| |
| |
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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 |
|
|
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 201.001(a), Insurance Code, is amended |
|
|
to read as follows: |
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(a) The Texas Department of Insurance operating account is |
|
|
an account in the general revenue fund. The account includes the |
|
|
following: |
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(1) taxes, surcharges, and fees received by the |
|
|
commissioner or comptroller that are required by this code or other |
|
|
law to be deposited to the credit of the account; and |
|
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(2) money or credits received by the department or |
|
|
commissioner from sales, reimbursements, and fees authorized by law |
|
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other than this code, including money or credits received from: |
|
|
(A) charges for providing copies of public |
|
|
information under Chapter 552, Government Code; |
|
|
(B) the disposition of surplus or salvage |
|
|
property under Subchapters C and D, Chapter 2175, Government Code; |
|
|
(C) the sale of publications and other printed |
|
|
material under Section 2052.301, Government Code; |
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(D) miscellaneous transactions and sources under |
|
|
Section 403.011 or 403.012, Government Code; |
|
|
(E) charges for postage spent to serve legal |
|
|
process under Section 17.025, Civil Practice and Remedies Code; |
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(F) the comptroller involving warrants for which |
|
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payment is barred under Chapter 404, Government Code; |
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|
(G) sales or reimbursements authorized by the |
|
|
General Appropriations Act; and |
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|
(H) the sale of property purchased with money |
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|
from the account or a predecessor fund or account. |
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SECTION 4. Section 251.001(a), Insurance Code, is amended |
|
|
to read as follows: |
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(a) The commissioner shall annually determine the rate of |
|
|
assessment of each maintenance tax or workers' compensation |
|
|
surcharge imposed under this subtitle. |
|
|
SECTION 5. Section 251.002, Insurance Code, is amended to |
|
|
read as follows: |
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Sec. 251.002. DUTY TO ADVISE COMPTROLLER OF RATE. The |
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|
commissioner shall advise the comptroller of the applicable rate of |
|
|
assessment of a maintenance tax or workers' compensation surcharge |
|
|
not later than the 45th day before the due date of the tax or |
|
|
surcharge report for the period for which that tax or surcharge is |
|
|
due. |
|
|
SECTION 6. Section 251.003, Insurance Code, is amended to |
|
|
read as follows: |
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|
Sec. 251.003. EFFECT OF LATE ADVISEMENT OF |
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|
RATE. (a) Except as provided by Subsection (b), if the |
|
|
commissioner does not advise the comptroller of the applicable rate |
|
|
of assessment of a maintenance tax or workers' compensation |
|
|
surcharge by the date required by Section 251.002, the rate of |
|
|
assessment is the rate applied in the previous tax or surcharge |
|
|
period. |
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(b) If the commissioner advises the comptroller of the |
|
|
applicable rate of assessment of a maintenance tax or workers' |
|
|
compensation surcharge after the tax or surcharge has been |
|
|
assessed, the comptroller shall: |
|
|
(1) advise each taxpayer or surcharge payer in writing |
|
|
