SF 1164

1st Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act
  1.2             relating to health; changing the governance structure 
  1.3             of the Minnesota Comprehensive Health Association; 
  1.4             increasing the cigarette tax; conforming to federal 
  1.5             law on health savings accounts; providing a health 
  1.6             insurance exemption from the insurance premiums tax; 
  1.7             repealing the assessment for the Minnesota 
  1.8             Comprehensive Health Association; appropriating money; 
  1.9             amending Minnesota Statutes 2004, sections 62A.02, by 
  1.10            adding a subdivision; 62E.02, subdivision 23; 62E.091; 
  1.11            62E.10, subdivisions 1, 2, 3, 6, 7; 62E.11, 
  1.12            subdivisions 9, 10; 62E.13, subdivisions 2, 3a, by 
  1.13            adding a subdivision; 62E.14, subdivisions 1, 6; 
  1.14            290.01, subdivisions 19, 31; 297F.05, subdivision 1; 
  1.15            297F.10, subdivision 1; 297I.15, subdivision 4; 
  1.16            repealing Minnesota Statutes 2004, sections 62E.02, 
  1.17            subdivision 23; 62E.11, subdivisions 5, 6, 13; 62E.13, 
  1.18            subdivision 1.  
  1.19  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.20     Section 1.  Minnesota Statutes 2004, section 62A.02, is 
  1.21  amended by adding a subdivision to read: 
  1.22     Subd. 8.  [EFFECTS ON PREMIUM RATES OF CERTAIN LAW 
  1.23  CHANGES.] In approving premium rates under this section and 
  1.24  sections 62A.021; 62A.65, subdivision 3; and 62L.08, subdivision 
  1.25  8, the commissioners of commerce and health shall ensure that 
  1.26  the provisions of this act eliminating the Comprehensive Health 
  1.27  Association assessment and reducing the scope of the premium tax 
  1.28  are reflected in the premium rates charged by health plan 
  1.29  companies. 
  1.30     [EFFECTIVE DATE.] This section is effective for coverage 
  1.31  issued on or after January 1, 2006.  
  1.32     Sec. 2.  Minnesota Statutes 2004, section 62E.02, 
  2.1   subdivision 23, is amended to read: 
  2.2      Subd. 23.  [CONTRIBUTING MEMBER HEALTH PLAN COMPANY.] 
  2.3   "Contributing member Health plan company" means those companies 
  2.4   regulated under chapter 62A and offering, selling, issuing, or 
  2.5   renewing policies or contracts of accident and health insurance; 
  2.6   health maintenance organizations regulated under chapter 62D; 
  2.7   nonprofit health service plan corporations regulated under 
  2.8   chapter 62C; community integrated service networks regulated 
  2.9   under chapter 62N; fraternal benefit societies regulated under 
  2.10  chapter 64B; the Minnesota employees insurance program 
  2.11  established in section 43A.317, effective July 1, 1993; and 
  2.12  joint self-insurance plans regulated under chapter 62H.  For the 
  2.13  purposes of determining liability of contributing members 
  2.14  pursuant to section 62E.11 payments received from or on behalf 
  2.15  of Minnesota residents for coverage by a health maintenance 
  2.16  organization or community integrated service network shall be 
  2.17  considered to be accident and health insurance premiums. 
  2.18     [EFFECTIVE DATE.] This section is effective January 1, 2006.
  2.19     Sec. 3.  Minnesota Statutes 2004, section 62E.091, is 
  2.20  amended to read: 
  2.21     62E.091 [APPROVAL OF STATE PLAN PREMIUMS.] 
  2.22     The association shall submit to the commissioner any 
  2.23  premiums it proposes to become effective for coverage under the 
  2.24  comprehensive health insurance plan, pursuant to section 62E.08, 
  2.25  subdivision 3.  No later than 45 days before the effective date 
  2.26  for premiums specified in section 62E.08, subdivision 3, the 
  2.27  commissioner shall approve, modify, or reject the proposed 
  2.28  premiums on the basis of the following criteria:  
  2.29     (a) whether the association has complied with the 
  2.30  provisions of section 62E.11, subdivision 11; 
  2.31     (b) whether the association has submitted the proposed 
  2.32  premiums in a manner which provides sufficient time for 
  2.33  individuals covered under the comprehensive insurance plan to 
  2.34  receive notice of any premium increase no less than 30 days 
  2.35  prior to the effective date of the increase; 
  2.36     (c) the degree to which the association's computations and 
  3.1   conclusions are consistent with section 62E.08; 
  3.2      (d) the degree to which any sample used to compute a 
  3.3   weighted average by the association pursuant to section 62E.08 
  3.4   reasonably reflects circumstances existing in the private 
  3.5   marketplace for individual coverage; 
  3.6      (e) the degree to which a weighted average computed 
  3.7   pursuant to section 62E.08 that uses information pertaining to 
  3.8   individual coverage available only on a renewal basis reflects 
  3.9   the circumstances existing in the private marketplace for 
  3.10  individual coverage; 
  3.11     (f) a comparison of the proposed increases with increases 
  3.12  in the cost of medical care and increases experienced in the 
  3.13  private marketplace for individual coverage; 
  3.14     (g) the financial consequences to enrollees of the proposed 
  3.15  increase; 
  3.16     (h) the actuarially projected effect of the proposed 
  3.17  increase upon both total enrollment in, and the nature of the 
  3.18  risks assumed by, the comprehensive health insurance plan; and 
  3.19     (i) the relative solvency of the contributing members; and 
  3.20     (j) other factors deemed relevant by the commissioner. 
