Insurance premium taxes

AN ACT Relating to temporarily increasing insurance premium taxes 1
on insurers to fund health insurance premium assistance; and amending 2
RCW 48.14.020 and 48.14.0201. 3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:4
Sec. 1. RCW 48.14.020 and 2023 c 388 s 4 are each amended to 5
read as follows: 6
(1)(a) Subject to other provisions of this chapter, each 7
authorized insurer except title insurers and registered eligible 8
captive insurers as defined in RCW 48.201.020 shall on or before the 9
first day of March of each year pay to the state treasurer through 10
the commissioner's office a tax on premiums. Except as provided in 11
subsection (3) of this section, such tax shall be in the amount of 12
((two)) 2.75 percent of all premiums collected during calendar year 13
2026, and in the amount of 2.0 percent of all premiums collected 14
during calendar year 2027 and thereafter , excluding amounts returned 15
to or the amount of reductions in premiums allowed to holders of 16
industrial life policies for payment of premiums directly to an 17
office of the insurer, collected or received by the insurer under RCW 18
48.14.090 during the preceding calendar year other than ocean marine 19
and foreign trade insurances, after deducting premiums paid to 20
policyholders as returned premiums, upon risks or property resident, 21
H-3719.1
HOUSE BILL 2745
State of Washington 69th Legislature 2026 Regular Session
By Representatives Parshley and Macri
Read first time 02/28/26. Referred to Committee on Finance.
p. 1 HB 2745
situated, or to be performed in this state. For tax purposes, the 1
reporting of premiums shall be on a written basis or on a paid-for 2
basis consistent with the basis required by the annual statement. For 3
the purposes of this section the consideration received by an insurer 4
for the granting of an annuity shall not be deemed to be a premium.5
(b) Beginning July 1, 2023, and July 1st of each year thereafter, 6
the state treasurer shall deposit $7,000,000 in moneys collected for 7
premium taxes pursuant to this section into the Washington auto theft 8
prevention authority account created in RCW 46.66.080. Beginning July 9
1, 2023, the amount deposited under this subsection must be adjusted 10
by the most current seasonally adjusted index of the consumer price 11
index for all urban consumers as published by the bureau of labor 12
statistics of the United States department of labor.13
(2)(a) The taxes imposed in this section do not apply to amounts 14
received by any life and disability insurer for health care services 15
included within the definition of practice of dentistry under RCW 16
18.32.020 except amounts received for pediatric oral services that 17
qualify as coverage for the minimum essential coverage requirement 18
under P.L. 111-148 (2010), as amended, and for stand-alone family 19
dental plans as defined in RCW 43.71.080(4)(a), only when offered in 20
the individual market, as defined in RCW 48.43.005, or to a small 21
group, as defined in RCW 48.43.005. 22
(b) ((Beginning)) Except as provided in subsection (7) of this 23
section, beginning January 1, 2014, moneys collected for premiums 24
written on qualified health benefit plans and qualified dental plans 25
offered through the health benefit exchange under chapter 43.71 RCW 26
must be deposited in the health benefit exchange account under RCW 27
43.71.060. 28
(3) In the case of insurers which require the payment by their 29
policyholders at the inception of their policies of the entire 30
premium thereon in the form of premiums or premium deposits which are 31
the same in amount, based on the character of the risks, regardless 32
of the length of term for which such policies are written, such tax 33
shall be in the amount of ((two)) 2.75 percent of the gross amount of 34
such premiums and premium deposits collected during calendar year 35
2026, and in the amount of 2.0 percent of the gross amount of such 36
premiums and premium deposits collected during calendar year 2027 and 37
thereafter, upon policies on risks resident, located, or to be 38
performed in this state, in force as of the ((thirty-first)) 31st day 39
of December next preceding, less the unused or unabsorbed portion of 40
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such premiums and premium deposits computed at the average rate 1
thereof actually paid or credited to policyholders or applied in part 2
payment of any renewal premiums or premium deposits on one-year 3
policies expiring during such year. 4
(4) Each authorized insurer shall with respect to all ocean 5
marine and foreign trade insurance contracts written within this 6
state during the preceding calendar year, on or before the first day 7
of March of each year pay to the state treasurer through the 8
commissioner's office a tax of ninety-five one-hundredths of one 9
percent on its gross underwriting profit. Such gross underwriting 10
profit shall be ascertained by deducting from the net premiums (i.e., 11
gross premiums less all return premiums and premiums for reinsurance) 12
on such ocean marine and foreign trade insurance contracts the net 13
