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A BILL TO BE ENTITLED
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AN ACT
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relating to the funding mechanism for the regulation of workers' |
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compensation and workers' compensation insurance; authorizing |
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surcharges. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. The heading to Title 3, Insurance Code, is |
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amended to read as follows: |
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TITLE 3. DEPARTMENT FUNDS, FEES, SURCHARGES, AND TAXES |
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SECTION 2. The heading to Subtitle C, Title 3, Insurance |
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Code, is amended to read as follows: |
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SUBTITLE C. INSURANCE MAINTENANCE TAXES AND SURCHARGES |
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SECTION 3. Section 251.001(a), Insurance Code, is amended |
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to read as follows: |
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(a) The commissioner shall annually determine the rate of |
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assessment of each maintenance tax or workers' compensation |
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surcharge imposed under this subtitle. |
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SECTION 4. The heading to Section 251.004, Insurance Code, |
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is amended to read as follows: |
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Sec. 251.004. DEPOSIT OF MAINTENANCE TAXES AND SURCHARGES. |
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SECTION 5. Section 251.004(a), Insurance Code, is amended |
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to read as follows: |
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(a) Except as provided by Subsection (b), maintenance taxes |
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collected under this subtitle and surcharges collected under |
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Chapter 255 shall be deposited in the general revenue fund and |
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reallocated to the Texas Department of Insurance operating account. |
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SECTION 6. Chapter 255, Insurance Code, is amended to read |
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as follows: |
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CHAPTER 255. WORKERS' COMPENSATION INSURANCE |
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Sec. 255.001. SURCHARGE [MAINTENANCE TAX] IMPOSED. (a) A |
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surcharge [maintenance tax] is imposed on each authorized insurer |
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with gross premiums subject to the surcharge [taxation] under |
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Section 255.003, including a: |
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(1) stock insurance company; |
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(2) mutual insurance company; |
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(3) reciprocal or interinsurance exchange; and |
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(4) Lloyd's plan. |
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(b) The surcharge [tax] required by this chapter is in |
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addition to [other] taxes or other surcharges imposed that are not |
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in conflict with this chapter. |
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Sec. 255.002. MAXIMUM RATE; ANNUAL ADJUSTMENT. (a) The |
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sum of the rates [rate] of assessment for the surcharge imposed by |
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this chapter and the surcharges imposed by Chapters 403 and 405, |
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Labor Code, set by the commissioner, may not exceed 2.7 [0.6] |
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percent of the gross premiums subject to surcharges [taxation under |
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Section 255.003]. |
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(b) The commissioner shall annually adjust the rate of |
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assessment of the surcharge [maintenance tax] so that the surcharge |
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[tax] imposed that year, together with any unexpended funds |
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produced by the surcharge [tax], produces the amount the |
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commissioner determines is necessary to pay the expenses during the |
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succeeding year of regulating workers' compensation insurance. |
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Sec. 255.003. PREMIUMS SUBJECT TO SURCHARGE [TAXATION]. |
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(a) An insurer shall pay the surcharge [maintenance taxes] under |
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this chapter on the correctly reported gross workers' compensation |
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insurance premiums from writing workers' compensation insurance in |
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this state, including the modified annual premium of a policyholder |
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that purchases an optional deductible plan under Subchapter E, |
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Chapter 2053. |
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(b) The rate of assessment for a surcharge shall be applied |
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to the modified annual premium before application of a deductible |
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premium credit. |
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Sec. 255.004. SURCHARGE [MAINTENANCE TAX] DUE DATES. (a) |
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The insurer shall pay the surcharge [maintenance tax] annually or |
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semiannually. |
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(b) The comptroller may require semiannual payment only |
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from an insurer whose surcharge [maintenance tax] liability under |
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this chapter for the previous tax year was at least $2,000. |
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Sec. 255.005. RECOVERY OF SURCHARGE. An insurer may |
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recover a surcharge under this chapter by: |
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(1) reflecting the surcharge as an expense in a rate |
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filing required under this code; or |
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(2) charging the insurer's policyholders. |
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SECTION 7. Section 403.001(a), Labor Code, is amended to |
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read as follows: |
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(a) Except as provided by Sections 403.006, 403.007, and |
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403.008, or as otherwise provided by law, money collected under |
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this subtitle, including surcharges and advance deposits for |
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purchase of services, shall be deposited in the general revenue |
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fund of the state treasury to the credit of the Texas Department of |
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Insurance operating account. |
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SECTION 8. Section 403.002, Labor Code, is amended to read |
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as follows: |
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Sec. 403.002. SURCHARGES [MAINTENANCE TAXES]. (a) Each |
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insurance carrier, other than a governmental entity, shall pay an |
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annual surcharge [maintenance tax] to pay the costs of |
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administering this subtitle and to support the prosecution of |
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workers' compensation insurance fraud in this state. |
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(b) The rate of assessment is applied to [may not exceed an |
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amount equal to two percent of] the correctly reported gross |
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workers' compensation insurance premiums, including the modified |
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annual premium of a policyholder that purchases an optional |
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deductible plan under Subchapter E, Chapter 2053 [Article 5.55C], |
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Insurance Code. The rate of assessment shall be applied to the |
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modified annual premium before application of a deductible premium |
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credit. |
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(c) A workers' compensation insurance company is assessed |
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[taxed] at the rate established under Section 403.003 and as |
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limited by Section 255.002(a), Insurance Code. The surcharge [tax] |
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shall be collected in the manner provided for collection of other |
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surcharges [taxes] on gross premiums from a workers' compensation |
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insurance company as provided in Chapter 255, Insurance Code. |
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(d) Each certified self-insurer shall pay a fee and |
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maintenance taxes as provided by Subchapter F, Chapter 407. |