of the amount of any additional taxes or surcharges due; or |
|
|
(2) refund any excess taxes or surcharges paid. |
|
|
SECTION 7. The heading to Section 251.004, Insurance Code, |
|
|
is amended to read as follows: |
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|
Sec. 251.004. DEPOSIT OF MAINTENANCE TAXES AND SURCHARGES. |
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|
SECTION 8. Section 251.004(a), Insurance Code, is amended |
|
|
to read as follows: |
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|
(a) Except as provided by Subsection (b), maintenance taxes |
|
|
collected under this subtitle and surcharges collected under |
|
|
Chapter 255 shall be deposited in the general revenue fund and |
|
|
reallocated to the Texas Department of Insurance operating account. |
|
|
SECTION 9. Chapter 255, Insurance Code, is amended to read |
|
|
as follows: |
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CHAPTER 255. WORKERS' COMPENSATION INSURANCE |
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|
Sec. 255.001. SURCHARGE [MAINTENANCE TAX] IMPOSED. (a) A |
|
|
surcharge [maintenance tax] is imposed on each authorized insurer |
|
|
with gross premiums subject to the surcharge [taxation] under |
|
|
Section 255.003, including a: |
|
|
(1) stock insurance company; |
|
|
(2) mutual insurance company; |
|
|
(3) reciprocal or interinsurance exchange; and |
|
|
(4) Lloyd's plan. |
|
|
(b) The surcharge [tax] required by this chapter is in |
|
|
addition to [other] taxes or other surcharges imposed that are not |
|
|
in conflict with this chapter. |
|
|
Sec. 255.002. MAXIMUM RATE; ANNUAL ADJUSTMENT. (a) The |
|
|
sum of the rates [rate] of assessment for the surcharge imposed by |
|
|
this chapter and the surcharges imposed by Chapters 403 and 405, |
|
|
Labor Code, set by the commissioner, may not exceed 2.7 [0.6] |
|
|
percent of the gross premiums subject to surcharges [taxation under |
|
|
Section 255.003]. |
|
|
(b) The commissioner shall annually adjust the rate of |
|
|
assessment of the surcharge [maintenance tax] so that the surcharge |
|
|
[tax] imposed that year, together with any unexpended funds |
|
|
produced by the surcharge [tax], produces the amount the |
|
|
commissioner determines is necessary to pay the expenses during the |
|
|
succeeding year of regulating workers' compensation insurance. |
|
|
Sec. 255.003. PREMIUMS SUBJECT TO SURCHARGE [TAXATION]. |
|
|
(a) An insurer shall pay the surcharge [maintenance taxes] under |
|
|
this chapter on the correctly reported gross workers' compensation |
|
|
insurance premiums from writing workers' compensation insurance in |
|
|
this state, including the modified annual premium of a policyholder |
|
|
that purchases an optional deductible plan under Subchapter E, |
|
|
Chapter 2053. |
|
|
(b) The rate of assessment for a surcharge shall be applied |
|
|
to the modified annual premium before application of a deductible |
|
|
premium credit. |
|
|
Sec. 255.004. SURCHARGE [MAINTENANCE TAX] DUE DATES. (a) |
|
|
The insurer shall pay the surcharge [maintenance tax] annually or |
|
|
semiannually. |
|
|
(b) The comptroller may require semiannual payment only |
|
|
from an insurer whose surcharge [maintenance tax] liability under |
|
|
this chapter for the previous surcharge [tax] year was at least |
|
|
$2,000. |
|
|
Sec. 255.005. RECOVERY OF SURCHARGE. An insurer may |
|
|
recover a surcharge under this chapter by: |
|
|
(1) reflecting the surcharge as an expense in a rate |
|
|
filing required under this code; or |
|
|
(2) charging the insurer's policyholders. |
|
|
SECTION 10. Section 402.076(b), Labor Code, is amended to |
|
|
read as follows: |
|
|
(b) The operations of the division under this section are |
|
|
funded through the surcharge [maintenance tax] assessed under |
|
|
Section 403.002. |
|
|
SECTION 11. Section 403.001(a), Labor Code, is amended to |
|
|
read as follows: |
|
|
(a) Except as provided by Sections 403.006, 403.007, and |
|
|
