Texas Supreme Court denies $3M premium tax refund to BCBS

The Texas Supreme Court ruled 5-4 on June 17 that Blue Cross Blue Shield of Texas cannot receive a $3 million tax refund from its stop-loss policies that reimburse self-insured employers because they are a form of health insurance, according to Law360.

In previous court rulings in favor of BCBS, the payer had argued that its stop-loss policies only covered employers and not individuals or groups, so therefore, the premiums were not taxable.

Texas' highest court, however, ruled that because the policies do cover more than individual and aggregate claims, the reimbursements are linked to care claims. 

According to Law360, the original case stemmed from state taxation of over $171 million in premiums for stop-loss policies in 2012. BCBS paid $3 million in premium taxes and then sought a refund.

In the ruling, the state Supreme Court said the tax on premiums applies to any insurance policy that covers individuals and groups. Even if the court accepted BCBS' argument, it said it would still have ruled against the payer because an employer is technically a group under state law.

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