HF 1169

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to health; changing the governance structure
of the Minnesota Comprehensive Health Association;
increasing the cigarette tax; conforming to federal
law on health savings accounts; providing a health
insurance exemption from the insurance premiums tax;
repealing the assessment for the Minnesota
Comprehensive Health Association; appropriating money;
amending Minnesota Statutes 2004, sections 62A.02, by
adding a subdivision; 62E.02, subdivision 23; 62E.091;
62E.10, subdivisions 1, 2, 3, 6, 7; 62E.11,
subdivisions 9, 10; 62E.13, subdivisions 2, 3a, by
adding a subdivision; 62E.14, subdivisions 1, 6;
290.01, subdivisions 19, 31; 297F.05, subdivision 1;
297F.10, subdivision 1; 297I.15, subdivision 4;
repealing Minnesota Statutes 2004, sections 62E.02,
subdivision 23; 62E.11, subdivisions 5, 6, 13; 62E.13,
subdivision 1; 297I.01, subdivision 10; 297I.05,
subdivision 5.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2004, section 62A.02, is
amended by adding a subdivision to read:

new text begin Subd. 8. new text end

new text begin Effects on premium rates of certain law
changes. new text end

new text begin In approving premium rates under this section and
sections 62A.021; 62A.65, subdivision 3; and 62L.08, subdivision
8, the commissioners of commerce and health shall ensure that
the provisions of this act eliminating the Comprehensive Health
Association assessment and reducing the scope of the premium tax
are reflected in the premium rates charged by health plan
companies.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for coverage
issued on or after January 1, 2006.
new text end

Sec. 2.

Minnesota Statutes 2004, section 62E.02,
subdivision 23, is amended to read:

Subd. 23.

deleted text begin contributing member deleted text end new text begin health plan company new text end .

" deleted text begin Contributing member deleted text end new text begin Health plan company new text end " means those companies
regulated under chapter 62A and offering, selling, issuing, or
renewing policies or contracts of accident and health insurance;
health maintenance organizations regulated under chapter 62D;
nonprofit health service plan corporations regulated under
chapter 62C; community integrated service networks regulated
under chapter 62N; fraternal benefit societies regulated under
chapter 64B; the Minnesota employees insurance program
established in section 43A.317, effective July 1, 1993; and
joint self-insurance plans regulated under chapter 62H. deleted text begin For the
purposes of determining liability of contributing members
pursuant to section 62E.11 payments received from or on behalf
of Minnesota residents for coverage by a health maintenance
organization or community integrated service network shall be
considered to be accident and health insurance premiums.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2006.
new text end

Sec. 3.

Minnesota Statutes 2004, section 62E.091, is
amended to read:

62E.091 APPROVAL OF STATE PLAN PREMIUMS.

The association shall submit to the commissioner any
premiums it proposes to become effective for coverage under the
comprehensive health insurance plan, pursuant to section 62E.08,
subdivision 3. No later than 45 days before the effective date
for premiums specified in section 62E.08, subdivision 3, the
commissioner shall approve, modify, or reject the proposed
premiums on the basis of the following criteria:

(a) whether the association has complied with the
provisions of section 62E.11, subdivision 11;

(b) whether the association has submitted the proposed
premiums in a manner which provides sufficient time for
individuals covered under the comprehensive insurance plan to
receive notice of any premium increase no less than 30 days
prior to the effective date of the increase;

(c) the degree to which the association's computations and
conclusions are consistent with section 62E.08;

(d) the degree to which any sample used to compute a
weighted average by the association pursuant to section 62E.08
reasonably reflects circumstances existing in the private
marketplace for individual coverage;

(e) the degree to which a weighted average computed
pursuant to section 62E.08 that uses information pertaining to
individual coverage available only on a renewal basis reflects
the circumstances existing in the private marketplace for
individual coverage;

(f) a comparison of the proposed increases with increases
in the cost of medical care and increases experienced in the
private marketplace for individual coverage;

(g) the financial consequences to enrollees of the proposed
increase;

(h) the actuarially projected effect of the proposed
increase upon both total enrollment in, and the nature of the
risks assumed by, the comprehensive health insurance plan; new text begin and
new text end

(i) deleted text begin the relative solvency of the contributing members; and
deleted text end

deleted text begin (j) deleted text end other factors deemed relevant by the commissioner.

