SF 1682

as introduced - 79th Legislature (1995 - 1996) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; increasing income tax rates on 
  1.3             the income of certain individuals, estates, and 
  1.4             trusts; abolishing the tax on hospitals and health 
  1.5             care providers; depositing the revenue from the rate 
  1.6             increase to the health care access fund; amending 
  1.7             Minnesota Statutes 1994, sections 60A.02, subdivision 
  1.8             3; 62D.02, subdivision 4; 62N.02, subdivision 4a; 
  1.9             62P.04, subdivision 1; 214.16, subdivision 3; 270B.01, 
  1.10            subdivision 8; 290.06, subdivisions 2c and 2d; and 
  1.11            290.62; repealing Minnesota Statutes 1994, sections 
  1.12            144.1484, subdivision 2; 295.50; 295.51, subdivision 
  1.13            1; 295.52; 295.53; 295.54; 295.55; 295.57; 295.58; 
  1.14            295.582; and 295.59. 
  1.15  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.16     Section 1.  Minnesota Statutes 1994, section 60A.02, 
  1.17  subdivision 3, is amended to read: 
  1.18     Subd. 3.  [INSURANCE.] (a) "Insurance" is any agreement 
  1.19  whereby one party, for a consideration, undertakes to indemnify 
  1.20  another to a specified amount against loss or damage from 
  1.21  specified causes, or to do some act of value to the assured in 
  1.22  case of such loss or damage.  A program of self-insurance, 
  1.23  self-insurance revolving fund or pool established under section 
  1.24  471.981 is not insurance for purposes of this subdivision.  
  1.25     (b) Notwithstanding paragraph (a), capitation payments to a 
  1.26  capitated entity by an employer that maintains a program of 
  1.27  self-insurance described in this paragraph, do not constitute 
  1.28  insurance with respect to the receipt of the payments.  The 
  1.29  payments are not premium revenues for the purpose of calculating 
  1.30  liability for otherwise applicable state taxes, assessments, or 
  2.1   surcharges, with the exception of: 
  2.2      (1) the MinnesotaCare provider tax; 
  2.3      (2) the one percent premium tax imposed in section 60A.15, 
  2.4   subdivision 1, paragraph (d); and 
  2.5      (3) (2) effective July 1, 1995, assessments by the 
  2.6   Minnesota comprehensive health association. 
  2.7   This paragraph applies only where: 
  2.8      (1) the capitated entity does not bear risk in excess of 
  2.9   110 percent of the self-insurance program's expected costs; 
  2.10     (2) the employer does not carry stop loss, excess loss, or 
  2.11  similar coverage with an attachment point lower than 120 percent 
  2.12  of the self-insurance program's expected costs; 
  2.13     (3) the capitated entity and the employer comply with the 
  2.14  data submission and administrative simplification provisions of 
  2.15  chapter 62J; 
  2.16     (4) the capitated entity and the employer comply with the 
  2.17  provider tax pass-through provisions of section 295.582; 
  2.18     (5) the capitated entity's required minimum reserves 
  2.19  reflect the risk borne by the capitated entity under this 
  2.20  paragraph, with an appropriate adjustment for the 110 percent 
  2.21  limit on risk borne by the capitated entity; 
  2.22     (6) (5) on or after July 1, 1994, but prior to January 1, 
  2.23  1995, the employer has at least 1,500 current employees, as 
  2.24  defined in section 62L.02, or, on or after January 1, 1995, the 
  2.25  employer has at least 750 current employees, as defined in 
  2.26  section 62L.02; 
  2.27     (7) (6) the employer does not exclude any eligible 
  2.28  employees or their dependents, both as defined in section 
  2.29  62L.02, from coverage offered by the employer, under this 
  2.30  paragraph or any other health coverage, insured or self-insured, 
  2.31  offered by the employer, on the basis of the health status or 
  2.32  health history of the person.  For purposes of this subdivision, 
  2.33  a capitated entity must be licensed as a health maintenance 
  2.34  organization, integrated service network, or community 
  2.35  integrated service network, or must be a preferred provider 
  2.36  organization.  For purposes of this section, a preferred 
  3.1   provider organization is a health plan company that contracts 
  3.2   with providers to provide health care to its enrollees.  All 
  3.3   other insurance as defined in paragraph (a), even if maintained 
  3.4   by an employer that also offers programs of self-insurance, 
  3.5   continues to be subject to all applicable state regulations. 
