Case Information

*1 The Attorney General of Texas December 31, 1982

MARK WHITE

Attorney General Telex Supreme 5121475-2501 I? 0. BOX 12546 Telecopier Austin, 9101674.1367 TX. 76711. Court Building 5121475-0266 ^[2546] Mr. Kenneth H. Ashworth Austin, Texas 78711 Texas College and University System Coordinating Board P. 0. Box 12788, Capitol Station of the Texas Insurance Code, consistent with article 3.50-3 Opinion No. NJ-592 Re: Whether a public institu- tion of higher education may,

self-insure its employees without purchasing a group 1607 Main St., Suite 1400 insurance policy Dallas, TX. 75201-4709 2141742.6944 Dear Mr. Ashworth: 4624 Alberta Ave.. Suite El Paso. TX. 79905.2793 9151533.3464 ^[160]

university to establish a self-insurance fund to provide life, accident, and health coverage to its employees. You inquire as to the ability of a public senior college or 1220 Dallas Ave., Suite 202 In 1977, the Texas State College and University Employees Uniform Houston, TX. 77002-6966 Insurance Benefits Act was enacted to provide, inter alia, uniformity 7131650-0666 in the basic group life, accident, and health insurance coverages for

all employees of Texas state colleges and universities. Tex. Ins. 606 Broadway. Suite 312 Code art. 3.50-3. A public senior college or university is an Lubbock. TX. 79401.3479 institution required by the act to provide basic insurance benefits 6061747-5236 for its employees. Tex. Ins. Code art. 3.50-3, 83(a)(B). Only

"qualified carriers" are eligible to bid on the insurance coverage to be provided according to the act. Tex. Ins. Code art. 3.50-3, 4309 N. Tenth, suite s McNen, TX. 76501-1665 §4(b)(4) CD) (0. Pursuant to section 3(a)(ll) of the act, a "qualified 5121662.4547 carrier" is: (A) any insurance company authorized to do 200 Main Plaza, Suite 400 San Antonio. TX. 76205-2797 business in this state by the State Board of 5121225-4191 Insurance to provide any of the types of insurance

coverages. benefits, or services provided for in this Act under any of the insurance laws of the A” Equal OpportunityI State of Texas, which has an adequate surplus, a Affirmative Action Employer successful operating history, and which has had

successful experience in providing and servicing any of the types of group coverage provided for in this Act as determined by the State Board of Insurance;

Mr. Kenneth H. Ashworth - Page 2 (Mw-592)

(B) any corporation operating under Chapter 20 of the Texas Insurance Code which provides any of the types of coverage, benefits, or services provided for in this Act, which has a successful operating history, and which has had successful experience in providing and servicing any of the types of group coverage provided for in this Act as determined by the State Board of Insurance; or (C) any combination of carriers as herein defined, upon such terms and conditions as may be prescribed by the administrative council.

The act further provides that an institution may select and contract for services performed by health maintenance organizations that have authorization to offer health care services to eligible employees in a specific area of Texas. Tex. Ins. Code art. 3.50-3, §4(b)(4)(D)(iv). A self-insured state college or university is not a qualified carrier under the act nor a licensed H.M.O. Therefore, a self-insurance arrangement as described in your request would be impermissible.

Conditioned upon a negative response to your first inquiry, you ask whether a public senior college or university may establish a self-insurance fund in conjunction with the purchase of a stop-loss insurance policy from an insurance company to provide its employees and their dependents with the basic health, life, and accident coverages. We interpret you as asking whether the stop-loss (or excess) policy with a qualified carrier would, in combination with a self-insurance program, assure employees and dependents of the provision of required coverages. In light of the act's clear requirement that -the basic coverage be provided by a "qualified carrier," our opinion is that a self-insurance program may not be used to provide any or all of the minimum required coverage.

SUMMARY A self-insurance fund may not be used by a -_ state senior college or university to provide any or all of the uniform life and accident and health benefits required by article 3.50-3 of the Texas Insurance Code.

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Attorney General of Texas *3 Mr. Kenneth H. Ashworth - Page 3 @lw-592)

JOHN W. FAINTER, JR.

First Assistant Attorney General

RICHARD E. GRAY III

Executive Assistant Attorney General

Prepared by Catherine B. Fryer

Assistant Attorney General

APPROVED:

OPINION COMMITTEE

Susan L. Garrison, Chairman

Jon Bible

Catherine B. Fryer

Rick Gilpin

Jim Moellinger