403.008, or as otherwise provided by law, money collected under |
|
|
this subtitle, including surcharges and advance deposits for |
|
|
purchase of services, shall be deposited in the general revenue |
|
|
fund of the state treasury to the credit of the Texas Department of |
|
|
Insurance operating account. |
|
|
SECTION 12. Section 403.002, Labor Code, is amended to read |
|
|
as follows: |
|
|
Sec. 403.002. SURCHARGES [MAINTENANCE TAXES]. (a) Each |
|
|
insurance carrier, other than a governmental entity, shall pay an |
|
|
annual surcharge [maintenance tax] to pay the costs of |
|
|
administering this subtitle and to support the prosecution of |
|
|
workers' compensation insurance fraud in this state. |
|
|
(b) The rate of assessment is applied to [may not exceed an |
|
|
amount equal to two percent of] the correctly reported gross |
|
|
workers' compensation insurance premiums, including the modified |
|
|
annual premium of a policyholder that purchases an optional |
|
|
deductible plan under Subchapter E, Chapter 2053 [Article 5.55C], |
|
|
Insurance Code. The rate of assessment shall be applied to the |
|
|
modified annual premium before application of a deductible premium |
|
|
credit. |
|
|
(c) A workers' compensation insurance company is assessed |
|
|
the surcharge [taxed] at the rate established under Section 403.003 |
|
|
and as limited by Section 255.002(a), Insurance Code. The |
|
|
surcharge [tax] shall be collected in the manner provided for |
|
|
collection of other surcharges [taxes] on gross premiums from a |
|
|
workers' compensation insurance company as provided in Chapter 255, |
|
|
Insurance Code. |
|
|
(d) Each certified self-insurer shall pay a fee and |
|
|
surcharge [maintenance taxes] as provided by Subchapter F, Chapter |
|
|
407. |
|
|
SECTION 13. The heading to Section 403.003, Labor Code, is |
|
|
amended to read as follows: |
|
|
Sec. 403.003. RATE OF SURCHARGE [ASSESSMENT]. |
|
|
SECTION 14. Section 403.003(a), Labor Code, is amended to |
|
|
read as follows: |
|
|
(a) The commissioner of insurance shall set and certify to |
|
|
the comptroller the rate of the surcharge, [maintenance tax |
|
|
assessment] taking into account: |
|
|
(1) any expenditure projected as necessary for the |
|
|
division and the office of injured employee counsel to: |
|
|
(A) administer this subtitle during the fiscal |
|
|
year for which the rate of assessment is set; and |
|
|
(B) reimburse the general revenue fund as |
|
|
provided by Section 201.052, Insurance Code; |
|
|
(2) projected employee benefits paid from general |
|
|
revenues; |
|
|
(3) a surplus or deficit produced by the surcharge |
|
|
[tax] in the preceding year; |
|
|
(4) revenue recovered from other sources, including |
|
|
reappropriated receipts, grants, payments, fees, gifts, and |
|
|
penalties recovered under this subtitle; and |
|
|
(5) expenditures projected as necessary to support the |
|
|
prosecution of workers' compensation insurance fraud. |
|
|
SECTION 15. Section 403.004, Labor Code, is amended to read |
|
|
as follows: |
|
|
Sec. 403.004. COLLECTION OF SURCHARGE [TAX] AFTER |
|
|
WITHDRAWAL FROM BUSINESS. The commissioner or the commissioner of |
|
|
insurance immediately shall proceed to collect surcharges [taxes] |
|
|
due under this chapter from an insurance carrier that withdraws |
|
|
from business in this state, using legal process as necessary. |
|
|
SECTION 16. Section 403.005, Labor Code, is amended to read |
|
|
as follows: |
|
|
Sec. 403.005. SURCHARGE [TAX] RATE. The commissioner of |
|
|
insurance shall annually adjust the rate of assessment of the |
|
|
surcharge [maintenance tax] imposed under Section 403.003 so that |
|
|
the surcharge [tax] imposed that year, together with any unexpended |
|
|
funds produced by the surcharge [tax], produces the amount the |
|
|
commissioner of insurance determines is necessary to pay the |
|
|
expenses of administering this subtitle. |
|
|
SECTION 17. Chapter 403, Labor Code, is amended by adding |
|
|
