Enacts the medical malpractice insurance premium credit act

2 Co-sponsors

• Andrea Stewart-Cousins
• David J. Valesky

BILL NUMBER:S581

Title of bill

An act to amend the tax law, in relation to enacting the medical malpractice insurance premiums credit act

Purpose or general idea of bill

Enacts the medical malpractice insurance premium credit act.

Summary of specific provisions

Amends section 210 of the tax law to add a new subdivision 25-b and section 606 of the tax law to add a new subsection (qq) providing a tax credit for medical malpractice insurance premiums equal to twenty-five percent of the amount by which annual qualified premiums exceed ten percent of the taxpayer's qualified income, up to twenty-five thousand dollars. Qualified premiums are defined to include all premiums regulated by the New York state department of insurance with the exception of premiums paid to the New York medical malpractice insurance plan. Qualified income is defined to include all net receipts the taxpayer derives from activities covered by the malpractice policy for which the qualified premiums are paid.

Justification

Rising malpractice insurance premiums remain a source of deep concern for physicians across the country, with doctors in high-risk specialties, such as neurosurgery and obstetrics paying the highest premiums. Medical malpractice insurance premiums also vary widely from one part of the state to another with doctors practicing on Long Island and in the outer boroughs of New York City paying the highest insurance rates, regardless of their field of specialty. A recent examination of median physician income data and average malpractice insurance premiums for locations and specialties around the state found that doctors in low risk specialties paying less than a percent of their income for the insurance coverage in the least expensive upstate cities and doctors in high-risk specialties paying more than half of their median income on Long Island.

Rising medical malpractice rates have driven some doctors to early retirement, while others have chosen to reduce costs by relocating to less expensive insurance markets or curtailing the riskiest elements of their practice, such as delivering babies.

The Malpractice Insurance Premium Credit is targeted specifically to those physicians who pay the highest malpractice insurance rates relative to their annual income. The credit would be available to New York physicians in any region or specialty whose qualified medical malpractice premiums exceed ten percent of their annual income. For physicians who cross that threshold, the credit would be worth twenty-five percent of the amount by which their annual premium exceeds ten percent of income, up to a maximum of $25,000. The measure would take effect in time for the 2004 tax year and sunset in 2014. The tax credit will be available to almost any New York physician who pays his or her own

medical malpractice insurance premium. The credit will not apply to those physicians who are insured by their employers.

The tax credit will also not be available to physicians who pay higher medical malpractice insurance premiums due to their own negligence or prior history. For this reason, qualified premiums under Klein's plan will not include premiums paid to the New York Medical Malpractice Insurance Plan, considered the insurer of last resort for New York's most at-risk doctors.

Legislative history

A.11754 of 2004 - Referred to Ways & Means S.2757 of 2006 - Referred to Investigations & Government Operations S.2217 of 2008 - Referred to Investigations & Government Operations S.1894 of 2009 - Referred to Investigations & Government Operations

Fiscal implications

A small percentage of physicians statewide would quality for this tax credit.

Effective date

This act shall take effect immediately and shall apply to taxable years commencing on or after January 1, 2011 through December 31, 2020.