Summary#
HB 338, “Health Practitioner Grt Deduction Sunset,” would amend New Mexico’s existing gross receipts tax law; it would not create a new program. Its goal is to keep a tax deduction for certain health care receipts available longer and broaden which coinsurance payments qualify. The bill is listed as postponed indefinitely and is not law.
- The bill would extend the deduction for patients’ coinsurance, copayments and deductibles on eligible commercial-plan services from before July 1, 2028, to before July 1, 2031.
- It would remove the current text’s “fixed dollar” limit from the definition of coinsurance or copayment. For example, this could allow a percentage-based coinsurance amount to qualify; that is an example, not a definition in the bill.
- The deduction would apply only to services within the practitioner’s scope of practice. The other part of the existing deduction—for certain commercial contract and Medicare Part C receipts paid by an insurer or managed care organization—remains in the bill text.
- Eligible practitioners include the listed licensed or registered health professionals and qualifying clinical laboratories. Some associations of practitioners also qualify, but the definition excludes certain organizations, including hospitals and 501(c)(3) organizations.
- The bill proposes an effective date of July 1, 2026, if enacted.
What it means for you#
- Eligible practitioners and associations: If enacted, they could deduct qualifying receipts from gross receipts tax. The deduction applies after other allowable deductions. Fee-for-service payments by a health care insurer are not deductible under the provision.
- Patients with commercial health plans: The bill would not change what you owe under your plan. It would change the tax treatment of qualifying amounts you pay to a practitioner.
- Taxpayers: A taxpayer claiming the deduction must report its amount separately as required by the state Taxation and Revenue Department.
- General public: The bill does not directly change health coverage, service prices, or who is eligible for health care.
Money#
No cost estimate is in the available material.
- The deduction would reduce the gross receipts subject to tax for taxpayers who qualify and claim it, which could reduce state revenue.
- The bill text requires the deductions to be included in the tax expenditure budget with an analysis of their cost. The materials do not give an estimate of the revenue effect.
What is unclear#
- The parent law is not supplied, so I could not independently verify the current law. The bill’s marked text indicates the existing sunset date is July 1, 2028, and the current definition limits coinsurance or copayment to a fixed-dollar amount.
- No publicly available information is provided on how much the deduction is used or how much state revenue the extension and broader definition would affect.
- The bill does not explain how the department will require taxpayers to report the deduction or how it will check claims.
- The bill’s listed status is postponed indefinitely; whether it will advance or take effect is unclear.
Case for#
- The bill appears intended to avoid the deduction ending in 2028 for qualifying patient cost-sharing payments.
- A possible argument for removing the fixed-dollar limit is that it could let the deduction apply to coinsurance amounts that are not fixed dollar amounts, as well as fixed copayments.
- Keeping the deduction may preserve similar tax treatment for different kinds of eligible payments under commercial health plans.
Case against#
- The bill would extend a tax deduction and broaden one part of it without providing an estimate of the resulting revenue loss.
- The extension would keep the deduction in place until 2031, delaying a decision about whether it should continue beyond that date.
- The bill does not provide details on how the state will check reported deductions or measure their effect beyond requiring a cost analysis in the tax expenditure budget.