HB3126

Regular Session

Relating to the election of certain entities to participate in the uniform group coverage program for active school employees; imposing a fee.

CriticalImmediate action required

High Cost

Effective:2025-06-20

Enforcing Agencies

Teacher Retirement System of Texas (TRS)

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

Effective Date: June 20, 2025 (Law effective immediately upon signature/vote).
Compliance Deadline: December 31, 2025 (Hard deadline for written notice of election to TRS).
Coverage Start Date: September 1, 2026 (Plan year commencement).
Agency Rulemaking: TRS must establish the "Risk Stabilization Fee" structure and specific election protocols between June 2025 and December 2025. Entities are in a "regulatory gray zone" until TRS publishes these fee schedules.

Immediate Action Plan

Verify Eligibility: Confirm legal records show your entity discontinued TRS participation specifically on September 1, 2022.
Audit Exit Clauses: Review current private health plan contracts for termination notice deadlines to ensure a clean exit on August 31, 2026.
Monitor TRS Dockets: Assign staff to monitor TRS Board meetings between July and October 2025 for the publication of the Risk Stabilization Fee structure.
Run Comparative Models: Once the fee is published, immediately model the total cost (TRS Premium + Fee) against projected private market renewals.
Execute Board Resolution: If financially viable, secure Board approval and transmit written notice to TRS via certified mail before December 15, 2025.

Operational Changes Required

Contracts

Commercial Vendor Termination: Entities electing to return to TRS must serve termination notices to current private carriers or Third-Party Administrators (TPAs) to end coverage effective August 31, 2026. Review current contracts for early termination penalties or notice requirements (often 90-180 days).
TRS Lock-In: The election to return creates a statutory contract binding the entity to TRS-ActiveCare for five years (until September 1, 2031).

Hiring/Training

Board Education: Superintendents and CFOs must educate Boards of Trustees on the financial implications of the "Risk Stabilization Fee" versus current private market trends.
HR Transition: HR departments must prepare for data migration and enrollment processing back into the TRS IT ecosystem for the 2026 plan year.

Reporting & Record-Keeping

Election Notice: A formal written notice must be submitted to the TRS Trustee by December 31, 2025.
Compliance Data: Be prepared to submit current plan census and claims data if TRS requires it under the "other requirements" clause to calculate risk fees.

Fees & Costs

Risk Stabilization Fee: A new, mandatory fee will be added to premiums starting September 1, 2026. This is an additional overhead cost distinct from standard premium contributions.
Budget Impact: CFOs must budget for TRS rates *plus* this fee, rather than standard TRS published rates.

Strategic Ambiguities & Considerations

Fee Calculation: The statute grants the TRS Trustee unilateral authority to determine the amount of the Risk Stabilization Fee. There is no statutory cap or formula in the bill text. Entities are currently blind to the actual cost of re-entry until TRS rulemaking occurs.
"Other Requirements": Section 1(b)(2) allows TRS to impose "any other requirements" for re-entry. Watch for emergency rules that may require submission of high-cost claimant data or payment of prior deficits.

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Legislative Timeline

This bill's path through the Texas Legislature

TopicsEducation Education--school Districts Insurance Insurance--health & Accident

Official Analysis

View HRO Analysis View All Bill Documents

BILL ANALYSIS

H.B. 3126

By: Darby

Pensions, Investments & Financial Services

Committee Report (Unamended)

BACKGROUND AND PURPOSE

During the 87th Regular Session, the Texas Legislature passed S.B. 1444, which authorized participating entities in TRS-ActiveCare to voluntarily leave the program beginning September 1, 2022. The bill author has informed the committee that school districts in House District 72 elected to leave the program under that mechanism, believing that a private plan could provide lower market rates and cheaper premiums than TRS-ActiveCare. However, after their provider filed for bankruptcy, those school districts were left to foot the bill for massive medical costs that threaten the small, rural school districts of House District 72. H.B. 3126 seeks to provide a limited exception to address this problem by allowing small school districts that left TRS-ActiveCare using this mechanism to rejoin under certain conditions.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that rulemaking authority is expressly granted to the Teacher Retirement System of Texas in SECTION 1 of this bill.