  3.21     In no case, however, may the commissioner approve premiums 
  3.22  for those plans of coverage described in section 62E.08, 
  3.23  subdivision 1, paragraphs (a) to (d), that are lower than 101 
  3.24  percent or greater than 125 percent of the weighted averages 
  3.25  computed by the association pursuant to section 62E.08.  The 
  3.26  commissioner shall support a decision to approve, modify, or 
  3.27  reject any premium proposed by the association with written 
  3.28  findings and conclusions addressing each criterion specified in 
  3.29  this section.  If the commissioner does not approve, modify, or 
  3.30  reject the premiums proposed by the association sooner than 45 
  3.31  days before the effective date for premiums specified in section 
  3.32  62E.08, subdivision 3, the premiums proposed by the association 
  3.33  under this section become effective.  
  3.34     [EFFECTIVE DATE.] This section is effective January 1, 2006.
  3.35     Sec. 4.  Minnesota Statutes 2004, section 62E.10, 
  3.36  subdivision 1, is amended to read: 
  4.1      Subdivision 1.  [CREATION; TAX EXEMPTION.] There is 
  4.2   established a Comprehensive Health Association to promote the 
  4.3   public health and welfare of the state of Minnesota with 
  4.4   membership consisting of all insurers; self-insurers; 
  4.5   fraternals; joint self-insurance plans regulated under chapter 
  4.6   62H; the Minnesota employees insurance program established in 
  4.7   section 43A.317, effective July 1, 1993; health maintenance 
  4.8   organizations; and community integrated service networks 
  4.9   licensed or authorized to do business in this state.  The 
  4.10  association shall have no members.  The Comprehensive Health 
  4.11  Association is exempt from the taxes imposed under chapter 297I 
  4.12  and any other laws of this state and all property owned by the 
  4.13  association is exempt from taxation. 
  4.14     [EFFECTIVE DATE.] This section is effective January 1, 2006.
  4.15     Sec. 5.  Minnesota Statutes 2004, section 62E.10, 
  4.16  subdivision 2, is amended to read: 
  4.17     Subd. 2.  [BOARD OF DIRECTORS; ORGANIZATION.] The board of 
  4.18  directors of the association shall be made up of eleven members 
  4.19  as follows:  six directors selected by contributing members, 
  4.20  subject to approval by the commissioner, one of which must be a 
  4.21  health actuary; five public directors 11 individuals selected by 
  4.22  the commissioner, at least two of whom must be plan enrollees, 
  4.23  two of whom must be representatives of employers whose accident 
  4.24  and health insurance premiums are part of the association's 
  4.25  assessment base, and one of whom must be a licensed insurance 
  4.26  agent and at least six of whom have a working knowledge of 
  4.27  health insurance.  At least two of the public directors must 
  4.28  reside outside of the seven county metropolitan area.  In 
  4.29  determining voting rights at members' meetings, each member 
  4.30  shall be entitled to vote in person or proxy.  The vote shall be 
  4.31  a weighted vote based upon the member's cost of self-insurance, 
  4.32  accident and health insurance premium, subscriber contract 
  4.33  charges, health maintenance contract payment, or community 
  4.34  integrated service network payment derived from or on behalf of 
  4.35  Minnesota residents in the previous calendar year, as determined 
  4.36  by the commissioner.  In approving directors of the board, the 
  5.1   commissioner shall consider, among other things, whether all 
  5.2   types of members are fairly represented.  Directors selected by 
  5.3   contributing members may be reimbursed from the money of the 
  5.4   association for expenses incurred by them as directors, but 
  5.5   shall not otherwise be compensated by the association for their 
  5.6   services.  The costs of conducting meetings of the association 
  5.7   and its board of directors shall be borne by members of the 
  5.8   association. 
  5.9      [EFFECTIVE DATE.] This section is effective January 1, 2006.
  5.10     Sec. 6.  Minnesota Statutes 2004, section 62E.10, 
  5.11  subdivision 3, is amended to read: 
  5.12     Subd. 3.  [MANDATORY MEMBERSHIP ORGANIZATIONAL 
  5.13  DOCUMENTS.] All members shall maintain their membership in the 
  5.14  association as a condition of doing accident and health 
  5.15  insurance, self-insurance, health maintenance organization, or 
  5.16  community integrated service network business in this state.  
  5.17  The association shall submit its articles, bylaws, and operating 
  5.18  rules to the commissioner for approval; provided that the 
  5.19  adoption and amendment of articles, bylaws, and operating rules 
  5.20  by the association and the their approval by the 
  5.21  commissioner thereof shall be is exempt from the provisions of 
  5.22  sections 14.001 to 14.69. 
  5.23     [EFFECTIVE DATE.] This section is effective January 1, 2006.
