The following persons are subject to taxation under this subtitle:
a person engaged as principal in the business of writing insurance contracts, surety contracts, guaranty contracts, or annuity contracts;
a managed care organization authorized by Title 15, Subtitle 1 of the Health – General Article;
a for–profit health maintenance organization authorized by Title 19, Subtitle 7 of the Health – General Article;
an attorney in fact for a reciprocal insurer; and
a credit indemnity company.
The following persons are not subject to taxation under this subtitle:
a nonprofit health service plan corporation that meets the requirements established under §§ 14–106 and 14–107 of this article;
a fraternal benefit society;
a surplus lines broker, who is subject to taxation in accordance with Title 3, Subtitle 3 of this article;
an unauthorized insurer, who is subject to taxation in accordance with Title 4, Subtitle 2 of this article;
a nonprofit health maintenance organization authorized by Title 19, Subtitle 7 of the Health – General Article that is exempt from taxation under § 501(c)(3) of the Internal Revenue Code; and
the Maryland Automobile Insurance Fund.
A tax is imposed on all new and renewal gross direct premiums of each person subject to taxation under this subtitle that are:
allocable to the State; and
written during the preceding calendar year.
Premiums to be taxed include:
the consideration for a surety contract, guaranty contract, or annuity contract;
gross receipts received as a result of capitation payments, supplemental payments, and bonus payments, made to a managed care organization for provider services to an individual who is enrolled in a managed care organization;
subscription charges or other amounts paid to a for–profit health maintenance organization on a predetermined periodic rate basis by a person other than a person subject to the tax under this subtitle as compensation for providing health care services to members;
dividends on life insurance policies that have been applied to buy additional insurance or to shorten the period during which a premium is payable;
the part of the gross receipts of a title insurer that is derived from insurance business or guaranty business; and
the amount allocable to travel insurance, excluding any amount received for travel assistance services or cancellation fee waivers, sold to:
an individual primary policyholder who is a resident of the State;
a primary certificate holder who:
is a resident of the State; and
elects coverage under a group travel insurance policy; or
a blanket travel insurance policyholder that:
is a resident of the State or has its principal place of business or the principal place of an affiliate or subsidiary in the State; and
has purchased blanket travel insurance in the State for eligible blanket group members, subject to any apportionment rules that:
apply to the insurer across multiple taxing jurisdictions; or
allow the insurer to allocate premiums on an apportioned basis in a reasonable and equitable manner in those jurisdictions.
Premiums not to be taxed include:
premiums on policies covering weekly disability benefits on which premiums are payable weekly; or
credits allowed on premiums under policies of industrial insurance because of payment being made to the home office or a branch office of the insurer.
Gross direct premiums or parts of gross direct premiums that are derived from or reasonably attributable to insurance business in the State shall be allocated to the State.
By regulation, the Commissioner may require or allow a method of allocating gross direct premiums written by a person subject to taxation under this subtitle that justly and fairly determines the part of the gross direct premiums that is derived from or reasonably attributable to the person’s insurance business in the State.
Funds accepted by a life insurer under a group contract that provides for an accumulation of funds to buy annuities at future dates may be considered as “gross premiums written”:
on receipt of the funds; or
on the actual application of the funds to buy annuities.
Any funds taxed on receipt and any interest later credited to those funds are not subject to taxation on the purchase of annuities.
Any interest credited to funds that are not taxed on receipt also shall be included in “gross premiums written”.
Each life insurer shall elect between alternatives in paragraph (1) of this subsection.
A life insurer may not change an election between alternatives in paragraph (1) of this subsection without the consent of the Commissioner.
If funds that have been taxed as gross premiums are withdrawn before actually applied to buy annuities, the funds are eligible to be included as returned premiums if otherwise eligible under § 6–104(a)(1) of this subtitle.
