hawaii health insurance premium tax bill hb2852_hd1

8/9/2019 Hawaii Health Insurance Premium Tax Bill HB2852_HD1

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HOUSE OF REPRESENTATIVESTWENTY-FIFTH LEGISLATURE, 2010STATE OF HAWAII H.B. NO. 2852H.D.1

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A BILL FOR AN ACTRELATING TO THE INSURANCE PREMIUM TAX.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:SECTION 1 . The purpose of t h i s Act i s to impose, from July

2 1, 2010, to June 30, 2015, the insurance premium tax on mutual3 b e ne fi t s o ci et ie s and heal th maintenance organizat ions . The tax4 i s imposed a t a graduated, esca la t ing tax r a t e .5 This Act a ls o e sta bl is he s a medi ca l workfor ce p romo tio n,6 hea l th workforce educat ion, or indigent heal th care program tax7 c re di t th at may be claimed aga ins t th e tax .8 SECTION 2. Chapter 431, Hawaii Revised Sta tu tes , i s9 amended by adding a new sect ion to pa r t I I of a r t i c l e 7 to be10 appropr ia te ly des igna ted and to read as fol lows:11 n431:7- Medical workforce promotion, health workforce12 education, or indigent health care program; insurance premium13 tax cred i t . An i n su re r th at o ffe r s heal th insurance plans14 w ith in the s t a t e may cla im fo r the t axable year a medical15 work fo rce p romot ion, hea l th workforce educat ion, o r indigent16 hea l th care program tax c red i t aga ins t the tax imposed under17 sec t ion 431:7-202(al . The amount o f the c red i t sha l l equal the

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Page 2 H.B. NO. 2852H.D.1

1 amount t h a t t h e i n s u r e r c o n t r i b u t e s i n cash i n t h e t a x a b le y e a r2 t o a s t a t e program t h a t :34567

i ll Provides o r pays f o r t h e i n c r e a s e o r e d u c a t i o n o f t h emedical workforce o r h e a l t h workforce o r f o r t h ep r o v i s i o n o f h e a l t h c a r e t o low-income i n d i v i d u a l s o rf a m i l i e s ; and

i l l Has b ee n ap pro ve d by t h e i n s u r a n c e commissioner .8 The c r e d i t s h a l l n o t be r e f u n d a b l e . n9 SECTION 3. S e c t i o n 431:7-202, Hawaii Revised S t a t u t e s , i s10 amended by amending s u b s e c t i o n (a) t o r e a d as fo l lows:1112

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n(a) [Baefi] With r e g a r d t o a u t h o r i z e d i n s u r e r s :i l l Each a u t h o r i z e d i n s u r e r , except w i t h r e s p e c t t o a l l

l i f e i n s u r a n c e c o n t r a c t s , ocean marine i n s u r a n c ec o n t r a c t s , and r e a l p r o p e r t y title i n s u r a n c ec o n t r a c t s , s h a l l pay t o t h e d i r e c t o r o f f i n a n c ethrough t h e commissioner a t a x [of 4.265 ~ e cent] a tt h e p e r t i n e n t r a t e p r e s c r i b e d i n t h i s paragraph on t h eg r o s s premiums w r i t t e n from a l l r i s k s o r p r o p e r t yr e s i d e n t , s i t u a t e d , o r l o c a t e d w i t h i n t h i s s t a t e ,d u r i n g t h e y e a r ending on t h e p r e c e d i n g December 31,l e s s r e t u r n premiums (but n o t i n c l u d i n g dividends p a i do r c r e d i t e d t o p o li c y h o l d e r s ), and l e s s any

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re insurance accep ted ( the tax upon such business beingpayable by th e d i r ec t wri t ing i n su re r ) . For th epurpose of th is p ar t , "au thor ized insure r" o r" insurer" includes a mutual bene f i t soc i e ty or hea l thmaintenance organiza t ion t ha t o f f e r s a hea l th careinsurance plan sub jec t to a r t i c l e 1 of chap te r 432 o r432D, as app l i cab le , but excludes a f r a t e rna l bene f i ts oc i e ty t ha t of fe r s bene f i t con t rac t s under a r t i c l e 2of chapte r 432. The r a t e of th e tax sha l l be 4.265per cen t fo r each author ized in su re r ; provided t ha tfo r a mutual benef i t so cie ty o r a hea l th maintenanceo rg an iza t io n, th e tax r a t e sha l l be:(A) 2.265 per cen t fo r the per iod from Ju ly 1, 2010,

to December 31, 2011;3.265 per cen t fo r th e pe r iod from January 1,2012, to December 31, 2012; and