Section 403.0055 to read as follows: |
|
|
Sec. 403.0055. RECOVERY OF SURCHARGE. An insurer may |
|
|
recover a surcharge under this chapter by: |
|
|
(1) reflecting the surcharge as an expense in a rate |
|
|
filing required under the Insurance Code; or |
|
|
(2) charging the insurer's policyholders. |
|
|
SECTION 18. Section 403.007(e), Labor Code, is amended to |
|
|
read as follows: |
|
|
(e) If the commissioner determines that the funding under |
|
|
Subsection (a) is not adequate to meet the expected obligations of |
|
|
the subsequent injury fund established under Section 403.006, the |
|
|
fund shall be supplemented by the collection of a surcharge |
|
|
[maintenance tax] paid by insurance carriers, other than a |
|
|
governmental entity, as provided by Sections 403.002 and 403.003. |
|
|
The rate of assessment must be adequate to provide 120 percent of |
|
|
the projected unfunded liabilities of the fund for the next |
|
|
biennium as certified by an independent actuary or financial |
|
|
advisor. |
|
|
SECTION 19. The heading to Section 405.003, Labor Code, is |
|
|
amended to read as follows: |
|
|
Sec. 405.003. FUNDING; SURCHARGE AND RECOVERY OF SURCHARGE |
|
|
BY INSURERS [MAINTENANCE TAX]. |
|
|
SECTION 20. Section 405.003, Labor Code, is amended by |
|
|
amending Subsections (a), (b), (c), and (d) and adding Subsection |
|
|
(g) to read as follows: |
|
|
(a) The group's duties under this chapter are funded through |
|
|
the assessment of a surcharge [maintenance tax] collected annually |
|
|
from all insurance carriers, and self-insurance groups that hold |
|
|
certificates of approval under Chapter 407A, except governmental |
|
|
entities. |
|
|
(b) The department shall set the rate of the surcharge |
|
|
[maintenance tax] based on the expenditures authorized and the |
|
|
receipts anticipated in legislative appropriations. The surcharge |
|
|
[tax] rate for insurance companies may not exceed the limitation in |
|
|
Section 255.002(a), Insurance Code. The surcharge rate is applied |
|
|
to [may not exceed one-tenth of one percent of] the correctly |
|
|
reported gross workers' compensation insurance premiums. The |
|
|
surcharge [tax] rate for certified self-insurers may not exceed the |
|
|
limitation in Section 255.002(a), Insurance Code. The surcharge |
|
|
rate is applied to [may not exceed one-tenth of one percent of] the |
|
|
total surcharge [tax] base of all certified self-insurers, as |
|
|
computed under Section 407.103(b). The surcharge [tax] rate for |
|
|
self-insurance groups described by Subsection (a) may not exceed |
|
|
the limitation in Section 255.002(a), Insurance Code. The |
|
|
surcharge rate is applied to [may not exceed one-tenth of one |
|
|
percent of] the group's gross premium for the group's retention, |
|
|
excluding premium collected by the group for excess insurance. |
|
|
(c) The surcharge [tax] imposed under Subsection (a) is in |
|
|
addition to all [other] taxes or other surcharges imposed on those |
|
|
insurance carriers for workers' compensation purposes. |
|
|
(d) The surcharge [tax] on insurance companies and on |
|
|
self-insurance groups described by Subsection (a) shall be |
|
|
assessed, collected, and paid in the same manner and at the same |
|
|
time as the surcharge [maintenance tax] established for the support |
|
|
of the department under Chapter 255, Insurance Code. The surcharge |
|
|
[tax] on certified self-insurers shall be assessed, collected, and |
|
|
paid in the same manner and at the same time as the self-insurer |
|
|
surcharge [maintenance tax] collected under Section 407.104. |
|
|
(g) An insurer may recover a surcharge under this section |
|
|
by: |
|
|
(1) reflecting the surcharge as an expense in a rate |
|
|
filing required under the Insurance Code; or |
|
|
(2) charging the insurer's policyholders. |
|
|
SECTION 21. Section 407.103, Labor Code, is amended to read |
|
|
as follows: |
|
|
Sec. 407.103. SELF-INSURER SURCHARGE [MAINTENANCE TAX]; |
|
|
