Relating to operation by certain nonprofit organizations of certain regional health care programs for employees of small employers.
LowStandard timeline
Low Cost
Effective:2025-09-01
Enforcing Agencies
Texas Department of Insurance (TDI)
01
Compliance Analysis
Key implementation requirements and action items for compliance with this legislation
Implementation Timeline
Effective Date: September 1, 2025
Compliance Deadline:January 1, 2026 (Recommended). While legal authority vests in September, the practical operational window aligns with the standard benefits plan year beginning January 1.
Agency Rulemaking:High Probability of Regulatory Guidance. While the statute does not explicitly mandate a rulemaking schedule, the Texas Department of Insurance (TDI) will likely issue guidance to distinguish these "premium assistance" vehicles from Multiple Employer Welfare Arrangements (MEWAs) or unauthorized insurance products.
Immediate Action Plan
1.Bylaw Review (Q1 2025): Determine if your nonprofit’s charter allows for the governance of a health assistance program.
2.Feasibility Study (Q2 2025): Conduct an actuarial analysis to determine if a premium assistance model offers genuine value to your small business members compared to the open market.
3.Legal Structuring (Q3 2025): Retain counsel to draft the Program Participation Agreement and ensure the funds flow does not constitute "the business of insurance."
4.Go-Live (Sept 2025): Formally charter the program committee upon the law's effective date.
Operational Changes Required
Contracts
Program Participation Agreements: Nonprofits must draft new agreements with participating small employers. These contracts must explicitly define the arrangement as "premium assistance" (financial subsidy) rather than "health coverage" to avoid triggering insurance code liabilities.
Governance Charters: Bylaws for participating nonprofits must be amended to accept the governance role previously held by the county commissioners court.
Vendor Agreements: Contracts with Third-Party Administrators (TPAs) must be updated to reflect that the nonprofit, not the county, is the contracting fiduciary.
Hiring/Training
Fiduciary Training: Board members of the operating nonprofit must receive training on fiduciary duties regarding the management of designated health funds.
Benefits Administration: Staff must be trained to verify "small employer" status (2–50 employees) and ensure funds are applied strictly to premium assistance, not direct medical service payments.
Reporting & Record-Keeping
Fund Segregation: You must establish strict accounting protocols to segregate premium assistance funds from the nonprofit’s general operating accounts. Commingling funds will create significant legal exposure.
Eligibility Audits: Maintain auditable records proving that all beneficiaries are employees of qualified small employers within the nonprofit’s operational region.
Fees & Costs
Insurance Costs: Nonprofits assuming this role must purchase Fiduciary Liability Insurance and potentially specific Errors & Omissions (E&O) coverage, as sovereign immunity protections applicable to county-run programs will not apply.
Legal Setup: Budget for outside counsel to structure the program to avoid classification as an unauthorized insurer by TDI.
Strategic Ambiguities & Considerations
Definition of "Premium Assistance": The statute distinguishes this from "health care services" but does not define the boundaries of assistance. It is unclear if the nonprofit can aggregate funds to purchase a group policy or if it is restricted to reimbursing individual market premiums. Conservative Position: Assume the latter until TDI clarifies.
Geographic Jurisdiction: The law authorizes operation in the "county in which a participating nonprofit organization operates." For statewide associations, it is ambiguous whether this authorizes a statewide program or requires county-by-county implementation.
Solvency Oversight: The removal of county oversight leaves a regulatory vacuum regarding financial solvency. Expect TDI to aggressively interpret existing insurance codes to fill this gap if programs fail to pay.
Need Help Understanding Implementation?
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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.
In 2007, the 80th Texas Legislature enacted legislation that allowed local entities to establish health care programs for small employers, known as three-share premium assistance programs, which use state funds to subsidize premiums for low-income employees of small businesses. Three-share programs are not regulated as insurance companies by the Texas Department of Insurance (TDI), and county commissioners courts are authorized to establish, participate in, and directly govern these programs under current state law. The bill author has informed the committee that TexHealth Central Texas is a premium assistance program that does not provide direct health insurance coverage but instead offers subsidies to help individuals afford licensed commercial health insurance. The bill author has also informed the committee that premium assistance programs pose lower risk than three-share programs and remain under TDI's direct oversight through grant management, which includes monthly reporting and a biennial application process. H.B. 2655 seeks to allow TexHealth Central Texas to operate statewide and continue to reduce the number of uninsured Texans by authorizing a community-based nonprofit organization to establish or participate in a regional health care program for employees of small employers without the participation of the commissioners court of a county if the program is a premium assistance program not offering health care services or health care benefits.
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. 2655 amends the Health and Safety Code to authorize a community-based nonprofit organization to establish or participate in a regional health care program for employees of small employers without the participation of the commissioners court of a county if the program is a premium assistance program not offering health care services or health care benefits. The bill provides for a participating nonprofit organization to operate and directly govern such a program and subjects such a program to the program objectives established under state law for other regional or local health programs but with respect to serving individuals in a county in which a participating nonprofit organization operates.
Honorable Cecil Bell, Chair, House Committee on Intergovernmental Affairs
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
HB2655 by Oliverson (Relating to operation by certain nonprofit organizations of certain regional health care programs for employees of small employers.), As Introduced
No fiscal implication to the State is anticipated.
Local Government Impact
No significant fiscal implication to units of local government is anticipated.
Source Agencies:
529 Health and Human Services Commission
LBB Staff:
JMc, SZ, BC, CWi
Related Legislation
Explore more bills from this author and on related topics
HB2655 deregulates the governance of regional health care programs for small employers, authorizing nonprofit organizations to operate "premium assistance programs" without obtaining county commissioners court approval. This legislation shifts control from local government to the private nonprofit sector, creating a new vehicle for trade associations and chambers of commerce to subsidize health costs for members effective September 1, 2025. Implementation Timeline Effective Date: September 1, 2025 Compliance Deadline: January 1, 2026 (Recommended).
Q
Who authored HB2655?
HB2655 was authored by Texas Representative Tom Oliverson during the Regular Session.
Q
When was HB2655 signed into law?
HB2655 was signed into law by Governor Greg Abbott on June 20, 2025.
Q
Which agencies enforce HB2655?
HB2655 is enforced by Texas Department of Insurance (TDI).
Q
How urgent is compliance with HB2655?
The compliance urgency for HB2655 is rated as "low". Businesses and organizations should review the requirements and timeline to ensure timely compliance.
Q
What is the cost impact of HB2655?
The cost impact of HB2655 is estimated as "low". This may vary based on industry and implementation requirements.
Q
What topics does HB2655 address?
HB2655 addresses topics including business & commerce, business & commerce--small business & minority business, charitable & nonprofit organizations, insurance and insurance--health & accident.
Legislative data provided by LegiScanLast updated: November 25, 2025
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