Present law establishes within the general fund the pre-need funeral account ("account"). Funds received by the commissioner of commerce and insurance ("commissioner") for the account, up to $2.5 million, or a higher amount as determined by the commissioner by rule, must be deposited into the account and held solely for the purposes related to the pre-need registration program and any receivership action initiated by the commissioner against a pre-need seller.
Under present law, once the balance in the account exceeds $2.5 million or a higher amount as determined by the commissioner by rule, an indigent fund must be established within the general fund to be administered by the commissioner. Any funds received for the account by the commissioner which are in excess of such amount must be deposited into the indigent fund. If the balance of the account is reduced below such amount, no funds will be deposited into the indigent fund until the account balance is restored to such amount.
This bill clarifies that the account is a state administrative fund within the general fund, and removes the $2.5 million cap on the amount the commissioner must deposit in the account. This bill further clarifies that all funds in the account are to be held solely for the pre-need registration program and any receivership action initiated by the commissioner against a pre-need seller, and used to fund the pre-need registration program and any receivership action initiated by the commissioner against a pre-need seller to the extent the funds or assets of the pre-need seller are not adequate to fund the receivership.
This bill removes the provision requiring funds over $2.5 million to go to the indigent fund and authorizes the commissioner to, by rule, implement an increase in the state administrative fee, described below, up to $20 for a period of up to two years if the balance in the account drops below $1 million. Interest accruing on investments and deposits of the fund must be credited to the account, must not revert to the general fund, and must be carried forward into each subsequent fiscal year.
INDIGENT FUND ADMINISTRATION
Present law establishes an indigent burial fund ("fund") for the purpose of reimbursing funeral homes that provide funeral services to Tennessee residents who are indigent. These funds must only be expended for a person who was receiving state financial assistance on the date such indigent person died. All funds in excess of $2.5 million must not revert to the general fund of the state, but must remain available to be allocated and used solely for such indigent funerals provided by funeral homes. Interest accruing on investments and deposits of the fund must be credited to the account, must not revert to the general fund, and must be carried forward into each subsequent fiscal year. The amount of reimbursement must be based on available funds in the indigent burial fund at the time a request for reimbursement is filed by a funeral home.
A funeral home that provides funeral services to those Tennessee residents who are indigent may file an application with the commissioner, in a manner established by the commissioner, requesting reimbursement from the indigent burial fund for amounts expended by the funeral home in providing such services. The funeral home must be required to file documentation verifying that the expenses were for providing such services and for no other purposes.
In accordance with the commissioner's rule-making authority, the commissioner must promulgate rules defining indigency for purposes of eligibility for reimbursement, setting a maximum amount for reimbursement per burial, the manner in which claims must be submitted and paid, and any other rules necessary for administration of this program.
This bill removes the provisions above related to the indigent fund.
PRE-NEED REGISTRATION RENEWAL
Present law prohibits issuing a pre-need registration renewal unless the applicant pays, in addition to the renewal fee, a pre-need funeral consumer protection fee of $20 for every pre-need funeral sales contract entered into during the preceding renewal period. If the pre-need funeral sales contract covers both funeral merchandise and cemetery merchandise, then a pre-need seller, other than a cemetery company paying a consumer protection fee for such a contract, must pay only one consumer protection fee for the contract, which must be credited to the pre-need funeral account.
This bill renames the consumer protection fee to the pre-need state administrative fee, which may be charged to the consumer, and changes the cost to $10.
EFFECTIVE DATE
This bill takes effect on January 1, 2025.
ON APRIL 17, 2024, THE SENATE ADOPTED AMENDMENTS #1 AND #2 AND PASSED SENATE BILL 2578, AS AMENDED.
AMENDMENT #1 makes the following changes to the bill:
(1) Requires the state treasurer, on January 1, 2025, to transfer all funds in the indigent burial fund created by the version of the pre-need funeral consumer protection account ("pre-need funeral account") law in effect as of December 31, 2024 to the pre-need funeral account;
(2) If the balance of the pre-need funeral account drops below $2 million as of June 30 of any year, establishes that the state administrative fee increases to $20 on the following January 1. If, after the administrative fee has increased to $20, the balance of the account is $2.5 million or greater as of June 30 of any year, then the fee reverts to $10 on the following January 1; and
(3) Requires interest accruing on investments and deposits of the fund to be credited to the account. Such interest must not revert to the general fund, and must be carried forward into each subsequent fiscal year.
ON APRIL 17, 2024, THE SENATE ADOPTED AMENDMENT #2 AND PASSED SENATE BILL 2578, AS AMENDED.
AMENDMENT #2 prohibits issuing a pre-need registration renewal, under the Tennessee Prepaid Funeral Benefits Act, unless the applicant pays, in addition to the renewal fee, a pre-need state administrative fee of $10 for every pre-need funeral sales contract entered into during the preceding renewal period and the state administrative fee may be charged to the consumer as part of the transaction. If the pre-need funeral sales contract covers both funeral merchandise and cemetery merchandise as defined in state law, then a pre-need seller, other than a cemetery company paying a consumer protection fee for such a contract under state law relative to cemetery consumer protection accounts, must pay only one state administrative fee for the contract, which must be credited to the pre-need funeral account. A pre-need seller must not charge a consumer more than one state administrative fee for the execution of one or more pre-need funeral sales contract entered into by the consumer at any one time.

Statutes affected:
Introduced: 62-5-414
Amended with SA0659, SA0998 -- 04/17/2024: 62-5-414