In no case, however, may the commissioner approve premiums
for those plans of coverage described in section 62E.08,
subdivision 1, paragraphs (a) to (d), that are lower than 101
percent or greater than 125 percent of the weighted averages
computed by the association pursuant to section 62E.08. The
commissioner shall support a decision to approve, modify, or
reject any premium proposed by the association with written
findings and conclusions addressing each criterion specified in
this section. If the commissioner does not approve, modify, or
reject the premiums proposed by the association sooner than 45
days before the effective date for premiums specified in section
62E.08, subdivision 3, the premiums proposed by the association
under this section become effective.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2006.
new text end

Sec. 4.

Minnesota Statutes 2004, section 62E.10,
subdivision 1, is amended to read:

Subdivision 1.

Creation; tax exemption.

There is
established a Comprehensive Health Association to promote the
public health and welfare of the state of Minnesota deleted text begin with
membership consisting of all insurers; self-insurers;
fraternals; joint self-insurance plans regulated under chapter
62H; the Minnesota employees insurance program established in
section 43A.317, effective July 1, 1993; health maintenance
organizations; and community integrated service networks
licensed or authorized to do business in this state deleted text end . new text begin The
association shall have no members. new text end The Comprehensive Health
Association is exempt from the taxes imposed under chapter 297I
and any other laws of this state and all property owned by the
association is exempt from taxation.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2006.
new text end

Sec. 5.

Minnesota Statutes 2004, section 62E.10,
subdivision 2, is amended to read:

Subd. 2.

Board of directors; organization.

The board of
directors of the association shall be made up of deleted text begin eleven members
as follows: six directors selected by contributing members,
subject to approval by the commissioner, one of which must be a
health actuary; five public directors deleted text end new text begin 11 individuals new text end selected by
the commissioner, at least two of whom must be plan enrollees deleted text begin ,
two of whom must be representatives of employers whose accident
and health insurance premiums are part of the association's
assessment base, and one of whom must be a licensed insurance
agent deleted text end . At least two of the deleted text begin public deleted text end directors must reside outside
of the seven county metropolitan area. deleted text begin In determining voting
rights at members' meetings, each member shall be entitled to
vote in person or proxy. The vote shall be a weighted vote
based upon the member's cost of self-insurance, accident and
health insurance premium, subscriber contract charges, health
maintenance contract payment, or community integrated service
network payment derived from or on behalf of Minnesota residents
in the previous calendar year, as determined by the
commissioner. In approving directors of the board, the
commissioner shall consider, among other things, whether all
types of members are fairly represented. Directors selected by
contributing members may be reimbursed from the money of the
association for expenses incurred by them as directors, but
shall not otherwise be compensated by the association for their
services. The costs of conducting meetings of the association
and its board of directors shall be borne by members of the
association.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2006.
new text end

Sec. 6.

Minnesota Statutes 2004, section 62E.10,
subdivision 3, is amended to read:

Subd. 3.

deleted text begin mandatory membership deleted text end new text begin organizational
documents new text end .

deleted text begin All members shall maintain their membership in the
association as a condition of doing accident and health
insurance, self-insurance, health maintenance organization, or
community integrated service network business in this state.
deleted text end The association shall submit its articles, bylaws new text begin , new text end and operating
rules to the commissioner for approval; provided that the
adoption and amendment of articles, bylaws new text begin , new text end and operating rules
by the association and deleted text begin the deleted text end new text begin their new text end approval by the
commissioner deleted text begin thereof shall be deleted text end new text begin is new text end exempt from deleted text begin the provisions of
deleted text end sections 14.001 to 14.69.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2006.
new text end

Sec. 7.

Minnesota Statutes 2004, section 62E.10,
subdivision 6, is amended to read:

Subd. 6.

Antitrust exemption.

In the performance of
their duties as deleted text begin members deleted text end new text begin directors new text end of the association, the
deleted text begin members deleted text end new text begin directors and their employers new text end shall be exempt from the
provisions of sections 325D.49 to 325D.66.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2006.
new text end

Sec. 8.

