Relating to the insurable interest of certain persons providing care to individuals with disabilities in the life of those individuals.
ModeratePlan for compliance
Low Cost
Effective:2025-05-29
Enforcing Agencies
Texas Department of Insurance
01
Compliance Analysis
Key implementation requirements and action items for compliance with this legislation
Implementation Timeline
Effective Date: May 29, 2025 (Law is currently in effect).
Compliance Deadline:January 1, 2026. This is the date the prohibition legally attaches to insurance policies (new or renewed). However, internal policy updates should be completed immediately to prevent surveyor citations for exploitation.
Agency Rulemaking: No specific rulemaking is mandated for the Texas Department of Insurance (TDI). However, expect the Health and Human Services Commission (HHSC) to interpret violations of this statute as "financial exploitation" during standard facility surveys.
Immediate Action Plan
Update Policies: Revise Employee Handbooks to classify non-relative beneficiary status as a prohibited Conflict of Interest immediately.
Audit Files: Conduct a review of all resident insurance documentation currently in your possession before Q4 2025.
Notify Staff: Distribute a memo explaining that this practice is now illegal under Texas law and grounds for termination.
Client Communication: Inform residents and guardians of the new law during the next care plan meeting or administrative review.
Operational Changes Required
Contracts
Employment Agreements: Update contracts for all direct care staff and management. Insert a representation and warranty clause stating the employee does not and will not hold an insurable interest in any non-relative resident.
Admission Agreements: Add a disclaimer stating the facility prohibits staff from being named beneficiaries and assumes no liability for private financial arrangements violating this policy.
Hiring/Training
Employee Handbook: Immediately amend the Code of Conduct to explicitly prohibit soliciting or accepting beneficiary status on a resident's life insurance policy. Define this as a terminable offense.
Verification Protocol: Establish a workflow to verify "relative" status (within the third degree of consanguinity or affinity) if an employee claims an exception. Require documentation (birth certificates, marriage licenses) before allowing the designation.
Reporting & Record-Keeping
Resident File Audit: Review all resident files where the facility assists with financial management or retains copies of insurance policies. Flag any policy naming a staff member.
Renewal Tracking: For flagged policies, note the renewal date. You must advise the resident or legal guardian to change the beneficiary prior to the first renewal on or after January 1, 2026, or the designation will be voided by law.
Fees & Costs
No New State Fees: There are no direct filing fees associated with this bill.
Operational Costs: Minimal administrative costs related to legal review of handbooks and auditing current resident files.
Strategic Ambiguities & Considerations
The "Indirect" Interest Trap: The statute prohibits holding an interest "directly or indirectly." This creates a regulatory gray zone regarding staff members who may attempt to use a spouse, shell LLC, or trust to bypass the prohibition. You must interpret "indirectly" broadly in your internal policies to protect the facility from exploitation claims.
Grandfathering Risks: Policies issued prior to January 1, 2026, and not renewed (e.g., paid-up whole life) may technically be exempt from the insurance code violation. However, relying on this technicality is dangerous. HHSC surveyors may still cite the facility for allowing financial exploitation regardless of the insurance code's technical applicability date.
Need Help Understanding Implementation?
Our government affairs experts can walk you through this bill's specific impact on your operations.
Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.
Current law does not specifically address conflicts of interest that may arise with respect to a provider, staff member, or paid caregiver of certain facilities and other settings serving individuals with a disability being named as a beneficiary on the life insurance policy of a client for whom such providers, staff members, and caregivers are responsible for ensuring the safety and well-being. The author informed the committee of an example of such a possible conflict involving Leroy Anderson who was a 49-year-old man with schizophrenia, bipolar disorder, and diabetes and who lived and received care in a group home. While in that facility, he fell into a diabetic coma and passed away and, in the course of settling his estate, it was revealed that the beneficiary on his life insurance policy had been changed from his uncle to his caregiver. H.B. 1041 seeks to address this type of conflict by providing that a person caring for an individual with a disability, including an intellectual disability, at an applicable state supported living facility, assisted living facility, intermediate care facility, or group home does not have an insurable interest in the life of the individual under the person's care unless the two are related.
CRIMINAL JUSTICE IMPACT
It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
ANALYSIS
H.B. 1041 amends the Insurance Code to establish that, for purposes of a life insurance policy issued or delivered in Texas or issued by a life insurance company organized under state law, a person providing care to an individual with a disability, including an intellectual disability, at a state supported living center, a state-licensed assisted living facility, a state-licensed intermediate care facility, or a group home, as defined by reference to the Persons with an Intellectual Disability Act, does not directly or indirectly have an insurable interest in the individual's life unless the person is the individual's relative who is related to the insured within the third degree by consanguinity or affinity. The bill's provisions apply only to an insurance policy delivered, issued for delivery, or renewed on or after January 1, 2026.
Honorable Lacey Hull, Chair, House Committee on Human Services
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
HB1041 by Turner (Relating to the insurable interest of certain persons providing care to individuals with disabilities in the life of those individuals.), As Introduced
No significant fiscal implication to the State is anticipated.
It is assumed that any costs associated with the bill could be absorbed using existing resources.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies:
454 Department of Insurance
LBB Staff:
JMc, NPe, GDZ, BFa
Related Legislation
Explore more bills from this author and on related topics
HB1041 prohibits employees of assisted living facilities, intermediate care facilities, and group homes from holding an insurable interest (ownership or beneficiary status) in a resident's life insurance policy unless they are related by blood or marriage. While the insurance code provision applies to policies issued or renewed starting January 1, 2026, facility operators must immediately update conflict-of-interest policies to mitigate liability regarding financial exploitation of residents. Implementation Timeline Effective Date: May 29, 2025 (Law is currently in effect).
Q
Who authored HB1041?
HB1041 was authored by Texas Representative Chris Turner during the Regular Session.
Q
When was HB1041 signed into law?
HB1041 was signed into law by Governor Greg Abbott on May 29, 2025.
Q
Which agencies enforce HB1041?
HB1041 is enforced by Texas Department of Insurance.
Q
How urgent is compliance with HB1041?
The compliance urgency for HB1041 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.
Q
What is the cost impact of HB1041?
The cost impact of HB1041 is estimated as "low". This may vary based on industry and implementation requirements.
Q
What topics does HB1041 address?
HB1041 addresses topics including disabilities, persons with, insurance, insurance--life & annuities, mental health & substance abuse and occupational regulation.
Legislative data provided by LegiScanLast updated: November 25, 2025
Need Strategic Guidance on This Bill?
Need help with Government Relations, Lobbying, or compliance? JD Key Consulting has the expertise you're looking for.
