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EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
*hb1228*
HOUSE BILL 1228
C4, Q7 6lr2199
CF SB 890
By: Delegate Qi
Introduced and read first time: February 11, 2026
Assigned to: Judiciary and Health
A BILL ENTITLED
AN ACT concerning 1
Insurance – Premium Receipts Tax – Exemption for Captive Insurance 2
Procured by Nonprofit Hospitals and Health Care Systems 3
FOR the purpose of exempting premiums on lawfully procured captive insurance by 4
nonprofit hospitals a nd health care systems located in the State from the State 5
insurance premium receipts tax imposed on unauthorized insurers and persons 6
insured by unauthorized insurers ; prohibiting the Maryland Insurance 7
Administration from charging or collecting a certain tax otherwise payable before 8
the effective date of this Act and certain fees, penalties, or interest accrued for failure 9
to pay a certain tax before the effective date of this Act from certain unauthorized 10
insurers and certain insureds; and generally relating to the State insurance 11
premium receipts tax. 12
BY repealing and reenacting, with amendments, 13
Article – Insurance 14
Section 4–209 and 4–211 15
Annotated Code of Maryland 16
(2017 Replacement Volume and 2025 Supplement) 17
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 18
That the Laws of Maryland read as follows: 19
Article – Insurance 20
4–209. 21
(a) This section does not apply to: 22
(1) premiums on lawfully procured surplus lines insurance; 23
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(2) premiums on independently procured insuranc e on which a tax has 1
been paid under § 4–211 of this subtitle; [or] 2
(3) PREMIUMS ON LAWFULLY PROCURED CAPTIVE INSURANCE BY: 3
(I) A NONPROFIT HEALTH C ARE SYSTEM LOCATED IN THE 4
STATE, INCLUDING PREMIUMS P AID BY THE SYSTEM ’S PARENT ENTITY , ANY 5
SUBSIDIARY ENTITY, OR ANY CONSTITUENT HEALTH CARE PROVIDER; OR 6
(II) A NONPROFIT HOSPITAL LOCATED IN THE STATE; OR 7
(4) wet marine and transportation insurance. 8
(b) (1) If an unauthorized insurer effects, continues, or renews insurance on a 9
subject resident, located, or to be performed in the State, the unauthorized insurer shall 10
pay to the Commissioner, before March 1 of the next calendar year, a premium receipts tax 11
of 3% of gross premiums charged for the insurance. 12
(2) For policies effective before July 21, 2011: 13
(i) if the policy covers property, risks, or exposures located or to be 14
performed entirely in the State, the premium receipts tax shall be computed on the entire 15
premium at the rate specified in paragraph (1) of this subsection; and 16
(ii) if the policy covers property, risks, or exposures located or to be 17
performed both in and outside the State, the premium receipts tax shall be computed at the 18
rate specified in paragraph (1) of this subsection only on that portion of the premiu m that 19
is properly allocable to the risks located in the State. 20
(3) For policies effective on or after July 21, 2011, if the State is the 21
insured’s home state, the premium receipts tax shall be computed on the entire premium 22
at the rate specified in paragraph (1) of this subsection. 23
(4) Insurance that an unauthorized insurer effects, continues, or renews on 24
a subject resident, located, or to be performed in the State that is procured through 25
negotiations or an application wholly or partly occurring or made in or from within or 26
outside of the State, or for which premiums wholly or partly are remitted directly or 27
indirectly from in or outside of the State, is deemed to be insurance procured, continued, or 28
renewed in the State. 29
(c) The premium receipts tax under this section is instead of all other State taxes. 30
(d) If an unauthorized insurer defaults on the payment of the tax under this 31
section, the insured shall pay the tax. 32
HOUSE BILL 1228 3
(e) If the tax is not timely paid under subsection (b) of this section, the amount of 1
the tax due shall be increased by a penalty of: 2
(1) 25% of the tax due; and 3
(2) an amount computed at the rate of 1% per month or any part of a month 4
after the date the payment was due to the date the payment is made. 5
4–211. 6
(a) This section does not apply to: 7
(1) PREMIUMS ON LAWFULLY PROCURED CAPTIVE INSURANCE BY: 8
(I) A NONPROFIT HEALTH C ARE SYSTEM LOCATED I N THE 9
STATE, INCLUDING PREMIUMS P AID BY THE SYSTEM ’S PARENT ENTITY , ANY 10
SUBSIDIARY ENTITY, OR ANY CONSTITUENT HEALTH CARE PROVIDER; OR 11
(II) A NONPROFIT HOSPITAL LOCATED IN THE STATE; OR 12
(2) wet marine and transportation insurance. 13
(b) (1) If an insured procures, continues, or renews insurance from an 14
unauthorized insurer that is subject to a report under § 4 –210 of this subtitle, a premium 15
receipts tax of 3% of the gross premiums charged for the insurance is levied on the 16
obligation, chose in action, or right represented by the premium charged for the insurance. 17
(2) If an insurance contract subject to the tax is canceled and rewritten, the 18
additional premium, for purposes of the premium receipts tax, is the premium in excess of 19
the unearned premium of the canceled insurance contract. 20
(c) If the insured fails to withhold from the premium the amount of the tax levied 21
under this section, the insured is liable for the amount of the tax imposed under subsection 22
(b) of this section and shall pay the tax to the Commissioner. 23
(d) If the tax imposed under subsection (b) of this section is not timely paid, the 24
amount of the tax due shall be increased by a penalty of: 25
(1) 25% of the tax due; and 26
(2) an amount computed at the rate of 1% per month or part of a month 27
after the date the payment is due until the date the payment is made. 28
(e) If the tax is not timely paid under this section, on request of the Commissioner, 29
the Attorney General shall proceed in a court of this State or another state or in a federal 30
court or agency to recover the tax. 31
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SECTION 2. AND BE IT FURTHER ENACTED, That the Maryland Insurance 1
Administration may not charge or collect the premium receipts tax under § 4 –209 or § 2
4–211 of the Insurance Article otherwise payable before the effective date of this Act or a 3
fee, penalty, or interest accrued for failure to pay th at tax before the effective date of this 4
Act from an unauthorized insurer exempt from the tax under § 4–209(a)(3) of the Insurance 5
Article, as enacted by Section 1 of this Act, or an insured exempt from th e tax under § 6
4–211(a)(1) of the Insurance Article, as enacted by Section 1 of this Act. 7
SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect July 8
1, 2026. 9