7 LONG TITLE
8 General Description:
9 This bill expands the Medicaid program to individuals who are below 138% of the
10 federal poverty level and provides funding mechanisms for the Medicaid expansion.
11 Highlighted Provisions:
12 This bill:
13 ▸ requires the Department of Health to apply to the federal government for waivers
14 from federal law necessary to implement Medicaid expansion;
15 ▸ defines terms;
16 ▸ describes the terms of the Medicaid waiver, which:
17 • establishes an alternative health benefit package for Medicaid enrollees using
18 premium subsidies to purchase commercial health insurance policies;
19 • seeks waivers for certain cost sharing requirements;
20 • enrolls individuals into employer sponsored insurance, if available, and with
21 cost sharing protections for the individual when required by the federal
22 Medicaid program;
23 • prohibits reimbursement for emergency room facility charges if the visit is not
24 an emergency;
25 • prohibits reimbursement for non-emergency transportation;
26 • keeps families together in one policy in most circumstances;
27 • requires an enrollee to be offered work assistance;
28 • requires the division to apply for waivers from CMS after January 1, 2017, to
29 cover up to 100% of the federal poverty level at the full match rate; and
30 • rolls back expansion to 100% of the federal poverty level if the cost of
31 providing full expansion coverage equals or exceeds the cost of providing
32 coverage up to 100% of the federal poverty level;
33 ▸ establishes an inpatient hospital assessment, the proceeds of which shall be
34 deposited into the Medicaid Expansion Fund; and
35 ▸ establishes an electronic cigarette tax:
36 • defines terms;
37 • addresses licensing issues;
38 • deposits the proceeds into the Medicaid Expansion Fund; and
39 • makes technical changes.
40 Money Appropriated in this Bill:
42 Other Special Clauses:
43 This bill provides a special effective date.
44 Utah Code Sections Affected:
46 26-18-18, as last amended by Laws of Utah 2015, Chapter 283
47 59-14-102, as last amended by Laws of Utah 2013, Chapter 148
48 59-14-403, as renumbered and amended by Laws of Utah 1987, Chapters 2 and 3
49 59-14-802, as enacted by Laws of Utah 2015, Chapter 132
50 59-14-803, as enacted by Laws of Utah 2015, Chapter 132
52 26-18c-101, Utah Code Annotated 1953
53 26-18c-102, Utah Code Annotated 1953
54 26-18c-201, Utah Code Annotated 1953
55 26-18c-202, Utah Code Annotated 1953
56 26-18c-301, Utah Code Annotated 1953
57 26-18c-302, Utah Code Annotated 1953
58 26-18c-303, Utah Code Annotated 1953
59 26-18c-304, Utah Code Annotated 1953
60 26-18c-305, Utah Code Annotated 1953
61 26-18c-306, Utah Code Annotated 1953
62 26-18c-307, Utah Code Annotated 1953
63 26-18c-401, Utah Code Annotated 1953
64 26-18c-402, Utah Code Annotated 1953
65 26-18c-403, Utah Code Annotated 1953
66 26-18c-404, Utah Code Annotated 1953
67 26-18c-405, Utah Code Annotated 1953
68 26-18c-406, Utah Code Annotated 1953
69 26-18c-407, Utah Code Annotated 1953
70 26-18c-408, Utah Code Annotated 1953
71 26-18c-409, Utah Code Annotated 1953
72 59-14-804, Utah Code Annotated 1953
74 Be it enacted by the Legislature of the state of Utah:
75 Section 1. Section 26-18-18 is amended to read:
76 26-18-18. Optional Medicaid expansion.
77 (1) For purposes of this section, "PPACA" [
78 defined in Section 31A-1-301.
79 (2) The department and the governor shall not expand the state's Medicaid program to
80 the optional population under PPACA unless:
88 the state Medicaid program under PPACA to the Legislature in compliance with the legislative
89 review process in Sections 63N-11-106 and 26-18-3; and
91 for expansion of the Medicaid program for optional populations to the Legislature under the
92 high impact federal funds request process required by Section 63J-5-204, Legislative review
93 and approval of certain federal funds request; or
94 (ii) the department obtains approval from the Centers for Medicare and Medicaid
95 Services within the United States Department of Health and Human Services for waivers from
96 federal statutory and regulatory law necessary to implement and fund waivers to the state's
97 Medicaid plan that are necessary to implement Utah Medicaid Expansion under Chapter 18c,
98 Utah Medicaid Expansion.
99 Section 2. Section 26-18c-101 is enacted to read:
101 26-18c-101. Title.
