HB 2679 — Concerning funding for individuals who are not eligible for federal insurance subsidies and for foundational public health services.

H-4773.1SUBSTITUTEH-3943.1HOUSE HOUSE BILL 2679State of Washington66th Legislature2020 Regular SessionByHouseSessionByRepresentatives Appropriations (originally sponsored by Representatives Robinson, Macri, Cody, Chopp, Tarleton, Frame, Stonier, Ormsby, Riccelli, Tharinger, Ortiz-Self, Davis, Pollet, and Kloba)READKlobaRead FIRSTfirst TIMEtime 02/11/20.AN01/17/20.Referred to Committee on Appropriations.AN ACT Relating to funding for individuals who are not eligible for federal insurance subsidies and for foundational public health services;

amending RCW 48.14.080;

adding a new chapter to Title 82 RCW;

A new section is added to chapter 48.43 RCW to read as follows:(1) By July 1, 2021, and annually thereafter, nonprofit health carriers must submit to the commissioner the amount of the carrier's surplus.(2)(a) By October 1, 2021, and annually thereafter, the commissioner must determine whether a nonprofit health carrier's surplus is excessive.(b) The surplus of a nonprofit health carrier must be determined to be excessive if the surplus is greater than sixfour hundred percent of the nonprofit health carrier's RBC requirements, in accordance with the formula set forth in the RBC instructions.(3) Except when a reduction in payment is permitted under subsection (4) of this section, if the commissioner determines the surplus of a nonprofit health carrier to be excessive, within ninety days of the determination the nonprofit health carrier must pay three percent of the excessive surplus to the commissioner's office for deposit into the fund.(4)(a) Within thirty days of a determination by the commissioner that a nonprofit health carrier's surplus is excessive, a nonprofit health carrier may request a hearing by the commissioner to consider a reduction in the required amount of excessive surplus payment to the fund.(b) The commissioner may only reduce a nonprofit health carrier's payment to the fund if the nonprofit health carrier presents clear and compelling evidence to the commissioner that the required amount of excessive surplus payment would render the nonprofit health carrier financially impaired under the laws of this state or any other state in which the nonprofit health carrier is authorized to do business.(c) The hearing must be conducted in accordance with chapter 34.05 RCW.(5) The commissioner may adopt rules to implement this section.(6) The definitions in this subsection apply throughout this section and section 93 of this act unless the context clearly requires otherwise.(a) "Excessive surplus" means the amount of a nonprofit health carrier's surplus above sixfour hundred percent of the nonprofit health carrier's RBC requirements, as determined in subsection (2) of this section.(b) "Fund" means the nonprofit health carrier community benefit fund created in section 93 of this act.(c) "RBC" means risk-based capital.(d) "RBC instructions" has the same meaning as in RCW 48.43.300.(e) "Surplus" means the amount by which a nonprofit health carrier's assets exceed its liabilities.NEW SECTION.  Sec.

As used in this chapter, the following terms have the meanings indicated unless the context clearly requires otherwise.(1) "Covered health carrier" means a for-profit health carrier, as defined in RCW 48.43.005.(2) "Depreciation deduction" means depreciation deductions, allocated to Washington pursuant to section 5 of this act, and taken pursuant to Title 26 U.S.C.

Sec.

167 or 179 of the internal revenue code, as existed on the effective date of this section or such subsequent date as may be provided by the department by rule, consistent with the purposes of this act.(3) "Tax year" means a twelve-month period from January 1st to December 31st.NEW SECTION.  Sec.

4.

(1) A tax is imposed on depreciation expenses claimed by covered health carriers.

The tax is three percent of all depreciation deductions, allocated to Washington pursuant to section 5 of this act, and taken pursuant to Title 26 U.S.C.

Sec.

167 or 179 of the internal revenue code on the covered health carrier's annual federal tax return for the previous tax year.(2) The tax imposed under this section is due by September 1st for the previous tax year.(3) The tax imposed under this section is in addition to any other tax imposed in Titles 48, 82, and 84 RCW.NEW SECTION.  Sec.

5.

