SECTION 132.16. Change in Payment Periods; Purchase of Annuity for Death Benefits

(a) Upon the request of the eligible beneficiaries, the insurance carrier and eligible beneficiaries entitled to death benefits may agree to change the frequency of death benefits payments from the standard weekly period to a monthly period. The agreement to change the payment frequency must be in writing. To relieve the insurance carrier of the responsibility to pay death benefits weekly:

(1) An application to change the frequency of payments must be submitted to the Commission with the written agreement for approval in the form, format and manner required by the Commission

(2) A separate application must be submitted to the Commission for each eligible beneficiary, and the application must state that a payment adjustment shall be made when there is a change in the individual beneficiary's eligibility status in accordance with the provisions of the Act.

(3) If less than the maximum weekly death benefit in effect at the time of death is being paid, a completed Employer's Wage Statement (Form TWCC-3) must be filed with the application to change the payment period.

(4) The written agreement for monthly payment of death benefits must include:

(A) the agreement for the monthly payment of death benefits will be effective the first calendar day of the month following the month in which the written agreement was approved by the Commission;

(B) payment of monthly death benefits shall be issued on or before the seventh day of the month for which benefits are due.

(C) continuation of weekly death benefits payments through the end of the month in which the agreement was approved;

(D) payment of the last week of death benefits to transition from weekly payment of death benefits to monthly payments shall be prorated to the end of the month to ensure the eligible beneficiaries receives death benefits through the last day of the month; and

(E) calculation of the monthly compensation rate by multiplying the weekly compensation rate by 4.34821.

(5) The Commission must approve the application to change the frequency of death benefit payments.

(b) With the exception of payments made by annuity under subsection (d)(7) of this section, at any time after signing the agreement for the monthly payment of death benefits, the eligible beneficiary or insurance carrier may notify the other party in writing that it no longer agrees to the monthly payment of death benefits. The last monthly payment shall be prorated to ensure the insurance carrier pays the appropriate amount of DBs. In this case, the insurance carrier shall pay all accrued but unpaid death benefits at the end of the current monthly cycle and shall continue to pay death benefits weekly as and when they accrue and are due.

(c) The insurance carrier and an eligible beneficiary may enter into a written agreement that the carrier shall purchase an annuity for that beneficiary for weekly or monthly payment of death benefits. An application for payment of death benefits by annuity must be submitted to the Commission for approval in the form, format and manner required by the Commission. If less than the maximum weekly death benefit in effect at the time of death is being paid, a completed Employer's Wage Statement (Form TWCC-3) must be filed with the application for payment by annuity.

(d) An annuity for the payment of death benefits shall meet the following terms and conditions.

(1) Monthly death benefit payments shall be initiated no later than the 45th day after the date on in which the written agreement was approved by the Commission.

(2) The company providing an annuity for the payment of death benefits must be licensed to do business in Texas and must have a current A. M. Best rating of B+ or better or have a Standard & Poor's rating of claims paying ability of A or better.

(3) The workers' compensation insurance carrier must guarantee the payments provided by the annuity company in the event of default.

(4) When benefits are paid to an eligible spouse of the deceased employee and the spouse subsequently remarries, the annuity contract must address the payment of a lump sum payment equal to 104 weeks of benefits to the eligible spouse and the redistribution of benefits at the end of 104 weeks to the remaining eligible beneficiaries, if any.

(5) If all beneficiaries become ineligible to receive death benefits and an amount equal to 364 weeks of death benefits has not been paid, the remaining benefits shall be paid by the annuity company without an order from the Commission to the Subsequent Injury Fund not later than 30 days after all beneficiaries' eligibility ends.

(6) A beneficiary, or the beneficiary's guardian if applicable, shall not be allowed to assign the right to receive death benefits from an annuity. All death benefits must be paid to the order of the eligible beneficiary or the legal guardian, if applicable.

(7) The annuity company shall pay death benefits either weekly or monthly as elected by the beneficiary in the application for payment of death benefits by annuity.

(8) If monthly payments are elected by the beneficiary, the transition from weekly to monthly benefits paid by annuity shall be the same as that for death benefits paid by the responsible insurance carrier set out in subsection (a) of this section.

(e) This section applies only to agreements entered into on or after January 1, 2000, for payment of death benefits under the provisions of the Act.

Source Note: The provisions of this §132.16 adopted to be effective December 26, 1999, 24 TexReg 11452