losses paid (i.e., gross losses paid less salvage and recoveries on 14
reinsurance ceded) during such calendar year under such contracts. In 15
the case of insurers issuing participating contracts, such gross 16
underwriting profit shall not include, for computation of the tax 17
prescribed by this subsection, the amounts refunded, or paid as 18
participation dividends, by such insurers to the holders of such 19
contracts. 20
(5) The state does hereby preempt the field of imposing excise or 21
privilege taxes upon insurers or their appointed insurance producers, 22
other than title insurers, and no county, city, town or other 23
municipal subdivision shall have the right to impose any such taxes 24
upon such insurers or these insurance producers. 25
(6) If an authorized insurer collects or receives any such 26
premiums on account of policies in force in this state which were 27
originally issued by another insurer and which other insurer is not 28
authorized to transact insurance in this state on its own account, 29
such collecting insurer shall be liable for and shall pay the tax on 30
such premiums. 31
(7) The portion of taxes imposed under subsections (1) and (3) of 32
this section that exceed two percent of premiums shall be deposited 33
in the state health care affordability account created in RCW 34
43.71.130 and used to fund the premium assistance and cost-sharing 35
reduction program established in RCW 43.71.110.36
(8) The portion of taxes imposed under subsection (1) or (3) of 37
this section that exceed two percent of premiums must be borne solely 38
by the taxpayer and may not be passed through to enrollees in 39
premiums, rates, plan design, or otherwise, unless the commissioner 40
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determines that to do so would create a significant risk of carrier 1
insolvency or consumer harm. A taxpayer shall demonstrate the 2
taxpayer's compliance with this subsection as directed by the 3
commissioner. The commissioner may adopt rules to implement this 4
subsection. 5
Sec. 2. RCW 48.14.0201 and 2025 c 423 s 103 are each amended to 6
read as follows: 7
(1) As used in this section, "taxpayer" means a health 8
maintenance organization as defined in RCW 48.46.020, a health care 9
service contractor as defined in chapter 48.44 RCW, or a self-funded 10
multiple employer welfare arrangement as defined in RCW 48.125.010.11
(2) ((Each)) (a) Except as provided in (b) of this subsection, 12
each taxpayer must pay a tax on or before the first day of March of 13
each year to the state treasurer through the insurance commissioner's 14
office. The tax must be equal to the total amount of all premiums and 15
prepayments for health care services collected or received by the 16
taxpayer under RCW 48.14.090 during the preceding calendar year 17
multiplied by the rate of two percent. For tax purposes, the 18
reporting of premiums and prepayments must be on a written basis or 19
on a paid-for basis consistent with the basis required by the annual 20
statement. 21
(b) For all premiums and prepayments collected during calendar 22
year 2026, the tax must be equal to the total amount of all premiums 23
and prepayments for health care services collected or received by the 24
taxpayer under RCW 48.14.090 during the preceding calendar year 25
multiplied by the rate of 2.75 percent.26
(3) Taxpayers must prepay their tax obligations under this 27
section. The minimum amount of the prepayments is the percentages of 28
the taxpayer's tax obligation for the preceding calendar year 29
recomputed using the rate in effect for the current year. For the 30
prepayment of taxes due during the first calendar year, the minimum 31
amount of the prepayments is the percentages of the taxpayer's tax 32
obligation that would have been due had the tax been in effect during 33
the previous calendar year. The tax prepayments must be paid to the 34
state treasurer through the commissioner's office by the due dates 35
and in the following amounts: 36
(a) On or before June 15, 45 percent; 37
(b) On or before September 15, 25 percent; 38
(c) On or before December 15, 25 percent. 39
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(4) For good cause demonstrated in writing, the commissioner may 1
approve an amount smaller than the preceding calendar year's tax 2
obligation as recomputed for calculating the health maintenance 3
organization's, health care service contractor's, self-funded 4
multiple employer welfare arrangement's, or certified health plan's 5
prepayment obligations for the current tax year. 6
(5)(a) Except as provided in (b) and (c) of this subsection, 7
moneys collected under this section are deposited in the general 8
fund. 9
(b) Beginning January 1, 2014, moneys collected from taxpayers 10
for premiums written on qualified health benefit plans and qualified 11
dental plans offered through the health benefit exchange under 12
chapter 43.71 RCW must be deposited in the health benefit exchange 13
account under RCW 43.71.060, except as provided in (c) of this 14
subsection.15
(c) The portion of taxes collected under subsection (2)(b) of 16