Minnesota Statutes 2004, section 62E.10,
subdivision 7, is amended to read:

Subd. 7.

General powers.

The association may:

(a) Exercise the powers granted to insurers under the laws
of this state;

(b) Sue or be sued;

(c) Enter into contracts with insurers, similar
associations in other states new text begin , new text end or with other persons for the
performance of administrative functions deleted text begin including the functions
provided for in clauses (e) and (f) deleted text end ; new text begin and
new text end

(d) Establish administrative and accounting procedures for
the operation of the association deleted text begin ; deleted text end new text begin .
new text end

deleted text begin (e) Provide for the reinsuring of risks incurred as a
result of issuing the coverages required by sections 62E.04 and
62E.16 by members of the association. Each member which elects
to reinsure its required risks shall determine the categories of
coverage it elects to reinsure in the association. The
categories of coverage are:
deleted text end

deleted text begin (1) individual qualified plans, excluding group
conversions;
deleted text end

deleted text begin (2) group conversions;
deleted text end

deleted text begin (3) group qualified plans with fewer than 50 employees or
members; and
deleted text end

deleted text begin (4) major medical coverage.
deleted text end

deleted text begin A separate election may be made for each category of
coverage. If a member elects to reinsure the risks of a
category of coverage, it must reinsure the risk of the coverage
of every life covered under every policy issued in that
category. A member electing to reinsure risks of a category of
coverage shall enter into a contract with the association
establishing a reinsurance plan for the risks. This contract
may include provision for the pooling of members' risks
reinsured through the association and it may provide for
assessment of each member reinsuring risks for losses and
operating and administrative expenses incurred, or estimated to
be incurred in the operation of the reinsurance plan. This
reinsurance plan shall be approved by the commissioner before it
is effective. Members electing to administer the risks which
are reinsured in the association shall comply with the benefit
determination guidelines and accounting procedures established
by the association. The fee charged by the association for the
reinsurance of risks shall not be less than 110 percent of the
total anticipated expenses incurred by the association for the
reinsurance; and
deleted text end

deleted text begin (f) Provide for the administration by the association of
policies which are reinsured pursuant to clause (e). Each
member electing to reinsure one or more categories of coverage
in the association may elect to have the association administer
the categories of coverage on the member's behalf. If a member
elects to have the association administer the categories of
coverage, it must do so for every life covered under every
policy issued in that category. The fee for the administration
shall not be less than 110 percent of the total anticipated
expenses incurred by the association for the administration.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2006.
new text end

Sec. 9.

Minnesota Statutes 2004, section 62E.11,
subdivision 9, is amended to read:

Subd. 9.

Special assessment upon termination of
individual health coverage.

Each deleted text begin contributing member deleted text end new text begin health
plan company new text end that terminates individual health coverage for
reasons other than (a) nonpayment of premium; (b) failure to
make co-payments; (c) enrollee moving out of the area served; or
(d) a materially false statement or misrepresentation by the
enrollee in the application for membership; and does not provide
or arrange for replacement coverage that meets the requirements
of section 62D.121; shall pay a special assessment to the state
plan based upon the number of terminated individuals who join
the comprehensive health insurance plan as authorized under
section 62E.14, subdivisions 1, paragraph (d), and 6. Such a
deleted text begin contributing member deleted text end new text begin health plan company new text end shall pay the
association an amount equal to the average cost of an enrollee
in the state plan in the year in which the deleted text begin member deleted text end new text begin health plan
company new text end terminated enrollees multiplied by the total number of
terminated enrollees who enroll in the state plan.

