NY State Senate Bill 2023-S3122

Senate Bill S3122

2023-2024 Legislative Session

Imposes a tax on out-of-state transfers, dividends, payments, and loans by certain accident and health insurance companies and health maintenance organizations

download bill text pdf

Current Bill Status - In Senate Committee Insurance Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 03, 2024	referred to insurance
Jan 27, 2023	referred to insurance

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2023-S3122 (ACTIVE) - Details

See Assembly Version of this Bill:: A3885
Current Committee:: Senate Insurance
Law Section:: Insurance Law
Laws Affected:: Add §9112, amd §§1109 & 9106, Ins L
Versions Introduced in 2021-2022 Legislative Session:: S8470, A9519

2023-S3122 (ACTIVE) - Summary

Imposes a tax on out-of-state transfers, dividends, payments, and loans by certain accident and health insurance companies and health maintenance organizations to be deposited in the New York state agency trust fund, distressed provider assistance account.

2023-S3122 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S3122

SPONSOR: KENNEDY
 
TITLE OF BILL:

An act to amend the insurance law, in relation to imposing a tax on
out-of-state transfers, dividends, payments, and loans by certain acci-
dent and health insurance companies and health maintenance organizations

 
PURPOSE:

To amend the insurance law to tax out-of-state transfers of premium
dollars by publicly-traded accident and health insurance companies domi-
ciled in other states and to return such dollars to New York communities
through the Distressed Provider Assistance Account, which aids
distressed hospitals

 
SUMMARY OF PROVISIONS:

Section 1 of the bill adds a new section 9112 to the insurance law to
provide for a tax on accident and health insurance companies equal to
9.63% of any dividends or other funds derived from subscriber prepay-

ments or premiums received for the domestic insurers commercial programs
in New York State that are then transferred, distributed, or loaned to
an entity in the domestic insurers' holding company system that is domi-
ciled outside of New York State, with some exceptions.  Each domestic
insurer would be required to report to the Department of Financial
Services all transfers, distributions, and loans in a form determined by
the Superintendent. All revenues collected from the tax would be depos-
ited into the New York State Agency Trust Fund, Distressed Provider
Assistance Account.

Sections 2 and 3 of the bill amend sections 1109 and 9106 of the insur-
ance law to clarify that the provisions of this legislation apply also
to health maintenance organizations licensed under article 44 of the
public health law.

Section 4 establishes the effective date.

 
JUSTIFICATION:

The New York health insurance marketplace has become increasingly domi-
nated by publicly-traded health insurance companies domiciled outside of
New York State. These companies' parent corporations, including United-
Healthcare, Aetna, and Anthem (operating in New York as Empire), have
made huge profits both before and during the COVID-19 pandemic-before
the pandemic by routinely denying payments to doctors and hospitals for
care provided to their enrollees, and then during the pandemic because
so many New Yorkers deferred health care visits and procedures while
continuing to pay premiums. The primary concern of these companies is to
provide a return for their shareholders, which is why they engage in
practices to increase their profits-by denying payments and transferring
funds to their parent companies in Indianapolis (Anthem), Minnetonka
(UnitedHealthcare), and Hartford (Aetna).

This bill would keep a portion of these transferred premium dollars paid
by New Yorkers and their employers in New York State by taxing transfers
out of state by 9.63%. These dollars would be returned to underserved
communities by depositing any revenue collected into the State's
Distressed Provider Assistance Account, which is set aside for invest-
ments in financially distressed hospitals. In this way, more of New
Yorkers' premium dollars would remain in New York State and strengthen
health care in low-income communities, rather than transferred to other
states to increase insurers' profits.

 
LEGISLATIVE HISTORY:

S8470/A9519 (2022)

 
FISCAL IMPLICATIONS:

This proposal has the potential to provide additional revenue to New
York State.

 
EFFECTIVE DATE:
This act shall take effect immediately, except that if this act shall
have become a law on or after April 1, 2023 this act shall take effect
immediately and shall be deemed to have been in full force and effect on
and after April 1, 2023.

