House File 2739 - Reprinted HOUSE FILE 2739 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HSB 762) (As Amended and Passed by the House March 23, 2026 ) A BILL FOR An Act relating to state finances by modifying the taxes 1 imposed on health maintenance organizations, making 2 transfers from the taxpayer relief fund, making and 3 supplementing appropriations to the department of health and 4 human services, and including effective date, contingent 5 effective date, and retroactive applicability provisions. 6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 7 HF 2739 (2) 91 jm/jh/md

H.F. 2739 DIVISION I 1 HEALTH MAINTENANCE ORGANIZATION TAXATION 2 Section 1. Section 249A.13, subsection 1, Code 2026, is 3 amended to read as follows: 4 1. A Medicaid managed care organization premiums health 5 care tax fund is created in the state treasury under the 6 authority of the department of health and human services. 7 Moneys collected by the director of the department of revenue 8 as taxes on premiums pursuant to section 432.1B 432B.2 shall be 9 deposited in the fund. 10 Sec. 2. Section 432.1, unnumbered paragraph 1, Code 2026, 11 is amended to read as follows: 12 Every insurance company or association of whatever kind or 13 character, not including fraternal beneficiary associations, 14 health maintenance organizations, and nonprofit hospital and 15 medical service corporations, shall, as required by law, pay to 16 the director of the department of revenue, or to a depository 17 designated by the director, as taxes, an amount equal to the 18 following, except that the premium tax applicable to county 19 mutual insurance associations shall be governed by section 20 518.18 : 21 Sec. 3. Section 432.1, subsection 2, unnumbered paragraph 22 1, Code 2026, is amended to read as follows: 23 The “applicable percent” for purposes of subsection 1 of this 24 section , section 432.1B , and section 432.2 is the following: 25 Sec. 4. NEW SECTION . 432B.1 Definitions. 26 As used in this chapter: 27 1. “Commissioner” means the commissioner of insurance. 28 2. “Health maintenance organization” means the same as 29 defined in section 514B.1. “Health maintenance organization” 30 includes a health maintenance organization contracting with 31 the department of health and human services to administer the 32 medical assistance program under chapter 249A. 33 3. a. “Taxable funds” means all of the following: 34 (1) Payments received by the health maintenance 35 -1- HF 2739 (2) 91 jm/jh/md 1/ 9

H.F. 2739 organization for health care services, insurance, indemnity, 1 or other benefits to which an enrollee is entitled through a 2 health maintenance organization. 3 (2) Payments made by the health maintenance organization 4 to providers for health care services, to insurers, or to 5 corporations authorized under chapter 514 for insurance, 6 indemnity, or other authorized service benefits, except 7 a payment made by a health maintenance organization that 8 qualifies both as a payment received under subparagraph (1) and 9 a payment made under this subparagraph, shall be considered 10 taxable funds under subparagraph (1). 11 b. “Taxable funds” does not include payments made to a 12 health maintenance organization by the United States secretary 13 of health and human services under a contract issued under 14 section 1833 or 1876 of the federal Social Security Act, or 15 under section 4015 of the federal Omnibus Budget Reconciliation 16 Act of 1987. 17 Sec. 5. NEW SECTION . 432B.2 Imposition of health 18 care-related tax. 19 1. Commencing with the calendar year beginning January 20 1, 2026, and for subsequent calendar years, each health 21 maintenance organization transacting business in this state 22 shall be subject to a health care-related tax payable to 23 the director of revenue in an amount equal to ninety-five 24 hundredths of one percent of the applicable percentage of 25 taxable funds. 26 2. The amounts received by the director of revenue from the 27 imposition of the tax shall be deposited in the health care tax 28 fund created in section 249A.13. 29 Sec. 6. NEW SECTION . 432B.3 Date tax due —— method of 30 payment —— statute of limitations. 31 1. Except as provided in subsection 2, the tax imposed 32 under this chapter shall be paid on or before March 1 of the 33 year following the calendar year for which the tax is due. The 34 commissioner may suspend or revoke the license of a health 35 -2- HF 2739 (2) 91 jm/jh/md 2/ 9