The average cost of an enrollee in the state comprehensive
health insurance plan shall be determined by dividing the state
plan's total annual losses by the total number of enrollees from
that year. deleted text begin This cost will be assessed to the contributing
member who has terminated health coverage before the association
makes the annual determination of each contributing member's
liability as required under this section.
deleted text end

In the event that the deleted text begin contributing member deleted text end new text begin health plan
company new text end is terminating health coverage because of a loss of
health care providers, the commissioner may review whether or
not the special assessment established under this subdivision
will have an adverse impact on the deleted text begin contributing member deleted text end new text begin health
plan company new text end or its enrollees or insureds, including but not
limited to causing the deleted text begin contributing member deleted text end new text begin health plan company
new text end to fall below statutory net worth requirements. If the
commissioner determines that the special assessment would have
an adverse impact on the deleted text begin contributing member deleted text end new text begin health plan company
new text end or its enrollees or insureds, the commissioner may adjust the
amount of the special assessment, or establish alternative
payment arrangements to the state plan. For health maintenance
organizations regulated under chapter 62D, the commissioner of
health shall make the determination regarding any adjustment in
the special assessment and shall transmit that determination to
the commissioner of commerce.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2006.
new text end

Sec. 10.

Minnesota Statutes 2004, section 62E.11,
subdivision 10, is amended to read:

Subd. 10.

Termination of individual plan without
replacement coverage.

Any deleted text begin contributing members deleted text end new text begin health plan
companies new text end who have terminated individual health plans and do not
provide or arrange for replacement coverage that meets the
requirements of section 62D.121, and whose former insureds or
enrollees enroll in the state comprehensive health insurance
plan with a waiver of the preexisting conditions pursuant to
section 62E.14, subdivisions 1, paragraph (d), and 6, will be
liable for the costs of any preexisting conditions of their
former enrollees or insureds treated during the first six months
of coverage under the state plan. deleted text begin The liability for preexisting
conditions will be assessed before the association makes the
annual determination of each contributing member's liability as
required under this section.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2006.
new text end

Sec. 11.

Minnesota Statutes 2004, section 62E.13,
subdivision 2, is amended to read:

Subd. 2.

Selection of writing carrier.

The association
may deleted text begin select policies and contracts, or parts thereof, submitted
by a member or members of the association, or by the association
or others, to deleted text end develop specifications for bids from any entity
which wishes to be selected as a writing carrier to administer
the state plan. The selection of the writing carrier shall be
based upon criteria established by the board of directors of the
association and approved by the commissioner. The criteria
shall outline specific qualifications that an entity must
satisfy in order to be selected and, at a minimum, shall include
the entity's proven ability to handle large group accident and
health insurance cases, efficient claim paying capacity, and the
estimate of total charges for administering the plan. The
association may select separate writing carriers for the two
types of qualified plans and the $2,000, $5,000, and $10,000
deductible plans, the qualified Medicare supplement plan, and
the health maintenance organization contract.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2006.
new text end

Sec. 12.

Minnesota Statutes 2004, section 62E.13,
subdivision 3a, is amended to read:

Subd. 3a.

Extension of writing carrier contract.

Subject
to the approval of the commissioner, and subject to the consent
of the writing carrier, the association may extend the effective
writing carrier contract for a period not to exceed three years,
if the association and the commissioner determine that it would
be in the best interest of the association's enrollees and
deleted text begin contributing members deleted text end new text begin of the state new text end . This subdivision applies
notwithstanding anything to the contrary in subdivisions 2 and 3.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2006.
new text end

Sec. 13.

Minnesota Statutes 2004, section 62E.13, is
amended by adding a subdivision to read:

new text begin Subd. 14. new text end

new text begin Appropriation. new text end

new text begin An amount sufficient to offset
any deficit of the association for the fiscal year is
appropriated to the commissioner of commerce for payment to the
association.
new text end

Sec. 14.

Minnesota Statutes 2004, section 62E.14,
subdivision 1, is amended to read:

Subdivision 1.

Application, contents.

The comprehensive
health insurance plan shall be open for enrollment by eligible
persons. An eligible person shall enroll by submission of an
application to the writing carrier. The application must
provide the following:

(a) name, address, age, list of residences for the
immediately preceding six months and length of time at current
residence of the applicant;

(b) name, address, and age of spouse and children if any,
if they are to be insured;

(c) evidence of rejection, a requirement of restrictive
riders, a rate up, or a preexisting conditions limitation on a
qualified plan, the effect of which is to substantially reduce
coverage from that received by a person considered a standard
risk, by at least one deleted text begin association member deleted text end new text begin health plan company
new text end within six months of the date of the application, or other
eligibility requirements adopted by rule by the commissioner
which are not inconsistent with this chapter and which evidence
that a person is unable to obtain coverage substantially similar
to that which may be obtained by a person who is considered a
standard risk;

