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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| HOUSE BILL |
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| INTRODUCED BY REICHLEY, CLYMER, CUTLER, GEIST, GOODMAN, HARHART, KILLION, MILNE, READSHAW, SWANGER AND WATSON, FEBRUARY 14, 2011 |
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| REFERRED TO COMMITTEE ON FINANCE, FEBRUARY 14, 2011 |
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| AN ACT |
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1 | Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An |
2 | act relating to tax reform and State taxation by codifying |
3 | and enumerating certain subjects of taxation and imposing |
4 | taxes thereon; providing procedures for the payment, |
5 | collection, administration and enforcement thereof; providing |
6 | for tax credits in certain cases; conferring powers and |
7 | imposing duties upon the Department of Revenue, certain |
8 | employers, fiduciaries, individuals, persons, corporations |
9 | and other entities; prescribing crimes, offenses and |
10 | penalties," providing for a disease management tax credit. |
11 | The General Assembly of the Commonwealth of Pennsylvania |
12 | hereby enacts as follows: |
13 | Section 1. The act of March 4, 1971 (P.L.6, No.2), known as |
14 | the Tax Reform Code of 1971, is amended by adding an article to |
15 | read: |
16 | ARTICLE XVII-G |
17 | DISEASE MANAGEMENT TAX CREDIT |
18 | Section 1701-G. Scope. |
19 | This article relates to disease management insurance policy |
20 | tax credits. |
21 | Section 1702-G. Definitions. |
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1 | The following words and phrases when used in this article |
2 | shall have the meanings given to them in this section unless the |
3 | context clearly indicates otherwise: |
4 | "Department." The Department of Revenue of the Commonwealth. |
5 | "Disease management insurance policy." A group or individual |
6 | health insurance policy that includes a disease management |
7 | program. |
8 | "Disease management program." A set of interventions |
9 | designed to improve the health of individuals, especially those |
10 | with certain ailments or diseases. A disease management program |
11 | may include: |
12 | (1) Identifying patients and matching the intervention |
13 | with need. |
14 | (2) Support for adherence to evidence-based medical |
15 | practice guidelines, including providing medical treatment |
16 | guidelines to physicians and other providers, and providing |
17 | support services to assist the physician in monitoring the |
18 | patient. |
19 | (3) Services designed to enhance patient management and |
20 | adherence to an individualized treatment plan, including |
21 | patient education, monitoring and reminders, and behavior |
22 | modification programs aimed at encouraging lifestyle changes. |
23 | (4) Routine reporting and feedback loops, including |
24 | communication with patient, physician, health plan and |
25 | ancillary providers, and practice profiling. |
26 | (5) Collection and analysis of process and outcome |
27 | measures. |
28 | "Pass-through entity." Any of the following: |
29 | (1) A partnership, limited partnership, limited |
30 | liability company, business trust or other unincorporated |
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1 | entity that for Federal income tax purposes is taxable as a |
2 | partnership. |
3 | (2) A Pennsylvania S corporation. |
4 | "Primary contractor." A person licensed to conduct business |
5 | in this Commonwealth that develops, implements or monitors |
6 | disease management programs. |
7 | "Qualified tax liability." The liability for taxes imposed |
8 | under Article III, IV or VI. The term includes the liability for |
9 | taxes imposed under Article III on a sole proprietor, partner, |
10 | shareholder, owner or member of a pass-through entity. |
11 | "Secretary." The Secretary of Revenue of the Commonwealth. |
12 | "Service provider." A person licensed to conduct business in |
13 | this Commonwealth that is selected by the primary contractor to |
14 | provide disease management programs. |
15 | "Small business." A taxpayer with fewer than 50 employees. |
16 | "Tax credit." The disease management insurance policy tax |
17 | credit authorized under this article. |
18 | "Taxpayer." An entity subject to tax under Article III, IV |
19 | or VI. The term includes: |
20 | (1) the partner, shareholder, owner or member of a pass- |
21 | through entity that receives a tax credit; or |
22 | (2) a sole proprietor. |
23 | Section 1703-G. Credit for disease management insurance |
24 | policies. |
25 | (a) Application.-- |
26 | (1) A taxpayer who purchases and provides a disease |
27 | management insurance policy to employees in a taxable year |
28 | may apply for a tax credit as provided in this article. By |
29 | September 15, a taxpayer must submit an application to the |
