SECTION 55.601. Scope

(a) Under Texas Family Code §231.015, the Child Support Division (CSD) of the Office of the Attorney General, in consultation with the Texas Department of Insurance and representatives of the insurance industry, is required to operate by rule an insurance intercept program under which insurers must cooperate with the CSD in matching the names of claimants with the names of child support obligors who owe past-due child support. When such an individual is identified, the insurer will receive either a notice of child support lien or an income withholding order to secure the payment of the amount of past-due support. This subchapter explains how the matching process and the reporting process work.

(b) Except as provided by subsection (c) of this section, as used in this subchapter, a "claim" that must be matched and must be reported is any which seeks an economic benefit for the claimant.

(1) An "economic benefit" under a life, accident, health policy or annuity is defined as a payment in which an individual is paid as the payee or co-payee:

(A) for a claim by a beneficiary under a life insurance policy;

(B) for the cash surrender value by an owner of a life insurance policy or annuity;

(C) for payments to an annuitant; or

(D) a payment to an individual as the payee or co-payee on a first-party claim as defined herein, unless excluded under subsection (c)(2) of this section.

(2) An "economic benefit" under a property and casualty insurance policy is defined as a payment involving:

(A) a payment to an individual as the payee or co-payee on a first-party claim as defined herein, unless excluded under subsection (c)(1) of this section; payments involving third-party claims, as defined herein, where the individual would be entitled to compensations from an insured covered by a liability insurance policy or self-insurer including claims covering personal or bodily injury, lost wages, property damage, non-economic tort damages, wrongful death damages, or accidental death damages; or

(B) payments to individuals for employment or workers' compensation benefits covered by an insurance policy or certified self-insurer.

(3) The term "first-party claim" means:

(A) a claim that is made by the insured or policyholder under an insurance policy or contract or by a beneficiary named in a life insurance policy or annuity; and

(B) the proceeds must be paid by the insurer directly to the insured or beneficiary.

(4) The term "third-party claim" means a claim for bodily injury, property damage or other damages that is brought by a third-party against an insured that is covered by a liability insurance policy or contract or by a self-insured.

(c) The following economic benefits are not considered economic benefits that require reporting:

(1) "first-party actual property damage claims" defined as benefits payable under an insurance policy arising out of covered damage for actual repair, replacement, or loss of use of insured property. Examples include:

(A) physical damage coverage under a personal automobile policy for actual repair, replacement, loss of use, or other associated costs including, but not limited to towing, storage, vehicle rentals, or costs to an insured vehicle;

(B) coverage for loss of damage to an insured dwelling and contents under a residential, homeowners, farm and ranch owners, condominium owners, tenant property insurance policy, or other similar policies including additional living expenses payable under such a policy;

(C) benefits paid to the mortgagee or lienholder of the property including payments issued jointly to the insured and mortgagee; and

(D) coverage for physical loss or damage to commercial property or business personal property insured under a commercial property, farm, inland marine, builder's risk, or other similar policies.

(2) "actual medical expenses" defined as a payment

(A) issued and sent directly to a healthcare provider; or

(B) issued and sent directly to the claimant after the claimant provides proof of the amount actually paid by the claimant to the healthcare provider or providers, the amount is at least as much as the insurance payment and, the amount does not include any amounts billed but not paid.

(3) A co-payable insurance payment mailed directly to a vendor, repair facility, or healthcare provider that includes the claimant as a co-payee under subsection (1) or (2) of this section.

(4) A loan against the cash value or surrender value of an insurance policy or annuity, including loans for premium payments.

(5) Dividends or other payments made under an insurance policy or annuity that are credited or retained by the insurer or that will not exceed $1,200 over a 12-month period.

(6) Benefits payable directly to a creditor of a claimant under the terms of the policy.

(7) Benefits assigned to be paid to a healthcare provider or facility for "actual expenses" defined as the amount actually owed by the insured not otherwise paid or reimbursed.

(8) Limited benefits that include coverage for one or more specified diseases or illnesses; dental or vision benefits; hospital indemnity or other fixed indemnity insurance coverage; and, short-term major medical contracts, including any benefits to be paid under a plan or rider of accident insurance, accidental death, or loss of limb coverage.

