Texas Register, Volume 38, Number 46, Pages 8023-8312, November 15, 2013 Page: 8,096
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of 1 percent of its 2013 gross premium for the group's retention
under Labor Code 407A.302.
The cost in 2014 for an insurer that received premiums in 2013
for life, health, and accident insurance, will be .040 of 1 percent
of those gross premiums. In 2014, an HMO will pay $.26 per
enrollee if it is a single service HMO or a limited service HMO,
and $.78 per enrollee if it is a multi-service HMO. In 2014, a third
party administrator will pay .027 of 1 percent of its correctly re-
ported gross amount of administrative or service fees received in
2013. In 2014, for a nonprofit legal services corporation issuing
prepaid legal service contracts, the cost will be .020 of 1 percent
of correctly reported gross revenues for 2013.
In 2014, to fund the Workers' Compensation Research and Eval-
uation Group's activities, a workers' compensation certified self-
insurer will pay .014 of 1 percent of the tax base calculated under
Labor Code 407.103(b), and a workers' compensation self-in-
surance group will pay .014 of 1 percent of the tax base calcu-
lated under Labor Code 407.103(b).
Finally, in 2014, a workers' compensation certified self-insurer
will pay 1.543 percent of the tax base calculated under Labor
Code 407.103(b).
Except for workers' compensation certified self-insurers, there
are two components of costs for entities required to comply with
the proposal: the cost to gather the information, calculate the
assessment, and complete the required forms; and the cost of
the maintenance tax or fee. Based on the information obtained
by the department, the actual cost of gathering the information
required calculate the assessment, and complete the form will
be identical for the same number of lines of insurance for micro,
small, and large businesses. Generally, a person familiar with
the accounting records of the company and accounting practices
in general will perform the activities necessary to comply with the
section. Such persons are similarly compensated between $24 -
$40 an hour by small and large insurers. The actual time neces-
sary to complete the form will vary depending on the number of
lines of insurance written by the company. For a company that
writes only one line of business subject to the tax, regardless of
whether the company is micro, small, or large, the department
estimates it will take two hours to complete the form. If a com-
pany writes all the lines subject to the tax, regardless of whether
the company is micro, small, or large, the department estimates
it will take six hours to complete the form. In the case of a cer-
tified self-insurer, DWC will calculate the maintenance tax and
bill the certified self-insurer. The requirement to pay the main-
tenance tax or fee is the result of the legislative enactment of
the statutes that impose the maintenance tax or fee and is not
a result of the adoption or enforcement of this proposal. Rates
of assessment proposed by the department are the same for
micro, small, or large businesses. The department, after consid-
ering the purpose of the authorizing statutes, does not believe
it is legal or feasible to waive or modify the requirements of the
proposal for small or micro businesses.
ECONOMIC IMPACT STATEMENT AND REGULATORY FLEX-
IBILITY ANALYSIS FOR SMALL AND MICRO BUSINESSES.
As required by Government Code 2006.002(c), the department
has determined the proposal may have an adverse economic ef-
fect on approximately 56 to 188 insurance companies and HMOs
and approximately 299 third party administrators that are small
or micro businesses required to comply with the proposed rules.
Adverse economic impact may result from the costs of the main-
tenance taxes and fees. The cost of compliance will not vary
between large businesses and small or micro businesses, andthe department's cost analysis and resulting estimated costs in
the public benefit/cost note portion of this proposal is equally ap-
plicable to small or micro businesses. The total cost of compli-
ance to large businesses and small or micro businesses does not
depend on the size of the business. For insurers in the follow-
ing lines of insurance, the cost of compliance depends upon the
amount of gross premiums in 2013: motor vehicle insurance; ca-
sualty insurance and fidelity, guaranty, and surety bonds; fire in-
surance and allied lines, including inland marine; workers' com-
pensation insurance; title insurance; and life, health, and acci-
dent insurance. For annuity and endowment contracts, the cost
of compliance depends on the amount of gross considerations in
2013. For HMOs, the cost of compliance depends on the number
of enrollees in 2013. For third party administrators, the cost of
compliance depends on the amount of correctly reported gross
administrative or service fees in 2013. For nonprofit legal service
corporations issuing prepaid legal service contracts, the cost of
compliance depends on the correctly reported gross revenues.
For workers' compensation certified self-insurers and workers'
compensation certified self-insurance groups, the cost of com-
pliance depends on the tax base calculated under Labor Code
407.103(b).
In accord with Government Code 2006.002(c-1), the depart-
ment considered other regulatory methods to accomplish the ob-
jectives of the proposal that will also minimize any adverse im-
pact on small and micro businesses.
The primary objective of the proposal is to provide the rates of
assessment for maintenance taxes and fees for 2014 to be ap-
plied to life, accident, and health insurance; motor vehicle in-
surance; casualty insurance and fidelity, guaranty and surety
bonds; fire insurance and allied lines, including inland marine;
workers' compensation insurance; workers' compensation self-
insured groups; title insurance; HMOs; third party administra-
tors; nonprofit legal services corporations issuing prepaid legal
services contracts; and workers' compensation certified self-in-
surers.
The other regulatory methods considered by the department to
accomplish the objectives of the proposal and to minimize any
adverse impact on small and micro businesses include: (i) not
adopting the proposed rule, (ii) adopting different tax rates for
small and micro businesses, and (iii) exempting small and micro
businesses from the tax requirements.
Not adopting the proposed rule. Under Insurance Code
251.003, if the commissioner does not advise the comptrol-
ler of the applicable maintenance tax assessment rates, the
comptroller must assess taxes based on the previous year's
assessment. Use of the previous year's rates and the estimated
assessment bases for 2013, the department estimates revenue
collections would exceed amounts needed by approximately
$6.5 million. If no rule is adopted the department would collect
excess revenue to fund the department's costs. The department
has rejected this option.
Adopting different taxes for small and micro businesses. The
current methodology is already the most equitable methodol-
ogy the department can develop. The department applies an
assessment methodology that contemplates a smaller assess-
ment for small or micro businesses because the assessment is
determined based on number of enrollees, gross premiums, or
gross amount of administrative or service fees. The department
anticipates that a small or micro business that would be most
susceptible to economic harm would be one that has fewer en-
rollees, lower gross premiums, or a lower gross amount of ad-38 TexReg 8096 November 15, 2013 Texas Register
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Texas. Secretary of State. Texas Register, Volume 38, Number 46, Pages 8023-8312, November 15, 2013, periodical, November 15, 2013; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth379973/m1/74/: accessed July 18, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting UNT Libraries Government Documents Department.