  5.24     Sec. 7.  Minnesota Statutes 2004, section 62E.10, 
  5.25  subdivision 6, is amended to read: 
  5.26     Subd. 6.  [ANTITRUST EXEMPTION.] In the performance of 
  5.27  their duties as members directors of the association, the 
  5.28  members directors and their employers shall be exempt from the 
  5.29  provisions of sections 325D.49 to 325D.66. 
  5.30     [EFFECTIVE DATE.] This section is effective January 1, 2006.
  5.31     Sec. 8.  Minnesota Statutes 2004, section 62E.10, 
  5.32  subdivision 7, is amended to read: 
  5.33     Subd. 7.  [GENERAL POWERS.] The association may: 
  5.34     (a) Exercise the powers granted to insurers under the laws 
  5.35  of this state; 
  5.36     (b) Sue or be sued; 
  6.1      (c) Enter into contracts with insurers, similar 
  6.2   associations in other states, or with other persons for the 
  6.3   performance of administrative functions including the functions 
  6.4   provided for in clauses (e) and (f); and 
  6.5      (d) Establish administrative and accounting procedures for 
  6.6   the operation of the association;. 
  6.7      (e) Provide for the reinsuring of risks incurred as a 
  6.8   result of issuing the coverages required by sections 62E.04 and 
  6.9   62E.16 by members of the association.  Each member which elects 
  6.10  to reinsure its required risks shall determine the categories of 
  6.11  coverage it elects to reinsure in the association.  The 
  6.12  categories of coverage are: 
  6.13     (1) individual qualified plans, excluding group 
  6.14  conversions; 
  6.15     (2) group conversions; 
  6.16     (3) group qualified plans with fewer than 50 employees or 
  6.17  members; and 
  6.18     (4) major medical coverage. 
  6.19     A separate election may be made for each category of 
  6.20  coverage.  If a member elects to reinsure the risks of a 
  6.21  category of coverage, it must reinsure the risk of the coverage 
  6.22  of every life covered under every policy issued in that 
  6.23  category.  A member electing to reinsure risks of a category of 
  6.24  coverage shall enter into a contract with the association 
  6.25  establishing a reinsurance plan for the risks.  This contract 
  6.26  may include provision for the pooling of members' risks 
  6.27  reinsured through the association and it may provide for 
  6.28  assessment of each member reinsuring risks for losses and 
  6.29  operating and administrative expenses incurred, or estimated to 
  6.30  be incurred in the operation of the reinsurance plan.  This 
  6.31  reinsurance plan shall be approved by the commissioner before it 
  6.32  is effective.  Members electing to administer the risks which 
  6.33  are reinsured in the association shall comply with the benefit 
  6.34  determination guidelines and accounting procedures established 
  6.35  by the association.  The fee charged by the association for the 
  6.36  reinsurance of risks shall not be less than 110 percent of the 
  7.1   total anticipated expenses incurred by the association for the 
  7.2   reinsurance; and 
  7.3      (f) Provide for the administration by the association of 
  7.4   policies which are reinsured pursuant to clause (e).  Each 
  7.5   member electing to reinsure one or more categories of coverage 
  7.6   in the association may elect to have the association administer 
  7.7   the categories of coverage on the member's behalf.  If a member 
  7.8   elects to have the association administer the categories of 
  7.9   coverage, it must do so for every life covered under every 
  7.10  policy issued in that category.  The fee for the administration 
  7.11  shall not be less than 110 percent of the total anticipated 
  7.12  expenses incurred by the association for the administration. 
  7.13     [EFFECTIVE DATE.] This section is effective January 1, 2006.
  7.14     Sec. 9.  Minnesota Statutes 2004, section 62E.11, 
  7.15  subdivision 9, is amended to read: 
  7.16     Subd. 9.  [SPECIAL ASSESSMENT UPON TERMINATION OF 
  7.17  INDIVIDUAL HEALTH COVERAGE.] Each contributing member health 
  7.18  plan company that terminates individual health coverage for 
  7.19  reasons other than (a) nonpayment of premium; (b) failure to 
  7.20  make co-payments; (c) enrollee moving out of the area served; or 
  7.21  (d) a materially false statement or misrepresentation by the 
  7.22  enrollee in the application for membership; and does not provide 
  7.23  or arrange for replacement coverage that meets the requirements 
  7.24  of section 62D.121; shall pay a special assessment to the state 
  7.25  plan based upon the number of terminated individuals who join 
  7.26  the comprehensive health insurance plan as authorized under 
  7.27  section 62E.14, subdivisions 1, paragraph (d), and 6.  Such a 
  7.28  contributing member health plan company shall pay the 
  7.29  association an amount equal to the average cost of an enrollee 
  7.30  in the state plan in the year in which the member health plan 
  7.31  company terminated enrollees multiplied by the total number of 
  7.32  terminated enrollees who enroll in the state plan. 
  7.33     The average cost of an enrollee in the state comprehensive 
  7.34  health insurance plan shall be determined by dividing the state 
  7.35  plan's total annual losses by the total number of enrollees from 
  7.36  that year.  This cost will be assessed to the contributing 
  8.1   member who has terminated health coverage before the association 
  8.2   makes the annual determination of each contributing member's 
  8.3   liability as required under this section. 
