In a public hearing April 30, 1998, the Commissioner of Insurance adopted an amended rate of 0.0% as the 1998 Maintenance Tax Surcharge to service the bond debt of the Texas Workers' Compensation Insurance Fund (Fund). Based on actions recently taken by the Fund, the Texas Department of Insurance proposed an amendment to 28 TAC § 1.415 to reduce the previously adopted rate of .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 $73.8 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 it bonded indebtedness. Since insurers writing workers' compensation insurance in Texas have already been assessed at a 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.
There is no cost to pass through to workers' compensation policyholders during the recoupment period of June 1, 1998 through May 31, 1999 since there is no maintenance tax surcharge for 1998. The rate of .85% will continue to be applicable until May 31, 1998, which is the end of the current recoupment period. Any premium calculation for a policyholder with a policy effective date during the recoupment period of June 1, 1998 through May 31, 1999, that includes the maintenance tax surcharge must be amended to delete the pass through of this tax.
Sincerely,
Nancy Moore
Deputy Commissioner, Workers' Compensation
By: Vicki Martinka
Manager, Workers' Compensation
Mail Code 105-2A