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S.108

Introduced by   Senator Illuzzi of Essex-Orleans District and Senator Mullin of Rutland District

Referred to Committee on

Date:

Subject:  Insurance; health insurance; Healthy Vermont

Statement of purpose:  This bill proposes to:  (1) offer premium and deductible assistance to uninsured low and moderate income Vermonters; (2) create a reinsurance program to lower nongroup health insurance premiums;

(3) establish a health insurance tax credit to enable small businesses to offer health insurance to their employees; (4) permit health insurance companies to offer discounts to members and subscribers who make healthy choices; and (5) establish a consumer health care price and quality information system to empower individuals to make economically sound and medically appropriate decisions.

AN ACT RELATING TO THE PRESCRIPTION FOR A HEALTHY VERMONT

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1.  FINDINGS AND PRINCIPLES FOR HEALTH CARE REFORM

     (a)  Findings.

          (1)  Vermont faces two significant challenges to our health care system: unsustainable health care inflation and a growing number of uninsured Vermonters.  These challenges are interrelated:  unsustainable health care inflation results in more uninsured Vermonters; and more uninsured Vermonters increase the cost of uncompensated care paid for by those who are insured.

          (2)  Health care spending in Vermont and the nation is increasing at an unsustainable rate, and per capita spending by Vermonters on health care has been increasing faster than per capita health care spending in the nation.

          (3)  Higher health care costs are likely to result in reduced private and public capacity to offer coverage, reduced employee participation rates, and greater numbers of uninsured. 

          (4)  Most of the uninsured are connected to the workforce, either as employees or as dependents of employees.  Workers in firms with fewer than 25 employees have the greatest difficulty gaining access to coverage.

          (5)  The largest group of uninsured Vermonters (about 43 percent) is potentially eligible for Medicaid, based on their household income, but have not enrolled in the Medicaid program.  For this group of uninsured Vermonters, care could be provided and paid for under the Medicaid program.

          (6)  Another group of uninsured Vermonters (about 23 percent) has household income over 300 percent of the federal poverty level.  These households most likely could afford to purchase health insurance.

          (7)  About 24 percent of uninsured Vermonters have household income between 150 percent and 300 percent of the federal poverty level.  These Vermonters are ineligible for a Medicaid program and, because of their income, might have difficulty affording commercial health insurance coverage.

          (8)  Expansion of Medicaid eligibility or the creation of some other public health care coverage program is not a realistic solution to the challenges of health care inflation and the uninsured because:

               (A)  The Vermont Medicaid program is projected to have a deficit of $60 to 70 million in fiscal year 2006 if the design of the program remains the same.

               (B)  Medicaid expansion results in worse inflation for private sector premiums because of the “cost shift.”  Vermont’s Medicaid program pays hospitals and doctors at a low reimbursement level, and as a result, any unpaid costs are shifted to commercial insurance premiums and paid by businesses and individuals.

               (C)  Approximately 25 percent of Vermonters are enrolled in some form of Medicaid or other state-funded program.  Even as Vermont Medicaid programs have expanded, the percentage of Vermonters who are uninsured has grown.

          (9)  Increased regulation is not a panacea for the challenges facing Vermont’s health care system.  There is a legitimate role for reasonable regulation to contain health care costs, but Vermont already has one of the most comprehensive regulatory systems of any state in the nation, including a stringent certificate of need program, a rigorous annual process to review and restrain hospital budgets, and strict regulation of health insurance quality and premiums.

(b)  Principles for health care reform.  The goals of a health care reform plan for Vermont should be:

(1)  Universal access to affordable, equitable, and comprehensive health care for all Vermonters.

(2)  Consumer choice, with the patient and the patient’s health care provider at the center of decision-making.

(3)  A competitive and efficient private health insurance market.

(4)  Financial sustainability of public programs and private health insurance premiums.

(5)  A combination of short-term and long-term efforts, as part of a comprehensive, systematic plan to reduce costs, maintain and increase access, and improve health care quality and safety for all Vermonters.


* * * Premium Assistance Program * * *

Sec. 2.  8 V.S.A. § 4062d is added to read:

§ 4062d.  PREMIUM ASSISTANCE PROGRAM

(a)  Beginning in January 2006, the secretary of human services shall establish the premium assistance program within the office of Vermont health access for the purpose of providing uninsured low and moderate income Vermonters with financial assistance to enroll in or purchase health care coverage.  Financial assistance shall be in the form of

(1)  a reduced premium obligation of an eligible individual; and

(2)  in the case of an approved high deductible plan, a reduced deductible payment obligation for the eligible individual.