(d) if the applicant has been terminated from individual
health coverage which does not provide replacement coverage,
evidence that no replacement coverage that meets the
requirements of section 62D.121 was offered, and evidence of
termination of individual health coverage by an insurer,
nonprofit health service plan corporation, or health maintenance
organization, provided that the contract or policy has been
terminated for reasons other than (1) failure to pay the charge
for health care coverage; (2) failure to make co-payments
required by the health care plan; (3) enrollee moving out of the
area served; or (4) a materially false statement or
misrepresentation by the enrollee in the application for the
terminated contract or policy; and

(e) a designation of the coverage desired.

An eligible person may not purchase more than one policy
from the state plan. Upon ceasing to be a resident of Minnesota
a person is no longer eligible to purchase or renew coverage
under the state plan, except as required by state or federal law
with respect to renewal of Medicare supplement coverage.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2006.
new text end

Sec. 15.

Minnesota Statutes 2004, section 62E.14,
subdivision 6, is amended to read:

Subd. 6.

Termination of individual policy or contract.

A
Minnesota resident who holds an individual health maintenance
contract, individual nonprofit health service corporation
contract, or an individual insurance policy previously approved
by the commissioners of health or commerce, may enroll in the
comprehensive health insurance plan with a waiver of the
preexisting condition as described in subdivision 3, without
interruption in coverage, provided (1) no replacement coverage
that meets the requirements of section 62D.121 was offered by
the deleted text begin contributing member deleted text end new text begin health plan company new text end , and (2) the policy
or contract has been terminated for reasons other than (a)
nonpayment of premium; (b) failure to make co-payments required
by the health care plan; (c) moving out of the area served; or
(d) a materially false statement or misrepresentation by the
enrollee in the application for the terminated policy or
contract; and, provided further, that the option to enroll in
the plan is exercised by submitting an application that is
received by the writing carrier no later than 90 days after
termination of the existing policy or contract.

Coverage allowed under this section is effective when the
contract or policy is terminated and the enrollee has submitted
the proper application that is received within the time period
stated in this subdivision and paid the required premium or fee.

Expenses incurred from the preexisting conditions of
individuals enrolled in the state plan under this subdivision
must be paid by the deleted text begin contributing member deleted text end new text begin health plan company
new text end canceling coverage as set forth in section 62E.11, subdivision
10.

The application must include evidence of termination of the
existing policy or certificate as required in subdivision 1.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2006.
new text end

Sec. 16.

Minnesota Statutes 2004, section 290.01,
subdivision 19, is amended to read:

Subd. 19.

Net income.

The term "net income" means the
federal taxable income, as defined in section 63 of the Internal
Revenue Code of 1986, as amended through the date named in this
subdivision, incorporating any elections made by the taxpayer in
accordance with the Internal Revenue Code in determining federal
taxable income for federal income tax purposes, and with the
modifications provided in subdivisions 19a to 19f.

In the case of a regulated investment company or a fund
thereof, as defined in section 851(a) or 851(g) of the Internal
Revenue Code, federal taxable income means investment company
taxable income as defined in section 852(b)(2) of the Internal
Revenue Code, except that:

(1) the exclusion of net capital gain provided in section
852(b)(2)(A) of the Internal Revenue Code does not apply;

(2) the deduction for dividends paid under section
852(b)(2)(D) of the Internal Revenue Code must be applied by
allowing a deduction for capital gain dividends and
exempt-interest dividends as defined in sections 852(b)(3)(C)
and 852(b)(5) of the Internal Revenue Code; and

(3) the deduction for dividends paid must also be applied
in the amount of any undistributed capital gains which the
regulated investment company elects to have treated as provided
in section 852(b)(3)(D) of the Internal Revenue Code.

The net income of a real estate investment trust as defined
and limited by section 856(a), (b), and (c) of the Internal
Revenue Code means the real estate investment trust taxable
income as defined in section 857(b)(2) of the Internal Revenue
Code.

