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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
AMENDED
classical
learning; tests; examinations
(NOW: school districts; insurance quotes)
Purpose
Requires a school district governing board (governing board) that establishes a self-insurance program and employs at least 300 employees to obtain quotes for coverage and services at least once every four years. Requires the person who supports a school district's self-insurance program to provide the school district prescribed insurance information at least 60 days before the end of the current benefit program year. Exempts specified self-insurance programs from the procurement requirements relating to obtaining quotes for coverage.
Background
A governing board may determine that self-insurance is in the best interest of the district and provide for a self-insurance program or programs for the school district, including risk management consultation. A governing board must verify that any risk management consultant or insurance administrator the governing board employs is licensed by the Department of Insurance and Financial Institutions. A school district governing board may: 1) enter into intergovernmental agreements or contracts for participation in programs offered by public agency pools; 2) separately contract with a trustee or board of trustees that provides a common self-insurance program or programs with pooled funds and risks to more than one district, a community college district, or an association of Arizona school districts that is funded by member school districts or a pool created for and operated solely for charter schools; 3) enter into cooperative procurement agreements with other school districts to participate in programs for self-insurance or the joint purchase of insurance; or 4) separately establish a self-insurance program solely for the school district.
If a governing board, either alone, in combination with another school district or with an association of Arizona school districts establishes a self-insurance program, the governing board or an association of school districts must place all funds into a trust to be used for payment of: 1) uninsured losses; 2) claims; 3) defense costs; 4) costs of training designed to reduce losses and claims; 5) the cost of related employee benefits including wellness programs, life, disability and other fully and partially insured group insurance plans; 6) programs that allow for participation in a cafeteria plan that meets federal tax requirements; and 7) costs of administration and other related expenses (A.R.S. § 15-382).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Requires the governing board of a school district that employs at least 300 employees and establishes a self-insurance program to obtain quotes for coverage and services from authorized service providers at least once during every four-year period to determine whether comparable coverage and services are available at a more favorable price, if the governing board establishes a self-insurance program to:
a) purchase of disability or health benefit plans insurance;
b) pooling retention of its risk of loss for health or accident claims; or
c) the provision of health and medical services.
2. Prohibits a governing board from renewing coverage or services from any person that fails to provide timely, accurate and complete information as prescribed.
3. Requires, at least 60 days before the end of the current benefit program year, each trust, insurer, third-party administrator, pharmacy benefit manager or other person who supports a school district's self-insurance program to provide the following information to the school district in an electronic, machine-readable format:
a) monthly enrollment counts by employee-only and dependent tiers for each plan option offered to the school district for the two calendar years that immediately precede the current year;
b) monthly total claims paid for the two calendar years that immediately precede the current year, disaggregated by medical claims and prescription drug claims;
c) a detailed report on enrollees whose total claims paid exceeds $50,000 for any of the four calendar years that immediately precede the current year and enrollees whose total claims paid is projected to exceed $50,000 for the current year;
d) detailed prescription drug data for the immediately preceding 12-month period for all enrollees;
e) complete documentation for each benefit plan currently available to the school district's employees; and
f) a report of comprehensive eligibility census data for all employees and dependents who participate in the school district's self-insurance program that is updated not more than 60 days before the report is submitted.
4. Specifies that the detailed report relating to enrollees who total claims paid exceed $50,000 must include only de-identified data, comply with the federal Health Insurance Portability and Accountability Act (HIPAA) and include:
a) the total claims paid for each enrollee;
b) each enrollee's diagnosis or a description of each enrollee's medical condition or conditions; and
c) a statement indicating whether each claim is completed with no further health care services expected or is ongoing with additional health care services expected or required to address the enrollee's diagnosis.
5. Specifies that the detailed prescription drug data must include:
a) the National Drug Code;
b) the date each prescription was filed;
c) the drug name;
d) the total days' supply of the drug;
e) the metric quantity that is dispensed;
f) the ingredient cost;
g) the dispensing fee;
h) the pharmacy provider number;
i) the amount paid by the school district, if any;
j) the amount paid by the enrollee, if any;
k) the total amount of rebates received, including rebates by the drug manufacturer and the method of allocation;
l) the amount of pharmacy benefit manager administrative fees paid, if any;
m) any other fees charged to the school district, including pre-claim fees, network access fees, data or clinical program fees, spread-pricing components and all sources of pharmacy benefit manager compensation charged to the school district; and
n) whether pricing is set on a pass-through or spread basis.
6. Specifies that the documentation for each benefit plan currently available must include:
a) summary benefits and coverage;
b) full plan documents or benefit booklets;
c) prescription drug formularies; and
d) cost-sharing structures, deductibles and out-of-pocket maximums.
7. Specifies that the report relating to comprehensive eligibility census data must include only de-identified data, comply with HIPAA and include the following for each person:
a) date of birth;
b) gender;
c) zip code of residence;
d) coverage tier; and
e) selected plan.
8. Exempts, from the self-insurance procurement requirements relating to obtaining quotes for coverage, a school district that participates in a self-insurance program that:
a) is provided by a nonprofit corporation health care pool as specified;
b) has two or more network options for school district members; and
c) has an administrator that is a nonprofit corporation as specified.
9. Defines authorized service providers as:
a) two or more service providers available through the pool, trustee or board of trustees that administers the school district's self-insurance program;
b) two or more qualified insurers that provide proposals directly to the governing board; or
c) a licensed insurance provider who obtains proposals from two or more qualified insurers on behalf of the governing board.
10. Makes technical and conforming changes.
11. Becomes effective on the general effective date.
Amendments Adopted by Committee
· Adopted the S/E amendment.
Amendments Adopted by the Committee of the Whole
1. Requires a governing board that establishes a self-insurance program as outlined to obtain quotes for coverage and services as prescribed at least once during every four-year period, rather than every three-year period.
2. Specifies that the requirement to obtain a quote for insurance coverage every four years applies to governing boards that establish a self-insurance program to:
a) purchase disability or health benefit plans insurance;
b) pool the retention of risk of losses for health or accident claims; or
c) provide health and medical services.
3. Specifies that the detailed report that outlined individuals must provide to a school district when obtaining quotes for coverage must include enrollees whose total claims paid exceed $50,000 for any of the four calendar years, rather than three calendar years, that immediately precede the current year.
4. Exempts, from the self-insurance procurement requirements relating to obtaining quotes for coverage, a school district that participates in a self-insurance program that:
a) is provided by a nonprofit corporation health care pool;
b) has two or more network options for school district members; and
c) has an administrator that is a nonprofit corporation.
5. Defines authorized service providers.
6. Makes technical and conforming changes.
Senate Action
ED 2/18/26 DPA 5-0-2
Prepared by Senate Research
March 10, 2026
MH/KP/hk