STAND. COM. REP. 2041

Honolulu, Hawaii

, 2004

RE: S.B. No. 3072

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred S.B. No. 3072 entitled:

"A BILL FOR AN ACT RELATING TO INSURANCE PREMIUM TAX",

begs leave to report as follows:

The purpose of this measure is to exempt health insurers from the payment of premium taxes on gross premiums received.

The Department of Commerce and Consumer Affairs, Hawaii Transportation Association, Hawaii Medical Association, and Kaiser Permanente testified in support of this measure. The Tax Foundation of Hawaii presented comments.

Health insurers organized under chapter 431, Hawaii Revised Statutes (HRS), are subject to a premium tax rate of 4.265 per cent on gross premiums received, while mutual benefit societies and health maintenance organizations, organized respectively under chapters 432 and 432D, HRS, are exempted from the tax assessment.

This measure establishes a premium tax exemption for health insurers. Your Committee finds that extending the exemption to health insurers will create a more level playing field among health insurance providers and encourage greater competition in the marketplace.

Your Committee has amended this measure to:

(1) Replace references to "prepaid health care plan contracts defined in chapter 393" with references to "health care plan contract";

(2) Define "health care plan contract" within section 431:7-202, HRS, consistent with the definition of "prepaid health care plan" established in section 393-3, HRS;

(3) Provide that the tax exemption applies to all gross premiums received by health insurers after June 30, 2004; and

(4) Reflect preferred drafting style.

As affirmed by the record of votes of the members of your

Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 3072, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 3072, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Commerce, Consumer Protection and Housing,

____________________________

RON MENOR, Chair