Texas 2023 - 88th Regular

Texas House Bill HB4389 Compare Versions

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1	1	By: Cole (Senate Sponsor - Zaffirini) H.B. No. 4389
2	2	(In the Senate - Received from the House May 8, 2023;
3	3	May 10, 2023, read first time and referred to Committee on Business &
4	4	Commerce; May 22, 2023, reported adversely, with favorable
5	5	Committee Substitute by the following vote: Yeas 9, Nays 2;
6	6	May 22, 2023, sent to printer.)
7	7	Click here to see the committee vote
8	8	COMMITTEE SUBSTITUTE FOR H.B. No. 4389 By: Zaffirini
9	9
10	10
11	11	A BILL TO BE ENTITLED
12	12	AN ACT
13	13	relating to the funding mechanism for the regulation of workers'
14	14	compensation and workers' compensation insurance; authorizing
15	15	surcharges.
16	16	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
17	17	SECTION 1. The heading to Title 3, Insurance Code, is
18	18	amended to read as follows:
19	19	TITLE 3. DEPARTMENT FUNDS, FEES, SURCHARGES, AND TAXES
20	20	SECTION 2. The heading to Subtitle C, Title 3, Insurance
21	21	Code, is amended to read as follows:
22	22	SUBTITLE C. INSURANCE MAINTENANCE TAXES AND SURCHARGES
23	23	SECTION 3. Section 251.001(a), Insurance Code, is amended
24	24	to read as follows:
25	25	(a) The commissioner shall annually determine the rate of
26	26	assessment of each maintenance tax or workers' compensation
27	27	surcharge imposed under this subtitle.
28	28	SECTION 4. The heading to Section 251.004, Insurance Code,
29	29	is amended to read as follows:
30	30	Sec. 251.004. DEPOSIT OF MAINTENANCE TAXES AND SURCHARGES.
31	31	SECTION 5. Section 251.004(a), Insurance Code, is amended
32	32	to read as follows:
33	33	(a) Except as provided by Subsection (b), maintenance taxes
34	34	collected under this subtitle and surcharges collected under
35	35	Chapter 255 shall be deposited in the general revenue fund and
36	36	reallocated to the Texas Department of Insurance operating account.
37	37	SECTION 6. Chapter 255, Insurance Code, is amended to read
38	38	as follows:
39	39	CHAPTER 255. WORKERS' COMPENSATION INSURANCE
40	40	Sec. 255.001. SURCHARGE [MAINTENANCE TAX] IMPOSED. (a) A
41	41	surcharge [maintenance tax] is imposed on each authorized insurer
42	42	with gross premiums subject to the surcharge [taxation] under
43	43	Section 255.003, including a:
44	44	(1) stock insurance company;
45	45	(2) mutual insurance company;
46	46	(3) reciprocal or interinsurance exchange; and
47	47	(4) Lloyd's plan.
48	48	(b) The surcharge [tax] required by this chapter is in
49	49	addition to [other] taxes or other surcharges imposed that are not
50	50	in conflict with this chapter.
51	51	Sec. 255.002. MAXIMUM RATE; ANNUAL ADJUSTMENT. (a) The
52	52	sum of the rates [rate] of assessment for the surcharge imposed by
53	53	this chapter and the surcharges imposed by Chapters 403 and 405,
54	54	Labor Code, set by the commissioner, may not exceed 2.7 [0.6]
55	55	percent of the gross premiums subject to surcharges [taxation under
56	56	Section 255.003].
57	57	(b) The commissioner shall annually adjust the rate of
58	58	assessment of the surcharge [maintenance tax] so that the surcharge
59	59	[tax] imposed that year, together with any unexpended funds
60	60	produced by the surcharge [tax], produces the amount the
61	61	commissioner determines is necessary to pay the expenses during the
62	62	succeeding year of regulating workers' compensation insurance.
63	63	Sec. 255.003. PREMIUMS SUBJECT TO SURCHARGE [TAXATION].
64	64	(a) An insurer shall pay the surcharge [maintenance taxes] under
65	65	this chapter on the correctly reported gross workers' compensation
66	66	insurance premiums from writing workers' compensation insurance in
67	67	this state, including the modified annual premium of a policyholder
68	68	that purchases an optional deductible plan under Subchapter E,
69	69	Chapter 2053.
