In New York State, approximately $700 million in taxes on health insurance was enacted in the budget, including the taxes that were passed as part of the Deficit Reduction Plan (DRP). The DRP was signed into law by Governor Paterson on February 4, 2009. Taxes on New Yorkers voluntarily purchasing private health coverage will increase from $3.5 billion to $4.2 billion, reflecting as much as 10 percent of the cost of coverage in some areas of New York.
HOW DOES THIS AFFECT YOU AS AN EMPLOYER?
The agreement included the following:
- Employer and/or Employee Impact - $240 million increase in the Covered Lives Assessment ($120 million for 2008-09 and $120 million for 2009-10 as part of the DRP). The total Covered Lives Assessment increases from $920 million to $1.160 billion from 2008 through 2010. (S. 249-A/A.162-A; pg. 10)
- Employer and /or Employee Hospital Use Tax - an estimated $126 million increase in the HCRA hospital patient services assessment – essentially a sales tax on health care services performed in hospitals – from 8.95 percent to 9.63 percent on private payors. (S. 58-B/A. 158-B, Part B pg. 34-35)
- Health Insurer Impact - an estimated $230 million increase in the health insurers’ portion of the New York Insurance Code Section 332 assessment. The overall increase in carrier surtaxes will total approximately $400 million through the DRP and enacted budget. (S. 250-A/A. 163-A; pg. 40; S. 55-C/A.155-C pgs. 299-306)
- HMO Insurer Tax - $107 million increase through extending the premium tax on commercial insurers to for-profit HMOs. (S. 57-B/A. 157-B, Part B1 pg. 83)
- Out-of-state Insurer Tax - $5 million increase through extending the Covered Lives Assessment to health insurers licensed outside of New York. (S. 58-B/A. 158-B, Part C pg. 93)
WHAT SHOULD I DO NEXT?
As a result of New York State’s DRP, certain insurance carriers have already begun to pass the state’s tax increase on to group health plans sitused in New York State. We are expecting additional insurance carriers to follow suit. Actual realized percentage increases may vary taking into account several factors including but not limited to group size and regional location. If you have any additional questions regarding the information within this eCommunication, please call Corporate Synergies at 1.866.CSG.1719 or click here to contact us today.
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