Maryland Regulators Studied Hospital Insurance Taxes
The state is investigating if hospital-owned offshore captive insurance firms should be subject to a 3% premium tax.
Updated on Oct. 13, 2026 in Healthcare
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The Maryland Insurance Administration is evaluating whether nonprofit hospitals that utilize offshore captive insurance companies owe premium taxes to the state. The agency is currently reviewing transactions to determine potential tax liabilities.
Why it matters
The study stems from a 2026 state bill aimed at ensuring equitable tax collection from healthcare providers using offshore entities. Determining the tax status of these arrangements could impact state revenue and how Maryland hospitals manage risk.
Maryland maintains a 3% premium tax rate on insurance transactions. Seven entities have already paid $3.5 million, while 40 additional tax matters remain under investigation.
The players
Maryland Insurance Administration
This is the state agency responsible for regulating the insurance industry and investigating potential violations of tax and insurance laws in Maryland.
Jason Schupp
He is an individual who provided testimony before the Maryland House Ways and Means Committee regarding the taxation of captive insurance.
House Ways and Means Committee
This is a standing committee of the Maryland House of Delegates that reviews legislation related to state revenue, taxation, and fiscal policy.
The details
Maryland does not currently permit captive insurance companies to be established within the state, prompting many hospitals to form them in jurisdictions like the Cayman Islands. The state's insurance administration is assessing these offshore arrangements for potential nonpayment of premium taxes.
Timeline
The Maryland Insurance Administration began opening investigations into nonpayment of premium taxes in 2023.
Jason Schupp testified before the House Ways and Means Committee in April 2026.
A public meeting regarding captive insurance taxation was held on October 7, 2026.
The Maryland Insurance Administration will submit its final study and recommendations to state lawmakers by January 1, 2027.
Market Landscape
This study follows the Maryland 2026 state captive insurance taxation bill, which mandates a formal review of how offshore hospital insurance models integrate with state tax obligations. The findings will likely dictate the future competitive landscape for hospital financial risk management within the state.
Potential changes to tax enforcement could influence the financial operating costs of nonprofit hospitals throughout the state. Patients may see indirect effects if hospitals adjust their administrative budgets or risk management strategies in response to new tax requirements.
The takeaway
The state's inquiry seeks to clarify whether tax obligations for offshore insurance entities are being met consistently across the hospital sector. Stakeholders should monitor upcoming legislative reports for potential shifts in tax compliance requirements for healthcare organizations.
What happens next
The Maryland Insurance Administration is scheduled to submit its formal study and policy recommendations to state lawmakers on January 1, 2027.
Further reading
Learn more about the local regulatory environment in the Maryland Healthcare section.
Source note: This article includes information reported by Becker's Hospital Review | Healthcare News & Analysis.
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Should nonprofit hospitals be required to pay the same premium taxes as for-profit insurance providers?
