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STATE OF IOWA
KIM REYNOLDS
GOVERNOR
March 25, 2026
The Honorable Paul Pate
Secretary of State of Iowa
State Capitol
Des Moines, Iowa 50319
Dear Mr. Secretary,
I hereby transmit:
House File 2739, an Act relating to state finances by modifying the taxes imposed on
health maintenance organizations, making transfers from the taxpayer relief fund, making
and supplementing appropriations to the department of health and human services, and
including effective date, contingent effective date, and retroactive applicability
provisions.
The above House File is hereby approved on this date.
Sincerely,
Governor of lowa"^
cc: Secretaiy of the Senate
Clerk of the House
STATE CAPITOL DES MOINES, IOWA 50319 515.281.5211 WWW.GOVERNOR.IOWA.GOV
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House File 2739
AN ACT
RELATING TO STATE FINANCES BY MODIFYING THE TAXES IMPOSED
ON HEALTH MAINTENANCE ORGANIZATIONS, MAKING TRANSFERS
FROM THE TAXPAYER RELIEF FUND, MAKING AND SUPPLEMENTING
APPROPRIATIONS TO THE DEPARTMENT OF HEALTH AND HUMAN
SERVICES, AND INCLUDING EFFECTIVE DATE, CONTINGENT EFFECTIVE
DATE, AND RETROACTIVE APPLICABILITY PROVISIONS.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
DIVISION I
HEALTH MAINTENANCE ORGANIZATION TAXATION
Section 1. Section 249A.13, subsection 1, Code 2026, is
amended to read as follows:
1. A Medicaid managed care organization pr e miums health
care tax fund is created in the state treasury under the
authority of the department of health and human services.
Moneys collected by the director of the department of revenue
House File 2739, p. 2
as taxes en- premium s pursuant to section 4 32 . IB 432B. 2 shall be
deposited in the fund.
Sec. 2. Section 432.1, unnumbered paragraph 1, Code 2026,
is amended to read as follows:
Every insurance company or association of whatever kind or
character, not including fraternal beneficiary associations,
health maintenance organizations, and nonprofit hospital and
medical service corporations, shall, as required by law, pay to
the director of the department of revenue, or to a depository
designated by the director, as taxes, an amount equal to the
following, except that the premium tax applicable to county
mutual insurance associations shall be governed by section
518.18:
Sec. 3. Section 432.1, subsection 2, unnumbered paragraph
1, Code 2026, is amended to read as follows:
The "applicable percent" for purposes of subsection 1 of this
section-; — section -4 32. IB, and section 432.2 is the following:
Sec. 4. NEW SECTION . 432B.1 Definitions.
As used in this chapter:
1. "Commissioner" means the commissioner of insurance.
2. "Health maintenance organization" means the same as
defined in section 514B.1. "Health maintenance organization"
includes a health maintenance organization contracting with
the department of health and human services to administer the
medical assistance program under chapter 249A.
3. a. "Taxable funds" means all of the following:
(1) Payments received by the health maintenance
organization for health care services, insurance, indemnity,
or other benefits to which an enrollee is entitled through a
health maintenance organization.
(2) Payments made by the health maintenance organization
to providers for health care services, to insurers, or to
corporations authorized under chapter 514 for insurance,
indemnity, or other authorized service benefits, except
a payment made by a health maintenance organization that
qualifies both as a payment received under subparagraph (1) and
a payment made under this subparagraph, shall be considered
taxable funds under subparagraph (1).
b. "Taxable funds" does not include payments made to a
House File 2739, p. 3
health maintenance organization by the United States secretary
of health and human services under a contract issued under
section 1833 or 1876 of the federal Social Security Act, or
under section 4015 of the federal Omnibus Budget Reconciliation
Act of 1987.
Sec. 5. NEW SECTION . 432B.2 Imposition of health
care-related tax.
1. Commencing with the calendar year beginning January
1, 2026, and for subsequent calendar years, each health
maintenance organization transacting business in this state
shall be subject to a health care-related tax payable to
the director of revenue in an amount equal to ninety-five
hundredths of one percent of the applicable percentage of
taxable funds.
2. The amounts received by the director of revenue from the
imposition of the tax shall be deposited in the health care tax
fund created in section 249A.13.
Sec. 6. NEW SECTION . 432B.3 Date tax due — method of
payment — statute of limitations.
1. Except as provided in subsection 2, the tax imposed
under this chapter shall be paid on or before March 1 of the
year following the calendar year for which the tax is due. The
commissioner may suspend or revoke the license of a health
maintenance organization subject to the health care-related tax
in this chapter that fails to pay the health care-related tax
on or before the due date.
2. a. Each health maintenance organization transacting
business in this state that is subject to the tax in section
432B.2 shall remit on or before June 1, on a prepayment basis,
an amount equal to one-half of the product of the rate in
section 432B.2 and the taxable funds in the prior calendar
year .
b. In addition to the prepayment amount in paragraph "a",
each health maintenance organization subject to the tax in this
chapter shall remit on or before August 15, on a prepayment
basis, an additional amount equal to one-half of the product of
the rate in section 432B.2 and the taxable funds in the prior
calendar year.
c. (1) The sums prepaid by a health maintenance
House File 2739, p. 4
organization under paragraphs "a" and "b" shall be allowed
as credits against the health maintenance organization's
health care-related tax liability for the calendar year during
which the payments are made. If a prepayment made under this
subsection exceeds the health maintenance organization's annual
health care-related tax liability, the excess shall be allowed
as a credit against the health maintenance organization's
subsequent prepayment or tax liabilities under this chapter.