  8.4      In the event that the contributing member health plan 
  8.5   company is terminating health coverage because of a loss of 
  8.6   health care providers, the commissioner may review whether or 
  8.7   not the special assessment established under this subdivision 
  8.8   will have an adverse impact on the contributing member health 
  8.9   plan company or its enrollees or insureds, including but not 
  8.10  limited to causing the contributing member health plan company 
  8.11  to fall below statutory net worth requirements.  If the 
  8.12  commissioner determines that the special assessment would have 
  8.13  an adverse impact on the contributing member health plan company 
  8.14  or its enrollees or insureds, the commissioner may adjust the 
  8.15  amount of the special assessment, or establish alternative 
  8.16  payment arrangements to the state plan.  For health maintenance 
  8.17  organizations regulated under chapter 62D, the commissioner of 
  8.18  health shall make the determination regarding any adjustment in 
  8.19  the special assessment and shall transmit that determination to 
  8.20  the commissioner of commerce. 
  8.21     [EFFECTIVE DATE.] This section is effective January 1, 2006.
  8.22     Sec. 10.  Minnesota Statutes 2004, section 62E.11, 
  8.23  subdivision 10, is amended to read: 
  8.24     Subd. 10.  [TERMINATION OF INDIVIDUAL PLAN WITHOUT 
  8.25  REPLACEMENT COVERAGE.] Any contributing members health plan 
  8.26  companies who have terminated individual health plans and do not 
  8.27  provide or arrange for replacement coverage that meets the 
  8.28  requirements of section 62D.121, and whose former insureds or 
  8.29  enrollees enroll in the state comprehensive health insurance 
  8.30  plan with a waiver of the preexisting conditions pursuant to 
  8.31  section 62E.14, subdivisions 1, paragraph (d), and 6, will be 
  8.32  liable for the costs of any preexisting conditions of their 
  8.33  former enrollees or insureds treated during the first six months 
  8.34  of coverage under the state plan.  The liability for preexisting 
  8.35  conditions will be assessed before the association makes the 
  8.36  annual determination of each contributing member's liability as 
  9.1   required under this section. 
  9.2      [EFFECTIVE DATE.] This section is effective January 1, 2006.
  9.3      Sec. 11.  Minnesota Statutes 2004, section 62E.13, 
  9.4   subdivision 2, is amended to read: 
  9.5      Subd. 2.  [SELECTION OF WRITING CARRIER.] The association 
  9.6   may select policies and contracts, or parts thereof, submitted 
  9.7   by a member or members of the association, or by the association 
  9.8   or others, to develop specifications for bids from any entity 
  9.9   which wishes to be selected as a writing carrier to administer 
  9.10  the state plan.  The selection of the writing carrier shall be 
  9.11  based upon criteria established by the board of directors of the 
  9.12  association and approved by the commissioner.  The criteria 
  9.13  shall outline specific qualifications that an entity must 
  9.14  satisfy in order to be selected and, at a minimum, shall include 
  9.15  the entity's proven ability to handle large group accident and 
  9.16  health insurance cases, efficient claim paying capacity, and the 
  9.17  estimate of total charges for administering the plan.  The 
  9.18  association may select separate writing carriers for the two 
  9.19  types of qualified plans and the $2,000, $5,000, and $10,000 
  9.20  deductible plans, the qualified Medicare supplement plan, and 
  9.21  the health maintenance organization contract. 
  9.22     [EFFECTIVE DATE.] This section is effective January 1, 2006.
  9.23     Sec. 12.  Minnesota Statutes 2004, section 62E.13, 
  9.24  subdivision 3a, is amended to read: 
  9.25     Subd. 3a.  [EXTENSION OF WRITING CARRIER CONTRACT.] Subject 
  9.26  to the approval of the commissioner, and subject to the consent 
  9.27  of the writing carrier, the association may extend the effective 
  9.28  writing carrier contract for a period not to exceed three years, 
  9.29  if the association and the commissioner determine that it would 
  9.30  be in the best interest of the association's enrollees and 
  9.31  contributing members of the state.  This subdivision applies 
  9.32  notwithstanding anything to the contrary in subdivisions 2 and 3.
  9.33     [EFFECTIVE DATE.] This section is effective January 1, 2006.
  9.34     Sec. 13.  Minnesota Statutes 2004, section 62E.13, is 
  9.35  amended by adding a subdivision to read: 
  9.36     Subd. 14.  [APPROPRIATION.] An amount sufficient to offset 
 10.1   any deficit of the association for the fiscal year is 
 10.2   appropriated to the commissioner of commerce for payment to the 
 10.3   association. 