H.F. 2739 maintenance organization subject to the health care-related tax 1 in this chapter that fails to pay the health care-related tax 2 on or before the due date. 3 2. a. Each health maintenance organization transacting 4 business in this state that is subject to the tax in section 5 432B.2 shall remit on or before June 1, on a prepayment basis, 6 an amount equal to one-half of the product of the rate in 7 section 432B.2 and the taxable funds in the prior calendar 8 year. 9 b. In addition to the prepayment amount in paragraph “a” , 10 each health maintenance organization subject to the tax in this 11 chapter shall remit on or before August 15, on a prepayment 12 basis, an additional amount equal to one-half of the product of 13 the rate in section 432B.2 and the taxable funds in the prior 14 calendar year. 15 c. (1) The sums prepaid by a health maintenance 16 organization under paragraphs “a” and “b” shall be allowed 17 as credits against the health maintenance organization’s 18 health care-related tax liability for the calendar year during 19 which the payments are made. If a prepayment made under this 20 subsection exceeds the health maintenance organization’s annual 21 health care-related tax liability, the excess shall be allowed 22 as a credit against the health maintenance organization’s 23 subsequent prepayment or tax liabilities under this chapter. 24 The commissioner shall authorize the department of revenue 25 to make a cash refund to a health maintenance organization, 26 in lieu of a credit against subsequent prepayment or tax 27 liabilities under this section, if the health maintenance 28 organization demonstrates the inability to recoup the funds 29 paid via a credit. 30 (2) The commissioner shall adopt rules establishing a 31 health maintenance organization’s eligibility for a cash 32 refund, and the process for the department of revenue to make a 33 cash refund to an eligible health maintenance organization from 34 the Medicaid managed care organization health care tax fund 35 -3- HF 2739 (2) 91 jm/jh/md 3/ 9

H.F. 2739 created in section 249A.13. The commissioner may suspend or 1 revoke the license of a health maintenance organization that 2 fails to make a prepayment on or before the due date under this 3 subsection. 4 3. The commissioner shall determine whether or not the tax 5 remitted is correct. If the tax remitted is not sufficient, 6 the commissioner shall notify the delinquent company of the 7 amount of such delinquency and certify the amount to the 8 department of revenue which shall proceed to collect the 9 delinquency. 10 4. Within five years after the tax return is filed or within 11 five years after the tax return became due, whichever is later, 12 the commissioner shall examine the return and determine the 13 tax. An assessment or a claim for credit must be made within 14 five calendar years after the annual tax filing is made. For 15 a five-year period preceding the current calendar year, a 16 company may apply for a credit, or the commissioner may make 17 an assessment, as appropriate. The period of examination and 18 determination of the correct amount of tax is unlimited in the 19 case of a false or fraudulent return made with the intent to 20 evade tax or in the case of a failure to file a return. 21 Sec. 7. Section 508C.19, Code 2026, is amended to read as 22 follows: 23 508C.19 Credits for assessments paid. 24 1. An insurer may offset an assessment made pursuant to 25 section 508C.9 against its premium tax liability pursuant to 26 chapter 432 or health care-related tax liability pursuant to 27 chapter 432B to the extent of twenty percent of the amount of 28 the assessment for each of the five calendar years following 29 the year in which the assessment was paid. If an insurer 30 ceases doing business, all uncredited assessments may be 31 credited against its premium or health care-related tax 32 liability for the year it ceases doing business. 33 2. Sums acquired by refund from the association which have 34 been written off by contributing insurers and offset against 35 -4- HF 2739 (2) 91 jm/jh/md 4/ 9

