Maryland Bill Would Pause Captive Insurance Premium Tax Collection

Maryland lawmakers are considering legislation that would temporarily suspend the collection of premium receipts taxes related to certain lawfully procured captive insurance arrangements used by entities, including nonprofit hospitals and health systems, as questions persist around the tax's application.

Senate Bill 890 includes provisions prohibiting the Maryland Insurance Administration from charging or collecting the premium receipts tax, along with associated fees, penalties, and interest, for a defined period. A premium receipts tax is a state-imposed tax calculated as a percentage of the insurance premium paid for coverage. The prohibition applies to certain captive insurance arrangements and includes tax liabilities otherwise payable before the bill's effective date.

In addition, the legislation requires the Maryland Insurance Administration to study the use, regulation, and taxation of captive insurance companies by entities in the state, including an examination of regulatory and taxation frameworks in other jurisdictions, prior investigations related to captive insurance use, and potential approaches to oversight, with findings due by December 1, 2027.

The bill would take effect July 1, 2026, with the temporary tax provisions scheduled to sunset in 2028.