North Carolina § 58-6-25 - Insurance regulatory charge.

§ 58-6-25. Insurance regulatory charge.

Charge Levied. - There is levied on each insurance company, other than a captive insurance company, an annual charge for the purposes stated in subsection (d) of this section. The charge levied in this section is in addition to all other fees and taxes. The percentage rate of the charge is established pursuant to subsection (b) of this section and is applied to the company's premium tax liability for the taxable year. In determining an insurance company's premium tax liability for a taxable year, the following shall be disregarded: Additional taxes imposed by G.S. 105-228.8. Repealed by Session Laws 2008-134, s. 67(a), as amended by Session Laws 2009-445, s. 44, effective for taxable years beginning on or after January 1, 2008. Any tax credits for guaranty or solvency fund assessments under G.S. 105-228.5A or G.S. 97-133(a). Any tax credits allowed under Chapter 105 of the General Statutes other than tax payments made by or on behalf of the taxpayer. Rates. - The rate of the charge for each taxable year shall be six and one-half percent (6.5%). When the Department prepares its budget request for each upcoming fiscal year, the Department shall propose a percentage rate of the charge levied in this section. The Governor shall submit that proposed rate to the General Assembly each fiscal year. It is the intent of the General Assembly (i) that the percentage rate not exceed the rate necessary to generate funds sufficient to defray the estimated cost of the operations of the Department for each upcoming fiscal year, including a reasonable margin for a reserve fund, and (ii) that the amount of the reserve not exceed one-third of the estimated cost of operating the Department for each upcoming fiscal year. In calculating the amount of the reserve, the General Assembly shall consider all relevant factors that may affect the cost of operating the Department or a possible unanticipated increase or decrease in North Carolina premiums or other charge revenue. Returns; When Payable. - The charge levied on each insurance company is payable at the time the insurance company remits its premium tax. If the insurance company is required to remit installment payments of premiums tax under G.S. 105-228.5 for a taxable year, it shall also remit installment payments of the charge levied in this section for that taxable year at the same time and on the same basis as the premium tax installment payments. Each installment payment shall be equal to at least thirty-three and one-third percent (33.3%) of the insurance company's regulatory charge liability incurred in the immediately preceding taxable year. Use of Proceeds. - The Insurance Regulatory Fund is created in the State treasury, under the control of the Office of State Budget and Management. The proceeds of the charge levied in this section and all fees collected under Articles 69 through 71 of this Chapter and under Articles 9 and 9C of Chapter 143 of the General Statutes shall be credited to the Fund. The Fund shall be placed in an interest-bearing account and any interest or other income derived from the Fund shall be credited to the Fund. Moneys in the Fund may be spent only pursuant to appropriation by the General Assembly and in accordance with the line item budget enacted by the General Assembly. The Fund is subject to the provisions of the State Budget Act, except that no unexpended surplus of the Fund shall revert to the General Fund. All money credited to the Fund shall be used to reimburse the General Fund for the following: Money appropriated to the Department of Insurance to pay its expenses incurred in regulating the insurance industry, including the captive insurance industry, and other industries in this State. Money appropriated to State agencies to pay the expenses incurred in regulating the insurance industry, in certifying statewide data processors under Article 11A of Chapter 131E of the General Statutes, and in purchasing reports of patient data from statewide data processors certified under that Article. Money appropriated to the Department of Revenue to pay the expenses incurred in collecting and administering the taxes on insurance companies levied in Article 8B of Chapter 105 of the General Statutes. Money appropriated for the office of Health Insurance Smart NC under G.S. 143-730 to pay the actual costs of administering the program. Money appropriated to the Department of Insurance for the implementation and administration of independent external review procedures required by Part 4 of Article 50 of this Chapter. Money appropriated to the Department of Justice to pay its expenses incurred in representing the Department of Insurance in its regulation of the insurance industry