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AB-2459 Personal income taxes: credits: health insurance premiums.(2017-2018)

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Date Published: 05/26/2018 04:00 AM
AB2459:v95#DOCUMENT

Amended  IN  Assembly  May 25, 2018
Amended  IN  Assembly  May 16, 2018
Amended  IN  Assembly  April 11, 2018
Amended  IN  Assembly  March 23, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 2459


Introduced by Assembly Member Friedman
(Coauthors: Assembly Members Arambula, Wood, and Chiu)

February 14, 2018


An act to add and repeal Section 17052.10 to of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 2459, as amended, Friedman. Personal income taxes: credits: health insurance premiums.
The Personal Income Tax Law allows various credits against the taxes imposed by that law.
This bill, for each taxable year beginning on or after January 1, 2019, and before January 1, 2026, would allow a credit under the Personal Income Tax Law in an amount equal to the cost of health insurance premiums of the lowest cost bronze plan for the qualified individual or the qualified individual’s dependent that exceeds 8% of the qualified individual’s modified adjusted gross income, as specified. The bill would make the credit operative only for taxable years for which resources are authorized in the annual Budget Act for the Franchise Tax Board to oversee and audit returns associated with the credit. If the allowed credit amount exceeds tax liability, the bill would also allow a payment in excess of that credit amount upon appropriation by the Legislature. The bill would require, on or before January 1, 2024, the Legislative Analyst’s Office to report on the number of qualified individuals who claimed the credit, the average and median credit amounts claimed, and the effectiveness of the credit in reducing health care costs.
This bill would take effect immediately as a tax levy.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 (a) The Legislature finds and declares that Medicare, Medicaid, employer coverage, and the Affordable Care Act provide most Californians with access to health care coverage that meets minimum standards of affordability.
(b) The Legislature further finds and declares that while, under existing state and federal law, most Californians are assured that their health insurance premiums will cost no more than 10 percent of their income, some Californians who buy coverage as individuals may face health insurance premiums that exceed 10 percent of income for coverage that pays on average 60 percent of the cost of care.
(c) It is the intent of the Legislature in enacting this legislation that no California taxpayer who buys coverage as an individual will spend more than 8 percent of his or her income on health insurance premiums. It is further the intent of the Legislature that those with incomes that exceed the threshold for federal advance premium tax credits through Covered California shall be able to claim a credit pursuant to Section 17052.10 of the Revenue and Taxation Code, as added by this bill, on their income tax returns.

SEC. 2.

 Section 17052.10 is added to the Revenue and Taxation Code, to read:

17052.10.
 (a) (1) For each taxable year beginning on or after January 1, 2019, and before January 1, 2026, there shall be allowed to a qualified individual a health insurance premium credit against the “net tax,” as defined by Section 17039, in an amount determined pursuant to paragraph (2).
(2) The credit shall be equal to the cost of health insurance premiums of the lowest cost bronze plan for the qualified individual or the qualified individual’s dependent that exceeds 8 percent of the qualified individual’s modified adjusted gross income.
(3) The credit shall be claimed on a return filed for the taxable year in which the health insurance premium was purchased, regardless of the year in which the health insurance plan is operative.
(4) The credit authorized by this subdivision shall only be operative for taxable years for which resources are authorized in the annual Budget Act for the Franchise Tax Board to oversee and audit returns associated with the credit.
(b) For purposes of this section:
(1) “Bronze plan” has the same meaning as “bronze level,” as defined in Section 1367.008 of the Health and Safety Code.
(2) “Individual market” means an individual market described in either Article 11.8 (commencing with Section 1399.845) of Chapter 2.2 (commencing with Section 1340) of Division 2 of the Health and Safety Code or Chapter 9.9 (commencing with Section 10965) of Part 2 of Division 2 of the Insurance Code.
(3) “Lowest cost bronze plan” means the lowest cost bronze plan available to the qualified individual or the qualified individual’s dependent, given the age and geographic region of the individual covered by the health care coverage.
(4) “Modified adjusted gross income” has the same meaning as in Section 36B(d)(2)(B) of the Internal Revenue Code, relating to modified adjusted gross income.
(5) (A) “Qualified individual” means a person who purchased health care coverage in the individual market for himself or herself or for a dependent, if that coverage is a standardized benefit design approved by Covered California pursuant to subdivision (c) of Section 100504 of the Government Code, whose household income equals or exceeds 400 percent is 400 percent to 600 percent, inclusive, of the federal poverty level, and who is not an applicable taxpayer under Section 36B(c)(1) of the Internal Revenue Code, relating to an applicable taxpayer.
(B) A “qualified individual” does not include an individual who, or whose dependent for which the credit is claimed, is otherwise eligible for minimum essential coverage through employment, Medicare, Medicaid, or other public programs. For purposes of this subparagraph, “minimum essential coverage through employment” means affordable employer coverage of minimum value, as provided in the federal Patient Protection and Affordable Care Act (Public Law 111-148), as amended by the federal Health Care and Education Reconciliation Act of 2010 (Public Law 111-152), and any rules and regulations promulgated thereunder.
(C) “Public programs” has the same meaning as an applicable state health subsidy program in Section 1413(e) of the federal Patient Protection and Affordable Care Act (Public Law 111-148).
(D) “Standardized benefit design” has the same meaning as a standardized product described in subdivision (e) of Section 1366.6 of the Health and Safety Code.
(E) “Dependent” has the same meaning as in subdivision (b) of Section 1399.845 of the Health and Safety Code.
(c) If the amount allowable as a credit under this section exceeds the tax liability computed under this part for the taxable year, the excess shall be credited against other amounts due, if any, and the balance, if any, shall, upon appropriation by the Legislature, be refunded to the qualified individual.
(d) The California Health Benefit Exchange, known as Covered California, pursuant to Title 22 (commencing with Section 100500) of the Government Code, shall be the certifying agency of the provisions of this section.
(e) Nothing in this section shall be construed to prohibit a qualified individual who purchases a health insurance premium other than the lowest cost bronze plan from receiving the credit.
(f) Section 41 does not apply to the credit allowed by this section.
(g) Notwithstanding Section 10231.5 of the Government Code, on or before January 1, 2024, the Legislative Analyst’s Office shall submit a report to the Legislature, in accordance with Section 9795 of the Government Code, on the number of qualified individuals who claimed the credit, the average and median credit amounts claimed, and the effectiveness of the credit in reducing health care costs.
(h) This section shall remain in effect only until December 1, 2026, and as of that date is repealed.

SEC. 3.

 This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.