This bill revises the taxation framework for health maintenance organizations (HMOs) in Iowa by repealing the existing premium tax under Code chapter 432 and introducing a new health care-related tax under Code chapter 432B. The new tax will apply to HMOs, including those contracted with the Department of Health and Human Services for the medical assistance program, and will be based on "taxable funds," which include payments received for health care services while excluding certain federal payments. The tax rates are set at 3.5% for the first three quarters of 2026 and 0.95% for the last quarter of 2026, continuing at 0.95% in subsequent years. The bill also modifies the tax payment schedule, requiring prepayments in June and August, and establishes a retroactive applicability to January 1, 2026, contingent upon federal approval.

Additionally, the bill outlines provisions for transferring funds from the taxpayer relief fund to the general fund based on state revenue shortfalls, with increasing percentages for fiscal years 2025 through 2027. It appropriates $70.3 million from the general fund to the Department of Health and Human Services for medical assistance program reimbursement for the fiscal year 2025-2026. The bill further amends the transfer percentages for the taxpayer relief fund to the general fund for fiscal years 2024-2025 through 2028-2029, increasing the transfer to 100% of the difference between actual net revenue and general fund appropriation for FY 2025-2026, and to 75% for FY 2026-2027, while ensuring these transfers do not impact the general fund expenditure limitation.

Statutes affected:
Introduced: 249A.13, 432.1, 432.2, 508C.9, 514E.1, 514B.31, 432.1B