The Centers for Medicare and Medicaid Services (CMS) recently approved New York's Managed Care Organization tax (MCO), effective 1/1/2025. This tax, authorized by the 2024-2025 State Budget, will apply different tax rates to Medicaid and non-Medicaid plans. The tax rates are based on per member per month enrollment and will apply on a calendar year basis.
The impacted lines of business include Commercial Fully Insured Group Health Plans, Commercial Individual Health Plans, D-SNP/Duals and Government Programs.
Experience Rated: The MCO tax will be converted to a PCPM of $2.70 and be included in the premium as part of retention on all renewals and new business quotes with effective dates of 7/1/2025 and forward. Tax details will be added to the Taxes and Fees Exhibit of the renewal packet.
Minimum Premium: An addendum to your current contract will be necessary to reflect the MCO tax. Minimum premium groups will be contacted by their account manager with additional information on the addendum.
Small Group, Individual, and Large Group HMO: Rates will not be impacted by the MCO tax for 2025 as rates were locked in during the fall of 2024 and approved by the state. The MCO tax will be included in 2026 premium rates.
Medicaid / Essential Plan: No impact to member level premium payments.
If you have any questions, please contact your account manager.
