When used in this chapter, the following terms shall have the following meanings, respectively, unless the context clearly indicates otherwise:

(1) EMPLOYEE. A person who works full time for the State of Alabama or for a county health department and who receives his full compensation on a monthly basis through means of a state warrant drawn upon the State Treasury or by check drawn by the Treasurer of the Alabama State Port Authority or by check drawn by the Treasurer of the Alabama state agency for surplus property other than those employees covered by the federal Railroad Retirement Act. Full-time employees of the county health department in all counties having populations of not less than 300,000 nor more than 500,000 shall also be included in the definition of employee for the purpose of this chapter, and the health department of any such county is hereby authorized to pay the employer*s share of any contributions to the retirement fund; provided further, that any district attorney or full-time employees in the district attorney*s office, of any judicial circuit shall be included in the definition of employee for the purpose of this chapter, and the respective judicial circuits are hereby authorized to pay the employer*s share of any contribution therefor and any person employed part time by the State of Alabama on a wage and hourly basis, excluding fee compensations and other like arrangements, shall be included in the definition of employee as defined in this chapter provided such person shall agree to have deducted from his hourly wage, as stipulated, a pro rata portion of the premium cost of a full-time state employee based on the percentage of time such person is employed by the state according to rules and regulations established by the State Employees* Insurance Board. The term shall also include an employee who worked at least 10 years for the State Department of Transportation in @captive county@ circumstances as defined by Section 23-1-100 and who was transferred to county employment upon the adoption of Article 3A, Chapter 1, Title 23. Provided further, however, any costs incurred as a result of including such employee in this term shall be payable from funds of the State Department of Transportation.

(2) BOARD. The State Employees* Insurance Board.

(3) CLASS. An employee or retiree shall be included in one of the following classes: (i) Active employee single, (ii) Active employee family, (iii) non-Medicare retiree single, (iv) non-Medicare retiree family, (v) Medicare retiree single, or (vi) Medicare retiree family, (vii) non-Medicare retiree with Medicare eligible dependent, or (viii) Medicare retiree with non-Medicare dependent(s).

(4) EMPLOYEE CONTRIBUTION. The amount of the total health insurance premium to be paid by the employee or retiree as determined by the Board.

(5) EMPLOYER CONTRIBUTION. The amount of the total health insurance premium to be paid by the employer as determined by the Board.

(6) FEDERAL POVERTY LEVEL. Income level determined in Section 673(2) of the Community Services Block Grant Act 2 (42 U.S.C. § 9902(2)). Should the federal government no longer derive or substantially change its derivation of the federal poverty level, the State Employees* Insurance Board has the authority to derive and apply an alternate poverty level to carry out its obligations under this chapter.

(7) HEALTH INSURANCE PREMIUM. The total health insurance cost under the state employees* health insurance plan with respect to each class of employees or retirees. Individual premiums may include adjustments and surcharges for (i) family size including, but not limited to, a husband and wife both being covered by the state employees* health insurance plan, (ii) smokers and users of tobacco products, (iii) preventative care and wellness care participation, and (iv) any such other categories of risk that the Board shall approve.

(8) MEDICARE RETIREE. A retiree entitled to benefits under the federal Medicare program (Subchapter XVIII of the Social Security Act, 42 U.S.C. §§ 1395 et seq.).

(9) NON-MEDICARE RETIREE. A retiree not entitled to benefits under the federal Medicare program (Subchapter XVIII of the Social Security Act, 42 U.S.C. §§ 1395 et seq.).

(10) OTHER EMPLOYER GROUP HEALTH INSURANCE COVERAGE. Group health insurance coverage available to an employee or retiree through an employer other than the State of Alabama. Other employer group health insurance coverage does not include the State Employees* Health Insurance Plan, the Public Education Employees* Health Insurance Plan or the Local Government Health Insurance Plan.

(11) RETIREE. Employee who retires from the service of the State of Alabama, who at the time of such retirement, meets the criteria set out in this chapter and who, following such retirement, draws a monthly benefit from the Employees* Retirement System of Alabama, the Judicial Retirement System of Alabama or the Teachers* Retirement System of Alabama.

