Texas Comptroller Manual of Accounts - Fiscal 2025
Revenue Object 3221 – Insurance Penalties

Late payment penalties paid by insurance companies, health maintenance organizations and other insurers for failure to make a prompt payment on a valid claim.

Fifty percent of the penalty for failure to pay a claim submitted by an institutional provider is paid to the Texas Department of Insurance (TDI) and 50% to the provider. For claims submitted by non-institutional providers, after 90 days of non-payment, 18% interest is calculated on the penalty amount due and the interest is paid by the insurer to TDI.

Penalty amounts are calculated based on the time period overdue. Under 45 days past due the penalty is the lesser of:

• 50% of the difference between the billed charges and the contracted rate or;
• $100,000.

Between 45 and 90 days past due the lesser of:

• 100% of the difference between the billed charges and the contracted rate or;
• $200,000.

Penalty over 90 days is the same as after 45 days plus 18% interest.

Civil penalties assessed under Insurance Code sec. 101.105 are collected under revenue code 3717.

Established by S.B. 1467, 76th Leg., R.S. under Insurance Code 101.105 and previously used to collect a civil penalty of up to $10,000 for violation of the Unauthorized Insurance Act. H.B. 4339, 81st Leg., R.S., attempted to create a local Unauthorized Insurance Guaranty Fund, effective June 19, 2009, with the Safekeeping Trust Company for various penalties. However, the fund was not exempted under funds consolidation, H.B. 4583, and penalties continued to go to the General Revenue Fund 0001.

H.B. 2064, 81st Leg., R.S. added 50/50 split of penalties and interest allocation to the Texas Health Insurance Risk Pool.

These penalties previously used to reduce premium payment for clients of the Texas Health Insurance Risk Pool. Transferred to TDI per S.B. 1367, 83rd Leg., R.S. on abolition of the pool.

Revenue object amended for collection of penalties transferred to TDI per S.B. 1367, 83rd Leg., R.S. S.B. 1367 requires deposit of penalties to 0329 -- Healthy Texas Small Employer Premium Stabilization Fund. However, this dedication was not exempted in the funds consolidation bill (H.B. 6) therefore the penalties are deposited to General Revenue Fund 0001.