30 | department for premiums paid in the taxable year that ended |
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1 | in the prior calendar year. |
2 | (2) A taxpayer with 50 or more employees who purchases |
3 | and provides a disease management insurance policy to |
4 | employees in a taxable year may apply for a tax credit as |
5 | provided in this article. By September 15, a taxpayer must |
6 | submit an application to the department for premiums paid in |
7 | the taxable year that ended in the prior calendar year. |
8 | (b) Tax credit.--A taxpayer qualified under subsection |
9 | (a)(1) shall receive a tax credit for the taxable year in the |
10 | amount of $500 for each employee of the taxpayer covered by a |
11 | disease management insurance policy. A taxpayer qualified under |
12 | subsection (a)(2) shall receive a tax credit for the taxable |
13 | year in an amount equal to 50% of the cost to the taxpayer for |
14 | providing health care coverage for employees, contingent on |
15 | proof the purchased coverage utilizes disease management |
16 | protocols. |
17 | (c) Notification of credit.--By December 15 of the calendar |
18 | year following the close of the taxable year, the department |
19 | shall notify the taxpayer of the amount of the taxpayer's tax |
20 | credit approved by the department. |
21 | Section 1704-G. Certification requirement. |
22 | (a) Application.--In order to qualify for the tax credit, a |
23 | taxpayer, in conjunction with the Department of Labor and |
24 | Industry and the Insurance Department, shall make application |
25 | for the certification of the disease management program |
26 | purchased as part of the disease management insurance policy. |
27 | The Insurance Department shall develop the certification |
28 | criteria. |
29 | (b) Reapplying.--In the subsequent tax year, a taxpayer |
30 | reapplying for the tax credit must provide verification to the |
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1 | Department of Labor and Industry and the Insurance Department |
2 | that the disease management program meets the certification |
3 | requirements and continues to be purchased by the taxpayer. |
4 | Section 1705-G. Carryover, carryback, refund and assignment of |
5 | credit. |
6 | (a) General rule.--If the taxpayer cannot use the entire |
7 | amount of the tax credit for the taxable year in which the tax |
8 | credit is first approved because the amount of the tax credit |
9 | exceeds the tax liability of the taxpayer for the year in which |
10 | the tax credit under section 1703-G is to be applied, the excess |
11 | may be carried over to succeeding taxable years and used as a |
12 | credit against the qualified tax liability of the taxpayer for |
13 | those taxable years. Each time the tax credit is carried over to |
14 | a succeeding taxable year, it shall be reduced by the amount |
15 | that was used as a credit during the immediately preceding |
16 | taxable year. The tax credit may be carried over and applied to |
17 | succeeding taxable years for no more than 15 taxable years |
18 | following the first taxable year for which the taxpayer was |
19 | entitled to claim the credit. |
20 | (b) Application of tax credit.--A tax credit approved by the |
21 | department for premiums incurred in a taxable year shall first |
22 | be applied against the taxpayer's qualified tax liability for |
23 | the current taxable year as of the date on which the credit was |
24 | approved before the tax credit may be applied against any tax |
25 | liability under subsection (a). |
26 | (c) Unused tax credit.--A taxpayer is not entitled to |
27 | assign, carry back or obtain a refund of an unused tax credit. |
28 | Section 1706-G. Time limitations. |
29 | A taxpayer is not entitled to a tax credit for health |
30 | insurance premiums providing for disease management programs |
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1 | incurred in taxable years ending after December 31, 2013. |
2 | Section 1707-G. Limitation on credits. |
3 | (a) Allocation for small businesses.--Forty percent of |
4 | available funds shall be allocated exclusively for small |
5 | businesses. However, if the total amounts allocated to either |
6 | the group of applicants exclusive of small businesses or the |
7 | group of small business applicants is not approved in any fiscal |
8 | year, the unused portion will become available for use by other |
9 | qualifying taxpayers. |
10 | (b) Proration of tax credits.-- |
11 | (1) If the total amount of tax credits applied for by |
12 | all taxpayers, exclusive of small businesses, exceeds the |
13 | amount allocated for those credits, the tax credit to be |
14 | received by each applicant shall be prorated by the |
15 | department among all applicants, exclusive of small |
16 | businesses, who have qualified for the credit. |
17 | (2) If the total amount of tax credits applied for by |
18 | all small businesses exceeds the amount allocated for those |