The net income of a designated settlement fund as defined
in section 468B(d) of the Internal Revenue Code means the gross
income as defined in section 468B(b) of the Internal Revenue
Code.

The provisions of sections 1113(a), 1117, 1206(a), 1313(a),
1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612,
1616, 1617, 1704(l), and 1704(m) of the Small Business Job
Protection Act, Public Law 104-188, the provisions of Public Law
104-117, the provisions of sections 313(a) and (b)(1), 602(a),
913(b), 941, 961, 971, 1001(a) and (b), 1002, 1003, 1012, 1013,
1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 1111(a), 1131(b)
and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) and (h), and
1604(d)(1) of the Taxpayer Relief Act of 1997, Public Law
105-34, the provisions of section 6010 of the Internal Revenue
Service Restructuring and Reform Act of 1998, Public Law
105-206, the provisions of section 4003 of the Omnibus
Consolidated and Emergency Supplemental Appropriations Act,
1999, Public Law 105-277, and the provisions of section 318 of
the Consolidated Appropriation Act of 2001, Public Law 106-554,
shall become effective at the time they become effective for
federal purposes.

The Internal Revenue Code of 1986, as amended through
December 31, 1996, shall be in effect for taxable years
beginning after December 31, 1996.

The provisions of sections 202(a) and (b), 221(a), 225,
312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and
(c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306,
1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528,
1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e)
of the Taxpayer Relief Act of 1997, Public Law 105-34, the
provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 7002,
and 7003 of the Internal Revenue Service Restructuring and
Reform Act of 1998, Public Law 105-206, the provisions of
section 3001 of the Omnibus Consolidated and Emergency
Supplemental Appropriations Act, 1999, Public Law 105-277, the
provisions of section 3001 of the Miscellaneous Trade and
Technical Corrections Act of 1999, Public Law 106-36, and the
provisions of section 316 of the Consolidated Appropriation Act
of 2001, Public Law 106-554, shall become effective at the time
they become effective for federal purposes.

The Internal Revenue Code of 1986, as amended through
December 31, 1997, shall be in effect for taxable years
beginning after December 31, 1997.

The provisions of sections 5002, 6009, 6011, and 7001 of
the Internal Revenue Service Restructuring and Reform Act of
1998, Public Law 105-206, the provisions of section 9010 of the
Transportation Equity Act for the 21st Century, Public Law
105-178, the provisions of sections 1004, 4002, and 5301 of the
Omnibus Consolidation and Emergency Supplemental Appropriations
Act, 1999, Public Law 105-277, the provision of section 303 of
the Ricky Ray Hemophilia Relief Fund Act of 1998, Public Law
105-369, the provisions of sections 532, 534, 536, 537, and 538
of the Ticket to Work and Work Incentives Improvement Act of
1999, Public Law 106-170, the provisions of the Installment Tax
Correction Act of 2000, Public Law 106-573, and the provisions
of section 309 of the Consolidated Appropriation Act of 2001,
Public Law 106-554, shall become effective at the time they
become effective for federal purposes.

The Internal Revenue Code of 1986, as amended through
December 31, 1998, shall be in effect for taxable years
beginning after December 31, 1998.

The provisions of the FSC Repeal and Extraterritorial
Income Exclusion Act of 2000, Public Law 106-519, and the
provision of section 412 of the Job Creation and Worker
Assistance Act of 2002, Public Law 107-147, shall become
effective at the time it became effective for federal purposes.

The Internal Revenue Code of 1986, as amended through
December 31, 1999, shall be in effect for taxable years
beginning after December 31, 1999. The provisions of sections
306 and 401 of the Consolidated Appropriation Act of 2001,
Public Law 106-554, and the provision of section 632(b)(2)(A) of
the Economic Growth and Tax Relief Reconciliation Act of 2001,
Public Law 107-16, and provisions of sections 101 and 402 of the
Job Creation and Worker Assistance Act of 2002, Public Law
107-147, shall become effective at the same time it became
effective for federal purposes.

