MARK WHITE Attorney General

Supreme Court Building I? 0. BOX 12546 Austin, TX. 76711. 2546 5121475-2501 Telex 9101674.1367 Telecopier 5121475-0266

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# The Attorney General of Texas
December 31, 1982

Mr. Kenneth H. Ashworth CoordinatingBoard OpinionNo. NJ-592
Texas Collegeand University System Re: Whether a public instituP. 0. Box 12788,Capitol Station tion of higher educationmay, Austin, Texas 78711 consistentwith article 3.50-3 of the Texas Insurance Code, self-insure its employees without purchasing a group insurancepolicy
DearMr. Ashworth:
You inquire as to the ability of a public senior college or university to establish a self-insurance fund to provide life, accident,and health coverage to its employees.
In 1977, the Texas StateCollegeand UniversityEmployeesUniform Insurance BenefitsAct was enacted to provide, inter alia, uniformity in the basic group life, accident, and health insurance coverages for all employees of Texas state colleges and universities. Tex. Ins. Code art. 3.50-3. A public senior college or university is an institution required by the act to provide basic insurance benefits 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, §4(b)(4)

CD)(0. Pursuant to section 3(a)(ll)of the act, a "qualified carrier" is: (A) any insurance company authorized to do

business in this state by the State Board of 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 State of Texas, which has an adequate surplus, a successful operating history, and which has had successful experience in providing and servicing any of the types of group coverageprovided for in this Act as determined by the State Board of Insurance;

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### (B) any corporationoperatingunder Chapter 20 of the Texas InsuranceCode 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 determinedby the State Board of Insurance;or (C) any combination of carriers as herein defined,upon such terms and conditionsas may be prescribedby the administrativecouncil. The act further provides that an institutionmay select and contract for services performed by health maintenance organizations that have authorizationto offerhealth 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 arrangementas described in your requestwould 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 conjunctionwith 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 carrierwould, in combinationwith 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 carrier,"our opinion is that a self-insuranceprogrammay to provideany or all of theminimum requiredcoverage. SUMMARY
A self-insurance fund may not be used by

-_ "qualified not be used

a state senior college or university to provide any or all of theuniform lifeand accidentand health benefits required by article 3.50-3 of the Texas InsuranceCode.
z&&7

Attorney General of Texas

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JOHNW. FAINTER,JR. FirstAssistantAttorney General RICHARD E. GRAY III ExecutiveAssistantAttorney General Preparedby CatherineB. Fryer AssistantAttorneyGeneral APPROVED: OPINION COMMITTEE SusanL. Garrison, Chairman Jon Bible CatherineB. Fryer Rick Gilpin Jim Moellinger

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