(e) 4.265 per cen t fo r the per iod from January 1,2013, to June 30, 2015.

il l All premiums wri t t en , procured , o r rece ived in th eS ta t e s ha l l be presumed to have been from r i sk s orprope r ty r e s iden t , s i t u a t ed , o r l oc at ed w i th in th e

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Sta te . This p re sumpt ion may be rebut ted as to anypremium:

[++] (A) By showing t ha t it has been proper ly al loca ted orapportioned and reported as a taxable premium ofanother s ta te or other app rop ria te ta xingauthor i ty; or

[ ~ By fac ts as to the residence, s i tua t ion , orloca t ion of the r i sks o r p ro pe rty , conclusivelyshowing the nontaxabi l i ty of the premium. n

SECTION 4. Section 431:7-204, Hawaii Revised Sta tutes , i s11 amended to read as follows:12 n431:7-204 In l i eu provis ion. (a ) As to insurers , the13 taxes and fees imposed by sec t ion 431:7-201 to sec t ion14 431 :7-204, and the fees imposed by th is code, when paid sha l l be15 in se t t l ement of and in l ieu of a l l demands fo r taxes, l i censes ,16 or fees of every character imposed by the laws of th i s Sta te ,17 the ordinances or other laws, ru les , or regulat ions of any18 county of th i s Sta te , except:19

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(1 ) As expressly otherwise provided;(2 ) Taxes on r ea l property;(3 ) Taxes on the pu rch ase, u se, or ownership of tangible

pe rsona l p roper ty ; andHB2852 HD1 HMS 2010-2224

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(4) Taxes on g r o s s income, g r o s s proceeds, g r o s s r e n t a l ,o r g r o s s r e n t a l proceeds under c h a p t e r 237 o r 237D.

(b l I n a d d it i o n t o s u b s e c t i o n ( a l , w i t h r e g a r d t o mutual4 b e n e f i t s o c i e t i e s and n o n p r o f i t h e a l t h maintenance5 o r g a n i z a t i o n s , it s h a l l be a m a t t e r of s t a t e w i d e concern under6 a r t i c l e V I I I , s e c t i o n 6, of t h e Hawaii C o n s t i t u t i o n t h a t t h e7 t a x e s imposed under t h i s p a r t , when p a i d , s h a l l be i n s e t t l e m e n t8 and i n l i e u o f a l l demands f o r r e a l p r o p e r t y t a x e s by a county .9 lL Nothing i n t h i s s e c t i o n s h a l l be deemed t o exempt10 i n s u r e r s from l i a b i l i t y f o r withhold ing t a x e s payable by t h e i r11 employees and paying t h e same t o t h e proper c o l l e c t i o n o f f i c e r s ,12 o r from k ee pin g s uc h r e c o r d s , and making such r e t u r n s and13 r e p o r t s , as may be r e q u i r e d i n t h e case o f o t h e r persons14 en joy ing t a x exemption."15 SECTION 5. S e c t i o n 432:1-403, Hawaii Revised S t a t u t e s , i s16 amended t o r e a d as fo llow s:17 "432::L-403 Nonprofit medical, hospi ta l indemnity18 a ss oc ia tio n s; t ax exemption. Every a s s o c i a t i o n o r s o c i e t y19 organized and o p e r a t i n g under t h i s a r t i c l e s o l e l y as a n o n p r o f i t20 medic al i nd emn it y o r h o s p i t a l s e r v i c e a s s o c i a t i o n o r societYL o r21 bothL s h a l l be, from t h e t ime o f such o r g a n i z a t i o n , exempt from

