The Iowa legislature advanced several significant measures in late March, including a new health care-related tax on Health Maintenance Organizations (HMOs) and proposed sales and use tax exemptions for nuclear electric generation facilities.
These legislative actions are expected to affect the healthcare sector, state revenue, and energy policy in Iowa. The changes come as lawmakers seek to address both industry-specific needs and broader fiscal adjustments.
On March 25, House Study Bill 767 and Senate Study Bill 3181, which propose a new sales and use tax exemption related to nuclear electric generation facilities, passed subcommittees in their respective chambers. The Senate subcommittee recommended passage with an amendment. These bills aim to provide financial incentives for the development or operation of nuclear power plants in the state.
Separately, House File 2739 passed the Senate floor on Tuesday by a vote of 26-19 after some procedural debate. The Governor signed it into law on Thursday. The new law creates a health care-related tax on HMOs at a rate of 0.95% of taxable funds, with a special higher rate of 3.5% from January through September 2026 if federal approval is obtained. This replaces the previous premium tax rates set for upcoming years.
The legislation also defines what constitutes ‘taxable funds’ for HMOs—primarily payments received for health services but excluding certain federal payments—and sets out procedures regarding prepayment, crediting, refunds, and potential penalties such as license suspension or revocation for noncompliance.
Additional provisions amend how insurers can offset assessments against both the new HMO health care-related tax and traditional premium taxes; adjust rules governing transfers from the taxpayer relief fund to the general fund; transfer $347 million from taxpayer relief due to federal changes; readjust expenditure limitations; and appropriate $89 million from the general fund to Medicaid reimbursement within the Department of Health and Human Services.
Observers say these measures reflect ongoing efforts by Iowa lawmakers to respond to shifting federal policies while maintaining support for healthcare providers and exploring energy alternatives.
