ROBERT L. EHRLICH, JR., Governor                               H.B. 2

(I)      GROSS RECEIPTS RECEIVED AS A RESULT OF CAPITATION
PAYMENTS MADE TO A MANAGED CARE ORGANIZATION, SUPPLEMENTAL PAYMENTS,
AND BONUS PAYMENTS; AND

(II)     SUBSCRIPTION CHARGES OR OTHER AMOUNTS PAID TO A
HEALTH MAINTENANCE ORGANIZATION.

6-104.

(a) Subject to subsection (b) of this section, in computing the tax under this
section, the following deductions from gross direct premiums allocable to the State
are allowed:

(1)     returned premiums, not including surrender values;

(2)     dividends that are:

(i) paid or credited to policyholders; or

(ii) applied to buy additional insurance or to shorten the period
during which premiums are payable; AND

(3)     returns or refunds made or credited to policyholders because of
retrospective ratings or safe driver rewards[; and

(4)     premiums received by a person subject to taxation under this subtitle
under policies providing health maintenance organization benefits to the extent:

(i) of the amounts actually paid by the person to a nonprofit health
maintenance organization authorized by Title 19, Subtitle 7 of the Health - General
Article that operates only as a health maintenance organization that is exempt from
taxes under § 19-727(b) of the Health - General Article; or

(ii) that the premiums have been paid by a health maintenance
organization that is exempt from taxes under § 19-727(b) of the Health - General
Article].

6-107.

(a) On or before March 15 of each year, each person subject to taxation under
this subtitle shall:

(1) file with the Commissioner:

(i) a report of the new and renewal gross direct premiums less
returned premiums written by the person during the preceding calendar year; [and]

(II) A REPORT OF THE GROSS RECEIPTS RECEIVED AS A RESULT OF
CAPITATION PAYMENTS, SUPPLEMENTAL PAYMENTS, AND BONUS PAYMENTS MADE
TO A MANAGED CARE ORGANIZATION DURING THE PRECEDING CALENDAR YEAR;
AND

[(ii)] (III) if the person issues perpetual policies of fire insurance, a
report of the average amount of deposits held by the person during the preceding

- 163 -