 10.4      Sec. 14.  Minnesota Statutes 2004, section 62E.14, 
 10.5   subdivision 1, is amended to read: 
 10.6      Subdivision 1.  [APPLICATION, CONTENTS.] The comprehensive 
 10.7   health insurance plan shall be open for enrollment by eligible 
 10.8   persons.  An eligible person shall enroll by submission of an 
 10.9   application to the writing carrier.  The application must 
 10.10  provide the following: 
 10.11     (a) name, address, age, list of residences for the 
 10.12  immediately preceding six months and length of time at current 
 10.13  residence of the applicant; 
 10.14     (b) name, address, and age of spouse and children if any, 
 10.15  if they are to be insured; 
 10.16     (c) evidence of rejection, a requirement of restrictive 
 10.17  riders, a rate up, or a preexisting conditions limitation on a 
 10.18  qualified plan, the effect of which is to substantially reduce 
 10.19  coverage from that received by a person considered a standard 
 10.20  risk, by at least one association member health plan company 
 10.21  within six months of the date of the application, or other 
 10.22  eligibility requirements adopted by rule by the commissioner 
 10.23  which are not inconsistent with this chapter and which evidence 
 10.24  that a person is unable to obtain coverage substantially similar 
 10.25  to that which may be obtained by a person who is considered a 
 10.26  standard risk; 
 10.27     (d) if the applicant has been terminated from individual 
 10.28  health coverage which does not provide replacement coverage, 
 10.29  evidence that no replacement coverage that meets the 
 10.30  requirements of section 62D.121 was offered, and evidence of 
 10.31  termination of individual health coverage by an insurer, 
 10.32  nonprofit health service plan corporation, or health maintenance 
 10.33  organization, provided that the contract or policy has been 
 10.34  terminated for reasons other than (1) failure to pay the charge 
 10.35  for health care coverage; (2) failure to make co-payments 
 10.36  required by the health care plan; (3) enrollee moving out of the 
 11.1   area served; or (4) a materially false statement or 
 11.2   misrepresentation by the enrollee in the application for the 
 11.3   terminated contract or policy; and 
 11.4      (e) a designation of the coverage desired. 
 11.5      An eligible person may not purchase more than one policy 
 11.6   from the state plan.  Upon ceasing to be a resident of Minnesota 
 11.7   a person is no longer eligible to purchase or renew coverage 
 11.8   under the state plan, except as required by state or federal law 
 11.9   with respect to renewal of Medicare supplement coverage. 
 11.10     [EFFECTIVE DATE.] This section is effective January 1, 2006.
 11.11     Sec. 15.  Minnesota Statutes 2004, section 62E.14, 
 11.12  subdivision 6, is amended to read: 
 11.13     Subd. 6.  [TERMINATION OF INDIVIDUAL POLICY OR CONTRACT.] A 
 11.14  Minnesota resident who holds an individual health maintenance 
 11.15  contract, individual nonprofit health service corporation 
 11.16  contract, or an individual insurance policy previously approved 
 11.17  by the commissioners of health or commerce, may enroll in the 
 11.18  comprehensive health insurance plan with a waiver of the 
 11.19  preexisting condition as described in subdivision 3, without 
 11.20  interruption in coverage, provided (1) no replacement coverage 
 11.21  that meets the requirements of section 62D.121 was offered by 
 11.22  the contributing member health plan company, and (2) the policy 
 11.23  or contract has been terminated for reasons other than (a) 
 11.24  nonpayment of premium; (b) failure to make co-payments required 
 11.25  by the health care plan; (c) moving out of the area served; or 
 11.26  (d) a materially false statement or misrepresentation by the 
 11.27  enrollee in the application for the terminated policy or 
 11.28  contract; and, provided further, that the option to enroll in 
 11.29  the plan is exercised by submitting an application that is 
 11.30  received by the writing carrier no later than 90 days after 
 11.31  termination of the existing policy or contract. 
 11.32     Coverage allowed under this section is effective when the 
 11.33  contract or policy is terminated and the enrollee has submitted 
 11.34  the proper application that is received within the time period 
 11.35  stated in this subdivision and paid the required premium or fee. 
 11.36     Expenses incurred from the preexisting conditions of 
 12.1   individuals enrolled in the state plan under this subdivision 
 12.2   must be paid by the contributing member health plan company 
 12.3   canceling coverage as set forth in section 62E.11, subdivision 
 12.4   10. 
 12.5      The application must include evidence of termination of the 
 12.6   existing policy or certificate as required in subdivision 1. 
 12.7      [EFFECTIVE DATE.] This section is effective January 1, 2006.
 12.8      Sec. 16.  Minnesota Statutes 2004, section 290.01, 
 12.9   subdivision 19, is amended to read: 
 12.10     Subd. 19.  [NET INCOME.] The term "net income" means the 
 12.11  federal taxable income, as defined in section 63 of the Internal 
 12.12  Revenue Code of 1986, as amended through the date named in this 
 12.13  subdivision, incorporating any elections made by the taxpayer in 
 12.14  accordance with the Internal Revenue Code in determining federal 
 12.15  taxable income for federal income tax purposes, and with the 
 12.16  modifications provided in subdivisions 19a to 19f. 
 12.17     In the case of a regulated investment company or a fund 
 12.18  thereof, as defined in section 851(a) or 851(g) of the Internal 
 12.19  Revenue Code, federal taxable income means investment company 
 12.20  taxable income as defined in section 852(b)(2) of the Internal 
 12.21  Revenue Code, except that:  
 12.22     (1) the exclusion of net capital gain provided in section 
 12.23  852(b)(2)(A) of the Internal Revenue Code does not apply; 
 12.24     (2) the deduction for dividends paid under section 
 12.25  852(b)(2)(D) of the Internal Revenue Code must be applied by 
 12.26  allowing a deduction for capital gain dividends and 
 12.27  exempt-interest dividends as defined in sections 852(b)(3)(C) 
 12.28  and 852(b)(5) of the Internal Revenue Code; and 
 12.29     (3) the deduction for dividends paid must also be applied 
 12.30  in the amount of any undistributed capital gains which the 
 12.31  regulated investment company elects to have treated as provided 
 12.32  in section 852(b)(3)(D) of the Internal Revenue Code.  