(12) STATE EMPLOYEES* HEALTH INSURANCE PLAN. The health benefit plan administered or offered by the State Employees* Insurance Board for eligible employees and retirees and their respective dependents. The State Employees* Insurance Board may offer supplemental coverages and policies in lieu of or in addition to coverage in the basic medical plan of the State Employees* Health Insurance Plan. Also referred herein as @health insurance plan@ or @Plan.@

(13) SUPPLEMENTAL COVERAGE. Coverage offered to employees and retirees by the State Employees* Insurance Board in lieu of coverage in the basic medical plan of the State Employees* Health Insurance Plan that supplements an employee*s or retiree*s other employer group health insurance coverage.

(14) SUPPLEMENTAL POLICY. Policy offered to employees and retirees by the State Employees* Insurance Board, in lieu of or in addition to coverage in the basic medical plan of the State Employees* Health Insurance Plan, that provides a defined set of benefits.

(15) THIRD PARTY ADMINISTRATOR. Entity contracted by the State Employees* Insurance Board to provide certain administrative services as it deems appropriate and necessary to carry out its obligations under this chapter.

(16) YEARS OF SERVICE. The number of years and months of creditable service by an employee prior to retirement as determined by the Employees* Retirement System, Teachers* Retirement System, or Judicial Retirement System including any periods of full time permanent employment subsequent to retirement up to a maximum of five years.

The State Employees* Insurance Board shall consist of the members of the State Personnel Board, together with the Director of Finance, the Secretary-Treasurer of the Employees* Retirement System of Alabama, two members who are regular employees of the state and two retirees covered under the State Employees* Health Insurance Plan who are receiving benefits from the Employees* Retirement System of Alabama. The present ex officio officers named shall constitute the membership of the board hereby created, and their successors in office, by virtue of assuming such office, shall succeed to membership on the board. The two state employee members of the board shall be elected at the regular election for officers of the Alabama State Employees* Association as follows:

At the expiration of the term of the existing state employee members of the board one state employee member of the board shall be elected for a two-year term and every four years thereafter, and the other state employee member of the board shall be elected for a four-year term, and every four years thereafter. Vacancies of the state employee members of the board shall be filled for the remainder of the term by special election of the Alabama State Employees* Association. The Chairman of the State Personnel Board shall serve as the Chairman of the State Employees* Insurance Board.

The retired members shall be elected in a statewide ballot conducted under the supervision and direction of the board under such rules and regulations as are necessary to insure that all eligible retirees are afforded the opportunity to vote.

The Board of Directors of the Alabama Retired State Employees* Association shall submit one nomination for each retired member position. The board shall determine the procedure for qualification of additional candidates which shall include but is not limited to the submission of a petition or petitions which shall include the signature of at least 50 eligible retirees. With the exception of the initial election, each position shall be for a term of four years. The initial terms shall be as follows:

(1) Retired member Place Number 1 for a period of two years beginning November 1, 1985.

(2) Retired member Place Number 2 for a period of four years beginning November 1, 1985.

Any vacancy in the office of either retired positions shall be filled for the remainder of that term by the board from a list of three eligible retired members submitted by the Board of Directors of the Alabama Retired State Employees* Association.

The health insurance plan provided for in this chapter shall be designed by the State Employee*s Insurance Board to provide a reasonable relationship between the hospital, surgical and medical benefits to be included and the expected hospital, surgical and medical expenses to be incurred by the affected employee and retiree and dependents and to include reasonable controls, which may include, but not limited to, deductible, copayment, coinsurance and other cost containment measures to prevent unnecessary utilization of the various hospital, surgical and medical services available and to provide reasonable assurance of stability in future years for the Plan.

The Board is hereby empowered and authorized to establish a fully insured or self-insured health insurance plan for employees and retirees of the State of Alabama and to adopt and promulgate rules and regulations for the administration of such plan, subject to such limitations as may be contained in this chapter. Such plan may provide for group hospitalization, surgical and medical insurance against the financial costs of hospitalization, surgical and medical treatment and care and may also include, among other things, prescribed drugs, medicines, prosthetic appliances, hospital inpatient and outpatient service benefits and medical expenses indemnity benefits, including major medical benefits or such other coverage or benefits as may be deemed appropriate and desirable by the board.