102 This chapter is known as "Utah Medicaid Expansion."
103 Section 3. Section 26-18c-102 is enacted to read:
104 26-18c-102. Definitions.
105 For purposes of this chapter:
106 (1) "Adult expansion population" means an individual who:
107 (a) is described in 42 U.S.C. Sec. 1396a(10)(A)(i)(VIII); and
108 (b) is not otherwise eligible for Medicaid as a mandatory categorically needy
110 (2) "CMS" means the Centers for Medicare and Medicaid Services within the United
111 States Department of Health and Human Services.
112 (3) "Division" means the Division of Health Care Financing established under Section
113 26-18-2.1, within the department.
114 (4) "Employer sponsored insurance" means minimum essential coverage, as that term
115 is defined in 26 C.F.R. 1.5000A-2, that is offered by an employer to its employees.
116 (5) "Enhanced match rate" means the federal match for the adult expansion population
117 established in 42 U.S.C. Sec. 1396d(y).
118 (6) "Federal poverty level" means the poverty guidelines established by the secretary of
119 the United States Department of Health and Human Services under 42 U.S.C. Sec. 9909(2).
120 (7) "Medically frail" means an individual in the adult expansion population who meets
121 the medically exempt criteria of 42 C.F.R. 440.315:
122 (a) as determined by the department; and
123 (b) based on methodology administered by the department or another entity selected by
124 the department.
125 (8) "PPACA" means the same as that term is defined in Section 31A-1-301.
126 (9) "Silver level plan" means a health insurance plan for which an individual may
127 receive federal premium and cost sharing subsidies in the federal health insurance marketplace
128 established under PPACA.
129 (10) "Utah Medicaid Expansion " means the Medicaid expansion program described in
130 Part 3, Description of Utah Medicaid Expansion, and the funding of Utah Medicaid Expansion
131 as described in Part 4, Inpatient Hospital Services Assessment.
132 Section 4. Section 26-18c-201 is enacted to read:
134 26-18c-201. Duty to request and implement Medicaid waivers.
135 No later than July 1, 2016, the department shall submit to CMS a request for waivers
136 from federal statutory and regulatory law necessary to implement and fund a state Medicaid
137 plan to cover the adult expansion population in accordance with this chapter. The request for
138 waivers shall include a request to amend the state's existing Medicaid waivers for the purpose
139 of carrying forward credits the state has accumulated under the state's existing spending
140 authority for work on health care quality improvements.
141 Section 5. Section 26-18c-202 is enacted to read:
142 26-18c-202. Facilitating enrollment in the Utah Medicaid Expansion.
143 The department shall facilitate enrollment in Utah Medicaid Expansion and facilitate
144 the selection of a commercial health insurance plan by certain individuals enrolled in Utah
145 Medicaid Expansion by coordinating with the Medicaid eligibility system administered by the
146 Department of Workforce Services, and with the Avenue H web portal created by Section
147 63N-11-104 and administered by the Office of Consumer Health Services within the
148 Governor's Office of Economic Development.
149 Section 6. Section 26-18c-301 is enacted to read:
151 26-18c-301. Medically frail individuals.
152 (1) An individual in the adult expansion population who is medically frail shall receive
153 Medicaid benefits and services in the state's traditional Medicaid program.
154 (2) The department shall implement a pilot program that integrates medical and
155 behavioral health care services for the medically frail in selected geographic areas in the state.
156 Section 7. Section 26-18c-302 is enacted to read:
157 26-18c-302. Individuals with employer sponsored insurance.
158 (1) An individual in the adult expansion population who is not medically frail and who
159 is offered employer sponsored insurance shall enroll in the employer sponsored insurance.
160 (2) An individual enrolled in employer sponsored insurance under Subsection (1) shall
161 receive wrap-around coverage through Utah Medicaid Expansion in accordance with
162 Subsection (3).
163 (3) (a) If an individual is under 100% of the federal poverty level, the individual shall
164 receive Medicaid wrap-around coverage that provides cost sharing and benefits as required by
166 (b) If an individual is at or above 100% of the federal poverty level, the individual shall
167 receive Medicaid wrap-around coverage that provides cost sharing and benefits substantially
168 equivalent to the cost sharing and benefits provided to an individual who is enrolled in a silver
169 level plan under Section 26-18c-303.
170 (4) If the department determines that the differences between the Medicaid
171 wrap-around coverages described in Subsections (3)(a) and (b) are administratively
172 burdensome, the department:
173 (a) shall report the department's determination to the Legislature in accordance with
174 Section 26-18-3; and
175 (b) may provide Medicaid wrap-around coverage with more uniform levels of cost
176 sharing and benefits.
