ALANNA BENDEL

ASSISTANT RESEARCH ANALYST

 

CHERIE STONE

LEGISLATIVE RESEARCH ANALYST

HEALTH & HUMAN SERVICES COMMITTEE

Telephone: (602) 926-3171

ARIZONA STATE SENATE

RESEARCH STAFF

 

 

TO:                  MEMBERS OF THE SENATE

                        HEALTH & HUMAN SERVICES COMMITTEE

DATE:            February 19, 2020

SUBJECT:      Strike everything amendment to S.B. 1028, relating to tax credit; insulin assistance program


 


Purpose

Establishes the Voluntary Insulin Assistance Program costs premium tax credit (tax credit).

Background

The Department of Insurance (DOI) regulates and monitors insurance companies and professionals operating in Arizona to protect the public and help ensure that these entities follow Arizona and federal laws (Ariz. Const. art. 15 § 5). Beginning July 1, 2020, DOI will be consolidated into the Department of Insurance and Financial Institutions (DIFI) (Laws 2019,
Ch. 252
).

Insurance premium taxes apply to premiums paid for insurance covering liabilities that exist in Arizona. The tax is levied on the net premium income, which is the total amount received from premiums after deducting cancellations, returned premiums, policy dividends, refund reductions, savings coupons and similar amounts paid or credited to Arizona policyholders and not reapplied as premiums for new, additional or extended insurance (A.R.S. § 20-224). Insurance premium taxes also include retaliatory taxes, which are taxes owed by foreign insurers to the extent that the sum of taxes an insurer pays in Arizona is less than what the sum of taxes would be if the same insurance business was transacted in the insurer’s home state (A.R.S. § 20-230).

S.B. 1028 establishes the tax credit which may affect insurance premium tax revenues.

Provisions

1.      Establishes the tax credit for insurers who develop and provide a Voluntary Insulin Assistance Program.

2.      Specifies that the tax credit is allowed against the premium tax liability incurred by an insurer for the amount of claim costs incurred to provide a Voluntary Insulin Assistance Program.

3.      Specifies that the amount of tax credit an insurer may claim for costs incurred to cover participating insureds are the costs the insurer incurred to provide a Voluntary Insulin Assistance Program, excluding any cost sharing paid by the participating insureds.

4.      Stipulates that an insurer who claims the tax credit is not required to pay any additional retaliatory tax as a result of claiming the tax credit.

5.      Directs DIFI, with the cooperation of the Arizona Department of Revenue, to adopt rules and prescribe forms and procedures necessary for the administration of the tax credit.

6.      Defines Voluntary Insulin Assistance Program as a program in which an insurer voluntarily reduces an insured's total cost sharing amount, including any copayment, deductible or coinsurance, for covered insulin prescription drugs to a maximum of $100 per month.

7.      Becomes effective on the general effective date.