(a) Such health insurance shall not include any of the following:

(1) Expenses incurred by or on account of an individual prior to the effective date of the plan.

(2) Cosmetic surgery or treatment, except to the extent necessary for correction of damages caused by accidental injury while covered by the plan or as a direct result of disease covered by the plan.

(3) Services received in a hospital owned or operated by the United States government for which no charge is made.

(4) Services received for injury or sickness due to war or any act of war, whether declared or undeclared, which war or act of war shall have occurred after the effective date of this plan.

(5) Expenses for which the individual is not required to make payment.

(6) Expenses to the extent of benefits provided under any employer group plan other than the plan in which the state participates in the cost thereof.

(7) Such other expenses as may be excluded by regulations of the board.

(b) This section shall not mandate the coverage of hearing assistance devices except that the State Employees* Health Insurance Board may determine by a majority vote of the board to cover such expenses in part or in whole on or after April 11, 2000.

(a) The board is hereby authorized to execute a contract or contracts to provide the Plan determined in accordance with the provisions of this chapter. Such contract or contracts may be executed with one or more agencies or corporations licensed to transact or administer group health insurance business in this state. All of the benefits to be provided under this chapter may be included in one or more similar contracts issued by the same or different companies.

(b) Before entering into any contract or contracts authorized by subsection (a) of this section, said board shall invite competitive bids from all qualified entities who may wish to administer or offer plans for the health insurance coverage desired. The board shall award such contract or contracts on a competitive basis as determined by the benefits afforded, administrative costs, the costs to be incurred by employee, retiree and employer, the experience of the offering company or agency in the group health insurance field and its facilities for the handling of claims. In evaluating these factors the board may employ the services of impartial professional insurance analysts or actuaries.

(c) The contract or contracts executed by the board with the selected carrier or third party administrator shall be a contract to offer coverage to all employees and retirees of the state subject to the provisions of this chapter; provided, however, that nothing contained in this chapter shall prohibit other insurance carriers from soliciting additional health and other types of insurance coverage with state employees, and nothing contained in this chapter shall prohibit the Director of Finance from authorizing payment of premiums for such additional health and other types of coverage by payroll deduction.

(d) The board may authorize a carrier with whom a contract has been executed to reinsure portions of such contract with other such carriers which elect to be a reinsurer and who are legally qualified to enter into a reinsurance agreement under the laws of this state.

(e) Each employee and retiree who is covered under the Plan shall receive a certificate or summary document setting forth the benefits to which the employee, retiree and dependents are entitled thereunder, to whom such benefits shall be payable, to whom claims shall be submitted and a summary of the provisions of the Plan as they affect the employee, retiree and dependents.

(f) The board may at the end of any contract period discontinue any contract or contracts it has executed with any carrier or third party administrator and replace same with a contract or contracts with any other carrier or third party administrator meeting the requirements of this chapter.

(g) The State Employees* Insurance Board may enter into contracts of the Public Education Employees* Health Insurance Board that were awarded through a competitive bid process, upon the mutual consent of the Public Education Employees* Health Insurance Board and the contractor.

(a) The Board is hereby authorized to provide under the provisions of this chapter that the employer*s contribution to the cost of such Plan for coverage of the employee and retiree shall be paid by the employer.

(b) Each employee and retiree shall be entitled to have his spouse and dependent children, as defined by the rules and regulations of the board, included in the coverage provided upon agreeing to pay the employee*s contribution of the health insurance premium for such dependents. The board shall adopt regulations governing the discontinuance and resumption by such employees and retirees of coverage for dependents.

(c) Subject to Section 36-29-19.3, any further changes in employee or retiree contribution to the health insurance premium or other out-of-pocket expenses including, but not limited to, any surcharge, copay, or deductible may only be enacted when: (1) the Executive Director certifies that after proper evaluation said increase is justified and (2) the change is approved by at least a two-thirds vote of the Board members present.

