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PRICE DANIEL
ATTORNEYGEXERAL
December 13, i9%
Hon. Robert S. Calvert
Comptroller of Public Accounts
Austin, Texas
opinion NO. V-13?%
.,I Rer Group insurance policias
for which the Comptroller
is authorized to make pay-,
: Dear Sir: roll deductions.
You.have requested an opinion of this
orfics relating to payroll deduotions which you
are required to make in compllancr with the stats-
atory provisions dealing with group life, health
accident, accidental death and dfsmemberment, an A
hospital, surgical and/op medical expense lnsur-
ante r0r State employees.
The statutory provisions regulating
grrpW;;re insurance for Stats employees are as
“Sea. 1. rio policy 0r gsoup life
iasuranaa shall be delivered in this
Stste’unless It conforms to one of the
rollowing descriptions:
I
. . .
“(3)
'A ollcy Issued to an lnde-
igdent schco P d%strfct, incorporated
town or village whfoh has assumed
aon g9rol or the puhlfc school system
vltbin such munfcfpalfty, Stato colleges
or unfversitlcs, m a5sociatkon a
State ernu~ 4~,&gT&&&!A
li!i3- ~t$t.J&~:&$x!&Q&J&&&y-&p
m of I&&J&~ GCLVO~~" vhfoh
employer or aesoclation shall be deemed
the polfcyhoPdsr, to fnaeare the employ-
ees of any ouch independent schoo2 dis-
tpict and 00 the public 5aheoX syst68 0r
‘i;/f-‘&iT d. --vrrFE~~~
Edp s s a &A th.rougi~ou~~
0
Hon. Robert S.: Calvert , pag3 2 (V-1374)
:z. v-2 -- 4. _ _ y-z- .- i- . --:==- _ ;..__
--~ - -37’ __
any such mxiicipality, of any such
State colleges and universities, of
any such 3epxtment of the State
Government, members of &y assoola- .’
Mon. of State employees, and members
at Any association of’ State and
County employees for the benefit of
persons other than the policyholder ..‘:
subject to the following require-
ments:
ii I*(a’I The employees eligible for
Insurance under the policy shall be
iill of the employees of tha employer
or all of any clsss or classes there-
qf determined by conditions pertain-
ing to their employment.
‘l(b) The premium for the policy
shall be paid by ‘the policy holder
wholly from funds contributed by the
insured employees; provided, however,~
that any moneys or credits received
by or allowed to the policyholder pur-
puant to any participation agroement
contained, In or Issued in connection
with, ths policy shall be .applied to
the payment of ruture premiums nnd to
the prorate, abatement of the insured
lmplolr)eis* oontributions therefor; and
provUiod tither, that the employer
8sy deduct from the .emplo~es’ salaries
tho required contributions for the pn-
IEWM vhen authorized la vtitlng by the
respective employees so to do. Suob
pulley ms9 be placed tn r0r00only it
at least ssvsnty-rive (.75%) per oont
of the eligible employees, excluding
any as to whom evidence of lndlvidual
Insurability is not satisfactory to the
Insurer, elect to make the required pre-
mlum contributions and become insured
thereunder.
e(c) The policy must cover at
~fa~~s~enty-rivo (25) employees at dato
.
“Cd) The amounts of insurance un-
der tha poUcy,must se based on
0
-
BOA. Robert ,$i, Calvert, page
3 (V-1374)
w>--+ww.r t<--.~._I~-.-'--.~T;'-~c.-'-.~-
--yi. ..- :
some plan precluding Individual se-
lection either by the employeesor
by the policyholder.” Art. 3.50,In-
suranc6 Code (Acts 52Ad Leg., R.S,
195l,ch. 491, pe 868).
_; _ .Thd provisions relating to group health,
accident, accidental death and dismemberment, and
hospital, surgical, and/or medical expense insur-
ance for State employees are as follows:
“Sec. l., me State of Texas a
9 .”
&iic
admbistrative subQ&gJons. de-
partments. aP;encIes. a soclatl n of
ve s and fhe gove&lng
&teho&tles of each State
‘university, college, common and lnde-
pendent school districts or of any
other agency or subdivision of the pub-
llc schooX%ystem pf the State of Texas
are author,ized to procure contracts ln-
&ring their respective employees or
any class or classes thereof under a
policy or policies of group health,
accident, accidental death and dlsmem-
berment, and hospital, surgical, and/or
medical expense Insurance. The depend-
~. ents of any such employees may be ln-
..sured under group policies which pro-
vide hospital, surgical and/or medical
expense lnsurancec The employees’ con-
trlbatloAs to the premiums for such in-
sur&&ce Issued to the employer or to en
assokiatlon of public employees aa the
policyholder may be deducted by the em-
ployer. from the employees’ salaries
when authorized in writing’ by the re-
spective employees so. to do.
“Sec.2. All group Insurance COA-
tracts effected pursuant hereto shall
conZorm and be subject to all the pro-
visions of any existing or future laws
concerning group Insurance.” Art. 3.51,
Insurance Code.
1~ light of the abovb statutes you wish to
lrnow how to distinguish among the various pollc%es
Eon. Robert S. Calvert,
page 4 (V-1374)
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.__
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I? 5s-- .-_.-,
~-._ _.
issued to State employere so that you will make
only the payroll deductions authorized by statute.