(b)  Financial assistance to eligible individuals shall be as follows:

(1)  For eligible individuals with household income greater than 150 percent of the federal poverty level and equal to or less than 200 percent of the federal poverty level:

(A)  Premium assistance shall be a $65.00 discount from the monthly cost of participation in or purchase of an approved group or nongroup health benefit plan with single-person coverage; a $105.00 discount from the monthly cost of participation in or purchase of an approved group or nongroup health benefit plan with two-person coverage; and a $155.00 discount from the monthly cost of participation in or purchase of an approved group or nongroup health benefit plan with family coverage; provided that in no event shall the discount be greater than 60 percent of the eligible individual’s share of group plan coverage; and

(B)  Cost sharing assistance in connection with an approved high deductible health insurance plan shall be 60 percent of the individual’s deductible expenditures.

(2)  For eligible individuals with household income greater than 200 percent of the federal poverty level and equal to or less than 250 percent of the federal poverty level:

(A)  Premium assistance shall be a $45.00 discount from the monthly cost of participation in or purchase of an approved group or nongroup health benefit plan with single-person coverage; a $70.00 discount from the monthly cost of participation in or purchase of an approved group or nongroup health benefit plan with two-person coverage, and a $105.00 discount from the monthly cost of participation in or purchase of an approved group or nongroup health benefit plan with family coverage; provided that in no event shall the discount be greater than 40 percent of the eligible individual’s share of group plan coverage; and

(B)  Cost sharing assistance in connection with an approved high deductible health insurance plan shall be 40 percent of the individual’s deductible expenditures.

(3)  For eligible individuals with household income greater than 250 percent of the federal poverty level and equal to or less than 300 percent of the federal poverty level:

(A)  Premium assistance shall be a $25.00 discount from the monthly cost of participation in or purchase of an approved group or nongroup health benefit plan with single-person coverage; a $35.00 discount from the monthly cost of participation in or purchase of an approved group or nongroup health benefit plan with two-person coverage; and a $55.00 discount from the monthly cost of participation in or purchase of an approved group or nongroup health benefit plan with family coverage; provided that in no event shall the discount be greater than 20 percent of the eligible individual’s share of group plan coverage; and

(B)  Cost sharing assistance in connection with an approved high deductible health insurance plan shall be 20 percent of the individual’s deductible expenditures.

(c)  Annually on or before October 1 of each year, the commissioner of banking, insurance, securities, and health care administration, after public hearing and an opportunity for comment by interested parties and the public, shall order the adjustment of the premium discount and cost sharing assistance amounts established in subsection (b) of this section to account for anticipated medical inflation for the next calendar year, as determined by the commissioner in his or her sole discretion.

(d)  The secretary shall adopt rules for the premium assistance program.  Such rules shall include:

(1)  Rules governing the operation of the premium assistance program by the nonprofit organization formed pursuant to section 4062e of this title;

(2)  The form and manner of an individual’s application for assistance authorized by this section;

(3)  Criteria for a group or nongroup health benefit plan to be approved for participation in the premium assistance program;

(4)  Standards and procedures for participating health insurers to be compensated for the premium discounts, cost sharing assistance, and other approved costs associated with the premium assistance program; and

(5)  Any other rules necessary to carry out the purposes of this section.

(e)  Any health insurer or self-insured plan may participate in the program.  The commissioner of banking, insurance, securities, and health care administration, after notice and an opportunity to be heard, may require one or more health insurance companies, hospital or medical services corporations, or health maintenance organizations covering at least 15,000 lives in this state to participate in the program if the commissioner determines that such designation is necessary to carry out the purposes of this section. 

(f)  As used in this section:

(1)  “Approved group or nongroup health benefit plan” means an insured or self-insured health benefit plan that satisfies the secretary’s criteria for participation in the premium assistance program.

(2)  “Approved high deductible health insurance plan” means a high deductible health benefit plan with deductible amounts no less than and no greater than the deductible amounts required of a high deductible health insurance plan under Section 223 of the Internal Revenue Code (health savings accounts).

