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Signed Into Law
Signed June 20, 2025Effective 2025-06-20
HB3126

Regular Session

Relating to the election of certain entities to participate in the uniform group coverage program for active school employees; imposing a fee.

Government Affairs & Regulatory Compliance Analysis

HB3126: Government Affairs Overview

HB3126 creates a one-time statutory exception allowing school districts and educational entities that discontinued TRS-ActiveCare participation effective September 1, 2022, to re-enter the program early. Eligible entities must submit a binding election by December 31, 2025, to restart coverage on September 1, 2026, subject to a mandatory five-year lock-in and a new, Trustee-determined "Risk Stabilization Fee.

Rep. Drew Darby·House Bill·Regular Session

Critical
High Cost
Effective:2025-06-20
Business Impact

Who HB3126 Affects

This legislation has regulatory implications for the following Texas businesses and organizations:

Regulatory Priority: critical

Significant regulatory changes (effective 2025-06-20). Review with your legal and compliance teams to understand implications.

🎓

Education

Affected business types:

  • School districts
  • Charter schools
  • Private schools
  • Education service providers
View all education legislation

Key Operational Considerations

  • 1TRS Lock-In: The election to return creates a statutory contract binding the entity to TRS-ActiveCare for five years (until September 1, 2031).
  • 2Board Education: Superintendents and CFOs must educate Boards of Trustees on the financial implications of the "Risk Stabilization Fee" versus current private market trends.
  • 3HR Transition: HR departments must prepare for data migration and enrollment processing back into the TRS IT ecosystem for the 2026 plan year.

Estimated Cost Impact

highSignificant operational investment may be required.

Enforcing Agencies

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HB3126
Relating to the election of certain entities to participate in the uniform group coverage program for active school employees; imposing a fee.
Critical Urgency
Passed with Opposition
House Vote141 - 4
YEA
97% in favor145 voting
Senate Vote31 - 0
YEA
100% in favor31 voting
4
Total Opposition Votes
Cost Impact
High
Effective
2025-06-20
Enforcing Agencies
TRS
Primary Author: Rep. Drew Darby
89th Texas Legislature
jdkey.com
01

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

  • Effective Date: June 20, 2025 (Law effective immediately upon signature/vote).
  • Compliance Deadline: December 31, 2025 (Hard deadline for written notice of election to TRS).
  • Coverage Start Date: September 1, 2026 (Plan year commencement).
  • Agency Rulemaking: TRS must establish the "Risk Stabilization Fee" structure and specific election protocols between June 2025 and December 2025. Entities are in a "regulatory gray zone" until TRS publishes these fee schedules.

Immediate Action Plan

  • Verify Eligibility: Confirm legal records show your entity discontinued TRS participation specifically on September 1, 2022.
  • Audit Exit Clauses: Review current private health plan contracts for termination notice deadlines to ensure a clean exit on August 31, 2026.
  • Monitor TRS Dockets: Assign staff to monitor TRS Board meetings between July and October 2025 for the publication of the Risk Stabilization Fee structure.
  • Run Comparative Models: Once the fee is published, immediately model the total cost (TRS Premium + Fee) against projected private market renewals.
  • Execute Board Resolution: If financially viable, secure Board approval and transmit written notice to TRS via certified mail before December 15, 2025.

Operational Changes Required

Contracts

  • Commercial Vendor Termination: Entities electing to return to TRS must serve termination notices to current private carriers or Third-Party Administrators (TPAs) to end coverage effective August 31, 2026. Review current contracts for early termination penalties or notice requirements (often 90-180 days).
  • TRS Lock-In: The election to return creates a statutory contract binding the entity to TRS-ActiveCare for five years (until September 1, 2031).

Hiring/Training

  • Board Education: Superintendents and CFOs must educate Boards of Trustees on the financial implications of the "Risk Stabilization Fee" versus current private market trends.
  • HR Transition: HR departments must prepare for data migration and enrollment processing back into the TRS IT ecosystem for the 2026 plan year.