and other related programs and industries in this State that fall under the jurisdiction of the Department of Insurance. Money appropriated to the Department of Insurance to pay its expenses incurred in connection with providing staff support for State boards and commissions, including the North Carolina Manufactured Housing Board, State Fire and Rescue Commission, North Carolina Building Code Council, North Carolina Code Officials Qualification Board, Public Officers and Employees Liability Insurance Commission, North Carolina Home Inspector Licensure Board, and the Volunteer Safety Workers' Compensation Board. Money appropriated to the Department of Insurance to pay its expenses incurred in connection with continuing education programs under Article 33 of this Chapter and in connection with the purchase and sale of copies of the North Carolina State Building Code. Money appropriated to the Department of Insurance for the regulation of the professional employer organization industry pursuant to Article 89A of Chapter 58 of the General Statutes. Money appropriated to the Department of Insurance to pay its expenses incurred in promoting North Carolina's captive insurance industry. Money appropriated to the North Carolina Industrial Commission for support of the Commission's duties excepted from its statutory fee authority as set forth in G.S. 97-73(e). Definitions. - The following definitions apply in this section: Repealed by Session Laws 2003-284, s. 43.2, effective for taxable years beginning on or after January 1, 2004. Captive insurance company. - Defined in G.S. 105-228.3. Insurance company. - A company or prepaid health plan, as defined in G.S. 58-93-5, that pays the gross premiums tax levied in G.S. 105-228.5 and G.S. 105-228.8. Insurer. - Defined in G.S. 105-228.3. Every insurance company shall, on or before the date the charge levied in this section is due, file a return on a form prescribed by the Secretary of Revenue. The return shall state the company's total North Carolina premiums or presumed premiums for the taxable year and shall be accompanied by any supporting documentation that the Secretary of Revenue may by rule require. History (1991, c. 689, s. 289; 1991 (Reg. Sess., 1992), c. 812, s. 6(e); 1995, c. 360, ss. 1(i), 3(a); c. 517, s. 39(f), (g); 1995 (Reg. Sess., 1996), c. 646, s. 19; c. 747, s. 3; 1997-443, s. 26.1; 1997-475, s. 2.2; 1998-212, s. 29A.7(b); 1999-413, s. 4; 2000-140, s. 93.1(a); 2001-424, ss. 12.2(b), 14E.1(a), 34.22(b), 34.22(c); 2001-489, s. 2(d); 2002-72, s. 9(a); 2002-126, s. 15.5; 2002-144, s. 1; 2002-159, s. 66.5; 2003-284, ss. 22.2, 43.2; 2004-124, s. 21.1; 2005-124, s. 7; 2005-276, s. 38.4(b); 2008-134, s. 67(a); 2009-445, s. 44; 2013-116, s. 7; 2013-199, s. 12; 2014-100, s. 20.2(b); 2020-58, s. 8; 2020-88, s. 16(d).) Percentage Rate for Calculating Regulatory Charge. - Session Laws 2019-237, s. 7, provides: "The percentage rate to be used in calculating the insurance regulatory charge under G.S. 58-6-25 is six and one-half percent (6.5%) for the 2020 calendar year." For similar prior provisions, see Session Laws 2003-284, s. 33.1(a), 2004-110, s. 3.1, 2005-276, s. 40.1(a), 2006-66, s. 26.2, 2007-323, s. 31.12(a), 2008-107, s. 28.13(a), 2009-451, s. 21.1(a) and (b), 2011-145, s. 31.27(a), 2012-74, s. 1(c), 2013-360, s. 20.3(a), 2014-100, s. 20.2(a), 2015-241, s. 20.1, 2016-94, s. 23.1, Session Laws 2017-57, s. 22.1, and Session Laws 2018-5, s. 22.2. Editor's Note. - Session Laws 1995 (Reg. Sess., 1996), c. 747, s. 16, provides: "This act does not obligate the General Assembly to appropriate funds." Session Laws 2009-445, s. 44, effective August 7, 2009, made a technical amendment to the prefatory language of Session Laws 2008-134, s. 67(a). Session Laws 2009-451, s. 1.2, provides: "This act shall be known as the 'Current Operations and Capital Improvements Appropriations Act of 2009'." Session Laws 2009-451, s. 28.3, provides: "Except for statutory changes or other provisions that clearly indicate an intention to have effects beyond the 2009-2011 fiscal biennium, the textual provisions of this act apply only to funds appropriated for, and activities occurring during, the 2009-2011 fiscal biennium." Session Laws 2009-451, s. 28.5 is a severability clause. Session Laws 2011-145, s. 32.2, provides: "Except for statutory changes or other provisions that clearly indicate an intention to have effects beyond the 2011-2013 fiscal biennium, the textual provisions of this act apply only to funds appropriated for, and activities occurring during, the 2011-2013 fiscal biennium." Session Laws 2011-145, s. 32.5 is a severability clause. Session Laws 2013-116, s. 8, provides: "Nothing in this act shall be construed to obligate the General Assembly to appropriate funds to implement the provisions of