 12.33     The net income of a real estate investment trust as defined 
 12.34  and limited by section 856(a), (b), and (c) of the Internal 
 12.35  Revenue Code means the real estate investment trust taxable 
 12.36  income as defined in section 857(b)(2) of the Internal Revenue 
 13.1   Code.  
 13.2      The net income of a designated settlement fund as defined 
 13.3   in section 468B(d) of the Internal Revenue Code means the gross 
 13.4   income as defined in section 468B(b) of the Internal Revenue 
 13.5   Code. 
 13.6      The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 
 13.7   1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 
 13.8   1616, 1617, 1704(l), and 1704(m) of the Small Business Job 
 13.9   Protection Act, Public Law 104-188, the provisions of Public Law 
 13.10  104-117, the provisions of sections 313(a) and (b)(1), 602(a), 
 13.11  913(b), 941, 961, 971, 1001(a) and (b), 1002, 1003, 1012, 1013, 
 13.12  1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 1111(a), 1131(b) 
 13.13  and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) and (h), and 
 13.14  1604(d)(1) of the Taxpayer Relief Act of 1997, Public Law 
 13.15  105-34, the provisions of section 6010 of the Internal Revenue 
 13.16  Service Restructuring and Reform Act of 1998, Public Law 
 13.17  105-206, the provisions of section 4003 of the Omnibus 
 13.18  Consolidated and Emergency Supplemental Appropriations Act, 
 13.19  1999, Public Law 105-277, and the provisions of section 318 of 
 13.20  the Consolidated Appropriation Act of 2001, Public Law 106-554, 
 13.21  shall become effective at the time they become effective for 
 13.22  federal purposes. 
 13.23     The Internal Revenue Code of 1986, as amended through 
 13.24  December 31, 1996, shall be in effect for taxable years 
 13.25  beginning after December 31, 1996. 
 13.26     The provisions of sections 202(a) and (b), 221(a), 225, 
 13.27  312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 
 13.28  (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 
 13.29  1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 
 13.30  1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 
 13.31  of the Taxpayer Relief Act of 1997, Public Law 105-34, the 
 13.32  provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 7002, 
 13.33  and 7003 of the Internal Revenue Service Restructuring and 
 13.34  Reform Act of 1998, Public Law 105-206, the provisions of 
 13.35  section 3001 of the Omnibus Consolidated and Emergency 
 13.36  Supplemental Appropriations Act, 1999, Public Law 105-277, the 
 14.1   provisions of section 3001 of the Miscellaneous Trade and 
 14.2   Technical Corrections Act of 1999, Public Law 106-36, and the 
 14.3   provisions of section 316 of the Consolidated Appropriation Act 
 14.4   of 2001, Public Law 106-554, shall become effective at the time 
 14.5   they become effective for federal purposes. 
 14.6      The Internal Revenue Code of 1986, as amended through 
 14.7   December 31, 1997, shall be in effect for taxable years 
 14.8   beginning after December 31, 1997. 
 14.9      The provisions of sections 5002, 6009, 6011, and 7001 of 
 14.10  the Internal Revenue Service Restructuring and Reform Act of 
 14.11  1998, Public Law 105-206, the provisions of section 9010 of the 
 14.12  Transportation Equity Act for the 21st Century, Public Law 
 14.13  105-178, the provisions of sections 1004, 4002, and 5301 of the 
 14.14  Omnibus Consolidation and Emergency Supplemental Appropriations 
 14.15  Act, 1999, Public Law 105-277, the provision of section 303 of 
 14.16  the Ricky Ray Hemophilia Relief Fund Act of 1998, Public Law 
 14.17  105-369, the provisions of sections 532, 534, 536, 537, and 538 
 14.18  of the Ticket to Work and Work Incentives Improvement Act of 
 14.19  1999, Public Law 106-170, the provisions of the Installment Tax 
 14.20  Correction Act of 2000, Public Law 106-573, and the provisions 
 14.21  of section 309 of the Consolidated Appropriation Act of 2001, 
 14.22  Public Law 106-554, shall become effective at the time they 
 14.23  become effective for federal purposes. 
 14.24     The Internal Revenue Code of 1986, as amended through 
 14.25  December 31, 1998, shall be in effect for taxable years 
 14.26  beginning after December 31, 1998.  
 14.27     The provisions of the FSC Repeal and Extraterritorial 
 14.28  Income Exclusion Act of 2000, Public Law 106-519, and the 
 14.29  provision of section 412 of the Job Creation and Worker 
 14.30  Assistance Act of 2002, Public Law 107-147, shall become 
 14.31  effective at the time it became effective for federal purposes. 