  3.6      This paragraph expires December 31, 1997. 
  3.7      Sec. 2.  Minnesota Statutes 1994, section 62D.02, 
  3.8   subdivision 4, is amended to read: 
  3.9      Subd. 4.  (a) "Health maintenance organization" means a 
  3.10  nonprofit corporation organized under chapter 317A, or a local 
  3.11  governmental unit as defined in subdivision 11, controlled and 
  3.12  operated as provided in sections 62D.01 to 62D.30, which 
  3.13  provides, either directly or through arrangements with providers 
  3.14  or other persons, comprehensive health maintenance services, or 
  3.15  arranges for the provision of these services, to enrollees on 
  3.16  the basis of a fixed prepaid sum without regard to the frequency 
  3.17  or extent of services furnished to any particular enrollee.  
  3.18     (b) Notwithstanding paragraph (a), an organization licensed 
  3.19  as a health maintenance organization that accepts payments for 
  3.20  health care services on a capitated basis, or under another 
  3.21  similar risk sharing agreement, from a program of self-insurance 
  3.22  as described in section 60A.02, subdivision 3, paragraph (b), 
  3.23  shall not be regulated as a health maintenance organization with 
  3.24  respect to the receipt of the payments.  The payments are not 
  3.25  premium revenues for the purpose of calculating the health 
  3.26  maintenance organization's liability for otherwise applicable 
  3.27  state taxes, assessments, or surcharges, with the exception of: 
  3.28     (1) the MinnesotaCare provider tax; 
  3.29     (2) the one percent premium tax imposed in section 60A.15, 
  3.30  subdivision 1, paragraph (d); and 
  3.31     (3) (2) effective July 1, 1995, assessments by the 
  3.32  Minnesota comprehensive health association. 
  3.33  This paragraph applies only where: 
  3.34     (1) the health maintenance organization does not bear risk 
  3.35  in excess of 110 percent of the self-insurance program's 
  3.36  expected costs; 
  4.1      (2) the employer does not carry stop loss, excess loss, or 
  4.2   similar coverage with an attachment point lower than 120 percent 
  4.3   of the self-insurance program's expected costs; 
  4.4      (3) the health maintenance organization and the employer 
  4.5   comply with the data submission and administrative 
  4.6   simplification provisions of chapter 62J; 
  4.7      (4) the health maintenance organization and the employer 
  4.8   comply with the provider tax pass-through provisions of section 
  4.9   295.582; 
  4.10     (5) the health maintenance organization's required minimum 
  4.11  reserves reflect the risk borne by the health maintenance 
  4.12  organization under this paragraph, with an appropriate 
  4.13  adjustment for the 110 percent limit on risk borne by the 
  4.14  community network; 
  4.15     (6) (5) on or after July 1, 1994, but prior to January 1, 
  4.16  1995, the employer has at least 1,500 current employees, as 
  4.17  defined in section 62L.02, or, on or after January 1, 1995, the 
  4.18  employer has at least 750 current employees, as defined in 
  4.19  section 62L.02; 
  4.20     (7) (6) the employer does not exclude any eligible 
  4.21  employees or their dependents, both as defined in section 
  4.22  62L.02, from coverage offered by the employer, under this 
  4.23  paragraph or any other health coverage, insured or self-insured, 
  4.24  offered by the employer, on the basis of the health status or 
  4.25  health history of the person.  
  4.26     This paragraph expires December 31, 1997. 
  4.27     Sec. 3.  Minnesota Statutes 1994, section 62N.02, 
  4.28  subdivision 4a, is amended to read: 
  4.29     Subd. 4a.  [COMMUNITY INTEGRATED SERVICE NETWORK.] (a) 
  4.30  "Community integrated service network" or "community network" 
  4.31  means a formal arrangement licensed by the commissioner under 
  4.32  section 62N.25 for providing prepaid health services to enrolled 
  4.33  populations of 50,000 or fewer enrollees, including enrollees 
  4.34  who are residents of other states.  