EFFECT ON GENERAL SURCHARGE [MAINTENANCE TAX]. (a) Each certified |
|
|
self-insurer shall pay a self-insurer surcharge [maintenance tax] |
|
|
for the administration of the division and the office of injured |
|
|
employee counsel and to support the prosecution of workers' |
|
|
compensation insurance fraud in this state. Not more than two |
|
|
percent of the total surcharge [tax] base of all certified |
|
|
self-insurers, as computed under Subsection (b), may be assessed |
|
|
for a surcharge [maintenance tax] under this section. |
|
|
(b) To determine the surcharge [tax] base of a certified |
|
|
self-insurer for purposes of this chapter, the department shall |
|
|
multiply the amount of the certified self-insurer's liabilities for |
|
|
workers' compensation claims incurred in the previous year, |
|
|
including claims incurred but not reported, plus the amount of |
|
|
expense incurred by the certified self-insurer in the previous year |
|
|
for administration of self-insurance, including legal costs, by |
|
|
1.02. |
|
|
(c) The surcharge [tax] liability of a certified |
|
|
self-insurer under this section is the surcharge [tax] base |
|
|
computed under Subsection (b) multiplied by the rate assessed |
|
|
workers' compensation insurance companies under Sections 403.002 |
|
|
and 403.003, as limited by Section 255.002(a), Insurance Code. |
|
|
(d) In setting the rate of the surcharge [maintenance tax |
|
|
assessment] for insurance companies, the commissioner of insurance |
|
|
may not consider revenue or expenditures related to the operation |
|
|
of the self-insurer program under this chapter. |
|
|
SECTION 22. Section 407.104, Labor Code, is amended to read |
|
|
as follows: |
|
|
Sec. 407.104. COLLECTION OF SURCHARGES [TAXES] AND FEES; |
|
|
ADMINISTRATIVE VIOLATION. (a) The regulatory fee imposed by |
|
|
Section 407.102 and the surcharge [taxes] imposed by Section |
|
|
407.103 are due on the 60th day after the issuance of a certificate |
|
|
of authority to self-insure and on the 60th day after each annual |
|
|
renewal date. |
|
|
(b) The department shall compute the fee and surcharge |
|
|
[taxes] of a certified self-insurer and notify the certified |
|
|
self-insurer of the amounts due. The surcharge [taxes] and fees |
|
|
shall be remitted to the division. |
|
|
(c) The regulatory fee imposed under Section 407.102 shall |
|
|
be deposited in the Texas Department of Insurance operating account |
|
|
to the credit of the division. The self-insurer surcharge imposed |
|
|
under Section 407.103 [maintenance tax] shall be deposited in the |
|
|
Texas Department of Insurance operating account to the credit of |
|
|
the division. |
|
|
(d) A certified self-insurer commits an administrative |
|
|
violation if the self-insurer does not pay the surcharge [taxes] |
|
|
and fee imposed under Sections 407.102 and 407.103 in a timely |
|
|
manner. |
|
|
(e) If the certificate of authority to self-insure of a |
|
|
certified self-insurer is terminated, the commissioner or the |
|
|
commissioner of insurance shall proceed immediately to collect |
|
|
surcharges [taxes] due under this subtitle, using legal process as |
|
|
necessary. |
|
|
SECTION 23. Section 407A.252(b), Labor Code, is amended to |
|
|
read as follows: |
|
|
(b) The commissioner has full access to the records, |
|
|
officers, agents, and employees of a group as necessary to complete |
|
|
an examination under this section. The commissioner may recover the |
|
|
expenses of the examination under Sections 401.151 and 401.152 |
|
|
[Article 1.16], Insurance Code, to the extent the surcharge |
|
|
[maintenance tax] under Section 407A.302 does not cover those |
|
|
expenses. |
|
|
SECTION 24. The heading to Subchapter G, Chapter 407A, |
|
|
Labor Code, is amended to read as follows: |
|
|
SUBCHAPTER G. TAXES, SURCHARGES [FEES], AND ASSESSMENTS |
|
|
SECTION 25. Section 407A.301, Labor Code, is amended to |
|
|
read as follows: |
|
|
Sec. 407A.301. SURCHARGE [MAINTENANCE TAX] FOR DIVISION AND |
