MCO - Managed Care Organization

The imposition of certain special taxes on those persons who provide health care related services within the State. The measure of the taxes is gross receipts (accounts received or receivable) from the provision of various health care services and sales of related items within West Virginia.

The West Virginia State Tax Department previously provided guidance on the filing and payment of the tax on the provision of Managed Care. This guidance is issued to provide instruction on calculating the tax in any tax year that is less than 12 months (a “short period return”). If a taxpayer has an annual period ending December 31, 2020, the 2020 annual return is a short period return of six months because the tax was imposed beginning July 1, 2020.

Special Instructions for Payment of Annual Tax Due on Organizations Providing Managed Care for the 2020 Tax Year

Short Period Return Calculator

What is it?

  • The passage of Senate Bill 719 established tax rates on the provisions of two particular services: Medicaid membership and Non-Medicaid membership in managed care plans. The rates were determined based upon the number of members of a plan for each month or part of a month on a graduated scale. The following rates will apply from July 1, 2020 until June 30, 2023:
  • (1) Tier I - $35 for each Medicaid member-month under 250,000;
  • (2) Tier II - $20 for each Medicaid member-month between 250,000 and 500,000;
  • (3) Tier III - $1 for each Medicaid member-month greater than 500,000;
  • (4) Tier IV - 25 cents for each non-Medicaid member-month under 150,000; and
  • (5) Tier V - 10 cents for each non-Medicaid member-month of 150,000 or more.

Who is affected?

Managed Care providers offering Medicaid membership plans and Non-Medicaid memberships plans.

What do taxpayers have to do?

Electronic filing and payment of tax is required. Much like broad-based healthcare, taxpayers must file monthly estimated returns and an annual return. Returns will be available in MyTaxes by August 1, 2020.

When do I begin filing estimated returns and making estimated payments?

The requirement to file estimated returns and make estimated payments is waived for the 2020 tax year. No estimated payments are due, and no penalty will be paid for failure to make estimated payments if tax is paid by the due date of the annual return.

Additionally, the requirement to file estimated returns and make estimated payments is waived for the first three months of the 2021 tax year. No penalty will be paid for failure to make estimated payments so long as the first three months of estimated payments are paid by April 15, 2021.

How do I calculate my estimated payment?

The Tax Department has provided a Monthly Estimated Payment Calculator for taxpayer use.

Special Instructions for Estimated Payment of Tax Due on Organizations Providing Managed Care

When do I file my annual return?

The annual period for the tax is the federal tax year of the taxpayer. For most taxpayers, this will be a calendar year with the due date on the last day of the month following the end of the taxable year (January 31st). Any taxpayer with a fiscal year, contact the Tax Department to update your account.

For the first calendar year, the Tax Department is extending the time to file the annual return by three months to April 30, 2021. In addition, the Tax Department is prepared to waive penalties for any taxpayer choosing to pay by the extension date.

Any amount not paid by January 31, 2021 will be subject to interest at the statutory rate. The interest rate for the 2021 calendar year is 7.75%.