Hon. Robert S. Calvert 

Comptroller of Public Accounts 

Austin, Texas 

Opinion No. M- 1109 

Re: Construction of Articles 3.50 

and 3.51 of the Texas Insurance 

Code with reference to the 

meaning and applicability of 

“group” to permit payroll 

deductions for insurance preDear Mr. Calvert: miums for state employees. 

Reference is made to your letter of February 15, 1972 (as 

clarified by your letter of February 29, 1972) which requested an 

opinion from this office as to the above captioned matter. The following 

questions were asked: 

“(1) Under the provisions of Article 3.50 of the 

Insurance Code, what is the definition of a ‘group’ 

which will allow payroll deductions and also’ the 

State paying a portion of the premium for a State 

employee? 

“(2) Under the provisions ‘of Article 3.51 of the 

Insurance Code, what is the definition of a ‘group’ 

which will allow payroll deductions and also the 

State paying a portion of the premium for a State 

employee? 

“(3) Under the provisions of Article 3.50 of the 

Insurance Code, could a payroll deduction be legally 

made for or the State contribute premiums for an 

employee on a policy of wholesale, franchise, or 

employee life insurance? 

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Honorable Robert S. Calvert, page 2 (M-l 109) 

“(4) Under the provisions of either Article 3.50 

or Article 3.51 of the Insurance Code, could a 

payroll deduction be legally made for or the State 

contribute premiums for an employee on a policy 

contracted for by the employee and issued to that 

employee under permission of the Department Head? 

“(5) Under the provisions of Article 3.50 of the 

Insurance Code, Section 1, Subsection (3) and also 

Sections 2 and 3 seem to be all of the provisions 

that would apply to group insurance for State employees which authorize payment by the State for an 

employee for group life insurance, is this correct, 

or would other provisions apply, and if so, what 

provisions7 

“(6) Under the provisions of Article 3.51 of the 

Insurance Code, does Section 2 of this Article make 

the provisions of Article 3.50 of the Insurance Code, 

as set out in Question No. 5 above, applicable to 

insurance policies contracted for under Article 3.51 

of the Insurance Code?” 

Question No. 1 asks for the definition of a group under Article 3.50 of 

the Texas Insurance Code so as to allow payroll deductions and also the 

state paying a portion of the premium for a state employee. A group, for 

the purpose of group life insurance under Subsection (3), Section I of Article 

3.50 of the Texas Insurance Code, is a class of designated employees, of 

not less than 10 nor less than 75% of the eligible employees (excluding any 

employee as to whom evidence of individual insurability is not satisfactory 

to the insurer) of any association of state employees or employees of any 

department or agency of the state. 

Question No. 2 asks for the definition of a group under Article 3.51 of 

the Texas Insurance Code so as to allow payroll deductions and also the 

State paying a portion of the premiums for a state employee. Under the 

provisions of Article 3.51 there is no definition of a group as can be found 

in Article 3.50 and the provisions of Article 3.50 may not be used in this 

connection. See Attorney General’s Opinion No. V-1374 (1951). For the 

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. . 

Honorable Robert S. Calvert, page 3 (M-1109) 

purposes of Article 3.51, a group may consist of any number of employees 

in excess of one, as determined by the contract between the department 

head and the insurer, this being a matter of discretion with the department 

head. See Attorney General’s Opinion No. M-394 (1967). 

Question No. 3 asks whether a payroll deduction can be legally made 

for or the State cant ribute premiums for an employee on a policy of 

wholesale, franchise, or employee life insurance. Your questions appears 

to assume that ,a policy of wholesale, franchise, or employee life insurance 

can be issued to a group of state employees. Under the provisions of 

Subsection (3), Section 1 of Article 3.50, the department head of the state 

government or the association is deemed to be the policyholder for purposes 

of group life insurance. Subsection (6), Section 1 of Article 3.50 states that: 

“(b) Wholesale, franchise, or employee life 

insurance may be issued to (1) the employees of 

a common employer or employers, covering at 

date of issue not less than five employees;. . . ” 

Thus, Subsection (6) does not provide for issuance of a wholesale, 

franchise, or employee life insurance policy to a department head or 

association as the policyholder but rather directly to the employees. It 

is the opinion of this office that policies of wholesale, franchise, or employee 

life insurance cannot be issued to state employees under Article 3.50 of 

the Texas Insurance Code and payroll deductions cannot be legally made 

for such premium payments nor can the state contribute premiums for a 

state employee insured under wholesale, franchise or employee life insurance 

policies. 