The commissioner shall authorize the department of revenue
to make a cash refund to a health maintenance organization,
in lieu of a credit against subsequent prepayment or tax
liabilities under this section, if the health maintenance
organization demonstrates the inability to recoup the funds
paid via a credit.
(2) The commissioner shall adopt rules establishing a
health maintenance organization's eligibility for a cash
refund, and the process for the department of revenue to make a
cash refund to an eligible health maintenance organization from
the Medicaid managed care organization health care tax fund
created in section 249A.13. The commissioner may suspend or
revoke the license of a health maintenance organization that
fails to make a prepayment on or before the due date under this
subsection .
3. The commissioner shall determine whether or not the tax
remitted is correct. If the tax remitted is not sufficient,
the commissioner shall notify the delinquent company of the
amount of such delinquency and certify the amount to the
department of revenue which shall proceed to collect the
delinquency .
4. Within five years after the tax return is filed or within
five years after the tax return became due, whichever is later,
the commissioner shall examine the return and determine the
tax. An assessment or a claim for credit must be made within
five calendar years after the annual tax filing is made. For
a five-year period preceding the current calendar year, a
company may apply for a credit, or the commissioner may make
an assessment, as appropriate. The period of examination and
determination of the correct amount of tax is unlimited in the
case of a false or fraudulent return made with the intent to
House File 2739, p. 5
evade tax or in the case of a failure to file a return.
Sec. 7 . Section 508C.19, Code 2026, is amended to read as
follows :
508C.19 Credits for assessments paid.
1. An insurer may offset an assessment made pursuant to
section 508C.9 against its premium tax liability pursuant to
chapter 432 or health care-related tax liability pursuant to
chapter 432B to the extent of twenty percent of the amount of
the assessment for each of the five calendar years following
the year in which the assessment was paid. If an insurer
ceases doing business, all uncredited assessments may be
credited against its premium or health care-related tax
liability for the year it ceases doing business.
2. Sums acquired by refund from the association which have
been written off by contributing insurers and offset against
premium taxes or health care-related taxes as provided in
subsection 1 and are not then needed for purposes of this
chapter shall be paid by the association to the commissioner.
The commissioner shall remit the moneys to the treasurer of
state to deposit in the state general fund.
Sec. 8. Section 514B.31, Code 2026, is amended by striking
the section and inserting in lieu thereof the following:
514B.31 Health maintenance organization health care-related
taxation.
Every health maintenance organization and including health
maintenance organizations contracting with the department of
health and human services to administer the medical assistance
program under chapter 249A shall be subject to taxation under
chapter 432B.
Sec. 9. Section 514E.1, subsection 3, Code 2026, is amended
to read as follows:
3. '’'Carrier" means an insurer providing accident and
sickness insurance under chapter 509, 514, 514A and includes a
health maintenance organization established under chapter 514B
if payments received by the health maintenance organization
are consid e r e d pr -e m-i-ums pursuant to section 51 4 B.31 and ar e
tax e d under chapt e r 4 32 subject to the health care-related
tax under chapter 432B . "Carrier" also includes a corporation
which becomes a mutual insurer pursuant to section 514.23 and
House File 2739, p. 6
any other person as defined in section 4.1, subsection 20, who
is or may become liable for the tax imposed by chapter 432 or
432B .
Sec. 10. Section 514E.2, subsection 13, Code 2026, is
amended to read as follows:
13. An insurer may offset an assessment made pursuant to
this chapter against its premium tax liability pursuant to
chapter 432 or against its health care-related tax liability
pursuant to chapter 432B, as applicable, to the extent of
twenty percent of the amount of the assessment for each
of the five calendar years following the year in which the
assessment was paid. If an insurer ceases doing business, all
uncredited assessments may be credited against its premium or
health care-related tax liability for the year it ceases doing
business .
Sec. 11. REPEAL. Section 432. IB, Code 2026, is repealed.
sec. 12. PREMIUM TAX — HEALTH MAINTENANCE
ORGANIZATION. For purposes of imposing the premium tax
under section 432.1, beginning with calendar year 2026, and
subsequent calendar years, a health maintenance organization
is not subject to the premium tax under section 432.1, if the
health maintenance organization is subject to the imposition
of the health care-related tax under chapter 432B, if enacted
by this division of this Act.
