The People News, a free newspaper serving Cleveland Tennessee (TN) and Bradley County Tennessee (Tn).





Of Bradley County Tn.


APRIL  2005

                            The People News, a free newspaper serving Cleveland and Bradley County Tn.

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New Tax Bill Pending

by Pete Edwards

A new twist on the familiar call for a Tennessee state income tax has surfaced in

the form of a Privilege Tax paid by employers on their employees earnings. House Bill 2027 was filed in February by State Representative Mike Kernell, a Democrat from Memphis. The bill proposes to impose a 1% Privilege Tax on wages paid by every qualifying employer in the state of Tennessee. The new tax would eliminate the present privilege tax paid by professionals such as lawyers and physicians. A portion of the  new tax revenue would be used to create a Tennessee Comprehensive Health Insurance Pool (TCHIP) managed by an appointed board of directors, the rest being used to fund hospitals and health institutions participating in TennCare.

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Part of the summary of HB 2027 follows:

"This bill would create an employer privilege tax and a comprehensive health insurance pool.

EMPLOYMENT PRIVILEGE TAX

Present law provides for a privilege tax on certain occupations such as lawyers, physicians, engineers, and accountants. The tax is $400 per year. This bill would

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abolish that tax and would create a new employer privilege tax. This bill would create a new Tennessee employer privilege tax, whereby acting as an employer and paying compensation for state service rendered by employees would be considered taxable privileges. The tax would be 1 percent of the total amount of compensation paid by the employer in excess of $4,166 each month. If an employer pays less than $50,000 in compensation during the tax year, the employer would receive a refund of the privilege tax. If an employer pays over $350,000,000 in compensation during the tax year, the employer would not have to pay the tax on the amount over $350,000,000. The tax return and payment must be filed on the fifteenth day of the next month. If there is a deficiency or late payment, the penalty would be 5 percent for each month of underpayment not to exceed 25 percent and interest. Half of the revenue derived from the employer privilege tax would be allocated to provide the state appropriation for a comprehensive health insurance pool (discussed below) and the other half would be allocated to provide payments to hospitals providing uncompensated care in the following manner: (1) 50 percent to safety net hospitals: the pool amount will be based on a pro-rata distribution of adjusted uncompensated or charity care; (2) 45 percent to other essential hospitals: the pool amount will be based 90 percent on a pro-rata distribution of the adjusted uncompensated or charity care and 10 percent to sole community providers based on TennCare volume; and (3) 5 percent to children's hospitals: the pool amount will be based on a pro-rata distribution of adjusted uncompensated or charity care. In regard to the hospitals, eligibility each quarter would be determine based on the hospital's participation in TennCare. The hospital must have a contract with

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Are you in favor of the Tennessee Legislature imposing a new Privilege Tax if the proceeds were used for medical insurance for the uninsured and to support hospitals administering TennCare?

TennCare Select and one other managed care organization and the TennCare contract must have been for the whole quarter.

TENNESSEE COMPREHENSIVE HEALTH INSURANCE POOL

This bill would create the nonprofit Tennessee comprehensive health insurance pool (TCHIP). All health insurance issuers and providers of health plan benefits and all persons and entities operating health maintenance organizations (HMOs) in this state, on or after July 1, 2005, would be required to become members of the pool.

POOL ELIGIBILITY AND BENEFITS

Any individual person, including the individual's dependents, who has been a state resident for one year would be eligible for coverage under TCHIP except for: (1) Persons who have or who are eligible to have substantially equivalent coverage under health insurance or other health plan; (2) Persons eligible for TennCare; (3) Persons with terminated pool coverage, unless 12 months have lapsed since the termination; (4) Any person on whose behalf the pool has paid out $1,000,000 in benefits; or (5) Inmates of public institutions and persons whose benefits are duplicated under other public programs. The administrator would have a legal right to recover any benefits received by a person if the person is covered by another health insurance or health benefit plan. Any person whose health insurance coverage is involuntarily terminated for any reason other than nonpayment of premiums, who is not eligible for conversion, or who is not covered by equivalent heath plans, could apply for coverage under the pool plan. Such coverage would retroactively apply to the date of the previous coverage involuntary termination if application were made within 60 days of the termination. This pool would only pay usual and customary charges and expenses for medically necessary services. The board could establish deductibles, co-insurance and maximum out-of-pocket payments, and could specify limitations and exclusions, including exclusions for preexisting conditions. This bill would require the board to also establish a qualified Medicare supplemental health coverage for eligible persons enrolled under Medicare."

The complete text for HB 2027 can be accessed at:
www.legislature.state.tn.us/bills/currentga/BillCompanionInfo.asp?BillNumber= HB2027

The People News
PO Box 3921
Cleveland TN. 37320
(423) 559-2150  Fax 559-1044

Editor-Publisher, Pete Edwards
Copyright 2005 (All rights reserved)

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