The Internal Revenue Code of 1986, as amended through
December 31, 2000, shall be in effect for taxable years
beginning after December 31, 2000. The provisions of sections
659a and 671 of the Economic Growth and Tax Relief
Reconciliation Act of 2001, Public Law 107-16, the provisions of
sections 104, 105, and 111 of the Victims of Terrorism Tax
Relief Act of 2001, Public Law 107-134, and the provisions of
sections 201, 403, 413, and 606 of the Job Creation and Worker
Assistance Act of 2002, Public Law 107-147, shall become
effective at the same time it became effective for federal
purposes.

The Internal Revenue Code of 1986, as amended through March
15, 2002, shall be in effect for taxable years beginning after
December 31, 2001.

The provisions of sections 101 and 102 of the Victims of
Terrorism Tax Relief Act of 2001, Public Law 107-134, shall
become effective at the same time it becomes effective for
federal purposes.

The Internal Revenue Code of 1986, as amended through June
15, 2003, shall be in effect for taxable years beginning after
December 31, 2002. The provisions of section 201 of the Jobs
and Growth Tax Relief and Reconciliation Act of 2003, H.R. 2, if
it is enacted into law, are effective at the same time it became
effective for federal purposes.

new text begin Section 1201 of the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003, Public Law 108-173,
relating to health savings accounts, is effective at the same
time it became effective for federal purposes.
new text end

Except as otherwise provided, references to the Internal
Revenue Code in subdivisions 19a to 19g mean the code in effect
for purposes of determining net income for the applicable year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 17.

Minnesota Statutes 2004, section 290.01,
subdivision 31, is amended to read:

Subd. 31.

Internal revenue code.

Unless specifically
defined otherwise, "Internal Revenue Code" means the Internal
Revenue Code of 1986, as amended through June 15, 2003 new text begin , and as
amended by section 1201 of the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003, Public Law 108-173,
relating to health savings accounts new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable
years beginning after December 31, 2003.
new text end

Sec. 18.

Minnesota Statutes 2004, section 297F.05,
subdivision 1, is amended to read:

Subdivision 1.

Rates; cigarettes.

A tax is imposed upon
the sale of cigarettes in this state, upon having cigarettes in
possession in this state with intent to sell, upon any person
engaged in business as a distributor, and upon the use or
storage by consumers, at the following rates:

(1) on cigarettes weighing not more than three pounds per
thousand, deleted text begin 24 deleted text end new text begin 73.5 new text end mills on each such cigarette; and

(2) on cigarettes weighing more than three pounds per
thousand, deleted text begin 48 deleted text end new text begin 147 new text end mills on each such cigarette.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective December 1,
2005.
new text end

Sec. 19.

Minnesota Statutes 2004, section 297F.10,
subdivision 1, is amended to read:

Subdivision 1.

Tax and use tax on cigarettes.

Revenue
received from cigarette taxes, as well as related penalties,
interest, license fees, and miscellaneous sources of revenue
shall be deposited by the commissioner in the state treasury and
credited as follows:

(1) the revenue produced by deleted text begin 3.25 deleted text end new text begin 3.95 new text end mills of the tax on
cigarettes weighing not more than three pounds a thousand and
deleted text begin 6.5 deleted text end new text begin 7.9 new text end mills of the tax on cigarettes weighing more than three
pounds a thousand must be credited to the Academic Health Center
special revenue fund hereby created and is annually appropriated
to the Board of Regents at the University of Minnesota for
Academic Health Center funding at the University of Minnesota;
and

(2) the revenue produced by deleted text begin 1.25 deleted text end new text begin 1.52 new text end mills of the tax on
cigarettes weighing not more than three pounds a thousand and
deleted text begin 2.5 deleted text end new text begin 3.04 new text end mills of the tax on cigarettes weighing more than three
pounds a thousand must be credited to the medical education and
research costs account hereby created in the special revenue
fund and is annually appropriated to the commissioner of health
for distribution under section 62J.692, subdivision 4; and

(3) the balance of the revenues derived from taxes,
penalties, and interest (under this chapter) and from license
fees and miscellaneous sources of revenue shall be credited to
the general fund.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for revenues
received for taxes subject to the rate increase in Minnesota
Statutes, section 297F.05, subdivision 1, as amended by section
18, as determined by the commissioner of revenue.
new text end

Sec. 20.