(d) As used in this section, the employer shall mean the fund from which the salaries of such employees are paid. There is hereby appropriated annually from each fund amounts sufficient to provide the employer*s contribution of the health insurance premium. In the case of those departments supported wholly by transfers from other state funds, there is hereby appropriated from the supporting funds such additional amounts as may be necessary to pay the sums required to pay the employer*s contribution costs of employees and retirees of each department so supported in the same proportion as the other state funds contribute to the support and maintenance of such department.

(e) During any period in which an employee or an employee*s dependents are covered under this chapter, there shall be withheld from the salary payment of such employee the employee*s contribution to the cost of coverage.

(f) There is hereby created in the State Treasury a fund to be known as the State Employees* Insurance Fund. Such fund shall consist of and there shall be deposited into such fund all appropriations made from employer funds, under the provisions of subsection (d) of this section and all premiums paid by employees and retirees under the provisions of subsection (e) of this section and any other premiums paid under the provisions of this chapter. The board shall designate a custodian of this fund who shall be authorized to make deposits into and payments therefrom in accordance with contracts entered into by said board.

(a) All persons in the employment of the State of Alabama who are eligible for coverage under the provisions of this chapter and the rules and regulations of the board adopted pursuant thereto shall have the option to be included in such coverage and shall have an option as to whether they will subscribe to such coverage for their dependents, such option to be exercised in the manner and within the time limitation prescribed by the board.

(b) All persons who become employees of the State of Alabama, as defined by the terms of this chapter and the rules and regulations promulgated by the board pursuant thereto shall have the option to become members of the Plan hereby provided and shall have an option as to whether they will subscribe to such coverage for their dependents; provided, that the exercise of such option shall be contingent upon acceptance by the Board subject to proper documentation of eligibility and such coverage may be deferred during any reasonable waiting period provided in the contract or contracts.

(c) Any employee or retiree knowingly and willfully submitting materially false information to the Board shall, upon a determination by the Board, repay all claims and other expenses incurred by the Plan related to false or misleading information submitted by the employee or retiree in addition to a charge based on the applicable interest rate paid by the state, under Code Section 40-1-44.

The contract or contracts shall provide for health insurance for retiring state employees and their spouses and dependents as defined by rules and regulations of the board on such terms as the board may deem appropriate.

The board shall adopt rules and regulations prescribing the conditions under which retiring employees, and in the event of the death of a retired employee their spouses and dependents, may elect to participate in or withdraw from the plan.

Employees covered under the Plan who retire from active service and begin receiving monthly benefits from the Employees* Retirement System of Alabama, Judicial Retirement System of Alabama, or from the Teachers* Retirement System of Alabama may elect to continue coverage under the Plan by consenting to have the employee contribution deducted from their monthly benefit payment for coverage of such retired employees. The premiums so deducted shall be transmitted monthly to the board. Notwithstanding the foregoing provisions no person otherwise eligible for coverage under the Plan shall be denied participation therein, for the reason that such person is precluded from having the cost of his coverage deducted from a monthly benefit payment. The board shall adopt such rules and regulations as they deem appropriate and necessary for carrying out the provisions of this subsection.

Any benefits payable under the plan adopted may be paid either directly to the attending physician, hospital, medical group or other furnishing the service upon which the claim is based or to the insured employee upon presentation of valid bills for such services, subject to such provisions designed to facilitate payment as may be made by the board.

The Board shall promulgate such rules and regulations as may be required for the effective administration of the provisions of this chapter. The Board shall have discretion and authority to interpret the terms and conditions of the Plan. The Plan shall require adequate notice in writing to any participant whose claim for benefits under the plan has been denied, setting forth the specific reasons for such denial and shall afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the claims administrator upon the written request of the participant, within 60 days of the date of denial, setting forth the specific reasons for review. The claims administrator shall provide in writing a final determination of the claim. Review of a final decision by the claims administrator shall be by the Circuit Court of Montgomery County.

(a) There is hereby provided from the funds of the State Employees* Health Insurance Plan $1,592,605.00 (estimated) for the fiscal year beginning October 1, 1985. The State Employees* Insurance Board is hereby to expend $22.35 per month per eligible retired employee towards coverage for said retired employee for the fiscal year beginning October 1, 1985.

