SENATE BILL 125
57th legislature - STATE OF NEW MEXICO - second session, 2026
INTRODUCED BY
Roberto "Bobby" J. Gonzales
FOR THE LEGISLATIVE FINANCE COMMITTEE
AN ACT
RELATING TO STATE EMPLOYEE INSURANCE; AMENDING THE GROUP INSURANCE CONTRIBUTIONS FOR SCHOOL DISTRICTS AND CHARTER SCHOOLS; ELIMINATING WAIVERS FOR SCHOOL DISTRICT AND CHARTER SCHOOL PARTICIPATION IN PUBLIC SCHOOL INSURANCE AUTHORITY HEALTH, DISABILITY INCOME AND TERM LIFE PLANS; REQUIRING REFERENCE-BASED PRICING.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 10-7-4 NMSA 1978 (being Laws 1941, Chapter 188, Section 1, as amended) is amended to read:
"10-7-4. GROUP INSURANCE--CAFETERIA PLAN--CONTRIBUTIONS FROM PUBLIC FUNDS.--
A. All state departments and institutions and all political subdivisions of the state, excluding municipalities, counties and political subdivisions of the state with twenty-five employees or fewer, shall cooperate in providing group term life, medical or disability income insurance for the benefit of eligible employees or salaried officers of the respective departments, institutions and political subdivisions.
B. The group insurance contributions of the state or any of its departments or institutions, including institutions of higher education, shall be made as follows:
(1) at least seventy-five percent of the cost of the insurance of an employee whose annual salary is less than fifteen thousand dollars ($15,000);
(2) at least seventy percent of the cost of the insurance of an employee whose annual salary is fifteen thousand dollars ($15,000) or more but less than twenty thousand dollars ($20,000);
(3) at least sixty-five percent of the cost of the insurance of an employee whose annual salary is twenty thousand dollars ($20,000) or more but less than twenty-five thousand dollars ($25,000); and
(4) at least sixty percent of the cost of the insurance of an employee whose annual salary is twenty-five thousand dollars ($25,000) or more.
C. The group insurance contributions of school districts and charter schools shall be [made as follows:
(1) at least eighty percent of the cost of the insurance of an employee whose annual salary is less than fifty thousand dollars ($50,000);
(2) at least seventy percent of the cost of the insurance of an employee whose annual salary is fifty thousand dollars ($50,000) or more but less than sixty thousand dollars ($60,000); and
(3) at least sixty percent of the cost of the insurance of an employee whose annual salary is sixty thousand dollars ($60,000) or more] at least eighty percent of the cost of the insurance.
D. Effective July 1, 2004, the group insurance contributions of the state or any of its executive, judicial or legislative departments, including agencies, boards or commissions, shall be made as follows; provided that the contribution percentage shall be the same for all affected public employees in a given salary bracket:
(1) up to eighty percent of the cost of the insurance of an employee whose annual salary is less than thirty thousand dollars ($30,000);
(2) up to seventy percent of the cost of the insurance of an employee whose annual salary is thirty thousand dollars ($30,000) or more but less than forty thousand dollars ($40,000); and
(3) up to sixty percent of the cost of the insurance of an employee whose annual salary is forty thousand dollars ($40,000) or more.
E. Except as provided in Subsection H of this section, effective July 1, 2025, the group insurance contributions of the state or any of its executive, judicial or legislative departments, including agencies, boards or commissions, shall be eighty percent of the cost of insurance.
F. Effective July 1, 2013, the employer shall pay one hundred percent of basic life insurance premiums for employees, and employees who choose to carry disability insurance shall pay one hundred percent of the premium.
G. The state shall not make any group insurance contributions for legislators. A legislator shall be eligible for group benefits only if the legislator contributes one hundred percent of the cost of the insurance.
H. An employer shall pay one hundred percent of the employee group insurance contributions due and payable on or after July 1, 2016 for an employee who is injured while performing a public safety function or duty and, as a result of the injury, is placed on approved workers' compensation leave.
I. As used in this section, "cost of the insurance" means the premium required to be paid to provide coverages. Any contributions of the political subdivisions of the state, except the public schools and political subdivisions of the state with twenty-five employees or fewer, shall not exceed sixty percent of the cost of the insurance.
J. When a public employee elects to participate in a cafeteria plan as authorized by the Cafeteria Plan Act and enters into a salary reduction agreement with the governmental employer, the provisions of Subsections B through G of this section with respect to the maximum contributions that can be made by the employer are not violated and will still apply. The employer percentage or dollar contributions as provided in Subsections B through E of this section shall be determined by the employee's gross salary prior to any salary reduction agreement.