 14.32     The Internal Revenue Code of 1986, as amended through 
 14.33  December 31, 1999, shall be in effect for taxable years 
 14.34  beginning after December 31, 1999.  The provisions of sections 
 14.35  306 and 401 of the Consolidated Appropriation Act of 2001, 
 14.36  Public Law 106-554, and the provision of section 632(b)(2)(A) of 
 15.1   the Economic Growth and Tax Relief Reconciliation Act of 2001, 
 15.2   Public Law 107-16, and provisions of sections 101 and 402 of the 
 15.3   Job Creation and Worker Assistance Act of 2002, Public Law 
 15.4   107-147, shall become effective at the same time it became 
 15.5   effective for federal purposes. 
 15.6      The Internal Revenue Code of 1986, as amended through 
 15.7   December 31, 2000, shall be in effect for taxable years 
 15.8   beginning after December 31, 2000.  The provisions of sections 
 15.9   659a and 671 of the Economic Growth and Tax Relief 
 15.10  Reconciliation Act of 2001, Public Law 107-16, the provisions of 
 15.11  sections 104, 105, and 111 of the Victims of Terrorism Tax 
 15.12  Relief Act of 2001, Public Law 107-134, and the provisions of 
 15.13  sections 201, 403, 413, and 606 of the Job Creation and Worker 
 15.14  Assistance Act of 2002, Public Law 107-147, shall become 
 15.15  effective at the same time it became effective for federal 
 15.16  purposes. 
 15.17     The Internal Revenue Code of 1986, as amended through March 
 15.18  15, 2002, shall be in effect for taxable years beginning after 
 15.19  December 31, 2001. 
 15.20     The provisions of sections 101 and 102 of the Victims of 
 15.21  Terrorism Tax Relief Act of 2001, Public Law 107-134, shall 
 15.22  become effective at the same time it becomes effective for 
 15.23  federal purposes. 
 15.24     The Internal Revenue Code of 1986, as amended through June 
 15.25  15, 2003, shall be in effect for taxable years beginning after 
 15.26  December 31, 2002.  The provisions of section 201 of the Jobs 
 15.27  and Growth Tax Relief and Reconciliation Act of 2003, H.R. 2, if 
 15.28  it is enacted into law, are effective at the same time it became 
 15.29  effective for federal purposes. 
 15.30     Section 1201 of the Medicare Prescription Drug, 
 15.31  Improvement, and Modernization Act of 2003, Public Law 108-173, 
 15.32  relating to health savings accounts, is effective at the same 
 15.33  time it became effective for federal purposes. 
 15.34     Except as otherwise provided, references to the Internal 
 15.35  Revenue Code in subdivisions 19a to 19g mean the code in effect 
 15.36  for purposes of determining net income for the applicable year. 
 16.1      [EFFECTIVE DATE.] This section is effective the day 
 16.2   following final enactment. 
 16.3      Sec. 17.  Minnesota Statutes 2004, section 290.01, 
 16.4   subdivision 31, is amended to read: 
 16.5      Subd. 31.  [INTERNAL REVENUE CODE.] Unless specifically 
 16.6   defined otherwise, "Internal Revenue Code" means the Internal 
 16.7   Revenue Code of 1986, as amended through June 15, 2003, and as 
 16.8   amended by section 1201 of the Medicare Prescription Drug, 
 16.9   Improvement, and Modernization Act of 2003, Public Law 108-173, 
 16.10  relating to health savings accounts. 
 16.11     [EFFECTIVE DATE.] This section is effective for taxable 
 16.12  years beginning after December 31, 2003. 
 16.13     Sec. 18.  Minnesota Statutes 2004, section 297F.05, 
 16.14  subdivision 1, is amended to read: 
 16.15     Subdivision 1.  [RATES; CIGARETTES.] A tax is imposed upon 
 16.16  the sale of cigarettes in this state, upon having cigarettes in 
 16.17  possession in this state with intent to sell, upon any person 
 16.18  engaged in business as a distributor, and upon the use or 
 16.19  storage by consumers, at the following rates: 
 16.20     (1) on cigarettes weighing not more than three pounds per 
 16.21  thousand, 24 73.5 mills on each such cigarette; and 
 16.22     (2) on cigarettes weighing more than three pounds per 
 16.23  thousand, 48 147 mills on each such cigarette. 
 16.24     [EFFECTIVE DATE.] This section is effective December 1, 
 16.25  2005. 
 16.26     Sec. 19.  Minnesota Statutes 2004, section 297F.10, 
 16.27  subdivision 1, is amended to read: 
 16.28     Subdivision 1.  [TAX AND USE TAX ON CIGARETTES.] Revenue 
 16.29  received from cigarette taxes, as well as related penalties, 
 16.30  interest, license fees, and miscellaneous sources of revenue 
 16.31  shall be deposited by the commissioner in the state treasury and 
 16.32  credited as follows: 
 16.33     (1) the revenue produced by 3.25 3.95 mills of the tax on 
 16.34  cigarettes weighing not more than three pounds a thousand and 
 16.35  6.5 7.9 mills of the tax on cigarettes weighing more than three 
 16.36  pounds a thousand must be credited to the Academic Health Center 
 17.1   special revenue fund hereby created and is annually appropriated 
 17.2   to the Board of Regents at the University of Minnesota for 
 17.3   Academic Health Center funding at the University of Minnesota; 
 17.4   and 
 17.5      (2) the revenue produced by 1.25 1.52 mills of the tax on 
 17.6   cigarettes weighing not more than three pounds a thousand and 
 17.7   2.5 3.04 mills of the tax on cigarettes weighing more than three 
 17.8   pounds a thousand must be credited to the medical education and 
 17.9   research costs account hereby created in the special revenue 
 17.10  fund and is annually appropriated to the commissioner of health 
 17.11  for distribution under section 62J.692, subdivision 4; and 
 17.12     (3) the balance of the revenues derived from taxes, 
 17.13  penalties, and interest (under this chapter) and from license 
 17.14  fees and miscellaneous sources of revenue shall be credited to 
 17.15  the general fund. 