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SECTION 9. The heading to Section 403.003, Labor Code, is |
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amended to read as follows: |
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Sec. 403.003. RATE OF SURCHARGE [ASSESSMENT]. |
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SECTION 10. Section 403.003(a), Labor Code, is amended to |
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read as follows: |
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(a) The commissioner of insurance shall set and certify to |
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the comptroller the rate of the surcharge, [maintenance tax |
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assessment] taking into account: |
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(1) any expenditure projected as necessary for the |
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division and the office of injured employee counsel to: |
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(A) administer this subtitle during the fiscal |
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year for which the rate of assessment is set; and |
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(B) reimburse the general revenue fund as |
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provided by Section 201.052, Insurance Code; |
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(2) projected employee benefits paid from general |
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revenues; |
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(3) a surplus or deficit produced by the surcharge |
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[tax] in the preceding year; |
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(4) revenue recovered from other sources, including |
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reappropriated receipts, grants, payments, fees, gifts, and |
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penalties recovered under this subtitle; and |
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(5) expenditures projected as necessary to support the |
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prosecution of workers' compensation insurance fraud. |
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SECTION 11. Section 403.004, Labor Code, is amended to read |
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as follows: |
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Sec. 403.004. COLLECTION OF SURCHARGE [TAX] AFTER |
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WITHDRAWAL FROM BUSINESS. The commissioner or the commissioner of |
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insurance immediately shall proceed to collect surcharges [taxes] |
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due under this chapter from an insurance carrier that withdraws |
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from business in this state, using legal process as necessary. |
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SECTION 12. Section 403.005, Labor Code, is amended to read |
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as follows: |
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Sec. 403.005. SURCHARGE [TAX] RATE. The commissioner of |
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insurance shall annually adjust the rate of assessment of the |
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surcharge [maintenance tax] imposed under Section 403.003 so that |
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the surcharge [tax] imposed that year, together with any unexpended |
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funds produced by the surcharge [tax], produces the amount the |
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commissioner of insurance determines is necessary to pay the |
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expenses of administering this subtitle. |
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SECTION 13. Chapter 403, Labor Code, is amended by adding |
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Section 403.0055 to read as follows: |
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Sec. 403.0055. RECOVERY OF SURCHARGE. An insurer may |
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recover a surcharge under this chapter by: |
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(1) reflecting the surcharge as an expense in a rate |
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filing required under the Insurance Code; or |
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(2) charging the insurer's policyholders. |
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SECTION 14. The heading to Section 405.003, Labor Code, is |
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amended to read as follows: |
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Sec. 405.003. FUNDING; SURCHARGE AND RECOVERY OF SURCHARGE |
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BY INSURERS [MAINTENANCE TAX]. |
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SECTION 15. Section 405.003, Labor Code, is amended by |
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amending Subsections (a), (b), (c), and (d) and adding Subsection |
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(g) to read as follows: |
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(a) The group's duties under this chapter are funded through |
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the assessment of a surcharge [maintenance tax] collected annually |
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from all insurance carriers, and self-insurance groups that hold |
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certificates of approval under Chapter 407A, except governmental |
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entities. |
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(b) The department shall set the rate of the surcharge |
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[maintenance tax] based on the expenditures authorized and the |
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receipts anticipated in legislative appropriations. The surcharge |
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[tax] rate for insurance companies may not exceed the limitation in |
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Section 255.002(a), Insurance Code. The surcharge rate is applied |
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to [may not exceed one-tenth of one percent of] the correctly |
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reported gross workers' compensation insurance premiums. The |
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surcharge [tax] rate for certified self-insurers may not exceed the |
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limitation in Section 255.002(a), Insurance Code. The surcharge |
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rate is applied to [may not exceed one-tenth of one percent of] the |
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total tax base of all certified self-insurers, as computed under |
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Section 407.103(b). The surcharge [tax] rate for self-insurance |
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groups described by Subsection (a) may not exceed the limitation in |
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Section 255.002(a), Insurance Code. The surcharge rate is applied |
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to [may not exceed one-tenth of one percent of] the group's gross |
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premium for the group's retention, excluding premium collected by |
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the group for excess insurance. |
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(c) The surcharge [tax] imposed under Subsection (a) is in |
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addition to all [other] taxes or other surcharges imposed on those |
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insurance carriers for workers' compensation purposes. |
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(d) The surcharge [tax] on insurance companies and on |
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self-insurance groups described by Subsection (a) shall be |
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assessed, collected, and paid in the same manner and at the same |
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time as the surcharge [maintenance tax] established for the support |
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of the department under Chapter 255, Insurance Code. The surcharge |
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[tax] on certified self-insurers shall be assessed, collected, and |
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paid in the same manner and at the same time as the self-insurer |
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maintenance tax collected under Section 407.104. |
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(g) An insurer may recover a surcharge under this section |
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by: |
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(1) reflecting the surcharge as an expense in a rate |
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filing required under the Insurance Code; or |
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(2) charging the insurer's policyholders. |
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SECTION 16. The changes in law made by this Act relating to |
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surcharges on gross workers' compensation premiums apply only to |
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the gross annual premiums reported for an annual period beginning |
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on or after the effective date of this Act. Maintenance taxes |
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imposed on gross annual workers' compensation premiums before the |
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effective date of this Act are governed by the law as it existed |
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before the effective date of this Act, and the former law is |
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continued in effect for that purpose. |
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SECTION 17. This Act takes effect January 1, 2024. |
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* * * * * |