|
|
RESEARCH FUNCTIONS OF DEPARTMENT. (a) Each group shall pay a |
|
|
self-insurance group surcharge [maintenance tax] under this |
|
|
section for: |
|
|
(1) the administration of the division of workers' |
|
|
compensation of the department; |
|
|
(2) the prosecution of workers' compensation insurance |
|
|
fraud in this state; |
|
|
(3) the research functions of the department under |
|
|
Chapter 405; and |
|
|
(4) the administration of the office of injured |
|
|
employee counsel under Chapter 404. |
|
|
(b) The surcharge [tax] liability of a group under |
|
|
Subsections (a)(1) and (2) is based on gross premium for that [the] |
|
|
group's retention multiplied by the rate assessed insurance |
|
|
carriers under Sections 403.002 and 403.003, as limited by Section |
|
|
255.002(a), Insurance Code. |
|
|
(c) The surcharge [tax] liability of a group under |
|
|
Subsection (a)(3) is based on gross premium for the group's |
|
|
retention multiplied by the rate assessed insurance carriers under |
|
|
Section 405.003, as limited by Section 255.002(a), Insurance Code. |
|
|
(d) The surcharge [tax] under this section does not apply to |
|
|
premium collected by the group for excess insurance. |
|
|
(e) The surcharge [tax] under this section shall be |
|
|
collected by the comptroller as provided by Section 201.051 and |
|
|
Chapter 255, Insurance Code. |
|
|
SECTION 26. Section 407A.302, Labor Code, is amended to |
|
|
read as follows: |
|
|
Sec. 407A.302. SURCHARGE [MAINTENANCE TAX] FOR DEPARTMENT. |
|
|
(a) Subject to Subsection (b), each group shall pay the surcharge |
|
|
[maintenance tax] imposed under Chapter 255, Insurance Code, for |
|
|
the administrative costs incurred by the department in implementing |
|
|
this chapter. |
|
|
(b) The surcharge owed by [tax liability of] a group under |
|
|
this section is based on gross premium for the group's retention and |
|
|
does not include premium collected by the group for excess |
|
|
insurance. |
|
|
(c) The surcharge owed [maintenance tax assessed] under |
|
|
this section is subject to Chapter 255, Insurance Code, and shall be |
|
|
collected by the comptroller in the manner provided by that |
|
|
chapter. |
|
|
SECTION 27. Section 407A.303, Labor Code, is amended to |
|
|
read as follows: |
|
|
Sec. 407A.303. COLLECTION AND PAYMENT OF SURCHARGES |
|
|
[TAXES]. (a) The group shall remit the surcharges [taxes] for |
|
|
deposit in the Texas Department of Insurance operating account to |
|
|
the credit of the division. |
|
|
(b) A group commits an administrative violation if the group |
|
|
does not pay the surcharges [taxes] imposed under Sections 407A.301 |
|
|
and 407A.302 in a timely manner. |
|
|
(c) If the certificate of approval of a group is terminated, |
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|
the commissioner or the commissioner of insurance shall immediately |
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notify the comptroller to collect surcharges [taxes] as directed |
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under Sections 407A.301 and 407A.302. |
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SECTION 28. The changes in law made by this Act relating to |
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surcharges on gross workers' compensation premiums or certified |
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self-insurers' liabilities and expenses apply only to the gross |
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annual premiums reported or liabilities and expenses incurred for |
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an annual period beginning on or after the effective date of this |
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Act. Maintenance taxes imposed on gross annual workers' |
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compensation premiums or liabilities and expenses 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 29. This Act takes effect January 1, 2026. |