70	70	(b) The rate of assessment for a surcharge shall be applied
71	71	to the modified annual premium before application of a deductible
72	72	premium credit.
73	73	Sec. 255.004. SURCHARGE [MAINTENANCE TAX] DUE DATES. (a)
74	74	The insurer shall pay the surcharge [maintenance tax] annually or
75	75	semiannually.
76	76	(b) The comptroller may require semiannual payment only
77	77	from an insurer whose surcharge [maintenance tax] liability under
78	78	this chapter for the previous tax year was at least $2,000.
79	79	Sec. 255.005. RECOVERY OF SURCHARGE. An insurer may
80	80	recover a surcharge under this chapter by:
81	81	(1) reflecting the surcharge as an expense in a rate
82	82	filing required under this code; or
83	83	(2) charging the insurer's policyholders.
84	84	SECTION 7. Section 403.001(a), Labor Code, is amended to
85	85	read as follows:
86	86	(a) Except as provided by Sections 403.006, 403.007, and
87	87	403.008, or as otherwise provided by law, money collected under
88	88	this subtitle, including surcharges and advance deposits for
89	89	purchase of services, shall be deposited in the general revenue
90	90	fund of the state treasury to the credit of the Texas Department of
91	91	Insurance operating account.
92	92	SECTION 8. Section 403.002, Labor Code, is amended to read
93	93	as follows:
94	94	Sec. 403.002. SURCHARGES [MAINTENANCE TAXES]. (a) Each
95	95	insurance carrier, other than a governmental entity, shall pay an
96	96	annual surcharge [maintenance tax] to pay the costs of
97	97	administering this subtitle and to support the prosecution of
98	98	workers' compensation insurance fraud in this state.
99	99	(b) The rate of assessment is applied to [may not exceed an
100	100	amount equal to two percent of] the correctly reported gross
101	101	workers' compensation insurance premiums, including the modified
102	102	annual premium of a policyholder that purchases an optional
103	103	deductible plan under Subchapter E, Chapter 2053 [Article 5.55C],
104	104	Insurance Code. The rate of assessment shall be applied to the
105	105	modified annual premium before application of a deductible premium
106	106	credit.
107	107	(c) A workers' compensation insurance company is assessed
108	108	[taxed] at the rate established under Section 403.003 and as
109	109	limited by Section 255.002(a), Insurance Code. The surcharge [tax]
110	110	shall be collected in the manner provided for collection of other
111	111	surcharges [taxes] on gross premiums from a workers' compensation
112	112	insurance company as provided in Chapter 255, Insurance Code.
113	113	(d) Each certified self-insurer shall pay a fee and
114	114	maintenance taxes as provided by Subchapter F, Chapter 407.
115	115	SECTION 9. The heading to Section 403.003, Labor Code, is
116	116	amended to read as follows:
117	117	Sec. 403.003. RATE OF SURCHARGE [ASSESSMENT].
118	118	SECTION 10. Section 403.003(a), Labor Code, is amended to
119	119	read as follows:
120	120	(a) The commissioner of insurance shall set and certify to
121	121	the comptroller the rate of the surcharge, [maintenance tax
122	122	assessment] taking into account:
123	123	(1) any expenditure projected as necessary for the
124	124	division and the office of injured employee counsel to:
125	125	(A) administer this subtitle during the fiscal
126	126	year for which the rate of assessment is set; and
127	127	(B) reimburse the general revenue fund as
128	128	provided by Section 201.052, Insurance Code;
129	129	(2) projected employee benefits paid from general
130	130	revenues;
131	131	(3) a surplus or deficit produced by the surcharge
132	132	[tax] in the preceding year;
133	133	(4) revenue recovered from other sources, including
134	134	reappropriated receipts, grants, payments, fees, gifts, and
135	135	penalties recovered under this subtitle; and
136	136	(5) expenditures projected as necessary to support the
137	137	prosecution of workers' compensation insurance fraud.
138	138	SECTION 11. Section 403.004, Labor Code, is amended to read
139	139	as follows:
140	140	Sec. 403.004. COLLECTION OF SURCHARGE [TAX] AFTER
141	141	WITHDRAWAL FROM BUSINESS. The commissioner or the commissioner of
142	142	insurance immediately shall proceed to collect surcharges [taxes]
143	143	due under this chapter from an insurance carrier that withdraws
144	144	from business in this state, using legal process as necessary.
