LEG REG REVIEW GPAHU Edition 2017, 33rd Issue October 23, 2017


On October 18, the Senate Banking & Insurance Committee reported out House Bill 1388 (Irvin-R-Huntington) with one dissenting vote, that of Senator Larry Farnese (D-Phila.).  The sparks occurred earlier in the meeting when a party line vote (Republicans voting yes), approved an amendment to prohibit CHIP monies to go for transgender services was adopted.  Democrats and especially Senator Farnese contended that the amendment was discriminatory and suggested that recent legal action in Texas did not suspend the anti-discriminations of the Affordable Care Act.  The bill’s main focus was reauthorization of the Children’s Health Insurance Program (CHIP) through 2019.


The committee also approved two bills allowing for rebates and inducements not to exceed $100.  This is a major change in insurance law which traditionally prohibited rebates and inducements except for those with minimal value.  Senate Bills 877 and 878 are sponsored by Majority Chair Don White (R-Indiana).



On October 16, the House Insurance Committee approved a bill requiring that the PA Insurance Department disclose the identities and costs of third-party vendors which perform financial exams and market conduct exams for insurance companies.  House Bill 1335 (Pickett-R-Bradford) is regarded as a first step in addressing the high costs paid for by insurance companies with the exams, costs which might be mitigated if there was more accountability concerning costs and the amount of time needed for exams.  It is a major priority of the PA Association of Mutual Insurance Companies (PAMIC) and is supported by other insurer groups such as the Insurance Federation of PA.  Health insurance companies also back those future reforms.



On October 18, the House voted 104 – 86 to accept Senate amendments to House Bill 118.  This is an Administrative Code bill that impacts the State Budget.  HB 118 takes $200 million from the reserves of the Joint Underwriting Association (JUA), the medical malpractice insurer of last resort.  The bill’s language says that JUA is an instrument of the state which establishes the authority of the General Assembly to seize its reserves.  It also says that if the JUA does not hand over the money by November 1, 2017, it will be abolished.  JUA has promised a lawsuit if HB 118 is passed, claiming that it functions as an insurance company and the state has no legal authority to “raid” the reserves.  The vote showed Democrats lining up with House Republican leaders to vote for concurrence with Senate amendments to HB 188.  77 Republicans voted ‘no’ while only nine Democrats voted ‘no’.


A link to the text follows:

https://www.legis.state.pa.us/CFDOCS/Legis/PN/Public/btCheck.cfm?txtType=HTM&sessYr=2017&sessInd=0&billBody=H&billTyp=B&billNbr=0118&pn=2256 starting on page 51



On Tuesday October 17, the PA House of Representatives passed House Bill 542, the latest incarnation of a revenue plan to match the State Budget spending plan passed last summer.  The vote was 102 – 88 with significant crossovers.  46 Republican Representatives voted no to Republican leadership-endorsed HB 542 while 32 Democrats including Democratic leadership voted to support the bill.


Now, of course, it is up to the Senate to concur.  Previously, the Senate voted for Marcellus Shale taxes which the House did not accept.  The House countered with a revenue bill that went after special dedicated funds such as a fund used to cover Insurance Department general government operations, monies dedicated to conservation, districts, etc.  The Senate disagreed so this House vote on HB 542 was its response to the Senate rejection. The Senate is expected to vote next week.  If the Senate agrees, HB 542 will go to Governor Wolf.


(Ironically, the House Finance Committee voted for a Marcellus Shale severance tax this week in a separate bill, something that the GOP had steadfastly opposed.)


Following are a number of provisions in HB 542 that might be of interest.

  • Borrowing from future revenues from the Tobacco Master Settlement Agreement is expected to generate $1.5 billion.  It will be repaid over the next 30 years.

Background: The Tobacco Settlement was the result of lawsuits against tobacco companies which resulted in a settlement where tobacco companies would not have to fight off many individual lawsuits but would instead pay states certain amounts each year.  Pennsylvania uses that money to fund medical research, smoking cessation, uncompensated care from hospitals, specialized state health programs, etc.


  • Expansions of the Sales Tax
  • “Remote sellers” = $10 million in this fiscal year and $50 million thereafter
  • Exempted from the Sales Tax: Beer kegs


  • Personal Income Tax (PIT) Expansion = $20 million
  • Those with rent or royalty payments to out of state entities exceeding $5,000 must withhold PIT.
  • Out of state independent contractors coming into PA for work receiving over $5,000 will see PIT withheld from their compensation.
  • Personal Income Tax
  • Deductions for contributions to ABLE (disabled account similar to IRA) allowed
  • Makes permanent check-offs for Wildlife Resource Confirmation Fund, Organ Donation Awareness Fund, American Red Cross, Military & Family Relief Assistance Fund, Children’s Trust Fund
  • New Taxes
  • Carsharing Fee depending on distance from 25 cents to $2.00. Monies go into a dedicated account, the Public Transportation Assistance Fund.  Carsharing is defined as membership providing an alternative to a privately-owned vehicle where the rental is not trip-specific written agreement, no attendant is present when the car is used, and with access to shared vehicles 24 hours a day, fees can be based on time or distance.
  • Fireworks: 12% tax on consumer fireworks
  • Annual license fees paid by fireworks sellers for permanent structures facilities range from $7,500 to $20,000 depending on square footage.
  • Annual license fees for temporary (seasonal) fireworks facilities are $3,000.
  • Miscellaneous:  Anticipated revenue is $20 million/year.
  • Taxpayer period to file petition for reassessment shrinks from 90 to 60 days.
  • Period where a taxpayer appeals a Board of Appeals tax decision to the Board of Finance Revenue decreases from 90 to 60 days.

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