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1 every s t a t e , county and municipal tax , excep t the unemployment2 compensation t a x [ ~ ] and insurance premium tax .3 Nothing in t h i s sec t ion s ha l l be deemed to exempt the4 associa t ion or socie ty from l i a b i l i t y to withhold the t axes5 payable by i t s employees and to pay th e same to the proper6 co l l ec t ion of f i c e r s , and to keep such records , and make such7 r e tu rns and repor t s , as may be required in the case of o ther8 corpora t ions , a s s o c i a t i o n s ~ o r soc i e t i e s s imi la r ly exempted from9 such taxes ."10 SECTION 6. Sect ion 432D-19, Hawaii Revised Sta tu tes , i s11 amended by amending subsec t ion (d) to read as fo l lows:12 "(d) Ar t i c l e 2, a r t i c l e 7, pa r t I I , [arEiele] and a r t i c l e s13 13 and [arEiele] 14G of chapte r 431, and the power there granted14 to the commissioner , sha l l apply to heal th maintenance15 organiza t ions , so long as th e app l i ca t ion in any par t i cu l a r case16 i s in compliance with and i s not p re emp ted by appl icable federa l17 s t a t u t e s and regu la t ions . "18 SECTION 7. This Act s ha l l express ly apply to mutual19 benef i t soc i e t i e s . This sec t ion i s in tended to f u l f i l l th e20 requirement o f sect ion 432:1-101, Hawaii Revised Sta tu tes ,21 regard ing the app l i c ab i l i t y of any law enacted a f t e r ~ u l y 1,22 1988, to mutual bene f i t soc i e t i e s .

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1 SECTION 8. (a) The insurance commissioner s ha l l consider2 whether th e imposi t ion of th e insurance premium tax on mutual3 bene f i t soc i e t i e s and hea l th maintenance organiza t ions by th i s4 Act may cause t h e i r cur ren t managed care p lan r a t e s to become5 inadequate . I f so , th e insurance commissioner s ha l l use the6 au thor i ty under sec t ion 431:148-104, Hawaii Revised Sta tu tes , to7 det erm in e whe th er th e r a t e s should be ad jus t ed .8 (b) Nothing in subsec t ion (a) s ha l l be const rued to9 p roh ib i t a mutual bene f i t soc ie ty o r hea l th maintenance

10 organiza t ion from submi t t ing , on i t s own i n i t i a t i v e , a ra te11 f i l i ng pursuan t to chapte r 431, a r t i c l e 148, Hawaii Revised12 Sta tu tes , to r e f l e c t th e add i t iona l expense re su l t ing from the13 insurance premium tax l i ab i l i t y .14 SECTION 9. This Act does no t a f f e c t r i gh t s and du t ies t ha t15 matured, pena l t i e s t ha t were incurred , and proceedings t ha t were16 begun, before i t s e f f ec t ive da te .17 SECTION 10. Sta tu to ry m ate r ia l to be repealed i s bracketed18 and s t r i cken . New s t a tu to ry mater ia l i s underscored .19 SECTION 11. This Act s ha l l t ake e f f e c t on Ju ly 1, 2010,20 and sha l l be repea led on June 30, 2015; provided t ha t sect ions21 431:7-202(a) , 431:7-204, 4 32 :1 -40 3, and 432D-19 (d) , Hawaii22 Revised Sta tu tes , as amended by sec t ions 3, 4, 5, and 6,

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Page 8 H B NO 28.52H.D.1 1 respec t ive ly , of th i s Act sha l l be reenacted in the form in2 which they read on th e day before the e f fec t ive date of th i s3 Act.

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Report Ti t l e :Insurance Premium Tax; App li ca b il it y to Mutual Benef i t Soc ie t i e s& Heal th Maintenance Organiza t ionsDescription:Temporar i ly makes th e insurance premium tax app l i cab le to mutualbene f i t soc i e t i e s and hea l t h maintenance organ iza t ions .Excludes f r a t e rna l bene f i t soc i e t i e s . Es tab l i shes a medical andhea l th promot ion tax c r ed i t . Author izes th e insurancecommissioner to ad ju s t any inadequate ra te s fo r the managed carep lans of mutua l .bene f i t soc i e t i e s and hea l t h maintenanceorganiza t ions . (HB2852 HD1)

The summary description of legislation appearing on this page is for informational purposes only and isnot legislation or evidence of legislative intent.

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hawaii health insurance premium tax bill hb2852_hd1

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