Relating to state finances by modifying the taxes imposed on health maintenance organizations, making transfers from the taxpayer relief fund, making and supplementing appropriations to the department of health and human services, and including effective date, contingent effective date, and retroactive applicability provisions

By striking the taxation of HMO premiums in Code chapter 432 and creating the new health care-related tax in Code chapter 432B, the tax credits available to an HMO in Code chapter 432 are not available to an HMO in new Code chapter 432B. The bill applies the health care-related tax on the taxable funds of an HMO. The bill defines “taxable funds” to mean payments received by an HMO for health care services, insurance, indemnity, or other benefits to which an enrollee is entitled through an HMO; and payments made by the HMO to providers for health care services, to insurers, or to corporations authorized under Code chapter 514 for insurance, indemnity, or other authorized service benefits. The bill excludes from the definition of taxable funds the payments made to an HMO by the United States secretary of health and human services under a contract and pursuant to federal authority. If a payment qualifies as both a payment received by an HMO for services provided and a payment made by the HMO to providers, the bill requires the HMO to classify the payment as a payment received by the HMO.925 percent of premiums.95 percent. Currently, the premium tax is due March of the year following the calendar year for which the tax is due; however, one-half of the premium taxes are required to be prepaid on June and one-half on August 15. The health care-related tax is also due on March of the year following the calendar year for which the tax is due, and the bill establishes the same prepayment framework. The HMO is required to prepay one-half of the health care-related tax on June and one-half on August 15. Due to the effective date of the division being dependent upon notification of federal approval, for calendar year 2026 the first prepayment date shall be days and the second prepayment date shall be 135 days after the effective date of the division. The division takes effect upon the date the department of health and human services notifies the general assembly and the Code editor of the approval by the federal centers for Medicare and Medicaid services of the United States department of health and human services of the method of taxation imposed pursuant to the division. The division applies retroactively to tax years beginning on or after January 1, 2026. DIVISION II —— TAXPAYER RELIEF FUND TRANSFERS —— SUPPLEMENTAL APPROPRIATIONS. Under current law, for FY 2024-2025 through FY 2028-2029, if the actual net revenue for the general fund of the state (GF) for the fiscal year is less than the net GF appropriation for the fiscal year, there is transferred from the taxpayer relief fund to the GF an amount equal to percent of the difference. The bill provides that the transfer is 100 percent of the difference for FY 2025-2026 and percent of the difference for FY 2026-2027.54(5)(b)). _____ The bill makes a supplemental appropriation to the department of health and human services from the GF for FY 2025-2026 for the medical assistance program. This division of the bill takes effect upon enactment.