2023-S3122 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   3122
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                             January 27, 2023
                                ___________
 
 Introduced  by  Sen. KENNEDY -- read twice and ordered printed, and when
   printed to be committed to the Committee on Insurance
 
 AN ACT to amend the insurance law, in relation  to  imposing  a  tax  on
   out-of-state  transfers,  dividends,  payments,  and  loans by certain
   accident and health insurance companies and health maintenance  organ-
   izations

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. The insurance law is amended by adding a new  section  9112
 to read as follows:
   § 9112.  TAX ON OUT-OF-STATE TRANSFERS, DIVIDENDS, PAYMENTS, AND LOANS
 BY  ACCIDENT  AND  HEALTH  INSURANCE  COMPANIES  LICENSED  UNDER ARTICLE
 FORTY-TWO OF THIS CHAPTER AND HEALTH MAINTENANCE ORGANIZATIONS.  (A)  AS
 USED  IN THIS SECTION THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEAN-
 INGS:
   (1) "DOMESTIC INSURER" MEANS AN INSURER THAT IS AN ACCIDENT AND HEALTH
 INSURANCE COMPANY LICENSED UNDER ARTICLE FORTY-TWO OF THIS CHAPTER OR AN
 ORGANIZATION COMPLYING WITH THE PROVISIONS OF ARTICLE FORTY-FOUR OF  THE
 PUBLIC HEALTH LAW.
   (2)  "COMMERCIAL  PROGRAM" MEANS ANY PROGRAM OF HEALTH INSURANCE OTHER
 THAN (I) PROGRAMS FOR INDIVIDUALS COVERED BY ARTICLE FIVE OF THE  SOCIAL
 SERVICES  LAW,  ARTICLE  TWENTY-FIVE  OF  THE  PUBLIC HEALTH LAW, TITLES
 XVIII, XIX, AND XXI OF THE FEDERAL SOCIAL SECURITY ACT, OR CHAPTER 89 OF
 TITLE 5 OF THE UNITED STATES CODE OR (II) PROGRAMS OF  INSURANCE  AVAIL-
 ABLE  ON  THE HEALTH BENEFIT EXCHANGE ESTABLISHED BY SECTION TWO HUNDRED
 SIXTY-EIGHT OF THE PUBLIC HEALTH LAW.
   (B) EFFECTIVE ON AND AFTER APRIL  FIRST,  TWO  THOUSAND  TWENTY-THREE,
 THERE  SHALL BE PAID BY EVERY DOMESTIC INSURER TO THE SUPERINTENDENT, ON
 OR BEFORE THE FIRST DAY OF MARCH, A TAX EQUAL TO  NINE  AND  SIXTY-THREE
 ONE  HUNDREDTHS  PERCENT  OF  ANY DIVIDENDS, ORDINARY, EXTRAORDINARY, OR
 OTHERWISE, OR OTHER FUNDS DERIVING FROM SUBSCRIBER PREPAYMENTS OR PREMI-
 UMS RECEIVED FOR THE DOMESTIC INSURER'S  COMMERCIAL  PROGRAMS  THAT  ARE
 PAID,  TRANSFERRED, DISTRIBUTED, OR LOANED TO AN ENTITY IN SUCH DOMESTIC
 INSURER'S HOLDING COMPANY SYSTEM THAT IS DOMICILED IN ANY  OTHER  STATE;

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD03266-01-3
 S. 3122                             2
 