145	145	SECTION 12. Section 403.005, Labor Code, is amended to read
146	146	as follows:
147	147	Sec. 403.005. SURCHARGE [TAX] RATE. The commissioner of
148	148	insurance shall annually adjust the rate of assessment of the
149	149	surcharge [maintenance tax] imposed under Section 403.003 so that
150	150	the surcharge [tax] imposed that year, together with any unexpended
151	151	funds produced by the surcharge [tax], produces the amount the
152	152	commissioner of insurance determines is necessary to pay the
153	153	expenses of administering this subtitle.
154	154	SECTION 13. Chapter 403, Labor Code, is amended by adding
155	155	Section 403.0055 to read as follows:
156	156	Sec. 403.0055. RECOVERY OF SURCHARGE. An insurer may
157	157	recover a surcharge under this chapter by:
158	158	(1) reflecting the surcharge as an expense in a rate
159	159	filing required under the Insurance Code; or
160	160	(2) charging the insurer's policyholders.
161	161	SECTION 14. The heading to Section 405.003, Labor Code, is
162	162	amended to read as follows:
163	163	Sec. 405.003. FUNDING; SURCHARGE AND RECOVERY OF SURCHARGE
164	164	BY INSURERS [MAINTENANCE TAX].
165	165	SECTION 15. Section 405.003, Labor Code, is amended by
166	166	amending Subsections (a), (b), (c), and (d) and adding Subsection
167	167	(g) to read as follows:
168	168	(a) The group's duties under this chapter are funded through
169	169	the assessment of a surcharge [maintenance tax] collected annually
170	170	from all insurance carriers, and self-insurance groups that hold
171	171	certificates of approval under Chapter 407A, except governmental
172	172	entities.
173	173	(b) The department shall set the rate of the surcharge
174	174	[maintenance tax] based on the expenditures authorized and the
175	175	receipts anticipated in legislative appropriations. The surcharge
176	176	[tax] rate for insurance companies may not exceed the limitation in
177	177	Section 255.002(a), Insurance Code. The surcharge rate is applied
178	178	to [may not exceed one-tenth of one percent of] the correctly
179	179	reported gross workers' compensation insurance premiums. The
180	180	surcharge [tax] rate for certified self-insurers may not exceed the
181	181	limitation in Section 255.002(a), Insurance Code. The surcharge
182	182	rate is applied to [may not exceed one-tenth of one percent of] the
183	183	total tax base of all certified self-insurers, as computed under
184	184	Section 407.103(b). The surcharge [tax] rate for self-insurance
185	185	groups described by Subsection (a) may not exceed the limitation in
186	186	Section 255.002(a), Insurance Code. The surcharge rate is applied
187	187	to [may not exceed one-tenth of one percent of] the group's gross
188	188	premium for the group's retention, excluding premium collected by
189	189	the group for excess insurance.
190	190	(c) The surcharge [tax] imposed under Subsection (a) is in
191	191	addition to all [other] taxes or other surcharges imposed on those
192	192	insurance carriers for workers' compensation purposes.
193	193	(d) The surcharge [tax] on insurance companies and on
194	194	self-insurance groups described by Subsection (a) shall be
195	195	assessed, collected, and paid in the same manner and at the same
196	196	time as the surcharge [maintenance tax] established for the support
197	197	of the department under Chapter 255, Insurance Code. The surcharge
198	198	[tax] on certified self-insurers shall be assessed, collected, and
199	199	paid in the same manner and at the same time as the self-insurer
200	200	maintenance tax collected under Section 407.104.
201	201	(g) An insurer may recover a surcharge under this section
202	202	by:
203	203	(1) reflecting the surcharge as an expense in a rate
204	204	filing required under the Insurance Code; or
205	205	(2) charging the insurer's policyholders.
206	206	SECTION 16. The changes in law made by this Act relating to
207	207	surcharges on gross workers' compensation premiums apply only to
208	208	the gross annual premiums reported for an annual period beginning
209	209	on or after the effective date of this Act. Maintenance taxes
210	210	imposed on gross annual workers' compensation premiums before the
211	211	effective date of this Act are governed by the law as it existed
212	212	before the effective date of this Act, and the former law is
213	213	continued in effect for that purpose.
214	214	SECTION 17. This Act takes effect January 1, 2024.
215	215	* * * * *