this act. This act becomes effective July 1, 2013, if funds are appropriated for the 2013-2015 fiscal biennium to provide the Department with regulatory staff and resources to license and regulate captive insurance companies. If no funds are appropriated, then this act shall not become effective until July 1 of a year in which the General Assembly appropriates funds to implement it." Funds were appropriated in 2013. Session Laws 2016-94, s. 1.2, provides: "This act shall be known as the 'Current Operations and Capital Improvements Appropriations Act of 2016.'" Session Laws 2016-94, s. 39.4, provides: "Except for statutory changes or other provisions that clearly indicate an intention to have effects beyond the 2016-2017 fiscal year, the textual provisions of this act apply only to funds appropriated for, and activities occurring during, the 2016-2017 fiscal year." Session Laws 2016-94, s. 39.7, is a severability clause. Session Laws 2017-57, s. 1.1, provides: "This act shall be known as the 'Current Operations Appropriations Act of 2017.'" Session Laws 2017-57, s. 39.4, provides: "Except for statutory changes or other provisions that clearly indicate an intention to have effects beyond the 2017-2019 fiscal biennium, the textual provisions of this act apply only to funds appropriated for, and activities occurring during, the 2017-2019 fiscal biennium." Session Laws 2017-57, s. 39.6, is a severability clause. Session Laws 2019-237, s. 9, provides: "If any provision of this act and G.S. 143C-5-4 are in conflict, the provisions of this act shall prevail." Session Laws 2020-28, s. 2, provides: "Notwithstanding the provisions of G.S. 58-6-25 , effective for the insurance regulatory charge levied during the 2020-2021 fiscal year and due and collected after the effective date of this act, the General Fund shall be credited the sum of ten million dollars ($10,000,000) from the proceeds of the charge that would be credited to the Insurance Regulatory Fund." Session Laws 2020-88, s. 16(f), made the amendment of subdivision (e)(2) of this section by Session Laws 2020-88, s. 16(d), effective 30 days after it becomes law and applicable to capitation payments received by prepaid health plans on or after that date. Session Laws 2020-88 became law on July 2, 2020, making the effective date of this amendment August 1, 2020. Effect of Amendments. - Session Laws 2005-276, s. 38.4(b), effective for taxable years beginning on or after January 1, 2007, in subsection (a), in the introductory language, substituted "section and" for "section. For each insurance company that is not a health maintenance organization, the rate" and deleted the former fifth sentence, which read: "For health maintenance organizations, the rate is applied to a premium tax liability for the taxable year calculated as if the corporation or organization were paying tax at the rate in G.S. 105-228.5(d)(2) ." Session Laws 2005-124, s. 7, effective June 29, 2005, added subdivision (d)(9). Session Laws 2008-134, s. 67(a), as amended by Session Laws 2009-445, s. 44, effective for taxable years beginning on or after January 1, 2008, repealed subdivision (a)(2), which read: "The additional local fire and lightning tax imposed by G.S. 105-228.5(d)(4) ." Session Laws 2013-116, s. 7, in subsection (a), inserted "other than a captive insurance company," near the beginning; in subdivision (d)(1), inserted "including the captive insurance industry," near the middle; added subdivision (d)(10); and added subdivision (e)(1a). For effective date, see editor's note. Session Laws 2013-199, s. 12, effective July 1, 2013, substituted "Health Insurance Smart NC" for "Managed Care Patient Assistance Program established" in subdivision (d)(4). Session Laws 2014-100, s. 20.2(b), effective January 1, 2015, in subsection (d), substituted "State Budget Act" for "Executive Budget Act" in the fifth sentence of the introductory language, and added subdivision (d)(11). Session Laws 2020-58, s. 8, effective June 30, 2020, in subsection (b), substituted "six and one-half percent (6.5%)" for "the percentage rate established by the General Assembly" in the first sentence, deleted the second sentence, which formerly read: "The General Assembly shall set by law the percentage rate of the charge levied in this section.", substituted "It is the intent of the General Assembly (i) that the percentage rate not exceed" for "The percentage rate may not," and substituted "The fund, and (ii) that the amount of the reserve not exceed" for "fund. The amount of the reserve may not." Session Laws 2020-88, s. 16(d), inserted "or prepaid health plan, as defined in G.S. 58-93-5 " in subdivision (e)(2). For effective date and applicability, see editor's note. Legal Periodicals. - For 1997 legislative survey, see 20 Campbell L. Rev. 481.