For purposes of determining the premiums subject to taxation under subsection (b)(6) of this section, a travel insurer shall document the state of residence, which shall be:
for individual policies, the primary policyholder’s state, as specified by the primary policyholder during the purchase of the policy;
for group policies, the primary certificate holder’s state, as specified during the purchase of the coverage; or
for blanket policies, the state of the principal place of business of the primary blanket policyholder, affiliate, or subsidiary, as specified during the purchase of the policy.
This section applies to:
an insurer, a nonprofit health service plan, a health maintenance organization, a dental plan organization, a fraternal benefit organization, and any other person subject to regulation by the State that provides a product that:
was subject to § 9010 of the Affordable Care Act, as in effect on December 1, 2019; and
may be subject to an assessment by the State; and
a managed care organization authorized under Title 15, Subtitle 1 of the Health – General Article.
The purpose of this section is to assist in the stabilization of the individual health insurance market by assessing a health insurance provider fee that is attributable to State health risk for calendar years 2019 through 2028, both inclusive, as provided for under subsection (c) of this section.
In calendar year 2019, in addition to the amounts otherwise due under this subtitle, an entity subject to this section shall be subject to an assessment of 2.75% on all amounts used to calculate the entity’s premium tax liability under § 6–102 of this subtitle or the amount of the entity’s premium tax exemption value for calendar year 2018.
In calendar years 2020 through 2028, both inclusive, in addition to the amounts otherwise due under this subtitle, an entity subject to this section shall be subject to an assessment of 1% on all amounts used to calculate the entity’s premium tax liability under § 6–102 of this subtitle or the amount of the entity’s premium tax exemption value for the immediately preceding calendar year.
The assessments required in paragraphs (1) and (2) of this subsection are for products that:
were subject to § 9010 of the Affordable Care Act, as in effect on December 1, 2019; and
may be subject to an assessment by the State.
The calculation of the assessments required under paragraphs (1) and (2) of this subsection shall be made without regard to:
the threshold limits established in § 9010(b)(2)(A) of the Affordable Care Act; or
the partial exclusion of net premiums provided for in § 9010(b)(2)(B) of the Affordable Care Act.
In each of fiscal years 2021 and 2022, $100,000,000 of the funds collected from the assessment required under this section shall be transferred in accordance with subparagraphs (ii) and (iii) of this paragraph to Medical Care Provider Reimbursements (M00Q01.03) within the Medical Care Programs Administration of the Maryland Department of Health.
If all or a portion of the funds required to be transferred under subparagraph (i) of this paragraph have been received and are held in the Maryland Health Benefit Exchange Fund established under § 31–107 of this article, the Governor shall transfer the available amount in the Fund.
If the amount of funds transferred under subparagraph (ii) of this paragraph is less than the amount required to be transferred under subparagraph (i) of this paragraph, the Insurance Commissioner shall transfer the remaining amount from the funds collected from the assessment required under this section.
At the beginning of each of fiscal years 2023 and 2024, the Governor shall transfer the first $8,000,000 of the funds collected from the assessment required under this section to the Community Health Resources Commission.
Notwithstanding § 2–114 of this article, the remainder of the assessment required under this section after any transfers made under paragraphs (1) and (2) of this subsection shall be distributed by the Commissioner to the Maryland Health Benefit Exchange Fund established under § 31–107 of this article.
The tax rate is:
0% for premiums for annuities; and
2% for all other premiums, including:
gross receipts received as a result of capitation payments made to a managed care organization, supplemental payments, and bonus payments; and
subscription charges or other amounts paid to a for-profit health maintenance organization.
Notwithstanding § 2–114 of this article, beginning July 1, 2017, from the tax imposed on the health insurers under this subtitle, $500,000 shall be distributed annually to the Advance Directive Program Fund created under § 5–626 of the Health – General Article.
Notwithstanding § 2–114 of this article, beginning January 1, 2015, from the tax described in paragraph (2) of this subsection, a portion shall be distributed annually to the Maryland Health Benefit Exchange Fund established under § 31–107 of this article for the sole purpose of funding the operation and administration of the Maryland Health Benefit Exchange.
