SENATE BILL 21

54th legislature - STATE OF NEW MEXICO - first special session, 2020

INTRODUCED BY

Gerald Ortiz y Pino

 

 

 

 

 

AN ACT

RELATING TO HEALTH INSURANCE; INCREASING THE HEALTH INSURANCE PREMIUM SURTAX; TEMPORARILY DISTRIBUTING A PORTION OF THE REVENUE FROM THE INCREASE TO THE SURTAX TO A NEW HEALTH INSURANCE PREMIUM SURTAX FUND FOR THE MEDICAL ASSISTANCE PROGRAM.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     SECTION 1. A new section of the Tax Administration Act is enacted to read:

     "[NEW MATERIAL] DISTRIBUTION--HEALTH INSURANCE PREMIUM SURTAX FUND.--Prior to July 1, 2021, a distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to the health insurance premium surtax fund in an amount equal to seventy-one and forty-three hundredths percent of the net receipts attributable to the health insurance premium surtax for which estimated payments are made pursuant to Section 7-40-7 NMSA 1978 beginning on or after October 15, 2020."

     SECTION 2. Section 7-40-3 NMSA 1978 (being Laws 2018, Chapter 57, Section 3) is amended to read:

     "7-40-3. IMPOSITION AND RATE OF TAX--DENOMINATION OF "PREMIUM TAX" AND "HEALTH INSURANCE PREMIUM SURTAX".--

          A. A tax is imposed at a rate of three and three-thousandths percent of the gross premiums and membership and policy fees received or written by a taxpayer, as reported by March 1 of each year to the department in the appropriate schedule, as determined by the department, of the taxpayer's annual financial statement on insurance or contracts covering risks within the state during the preceding calendar year. The tax shall not be imposed on return premiums, dividends paid or credited to policyholders or contract holders and premiums received for reinsurance on New Mexico risks. The tax imposed pursuant to this section may be referred to as the "premium tax".

          B. For a taxpayer that is an insurer lawfully organized pursuant to the laws of the Republic of Mexico, the premium tax shall apply solely to the taxpayer's gross premium receipts from insurance policies issued by the taxpayer in New Mexico that cover residents of New Mexico or property or risks principally domiciled or located in New Mexico.

          C. With respect to a taxpayer that is a property bondsman, "gross premiums" shall be considered any consideration received as security or surety for a bail bond in connection with a judicial proceeding.

          D. The premium tax provided in Subsection A of this section is imposed on the gross premiums received of a surplus lines broker, less return premiums, on surplus lines insurance where New Mexico is the home state of the insured transacted under the surplus lines broker's license, as reported by the surplus lines broker to the department on forms and in the manner prescribed by the department. For purposes of this subsection, "gross premiums" shall include any additional amount charged the insured, including policy fees, risk purchasing group fees and inspection fees; but "premiums" shall not include any additional amount charged the insured for local, state or federal taxes; regulatory authority fees; or examination fees, if any. For a surplus lines policy issued to an insured whose home state is New Mexico and where only a portion of the risk is located in New Mexico, the entire premium tax shall be paid in accordance with this section.

          E. In addition to the premium tax, a health insurance premium surtax is imposed at a rate of [one] three and one-half percent of the gross health insurance premiums and membership and policy fees received by the taxpayer on hospital and medical expense incurred insurance or contracts; nonprofit health care plan contracts, excluding dental or vision only contracts; and health maintenance organization subscriber contracts covering health risks within this state during the preceding calendar year. The [tax] surtax shall not apply to return health insurance premiums, dividends paid or credited to policyholders or contract holders and health insurance premiums received for reinsurance on New Mexico risks. The surtax imposed pursuant to this section may be referred to as the "health insurance premium surtax"."

     SECTION 3. A new section of the Human Services Department Act is enacted to read:

     "[NEW MATERIAL] HEALTH INSURANCE PREMIUM SURTAX FUND.--The "health insurance premium surtax fund" is created in the state treasury. The fund consists of distributions, appropriations, gifts, grants and donations. Money in the fund at the end of a fiscal year shall revert to the general fund. The department shall administer the fund, and money in the fund is appropriated to the department for the medical assistance program established pursuant to Titles 19 and 21 of the federal Social Security Act. Disbursements from the fund shall be made by warrant of the secretary of finance and administration pursuant to vouchers signed by the secretary of human services or the secretary's authorized representative."

     SECTION 4. APPLICABILITY.--The provisions of Section 2 of this act apply to estimated payments made pursuant to Section 7-40-7 NMSA 1978 beginning on or after October 15, 2020.