H.F. 2739 premium taxes or health care-related taxes as provided in 1 subsection 1 and are not then needed for purposes of this 2 chapter shall be paid by the association to the commissioner. 3 The commissioner shall remit the moneys to the treasurer of 4 state to deposit in the state general fund. 5 Sec. 8. Section 514B.31, Code 2026, is amended by striking 6 the section and inserting in lieu thereof the following: 7 514B.31 Health maintenance organization health care-related 8 taxation. 9 Every health maintenance organization and including health 10 maintenance organizations contracting with the department of 11 health and human services to administer the medical assistance 12 program under chapter 249A shall be subject to taxation under 13 chapter 432B. 14 Sec. 9. Section 514E.1, subsection 3, Code 2026, is amended 15 to read as follows: 16 3. “Carrier” means an insurer providing accident and 17 sickness insurance under chapter 509 , 514 , 514A and includes a 18 health maintenance organization established under chapter 514B 19 if payments received by the health maintenance organization 20 are considered premiums pursuant to section 514B.31 and are 21 taxed under chapter 432 subject to the health care-related 22 tax under chapter 432B . “Carrier” also includes a corporation 23 which becomes a mutual insurer pursuant to section 514.23 and 24 any other person as defined in section 4.1, subsection 20 , who 25 is or may become liable for the tax imposed by chapter 432 or 26 432B . 27 Sec. 10. Section 514E.2, subsection 13, Code 2026, is 28 amended to read as follows: 29 13. An insurer may offset an assessment made pursuant to 30 this chapter against its premium tax liability pursuant to 31 chapter 432 or against its health care-related tax liability 32 pursuant to chapter 432B, as applicable, to the extent of 33 twenty percent of the amount of the assessment for each 34 of the five calendar years following the year in which the 35 -5- HF 2739 (2) 91 jm/jh/md 5/ 9

H.F. 2739 assessment was paid. If an insurer ceases doing business, all 1 uncredited assessments may be credited against its premium or 2 health care-related tax liability for the year it ceases doing 3 business. 4 Sec. 11. REPEAL. Section 432.1B, Code 2026, is repealed. 5 Sec. 12. PREMIUM TAX —— HEALTH MAINTENANCE 6 ORGANIZATION. For purposes of imposing the premium tax 7 under section 432.1, beginning with calendar year 2026, and 8 subsequent calendar years, a health maintenance organization 9 is not subject to the premium tax under section 432.1, if the 10 health maintenance organization is subject to the imposition 11 of the health care-related tax under chapter 432B, if enacted 12 by this division of this Act. 13 Sec. 13. TEMPORARY PROVISIONS FOR THE HEALTH CARE-RELATED 14 TAX AND PREPAYMENTS FOR CALENDAR YEAR 2026. Notwithstanding 15 section 432B.2, subsection 1, if enacted by this division 16 of this Act, each health care maintenance organization 17 transacting business in this state shall be subject to a health 18 care-related tax payable to the director of revenue in an 19 amount equal to three and one-half percent of the applicable 20 percentage of taxable funds as defined in section 432B.1, 21 if enacted by this division of this Act, for the period in 22 calendar year beginning January 1, 2026, and ending September 23 30, 2026. The difference between the amount of taxes collected 24 pursuant to this section and the amount of tax that would be 25 collected by imposing the rate under section 432B.2, subsection 26 1, if enacted by this division of this Act, shall not be 27 subject to prepayment under section 432B.3, subsection 1, if 28 enacted by this division of this Act. 29 Sec. 14. CONTINGENT EFFECTIVE DATE. The following takes 30 effect upon the date the department of health and human 31 services notifies the general assembly and the Code editor of 32 the approval by the federal centers for Medicare and Medicaid 33 services of the United States department of health and human 34 services of the method of taxation upon a health maintenance 35 -6- HF 2739 (2) 91 jm/jh/md 6/ 9

