LEG REG REVIEW is a periodic newsletter produced by PHILLIPS ASSOCIATES, a professional lobbying and consultant firm located near the State Capitol. It contains news on the legislative and regulatory scene in Pennsylvania that may be of interest to the Insurance and Business Communities. It is a free member benefit for those who are members of the Pennsylvania Association of Health Underwriters (PAHU) or Manufacturers Association of South Central PA (MASCPA). Subscription information may be obtained by contacting PHILLIPS ASSOCIATES at 717/728-1217 FAX 717/728-1164 or e-mail to email@example.com. Please email firstname.lastname@example.org supplying both your name and e-mail address if you wish to be removed from this list.
BUDGET REVENUE BILL SUMMARY
Following are a number of provisions contained within House Bill 1531, a taxation bill passed by the House late October 2, 2009 (Friday) on a 103-98 vote. Democrats except for Reps. Petrarca (Westmoreland) and Pallone (Westmoreland) voted yes. Republicans except for Rep. O’Brien (Phila.) voted no. Democratic leaders called the vote a step forward and showed a willingness to listen to members who were deeply upset over taxing arts community events and small games of chance. The vote appears to show this since previous critics such as Rep. Kotik (Allegheny) and Solobay (Washington) were on board for this vote.
Senate Republicans said that the vote was extremely disappointing and that the House “chose to push legislation which does not have sufficient support to pass in the Senate”. Governor Rendell, in an October 3 press conference, called it a step backwards but said that PA is still “very, very close to having a budget.” In a separate development, on October 2, Republican Appropriations Committee Chairman Mario Civera (Delaware) moved to discharge (release) HB 1943 from the Appropriations Committee as the GOP budget bill seeks a House vote.
- Tax on Managed Care Organizations with Medicaid contracts will pay 59 mills per one dollar in insurance premium in addition to the standard two-percent premium tax. If HHS says no to this arrangement, Department of Public Welfare reserves the right to cancel MCO contracts
- MCARE abatement fund (provider retention account) eliminated i.e. its monies put into General Fund
- Helicopter Parts or repairs now exempt from sales tax
- Business income tax rates for 2009 will be 8.5 x property factor, 8.5 times the payroll factor, 83 x sales factor
- Business income tax rates after 2009 will be 5 x property factor, 5 x payroll factor, and 90 x sales factor
- Net loss deduction for 2009 at 15% taxable income or $3 million; Net loss deduction for 2010 at 20% taxable income or $3 million
- New phase-out date for Capital Stock & Franchise Tax would be 2013
- Cigarette taxes increase to eight cents per cigarette from 6.75 cents; Smokeless tobacco taxed at 30% of purchase price from manufacturer to seller of smokeless tobacco product; manufacturer collects tax
- Natural gas severance tax levied equal to 5% of gross value plus 4.7 cents per 1,000 cubic feet of natural gas (“a unit”). Monies to be allocated as followed: General Fund 60%; 3% weatherization; 15% Environmental Stewardship Fund; 9% to impacted counties and municipalities for road etc. repair, etc.
- R&D tax credits may be sold
- An educational improvement tax credit may be provided to ‘Innovative Education Programs’ which enhance curriculum or academic program of public school or provides pre-K programs. (Article XVII-F)
- Tax amnesty program going back to 6/30/04 on a one-time basis
- Tax on table games if authorized with a licensing fee of $20 million ($7.5 million if already doing slots) plus 34% of daily gross revenue
INSURANCE COMMITTEE UPDATES
- The House Insurance Committee’s October 9 Insurance Fraud hearing was cancelled.
- On October 6, the committee will meet to consider HB 523 (DeLuca-D-Allegheny) establishing a state Landslide Insurance program similar to the mine subsidence insurance program administered by DEP and HB 1049 (Saylor-R-York) establishing dental anesthesia under certain conditions as a mandated benefit for health insurance policies.
MENSCH WINS SENATE RACE
Robert Mensch (R-Montgomery) won a special Senate election to succeed Rob Wonderling on September 29, thus continuing the GOP’s hold on that district. His success opens up the race for Mensch’s House seat (when a special election date is set) as well as a Republican vacancy on the House Insurance Committee.
KEEP THESE DATES OPEN
- The Pittsburgh Association of Health Underwriters holds a meeting on Federal & State Health Care Reform October 13 in Pittsburgh. Details: Marci Popek 412/747-7539 or Kevin Sweeney 412/261-2222
- The National Association of Insurance Women (NAIW) holds its’ PA Council Day October 16-17 in Coraopolis. Details: Cindy Sypien 412/808-3015 or Barbara Farris 412/327-5376
- October 20 is the Tenth Annual Crop Insurance Conference sponsored by the PA Department of Agriculture, Risk Management Agency of USDA, Cooperative Extension Service and others. Details; Karen Powell email@example.com .
FEDERAL COMMITTEE AMENDMENTS DONE
The long list of almost 600 amendments to the Baucus bill has been considered by the Senate Finance Committee and the bill is now in place for committee consideration before its movement to the Senate floor. After committee passage, the big issue to be resolved is whether or not the health overhaul will include a federal public option as a competitor to private sector plans. The Health Education Labor & Pensions (HELP) Committee bill contains it and the Baucus bill does not. Details: www.thomas.gov and reference the Senate Finance Committee to see information on the amended Baucus bill.
FEDERAL FLOOD PROGRAM GETS ONE MONTH MORE
In a last-minute vote, the U.S. Congress voted to extend the National Flood Insurance Program (NFIP) through October 31, 2009 via HR 2918. The program was set to expire September 30, 2009. Waiting to be considered is the Flood Insurance Reform and Modernization Act. Meanwhile, the Government Accountability Office (GAO) issued report GAO-09-455 criticizing the program as not even knowing whether its payments to Write Your Own (WYO) insurance carriers are reasonable. According to the GAO, FEMA paid six of the largest WYO insurers $327.1 million more than their expenses over a three policy year period, translating to what GAO feels is a 16.5 percent overpayment. Details: www.gao.gov
Another bit of flood insurance news: Don’t forget that there are a number of October 1 changes to the Flood Insurance Manual.
MICHELLE’S LAW EFFECTIVE OCTOBER 9
A new Federal law called Michelle’s Law takes effect October 9 affecting group health plans and how they treat dependent children based on student status. Carriers must continue coverage to dependent students who are required to take a medically necessary leave of absence from school or change their enrollment status such as changing from full to part-time student status because of serious illness or injury.