Minnesota Statutes 2004, section 297I.15,
subdivision 4, is amended to read:

Subd. 4.

Premiums paid to health carriers deleted text begin by state deleted text end .

A
health carrier as defined in section 62A.011 is exempt from the
taxes imposed under this chapter on premiums paid to it deleted text begin by the
state. Premiums paid by the state under medical assistance,
general assistance medical care, and the MinnesotaCare program
are not exempt under this subdivision deleted text end new text begin for a health plan, as
defined in section 62A.011, subdivision 3, but including
coverage described in clause (10) of that subdivision new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for premiums
received after December 31, 2005.
new text end

Sec. 21. new text begin FLOOR STOCKS TAX.
new text end

new text begin Subdivision 1. new text end

new text begin Tax imposed. new text end

new text begin (a) A floor stocks tax is
imposed on every person engaged in business in this state as a
distributor, retailer, subjobber, vendor, manufacturer, or
manufacturer's representative of cigarettes, on the stamped
cigarettes and unaffixed stamps in the person's possession or
under the person's control at 12:01 a.m. on December 1, 2005.
The tax is imposed at the following rates:
new text end

new text begin (1) on cigarettes weighing not more than three pounds per
thousand, 49.5 mills on each cigarette; and
new text end

new text begin (2) on cigarettes weighing more than three pounds per
thousand, 99 mills on each cigarette.
new text end

new text begin (b) Each distributor, by December 8, 2005, shall file a
report with the commissioner of revenue, in the form the
commissioner prescribes, showing the stamped cigarettes and
unaffixed stamps on hand at 12:01 a.m. on December 1, 2005, and
the amount of tax due on the cigarettes and unaffixed stamps.
The tax imposed by this section is due and payable by January 3,
2006, and after that date bears interest as provided in
Minnesota Statutes, section 270.75. Each retailer, subjobber,
vendor, manufacturer, or manufacturer's representative shall
file a return with the commissioner, in the form the
commissioner prescribes, showing the cigarettes on hand at 12:01
a.m. on December 1, 2005, and pay the tax due on them by January
3, 2006. Tax not paid by the due date bears interest as
provided in Minnesota Statutes, section 270.75.
new text end

new text begin Subd. 2. new text end

new text begin Audit and enforcement. new text end

new text begin The tax imposed by this
section is subject to the audit, assessment, and collection
provisions applicable to the taxes imposed under Minnesota
Statutes, chapter 297F. The commissioner shall deposit the
revenues from this tax in the general fund.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective December 1,
2005.
new text end

Sec. 22. new text begin APPROPRIATION.
new text end

new text begin (a) $210,309,000 is appropriated from the general fund to
the commissioner of commerce to offset the deficit in the
Minnesota Comprehensive Health Association program; $60,734,000
of this appropriation is for fiscal year 2006 and $149,575,000
for fiscal year 2007. Any amount not expended in fiscal year
2006 may be carried over to fiscal year 2007. Beginning for the
2008-2009 fiscal biennium, the commissioner of commerce shall
include estimates of the cost of the Minnesota Comprehensive
Health Association deficits in its submissions under Minnesota
Statutes, section 16A.10, and the governor shall include
recommendations on it in the governor's budget submission to the
legislature under Minnesota Statutes, section 16A.11.
new text end

new text begin (b) $41,151,000 is appropriated from the general fund for
transfer to the health care access fund in fiscal year 2006 and
$73,934,000 in fiscal year 2007 to offset the repeal of the
insurance premiums tax on health maintenance organizations and
nonprofit health service corporations.
new text end

Sec. 23. new text begin REPEALER.
new text end

new text begin (a) Minnesota Statutes 2004, sections 62E.02, subdivision
23; 62E.11, subdivisions 5, 6, and 13; and 62E.13, subdivision
1, are repealed.
new text end

new text begin (b) Minnesota Statutes 2004, sections 297I.01, subdivision
10; and 297I.05, subdivision 5, are repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin Paragraph (a) of this section is
effective January 1, 2006. Paragraph (b) of this section is
effective for premiums received after December 31, 2005.
new text end