this section for calendar year 2026 that exceed two percent of 17
premiums and prepayments, must be deposited in the state health care 18
affordability account created in RCW 43.71.130 and used to fund the 19
premium assistance and cost-sharing reduction program established in 20
RCW 43.71.110. 21
(6) The taxes imposed in this section do not apply to:22
(a) Amounts received by any taxpayer from the United States or 23
any instrumentality thereof as prepayments for health care services 24
provided under Title XVIII (medicare) of the federal social security 25
act. 26
(b) Amounts received by any taxpayer from the state of Washington 27
as prepayments for health care services provided under:28
(i) The medical care services program as provided in RCW 29
74.09.035; or 30
(ii) The Washington basic health plan on behalf of subsidized 31
enrollees as provided in chapter 70.47 RCW. 32
(c) Amounts received by any health care service contractor as 33
defined in chapter 48.44 RCW, or any health maintenance organization 34
as defined in chapter 48.46 RCW, as prepayments for health care 35
services included within the definition of practice of dentistry 36
under RCW 18.32.020, except amounts received for pediatric oral 37
services that qualify as coverage for the minimum essential coverage 38
requirement under P.L. 111-148 (2010), as amended, and for stand-39
alone family dental plans as defined in RCW 43.71.080(4)(a), only 40
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when offered in the individual market, as defined in RCW 48.43.005, 1
or to a small group, as defined in RCW 48.43.005. 2
(d) Participant contributions to self-funded multiple employer 3
welfare arrangements that are not taxable in this state.4
(7) Beginning January 1, 2000, the state preempts the field of 5
imposing excise or privilege taxes upon taxpayers and no county, 6
city, town, or other municipal subdivision has the right to impose 7
any such taxes upon such taxpayers. This subsection is limited to 8
premiums and payments for health benefit plans offered by health care 9
service contractors under chapter 48.44 RCW, health maintenance 10
organizations under chapter 48.46 RCW, and self-funded multiple 11
employer welfare arrangements as defined in RCW 48.125.010. The 12
preemption authorized by this subsection must not impair the ability 13
of a county, city, town, or other municipal subdivision to impose 14
excise or privilege taxes upon the health care services directly 15
delivered by the employees of a health maintenance organization under 16
chapter 48.46 RCW. 17
(8)(a) The taxes imposed by this section apply to a self-funded 18
multiple employer welfare arrangement only in the event that they are 19
not preempted by the employee retirement income security act of 1974, 20
as amended, 29 U.S.C. Sec. 1001 et seq. The arrangements and the 21
commissioner must initially request an advisory opinion from the 22
United States department of labor or obtain a declaratory ruling from 23
a federal court on the legality of imposing state premium taxes on 24
these arrangements. Once the legality of the taxes has been 25
determined, the multiple employer welfare arrangement certified by 26
the insurance commissioner must begin payment of these taxes.27
(b) If there has not been a final determination of the legality 28
of these taxes, then beginning on the earlier of (i) the date the 29
fourth multiple employer welfare arrangement has been certified by 30
the insurance commissioner, or (ii) April 1, 2006, the arrangement 31
must deposit the taxes imposed by this section into an interest 32
bearing escrow account maintained by the arrangement. Upon a final 33
determination that the taxes are not preempted by the employee 34
retirement income security act of 1974, as amended, 29 U.S.C. Sec. 35
1001 et seq., all funds in the interest bearing escrow account must 36
be transferred to the state treasurer. 37
(9) The effect of transferring contracts for health care services 38
from one taxpayer to another taxpayer is to transfer the tax 39
prepayment obligation with respect to the contracts.40
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(10) On or before June 1st of each year, the commissioner must 1
notify each taxpayer required to make prepayments in that year of the 2
amount of each prepayment and must provide remittance forms to be 3
used by the taxpayer. However, a taxpayer's responsibility to make 4
prepayments is not affected by failure of the commissioner to send, 5
or the taxpayer to receive, the notice or forms. 6
(11) The portion of taxes imposed under subsection (2)(b) of this 7
section that exceed two percent of premiums and prepayments must be 8
borne solely by the taxpayer and may not be passed through to 9
enrollees in premiums, rates, plan design, or otherwise, unless the 10
commissioner determines that to do so would create a significant risk 11
of carrier insolvency or consumer harm. A taxpayer shall demonstrate 12
the taxpayer's compliance with this subsection as directed by the 13
commissioner. The commissioner may adopt rules to implement this 14
subsection.15
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