For years, Maryland hospitals avoided paying millions of dollars in state taxes by creating their own insurance companies overseas — and, after being discovered, they asked lawmakers to exempt them from paying taxes.
The insurance is for medical malpractice, cyberattacks and other legal issues the hospitals say can be difficult to buy on the commercial market.
So, instead of buying policies from insurance companies, the nonprofit hospitals created their own for-profit insurance companies, known as “captive” insurers, and set them up in places such as the Cayman Islands. Those captive insurance companies did not pay the state’s 3% premium tax that other insurers did.
A whistleblower alerted the state, which began to investigate, and the Maryland Hospital Association asked lawmakers to absolve the hospitals of the tax, both retroactively and going forward.
The hospital association isn’t getting its way, however, with a bill moving forward in the General Assembly that would only pause the tax and study it for two years. The House has yet to act on the bill.
The debate reveals how hospitals used a little-known maneuver to avoid taxes and raises questions about whether it’s fair to tax nonprofit hospitals.
Lawmakers who sponsored the association’s bill said hospitals operate on thin financial margins and need ways to save money.
“We just have to be sensitive to understand how we can keep them afloat,” said Del. Lily Qi, a Montgomery County Democrat and one of the bill’s...
A federal judge on Monday largely blocked U.S. Immigration and Customs Enforcement from carrying out civil immigration arrests at several Manhattan immigration courthouses, after government lawyer...