(9) Benefits paid in accordance with a "long term care benefit plan" as defined in §1651.003 of the Insurance Code.

(10) Benefits paid on behalf of an individual directly to a retirement plan or an accelerated death benefit as defined in Chapter 1111 of the Insurance Code.

(11) "third-party property damage claims" defined as benefits paid or payable to:

(A) a vendor or repair facility for the actual repair, replacement, or loss of use of:

(i) a dwelling, condominium, or other improvements on real property;

(ii) a vehicle, including a motor vehicle, motorcycle, or recreational vehicle; or

(iii) other tangible property that has sustained actual damage or loss; or

(B) a claimant for reimbursement of the claimant for payments made by the claimant to a vendor or repair facility for the actual repair, replacement, or loss of use of:

(i) a dwelling, condominium, or other improvements on real property;

(ii) a vehicle, including a motor vehicle, motorcycle, or recreational vehicle; or

(iii) other tangible property that has sustained actual damage or loss.

(12) Benefits paid or payable to a claimant under workers' compensation coverage where the claimant has paid a healthcare provider's bill and payment is no greater than the amount owed for the treatment rendered.

(13) A claim for benefits, or a portion of a claim for benefits, assigned to be paid to a funeral service provider or facility for actual funeral expenses owed by the insured that are not otherwise paid or reimbursed.

(d) All insurers are subject to the matching and reporting requirements under this subchapter and must match and report any claim seeking an economic benefit in which:

(1) the owner of a life policy or annuity that was issued to an individual resides in Texas;

(2) the beneficiary making a claim on a life policy or annuity resides in Texas;

(3) a first-party claimant making a claim resides in Texas;

(4) a third-party claimant making a third-party claim, as defined in subsection (b)(4) of this section, resides in Texas; or

(5) a liability insurer or an eligible surplus lines insurer is providing coverage to an insured on a third-party claim and the claim occurs in Texas.

(e) For a claim under subsection (d)(4) or (d)(5) of this section, the liability insurer must comply with the match and reporting requirements if coverage to an insured would result in payments to the third-party claimant as a child support obligor based on the liability of the insured to the third-party claimant.

(f) To determine whether a recipient of funds paid under a claim owes child support arrearages or is subject to a lien for child support arrearages, insurers are encouraged to report all claims.

(g) As used in this subchapter, "insurer" means:

(1) a domestic, foreign, or alien company which provides insurance coverage of any kind, including:

(A) life insurance;

(B) health insurance;

(C) liability insurance for an occurrence;

(D) an annuity; or

(E) any combination of subparagraphs (A) - (D) of this paragraph;

(2) a Lloyd's plan;

(3) a reciprocal or interinsurance exchange;

(4) a fraternal benefit society;

(5) a mutual aid association, including a mutual insurance company;

(6) a surplus lines insurer;

(7) a certified self-insurer granted a certificate of authority as authorized by Labor Code Chapter 407;

(8) a certified self-insurer group granted a certificate of approval as authorized by Labor Code Chapter 407A; or

(9) a governmental entity that self-insures, either individually or collectively under an interlocal cooperation contract as authorized by Government Code Chapter 791.

(h) To assure the flexibility to accommodate the various types of operations of the entities subject to the rules, these rules will be liberally construed.

(i) If compliance with these rules may result in an operational hardship or an injustice to any party, the rules may be suspended at the discretion of the Title IV-D Director. An exemption request under this provision must be sent to the Office of the Attorney General of Texas, Special Collections Unit, by mail: P.O. Box 12027, Austin, Texas 78711-2027, by FAX: [phone], or by e-mail: [e-mail], providing the basis or the hardship or injustice and the length of time needed to comply.

(j) The Title IV-D Director may delegate a power, duty, or responsibility under these rules to one or more persons in the Child Support Division.

Source Note: The provisions of this §55.601 adopted to be effective June 10, 2003, 28 TexReg 4409; amended to be effective March 5, 2008, 33 TexReg 1762; amended to be effective March 16, 2010, 35 TexReg 2153; amended to be effective December 2, 2013, 38 TexReg 8639; amended to be effective May 12, 2022, 47 TexReg 2727