PRINTER'S NO. 1315
No. 251 Session of 2005
INTRODUCED BY REICHLEY, BAKER, DeWEESE, JAMES, BALDWIN, BOYD, CALTAGIRONE, CAPPELLI, DALLY, GOOD, GOODMAN, GRUCELA, HERMAN, HESS, HUTCHINSON, W. KELLER, MACKERETH, MARKOSEK, McCALL, McILHATTAN, NICKOL, PICKETT, READSHAW, RUBLEY, SHANER, E. Z. TAYLOR, THOMAS, TIGUE, TURZAI, WATSON AND FRANKEL, MARCH 29, 2005
REFERRED TO COMMITTEE ON FINANCE, MARCH 29, 2005
AN ACT 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-D 17 DISEASE MANAGEMENT TAX CREDIT 18 Section 1701-D. Scope. 19 This article relates to disease management insurance policy 20 tax credits.
1 Section 1702-D. Definitions. 2 The following words and phrases when used in this article 3 shall have the meanings given to them in this section unless the 4 context clearly indicates otherwise: 5 "Department." The Department of Revenue of the Commonwealth. 6 "Disease management insurance policy." A group or individual 7 health insurance policy that includes a disease management 8 program. 9 "Disease management program." A set of interventions 10 designed to improve the health of individuals, especially those 11 with certain ailments or diseases. A disease management program 12 may include: 13 (1) Identifying patients and matching the intervention 14 with need. 15 (2) Support for adherence to evidence-based medical 16 practice guidelines, including providing medical treatment 17 guidelines to physicians and other providers, and providing 18 support services to assist the physician in monitoring the 19 patient. 20 (3) Services designed to enhance patient management and 21 adherence to an individualized treatment plan, including 22 patient education, monitoring and reminders, and behavior 23 modification programs aimed at encouraging lifestyle changes. 24 (4) Routine reporting and feedback loops, including 25 communication with patient, physician, health plan and 26 ancillary providers, and practice profiling. 27 (5) Collection and analysis of process and outcome 28 measures. 29 "Pass-through entity." Any of the following: 30 (1) A partnership, limited partnership, limited 20050H0251B1315 - 2 -
1 liability company, business trust or other unincorporated 2 entity that for Federal income tax purposes is taxable as a 3 partnership. 4 (2) A Pennsylvania S corporation. 5 "Primary contractor." A person licensed to conduct business 6 in this Commonwealth that develops, implements or monitors 7 disease management programs. 8 "Qualified tax liability." The liability for taxes imposed 9 under Article III (relating to personal income tax), IV 10 (relating to corporate net income tax) or VI (relating to 11 capital stock franchise tax). The term includes the liability 12 for taxes imposed under Article III on a sole proprietor, 13 partner, shareholder, owner or member of a pass-through entity. 14 "Secretary." The Secretary of Revenue of the Commonwealth. 15 "Service provider." A person licensed to conduct business in 16 this Commonwealth that is selected by the primary contractor to 17 provide disease management programs. 18 "Small business." A taxpayer with fewer than 50 employees. 19 "Tax credit." The disease management insurance policy tax 20 credit authorized under this article. 21 "Taxpayer." An entity subject to tax under Article III 22 (relating to personal income tax), IV (relating to corporate net 23 income tax) or VI (relating to capital stock franchise tax). The 24 term includes: 25 (1) the partner, shareholder, owner or member of a pass- 26 through entity that receives a tax credit; or 27 (2) a sole proprietor. 28 Section 1703-D. Credit for disease management insurance 29 policies. 30 (a) Application.--A taxpayer who purchases and provides a 20050H0251B1315 - 3 -
1 disease management insurance policy to employees in a taxable 2 year may apply for a tax credit as provided in this article. By 3 September 15, a taxpayer must submit an application to the 4 department for premiums paid in the taxable year that ended in 5 the prior calendar year. 6 (b) Tax credit.--A taxpayer qualified under subsection (a) 7 shall receive a tax credit for the taxable year in the amount of 8 $200 for each employee of the taxpayer covered by a disease 9 management insurance policy. 10 (c) Notification of credit.--By December 15 of the calendar 11 year following the close of the taxable year, the department 12 shall notify the taxpayer of the amount of the taxpayer's tax 13 credit approved by the department. 14 Section 1704-D. Certification requirement. 15 (a) Application.--In order to qualify for the tax credit, a 16 taxpayer, in conjunction with the Department of Labor and 17 Industry and the Insurance Department, shall make application 18 for the certification of the disease management program 19 purchased as part of the disease management insurance policy. 20 The Insurance Department shall develop the certification 21 criteria. 22 (b) Reapplying.--In the subsequent tax year, a taxpayer 23 reapplying for the tax credit must provide verification to the 24 Department of Labor and Industry and the Insurance Department 25 that the disease management program meets the certification 26 requirements and continues to be purchased by the taxpayer. 27 Section 1705-D. Carryover, carryback, refund and assignment of 28 credit. 29 (a) General rule.--If the taxpayer cannot use the entire 30 amount of the tax credit for the taxable year in which the tax 20050H0251B1315 - 4 -