(3)  “Eligible individual” means an individual who:

(A)  is a Vermont resident;

(B)  has applied for assistance on a form and in a manner prescribed by the secretary;

(C)  has not been enrolled in a health benefit plan during the 12 months prior to application, except that the rules adopted by the secretary shall include criteria for waiver of the waiting period provided for in this subdivision if the individual has lost health insurance coverage for reasons beyond the control of the individual; and

(D)  has household income greater than 150 percent of the federal poverty level, and less than or equal to 300 percent of the federal poverty level, and is not eligible for the Medicaid program, the state children’s health insurance program, or any other similar state-funded program of health care coverage.

(4)  “Secretary” means the secretary of the agency of human services.

(g)  The secretary may adopt the initial rules required or permitted by this section by emergency rule so as to permit the premium assistance program to begin on January 1, 2006.

(h) The secretary may apply to the federal government to include the program authorized by this section as a Medicaid program or a state children’s health program, if the secretary determines that it is cost-effective to do so.

* * * Nongroup Reinsurance Program * * *

Sec. 3.  8 V.S.A. § 4062e is added to read:

§ 4062e.  NONGROUP REINSURANCE PROGRAM

(a)  The commissioner shall establish the nongroup reinsurance program for the purpose of lowering the cost of, and thereby increasing access to, health care coverage in the nongroup health insurance market.

(b)  The nongroup reinsurance program shall include a reinsurance mechanism permitting nongroup carriers to transfer all or a portion of the expenses and risk associated with certain individuals, based on the actual or anticipated expenses of such individuals, in accordance with rules adopted by the commissioner.  Such individuals shall remain enrolled policyholders, members, or subscribers of the carrier’s plan and shall be subject to the same terms and conditions of coverage, premiums, and cost sharing as any other policyholder, member, or subscriber. 

(c)  The commissioner may develop the nongroup reinsurance program in a manner that permits the program to be eligible for a federal grant to administer the plan, including a grant under the federal Trade Adjustment Act.

(d)  The commissioner may adopt rules for the nongroup reinsurance program relating to:

(1)  The creation of a private, nonprofit organization to operate the program, and the appointment of individuals to govern the organization.

(2)  Criteria governing the circumstances under which a nongroup carrier may transfer all or a portion of the expense and risk associated with individuals insured by the nongroup carrier to the reinsurance mechanism.

(3)  Eligibility criteria for providing financial support to nongroup carriers under the reinsurance mechanism, including nongroup carrier expenses eligible for financial support, standards and procedures for the treatment and management of chronic conditions, and any other eligibility criteria established by the commissioner.

(4)  Rules for operation of the reinsurance mechanism and the program.

(5)  Any other standards or procedures necessary or desirable to carry out the purposes of this section.

(e)  As used in this section:

(1)  “Nongroup carrier” means a health insurance company, a hospital or medical service corporation, or a health maintenance organization which is a nongroup carrier registered under section 4080b of this title.

(2)  “Program” means the nongroup reinsurance program established by this section.

(f)  The commissioner may adopt the initial rules required or permitted by this section by emergency rule so as to permit the nongroup reinsurance program to begin on January 1, 2006.

* * * Small Business Health Insurance Tax Credit * * *

Sec. 4.  32 V.S.A. § 5830e is added to read:

§ 5830e.  TAX CREDITS; SMALL BUSINESS HEALTH INSURANCE

                 CREDIT

(a)  Beginning in taxable year 2006, an eligible employer shall be entitled to a refundable health insurance credit against the tax imposed by section 5822 or 5832 of this title in an amount equal to $600.00 per year per approved employee policy, or $50.00 per month per approved employee policy for policies in force for less than a full year.

(b)  Eligibility for the credit established by this section shall terminate following the fifth consecutive year after the credit is first claimed.

(c)  The credit authorized by this section shall be allocated on a pro rata basis among the members of a pass-through entity.

(d)  Annually on or before October 1 of each year, the commissioner of banking, insurance, securities, and health care administration, after public hearing and an opportunity for comment by interested parties and the public, shall order the adjustment of the credit amount established in subsection (a) of this section to account for anticipated medical inflation for the next calendar year, as determined by the commissioner in his or her sole discretion.

(e)(1)  The commissioner of taxes shall adopt by rule standards and procedures necessary to carry out the purposes of this section.

(2)  The commissioner of taxes may adopt the initial rules required or permitted by this section by emergency rule so as to permit the standards and procedures necessary to carry out the purposes of this section to be adopted by January 1, 2006.