(b) It is the intent of the Legislature that subsequent appropriations to the State Employees* Insurance Board pursuant to this section shall be included in the appropriations made for active employees from employer funds pursuant to subsection (d) of Section 36-29-7 beginning with the fiscal year 1986-87 and each year thereafter and shall be increased to fully fund the employer*s portion of the benefits provided for in Section 36-29-10.

(c) The Board shall recognize any Medicare premium paid by a retiree in determining any increases in retiree contributions in existing and newly imposed premiums proscribed on state employees and retirees.

(a) Any agency of the state, any county, any municipality, any fire or water district or authority, any regional planning and development commission established pursuant to Sections 11-85-50 through 11-85-73, that is not and was not for the twelve months immediately preceding the date of application to participate in any plan created pursuant to the provisions of this article a member of an existing government sponsored health insurance program, formed under the provisions of Section 11-26-2, the Association of County Commissions of Alabama or the Alabama League of Municipalities, the Alabama Retired State Employees* Association, the Alabama State Employees Credit Union, Easter Seals Alabama, or the Alabama Rural Water Association may, by resolution legally adopt to conform to rules prescribed by the State Employees* Insurance Board, elect to have its officers, employees, and retired employees become eligible for health insurance coverage under the State Employees* Insurance Board without any liability to the state or the State Employees* Health Insurance Plan.

(b) Acceptance of the employees identified in subsection (a) shall be optional with the State Employees* Insurance Board.

(c) Employees, officers, and retirees who are eligible for health insurance pursuant to this section shall be entitled to coverage and benefits as designated by the State Employees* Insurance Board.

(d) Any portion of the cost of the insurance coverage as determined by the State Employees* Insurance Board for the employees, officers, and retirees and their dependents pursuant to this section may be paid by the employer.

(e) The chief fiscal officer of each employer shall remit to the State Employees* Insurance Board the amount of premiums required for employee and dependent coverage under this section. The employer shall furnish the necessary information to the State Employees* Insurance Board.

(f) The agreement of any employer to have its employees, officers, and retirees to be covered under the health insurance plan provided by the State Employees* Insurance Board may be revoked only by complying with the following provisions:

The employer, by resolution of the governing body, shall signify its intention and desire to withdraw from such plan in writing and by delivering a copy of such resolution by certified mail to the State Employees* Insurance Board no later than six months prior to the effective date of withdrawal. Any employer that withdraws from participation in such plan shall be responsible for paying its claims incurred prior to the date of withdrawal, but not reported and paid prior to the date of withdrawal. The withdrawing employer shall also be liable for interest which will accrue at a rate of 1.5 percent per month on any monies due to the State Employees* Insurance Board which are over 30 days past due. Any organization which provides or administers health insurance benefits through the Local Government Health Insurance Program shall not provide or administer health insurance benefits to any entity which withdraws from the Local Government Health Insurance Program for a period of two years from the effective date of withdrawal.

(g) The State Employees* Insurance Board shall promulgate such rules and regulations as may be necessary for the effective administration of the provisions of this section.

(a) The governing body of any county soil and water conservation district may, by resolution legally adopted to conform to rules prescribed by the State Employees* Insurance Board, elect to have its officers and employees who are full-time employees working at least a 40-hour work week and its retiring employees who worked full time at least a 40-hour work week during their active employment become eligible to participate in the State Employees* Health Insurance Plan. The term @officers@ and @employees@ as used in this section shall include those persons appointed or employed by the individual officers and performing their duties in public offices, but shall not include members of soil and water conservation district boards, known as district supervisors who are expressly prohibited from participating in said health insurance plan.

(b) Each employee who is covered by the State Employees* Health Insurance Plan pursuant to this section shall be entitled to the coverage and benefits as though he were a state employee.

(c) The cost of the insurance coverage for the employee shall be paid by the employer; however, each employee who chooses to have dependent coverage shall agree to pay the cost of coverage for his dependents. The chief fiscal officer of each employer shall pay to the State Employees* Insurance Board to the credit of the State Employees* Insurance Fund the amount of premiums paid by the employer and the employees.