1 credit is first approved because the amount of the tax credit 2 exceeds the tax liability of the taxpayer for the year in which 3 the tax credit under section 1703-D (relating to credit for 4 disease management insurance policies) is to be applied, the 5 excess may be carried over to succeeding taxable years and used 6 as a credit against the qualified tax liability of the taxpayer 7 for those taxable years. Each time the tax credit is carried 8 over to a succeeding taxable year, it shall be reduced by the 9 amount that was used as a credit during the immediately 10 preceding taxable year. The tax credit may be carried over and 11 applied to succeeding taxable years for no more than 15 taxable 12 years following the first taxable year for which the taxpayer 13 was entitled to claim the credit. 14 (b) Application of tax credit.--A tax credit approved by the 15 department for premiums incurred in a taxable year shall first 16 be applied against the taxpayer's qualified tax liability for 17 the current taxable year as of the date on which the credit was 18 approved before the tax credit may be applied against any tax 19 liability under subsection (a). 20 (c) Unused tax credit.--A taxpayer is not entitled to 21 assign, carry back or obtain a refund of an unused tax credit. 22 Section 1706-D. Time limitations. 23 A taxpayer is not entitled to a tax credit for health 24 insurance premiums providing for disease management programs 25 incurred in taxable years ending after December 31, 2007. 26 Section 1707-D. Limitation on credits. 27 (a) Allocation for small businesses.--Forty percent of 28 available funds shall be allocated exclusively for small 29 businesses. However, if the total amounts allocated to either 30 the group of applicants exclusive of small businesses or the 20050H0251B1315 - 5 -
1 group of small business applicants is not approved in any fiscal 2 year, the unused portion will become available for use by other 3 qualifying taxpayers. 4 (b) Proration of tax credits.-- 5 (1) If the total amount of tax credits applied for by 6 all taxpayers, exclusive of small businesses, exceeds the 7 amount allocated for those credits, the tax credit to be 8 received by each applicant shall be prorated by the 9 department among all applicants, exclusive of small 10 businesses, who have qualified for the credit. 11 (2) If the total amount of tax credits applied for by 12 all small businesses exceeds the amount allocated for those 13 credits, the tax credit to be received by each small business 14 applicant shall be prorated by the department among all small 15 business applicants who have qualified for the credit. 16 Section 1708-D. Shareholder, owner or member pass-through. 17 (a) Pennsylvania S corporations.--If a Pennsylvania S 18 corporation does not have an eligible tax liability against 19 which the tax credit may be applied, a shareholder of the 20 Pennsylvania S corporation is entitled to a tax credit equal to 21 the tax credit determined for the Pennsylvania S corporation for 22 the taxable year multiplied by the percentage of the 23 Pennsylvania S corporation's distributive income to which the 24 shareholder is entitled. 25 (b) Pass-through entities.--If a pass-through entity other 26 than a Pennsylvania S corporation does not have an eligible tax 27 liability against which the tax credit may be applied, an owner 28 or member of the pass-through entity is entitled to a tax credit 29 equal to the tax credit determined for the pass-through entity 30 for the taxable year multiplied by the percentage of the pass- 20050H0251B1315 - 6 -
1 through entity's distributive income to which the owner or 2 member is entitled. 3 (c) Entitlement.--The credit provided under subsection (a) 4 or (b) is in addition to any tax credit to which a shareholder, 5 owner or member of a pass-through entity is otherwise entitled 6 under this article. However, a pass-through entity and a 7 shareholder, owner or member of a pass-through entity may not 8 claim a credit under this article for the same premium or 9 employee. 10 Section 1709-D. Accountability. 11 (a) Review procedures.--Any taxpayer that receives a tax 12 credit under this article shall be subject to a performance 13 review by the Department of Labor and Industry, in conjunction 14 with the Insurance Department. As appropriate, the performance 15 review shall be based upon information submitted to the 16 department that includes the following: 17 (1) The contractor's or service provider's strategic 18 goals and objectives for disease management programs. 19 (2) The contractor's or service provider's annual 20 performance plan setting forth how these strategic goals and 21 objectives are to be achieved and the specific methodology 22 for evaluating results, along with any proposed methods for 23 improvement. 24 (3) The contractor's or service provider's annual 25 performance report setting forth the specific results in 26 achieving its strategic goals and objectives for disease 27 management, including any changes in the health of 28 participants in the disease management program. 29 (4) The progress made in achieving expected program 30 priorities and goals. 20050H0251B1315 - 7 -
1 (5) Any other information deemed necessary by the 2 department. 3 (b) Penalty.--If a performance review indicates that a 4 primary contractor or a service provider failed to comply with 5 contract requirements or meet performance goals, taxpayers may 6 be subject to a reduction in or ineligibility for future tax 7 credit funding under this article. 8 Section 1710-D. Report to General Assembly. 9 (a) Submission of report.--The secretary shall submit an 10 annual report indicating the effectiveness of the credit 11 provided by this article no later than March 15 following the 12 year in which the credits were approved to the Governor, the 13 chairmen and the minority chairmen of the Public Health and 14 Welfare Committee and the Appropriations Committee of the Senate 15 and the chairmen and minority chairmen of the Health and Human 16 Services Committee and the Appropriations Committee of the House 17 of Representatives. 18 (b) Contents.--The report shall include the names of all 19 taxpayers utilizing the credit as of the date of the report and 20 the amount of credits approved and utilized by each taxpayer. 21 (c) Public information.--Notwithstanding any law providing 22 for the confidentiality of tax records, the information 23 contained in the report shall be public information. 24 (d) Recommendations.--The report may also include any 25 recommendations for changes in the calculation or administration 26 of the credit. 27 Section 1711-D. Termination. 28 The department shall not approve a tax credit under this 29 article for taxable years ending after December 31, 2007. 30 Section 1712-D. Regulations. 20050H0251B1315 - 8 -
1 The secretary shall promulgate regulations necessary for the 2 implementation and administration of this article. 3 Section 2. This act shall take effect in 60 days. B17L72JS/20050H0251B1315 - 9 -