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A BILL TO BE ENTITLED
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AN ACT
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relating to treatment of retrospective premiums for group life |
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insurance issued through certain nonprofit membership |
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associations. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 1131.503, Insurance Code, is amended by |
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adding Subsection (c) to read as follows: |
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(c) For purposes of Sections 222.002, 257.001, and 281.004, |
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only the final retrospectively determined premium amount remitted |
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to the issuer by the group policyholder is taxable as gross |
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premiums, without regard to whether membership contributions, |
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fees, assessments, dues, revenues, or other considerations in |
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excess of that final amount are also collected from members. This |
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subsection applies only to a nonprofit membership association that: |
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(1) qualifies under Section 501(c)(9), Internal |
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Revenue Code of 1986; |
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(2) has been in existence for at least 50 years; |
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(3) limits association membership to: |
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(A) members of the uniformed services of the |
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United States serving on active duty; |
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(B) members of the ready reserve forces of the |
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United States, including the Army and Air National Guard; |
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(C) retirees and separatees of: |
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(i) the uniformed services of the United |
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States; or |
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(ii) the ready reserve forces of the United |
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States, including the Army and Air National Guard; |
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(D) cadets and midshipmen in the service |
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academies of the United States and other officer candidates; |
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(E) federal employees and contractors who are |
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employed by the United States government or other related |
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governmental entities or retired with pay from that employment; |
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(F) employees or members of any state, county, |
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municipal, or other local governmental body or other organized |
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governmental entity who are involved in homeland defense and |
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homeland security operations; and |
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(G) any other category of membership established |
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by the governing body of the association that falls within the scope |
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of permissible membership authorized by Section 501(c)(9), |
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Internal Revenue Code of 1986; |
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(4) has no separate membership enrollment or |
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application requirement; |
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(5) collects member contributions, fees, or dues, |
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including funds contributed specifically for insurance and |
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remitted by the group policyholder to the issuer following a |
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retrospective premium determination; and |
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(6) provides insurance and noninsurance membership |
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benefits. |
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SECTION 2. The change in law made by this Act applies only |
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to a premium remitted on or after the effective date of this Act. A |
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premium remitted before the effective date of this Act is governed |
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by the law as it existed immediately before the effective date of |
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this Act, and that law is continued in effect for that purpose. |
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SECTION 3. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect September 1, 2007. |
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