(d) The agreement of any employer to have its officers and employees and its retiring employees to be covered under the State Employees* Health Insurance Plan shall be irrevocable except it can be terminated by the employer, by resolution of the governing body, signifying its intention and desire to withdraw from such plan in writing and delivering a copy of such resolution to the State Employees* Insurance Board; provided, however, any officer or employee who becomes covered under such plan shall be entitled to a minimum of five consecutive years of coverage.

(e) The State Employees* Insurance Board shall promulgate such rules and regulations as may be required for the effective administration of the provisions of this article.

(a) Any member of the Legislature and the Lieutenant Governor, during their term of office, and their dependents, shall be eligible for coverage under the State Employees* Health Insurance Plan and upon expiration of their term of office may continue such coverage for a maximum of 36 months.

(b) Preexisting conditions shall not be covered until the insured has been covered under the plan for a period of 12 months, provided, however, that any legislator enrolling within 30 days of April 23, 1990 or within 30 days of the beginning of any calendar year thereafter shall not be subject to this limitation of benefits. A preexisting condition is any condition for which the insured or their covered dependent received medical treatment, advice or consultation or received any prescribed medication within 12 months of the effective date of the insured*s coverage under the plan.

(c) The premiums for the insurance coverage for a legislator, the Lieutenant Governor and their dependents shall be paid by the individual legislator and the Lieutenant Governor.

(d) The State Employees* Insurance Board shall promulgate such rules and regulations as may be required for the effective administration of the provisions of this section.

Any judge of probate who qualifies to retire from active service with a benefit from the Judicial Retirement Fund or any legislator shall be entitled to participate in the State Employees* Health Insurance Plan. The entire cost for the group health insurance during retirement for a judge of probate or for a legislator shall be paid by such retired judge or legislator under such terms and conditions as the group insurer may, from time to time, prescribe for such group health insurance.

(a) Notwithstanding the provisions of Section 36-29-1, an employee or executive officer of the Alabama Sports Hall of Fame Board and his or her dependents shall be eligible for coverage under the State Employees* Health Insurance Plan and upon the expiration of the employment may continue the coverage for a maximum of 36 months.

(b) Preexisting conditions shall not be covered until the insured has been covered under the plan for a period of 12 months. An employee enrolling within 30 days of August 7, 1995 or within 30 days of the beginning of a calendar year thereafter shall not be subject to this limitation of benefits. A preexisting condition is a condition for which the insured or their covered dependent received medical treatment, advice, or consultation, or received a prescribed medication within 12 months of the effective date of the insured*s coverage under the plan.

(c) The premiums for the insurance coverage for employees, executive officers, and their dependents shall be paid pursuant to Section 36-29-7. For those purposes, the Alabama Sports Hall of Fame shall be the employer.

(d) The State Employees* Insurance Board shall promulgate rules and regulations required for the effective administration of this section.

As a condition of participation in an insurance policy of the State Employees Insurance Board (SEIB) a pharmacist shall dispense a generic equivalent medication to fill a prescription for a patient covered by SEIB when one is available unless the physician indicates in longhand writing on the prescription @medically Necessary@ or @dispense as written@ or @do not substitute@. The generic equivalent drug product dispensed shall be pharmaceutically and therapeutically equivalent and contain the same active ingredient, or ingredients and shall be of the same dosage, form, and strength.

The Legislature finds that private employers have provided their employees with flexible employee benefit plans which provide a savings both to the employer and the employee, and that the State of Alabama, its departments and agencies, may provide the same tax-effective benefits to its employees. It is, therefore, the intent of the Legislature to provide for the establishment of a @cafeteria plan@ or flexible employee benefit plan in compliance with the Internal Revenue Code of 1986, with every effort being used to utilize the existing resources of the state Comptroller to implement said plan in conjunction with the Flexible Employees Benefits Board.

When used in this article, the following terms shall have the following meanings, unless the context clearly indicates otherwise:

(1) BOARD. The Flexible Employees Benefits Board.

