The Commissioner of Insurance adopted a rate of .763% as the 1998 Maintenance Tax Surcharge to service the bond debt of the Texas Workers' Compensation Insurance Fund (Fund) on February 9, 1998. Based on actions currently being taken by the Fund, the Texas Department of Insurance (TDI) is proposing an amendment to 28 TAC § 1.415 that will reduce the previously adopted 1998 rate of assessment against the gross workers' compensation premium written in Texas from .763% to 0.0%.
The elimination of the 1998 assessment for the Fund´s bonded indebtedness is necessary to reflect the Fund´s decision to prepay a minimum of $65 million of its bonded indebtedness. The prepayment will be made from the Fund´s accumulated earnings. Therefore, this year the Fund does not need the funds collected from the maintenance tax surcharge to service its bonded indebtedness. Since insurers writing workers' compensation insurance in Texas have already been assessed at the rate of .763%, the elimination of the assessment for 1998 will be implemented by refunding the funds collected pursuant to the 1998 workers' compensation maintenance tax surcharge. Future assessments will still be necessary to service the remaining outstanding debt of the Fund.
If there is no maintenance tax surcharge in 1998, there will be no cost to pass through to workers' compensation policyholders during the recoupment period of June 1, 1998 through May 31, 1999. The rate of .85% will continue to be applicable until May 31, 1998, which is the end of the current recoupment period. Any premium calculations for a policyholder with a policy effective date during the recoupment period of June 1, 1998 through May 31, 1999, which includes the maintenance tax surcharge must be amended to delete the pass through of this tax if the proposed rule is adopted. In addition, insurance companies must be prepared to explain to policyholders any changes in the amount charged.
TDI will consider the adoption of the amendment to §1.415 in a public hearing under Docket Number 2349, scheduled for 9:00 a.m. on April 30, 1998, in Room 100 of the William P. Hobby, Jr. State Office Building, 333 Guadalupe Street in Austin, Texas. Another Commissioner´s Bulletin/W. C. Circular Letter will be sent after the hearing on April 30, 1998 to advise the results of that hearing. Contact the Workers' Compensation Division at 512-322-3495 if you have any questions.
Sincerely,
Nancy Moore
Deputy Commissioner
Workers' Compensation
Mail Code 105-2A