Bill Text: TX HB4389 | 2023-2024 | 88th Legislature | Comm Sub


Bill Title: Relating to the funding mechanism for the regulation of workers' compensation and workers' compensation insurance; authorizing surcharges.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Engrossed - Dead) 2023-05-24 - Not again placed on intent calendar [HB4389 Detail]

Download: Texas-2023-HB4389-Comm_Sub.html
 
 
  By: Cole (Senate Sponsor - Zaffirini) H.B. No. 4389
         (In the Senate - Received from the House May 8, 2023;
  May 10, 2023, read first time and referred to Committee on Business &
  Commerce; May 22, 2023, reported adversely, with favorable
  Committee Substitute by the following vote:  Yeas 9, Nays 2;
  May 22, 2023, sent to printer.)
Click here to see the committee vote
 
  COMMITTEE SUBSTITUTE FOR H.B. No. 4389 By:  Zaffirini
 
 
A BILL TO BE ENTITLED
 
AN ACT
 
  relating to the funding mechanism for the regulation of workers'
  compensation and workers' compensation insurance; authorizing
  surcharges.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  The heading to Title 3, Insurance Code, is
  amended to read as follows:
  TITLE 3.  DEPARTMENT FUNDS, FEES, SURCHARGES, AND TAXES
         SECTION 2.  The heading to Subtitle C, Title 3, Insurance
  Code, is amended to read as follows:
  SUBTITLE C.  INSURANCE MAINTENANCE TAXES AND SURCHARGES
         SECTION 3.  Section 251.001(a), Insurance Code, is amended
  to read as follows:
         (a)  The commissioner shall annually determine the rate of
  assessment of each maintenance tax or workers' compensation
  surcharge imposed under this subtitle.
         SECTION 4.  The heading to Section 251.004, Insurance Code,
  is amended to read as follows:
         Sec. 251.004.  DEPOSIT OF MAINTENANCE TAXES AND SURCHARGES
         SECTION 5.  Section 251.004(a), Insurance Code, is amended
  to read as follows:
         (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 6.  Chapter 255, Insurance Code, is amended to read
  as follows:
  CHAPTER 255.  WORKERS' COMPENSATION INSURANCE
         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 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 7.  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 8.  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
  [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
  maintenance taxes as provided by Subchapter F, Chapter 407.
         SECTION 9.  The heading to Section 403.003, Labor Code, is
  amended to read as follows:
         Sec. 403.003.  RATE OF SURCHARGE [ASSESSMENT].
         SECTION 10.  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 11.  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 12.  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 13.  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 14.  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 15.  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 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
  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 16.  The changes in law made by this Act relating to
  surcharges on gross workers' compensation premiums apply only to
  the gross annual premiums reported for an annual period beginning
  on or after the effective date of this Act. Maintenance taxes
  imposed on gross annual workers' compensation premiums before the
  effective date of this Act are governed by the law as it existed
  before the effective date of this Act, and the former law is
  continued in effect for that purpose.
         SECTION 17.  This Act takes effect January 1, 2024.
 
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