The operation and administration of the Maryland Health Benefit Exchange may include functions delegated by the Maryland Health Benefit Exchange to a third party under law or by contract.
The distribution under paragraph (1) of this subsection shall be allocated from the tax imposed on a person under § 6–102 of this subtitle on premiums for health insurance.
For purposes of this paragraph, “person” does not include:
a managed care organization authorized by Title 15, Subtitle 1 of the Health – General Article; or
a for–profit health maintenance organization authorized by Title 19, Subtitle 7 of the Health – General Article.
For State fiscal year 2015 and each State fiscal year thereafter, the amount to be distributed under subsection (a) of this section shall be sufficient to fully fund the operation and administration of the Maryland Health Benefit Exchange for the State fiscal year.
Subject to subsection (b) of this section, in computing the tax under this section, the following deductions from gross direct premiums allocable to the State are allowed:
returned premiums, not including surrender values;
dividends that are:
paid or credited to policyholders; or
applied to buy additional insurance or to shorten the period during which premiums are payable; and
returns or refunds made or credited to policyholders because of retrospective ratings or safe driver rewards.
Deductions from gross direct premiums are allowed only to the extent that the deductions are properly allocable to premiums subject to tax.
Subject to paragraph (2) of this subsection, any insurer that has its home office in this State shall be entitled to a credit against the total amount of the taxes payable by the insurer under this subtitle equal to the amount of all retaliatory taxes imposed on the insurer in other states as a result of its payment of the assessment fee required under Title 2, Subtitle 5 of this article.
The aggregate total amount that may be credited to all qualifying insurers under this section may not exceed $1 million in any fiscal year.
If the credit available to insurers under paragraph (2) of this subsection is insufficient to offset the retaliatory taxes attributable to the imposition of the assessment fee under Title 2, Subtitle 5 of this article, the available credit shall be apportioned among those insurers claiming the credit based on the ratio of gross direct written premium allocable to this State of the insurer claiming the credit to the total amount of gross direct written premium allocable to this State written by all insurers claiming the credit.
A person that is subject to taxation under this subtitle may claim a tax credit against the tax imposed for neighborhood and community assistance contributions as provided under § 6-404 of the Housing and Community Development Article.
A person subject to the tax imposed under this subtitle may claim a credit against the tax for a certified rehabilitation as provided under § 5A-303 of the State Finance and Procurement Article.
A stand–alone dental plan carrier or a stand–alone vision plan carrier that is subject to the health insurance provider fee assessment imposed under § 6–102.1 of this subtitle in calendar year 2024 and each calendar year thereafter is exempt from the health care regulatory assessment under § 2–112.2 of this article and the annual assessment fee under § 2–502 of this article for each year in which the health insurance provider fee is paid.
Each person subject to taxation under this subtitle shall make a declaration of its estimated tax if the person’s total tax for the current taxable year reasonably is expected to exceed $1,000.
A person required to make a declaration of estimated tax shall:
file with the Commissioner:
an initial declaration of estimated tax on or before April 15 of the taxable year; and
a quarterly estimated tax report on or before June 15, September 15, and December 15 after filing the initial declaration; and
pay to the Commissioner at least 25% of the tax estimated for the full taxable year with the initial declaration for that year and with each quarterly report for that year.
On or before March 15 of each year, each person subject to taxation under this subtitle shall:
file with the Commissioner:
a report of the new and renewal gross direct premiums less returned premiums written by the person during the preceding calendar year;
a report of the gross receipts received as a result of capitation payments, supplemental payments, and bonus payments made to a managed care organization during the preceding calendar year; and
if the person issues perpetual policies of fire insurance, a report of the average amount of deposits held by the person during the preceding calendar year in connection with perpetual policies of fire insurance issued on property in the State and in force during any part of that year; and
pay to the Commissioner the total amount of taxes imposed by this subtitle, as shown on the face of the report, after crediting the amount of taxes paid with the declaration of estimated tax and each quarterly report filed under § 6-106 of this subtitle.
