89R2192 RDR-F     By: Hefner H.B. No. 4483       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 201.001(a), Insurance Code, is amended   to read as follows:          (a)  The Texas Department of Insurance operating account is   an account in the general revenue fund.  The account includes the   following:                (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                (2)  money or credits received by the department or   commissioner from sales, reimbursements, and fees authorized by law   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;                      (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;                      (F)  the comptroller involving warrants for which   payment is barred under Chapter 404, Government Code;                      (G)  sales or reimbursements authorized by the   General Appropriations Act; and                      (H)  the sale of property purchased with money   from the account or a predecessor fund or account.          SECTION 4.  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 5.  Section 251.002, Insurance Code, is amended to   read as follows:          Sec. 251.002.  DUTY TO ADVISE COMPTROLLER OF RATE.  The   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:          Sec. 251.003.  EFFECT OF LATE ADVISEMENT OF   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.          (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:          Sec. 251.004.  DEPOSIT OF MAINTENANCE TAXES AND SURCHARGES.          SECTION 8.  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 9.  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 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,   the commissioner or the commissioner of insurance shall immediately   notify the comptroller to collect surcharges [taxes] as directed   under Sections 407A.301 and 407A.302.          SECTION 28.  The changes in law made by this Act relating to   surcharges on gross workers' compensation premiums or certified   self-insurers' liabilities and expenses apply only to the gross   annual premiums reported or liabilities and expenses incurred for   an annual period beginning on or after the effective date of this   Act. Maintenance taxes imposed on gross annual workers'   compensation premiums or liabilities and expenses 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 29.  This Act takes effect January 1, 2026.