19 | credits, the tax credit to be received by each small business |
20 | applicant shall be prorated by the department among all small |
21 | business applicants who have qualified for the credit. |
22 | Section 1708-G. Shareholder, owner or member pass-through. |
23 | (a) Pennsylvania S corporations.--If a Pennsylvania S |
24 | corporation does not have an eligible tax liability against |
25 | which the tax credit may be applied, a shareholder of the |
26 | Pennsylvania S corporation is entitled to a tax credit equal to |
27 | the tax credit determined for the Pennsylvania S corporation for |
28 | the taxable year multiplied by the percentage of the |
29 | Pennsylvania S corporation's distributive income to which the |
30 | shareholder is entitled. |
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1 | (b) Pass-through entities.--If a pass-through entity other |
2 | than a Pennsylvania S corporation does not have an eligible tax |
3 | liability against which the tax credit may be applied, an owner |
4 | or member of the pass-through entity is entitled to a tax credit |
5 | equal to the tax credit determined for the pass-through entity |
6 | for the taxable year multiplied by the percentage of the pass- |
7 | through entity's distributive income to which the owner or |
8 | member is entitled. |
9 | (c) Entitlement.--The credit provided under subsection (a) |
10 | or (b) is in addition to any tax credit to which a shareholder, |
11 | owner or member of a pass-through entity is otherwise entitled |
12 | under this article. However, a pass-through entity and a |
13 | shareholder, owner or member of a pass-through entity may not |
14 | claim a credit under this article for the same premium or |
15 | employee. |
16 | Section 1709-G. Accountability. |
17 | (a) Review procedures.--Any taxpayer that receives a tax |
18 | credit under this article shall be subject to a performance |
19 | review by the Department of Labor and Industry, in conjunction |
20 | with the Insurance Department. As appropriate, the performance |
21 | review shall be based upon information submitted to the |
22 | department that includes the following: |
23 | (1) The contractor's or service provider's strategic |
24 | goals and objectives for disease management programs. |
25 | (2) The contractor's or service provider's annual |
26 | performance plan setting forth how these strategic goals and |
27 | objectives are to be achieved and the specific methodology |
28 | for evaluating results, along with any proposed methods for |
29 | improvement. |
30 | (3) The contractor's or service provider's annual |
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1 | performance report setting forth the specific results in |
2 | achieving its strategic goals and objectives for disease |
3 | management, including any changes in the health of |
4 | participants in the disease management program. |
5 | (4) The progress made in achieving expected program |
6 | priorities and goals. |
7 | (5) Any other information deemed necessary by the |
8 | department. |
9 | (b) Penalty.--If a performance review indicates that a |
10 | primary contractor or a service provider failed to comply with |
11 | contract requirements or meet performance goals, taxpayers may |
12 | be subject to a reduction in or ineligibility for future tax |
13 | credit funding under this article. |
14 | Section 1710-G. Report to General Assembly. |
15 | (a) Submission of report.--The secretary shall submit an |
16 | annual report indicating the effectiveness of the credit |
17 | provided by this article no later than March 15 following the |
18 | year in which the credits were approved to the Governor, the |
19 | chairmen and the minority chairmen of the Public Health and |
20 | Welfare Committee and the Appropriations Committee of the Senate |
21 | and the chairmen and minority chairmen of the Health Committee |
22 | and the Appropriations Committee of the House of |
23 | Representatives. |
24 | (b) Contents.--The report shall include the names of all |
25 | taxpayers utilizing the credit as of the date of the report and |
26 | the amount of credits approved and utilized by each taxpayer. |
27 | (c) Public information.--Notwithstanding any law providing |
28 | for the confidentiality of tax records, the information |
29 | contained in the report shall be public information. |
30 | (d) Recommendations.--The report may also include any |
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1 | recommendations for changes in the calculation or administration |
2 | of the credit. |
3 | Section 1711-G. Termination. |
4 | The department shall not approve a tax credit under this |
5 | article for taxable years ending after December 31, 2011. |
6 | Section 1712-G. Regulations. |
7 | The secretary shall promulgate regulations necessary for the |
8 | implementation and administration of this article. |
9 | Section 2. This act shall take effect in 60 days. |
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