Impact of California’s Reimposed MCO Tax on Employer-Provided Group Health Plans

This resource is provided by ACSA Partner4Purpose Keenan. 

On June 29, 2023, Governor Newsom signed into law AB 119 (Chapter 13, Statutes of 2023), a budget trailer bill that will temporarily re-impose a tax on managed care organizations operating in California from April 1, 2023, through December 31, 2026. The so-called “MCO tax,” had originally taken effect in 2009 and expired in 2012, but has been renewed and changed in the years since. The most recent MCO tax, which was passed in 2016, expired at the end of 2022. While it was in effect, it resulted in approximately $1.5 billion of annual state revenue and a stable funding source for the Medi-Cal program.