The Centers for Medicare and Medicaid Services (CMS) recently approved New York’s Managed Care Organization tax (MCO), effective January 1, 2025. This new tax on health plans, authorized by the NYS 2025 Budget, aims to enhance state Medicaid funding.

The tax will apply at varying rates based on plan type and is calculated based on per member, per month enrollment. Below we have summarized impacted vs. unaffected lines of business. 

For clients with impacted plans, Marshall + Sterling is currently monitoring how the tax will be implemented by each carrier. We will follow up with clients directly once we have confirmed carrier specific updates.

Plans Subject to the MCO Tax:
•    Commercial fully insured groups
•    Commercial individual 
•    DSNP/Duals 
•    Medicaid Managed Care (MMC)
•    Health and Recovery Plans (HARP)
•    Essential Plan (EP)
•    Child Health Plus (CHP)

Plans Not Subject to the MCO Tax:
•    Medicare Advantage
•    Medicare Supplement
•    CSNP 
•    Medicare Part D (prescription drug plans)
•    Federal Employee Health Benefits (FEHB)
•    Self-Funded Plans

For questions or more information, please contact your account manager.