(f)  For purposes of this section:

(1)  “Approved employee policy” means an insured health benefit plan offered by a small group carrier registered under section 4080a of Title 8 providing single, two-person, or family coverage that:

(A)  covers eligible preventive care which meets the requirements of Section 223 of the Internal Revenue Code (health savings accounts), as amended, notwithstanding any deductible amount; and

(B)  has deductible amounts no greater than the deductible amounts required under a high deductible health insurance plan which meets the requirements of Section 223 of the Internal Revenue Code (health savings accounts), as amended.

(2)  “Eligible employer” means any employer, including private nonprofit organizations, which:

(A)  employed 25 or fewer full-time-equivalent employees, on average, for the three months preceding January 1 of the taxable year;

(B)  pays in the taxable year at least 50 percent of the cost of premiums for an approved employee policy, pro-rated for a part-time employee as a portion of the workweek of a full-time employee of the employer; and        

(C)  has been an employer at least 24 months and has not paid any portion of employee health insurance premium costs in the preceding 24 months; provided that the commissioner of banking, insurance, securities, and health care administration shall adopt small business affordability criteria to permit employers currently offering employee health insurance coverage to be considered an eligible employer, notwithstanding the provisions of this subdivision (C), if the commissioner of finance and management determines that funds are available for these purposes.

(3)  “Full-time-equivalent employee” means the sum of hours worked in one week by all employees of the employer, divided by 40.  For purposes of this calculation, no individual employee’s hours during the week in excess of 40 shall be included in the sum.


* * * The Health Insurance Access Trust Fund * * *

Sec. 5.  8 V.S.A. § 4062f is added to read:

§ 4062f.  HEALTH INSURANCE ACCESS TRUST FUND

(a)  Beginning with taxes paid in calendar year 2006, all of the revenues raised by the premium tax on health insurers, hospital and medical service corporations, and health maintenance organizations, and carriers for health insurance in any health benefit plan stop loss and excess coverage insurance imposed by subchapter 7 of chapter 211 of Title 32 shall be deposited into the health insurance access trust fund, a special fund to be administered by the commissioner for the sole purpose of providing financial and administrative support for the premium assistance program authorized by section 4062d of this title and the nongroup reinsurance program authorized by section 4062e of this title.  The fund shall be administered in accordance with subchapter 5 of chapter 7 of Title 32, except that interest earned shall remain in the special fund.

(b)(1)  During each fiscal year, the commissioner shall allocate the funds in the health insurance access trust fund between the premium assistance program and the nongroup reinsurance program based on the commissioner’s consideration of:

     (A)  the stability of the nongroup health insurance market and the ability of individuals to purchase a nongroup health insurance policy; and

     (B)  participation rates in the premium assistance program established under section 4062d of this title.

(2)  The commissioner may transfer funds from the health insurance access trust fund in any fiscal year to support the small business tax credit authorized under 32 V.S.A. § 5830e to employers currently offering employee health insurance coverage if the commissioner determines that the remaining funds will be sufficient to support the premium assistance program authorized by section 4062e of this title, and to support the nongroup reinsurance program authorized by section 4062f of this title.

Sec. 6.  REVIEW OF HEALTH INSURANCE PREMIUMS AND

             HOSPITAL BUDGETS

(a)  Between July 1, 2005 and December 31, 2008, in connection with any petition or other request for approval of premium rates pursuant to

8 V.S.A. § 4062 by a nonprofit hospital or medical service corporation or a health maintenance organization, the commissioner of banking, insurance, securities, and health care administration shall not approve premium rates that pass through to insureds’ expenses relating to the premium tax imposed by

32 V.S.A. §§ 8551 through 8556 unless the petitioner demonstrates, and the commissioner finds, that the petitioner has taken all reasonable steps necessary to reduce its aggregate expenses in an amount equal to the petitioner’s premium tax obligation, or that failure to approve will have a substantial adverse effect on the financial safety and soundness of the petitioner. In determining the reasonableness of the petitioner’s efforts, the commissioner shall evaluate:

(1)  the petitioner’s efforts to reduce its administrative expenses; and

(2)  the petitioner’s efforts to negotiate lower health care facility and provider charges reflecting less uncompensated care attributable to the uninsured.

