February 20, 1975 

The Honorable Henry Wade 

Criminal District Attorney 

Dallas County Courthouse 

Dallas, Texas 75202 

Opinion No. H- 535 

Re: Payment by Dallas County 

of group health and life insurance 

premiums for retirees. 

Dear Mr. Wade: 

You have requested our opinion as to whether or not Dallas County 

may “legally pay premiums on a health and life groupinsurance policy for 

persons who have retired from the county and are eligible for benefits 

under the County and District Retirement System, ” and if the answer to 

this question “is in the negative, and if the qualified retirees pay their 

own premiums, ” whether Dallas County may “legally pay the group 

insurance premiums for persons employed by the county when the group 

rate for employed persons would reflect and partially be based uponlosses 

sustained by persons in the retired category. ” 

Our answer to both questions is in the negative. 

Article 3. 51-2(a) of the Texas Insurance Code empowers a county 

“to procure contracts insuring its officials and employees” for, inter alia, 

group life and group health insurance and to pay all or a portion of the 

premiums of such policies. 

“Employees” is not defined in article 3. 51-2. Section 1 of article 

3.50 dealing in general with the requirements for group life insurance’ 

policies, in its subsection (3) (d) which is applicable to policies issued to 

employees of governmental units, defines “employees” “in addition to its 

usual meaning [to] include elective and appointive officials of the state. ” 

Section l(2) of article 3. 51, dealing with group health insurance policies 

issued to employees of governmental units, defines “employees” to 

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The Honorable Henry Wade page 2 (H-535) 

“include elective and appointive officials of the state” as well as its 

“usual meaning. ” 

It would appear, then, that the question of whether to include 

“retirees” within the scope “employees” should be determined by the 

“usual meaning” of the term “employees. ” The judicial decisions most 

pertinent to this inquiry are not Texas cases, but they provide some 

illumination. 

The U.S. Supreme Court recently ruled that the term “employee” 

as used in the National Labor Relations Act is to be taken in its ordinary 

meaning, and, as such, excludes retirees. Allied Chemical & Alkali 

Workers of America Local Union No. 1 v. Pittsburgh Plate Glass Co., 

404 U.S. 157 (1971). Youngstown Sheet & Tube Co. v. Review Board, 

191 N. E. 2d 32 (Ind. 1963) interpreted the meaning of “employee” for purposes 

of a collective bargsining agreement, and quoting an earlier Indiana decision, Koch v. Wix, 25 N. E. 2d 277 (Ind. 1940), held that its “common, 

well-established meaning” is “one who is in the present service of another 

for pay at a particular time ” and “does not embrace one who has at some 

time been, but no longer is, in the employment of another. ” Youngstown, 

supra, at 36. 

The Texa’s ca s e s which have ~considered the definition of 

“employee” do not deal with persons who have left the service of their 

employers, but the definitions the courts accept would seem to preclude 

the subsuming of “retiree” under the umbrella of “employee. ” 

In Riverbend Country Club v. Patterson, 399 S. W. 2d 382 (Tex. Civ. 

APP. --Eastland 1965, ref. n. r. e.), the Court quoted the definition of an 

“employee” as one whose “employer has the power or right to control and 

direct the employee in the material details of how the work is to be performed.” Id. at 383. In Northwestern National Life Ins. Co. v. Black, 

383 S. W. 2dsO6 (Tex. Civ. App. --Texarkana 1964, ref. n. r. e. ), the 

Court held that an “employee” is “one who works for an employer: a 

person working for a salary or a wage. ” g, at 809. 

Neither definition seems capable of including the retiree. On the 

one hand, the employer has no “power or right to control or direct the 

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The Honorable Henry Wade page 3 (H-535) 

employee” and on the other, the retiree is no longer “working for a salary 

or a wage. ” Thus, if the term “employee” is restricted to its “usual 

nxmiirg” it would seem to exclude the retiree. 

There are other statutory provisions which argue on behalf of 

exclusion. Article 3. 51-4 of the Insurance Code authorizes the State 

of Texas to pay the group life and group health premiums for “retirees 

of the Central Education Agency, the Texas Rehabilitation Commission, 

and the Coordinating Board, Texas College and University System!’ If 

“retirees” are included within the general definition of “employees, ” 

there would seem to be no~need to create a special category to provide 

for these particular retirees. 

The only statutory authority which even apparently contradicts the 

proposition that a retiree is not an employee is found in section l(1) (a) of 

article 3.50 of the Insurance Code, which states that a policy “may provide that the term ‘employees’ shall include retired employees. ” As has 

been pointed out, supra, section 1 of article 3. 50 is concerned in general 

terms with the requirements for group life insurance policies. This 

office has previously ruled, in Attoiney General Opinion M-1109 (1972)) 

that section 1, subsection (3) and sections 2 and 3 of article 3.50 are the 

only provisions of article 3. 50 that apply to group insurance for state 

employees. Since subsection 3 of article 3. 50 includes employees of all 

governmental units, itis reasonable to presume that the provisions of 

article 3. 50 which have been interpreted as inapplicable to state employees, 

and in particular section 1, subsection l(a), are inapplicable to employees 

of all governmental units. We conclude, therefore, that Dallas County 

may not legally pay premiums on a health and life group insurance policy 

for persons who have retired from the county and are eligible for benefits 

under the County and District Retirement System. 

Your second question is a corollary to the first. The statute 

authorizing a county to provide group health and life insurance for its 

employees, article 3. 51-2, empowers the county “to procure contracts. ” 

Payment of all or part of the premiums is left to the county’s discretion. 

The basic right conferred is that of initiating the program. Even if a retiree 

pays his own premiums. Dallas County has not been authorized to include the 

retiree within its group insurance plans. 

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The Honorable Henry Wade page 4 (H-535) 

SUMMARY 

Dallas County may not legally pay premiums on 

a health and life group insurance policy for persons 

who have retired from the county and are eligible for 

benefits under the County and District Retirement 

System; even if the qualified retirees pay their own 

premiums, Dallas County may not legally pay the 

group insurance premium for persons employed by 

the county when the group rate for employed persons 

would reflect and partially be based upon losses 

sustained by persons in the retired category. 

Very truly yours, 

Attorney General of Texas 

APPROVED: 

DAVID M. KENDALL, First Assistant 

Opinion Committee 

lg 

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