Reporting & Record-Keeping

  • Election Notice: A formal written notice must be submitted to the TRS Trustee by December 31, 2025.
  • Compliance Data: Be prepared to submit current plan census and claims data if TRS requires it under the "other requirements" clause to calculate risk fees.

Fees & Costs

  • Risk Stabilization Fee: A new, mandatory fee will be added to premiums starting September 1, 2026. This is an additional overhead cost distinct from standard premium contributions.
  • Budget Impact: CFOs must budget for TRS rates *plus* this fee, rather than standard TRS published rates.

Strategic Ambiguities & Considerations

  • Fee Calculation: The statute grants the TRS Trustee unilateral authority to determine the amount of the Risk Stabilization Fee. There is no statutory cap or formula in the bill text. Entities are currently blind to the actual cost of re-entry until TRS rulemaking occurs.
  • "Other Requirements": Section 1(b)(2) allows TRS to impose "any other requirements" for re-entry. Watch for emergency rules that may require submission of high-cost claimant data or payment of prior deficits.

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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.

02

Legislative Timeline

This bill's path through the Texas Legislature

Filed
Feb 20, 2025
Passed House
Apr 29, 2025
Passed Senate
May 25, 2025
Signed
Jun 20, 2025
Effective
Jun 20, 2025
TopicsEducationEducation--school DistrictsInsuranceInsurance--health & Accident
03

House Authors

Rep. Drew DarbyRepublican · Primary Author
Joint Authors

Senate Sponsors

Sen. Judith ZaffiriniDemocrat · Primary Sponsor
Cosponsors (3)

Bill Text(with markup)

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

Related Legislation

Explore more bills from this author and on related topics

More from Rep. Drew Darby

View all bills by Rep. Drew Darby

Related by Topic

View more Education legislation
Quick Reference

Frequently Asked Questions

Common questions about HB3126

Q

What does Texas HB3126 do?

HB3126 creates a one-time statutory exception allowing school districts and educational entities that discontinued TRS-ActiveCare participation effective September 1, 2022, to re-enter the program early. Eligible entities must submit a binding election by December 31, 2025, to restart coverage on September 1, 2026, subject to a mandatory five-year lock-in and a new, Trustee-determined "Risk Stabilization Fee.

Q

Who authored HB3126?

HB3126 was authored by Texas Representative Drew Darby during the Regular Session.

Q

When was HB3126 signed into law?

HB3126 was signed into law by Governor Greg Abbott on June 20, 2025.

Q

Which agencies enforce HB3126?

HB3126 is enforced by Teacher Retirement System of Texas (TRS).

Q

How significant are the changes in HB3126?

The regulatory priority for HB3126 is rated as "critical". Businesses and organizations should review the legislation to understand potential impacts.

Q

What is the cost impact of HB3126?

The cost impact of HB3126 is estimated as "high". This may vary based on industry and implementation requirements.

Q

What topics does HB3126 address?

HB3126 addresses topics including education, education--school districts, insurance and insurance--health & accident.

Q

What are the key dates for HB3126?

Key dates for HB3126: Effective date is 2025-06-20. Rulemaking: Must establish 'other requirements' and risk stabilization fee structures to allow entities to make an informed election by the deadline. (2025-12-31). Consult with legal counsel regarding applicability.

Q

Which Texas businesses are affected by HB3126?

HB3126 primarily affects insurance companies and financial institutions, healthcare providers and medical facilities. These businesses should review the legislation with their legal and compliance teams to understand potential impacts.

Need Strategic Guidance on This Legislation?

JD Key Consulting is an Austin, Texas-based government affairs firm led by James Dickey, former Chairman of the Republican Party of Texas. We specialize in Texas regulatory compliance and legislative strategy for data centers, energy, banking, and manufacturing.

Legislative data provided by LegiScanLast updated: January 11, 2026