Sponsored by:
Assemblyman JAY WEBBER
District 26 (Essex, Morris and Passaic)
Assemblyman RAJ MUKHERJI
District 33 (Hudson)
Assemblyman DECLAN J. O'SCANLON, JR.
District 13 (Monmouth)
Co-Sponsored by:
Assemblymen C.J.Brown, DiMaio, Cryan, Assemblywomen Handlin and Angelini
SYNOPSIS
Excludes certain Medicaid income from gross income tax.
CURRENT VERSION OF TEXT
As introduced.
An Act excluding from gross income taxation certain Medicaid income, supplementing chapter 6 of Title 54A of the New Jersey Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. Gross income shall not include an amount equal to that proportion of net income derived from New Jersey Medicaid practice for the taxable year that the qualified Medicaid receipts of that practice for the taxable year bear to the total amount received for services at that practice for the taxable year.
b. As used in this section:
“New Jersey Medicaid practice” means a medical practice within the State in which a State-licensed physician engages in activities such as exercising medical judgments, communicating medical judgments and diagnoses to patients and other health care providers, and the performance of medical services such as, but not limited to, physical examinations and surgical procedures, with regard to patients of that practice who are recipients of Medicaid.
“Qualified Medicaid receipts” means amounts received for services from the Medicaid program pursuant to P.L.1968, c.413 (C.30:4D-1 et seq.), including amounts received from managed care organizations under contract with the Medicaid program for providing health care services to eligible program recipients.
2. This act shall take effect immediately and shall apply to taxable years beginning on or after the January 1 next following the date of enactment.
STATEMENT
This bill excludes from gross income taxation certain Medicaid income that would otherwise be taxable in order to incentivize physicians and medical practices to treat Medicaid patients. Taxpayer physicians and medical practices in the State that are organized as limited liability companies or partnerships benefit from this exclusion. The amount of the exclusion is equal to that proportion of net income from the provision of medical services to Medicaid patients in the State that the total Medicaid receipts of that practice for the taxable year bear to the total amount received for medical services at that practice for the taxable year.
The manner in which the amount of the exclusion is derived provides an incentive for physicians and practices to increase the numbers of Medicaid patients in their practices. Increased numbers of newly Medicaid-eligible and insured patients, resulting from the implementation of the federal Affordable Care Act, are in need of physicians for their health care needs. Accordingly, this bill acts to incentivize physicians and practices to treat Medicaid recipients by making what would otherwise be the taxable portion of Medicaid income, free of income taxation by the State.