K. Any group medical insurance plan offered pursuant to this section shall include effective cost-containment measures to control the growth of health care costs and maximize benefits for the least cost. [If] A state agency that is responsible for providing state employee health benefits under the Health Care Purchasing Act [establishes] shall establish a reference-based pricing program for in-network or out-of-network hospital services. Hospitals subject to the program shall not charge or collect from a member of the health benefit plan an amount in addition to the maximum payment established by the secretary of health care authority, except that a hospital may charge an amount for cost-sharing that is authorized by the terms of the member's health benefit plan. The responsible public body that administers a plan offered pursuant to this section shall report annually by September 1 to appropriate interim legislative committees on the effectiveness of the cost-containment measures required by this subsection.
L. Within available revenue, school districts, charter schools and participating entities pursuant to the Public School Insurance Authority Act may contribute up to one hundred percent of the cost of the insurance of all employees and institutions of higher education may contribute up to eighty percent of the cost of the insurance of all employees.
M. When the secretary of health care authority submits the health care authority's annual budget request to the legislature, the secretary shall include a budget request for purchasing state employee health benefits that has actuarially sound rates for the following fiscal year. Beginning July 1, 2025, the secretary shall set actuarially sound rates sufficient to cover projected claims, subject to legislative appropriation. By September 1 of each year, the projected actuarially sound rate adjustment for the following fiscal year, subject to legislative appropriation, shall be communicated to the local public bodies [who] that are part of the state employee health benefit program.
N. The secretary of health care authority shall establish a program to make state health benefit premiums more affordable for certain employees using appropriations from the health care affordability fund. The secretary shall establish a system for determining eligibility for the program and may annually update program eligibility and contribution criteria.
O. By July 1, 2026, the health care authority shall ensure that state employees are provided the opportunity to purchase a variety of health benefit plans with varying plan designs and cost-sharing options."
SECTION 2. Section 13-7-3 NMSA 1978 (being Laws 1997, Chapter 74, Section 3, as amended) is amended to read:
"13-7-3. DEFINITIONS.--As used in the Health Care Purchasing Act:
A. "consolidated purchasing" means a single process for the procurement of and contracting for all health care benefits by the publicly funded insurance agencies in compliance with the Procurement Code and includes associated activities related to the procurement such as actuarial, cost containment, benefits consultation and analysis; and
B. "publicly funded health care agency" means the:
(1) state health benefits division and the group benefits committee of the health care authority;
(2) retiree health care authority; and
(3) public school insurance authority [and
(4) publicly funded health care program of any public school district with a student enrollment in excess of sixty thousand students]."
SECTION 3. Section 22-29-3 NMSA 1978 (being Laws 1986, Chapter 94, Section 3, as amended by Laws 2007, Chapter 41, Section 1 and by Laws 2007, Chapter 236, Section 1) is amended to read:
"22-29-3. DEFINITIONS.--As used in the Public School Insurance Authority Act:
A. "authority" means the public school insurance authority;
B. "board" means the board of directors of the authority;
C. "charter school" means a school organized as a charter school pursuant to the provisions of the Charter Schools Act;
D. "director" means the director of the authority;
E. "due process reimbursement" means the reimbursement of a school district's or charter school's expenses for attorney fees, hearing officer fees and other reasonable expenses incurred as a result of a due process hearing conducted pursuant to the federal Individuals with Disabilities Education Improvement Act;
F. "educational entities" means state educational institutions as enumerated in Article 12, Section 11 of the constitution of New Mexico and other state diploma, degree-
granting and certificate-granting post-secondary educational institutions, regional education cooperatives and nonprofit organizations dedicated to the improvement of public education and whose membership is composed exclusively of public school employees, public schools or school districts;
G. "fund" means the public school insurance fund;
H. "group health insurance" means coverage that includes life insurance, accidental death and dismemberment, medical care and treatment, dental care, eye care and other coverages as determined by the authority;
I. "risk-related coverage" means coverage that includes property and casualty, general liability, auto and fleet, workers' compensation and other casualty insurance; and
J. "school district" means a school district as defined in Subsection R of Section 22-1-2 NMSA 1978 [excluding any school district with a student enrollment in excess of sixty thousand students]."
SECTION 4. Section 22-29-9 NMSA 1978 (being Laws 1986, Chapter 94, Section 9, as amended) is amended to read:
"22-29-9. PARTICIPATION--WAIVERS.--
A. School districts and charter schools shall participate in the authority, unless the school district or charter school is granted a waiver by the board; provided that beginning July 1, 2027, the board shall not grant a waiver for health, disability income or term life insurance.