The reports shall be verified in the manner and contain the information that the Commissioner requires by regulation.
A person that is not otherwise required to file a report with the Commissioner under this section shall file a report and pay the tax due if the person:
claimed a credit for a previous year against the tax imposed under this subtitle for a certified rehabilitation as provided under § 5A-303 of the State Finance and Procurement Article; and
is subject to the recapture of the credit as provided under § 5A-303 of the State Finance and Procurement Article.
From the insurance premium tax revenue, the Administration shall distribute each quarter the amount necessary to administer the insurance premium tax laws in the previous quarter to an administrative account.
A tax not paid when a report or declaration is due to be filed is subject to a penalty of 5% and interest at the rate determined under § 13-604(b) of the Tax - General Article from the date that the report or declaration was due.
If an additional amount is found to be due after a report or declaration has been filed, the additional amount is subject to interest at 6% per year from the due date of the report or declaration until payment is made to the Commissioner.
Subject to paragraph (2) of this subsection, if an insurer that is required under § 2-113 of this article to pay a premium tax on or before the due date in immediately available funds fails to do so, the Commissioner shall assess a penalty and interest as provided in subsection (a) of this section on the unpaid tax from the date the tax is due to the date on which the funds from the tax payment become available to the State.
The Commissioner may waive the penalty and interest on late payments under this subsection if the insurer proves that it:
made a good faith effort to comply with the requirements of § 2-113 of this article; and
exercised due diligence to initiate payment correctly and on a timely basis.
This subsection does not affect any other requirement of law for the payment of premium taxes or licensing fees by an insurer.
The Commissioner shall examine and audit each report as soon as practicable after receipt.
If the amount of tax computed by the Commissioner is greater than the amount shown on the report, the Commissioner shall:
assess the excess amount; and
mail, or send by electronic means in accordance with § 2–116 of this article, notice of the assessment to the person that filed the report.
The Commissioner shall make an assessment within 3 years after the date on which the report was due.
The Commissioner may make an assessment at any time if the person failed to file a report or filed a fraudulent report.
If a person required to file a report under this subtitle fails to do so on or before the date the report is due, the Commissioner may:
estimate the tax due by the insurer; and
assess a tax at no more than twice the estimated amount.
The Commissioner shall mail, or send by electronic means in accordance with § 2–116 of this article, notice of the assessment to the person at:
its mailing or e–mail address, if it has a mailing or e–mail address on file with the Commissioner; or
any other address of the person that appears on the records of the Commissioner, if there is no mailing or e–mail address on file with the Commissioner.
If the person does not file the report within 15 days after the notice of assessment is mailed or sent electronically:
the assessment is final; and
the amount of tax due on the assessment, including penalties and interest, shall be collected as other taxes are collected.
A person may appeal to the Maryland Tax Court in accordance with § 13-510 of the Tax - General Article if the person is dissatisfied with:
an assessment under § 6-109 of this subtitle; or
a disallowance by the Commissioner of all or part of a claim for refund.
An appeal under this section must be taken within 60 days after the earlier of delivery or mailing of a notice of:
an assessment under § 6-109 of this subtitle; or
disallowance of a claim for refund under § 13-904 of the Tax - General Article.
If the person subject to taxation under this subtitle dissolves or voluntarily or involuntarily retires from the State, the dissolution or retirement does not defeat the filing of reports and the assessment and collection of taxes imposed by this subtitle with respect to premiums written or deposits held during that part of the calendar year before the dissolution or retirement.
The person shall file the report required by this subtitle within 30 days after dissolution or retirement.
However, if the person is taken over for liquidation or rehabilitation, the person shall file the report within 6 months after the person is taken over.
Except for a property tax, a county or municipal corporation of the State may not impose a tax on a person subject to taxation under this subtitle.
This section does not exempt shares of stock of a domestic corporation from the property tax and assessment merely because the shares are owned by a person subject to taxation under this subtitle.