(b)  Between July 1, 2005 and December 31, 2008, the commissioner of banking, insurance, securities, and health care administration shall not approve a hospital budget under subchapter 7 of chapter 221 of Title 18 unless the hospital demonstrates, and the commissioner finds, that the hospital has taken all reasonable steps necessary to reduce its aggregate expenses or that failure to approve will have a substantial adverse effect on the financial health of the hospital.  In determining the reasonableness of the hospital’s efforts, the commissioner shall evaluate:

(1)  the hospital’s efforts to reduce its administrative expenses; and

(2)  the hospital’s reduction in expenses reflecting less uncompensated care attributable to the uninsured.


* * * Healthy Choices Insurance Discount * * *

Sec. 7.  8 V.S.A. § 4080a(h) is amended to read:

(h)(1)  A registered small group carrier shall use a community rating method acceptable to the commissioner for determining premiums for small group plans.  Except as provided in subdivision (2) of this subsection, the following risk classification factors are prohibited from use in rating small groups, employees or members of such groups, and dependents of such employees or members:

(A)  demographic rating, including age and gender rating;

(B)  geographic area rating;

(C)  industry rating;

(D)  medical underwriting and screening;

(E)  experience rating;

(F)  tier rating; or

(G)  durational rating.

(2)(A)  The commissioner shall, by rule, adopt standards and a process for permitting registered small group carriers to use one or more risk classifications in their community rating method, provided that the premium charged shall not deviate above or below the community rate filed by the carrier by more than 20 percent (20%), and provided further that the commissioner’s rules may not permit any medical underwriting and screening.

(B)  The commissioner’s rules may permit a carrier, including a hospital or medical service corporation, to establish premium discounts,  rebates, or otherwise modify applicable co-payments, deductibles, or other cost-sharing amounts in return for adherence by a member or subscriber to programs of health promotion and disease prevention, not inconsistent with federal regulations relating to bona fide wellness, approved by the commissioner.

(C)  The commissioner, in consultation with the commissioner of health, shall adopt by rule:

(i)  standards for approved health promotion and disease prevention programs, based on the best scientific, evidence-based medical practices; and

(ii)  standards and procedures for evaluating an individual’s adherence to programs of health promotion and disease prevention.

(3)  The commissioner may exempt from the requirements of this section an association as defined in section subdivision 4079(2) of this title which:

(A)  offers a small group plan to a member small employer which is community rated in accordance with the provisions of subdivisions (1) and (2) of this subsection.  The plan may include risk classifications in accordance with subdivision (2) of this subsection;

(B)  offers a small group plan that guarantees acceptance of all persons within the association and their dependents; and

(C)  offers one or more of the common health care plans approved by the commissioner under subsection (e) of this section.

(4)  The commissioner may revoke or deny the exemption set forth in subdivision (3) of this subsection if the commissioner determines that:

(A)  because of the nature, size, or other characteristics of the association and its members, the employees or members are in need of the protections provided by this section; or

(B)  the association exemption has or would have a substantial adverse effect on the small group market.

Sec. 8.  8 V.S.A. § 4080b(h) is amended to read:

(h)(1)  A registered nongroup carrier shall use a community rating method acceptable to the commissioner for determining premiums for nongroup plans. Except as provided in subdivision (2) of this subsection, the following risk classification factors are prohibited from use in rating individuals and their dependents:

(A)  demographic rating, including age and gender rating;

(B)  geographic area rating;

(C)  industry rating;

(D)  medical underwriting and screening;

(E)  experience rating;

(F)  tier rating; or

(G)  durational rating.

(2)(A)  The commissioner shall, by rule, adopt standards and a process for permitting registered nongroup carriers to use one or more risk classifications in their community rating method.  After July 1, 1993, provided that the premium charged shall not deviate above or below the community rate filed by the carrier by more than 40 percent (40%) for two years, and thereafter 20 percent (20%).  Such rules may not permit, and provided further that the commissioner’s rules may not permit any medical underwriting and screening and shall give due consideration to the need for affordability and accessibility of health insurance.

(B)  The commissioner’s rules may permit a carrier, including a hospital or medical service corporation, to establish premium discounts,  rebates, or otherwise modify applicable co-payments, deductibles or other cost sharing amounts in return for adherence to programs of health promotion and disease prevention, not inconsistent with federal regulations relating to bona fide wellness, approved by the commissioner.

