Subcommittee Action

HSB 767 and SSB 3181, which create a new sales and use tax exemption related to nuclear electric generation facilities, both passed subcommittees in their respective chambers on Wednesday, March 25. The Senate subcommittee recommended passage with amendment.

HMO Tax Increase

After some brief procedural drama, HF 2739 passed the Senate floor on Tuesday with a vote of 26-19. The Governor signed the bill into law on Thursday. The new law does the following:

• Creates a new health care-related tax on HMOs (0.95% of taxable funds, with special higher rate of 3.5% for Jan 1–Sep 30, 2026, if federal approval is obtained), replacing the previous premium tax rate of 0.925% in 2026 and 0.9% in 2027.
• Defines ‘taxable funds’ for HMOs, including most payments received for health services, but excluding certain federal payments.
• Establishes new procedures for prepayment, credit, and refund of the HMO health care-related tax, with the possibility of license suspension or revocation for noncompliance.
• Amends crediting provisions so assessments paid by insurers may now be offset against the new HMO health care-related tax as well as the traditional premium tax.
• Modifies rules for when and how much money can be transferred from the taxpayer relief fund to the general fund, and adjusts the expenditure limitation accordingly for fiscal years starting July 1, 2027 and July 1, 2028.
• Transfers $347,013,889 from the taxpayer relief fund to the general fund due to federal tax law changes, and readjusts the general fund expenditure limitation for FY2026 accordingly.
• Appropriates $89,000,000 from the general fund to the Department of Health and Human Services for Medicaid reimbursement, with non-reversion of unspent amounts until the end of the following fiscal year.