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 "taxable funds," which encompass payments received for health care services and payments made to providers, while excluding certain federal payments. The tax rates are established 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 in subsequent years. The bill also outlines due dates for tax payments and prepayments, with specific provisions for the first year of implementation, and retroactively applies to tax years beginning on or after January 1, 2026.

Additionally, the bill includes provisions for transferring funds from the taxpayer relief fund to the state general fund and makes supplemental appropriations to the Department of Health and Human Services for medical assistance program reimbursement. It modifies existing laws regarding state general fund expenditure limitations by removing the prohibition on using anticipated transfers to adjust the general fund expenditure limitation for fiscal year 2026-2027. The bill mandates the transfer of funds from the taxpayer relief fund to the general fund to account for revenue reductions due to changes in federal tax law and includes a supplemental appropriation for the Department of Health and Human Services for FY 2025-2026, with this division taking effect upon enactment.

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