- (a) Scope and Introduction. This section only applies to third party administrators that assist a school district in obtaining or managing a policy or contract for group health benefits for a school district. Texas Education Code, §22.004(a) requires each school district to make available to its employees group health coverage. Texas Education Code, §22.004(b) requires a school district to obtain an audited financial report showing the financial condition of any person before the school district may contract with the person regarding the obtaining or managing the policy or contract for such health coverage. Texas Education Code, §22.004(c) requires a person that has contracted with a school district to provide an annual audited financial statement to the school district showing the financial condition of the person. Texas Education Code, §22.004(d) requires such audited financial statements to be in accordance with rules adopted by the commissioner of insurance or state auditor as applicable. Since third party administrators are licensed by the Texas Department of Insurance, this section implements the requirement of Texas Education Code, §22.004(d) for third party administrators. Insurers and other entities regulated by the department and that assist a school district in obtaining or managing the policy or contract are also subject to Texas Education Code, §22.004. This section does not affect the duty of other entities regulated by the department to comply with the provisions of Texas Education Code, §22.004.
- (b) Definitions. The terms "Accountant," "Generally Accepted Auditing Standards," and "Generally Accepted Accounting Principles" have the same meaning described for those terms in §7.85 of this title (relating to Audited Financial Reports).
- (c) Audited Financial Statements. Audited financial statements required by subsection (a) of this section shall be audited by an accountant. Such audit must be done in accordance with Generally Accepted Auditing Standards and the resulting report must attest that the financial condition of the third party administrator is fairly presented in accordance with Generally Accepted Accounting Principles or disclose discrepancies therefrom.
Source Note:The provisions of this §7.1617 adopted to be effective November 13, 1996, 21 TexReg 10879.