  4.35     (b) Notwithstanding paragraph (a), an organization licensed 
  4.36  as a community network that accepts payments for health care 
  5.1   services on a capitated basis, or under another similar risk 
  5.2   sharing agreement, from a program of self-insurance as described 
  5.3   in section 60A.02, subdivision 3, paragraph (b), shall not be 
  5.4   regulated as a community network with respect to the receipt of 
  5.5   the payments.  The payments are not premium revenues for the 
  5.6   purpose of calculating the community network's liability for 
  5.7   otherwise applicable state taxes, assessments, or surcharges, 
  5.8   with the exception of: 
  5.9      (1) the MinnesotaCare provider tax; 
  5.10     (2) the one percent premium tax imposed in section 60A.15, 
  5.11  subdivision 1, paragraph (d); and 
  5.12     (3) (2) effective July 1, 1995, assessments by the 
  5.13  Minnesota comprehensive health association. 
  5.14  This paragraph applies only where: 
  5.15     (1) the community network does not bear risk in excess of 
  5.16  110 percent of the self-insurance program's expected costs; 
  5.17     (2) the employer does not carry stop loss, excess loss, or 
  5.18  similar coverage with an attachment point lower than 120 percent 
  5.19  of the self-insurance program's expected costs; 
  5.20     (3) the community network and the employer comply with the 
  5.21  data submission and administrative simplification provisions of 
  5.22  chapter 62J; 
  5.23     (4) the community network and the employer comply with the 
  5.24  provider tax pass-through provisions of section 295.582; 
  5.25     (5) the community network's required minimum reserves 
  5.26  reflect the risk borne by the community network under this 
  5.27  paragraph, with an appropriate adjustment for the 110 percent 
  5.28  limit on risk borne by the community network; 
  5.29     (6) (5) on or after July 1, 1994, but prior to January 1, 
  5.30  1995, the employer has at least 1,500 current employees, as 
  5.31  defined in section 62L.02, or, on or after January 1, 1995, the 
  5.32  employer has at least 750 current employees, as defined in 
  5.33  section 62L.02; 
  5.34     (7) (6) the employer does not exclude any eligible 
  5.35  employees or their dependents, both as defined in section 
  5.36  62L.02, from coverage offered by the employer, under this 
  6.1   paragraph or any other health coverage, insured or self-insured, 
  6.2   offered by the employer, on the basis of the health status or 
  6.3   health history of the person.  
  6.4      This paragraph expires December 31, 1997.  
  6.5      Sec. 4.  Minnesota Statutes 1994, section 62P.04, 
  6.6   subdivision 1, is amended to read: 
  6.7      Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
  6.8   section, the following definitions apply. 
  6.9      (b) "Health plan company" has the definition provided in 
  6.10  section 62Q.01. 
  6.11     (c) "Total expenditures" means incurred claims or 
  6.12  expenditures on health care services, administrative expenses, 
  6.13  charitable contributions, and all other payments made by health 
  6.14  plan companies out of premium revenues. 
  6.15     (d) "Net expenditures" means total expenditures minus 
  6.16  exempted taxes and assessments and payments or allocations made 
  6.17  to establish or maintain reserves.  
  6.18     (e) "Exempted taxes and assessments" means direct payments 
  6.19  for taxes to government agencies, contributions to the Minnesota 
  6.20  comprehensive health association, the medical assistance 
  6.21  provider's surcharge under section 256.9657, the MinnesotaCare 
  6.22  provider tax under section 295.52, assessments by the health 
  6.23  coverage reinsurance association, assessments by the Minnesota 
  6.24  life and health insurance guaranty association, assessments by 
  6.25  the Minnesota risk adjustment association, and any new 
  6.26  assessments imposed by federal or state law. 
  6.27     (f) "Consumer cost-sharing or subscriber liability" means 
  6.28  enrollee coinsurance, copayment, deductible payments, and 
  6.29  amounts in excess of benefit plan maximums. 
  6.30     Sec. 5.  Minnesota Statutes 1994, section 214.16, 
  6.31  subdivision 3, is amended to read: 
  6.32     Subd. 3.  [GROUNDS FOR DISCIPLINARY ACTION.] The board 
  6.33  shall take disciplinary action, which may include license 
  6.34  revocation, against a regulated person for: 
  6.35     (1) intentional failure to provide the commissioner of 
  6.36  health or the data analysis unit established under section 
  7.1   62J.30 with the data required under chapter 62J;. 
  7.2      (2) intentional failure to provide the commissioner of 
  7.3   revenue with data on gross revenue and other information 
  7.4   required for the commissioner to implement sections 295.50 to 
  7.5   295.58; and 
  7.6      (3) intentional failure to pay the health care provider tax 
  7.7   required under section 295.52. 