(C)  The commissioner, in consultation with the commissioner of health, shall adopt by rule:

(i)  standards for approved health promotion and disease prevention programs, based on the best scientific, evidence-based medical practices; and

(ii)  standards and procedures for evaluating an individual’s adherence to programs of health promotion and disease prevention.

* * * Consumer Health Care Price and Quality Information * * *

Sec. 9.  18 V.S.A. § 9410(a) and (c) are amended to read:

(a)  The commissioner shall establish and maintain a unified health care data base to enable the commissioner to carry out the duties under this chapter and Title 8, including:

(1)  Determining the capacity and distribution of existing resources.

(2)  Identifying health care needs and informing health care policy.

(3)  Evaluating the effectiveness of intervention programs on improving patient outcomes.

(4)  Comparing costs between various treatment settings and approaches.

(5)  Providing information to consumers and purchasers of health care.

(A)  The program authorized by this section shall include a consumer health care price and quality information system to make available to consumers transparent health care price information, quality information, and such other information as the commissioner determines is necessary to empower individuals to make economically sound and medically appropriate decisions.

(B)  The commissioner shall convene a working group composed of the commissioner of health, health care consumers, health care providers and facilities, the Vermont Program for Quality in Health Care, health insurers, and any other individual or group appointed by the commissioner to advise the commissioner on the development and implementation of the consumer health care price and quality information system.

(C)  The commissioner may require a health insurer covering at least 15,000 lives in this state to file with the commissioner a consumer health care price and quality information plan, in accordance with rules adopted by the commissioner.  Approved plans may include the internet publication of the charges established by health care facilities and health care providers, and other providers of health care services and products, including but not limited to providers of pharmaceutical products and medical equipment, and the reimbursable amounts negotiated with health insurers and payable by the individual in connection with the individual’s deductible or other cost sharing obligations.

(D)  The commissioner shall adopt such rules as are necessary to carry out the purposes of this subdivision.  The commissioner’s rules may permit the gradual implementation of the consumer health care price and quality information system over time, beginning with health care price and quality information which the commissioner determines is most needed by consumers, or which the commissioner determines can be most practicably provided to the consumer in an understandable manner.

(c)  Health insurers, health care providers, health care facilities, and other providers of health care services or products, including but not limited to providers of pharmaceutical products and medical equipment, and governmental agencies shall file reports, data, schedules, statistics, or other information determined by the commissioner to be necessary to carry out the purposes of this section.  Such information may include:

(1)  health insurance claims and enrollment information used by health insurers;

(2)  information relating to hospitals filed under subchapter 7 of this chapter (hospital budget reviews); and

(3)  any other information relating to health care costs, prices, quality, utilization, or resources required to be filed by the commissioner.


* * * Conforming Amendments * * *

Sec. 10.  32 V.S.A. § 8551 is amended to read:

§ 8551.  IMPOSITION; RATE AND BASIS OF TAX

A domestic or foreign insurance company, association or, society, or a hospital or medical service corporation, a health maintenance organization, other than life, or a surety or guaranty company, doing business in this state, shall pay a tax to the state, which is hereby assessed at the rate of two percent per annum on the gross amount of premiums and assessments written on its business in this state, but not including premiums received for reinsurance.  A domestic or foreign life insurance company, doing business in this state, shall pay a tax to the state, which is hereby assessed at the rate of two percent per annum on the gross amount of premiums and assessments collected on its business in this state, but not including premiums received for reinsurance.

Sec. 11.  32 V.S.A. § 8552 is amended to read:

§ 8552.  RETURNS

A domestic insurance company, association or, society, or a hospital or medical service corporation, a health maintenance organization, other than life, or surety or guaranty company shall pay a tax to the state on the gross amount of premiums and assessments written and not taxed in other states and shall pay a tax to the state on the gross amount of premiums and assessments collected and not taxed in other states and shall include such business in its returns.  A domestic life insurance company shall pay a tax to the state on the gross amount of premiums and assessments collected and not taxed in other states and shall include such business in its returns.  The term "taxed in other states" means:

(1)(A)  A tax imposed by another state on premiums and paid directly by the company, association, society, surety, guaranty, or life insurance company to such other state under an insurance premiums tax of the same general kind as found in subchapter 7 of chapter 211 of this title; or

(B)  A corporate income or franchise tax in which the premiums taxed under paragraph subdivision (A) of this subdivision (1) are a factor in the computation thereof; or

(2)  A tax of the same general kind as found in section 5035 of Title 8, imposed by another state upon surplus lines premiums which is paid directly or indirectly to that state by agents or brokers of the Vermont domestic insurer which is not itself authorized to do business in that state.