(2) EMPLOYEE. A person who is employed by the State of Alabama, its agencies, departments, or for a county health department, and who receives his compensation through means of a state warrant drawn upon the State Treasury, or by check drawn by the Alabama State Port Authority, or from the treasury of the Department of Mental Health and Mental Retardation, other than those employees covered by the federal Railroad Retirement Act. Further, for the purposes of long-term care insurance, this definition covers any person employed by a local government in the State of Alabama.

(3) INTERNAL REVENUE CODE. The Internal Revenue Code of 1986, as amended.

(4) PARTICIPATING EMPLOYEE. An employee who elects to participate in the flexible benefit plan and meets the requirements set forth in said plan.

(5) SALARY REDUCTION AGREEMENT. A written agreement between a participating employee and a state agency, department, or county health department, whereby the employee agrees to reduce his salary by a stated amount, or an amount equal to the cost of benefits selected under a flexible employee benefit plan, and the state agency, department, or county health department agrees to contribute such amounts to cover the cost of benefits selected by the participating employee, including related administrative expenses.

There is hereby created the Flexible Employees Benefit Board, which shall consist of a state employee appointed by the Executive Director of the Alabama State Employees Association, the members of the State Personnel Board, and the Director of Finance. The individuals presently holding the offices shall constitute the initial membership of the board, and their successors in office, by virtue of assuming such office, shall succeed to membership on the board. The Director of Finance may designate a person to attend the meetings from time to time and to vote in his or her absence.

The board shall elect one of its members as chair of the board and another as vice chair and shall also elect a secretary who need not be a member of the board. The chair, vice chair and the secretary shall serve as officers at the pleasure of the board. A majority of the members of the board shall constitute a quorum and the affirmative vote of a majority of those members present shall be necessary for any action taken by the board. No vacancy in the membership of the board shall impair the right of a quorum to exercise all rights and perform all duties of the board.

The board, with the approval of the Governor, is authorized to establish a flexible employee benefit plan for state employees in compliance with Section 125 and any other applicable sections of the Internal Revenue Code. The flexible employee benefit plan may provide for payments or salary reductions for qualified benefits in accordance with Section 125 of the Internal Revenue Code, which presently include health insurance premiums, group life insurance, disability insurance, supplemental health and accident insurance, dependent care expenses, and such other types of employee benefits permitted under Section 125 and any other applicable sections of the Internal Revenue Code. Futhermore, the board may establish a long-term care plan for employees.

In order to carry out the provisions of the flexible employee benefit plan or any long-term care plan, or both, the board or the head of each department, agency, or county health department is authorized on behalf of the state to deduct or reduce from salary or wages amounts voluntarily designated by the employees pursuant to salary reduction agreements or benefit deduction agreements for purchasing benefits offered under the plan.

The board may promulgate rules and regulations concerning the selection of benefits offered and such other rules and regulations as may be required for the effective administration of this article.

In the event the board adopts and implements a flexible employee benefit plan which includes the offering of benefits in addition to health insurance premiums, the board is authorized to pay administrative expenses related to the plan, said funds being derived from general appropriation and/or by fees charged to the participating employees.

The board is authorized to establish such funds in the State Treasury as are necessary to administer said plan and may deposit as necessary in such fund or funds employee payments, amounts deducted pursuant to salary reduction agreements, and administrative fees and appropriations, if any. The board shall designate a custodian of said fund or funds who shall be authorized to make deposits into and payments therefrom in accordance with rules and regulations adopted by said board.

The amount by which a state employee*s salary or wage is reduced pursuant to a salary reduction agreement authorized by this article shall continue to be included as earnable compensation for the purpose of computing benefits under the state Employees* Retirement System and/or the Teachers* Retirement System.

The board and the head of each department, agency, or county health department, and their employees shall not incur any liability to any employee for errors or omissions in the performance of any agreement authorized by this article.

Counties, municipal corporations, county school boards and other political subdivisions in this state shall continue to have the authority to adopt flexible benefit plans for their employees, in accordance with the Internal Revenue Code, upon the adoption of any necessary local enabling ordinance or resolution.