  7.8      Sec. 6.  Minnesota Statutes 1994, section 270B.01, 
  7.9   subdivision 8, is amended to read: 
  7.10     Subd. 8.  [MINNESOTA TAX LAWS.] For purposes of this 
  7.11  chapter only, "Minnesota tax laws" means the taxes administered 
  7.12  by or paid to the commissioner under chapters 289A (except taxes 
  7.13  imposed under sections 298.01, 298.015, and 298.24), 290, 290A, 
  7.14  291, and 297A and sections 295.50 to 295.59, or any similar 
  7.15  Indian tribal tax administered by the commissioner pursuant to 
  7.16  any tax agreement between the state and the Indian tribal 
  7.17  government, and includes any laws for the assessment, 
  7.18  collection, and enforcement of those taxes.  
  7.19     Sec. 7.  Minnesota Statutes 1994, section 290.06, 
  7.20  subdivision 2c, is amended to read: 
  7.21     Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
  7.22  AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
  7.23  married individuals filing joint returns and surviving spouses 
  7.24  as defined in section 2(a) of the Internal Revenue Code must be 
  7.25  computed by applying to their taxable net income the following 
  7.26  schedule of rates: 
  7.27     (1) On the first $19,910, 6 percent; 
  7.28     (2) On all over $19,910, but not over $79,120 $56,000, 8 
  7.29  percent; 
  7.30     (3) On all over $79,120, 8.5 $56,000, 9 percent. 
  7.31     Married individuals filing separate returns, estates, and 
  7.32  trusts must compute their income tax by applying the above rates 
  7.33  to their taxable income, except that the income brackets will be 
  7.34  one-half of the above amounts.  
  7.35     (b) The income taxes imposed by this chapter upon unmarried 
  7.36  individuals must be computed by applying to taxable net income 
  8.1   the following schedule of rates: 
  8.2      (1) On the first $13,620, 6 percent; 
  8.3      (2) On all over $13,620, but not over $44,750 $31,670, 8 
  8.4   percent; 
  8.5      (3) On all over $44,750, 8.5 $31,670, 9 percent. 
  8.6      (c) The income taxes imposed by this chapter upon unmarried 
  8.7   individuals qualifying as a head of household as defined in 
  8.8   section 2(b) of the Internal Revenue Code must be computed by 
  8.9   applying to taxable net income the following schedule of rates: 
  8.10     (1) On the first $16,770, 6 percent; 
  8.11     (2) On all over $16,770, but not over $67,390 $47,690, 8 
  8.12  percent; 
  8.13     (3) On all over $67,390, 8.5 $47,690, 9 percent. 
  8.14     (d) In lieu of a tax computed according to the rates set 
  8.15  forth in this subdivision, the tax of any individual taxpayer 
  8.16  whose taxable net income for the taxable year is less than an 
  8.17  amount determined by the commissioner must be computed in 
  8.18  accordance with tables prepared and issued by the commissioner 
  8.19  of revenue based on income brackets of not more than $100.  The 
  8.20  amount of tax for each bracket shall be computed at the rates 
  8.21  set forth in this subdivision, provided that the commissioner 
  8.22  may disregard a fractional part of a dollar unless it amounts to 
  8.23  50 cents or more, in which case it may be increased to $1. 
  8.24     (e) An individual who is not a Minnesota resident for the 
  8.25  entire year must compute the individual's Minnesota income tax 
  8.26  as provided in this subdivision.  After the application of the 
  8.27  nonrefundable credits provided in this chapter, the tax 
  8.28  liability must then be multiplied by a fraction in which:  
  8.29     (1) The numerator is the individual's Minnesota source 
  8.30  federal adjusted gross income as defined in section 62 of the 
  8.31  Internal Revenue Code after applying the allocation and 
  8.32  assignability provisions of section 290.081, clause (a), or 
  8.33  290.17; and 
  8.34     (2) the denominator is the individual's federal adjusted 
  8.35  gross income as defined in section 62 of the Internal Revenue 
  8.36  Code of 1986, as amended through December 31, 1993, increased by 
  9.1   the addition required for interest income from non-Minnesota 
  9.2   state and municipal bonds under section 290.01, subdivision 19a, 
  9.3   clause (1). 
