(a) The policyholder must pay the premium from:
(1) the policyholder’s funds;
(2) funds contributed by the employees or members specifically for their insurance; or
(3) both the policyholder’s funds and funds contributed by the employees or members.
(b) The policy may provide that the premium may be paid directly to the insurer by individual employees or members from their own funds. If the premium is paid as provided by this subsection, the respective employees or members become the premium payor for that particular certificate.

(c) For purposes of Sections 222.002, 257.001, and 281.004, only the final retrospectively determined premium amount remitted to the issuer by the group policyholder is taxable as gross premiums, without regard to whether membership contributions, fees, assessments, dues, revenues, or other considerations in excess of that final amount are also collected from members. This subsection applies only to a nonprofit membership association that:
(1) qualifies under Section 501(c)(9), Internal Revenue Code of 1986;
(2) has been in existence for at least 50 years;
(3) limits association membership to:
(A) members of the uniformed services of the United States serving on active duty;
(B) members of the ready reserve forces of the United States, including the Army and Air National Guard;
(C) retirees and separatees of:
(i) the uniformed services of the United States; or
(ii) the ready reserve forces of the United States, including the Army and Air National Guard;
(D) cadets and midshipmen in the service academies of the United States and other officer candidates;
(E) federal employees and contractors who are employed by the United States government or other related governmental entities or retired with pay from that employment;
(F) employees or members of any state, county, municipal, or other local governmental body or other organized governmental entity who are involved in homeland defense and homeland security operations; and
(G) any other category of membership established by the governing body of the association that falls within the scope of permissible membership authorized by Section 501(c)(9), Internal Revenue Code of 1986;
(4) has no separate membership enrollment or application requirement;
(5) collects member contributions, fees, or dues, including funds contributed specifically for insurance and remitted by the group policyholder to the issuer following a retrospective premium determination; and
(6) provides insurance and noninsurance membership benefits.