Replacing Bulletin Numbers 2015-014, 2015-027 and Bulletin 2018-005 – Application of Medical Insuran

# STATE OF NEW MEXICO ## OFFICE OF SUPERINTENDENT OF INSURANCE SUPERINTENDENT OF INSURANCE John G. Franchini - (505) 827-4299  DEPUTY SUPERINTENDENT Robert Doucette - (505) 827-5832 FILED 2018 MAY 6 PM 3:37 NM OFFICE OF SUPERINTENDENT OF INSURANCE Bulletin 2018-005 May 17, 2018 TO: EVERY INSURER, NONPROFIT HEALTH CARE PLAN, HEALTH MAINTENANCE ORGANIZATION, PREPAID DENTAL PLAN OR PREARRANGED FUNERAL PLAN TRANSACTING BUSINESS IN NEW MEXICO RE: APPLICATION OF MEDICAL INSURANCE POOL (MIP) CREDITS TO PREMIUM TAX LIABILITY, SECTION 59A-54-10 NMSA 1978 This Bulletin is issued pursuant to NMSA 1978 Sections 59A-6-5(B) and 59A-54-10 of the New Mexico Insurance Code and 13.1.2 et seq. NMAC. This Bulletin is issued to further clarify the application of New Mexico Medical Insurance Pool (MIP) credits to premium tax liability. This Bulletin is effective immediately and is of prospective effect only. This Bulletin replaces 2018-001. The provisions of Bulletin 2018-001 remain effective through May 16, 2018 only. Bulletins 2015-027 and 2015-014 continue to be rescinded as of January 5, 2018. In May or June of each year, the MIP, which is an entity separate from and not under the control of OSI, is expected to issue “Final Assessment” reports to participating insurance companies (“companies”) for the previous calendar year. Companies participating in the MIP are eligible to apply earned MIP credits on the final premium tax returns as provided for in Section 59A-54-10 NMSA 1978. The Office of Superintendent of Insurance (OSI) will accept the application of MIP credits to final premium tax returns using the following procedures: reports to participating insurance companies (“companies”) for the previous calendar year. Companies participating in the MIP are eligible to apply earned MIP credits on the final premium tax returns as provided for in Section 59A-54-10 NMSA 1978. The Office of Superintendent of Insurance (OSI) will accept the application of MIP credits to final premium tax returns using the following procedures: 1) MIP credits earned in the previous year and recorded on a company’s MIP “Final Assessment” report may only be applied to the final premium tax return due the subsequent April. When determining quarterly estimated payments of the premium tax and the health insurance premium surtax pursuant to Section 59A-6-2(D) NMSA 1978, companies may not claim MIP credits from quarterly “Interim Assessments.” a. Example: MIP credits earned in 2016 would be reflected on a MIP “Final Assessment” report issued in 2017. Then, a company would apply the 2016 MIP credits on its 2017 final premium tax return filed in 2018. 2) If a company’s MIP credit, applied in the manner described in Paragraph 1 of this Bulletin, is greater than its premium tax liability due within its final premium tax return, the premium tax liability will be reduced to zero dollars ($0). Upon request from a company, OSI may issue a refund of erroneous or overpaid premium tax cash payments. OSI may also permit a company to carry forward the erroneous payment or overpayment as a credit against future premium Mailing Address: P.O. Box 1689, Santa Fe, NM 87504-1689 Physical Address: 1120 Paseo de Peralta, Room 428, Santa Fe, NM 87501 Main Phone: (505) 827-4601 | Main Fax: (505) 827-4734 | Toll Free: (855) 4 - ASK - OSI www.osi.state.nm.us Bulletin 2018-005 Page | 2 tax liability within the succeeding three years, pursuant to Section 59A-6-5(B) NMSA 1978. Any refund request must be submitted in writing from a company as per the written instructions provided at www.osi.state.nm.us. seo de Peralta, Room 428, Santa Fe, NM 87501 Main Phone: (505) 827-4601 | Main Fax: (505) 827-4734 | Toll Free: (855) 4 - ASK - OSI www.osi.state.nm.us Bulletin 2018-005 Page | 2 tax liability within the succeeding three years, pursuant to Section 59A-6-5(B) NMSA 1978. Any refund request must be submitted in writing from a company as per the written instructions provided at www.osi.state.nm.us. 3) If a company receives a "Final Assessment" report from MIP after the company's final premium tax return was filed, the final premium tax return must be amended to reflect the application of the MIP credit. If a company receives a corrected "Final Assessment" report from MIP, the corresponding final premium tax return described above must be amended to reflect the correction. A company shall submit an amended premium tax return no later than 30 days after the date of the MIP "Final Assessment" report. Failure to do so could result in the assessment of a penalty in accordance with Section 59A-6-4 NMSA 1978. 4) OSI requires companies to submit a copy of the MIP "Final Assessment" report and copies of all cancelled checks that the company issued to MIP for the applicable year(s) in order to receive premium tax credit for participation in MIP. The canceled check copies must display the front and back of the check(s) and exhibit that MIP has deposited the check(s). 5) A company shall be entitled to use prior year earned MIP credits and MIP credits earned in the company's final tax year in business on its final year premium tax return, if the company demonstrates, to the satisfaction of OSI, that it does not expect to have a premium tax liability in the immediately succeeding tax year due to (1) complete cessation of business or (2) cessation of all lines of business that would generate premium subject to tax rned MIP credits and MIP credits earned in the company's final tax year in business on its final year premium tax return, if the company demonstrates, to the satisfaction of OSI, that it does not expect to have a premium tax liability in the immediately succeeding tax year due to (1) complete cessation of business or (2) cessation of all lines of business that would generate premium subject to tax. A company must demonstrate that it meets the requirements of this paragraph by submitting a verified statement with its final premium tax return or by submitting equivalent documentation deemed satisfactory by the OSI. If a company's MIP credit, applied in the manner described herein, is greater than its premium tax liability due within its final premium tax return, the premium tax liability will be reduced to zero dollars ($0). A company participating in the MIP may meet the requirements of this section even if the company retains a certificate of authority and writes only nontaxable business (such as Medicare Advantage) in New Mexico. 6) In the event that an insurer has cause to have a reasonable belief that it will cease writing insurance in New Mexico, the insurer must alert OSI promptly and in no event later than six months in advance of the cessation of writing insurance. All questions regarding this Amended Bulletin should be directed to Ms. Lea Geckler, Financial Audit Bureau Interim Manager and Financial Examiner Supervisor, at 505-827-6904 or leatrice.geckler@state.nm.us. John G. Franchini John G. Franchini Superintendent of Insurance