Tax on premiums and copayments

  1. Law
  2. Arkansas Code
  3. Public Utilities and Regulated Industries
  4. Insurance
  5. Health Maintenance Organizations
  6. Tax on premiums and copayments

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  1. (a)

    1. (1)

      1. (A)

        1. (i) Each health maintenance organization shall pay a tax on the premiums for coverages provided during the calendar year.

        2. (ii) The tax shall be paid on an annual basis and on a quarterly estimate basis as prescribed by the Insurance Commissioner and reconciled at the time of filing the annual statement.

      2. (B) The taxes due from licensed health maintenance organizations under this section shall be computed on net direct written premiums at the rate described in this section and in §§ 26-57-603 and 26-57-604.

      3. (C)

        1. (i) Further, the premium taxes at the same rate due under this section for health maintenance organization copayments shall only be computed, reported, and paid on the copayments actually received and collected by the health maintenance organization.

        2. (ii) Copayments paid by the patient directly to the doctor, hospital, or other medical providers shall not be subject to taxation.

    2. (2)

      1. (A) The tax shall be paid to the Treasurer of State through the commissioner as a tax imposed for the privilege of transacting business in this state.

      2. (B) The tax shall be computed at the rate of two and one-half percent (2½%), except as provided in subsection (b) of this section.

    3. (3)

      1. (A) The taxes shall be paid on a quarterly estimate basis as prescribed by the commissioner and reconciled annually at the time of filing the annual statement.

      2. (B) In his or her discretion, the commissioner may suspend or revoke the certificate of authority of any health maintenance organization that fails to pay the tax levied under this section on the date due or during any reasonable extension of time therefor which may have been expressly granted by the commissioner for good cause upon the health maintenance organization's request.

  2. (b)

    1. (1) For health maintenance organizations maintaining a home office or a regional office in this state, the tax shall be computed at the rate of two and one-half percent (2½%), except for the credit as provided in § 26-57-604. For purposes of this subsection, any office in this state shall be deemed a health maintenance organization's home or regional office if the office performs substantially the following functions in this state:

      1. (A) Underwriting;

      2. (B) Medical;

      3. (C) Legal;

      4. (D) Issuance of certificates or contracts;

      5. (E) Claims servicing, information, and service;

      6. (F) Advertising and publications;

      7. (G) Public relations; and

      8. (H) Hiring, testing, and training of sales or service forces.

    2. (2) On or before March 1 of each year, any health maintenance organization desiring to qualify an office in this state as a home or regional office shall furnish to the commissioner on forms prescribed by the commissioner proof that it is operating a home or regional office in this state.

  3. (c) The commissioner shall deposit all taxes collected under this section into the State Treasury as general revenues.


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