H.F. 2739 organization imposed pursuant to this division of the Act: 1 The section of this division of this Act enacting the 2 temporary provisions for the health care-related tax and 3 prepayments for calendar year 2026. 4 Sec. 15. EFFECTIVE DATE. Unless otherwise provided, this 5 division of this Act, being deemed of immediate importance, 6 takes effect upon enactment. 7 Sec. 16. RETROACTIVE APPLICABILITY. This division of this 8 Act applies retroactively to January 1, 2026, for tax years 9 beginning on or after that date. 10 DIVISION II 11 TAXPAYER RELIEF FUND TRANSFERS —— SUPPLEMENTAL APPROPRIATIONS 12 Sec. 17. Section 8.54, subsection 5, paragraph b, Code 2026, 13 is amended to read as follows: 14 b. (1) For fiscal years in which it is anticipated that 15 moneys will be transferred from the taxpayer relief fund to 16 the general fund of the state in accordance with section 17 8.57E, subsection 2 , paragraph “b” , the original state general 18 fund expenditure limitation amount provided for in subsection 19 3 shall not be readjusted to include the amount of moneys 20 anticipated to be so transferred. This paragraph subparagraph 21 is repealed July 1, 2029 2027 . 22 (2) For the fiscal year beginning July 1, 2027, and each 23 fiscal year thereafter, in which it is anticipated that moneys 24 will be transferred from the taxpayer relief fund to the 25 general fund of the state in accordance with section 8.57E, 26 subsection 2, paragraph “b” , the original state general fund 27 expenditure limitation amount provided for in subsection 3 28 shall be readjusted to include the amount of moneys anticipated 29 to be so transferred. 30 (3) This paragraph is repealed July 1, 2029. 31 Sec. 18. Section 8.57E, subsection 2, paragraph b, Code 32 2026, is amended by adding the following new subparagraph: 33 NEW SUBPARAGRAPH . (02) (a) For the fiscal year beginning 34 July 1, 2027, the transfer pursuant to this paragraph shall not 35 -7- HF 2739 (2) 91 jm/jh/md 7/ 9

H.F. 2739 exceed fifty percent of the difference between the adjusted 1 revenue estimate, as defined in section 8.54, for the fiscal 2 year and the net general fund appropriation for the fiscal 3 year. 4 (b) For the fiscal year beginning July 1, 2028, the transfer 5 pursuant to this paragraph shall not exceed fifty percent 6 of the difference between the adjusted revenue estimate, as 7 defined in section 8.54, for the fiscal year and the net 8 general fund appropriation for the fiscal year. 9 Sec. 19. TAXPAYER RELIEF FUND TRANSFER —— FEDERAL TAX LAW 10 CHANGES. 11 1. On the effective date of this division of this Act, there 12 is transferred from the taxpayer relief fund created in section 13 8.57E to the general fund of the state, the following amount: 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $347,013,889 15 2. The transfer under this section is made in accordance 16 with section 8.57E, subsection 2, paragraph “a”, for state tax 17 relief based on the reduction in state revenue for the fiscal 18 year beginning July 1, 2025, associated with 2025 federal tax 19 law changes pursuant to section 422.3, subsection 5, paragraph 20 “b”, including but not limited to the allowance of income tax 21 deductions for qualified tips, overtime compensation, and 22 qualified passenger vehicle loan interest under the federal 23 Internal Revenue Code, as amended by Pub. L. No. 119-21, 24 commonly referred to as the One Big Beautiful Bill Act. 25 3. Notwithstanding section 8.54, the state general fund 26 expenditure limitation amount calculated for the fiscal year 27 beginning July 1, 2026, shall be readjusted to include one 28 hundred percent of the moneys transferred under this section. 29 Sec. 20. DEPARTMENT OF HEALTH AND HUMAN SERVICES —— 30 SUPPLEMENTAL APPROPRIATION. There is appropriated from the 31 general fund of the state to the department of health and human 32 services for the fiscal year beginning July 1, 2025, and ending 33 June 30, 2026, the following amount, or so much thereof as is 34 necessary, to be used for the purposes designated: 35 -8- HF 2739 (2) 91 jm/jh/md 8/ 9

H.F. 2739 To supplement the appropriation made for medical assistance 1 program reimbursement and associated costs in 2025 Iowa Acts, 2 chapter 169, section 9, unnumbered paragraph 2: 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 89,000,000 4 Notwithstanding section 8.33, moneys appropriated in this 5 section that remain unencumbered or unobligated at the close of 6 the fiscal year shall not revert but shall remain available for 7 expenditure for the purposes designated until the close of the 8 succeeding fiscal year. 9 Sec. 21. EFFECTIVE DATE. This division of this Act, being 10 deemed of immediate importance, takes effect upon enactment. 11 -9- HF 2739 (2) 91 jm/jh/md 9/ 9