For purposes of the tax imposed under this chapter, depreciation deductions are allocated as follows:(1) Depreciation deductions attributable to real property are allocated to this state if the real property is located in this state or a majority of the fair market value of the real property is located in this state.(2) Depreciation deductions from tangible personal property are allocated to this state if the property was located in this state at the time of the deduction.

Depreciation deductions from tangible personal property are also allocated to this state even though the property was not located in this state at the time of the deduction if:(a) The property was located in the state at any time during the taxable year or the immediately preceding taxable year;(b) The taxpayer was a resident at the time of the deduction;

and(c) The taxpayer is not subject to the payment of an income or excise tax legally imposed on the depreciation deduction by another taxing jurisdiction.(3) Depreciation deduction derived from intangible personal property are allocated to this state if the taxpayer was domiciled in this state at the time the deduction occurred.NEW SECTION.  Sec.

6.

(1) A credit is allowed against the tax imposed in section 4 of this act equal to the amount of any legally imposed income or excise tax paid by the taxpayer to another taxing jurisdiction on the depreciated assets within the other taxing jurisdiction to the extent depreciated assets are included in the taxpayer's Washington capital gains.

The amount of credit under this subsection may not exceed the total amount of tax due under this chapter, and there is no carryback or carryforward of any unused credits.(2) As used in this section, "taxing jurisdiction" means a state of the United States other than the state of Washington, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States, or any foreign country or political subdivision of a foreign country.NEW SECTION.  Sec.

7.

All proceeds from this tax must be deposited in the nonprofit health carrier community benefit fund created in section 9 of this act.NEW SECTION.  Sec.

8.

The provisions of chapter 82.32 RCW apply to this chapter.NEW SECTION.  Sec.

9.

Moneys in the account may be spent only after appropriation.(2) All receipts from nonprofit health carrier excessive surplus payments collected by the insurance commissioner pursuant to section 2 of this act and proceeds of the tax imposed pursuant to section 4 of this act and collected by the department of revenue must be deposited in the nonprofit health carrier community benefit fund.(3) Expenditures from the nonprofit health carrier community benefit fund must be used exclusively for:(a) Subsidies for individuals purchasing individual market insurance coverage who are not eligible for federal insurance subsidies;

10.4.

Earnings derived from investing balances of the agricultural permanent fund, the normal school permanent fund, the permanent common school fund, the scientific permanent fund, the state university permanent fund, and the state reclamation revolving account shall be allocated to their respective beneficiary accounts.(b) Any state agency that has independent authority over accounts or funds not statutorily required to be held in the state treasury that deposits funds into a fund or account in the state treasury pursuant to an agreement with the office of the state treasurer shall receive its proportionate share of earnings based upon each account's or fund's average daily balance for the period.(5) In conformance with Article II, section 37 of the state Constitution, no treasury accounts or funds shall be allocated earnings without the specific affirmative directive of this section.Sec.section.NEW SECTION.  Sec.

11.5.

RCW 48.14.080 and 2010 1st sp.s.

c 23 s 520 are each amended to read as follows:(1) As to insurers, other than title insurers and taxpayers under RCW 48.14.0201, the taxes imposed by this title are in lieu of all other taxes, except as otherwise provided in this section.(2) Subsection (1) of this section does not apply with respect to:(a) Taxes on real and tangible personal property;(b) Excise taxes on the sale, purchase, use, or possession of (i) real property;

(ii) tangible personal property;

(iii) extended warranties;

(iv) services, including digital automated services as defined in RCW 82.04.192;

and (v) digital goods and digital codes as those terms are defined in RCW 82.04.192;

((and))(c) The tax imposed in section 4 of this act, regarding covered health carriers;

and(d) The tax imposed in RCW 82.04.260(((9)))(10), regarding public and nonprofit hospitals.(3) For the purposes of this section, the term "taxes" includes taxes imposed by the state or any county, city, town, municipal corporation, quasi-municipal corporation, or other political subdivision.NEW SECTION.  Sec.

12.

Sections 3 through 8 of this act constitute a new chapter in Title 82 RCW.NEW SECTION.  Sec.

13.

The provisions of RCW 82.32.805 and 82.32.808 do not apply to this act.NEW SECTION.  Sec.