Group life Insurance is closely regu-
lated by statute, and a policy Is not a “group life
_. -insurance!’ policy unless issued in strict compll-
ante with the statutory provisions* Board of ‘In-
e Co
gf-930 s
A group life Insurance policy for State
employee,s as such must be issued to the head of a
depar.$ment an association of State employees, or
an assocla ? iOA of State and County employees. .hrt.
34% Seca1, a3azme Section 2 of Article 3.50
provides in part;
‘#No.policy of group life IASUT-
ante shall be Issued or delivered in
this State unless and until a copy of
the formthereof has been’filed with
the Board of Insurance C+mmissioners
of the State of Texas and formally
approved by such Board . . .*
Thus, IS a group life Insurance policy has been ls-
sued to a proper, association or a department head,
and the same has been f lled with the Board of Insur-
ance Commissioners and approved by it, and the em-
.ployee has authorized the deduction in writing, you
are required to make the proper payroll deductions.
The cases defining an nassoclationt8 are al-
most completely in agreement that it may be ‘Ia body
of persons acting together, without a charter but
upon methods and forms used by corporations, i or pro- *’
secution of some common enter rise.” See 4 Words
and phrases (Permanent Ed. 19t 0) 565. Of a~urse it may
also be a formally chartered organization. wplying
these definitions to State employees, or to State and
County employees, we find they are an nassociatlonH
if they are a united group, with by-laws and officers,
and are In the prosecution of a common enterprise.
Such an association of employees Is authorized by stat-
. ute to be the policyholder for such contraats of group
llf 8 insurance.
SeCtiOA 2 of Article 3.51,m requires
that the group health, accident, accidental death and
Hon. Robert S. Calvert, page 5 (v-1374)
dismemberment, ~&ndhospital, suigioil, l
nd/o~~medi~
oal expense Insurance “be subject to all the p?Ovi-
sions of any existing or future law8 concorning
group 1nsurance.w The .only statutes at present deal-
ing with any type OS ngroup Insurance” are the group
~&&& Insurance. statutes and Artlales ?O*Ol-21 of
the Insurance Code, which req3lre AOAprOfit group
corporations to comply with cer-
tain statutiry provisions.
It Is manifest that nonproflt’corporatloas
organised-pursuant to Article 20.01, m aust corn-
ply with the provlslons of Articles 20001 40 20.22
when contracting for group hospital service lnsur-
ante covering State employees. In our opinion, this
1s the only existing law relating to group Insurance
which is applicable to any of the types of Insurance
mentioned In Article 3.5l. We do not think that the
Legislature Intended for the group life insurance
provisions In Article 3.50 to be applied to insurance
for publld,employees procured under Article 3.5l. It
Is clear that many of the provlslons of Sections 2,
3, and 5 of Article 3.50 setting out the requirements
for policies of group life Insurance are not approprl-
ate to other types of group Insurance polllcles; and
Articles 20.01 to 20a21 do not impose these requlre-
ments OA policies issued by.corporations operating un-
der those statutes. Moreover, the provisions of Sec-
tion 1 of Article 3.50, specifying the number and per-
centage of employees which must be Insured and other
conditions for the Issuance of group life Insurance
policies, are not applicable to other types of group
Insurance policies Issued on behalf of the employees
of a private employer. We are of the OPIAIOA that
the Legislature did not Intend to make the aoqulrement,
of these group olicles more onerous for State employ-
ees than It wouEd be for a comparable group of private
employees. IA our.oplnlon, the purpose of Section 2
of Article’ 3. $il Is to provide that as each o,f the spe-
cific types of insurance Is put under statutory regu-
lation, the provision.4 shall also apply to the same
types of polloies on public employees.
Section 1 of Article 3.53. authorizes Sta.te
departments and agencies and associations of public
~amployoesto procure the type8 of group insurance enum-
erat cd therein. We think it Is WithlA the discretion
of each department ,head to dec4do whether and with. whom
.~ . ...
)
.
: ’
,
:;,“ll’ contract for Insurance covering his amploy-
iuheil contracts have been made in accordance
witi this section, either by the head of the depart-
ment or by an association of public employees, the
employer is authorized to deduot the premiums from
-the emp10yee~s salary upon written authorization of
the as$loy ee ‘; Therefore, when payroLls have been
certified to you showing deductions for an author-
ized group for any of these types of group insurance,
you are required to make the proper deductions from
the salary warrants, If the contract is with a cor-
poratlon,.organized under Article 20.01 & w. of the
?,
Insurzxma Code, the employer or association must be
&atlsfied that ths corporation has the certificate
..’
requiredby Article 20.02(d) before making deductions
and authorizing the lssuancr of warrants to the cor-
poration covering deductions for group hospital sefv-
lee insnranc%.
SUMMARY.
The Comptroller is authorized by
statute (A t. 3.50,Insurance Code) to
make payro f 1 deductions for group life
insurance premiums of State employees
If a policy Issued to a dapartment,head
or an association of public employees
has been approved by the Board of Insur-
ance Commissioners.
The ComptroUer Is authorized by
statute (Art. 3.51,Insurance
Code) to
make payroll deductions ior group health,
aoizldent, accidental death and dlsmember-
ment, and hospital, surgloal; and/or med-
ical expanse insurance policies of Stat%
employees if the policies have beeti pro-
cured by the head of a proper State unit
.,:
or by ofi aasoclation of public employee&
AF’PROVED: Yours yery truly,
C. X. Richards PRICE DANIEL
Trial & Appellate~ DiViSlOn Attorney Generti
E. Jacobson
Reviewing Assistant
Charles D. Mathews
First AssistaAt Assistant
BWTrvb
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