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

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Date Published: 08/06/2018 09:00 PM
AB2459:v94#DOCUMENT

Amended  IN  Senate  August 06, 2018
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 Section 100504.1 to the Government Code, and to add and repeal Section 17052.10 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 individual, certified by the board of Covered California, 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. would, for a taxpayer with an allowable credit in excess of tax liability, allow a payment to the taxpayer in excess of that credit amount, upon appropriation by the Legislature, subject to the annual Budget Act or a bill providing for appropriations related to the Budget Act, as provided. 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 100504.1 is added to the Government Code, to read:

100504.1.
 (a) In addition to the other requirements of this title, the board shall certify qualified individuals for purposes of the credit allowed by Section 17052.10 of the Revenue and Taxation Code. The board shall provide the certification to both the qualified individual and the Franchise Tax Board.
(b) The board shall certify the following:
(1) The individual’s name and address.
(2) The individual’s social security number or taxpayer identification number.
(3) Whether the individual is a qualified individual.
(4) The cost of the second lowest bronze plan available to the qualified individual for the calendar year in excess of 8 percent of the qualified individual’s estimated adjusted gross income.
(5) The date of enrollment or renewal of coverage.
(6) The calendar year for which the coverage is obtained.
(c) 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) “Dependent” has the same meaning as in subdivision (b) of Section 1399.845 of the Health and Safety Code.
(3) “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.
(4) “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).
(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 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.
(6) “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.
(d) Until January 1, 2026, any necessary rules and regulations may be adopted by the board as emergency regulations in accordance with the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2). The adoption of emergency regulations pursuant to this section shall be deemed to be an emergency and necessary for the immediate preservation of the public peace, health and safety, or general welfare.

SEC. 2.SEC. 3.

 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)

(2) “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)

(3) “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)

(4) “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 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. received a certification from the board of Covered California pursuant to Section 100504.1 of the Government Code.

(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) (1) 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, subject to paragraph (2), shall, upon appropriation by the Legislature, be refunded to the qualified individual. taxpayer.
(2) Unless otherwise specified in the annual Budget Act or in any bill provided for appropriations related to the Budget Act, the amount paid to the taxpayer pursuant to this subdivision is zero dollars ($0).
(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) (1) The Franchise Tax Board may adopt regulations necessary or appropriate to carry out the purposes of this section, including any regulations to prevent improper claims from being filed or improper payments from being made. Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any standard, criterion, procedure, determination, rule, notice, or guideline established or issued by the Franchise Tax Board pursuant to this section.
(2) The adoption of any regulations pursuant to paragraph (1) may be adopted as emergency regulations in accordance with the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) and shall be deemed an emergency and necessary for the immediate preservation of the public peace, health and safety, or general welfare. Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, these emergency regulations shall not be subject to the review and approval of the Office of Administrative Law. The regulations shall become effective immediately upon filing with the Secretary of State, and shall remain in effect until revised or repealed by the Franchise Tax Board.

(h)

(i) This section shall remain in effect only until December 1, 2026, and as of that date is repealed.

SEC. 3.SEC. 4.

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