Kolkhorst Bill Pays Employers Up To $400 To Drop Group Plans

The text as introduced · 1,175 words

89R8839 BEF-F

By: Kolkhorst
S.B. No. 1949

A BILL TO BE ENTITLED

AN ACT

relating to a refund of sales and use taxes or a credit against the

franchise tax for certain small employers who contribute to an

individual coverage health reimbursement arrangement.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subchapter I, Chapter 151, Tax Code, is amended

by adding Section 151.4295 to read as follows:

Sec. 151.4295. TAX REFUND FOR SMALL EMPLOYERS WHO

CONTRIBUTE TO INDIVIDUAL COVERAGE HEALTH REIMBURSEMENT

ARRANGEMENT. (a) In this section:

(1) "Individual coverage health reimbursement

arrangement" means a health reimbursement arrangement or other

account-based group health plan that satisfies the conditions of 45

C.F.R. Section 146.123 to be integrated with individual health

insurance coverage or with Medicare, as applicable.

(2) "Small employer" means a person who employed an

average of at least one employee but not more than 50 employees on

business days during the preceding calendar year. The term includes

a governmental entity subject to Article 3.51-1, 3.51-4, or 3.51-5,

Insurance Code, to Subchapter C, Chapter 1364, Insurance Code, to

Chapter 1578, Insurance Code, or to Chapter 177, Local Government

Code, that otherwise meets the requirements of this subdivision.

For purposes of this definition, a partnership is the employer of a

partner.

(b) Except as provided by Subsection (d), a person is

eligible for a refund in an amount determined under Subsection (c)

of the taxes the person paid under this chapter during a calendar

year if the person:

(1) is a small employer;

(2) adopts an individual coverage health

reimbursement arrangement, in lieu of a traditional employer

provided health insurance plan, for the person's employees for the

calendar year; and

(3) contributes to the individual coverage health

reimbursement arrangement an amount per covered individual for the

calendar year that is at least equal to:

(A) if the person previously contributed to an

employer provided health insurance plan, the annual amount per

covered individual the person contributed to the employer provided

health insurance plan for the last year the person contributed to

the plan; or

(B) if the person did not previously contribute

to an employer provided health insurance plan, the least annual

amount per covered individual the person would be required to

contribute to obtain any available employer provided health

insurance plan for the same calendar year.

(c) The amount of the refund for a calendar year is equal to

the lesser of:

(1) the product of $400 and the average number of

covered individuals for whom the person contributes to an

individual coverage health reimbursement arrangement during the

calendar year; and

(2) the total amount of the taxes the person paid under

this chapter during the calendar year.

(d) A person is not eligible for a refund under this section

for a calendar year if the person will, as a taxable entity as

defined by Section 171.0002 or as a member of a combined group that

is a taxable entity, claim a credit under Subchapter N, Chapter 171,

on a franchise tax report covering any part of that year.

(e) To receive a refund under this section, a person must

apply to the comptroller in the manner prescribed by the

comptroller and include with the application any information

requested by the comptroller to determine whether the person is

eligible for the refund or the amount of the refund.

SECTION 2. Chapter 171, Tax Code, is amended by adding

Subchapter N to read as follows:

SUBCHAPTER N. TAX CREDIT FOR SMALL EMPLOYERS WHO CONTRIBUTE TO

INDIVIDUAL COVERAGE HEALTH REIMBURSEMENT ARRANGEMENT

Sec. 171.701. DEFINITIONS. In this subchapter, "individual

coverage health reimbursement arrangement" and "small employer"

have the meanings assigned by Section 151.4295.

Sec. 171.702. ENTITLEMENT TO CREDIT. A taxable entity is

entitled to a credit in the amount and under the conditions provided

by this subchapter against the tax imposed under this chapter.

Sec. 171.703. QUALIFICATION. A taxable entity qualifies

for a credit under this subchapter if the taxable entity:

(1) is a small employer;

(2) adopts an individual coverage health

reimbursement arrangement, in lieu of a traditional employer

provided health insurance plan, for the taxable entity's employees

for the entire period on which the report is based; and

(3) contributes to the individual coverage health

reimbursement arrangement an annual amount per covered individual

that is at least equal to:

(A) if the taxable entity previously contributed

to an employer provided health insurance plan, the annual amount

per covered individual the taxable entity contributed to the

employer provided health insurance plan for the last year the

taxable entity contributed to the plan; or

(B) if the taxable entity did not previously

contribute to an employer provided health insurance plan, the least

annual amount per covered individual the taxable entity would be

required to contribute to obtain any available employer provided

health insurance plan during the period on which the report is

based.

Sec. 171.704. INELIGIBILITY FOR CREDIT FOR CERTAIN PERIODS.

A taxable entity is not eligible for a credit on a report if the

taxable entity, or a member of the combined group if the taxable

entity is a combined group, received, for taxes paid under Chapter

151 during the period on which the report is based, a refund under

Section 151.4295.

Sec. 171.705. AMOUNT; LIMITATIONS. (a) The amount of the

credit for a report that is based on a period of one year is equal to

the product of $400 and the average number of covered individuals

for whom the taxable entity contributes to an individual coverage

health reimbursement arrangement during the period on which the

report is based.

(b) The amount of the credit for a report that is based on a

period other than one year is equal to a pro rata share of the amount

provided by Subsection (a) that reflects the duration of the period

on which the report is based.

(c) The total credit claimed for a report may not exceed the

amount of franchise tax due for the report after all other

applicable tax credits.

Sec. 171.706. APPLICATION FOR CREDIT. A taxable entity

must apply for a credit under this subchapter on or with the tax

report for the period for which the credit is claimed and include

with the application any information requested by the comptroller

to determine whether the taxable entity is eligible for the credit

or the amount of the credit.

SECTION 3. (a) Section 151.4295, Tax Code, as added by this

Act, applies only in connection with contributions to an individual

coverage health reimbursement arrangement made on or after January

1, 2026.

(b) A person may not file a claim for a refund under Section

151.4295, Tax Code, as added by this Act, before January 1, 2027.

SECTION 4. Subchapter N, Chapter 171, Tax Code, as added by

this Act, applies only to a report originally due on or after

January 1, 2027, and only in connection with contributions to an

individual coverage health reimbursement arrangement made on or

after January 1, 2026.

SECTION 5. This Act takes effect January 1, 2026.