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 is defined to include payments received by HMOs for health care services, while excluding certain federal payments, and sets tax rates at 3.5% for the first three quarters of 2026, decreasing to 0.95% for the last quarter of 2026 and remaining at that rate thereafter. The bill also establishes a prepayment structure for the tax, requiring HMOs to prepay half of the tax by June 1 and the other half by August 15, with retroactive applicability to tax years beginning on or after January 1, 2026.

In addition, the bill modifies the current law regarding transfers from the taxpayer relief fund to the general fund (GF) by removing the prohibition on using anticipated transfers to adjust the GF expenditure limitation for FY 2026-2027. It mandates a transfer of funds from the taxpayer relief fund to the GF to account for revenue reductions due to federal tax law changes for FY 2025-2026 and includes a supplemental appropriation for the medical assistance program from the GF for the same fiscal year. This division of the bill takes effect upon enactment.

Statutes affected:
Introduced: 249A.13, 432.1, 432.2, 508C.9, 514E.1, 514B.31, 432.1B, 8.57E