Keene council establishes employee benefits trust fund to capture premium tax savings

Keene — The City Council unanimously approved a resolution authorizing the creation of the City of Keene Employee Benefits Trust (EBT), a single‑employer trust established under the Texas Insurance Code to allow the city to retain premium taxes that otherwise would be remitted to the state.

Why it matters: Council and the city’s broker explained that Chapter 222 of the Texas Insurance Code permits a qualifying single nonprofit trust to receive plan premiums without remittance of the state premium tax, which effectively reduces the city’s annual insurance cost base. The broker said the trust mechanism can yield savings on medical, dental and vision premiums; life and disability lines generate little premium‑tax savings.

Key points from the meeting: The broker said, “since 2005 you’ve been paying an extra 1.75% in cost every year that you didn’t have to pay,” and estimated annual premium‑tax savings using a general rule of $17,500 saved per $1 million of premium. The council’s motion authorized the trust agreement, the trust name and trustees and directed staff to finalize the trust documents for the state controller’s office.

Council action: Councilman Rob Forza moved to authorize the trust agreement and name trustees; Councilman Johnny Shaw seconded. The motion was approved unanimously.

Next steps: Staff will finalize and file the trust documentation with the state controller and implement the trust for eligible insurance lines. The broker and staff said no separate trust bank account is required under the proposed structure; the trust name and document will be provided to carriers and the state controller.

Ending: Council members framed the trust as a mechanism to lower recurring costs for municipal insurance programs; staff will report back as the trust is implemented.