HB 5459
Relating to a tax on managed care organizations
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- Passed House of Delegates
- Passed Senate
- To Governor
- Became Law
Bill overview
This bill proposes a tax on managed care organizations (MCOs) operating in West Virginia. Initially, the tax would be calculated based on the number of Medicaid and non-Medicaid members enrolled in the MCO’s health plans, with different rates applied to different tiers of membership. Starting July 1, 2026, the tax will shift to a percentage of the MCO’s gross premiums written in the state, subject to federal approval. The bill also defines key terms related to managed care and establishes a timeline for implementation and federal approval.
Key provisions
- A tiered tax rate based on Medicaid member months within specific tiers (I, II, III) and non-Medicaid member months within other tiers (IV, V) will initially apply.
- Starting July 1, 2026, the tax will be a 2.5% assessment of gross premiums written by certified HMOs in West Virginia.
- The tax rate will be adjusted annually based on the average West Virginia Medicaid Managed Care capitation rate change from the two preceding fiscal years.
- The bill defines key terms such as ‘managed care organization,’ ‘managed care plan,’ and ‘taxable health plan.’
- The tax is contingent on federal approval of Medicaid rates and determination that the tax is a permissible health care-related tax.
- The tax does not apply to Medicare Advantage plans or certain federal employee health plans.
- The Department must receive written notice from the Centers for Medicare and Medicaid Services before collecting the tax.
- The tax will transition from the tiered member-month method to the gross premium assessment method on July 1, 2026.
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