The Attorney General of Texas
December 31, 1982
MARK WHITE
Attorney General
Mr. Kenneth H. Ashworth Opinion No. NJ-592
Supreme Court Building
I? 0. BOX 12546
Coordinating Board
Austin, TX. 76711. 2546 Texas College and University System Re: Whether a public institu-
5121475-2501 P. 0. Box 12788, Capitol Station tion of higher education may,
Telex 9101674.1367 Austin, Texas 78711 consistent with article 3.50-3
Telecopier 5121475-0266 of the Texas Insurance Code,
self-insure its employees
1607 Main St., Suite 1400 without purchasing a group
Dallas, TX. 75201-4709 insurance policy
2141742.6944
Dear Mr. Ashworth:
4624 Alberta Ave.. Suite 160
El Paso. TX. 79905.2793 You inquire as to the ability of a public senior college or
9151533.3464 university to establish a self-insurance fund to provide life,
accident, and health coverage to its employees.
1220 Dallas Ave., Suite 202
Houston, TX. 77002-6966
In 1977, the Texas State College and University Employees Uniform
7131650-0666 Insurance Benefits Act was enacted to provide, inter alia, uniformity
in the basic group life, accident, and health insurance coverages for
all employees of Texas state colleges and universities. Tex. Ins.
606 Broadway. Suite 312
Code art. 3.50-3. A public senior college or university is an
Lubbock. TX. 79401.3479
6061747-5236
institution required by the act to provide basic insurance benefits
for its employees. Tex. Ins. Code art. 3.50-3, 83(a)(B). Only
"qualified carriers" are eligible to bid on the insurance coverage to
4309 N. Tenth, suite s be provided according to the act. Tex. Ins. Code art. 3.50-3,
McNen, TX. 76501-1665
§4(b)(4)CD)(0. Pursuant to section 3(a)(ll) of the act, a "qualified
5121662.4547
carrier" is:
200 Main Plaza, Suite 400 (A) any insurance company authorized to do
San Antonio. TX. 76205-2797 business in this state by the State Board of
5121225-4191
Insurance to provide any of the types of insurance
coverages. benefits, or services provided for in
A” Equal OpportunityI this Act under any of the insurance laws of the
Affirmative Action Employer State of Texas, which has an adequate surplus, a
successful operating history, and which has had
successful experience in providing and servicing
any of the types of group coverage provided for in
this Act as determined by the State Board of
Insurance;
p. 2201
Mr. Kenneth H. Ashworth - Page 2 (Mw-592)
(B) any corporation operating under Chapter 20
of the Texas Insurance Code which provides any of
the types of coverage, benefits, or services
provided for in this Act, which has a successful
operating history, and which has had successful
experience in providing and servicing any of the
types of group coverage provided for in this Act
as determined by the State Board of Insurance; or
(C) any combination of carriers as herein
defined, upon such terms and conditions as may be
prescribed by the administrative council.
The act further provides that an institution may select and contract
for services performed by health maintenance organizations that have
authorization to offer health care services to eligible employees in a
specific area of Texas. Tex. Ins. Code art. 3.50-3, §4(b)(4)(D)(iv).
A self-insured state college or university is not a qualified carrier
under the act nor a licensed H.M.O. Therefore, a self-insurance
arrangement as described in your request would be impermissible.
Conditioned upon a negative response to your first inquiry, you
ask whether a public senior college or university may establish a
self-insurance fund in conjunction with the purchase of a stop-loss
insurance policy from an insurance company to provide its employees
and their dependents with the basic health, life, and accident
coverages. We interpret you as asking whether the stop-loss (or
excess) policy with a qualified carrier would, in combination with a
self-insurance program, assure employees and dependents of the
provision of required coverages. In light of the act's clear
requirement that -the basic coverage be provided by a "qualified
carrier," our opinion is that a self-insurance program may not be used
to provide any or all of the minimum required coverage.
SUMMARY
A self-insurance fund may not be used by a
-_
state senior college or university to provide any
or all of the uniform life and accident and health
benefits required by article 3.50-3 of the Texas
Insurance Code.
z&&7
Attorney General of Texas
p. 2202
Mr. Kenneth H. Ashworth - Page 3 @lw-592)
JOHN W. FAINTER, JR.
First Assistant Attorney General
RICHARD E. GRAY III
Executive Assistant Attorney General
Prepared by Catherine B. Fryer
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Susan L. Garrison, Chairman
Jon Bible
Catherine B. Fryer
Rick Gilpin
Jim Moellinger
p. 2203