 17.16     [EFFECTIVE DATE.] This section is effective for revenues 
 17.17  received for taxes subject to the rate increase in Minnesota 
 17.18  Statutes, section 297F.05, subdivision 1, as amended by section 
 17.19  18, as determined by the commissioner of revenue. 
 17.20     Sec. 20.  Minnesota Statutes 2004, section 297I.15, 
 17.21  subdivision 4, is amended to read: 
 17.22     Subd. 4.  [PREMIUMS PAID TO HEALTH CARRIERS BY STATE.] A 
 17.23  health carrier as defined in section 62A.011 is exempt from the 
 17.24  taxes imposed under this chapter on premiums paid to it by the 
 17.25  state.  Premiums paid by the state under medical assistance, 
 17.26  general assistance medical care, and the MinnesotaCare program 
 17.27  are not exempt under this subdivision for a health plan, as 
 17.28  defined in section 62A.011, subdivision 3, but including 
 17.29  coverage described in clause (10) of that subdivision. 
 17.30     [EFFECTIVE DATE.] This section is effective for premiums 
 17.31  received after December 31, 2005. 
 17.32     Sec. 21.  [FLOOR STOCKS TAX.] 
 17.33     Subdivision 1.  [TAX IMPOSED.] (a) A floor stocks tax is 
 17.34  imposed on every person engaged in business in this state as a 
 17.35  distributor, retailer, subjobber, vendor, manufacturer, or 
 17.36  manufacturer's representative of cigarettes, on the stamped 
 18.1   cigarettes and unaffixed stamps in the person's possession or 
 18.2   under the person's control at 12:01 a.m. on December 1, 2005.  
 18.3   The tax is imposed at the following rates: 
 18.4      (1) on cigarettes weighing not more than three pounds per 
 18.5   thousand, 49.5 mills on each cigarette; and 
 18.6      (2) on cigarettes weighing more than three pounds per 
 18.7   thousand, 99 mills on each cigarette. 
 18.8      (b) Each distributor, by December 8, 2005, shall file a 
 18.9   report with the commissioner of revenue, in the form the 
 18.10  commissioner prescribes, showing the stamped cigarettes and 
 18.11  unaffixed stamps on hand at 12:01 a.m. on December 1, 2005, and 
 18.12  the amount of tax due on the cigarettes and unaffixed stamps.  
 18.13  The tax imposed by this section is due and payable by January 3, 
 18.14  2006, and after that date bears interest as provided in 
 18.15  Minnesota Statutes, section 270.75.  Each retailer, subjobber, 
 18.16  vendor, manufacturer, or manufacturer's representative shall 
 18.17  file a return with the commissioner, in the form the 
 18.18  commissioner prescribes, showing the cigarettes on hand at 12:01 
 18.19  a.m. on December 1, 2005, and pay the tax due on them by January 
 18.20  3, 2006.  Tax not paid by the due date bears interest as 
 18.21  provided in Minnesota Statutes, section 270.75. 
 18.22     Subd. 2.  [AUDIT AND ENFORCEMENT.] The tax imposed by this 
 18.23  section is subject to the audit, assessment, and collection 
 18.24  provisions applicable to the taxes imposed under Minnesota 
 18.25  Statutes, chapter 297F.  The commissioner shall deposit the 
 18.26  revenues from this tax in the general fund. 
 18.27     [EFFECTIVE DATE.] This section is effective December 1, 
 18.28  2005. 
 18.29     Sec. 22.  [APPROPRIATION.] 
 18.30     $210,309,000 is appropriated from the general fund to the 
 18.31  commissioner of commerce to offset the deficit in the Minnesota 
 18.32  Comprehensive Health Association program; $60,734,000 of this 
 18.33  appropriation is for fiscal year 2006 and $149,575,000 for 
 18.34  fiscal year 2007.  Any amount not expended in fiscal year 2006 
 18.35  may be carried over to fiscal year 2007.  Beginning for the 
 18.36  2008-2009 fiscal biennium, the commissioner of commerce shall 
 19.1   include estimates of the cost of the Minnesota Comprehensive 
 19.2   Health Association deficits in its submissions under Minnesota 
 19.3   Statutes, section 16A.10, and the governor shall include 
 19.4   recommendations on it in the governor's budget submission to the 
 19.5   legislature under Minnesota Statutes, section 16A.11. 
 19.6      Sec. 23.  [REPEALER.] 
 19.7      Minnesota Statutes 2004, sections 62E.02, subdivision 23; 
 19.8   62E.11, subdivisions 5, 6, and 13; and 62E.13, subdivision 1, 
 19.9   are repealed. 
 19.10     [EFFECTIVE DATE.] This section is effective January 1, 2006.