HF 2344

as introduced - 87th Legislature (2011 - 2012) Posted on 02/20/2012 12:58pm

A bill for an act
relating to insurance; consolidating health-insurance-related taxes and
assessments; amending Minnesota Statutes 2010, sections 62E.11, subdivisions
5, 6; 256.9657, subdivision 3; 297I.05, subdivisions 1, 5, by adding a subdivision.

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

Section 1.

Minnesota Statutes 2010, section 62E.11, subdivision 5, is amended to read:

Subd. 5.

Allocation of losses.

new text begin (a) new text end Each contributing member of the association shall
share the losses due to claims expenses of the comprehensive health insurance plan for
plans issued or approved for issuance by the association, and shall share in the operating
and administrative expenses incurred or estimated to be incurred by the association
incident to the conduct of its affairs. Claims expenses of the state plan which exceed
the premium payments allocated to the payment of benefits shall be the liability of the
contributing members. Contributing members shall share in the claims expense of the
state plan and operating and administrative expenses of the association in an amount equal
to the ratio of the contributing member's total accident and health insurance premium,
received from or on behalf of Minnesota residents as divided by the total accident and
health insurance premium, received by all contributing members from or on behalf of
Minnesota residents, as determined by the commissioner. Payments made by the state
to a contributing member for medical assistance, MinnesotaCare, or general assistance
medical care services according to chapters 256, 256B, and 256D shall be excluded when
determining a contributing member's total premium.

new text begin (b) Beginning for claims expense losses and operating and administrative expenses
incurred on or after January 1, 2013, the total amount assessed by the association for
those costs shall be collected by the commissioner of revenue under section 297I.05,
subdivision 5a, and distributed to the association.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for health care provided on or after
January 1, 2013.
new text end

Sec. 2.

Minnesota Statutes 2010, section 62E.11, subdivision 6, is amended to read:

Subd. 6.

Member assessments.

new text begin (a) new text end The association shall make an annual
determination of each contributing member's liability, if any, and may make an annual
fiscal year end assessment if necessary. The association may also, subject to the approval
of the commissioner, provide for interim assessments against the contributing members
whose aggregate assessments comprised a minimum of 90 percent of the most recent prior
annual assessment, in the event that the association deems that methodology to be the
most administratively efficient and cost-effective means of assessment, and as may be
necessary to assure the financial capability of the association in meeting the incurred or
estimated claims expenses of the state plan and operating and administrative expenses of
the association until the association's next annual fiscal year end assessment. Payment
of an assessment shall be due within 30 days of receipt by a contributing member of a
written notice of a fiscal year end or interim assessment. Failure by a contributing member
to tender to the association the assessment within 30 days shall be grounds for termination
of the contributing member's membership. A contributing member which ceases to do
accident and health insurance business within the state shall remain liable for assessments
through the calendar year during which accident and health insurance business ceased.
The association may decline to levy an assessment against a contributing member if the
assessment, as determined herein, would not exceed ten dollars.

new text begin (b) Beginning January 1, 2013, the association may continue to make interim
assessments upon its contributing members if necessary to provide timely funding for the
association's obligations and duties, provided that the association shall repay any such
interim assessments to contributing members as soon after the end of the calendar year as
reasonably possible. The association shall not pay interest on these interim assessments.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for health care provided on or after
January 1, 2013.
new text end

Sec. 3.

Minnesota Statutes 2010, section 256.9657, subdivision 3, is amended to read:

Subd. 3.

Surcharge on HMOs and community integrated service networks.

(a)
Effective October 1, 1992, each health maintenance organization with a certificate of
authority issued by the commissioner of health under chapter 62D and each community
integrated service network licensed by the commissioner under chapter 62N shall pay to
the commissioner of human services a surcharge equal to six-tenths of one percent of the
total premium revenues of the health maintenance organization or community integrated
service network as reported to the commissioner of health according to the schedule in
subdivision 4. new text begin Effective January 1, 2013, this surcharge shall be collected under section
297I.05, subdivision 5a.
new text end

(b) For purposes of this subdivision, total premium revenue means:

(1) premium revenue recognized on a prepaid basis from individuals and groups
for provision of a specified range of health services over a defined period of time which
is normally one month, excluding premiums paid to a health maintenance organization
or community integrated service network from the Federal Employees Health Benefit
Program;

(2) premiums from Medicare wraparound subscribers for health benefits which
supplement Medicare coverage;

(3) Medicare revenue, as a result of an arrangement between a health maintenance
organization or a community integrated service network and the Centers for Medicare
and Medicaid Services of the federal Department of Health and Human Services, for
services to a Medicare beneficiary, excluding Medicare revenue that states are prohibited
from taxing under sections 1854, 1860D-12, and 1876 of title XVIII of the federal Social
Security Act, codified as United States Code, title 42, sections 1395mm, 1395w-112, and
1395w-24, respectively, as they may be amended from time to time; and

(4) medical assistance revenue, as a result of an arrangement between a health
maintenance organization or community integrated service network and a Medicaid state
agency, for services to a medical assistance beneficiary.

If advance payments are made under clause (1) or (2) to the health maintenance
organization or community integrated service network for more than one reporting period,
the portion of the payment that has not yet been earned must be treated as a liability.