Sec. 12.  32 V.S.A. § 8553 is amended to read:

§ 8553.  TIME OF PAYMENT

Such tax shall be based upon the business of such company, association or, society, hospital or medical service corporation, or a health maintenance organization during the year terminating with December 31 preceding.  It shall be paid quarterly on or before the last day of the second calendar month following the quarter ending the last day of March, June, September, and December of each calendar year and shall be computed either upon the business of such company, association or, society, hospital or medical service corporation, or a health maintenance organization during the quarter for which the payment is made, or upon an estimated basis predicated upon prior years business, upon forms to be prescribed by the commissioner of taxes.  Where the aggregate tax imposed upon a company, association, or, society, hospital or medical service corporation, or health maintenance organization is reasonably expected to be less than $500.00 for the calendar year it may be paid on an annual basis not later than the last day of February following the close of the year.  Such company, association or, society, hospital or medical service corporation, or health maintenance organization shall annually make a final reconciliation return on or before the last day of February in the manner provided in section 8123 of this title.

Sec. 13.  8 V.S.A. § 4518 is amended to read:

§ 4518.  TAX EXEMPTION

A hospital service corporation shall be exempt from all forms of taxation, except as provided under subchapter 7 of chapter 211 of Title 32.


Sec. 14.  8 V.S.A. § 4590 is amended to read:

§ 4590.  TAX EXEMPTION

A medical service corporation shall be exempt from all forms of taxation, except as provided under subchapter 7 of chapter 211 of Title 32.

Sec. 15.  8 V.S.A. § 4516 is amended to read:

§ 4516.  ANNUAL REPORT TO COMMISSIONER

Annually, on or before the fifteenth day of March, a hospital service corporation shall file with the commissioner of banking, insurance, securities, and health care administration a statement sworn to by the president and treasurer of the corporation showing its condition on the thirty-first day of December.  The statement shall be in such form and contain such matters as the commissioner shall prescribe.  To qualify for the tax exemption set forth in section 4518 of this title, the statement shall include a certification that the hospital service corporation operates on a nonprofit basis for the purpose of providing an adequate hospital service plan to individuals of the state, both groups and nongroups, without discrimination based on age, gender, geographic area, industry, and medical history, except as allowed by subdivisions 4080a(h)(2)(B) and 4080b(h)(2)(B) of this title.


Sec. 16.  8 V.S.A. § 4588 is amended to read:

§ 4588.  ANNUAL REPORT TO COMMISSIONER

Annually, on or before March 15, a medical service corporation shall file with the commissioner of banking, insurance, securities, and health care administration a statement sworn to by the president and treasurer of the corporation showing its condition on December 31, which shall be in such form and contain such matters as the commissioner shall prescribe.  To qualify for the tax exemption set forth in section 4590 of this title, the statement shall include a certification that the medical service corporation operates on a nonprofit basis for the purpose of providing an adequate medical service plan to individuals of the state, both groups and nongroups, without discrimination based on age, gender, geographic area, industry, and medical history, except as allowed by subdivisions 4080a(h)(2)(B) and 4080b(h)(2)(B) of this title.

* * * Appropriations * * *

Sec. 17.  APPROPRIATIONS; POSITIONS AUTHORIZED

The following sums are appropriated in fiscal year 2006 to the commissioner of banking, insurance, securities, and health care administration:

(1)  $3,000,000.00 from the health insurance access trust fund to carry out the purposes of the nongroup reinsurance program.

(2)  $4,500,000.00 from the health insurance access trust fund to be allocated to the secretary of human services to carry out the purposes of the premium assistance program.

(3)  $40,000.00 from the general fund and $60,000.00 from charges allocated to hospitals, nonprofit hospital and medical services corporations, health insurance companies and health maintenance organizations under 18 V.S.A. § 9415 to develop and adopt the initial rules of the nongroup reinsurance program and the consumer health care price and quality information system.

Sec. 18.  EFFECTIVE DATE; APPLICABILITY

This act shall take effect July 1, 2005 except that Secs. 10 through 14 of this act shall take effect January 1, 2006 and shall apply to taxes paid by nonprofit hospital and medical service corporations and health maintenance organizations on premiums and assessments during calendar year 2006 and thereafter. 



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us