Question No. 4 asks whether, under the provisions of either Article 

3.50 or Article 3.51 of the Texas Insurance Code, a payroll deduction can 

be made or the State contribute premiums for an employee on a policy 

contracted for by the employee and issued to that employee under permission 

of the department head; 

Subsection (3), Section 1, Article 3.50 of the Texas Insurance Code 

states, in part, as follows: 

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Honorable Robert S. Calvert, page 4 (M-1109) 

“(3) A policy issued to. . . any association of 

state employees. . . and any department of 

the state government which employer or association shall be deemed the policyholder. . .” 

Subsection (2), Section 1 of Article 3.51 of the Texas Insurance Code, 

states, in part, as follows: 

“Sec. 1. (a) The State of Texas and each of its 

political, government, and administrative subdivisions, departments, agencies, associations 

of public employees, . . . are authorized to procure contracts with any insurance company doing 

business in this state insuring their respective 

employees,. . .” 

In light of the above quoted statutory language, your question must 

be answered in the negative. Under the provisions of Article 3.50, the 

insurance policy must be issued to the department and under the provisions 

of Article 3.51, only the department head has the authority to procure the 

contracts of insurance. 

Question No. 5 asks whether the provisions of Article 3.50 of the 

Texas Insurance Code, Section 1, Subsection (3) and also Sections 2 and 3, 

are the only provisions that apply to group insurance for state employees 

which authorize payroll deductions and premium payments by the State for 

an employee for group life insurance. Your question is answered in the 

affirmative. 

Question No. 6 asks whether the provisions of Subsection 2 of Article 

3.51 of the Texas Insurance Code makes the provisions of Article 3.50 

of the Texas Insurance Code, as set out in Question No. 5, applicable to 

insurance policies contracted for under Article 3.51. Question No. 6 is 

answered in the negative. See Attorney General’s Opinion No. V-1374 

(1951). 

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Honorable Robert S. Calvert, page 5 (M-1109) 

SUMMARY 

Under the provisions of Subsection (3), Section 1 

of Article 3.50 of the Texas Insurance Code, a group is 

a class of designated employees, of not less than 10 nor 

less than 75% of the eligible employees (excluding any 

employee as to whom evidence of individual insurability 

is not satisfactory to the insurer) of any association of 

state employees or employees of any department or 

agency of the state. 

For the purposes of Article 3.51 of the Texas 

Insurance Code, a group may consist of any number of 

employees in excess of one, as determined by the contract between the department head and the insurer. 

Policies of wholesale, franchise, or employee 

life insurance cannot be, issued to state employees so 

as to authorize payroll deductions or the State to contribute premiums. 

Neither a payroll deduction or a state contribution for premium payments can be made under Article 

3.50 or Article 3.51 where an employee contracts for 

an insurance policy and the policy is issued to that employee. 

Section 1, Subsection (3) and Sections 2 and 3 of 

Article 3.50 of the Texas Insurance Code are the only provisions that apply to group insurance for state employees 

which authorize payroll deductions and premium payments 

by the State for an employee for group life insurance. 

The provisions of Subsection 2 of Article 3.51 of 

the Texas Insurance Code do not make the provisions of 

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Honorable Robert S. Calvert, page 6 (M-1109) 

Article 3.50 applicable to insurance for public employees 

procured under Article 3.51. 

D C. MARTIN 

eneral of Texas 

Prepared by James Hackney 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE 

Kerns Taylor, Chairman 

W. E. Allen, Co-Chairman 

Jack Goodman 

James Quick 

Jim Swearingen 

Bill Flanary 

SAMUEL D. MCDANIEL 

Staff Legal Assistant 

ALFRED WALKER 

Executive Assistant 

NOLA WHITE 

First Assistant 

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