BILL NUMBER: S8157
SPONSOR: RAMOS
 
TITLE OF BILL:
An act to amend the public health law, the tax law and the state finance
law, in relation to enacting the "NYS health care tax reform act"
 
PURPOSE OR GENERAL IDEA OF BILL:
The purpose of this legislation is to reduce the amount of taxes imposed
on health care and health insurance consumers and to eliminate all such
taxes on public employers. These taxes exceed the amount of annual fran-
chise taxes paid by corporations. In fact, health care and health insur-
ance taxes account for the fourth highest tax burden on New York resi-
dents, exceeded only by the income tax, the general sales tax, and
corporate taxes.
These health care and health insurance taxes are regressive because
these taxes are unrelated to a person's income, wealth, or ability to
pay. In addition, these taxes directly impact hospitalization costs at a
time when consumers are facing some of their greatest health care chal-
lenges, directly increase the cost of health insurance, and are coun-
ter-productive to the public policy objective of making health insurance
as affordable as possible. Estimates are that on average these taxes
increase benefit costs by over 4% annually, a cost of about $400 per
employee and $1000 per family. A reduction in health care and health
insurance costs will result in more people being able to afford health
care and health insurance. The elimination of these taxes as a burden to
most public employers will ease pressure to reduce retiree benefits and
give these employers the ability to maintain current benefits levels for
active employees.
 
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 names the bill the Health Care Tax Reform Act
Section 2 sets forth legislative findings that lowering the cost of
healthcare and health insurance is extremely important in maximizing the
number of New York State residents who can afford high quality health
care insurance; that New York State taxes on health care and health
insurance amount to over $6 Billion a year and have a substantial nega-
tive impact on the affordability of healthcare; and that reducing these
tax burdens would help make health care and health insurance more
affordable.
Section 3 amends section 2807-j(2) of the public health law to end the
surcharge on certain hospital based health services created by the
Health Care Reform Act (HCRA Surcharge) on April 1, 2026. The State may
opt to continue the application of the HCRA taxes in section 3 to its
own health benefits.
Section 4 amends section 2807-s(2)(c)(iv) of the public health law to
end the regional percentage allowance that imposes a flat tax on health
insurance policies for covered lives based on the residence of the
insured as of April 1, 2026.
Sections 5, 6, and 7, impose a 10.2% tax surcharge on insurance premi-
ums, corporate business income, and pass-through entity income. This
"fair share" tax is reduced to 5.4% for employers in these respective
categories who provide health insurance equivalent to at least a Bronze
Level ACA plan. Section six exempts small businesses from the additional
corporate franchise tax surcharge proposed under this bill. Section 6
includes a small business exemption for businesses with fewer than 50
full-time employees. Section 8 imposes a surcharge on LLC annual filing
fees.
Section 9 incorporates references to sections 1510-A, 220, and section
866-A of the tax law into state finance law section 92-dd.
Section 10 provides that the effective date
 
JUSTIFICATION:
The State of New York imposes over $6 Billion in taxes on health care
and health insurance, which significantly increases costs to patients
and consumers. Collectively, these taxes exceed the taxes imposed on
corporations through the annual franchise tax. Only income taxes, the
sales taxes, and corporate taxes exceed the tax burden placed on health
care and health insurance.
In addition to directly affecting the affordability of healthcare and
health insurance, these taxes are extremely regressive. These taxes
punish employers and their employees who provide and benefit from behav-
ior that has been encouraged by public policy. There are huge Federal
subsidies for employer-provided health benefits in the private sector.
Those who do the right thing concerning private health benefits are
punished while those who provide no benefits and pay no HCRA taxes pay
zero. Private employers that provide benefits and bid jobs against
employers that provide no benefits are at a severe disadvantage in
achieving the lowest responsible competitive bid. This bill will address
these inequities by eliminating the HCRA taxes and replacing them with
broad-based revenue streams to support HCRA public goods. Public employ-
ers would be exempt from any payments for the public goods.
 
LEGISLATIVE HISTORY:
New bill
 
FISCAL IMPLICATIONS:
To be determined.
 
EFFECTIVE DATE:
This act shall take effect April 1, 2026

Statutes affected:
S8157: 2807-s public health law, 2807-s(2) public health law, 92-dd state finance law