03/28/2024

California’s Four Largest Health Plans Could Owe State $10 Billion in Back Taxes

California’s four largest health plans may be on the hook for $10 billion in state back taxes — and at least $1 billion every year going forward — if a closely watched legal case does not break their way.

Should that happen, insurance industry critics say, it would end one of the biggest tax code abuses in state history — one that for decades has allowed Kaiser Permanente, Anthem Blue Cross, Blue Shield of California and Health Net to avoid paying a state tax on health insurance premiums. The health plans, however, say they aren’t insurers and thus shouldn’t be subject to the tax.

If they lose in court, it could mean a huge windfall for the state’s coffers, potentially pouring much-needed funds into the state’s overwhelmed Medi-Cal program — and perhaps an El NiƱo-like deluge into Gov. Jerry Brown’s Rainy Day Fund.

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