  9.4      Sec. 8.  Minnesota Statutes 1994, section 290.06, 
  9.5   subdivision 2d, is amended to read: 
  9.6      Subd. 2d.  [INFLATION ADJUSTMENT OF BRACKETS.] (a) For 
  9.7   taxable years beginning after December 31, 1991, the minimum and 
  9.8   maximum dollar amounts for each rate bracket for which a tax is 
  9.9   imposed in subdivision 2c shall be adjusted for inflation by the 
  9.10  percentage determined under paragraph (b).  For the purpose of 
  9.11  making the adjustment as provided in this subdivision all of the 
  9.12  rate brackets provided in subdivision 2c shall be the rate 
  9.13  brackets as they existed for taxable years beginning after 
  9.14  December 31, 1990, and before January 1, 1992, except that the 
  9.15  minimum and maximum dollar amounts for each rate bracket as 
  9.16  amended in section 7 shall be adjusted according to this 
  9.17  subdivision for taxable years beginning after December 31, 
  9.18  1996.  The rate applicable to any rate bracket must not be 
  9.19  changed.  The dollar amounts setting forth the tax shall be 
  9.20  adjusted to reflect the changes in the rate brackets.  The rate 
  9.21  brackets as adjusted must be rounded to the nearest $10 amount.  
  9.22  If the rate bracket ends in $5, it must be rounded up to the 
  9.23  nearest $10 amount.  
  9.24     (b) The commissioner shall adjust the rate brackets and by 
  9.25  the percentage determined pursuant to the provisions of section 
  9.26  1(f) of the Internal Revenue Code, except that in section 
  9.27  1(f)(3)(B) the word "1990" shall be substituted for the word 
  9.28  "1987."  For 1991, the commissioner shall then determine the 
  9.29  percent change from the 12 months ending on August 31, 1990, to 
  9.30  the 12 months ending on August 31, 1991, and in each subsequent 
  9.31  year, from the 12 months ending on August 31, 1990, to the 12 
  9.32  months ending on August 31 of the year preceding the taxable 
  9.33  year.  For taxable years beginning after December 31, 1996, the 
  9.34  rate brackets amended in section 7 shall be adjusted according 
  9.35  to the percentage change from the 12 months ending on August 31, 
  9.36  1995, to the 12 months ending on August 31 of the year preceding 
 10.1   the taxable year.  The determination of the commissioner 
 10.2   pursuant to this subdivision shall not be considered a "rule" 
 10.3   and shall not be subject to the administrative procedure act 
 10.4   contained in chapter 14.  
 10.5      No later than December 15 of each year, the commissioner 
 10.6   shall announce the specific percentage that will be used to 
 10.7   adjust the tax rate brackets. 
 10.8      Sec. 9.  Minnesota Statutes 1994, section 290.62, is 
 10.9   amended to read: 
 10.10     290.62 [DISTRIBUTION OF REVENUES.] 
 10.11     (a) Except as provided in paragraph (b), all revenues 
 10.12  derived from the taxes, interest, penalties and charges under 
 10.13  this chapter shall, notwithstanding any other provisions of law, 
 10.14  be paid into the state treasury and credited to the general 
 10.15  fund, and be distributed as follows: 
 10.16     (1) There shall, notwithstanding any other provision of the 
 10.17  law, be paid from this general fund all refunds of taxes 
 10.18  erroneously collected from taxpayers under this chapter as 
 10.19  provided herein; 
 10.20     (2) There is hereby appropriated to the persons entitled to 
 10.21  payment herein, from the fund or account in the state treasury 
 10.22  to which the money was credited, an amount sufficient to make 
 10.23  the refund and payment. 
 10.24     (b) The amount of revenue determined by the commissioner to 
 10.25  have been derived from the rate increase in section 7 shall be 
 10.26  paid into the state treasury and credited to the health care 
 10.27  access fund. 
 10.28     Sec. 10.  [REPEALER.] 
 10.29     Minnesota Statutes 1994, sections 144.1484, subdivision 2; 
 10.30  295.50; 295.51, subdivision 1; 295.52; 295.53; 295.54; 295.55; 
 10.31  295.57; 295.58; 295.582; and 295.59, are repealed. 
 10.32     Sec. 11.  [EFFECTIVE DATE.] 
 10.33     Sections 5 and 10 are effective for gross revenues 
 10.34  generated by services performed and goods sold after December 
 10.35  31, 1995.  Section 7 is effective for taxable years beginning 
 10.36  after December 31, 1995.