applies to employees of
your county if your county provides a group health plan and the plan does not fall within the
statutory exemption for small employers. However, COBRA does not require or authorize a county
to pay any portion of an employee’s health care premiums. See id.

        You also ask whether the county has the authority to extend health benefits to retirees and/or
their dependents past the time limits established in COBRA. Request Letter, supra note 2, at 1.
COBRA does not require a county or a county’s plan to extend coverage beyond the mandatory
The Honorable Delma Rios - Page 5                  (JC-0297)

periods for coverage, see id. 5 300bb-2(2) (p eriod of coverage “must extendfir at least the period
beginning on the date of the qualifying event and ending not earlier than the earliest of’) (emphasis
added), and therefore does not authorize a county to make coverage available for an indefinite period
of time. Whether a county has the authority to extend health benefits past the limits established in
COBRA is not governed by COBRA but rather by state law. Again, we are not aware of any statute,
other than COBRA, that governs the relationship between your county and its retirees with respect
to health insurance coverage. Although the arrangement between your county and its retirees
appears to be informal and not governed by any state law, we note that the Texas Department of
Insurance interprets articles 2OA.O9(k) and 3.51-6(1)(d)(3) of the Texas Insurance Code to require
an insurer to offer coverage for an additional six months beyond COBRA coverage.6 However,
neither provision appears to require or authorize coverage beyond the six month extension.

          Finally, based on the information you have provided, we believe that your county must
consider whether it is precluded from agreeing to pay part ofthe retirees’ health insurance premiums
by article III, section 53 ofthe Texas Constitution, which prohibits a county from granting “any extra
compensation, fee or allowance to a public officer, agent, servant or contractor, after service has been
rendered, or a contract has been entered into, and performed in whole or in part.” TEX. CONST. art.
III, 5 53. A contract to pay retirees additional benefits for no additional consideration contravenes
this provision. In City of Greenville v. Emerson, 740 S.W.2d 10, 13 (Tex. App.-Dallas 1987, no
writ), for example, the court held that the city’s alleged agreement to apply a new method of
calculating retirement benefits to retirees and to pay them the amount they would have received had
the method been applied when they retired would violate article III, section 53, because it would
require the city to pay additional sums of money for services already rendered and benefits already
paid: “In effect, it would constitute Greenville entering into a second contract with appellees to pay
them additional benefits above what they received under a prior valid existing contract for no
additional consideration.” Id. Payment of increased retirement benefits does not run afoul of article
III, section 53, however, if, at the time ofretirement, the statute governing the employee’s retirement
plan expressly provided for the possibility of additional payments. In that case, such extra payments
will not constitute “unbargained for, retroactive compensation” prohibited by article III, section 53.
See Tex. Att’y Gen. Op. No. DM-265 (1993) at 3; Tex. Att’y Gen. LO-97-l 13, at 4.

         Here, no statute other than COBRA governs the retirees’ arrangement with the county.
Instead, the arrangement whereby retirees maintain health insurance coverage by paying their own
premiums past the COBRA deadlines appears to be entirely informal. Moreover, it does not appear
that the county ever agreed to pay any portion of the retirees’ premiums. Unless the county agreed
to pay a portion of the retirees’ health premiums as part of their compensation for services rendered
to the county, article III, section 53 precludes the county Tom now agreeing to pay half their
premiums.

       %‘ee Letterfrom Lynda H. Nesenholtz, General Counsel, Texas Department of Insurance, to Opinion
Committee, Office of Attorney General (Aug. 3,200O) (on tile with Opinion Committee).
The Honorable Delma Rios - Page 6                 (X-0297)

         In sum, COBRA does not require or authorize a county to pay any portion of a retiree’s
health insurance premiums or to make health insurance coverage available beyond that statute’s
mandatory time periods for continued coverage. A county may not agree to pay half of county
retirees’ health insurance premiums unless the retirement plan is authorized by state law and is
consistent with article III. section 53 of the Texas Constitution.

                                        SUMMARY

                         The Federal Consolidated Omnibus Budget Reconciliation
               Act of 1985 does not require or authorize a county to pay any portion
               of a retiree’s health insurance premiums or to make health insurance
               coverage available beyond that statute’s mandatory time periods for
               continued coverage. A county may not agree to pay half of county
               retirees’ health insurance premiums unless the retirement plan is
               authorized by state law and is consistent with article III, section 53 of
               the Texas Constitution.      A county may not agree to pay half of a
               county retiree’s health insurance premiums if that payment would
               constitute unbargained-for, retroactive compensation.

                                               Attorney General of Texas

ANDY TAYLOR
First Assistant Attorney General

CLARK KENT ERVIN
Deputy Attorney Genera1 - Genera1 Counsel

SUSAN D. GUSKY
Chair, Opinion Committee

Mary R. Grouter
Assistant Attorney General - Opinion Committee