B. In determining whether a waiver should be granted, the board shall establish minimum benefit and financial standards for the desired line of coverage. These minimum benefit and financial standards and the proposed time schedule for responsive offers shall be sent to all school districts and charter schools at the time the request for proposals for the desired line of coverage is issued. Any school district or charter school seeking a waiver of coverage shall match the minimum benefit and financial standards set forth in the request for proposals for the desired line of coverage. School districts and charter schools shall submit documentation of their proposals matching the board's minimum benefit and financial requirements prior to the deadline established by the board. The authority has the power to approve or disapprove a waiver of participation based on the documentation submitted by the school district or charter school regarding the benefit and financial standards established by the board. The board shall grant a waiver to a school district or charter school that requests a waiver and that has met the minimum benefit and financial standards within the time schedule established by the board. Once the board awards the insurance contract, no school district or charter school shall be granted a waiver for the entire term of the contract.
C. [Any] Prior to July 1, 2027, a school district or charter school granted a waiver of participation for health insurance shall be required to petition for participation in other kinds of group insurance coverage and shall be required to meet the requirements established by the authority prior to participation in other kinds of group insurance coverage. A school district or charter school [which] that has been granted a waiver shall be prohibited from participating in the coverage for which a waiver was granted for the entire term of the authority's insurance contract. Provided, however, that if the authority contracts for a line or lines of coverage for a period of eight years, the board may establish procedures and preconditions for authorizing a school district or charter school [which] that has been granted a waiver to again participate in the coverage after the expiration of the first four years of coverage. A waiver of health, disability income or term life insurance shall not be effective after June 30, 2027.
D. Any school district or charter school granted a waiver of participation for workers' compensation shall be required to petition for participation in other risk-related coverages and shall be required to meet the requirements established by the authority prior to participation in other kinds of risk-related coverages. A school district or charter school [which] that has been granted a waiver shall be prohibited from participating in the coverage for which a waiver was granted for the entire term of the authority's insurance contract.
E. Educational entities may petition the authority for permission to participate in the insurance coverage provided by the authority. To protect the stability of the fund, the authority shall establish reasonable terms and conditions for participation by educational entities.
F. A participating school district or charter school may separately provide for coverage additional to that offered by the authority.
G. [The local] School districts, charter schools or the authority, as appropriate, may provide for marketing and servicing to be done by licensed insurance agents or brokers who should receive reasonable compensation for their services."
SECTION 5. Section 22-29-10 NMSA 1978 (being Laws 1989, Chapter 373, Section 5, as amended) is amended to read:
"22-29-10. GROUP INSURANCE CONTRIBUTIONS.--
A. Group insurance contributions for school districts and charter schools [and participating entities in the authority] shall be [made as follows:
(1) at least eighty percent of the cost of the insurance of an employee whose annual salary is less than fifty thousand dollars ($50,000);
(2) at least seventy percent of the cost of the insurance of an employee whose annual salary is fifty thousand dollars ($50,000) or more but less than sixty thousand dollars ($60,000); and
(3) at least sixty percent of the cost of the insurance of an employee whose annual salary is sixty thousand dollars ($60,000) or more.
B. Within available revenue, school districts, charter schools and participating entities in the authority may contribute up to one hundred percent of the cost of the insurance of all employees.] at least eighty percent of the cost of the insurance.
B. Group insurance contributions for state educational institutions as enumerated in Article 12, Section 11 of the constitution of New Mexico shall be at a rate set by the board of regents of the state educational institution. Group insurance contributions for other state diploma, degree-granting and certificate-granting post-secondary educational institutions shall be at a rate set by the governing board of the institution.
C. Group insurance contributions for nonprofit organizations eligible for participation in the authority shall be at a rate determined by the organization.
[C.] D. Whenever a school district, charter school or participating entity in the authority offers to its employees alternative health plan benefit options, including health maintenance organizations, preferred provider organizations or panel doctor plans, the school district, charter school or participating entity may pay an amount on behalf of the employee and family member for the indemnity health insurance plan sufficient to result in equal employee monthly costs to the cost of the health maintenance organization plans, preferred provider organization plans or panel doctor plans, regardless of the percentage limitations in the Public School Insurance Authority Act. School districts, charter schools and participating entities in the authority may pay up to one hundred percent of the first fifty thousand dollars ($50,000) of term life insurance."
SECTION 6. EFFECTIVE DATE.--
A. The effective date of the provisions of Sections 1, 4 and 5 of this act is July 1, 2026.
B. The effective date of the provisions of Sections 2 and 3 of this act is July 1, 2027.
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