A declaration or report that must be filed under this subtitle complies with the filing requirement if the declaration or report is:
mailed and postmarked by the United States Postal Service on or before the filing date;
delivered on or before the filing date to a private delivery service recognized by the Commissioner, if the delivery is evidenced by a receipt; or
sent by electronic means in accordance with § 2–116 of this article.
An insurer may claim a credit against the premium tax for wages paid to qualified employees as provided under Title 6, Subtitle 3 of the Economic Development Article.
An insurer may claim a credit against the premium tax payable under this subtitle for:
wages paid to a qualified employee with a disability; and
child care provided or paid for by the insurer for the children of a qualified employee with a disability as provided under § 21–309 of the Education Article; or
transportation provided or paid for by the insurer for a qualified employee with a disability as provided under § 21–309 of the Education Article.
An insurer may claim a State tax credit against the premium tax payable under this subtitle as provided under § 9-230 of the Tax - Property Article.
An insurer may claim a credit against the premium tax for employer-provided long-term care insurance as provided under § 10-710 of the Tax - General Article.
An insurer may claim a credit against the premium tax for One Maryland project costs and start–up costs as provided under Title 6, Subtitle 4 of the Economic Development Article.
An insurer may claim a credit against the premium tax for the cost of providing commuter benefits to the business entity’s employees as provided under § 2-901 of the Environment Article.
In this section the following words have the meanings indicated.
“Nonprofit health maintenance organization” means a health maintenance organization authorized by Title 19, Subtitle 7 of the Health – General Article that is exempt from taxation under § 501(c)(3) of the Internal Revenue Code.
“Premium tax exemption value” means the amount of premium taxes that a nonprofit health maintenance organization would have been required to pay if the nonprofit health maintenance organization were not exempt from taxation under § 6–101(b)(5) of this subtitle.
Beginning in fiscal year 2022, a nonprofit health maintenance organization shall transfer funds in an amount equal to the premium tax exemption value of the nonprofit health maintenance organization to the Commissioner to distribute to the General Fund of the State to be used to support the provision of health care to eligible individuals in the Medical Assistance Program.
Notwithstanding the allocation provided under § 19–803(b) of this article, the amount transferred to the Medical Assistance Program Account by a nonprofit health maintenance organization under paragraph (1) of this subsection:
shall be allocated directly to the Medical Assistance Program Account; and
shall be counted towards the total allocation required to the Medical Assistance Program Account under § 19–803(b)(3)(ii)2, (iii)2, (iv)2, (v)2, (vi), and (vii) of this article.
Beginning in fiscal year 2008 and annually thereafter, the amount under paragraph (2) of this subsection that is counted towards the total allocation under § 19–803(b)(3)(iv)2, (v)2, (vi), and (vii) of this article that exceeds the amount needed to increase both fee–for–service health care provider rates paid by the Medical Assistance Program and managed care organization health care provider rates to a level of rates paid to similar providers for the same services under the federal Medicare fee schedule shall be transferred, unless otherwise provided in the State budget, to the Community Health Resources Commission Fund under Title 19, Subtitle 22 of the Health – General Article for the purpose of supporting office–based specialty care, diagnostic testing, and laboratory tests for individuals with family income that does not exceed 200% of the federal poverty level.
A nonprofit health maintenance organization shall transfer to the Medical Assistance Program Account:
on or before August 1, 2005, an amount equal to the premium tax exemption value of the nonprofit health maintenance organization for the last 6 months of fiscal year 2005; and
within 30 days following the end of each calendar quarter, an amount equal to the premium tax exemption value of the nonprofit health maintenance organization for the quarter.
On or before March 1 of each year, a nonprofit health maintenance organization shall file a report with the Commissioner establishing that the nonprofit health maintenance organization transferred funds equal to its premium tax exemption value during the preceding calendar year as required by this section.
An insurer may claim a tax credit for an investment of designated capital as provided under Title 10, Subtitle 4 of the Economic Development Article.