Another $125 million will go toward long-term initiatives to improve access to behavioral health, primary care, and substance abuse services, and $275 million will be set aside in case Congress takes it back.
Horizon Blue Cross Blue Shield of New Jersey said Wednesday that its 3.8 million customers will get $150 million in direct "relief" in 2018 as their share of the health plan's $550 million windfall generated by federal tax reforms.
It is not yet clear how this money will be distributed. Horizon said it is working with New Jersey's Department of Banking and Insurance "to identify the most appropriate mechanism to use these funds in 2018 for its policyholders," according to a media release.
Horizon is not expected to use the windfall to lower premiums, because ultimately those premiums would have to be raised again once the refund is spent. However, the company is considering options that include a year-end dividend check for customers, similar to those issued by automobile insurance companies.
The not-for-profit insurer will also earmark $125 million of the tax refunds over the next five years for "significant initiatives that will drive improvements in healthcare for Horizon BCBSNJ members in the areas of behavioral health, access to care, and addiction."
While Horizon hopes to use the entire $550 million in tax cuts to benefit its customers, the remaining $275 million will be set aside as a hedge against the volatile politics in Washington, DC.
Horizon Chairman, President and CEO Kevin P. Conlin said distributing a portion of the windfall "is in keeping with our long-standing mission to operate for the benefit of our customers."
"This plan seeks to provide to them this year, in the most direct way possible, $150 million in relief," Conlin said. "Members will also benefit from the substantial investments this plan makes to expand access to care, improve healthcare quality and lower costs."
The windfall was generated with the elimination of the Alternative Minimum Tax in the Tax Cut and Jobs Act of 2017, which passed in December. Horizon is due federal refunds over each of the next five years through 2022.
Horizon has paid the AMT since 1986 and consequently paid federal taxes that were higher than they would have under standard corporate tax rates. As a result, Horizon earned AMT credits that have accrued every year since 1986 and now total $550 million, the company said.
New Jersey Gov. Phil Murphy praised Horizon for reinvesting the money in the state's healthcare access programs.
"They are setting the bar for how corporations can responsibly reinvest in our communities," Murphy said.
John Commins is the news editor for HealthLeaders.