 PROVIDED,  HOWEVER,  THAT  PAYMENTS  FOR  SERVICES  PERFORMED, INCLUDING
 PURSUANT TO REINSURANCE TREATIES OR AGREEMENTS, OR  AGREEMENTS  FOR  THE
 RENDERING  OF  SERVICES  ON  A REGULAR OR SYSTEMATIC BASIS, SHALL NOT BE
 SUBJECT  TO SUCH TAX. SUCH TAX SHALL BE IN ADDITION TO ANY TAX DUE UNDER
 ARTICLE THIRTY-THREE OF THE TAX LAW AND SHALL APPLY ONLY TO  A  PAYMENT,
 TRANSFER, DISTRIBUTION, OR LOAN MADE TO AN ENTITY DOMICILED OUT-OF-STATE
 WITHIN  THE  DOMESTIC  INSURER'S HOLDING COMPANY SYSTEM, AND NOT ALSO TO
 SUBSEQUENT DIVIDENDS OR DISTRIBUTIONS TO SHAREHOLDERS OR  OTHER  PERSONS
 OR  ENTITIES  MADE AFTER THE INITIAL PAYMENT, TRANSFER, DISTRIBUTION, OR
 LOAN THAT IS TAXED IN ACCORDANCE WITH THIS SECTION.
   (C) EACH  DOMESTIC  INSURER  SHALL  REPORT  ALL  PAYMENTS,  TRANSFERS,
 DISTRIBUTIONS  AND  LOANS SUBJECT TO SUBSECTION (B) OF THIS SECTION, AND
 TAXES PAID THEREON,  TO  THE  SUPERINTENDENT  IN  THE  MANNER  AND  FORM
 PRESCRIBED BY THE SUPERINTENDENT.
   (D) ALL TAXES COLLECTED OR RECEIVED UNDER THIS SECTION SHALL BE DEPOS-
 ITED  INTO  THE  NEW  YORK  STATE AGENCY TRUST FUND, DISTRESSED PROVIDER
 ASSISTANCE ACCOUNT.
   § 2. Subsection (a) of section 1109 of the insurance law,  as  amended
 by  section 1 of part A of chapter 78 of the laws of 2014, is amended to
 read as follows:
   (a) An organization complying with the provisions  of  article  forty-
 four  of  the public health law may operate without being licensed under
 this chapter and without being subject to any provisions of  this  chap-
 ter,  except:  (1) to the extent that such organization must comply with
 the provisions of this chapter by virtue of such article,  and  (2)  the
 provisions  of  sections three hundred eight, one thousand three hundred
 one, one thousand three hundred two, one thousand three  hundred  seven,
 one thousand three hundred twenty-two, NINE THOUSAND ONE HUNDRED SIX AND
 NINE  THOUSAND  ONE  HUNDRED  TWELVE,  with regard to health maintenance
 organizations that are domiciled in this state and certified or  operat-
 ing  in  at  least  one other state, two thousand one hundred three, two
 thousand one hundred twelve, two  thousand  one  hundred  fourteen,  two
 thousand  one  hundred  fifteen, two thousand one hundred seventeen, two
 thousand one hundred twenty-three, two thousand six hundred eight-a, two
 thousand six hundred twelve, three thousand two  hundred  twenty-four-a,
 four  thousand  three  hundred eight, four thousand three hundred seven-
 teen, four thousand three hundred eighteen, four thousand three  hundred
 twenty,  four  thousand  three  hundred  twenty-one, four thousand three
 hundred twenty-two and four thousand three hundred twenty-three of  this
 chapter.
   § 3. Subsection (d) of section 9106 of the insurance law is amended to
 read as follows:
   (d)  any corporation otherwise subject to the provisions of this arti-
 cle which as a health maintenance organization  offers  a  comprehensive
 health services plan pursuant to the provisions of article forty-four of
 the public health law to subscribers. Such exemption shall be limited to
 that  income derived from subscriber prepayments to such plan.  NOTWITH-
 STANDING THE FOREGOING, SECTION NINE THOUSAND ONE HUNDRED TWELVE OF THIS
 ARTICLE SHALL APPLY TO ALL DOMESTIC INSURERS WITHIN THE MEANING OF  THAT
 SECTION.
   §  4.  This act shall take effect immediately, except that if this act
 shall have become a law on or after April 1, 2023 this  act  shall  take
 effect  immediately  and  shall be deemed to have been in full force and
 effect on and after April 1, 2023.

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