ANALYSIS

H.B. 3126 amends the Insurance Code to authorize a public school district that discontinued participation in TRS-ActiveCare effective on September 1, 2022, to elect to participate in TRS-ActiveCare before the fifth anniversary of that effective date if the district has 500 or fewer employees at the time of that election and does the following:

·provides written notice to the Teacher Retirement System of Texas (TRS) not later than December 31, 2025, of the district's election to participate in TRS-ActiveCare effective beginning September 1, 2026; and

·complies with any other requirements established by TRS for TRS-ActiveCare participation.

H.B. 3126 requires TRS, for the plan year beginning September 1, 2026, to impose a risk stabilization fee in an amount determined by TRS on the premiums of such a district. The bill prohibits a district that elects to participate in TRS-ActiveCare in accordance with the bill from electing to discontinue participation until September 1, 2031. The bill authorizes TRS by rule to impose additional requirements, conditions, and deadlines with which an applicable district must comply to elect to participate in TRS-ActiveCare in accordance with the bill. The bill's provisions expire September 1, 2031.

EFFECTIVE DATE

September 1, 2025.

House Authors

Rep. Drew DarbyRepublican · Primary Author

Joint Authors

Senate Sponsors

Sen. Judith ZaffiriniDemocrat · Primary Sponsor

Cosponsors (3)

Bill Text(with markup)

H.B. No. 3126

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

	AN ACT
	relating to the election of certain entities to participate in the
	uniform group coverage program for active school employees;
	imposing a fee.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1. Subchapter D, Chapter 1579, Insurance Code, is
	amended by adding Section 1579.1551 to read as follows:
	Sec. 1579.1551. PROGRAM PARTICIPATION BY CERTAIN ENTITIES.
	(a) This section applies to an entity that discontinued
	participation in the program effective on September 1, 2022, in
	accordance with Section 1579.155(a).
	(b) Notwithstanding Section 1579.155(b), an entity to which
	this section applies may elect to participate in the program before
	the fifth anniversary of the effective date of the entity's
	election to discontinue participation in the program if the entity:
	(1) provides written notice to the trustee not later
	than December 31, 2025, of the entity's election to participate in
	the program effective beginning September 1, 2026; and
	(2) complies with any other requirements established
	by the trustee for program participation.
	(c) For the plan year beginning September 1, 2026, the
	trustee shall impose a risk stabilization fee in an amount
	determined by the trustee on the premiums of an entity to which this
	section applies.
	(d) An entity that elects to participate in the program in
	accordance with this section may not elect to discontinue
	participation until September 1, 2031.
	(e) The trustee by rule may impose additional requirements,
	conditions, and deadlines with which an entity to which this
	section applies must comply to elect to participate in the program
	in accordance with this section.
	(f) This section expires September 1, 2031.
	SECTION 2. This Act takes effect September 1, 2025.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


March 28, 2025

TO:	Honorable Stan Lambert, Chair, House Committee on Pensions, Investments & Financial Services

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	HB3126 by Darby (Relating to the election of certain school districts to participate in the uniform group coverage program for active school employees.), As Introduced

No significant fiscal implication to the State is anticipated.

It is assumed that any costs associated with the bill could be absorbed using existing resources.

Local Government Impact

Participating school districts would incur risk stabilization fees and healthcare costs.

Source Agencies:

323 Teacher Retirement System, 454 Department of Insurance

LBB Staff:

JMc, FV, ASA, ENA

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Frequently Asked Questions

Common questions about HB3126

What does Texas HB3126 do?

HB3126 creates a one-time statutory exception allowing school districts and educational entities that discontinued TRS-ActiveCare participation effective September 1, 2022, to re-enter the program early. Eligible entities must submit a binding election by December 31, 2025, to restart coverage on September 1, 2026, subject to a mandatory five-year lock-in and a new, Trustee-determined "Risk Stabilization Fee. " Implementation Timeline Effective Date: June 20, 2025 (Law effective immediately upon signature/vote).

Who authored HB3126?

HB3126 was authored by Texas Representative Drew Darby during the Regular Session.

When was HB3126 signed into law?

HB3126 was signed into law by Governor Greg Abbott on June 20, 2025.

Which agencies enforce HB3126?

HB3126 is enforced by Teacher Retirement System of Texas (TRS).

How urgent is compliance with HB3126?

The compliance urgency for HB3126 is rated as "critical". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

What is the cost impact of HB3126?

The cost impact of HB3126 is estimated as "high". This may vary based on industry and implementation requirements.

What topics does HB3126 address?

HB3126 addresses topics including education, education--school districts, insurance and insurance--health & accident.

Legislative data provided by LegiScanLast updated: November 25, 2025

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