Affordability - that is among the top principles that all actions in Albany must embrace this year. The senate has already passed several bills that will keep state spending in check and improve New York’s economic climate. This past week, another key piece of legislation that will help reduce health care costs was approved by the senate with overwhelming bi-partisan support.
Senate bill 7587, which I sponsored, would protect health insurance consumers from a new state tax that prevents anticipated savings from the federal tax reforms from going back to customers. The legislation ensures that the $140 million estimated windfall to health insurers from federal corporate tax rate reductions could still result in lower health care costs for taxpayers, instead of a proposal in the governor’s budget that diverts the savings back to the state.
This year, for-profit health insurance companies’ earnings will increase approximately 14 percent due to the federal government’s recent corporate tax rate reductions. The new tax savings would offset the increase in 2018 insurance premiums that were approved by regulators in 2017, in anticipation of federal cuts to cost-sharing reduction payments.
With insurance companies paying millions less in federal taxes, under current law, the spending ratio used by state regulators to determine premiums would potentially change and could trigger an opportunity for consumers' premiums to be reduced in the form of rate reductions, refunds, or credits.
However, the governor’s budget proposal effectively creates a new tax on health insurance companies that prevents the anticipated healthcare savings from being returned to consumers. The state would instead take the new revenue to fill the state’s general fund. My legislation is necessary to make sure the health companies’ windfall goes back to consumers instead of the state’s coffers.
When New Yorkers sit down at the kitchen table to pay their monthly bills, the health care budget is always a top concern. We need to take steps to ease that burden, not create a new hidden tax. Senate bill 7587 will help lower health insurance costs and lead to a healthier bottom line for families and individuals.
The health insurance legislation follows passage of another senate bill that addresses recent changes in the federal tax code and prevents $1.5 billion in higher taxes from being imposed on New Yorkers starting next year. The bill (S.6974) would:
Save approximately $400 million by allowing taxpayers to deduct their full property tax payments and save approximately $300 million by restoring other deductions. Currently, state personal income taxes are based on the federal tax code. The bill changes the reference to the federal tax code to reflect the code in effect prior to December 1, 2017 - pre-dating the passage of the federal tax cuts. This effectively decouples the state income tax code from the new federal tax code and allows individuals to choose to deduct the full amount of state and local tax (SALT) payments, among other potential benefits for those who might be negatively impacted by the $10,000 federal SALT cap and other federal tax changes;
Save $800 million by ensuring that more than 5 million single filers can claim their full New York State standard deduction. This is achieved by making a technical amendment to the definition of a single non-dependent filer in the state’s income tax code;
Save $45 million by removing the existing state prohibition on itemizing a state income tax return if a taxpayer chooses to take the new higher federal standard deduction. With the increase in the federal standard deduction, it is expected that more people will claim the standard deduction. However, under current state law, filers cannot itemize their state deductions if they take the federal standard deduction, and such a prohibition could cost New York taxpayers who want to itemize their state return to save more money.
Just like the health insurance bill, this measure will make sure taxpayers, not state government, will receive the benefits of federal changes.