(c) When a health maintenance organization or community integrated service
network merges or consolidates with or is acquired by another health maintenance
organization or community integrated service network, the surviving corporation or the
new corporation shall be responsible for the annual surcharge originally imposed on
each of the entities or corporations subject to the merger, consolidation, or acquisition,
regardless of whether one of the entities or corporations does not retain a certificate of
authority under chapter 62D or a license under chapter 62N.

(d) Effective July 1 of each year, the surviving corporation's or the new corporation's
surcharge shall be based on the revenues earned in the second previous calendar year by
all of the entities or corporations subject to the merger, consolidation, or acquisition
regardless of whether one of the entities or corporations does not retain a certificate of
authority under chapter 62D or a license under chapter 62N until the total premium
revenues of the surviving corporation include the total premium revenues of all the merged
entities as reported to the commissioner of health.

(e) When a health maintenance organization or community integrated service
network, which is subject to liability for the surcharge under this chapter, transfers,
assigns, sells, leases, or disposes of all or substantially all of its property or assets, liability
for the surcharge imposed by this chapter is imposed on the transferee, assignee, or buyer
of the health maintenance organization or community integrated service network.

(f) In the event a health maintenance organization or community integrated service
network converts its licensure to a different type of entity subject to liability for the
surcharge under this chapter, but survives in the same or substantially similar form, the
surviving entity remains liable for the surcharge regardless of whether one of the entities
or corporations does not retain a certificate of authority under chapter 62D or a license
under chapter 62N.

(g) The surcharge assessed to a health maintenance organization or community
integrated service network ends when the entity ceases providing services for premiums
and the cessation is not connected with a merger, consolidation, acquisition, or conversion.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for health care provided on or after
January 1, 2013.
new text end

Sec. 4.

Minnesota Statutes 2010, section 297I.05, subdivision 1, is amended to read:

Subdivision 1.

Domestic and foreign companies.

Except as otherwise provided
in this section, a tax is imposed on every domestic and foreign insurance company. The
rate of tax is equal to two percent of all gross premiums less return premiums on all
direct business received by the insurer or agents of the insurer in Minnesota, in cash
or otherwise, during the year. new text begin The portion of this tax that applies to health insurance
premiums shall be collected under subdivision 5a.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for health care provided on or after
January 1, 2013.
new text end

Sec. 5.

Minnesota Statutes 2010, section 297I.05, subdivision 5, is amended to read:

Subd. 5.

Health maintenance organizations, nonprofit health service plan
corporations, and community integrated service networks.

(a) A tax is imposed on
health maintenance organizations, community integrated service networks, and nonprofit
health care service plan corporations. The rate of tax is equal to one percent of gross
premiums less return premiums on all direct business received by the organization,
network, or corporation or its agents in Minnesota, in cash or otherwise, in the calendar
year.

(b) The commissioner shall deposit all revenues, including penalties and interest,
collected under this chapter from health maintenance organizations, community integrated
service networks, and nonprofit health service plan corporations in the health care access
fund. Refunds of overpayments of tax imposed by this subdivision must be paid from
the health care access fund. There is annually appropriated from the health care access
fund to the commissioner the amount necessary to make any refunds of the tax imposed
under this subdivision.

new text begin (c) The tax imposed in this subdivision shall be collected under subdivision 5a.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for health care provided on or after
January 1, 2013.
new text end

Sec. 6.

Minnesota Statutes 2010, section 297I.05, is amended by adding a subdivision
to read:

new text begin Subd. 5a. new text end

new text begin Combined health care sales tax. new text end

new text begin (a) The commissioner shall impose
and collect the following assessments and taxes as a single sales tax on health care, in
addition to the existing provider tax under section 295.52:
new text end

new text begin (1) the amount of the annual assessment determined by the Minnesota
Comprehensive Health Association under section 62E.11;
new text end

new text begin (2) the six-tenths of one percent surcharge imposed on total premium revenues of
health maintenance organizations and community integrated service networks under
section 256.9657, subdivision 3;
new text end

new text begin (3) the two percent tax imposed on health insurance premiums received by insurance
companies under subdivision 1; and
new text end

new text begin (4) the one percent tax imposed on gross premiums of health maintenance
organizations, community integrated service networks, and nonprofit health service plan
corporations under subdivision 5.
new text end

new text begin (b) The commissioner shall determine the rate of health care sales tax necessary
given the base of the tax to generate tax revenue equal to combined gross revenues
assessments and taxes specified in paragraph (a).
new text end

new text begin (c) Health care providers, as defined in section 295.50, subdivision 4, shall add the
sales tax created under this subdivision to the amount they bill to individuals, entities, and
third-party payers that purchase or pay for health care from them. Health care providers
shall display on their bills the portion of the billed amount that is attributable to this tax.
new text end

new text begin (d) Purchasers or payers of health care that is subject to the sales tax imposed under
this subdivision shall pay the tax to the health care provider, who shall in turn transmit
the amount of tax payment received to the commissioner under the procedure specified
in section 295.55.
new text end

new text begin (e) The commissioner shall allocate the revenues received under this subdivision to
the same accounts and entities, in the same proportions and for the same purposes, as the
existing taxes and assessments that comprise paragraph (a).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for health care provided on or after
January 1, 2013.
new text end