- Associated Press - Tuesday, March 1, 2016

SACRAMENTO, Calif. (AP) - Questions and answers on the new tax on California health insurers that Gov. Jerry Brown approved Tuesday, after negotiating a compromise package with state lawmakers.

WHAT IS THE TAX PLAN?

The state taxes organizations that provide care through California’s health care program for the poor. The law Gov. Jerry Brown signed Tuesday requires all health insurance plans to pay the tax, not only those that take part in Medi-Cal. It will replace health insurance companies’ gross premium and corporation taxes. Brown’s office on Tuesday called the plan a net tax cut.

WHY IS THE STATE DOING THIS?

California relies on federal matching dollars to help pay for Medi-Cal. President Barack Obama’s administration said it would not renew the arrangement this summer unless California applied its health tax more broadly, which would have left a $1.1 billion hole in the state budget. The state’s agreement with the Obama administration expires June 30.

WHAT HAPPENS NOW?

California’s state health care department will send the plan to federal regulators for review. Taxes on health insurance providers would change as soon as the feds approve the plan.

WILL I BE AFFECTED?

Brown and lawmakers have said the costs won’t be passed on to health insurance customers. State Sen. Ed Hernandez, an Azusa Democrat and chairman of the Senate health committee, says health insurance companies will pay no more in taxes under the brokered agreement than they do currently. If it does affect consumers, that would happen after the plan is approved by federal regulators and implemented.

WHAT ELSE?

The package includes three bills that also provided hundreds of millions of dollars in funding sought by reluctant state lawmakers in exchange for their votes. The California Legislature needs a two-thirds majority to approve taxes.

Lawmakers approved $300 million for services for developmentally disabled people; $173 million to repay transportation loans; $240 million for future retiree health care costs; $123 million in relief for hospitals with skilled nursing facilities; and $105 million for fire recovery and debris removal in Lake and Calaveras counties.

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