Sec. 13. TEMPORARY PROVISIONS FOR THE HEALTH CARE-RELATED
TAX AND PREPAYMENTS FOR CALENDAR YEAR 2026. Notwithstanding
section 432B.2, subsection 1, if enacted by this division
of this Act, each health care maintenance organization
transacting business in this state shall be subject to a health
care-related tax payable to the director of revenue in an
amount equal to three and one-half percent of the applicable
percentage of taxable funds as defined in section 432B.1,
if enacted by this division of this Act, for the period in
calendar year beginning January 1, 2026, and ending September
30, 2026. The difference between the amount of taxes collected
pursuant to this section and the amount of tax that would be
collected by imposing the rate under section 432B.2, subsection
1, if enacted by this division of this Act, shall not be
subject to prepayment under section 432B.3, subsection 1, if
House File 2739, p. 7
enacted by this division of this Act.
Sec. 14. CONTINGENT EFFECTIVE DATE. The following takes
effect upon the date the department of health and human
services notifies the general assembly and the Code editor of
the approval by the federal centers for Medicare and Medicaid
services of the United States department of health and human
services of the method of taxation upon a health maintenance
organization imposed pursuant to this division of the Act:
The section of this division of this Act enacting the
temporary provisions for the health care-related tax and
prepayments for calendar year 2026.
Sec. 15. EFFECTIVE DATE. Unless otherwise provided, this
division of this Act, being deemed of immediate importance,
takes effect upon enactment.
Sec. 16. RETROACTIVE APPLICABILITY. This division of this
Act applies retroactively to January 1, 2026, for tax years
beginning on or after that date.
DIVISION II
TAXPAYER RELIEF FUND TRANSFERS - SUPPLEMENTAL APPROPRIATIONS
Sec. 17. Section 8.54, subsection 5, paragraph b, Code 2026,
is amended to read as follows:
b. (1) For fiscal years in which it is anticipated that
moneys will be transferred from the taxpayer relief fund to
the general fund of the state in accordance with section
8.57E, subsection 2, paragraph "b" , the original state general
fund expenditure limitation amount provided for in subsection
3 shall not be readjusted to include the amount of moneys
anticipated to be so transferred. This paragraph subparagraph
is repealed July 1, 2029 2027 .
(2) For the fiscal year beginning July 1, 2027, and each
fiscal year thereafter, in which it is anticipated that moneys
will be transferred from the taxpayer relief fund to the
general fund of the state in accordance with section 8.57E,
subsection 2, paragraph "b", the original state general fund
expenditure limitation amount provided for in subsection 3
shall be readjusted to include the amount of moneys anticipated
to be so transferred.
(3) This paragraph is repealed July 1, 2029.
Sec. 18. Section 8.57E, subsection 2, paragraph b, Code
House File 2739, p. 8
2026, is amended by adding the following new subparagraph:
NEW SUBPARAGRAPH . (02) (a) For the fiscal year beginning
July 1, 2027, the transfer pursuant to this paragraph shall not
exceed fifty percent of the difference between the adjusted
revenue estimate, as defined in section 8.54, for the fiscal
year and the net general fund appropriation for the fiscal
year .
(b) For the fiscal year beginning July 1, 2028, the transfer
pursuant to this paragraph shall not exceed fifty percent
of the difference between the adjusted revenue estimate, as
defined in section 8.54, for the fiscal year and the net
general fund appropriation for the fiscal year.
Sec. 19. TAXPAYER RELIEF FUND TRANSFER - FEDERAL TAX LAW
CHANGES .
1. On the effective date of this division of this Act, there
is transferred from the taxpayer relief fund created in section
8.57E to the general fund of the state, the following amount:
. $347,013,889
2. The transfer under this section is made in accordance
with section 8.57E, subsection 2, paragraph "a", for state tax
relief based on the reduction in state revenue for the fiscal
year beginning July 1, 2025, associated with 2025 federal tax
law changes pursuant to section 422.3, subsection 5, paragraph
"b", including but not limited to the allowance of income tax
deductions for qualified tips, overtime compensation, and
qualified passenger vehicle loan interest under the federal
Internal Revenue Code, as amended by Pub. L. No. 119-21,
commonly referred to as the One Big Beautiful Bill Act.
3. Notwithstanding section 8.54, the state general fund
expenditure limitation amount calculated for the fiscal year
beginning July 1, 2026, shall be readjusted to include one
hundred percent of the moneys transferred under this section.
Sec. 20. DEPARTMENT OF HEALTH AND HUMAN SERVICES -
SUPPLEMENTAL APPROPRIATION. There is appropriated from the
general fund of the state to the department of health and human
services for the fiscal year beginning July 1, 2025, and ending
June 30, 2026, the following amount, or so much thereof as is
necessary, to be used for the purposes designated:
To supplement the appropriation made for medical assistance
House File 2739, p. 9
program reimbursement and associated costs in 2025 Iowa Acts,
chapter 169, section 9, unnumbered paragraph 2:
. $ 89,000,000
Notwithstanding section 8.33, moneys appropriated in this
section that remain unencumbered or unobligated at the close of
the fiscal year shall not revert but shall remain available for
expenditure for the purposes designated until the close of the
succeeding fiscal year.
Sec. 21. EFFECTIVE DATE. This division of this Act, being
deemed of immediate importance, takes effect upon enactment.
President of the Senate
PAT GRASSLEY
Speaker of the House
I hereby certify that this bill originated in the House and
is known as House File 2739, Ninety-first General Assembly.
'GHAN NELSON