177 Section 8. Section 26-18c-303 is enacted to read:
178 26-18c-303. Individuals without employer sponsored insurance who are above the
179 federal poverty level.
180 (1) (a) If an individual in the adult expansion population is not medically frail, does not
181 have an offer of employer sponsored insurance, and is at or above the federal poverty level, the
182 individual shall, upon application to participate in Utah Medicaid Expansion, receive:
183 (i) premium subsidies to enroll in a commercial health insurance plan that is actuarially
184 equivalent to a silver level plan; and
185 (ii) cost sharing subsidies equivalent to the cost sharing subsidies that would be
186 available to the individual on the federal marketplace.
187 (b) Premium and cost sharing subsidies under Subsection (1)(a) shall be sufficient to
188 ensure that:
189 (i) the individual pays at least, but no more than, 2% of the individual's household
190 income toward premiums; and
191 (ii) total cost sharing by the individual, including deductibles, copayments, and
192 coinsurance, but excluding premiums, does not exceed 6% of medical expenses covered by the
194 (2) Coverage under Subsection (1):
195 (a) begins on the first day of the month in which the individual is approved for the
196 program and makes an initial premium payment; and
197 (b) may not be applied retroactively from the first day of the month in which the first
198 premium payment was made.
199 (3) If an individual fails to make a monthly premium payment after the initial premium
200 payment, the individual shall receive a 60-day grace period during which to make the premium
201 payment before coverage under the commercial health insurance plan terminates.
202 (4) A commercial health insurance plan offered under this section may not:
203 (a) make a facility payment for non-emergent use of an emergency department; or
204 (b) provide non-emergent transportation.
205 Section 9. Section 26-18c-304 is enacted to read:
206 26-18c-304. Individuals without employer sponsored insurance who are below the
207 federal poverty level.
208 (1) (a) If an individual in the adult expansion population does not have an offer of
209 employer sponsored insurance, is not medically frail, and is below the federal poverty level, the
210 individual shall, upon application to participate in Utah Medicaid Expansion, receive:
211 (i) premium subsidies to enroll in a commercial health insurance plan that is actuarially
212 equivalent to a silver level plan; and
213 (ii) cost sharing subsidies described in Subsection (1)(b).
214 (b) Premium and cost sharing subsidies shall be sufficient to ensure that the individual
215 pays at least, but no more than, the maximum amount in premiums, deductibles, copayments,
216 coinsurance, and other cost sharing permitted by CMS for an individual below the federal
217 poverty level.
218 (2) Coverage under Subsection (1) may not be applied retroactively from the date of
220 (3) A commercial health insurance plan offered under this section may not:
221 (a) make a facility payment for non-emergent use of an emergency department; or
222 (b) provide non-emergent transportation.
223 Section 10. Section 26-18c-305 is enacted to read:
224 26-18c-305. Keeping families together.
225 (1) (a) If an individual in the adult expansion population is not medically frail, is above
226 100% of the federal poverty level, and has one or more children who qualify for the Medicaid
227 program or the Children's Health Insurance Program, the individual shall, upon application to
228 participate in Utah Medicaid Expansion:
229 (i) enroll the individual's children in the same commercial health insurance plan as the
230 plan selected by the individual; and
231 (ii) receive premium and cost sharing subsidies in accordance with Subsection (2) for
232 the individual and the individual's children.
233 (b) If an individual in the adult expansion population is not medically frail, is below
234 100% of the federal poverty level, and has one or more children who qualify for the Medicaid
235 program or the Children's Health Insurance Program, the individual may, at the individual's
237 (i) enroll the individual's children in the same commercial health insurance plan as the
238 plan selected by the individual; and
239 (ii) receive premium and cost sharing subsidies in accordance with Subsection (2) for
240 the individual and the individual's children.
241 (2) Premium and cost sharing subsidies shall be sufficient to:
242 (a) enable the individual to purchase coverage in accordance with Section 26-18c-303
243 or 26-18c-304; and
244 (b) ensure that the children receive any additional Medicaid benefits or cost sharing
245 subsidies that are required by CMS.
246 Section 11. Section 26-18c-306 is enacted to read:
247 26-18c-306. Work assistance.
248 An enrollee in Utah Medicaid Expansion shall be offered employment services at the
249 time of enrollment.
250 Section 12. Section 26-18c-307 is enacted to read:
251 26-18c-307. Modification of Medicaid expansion.
252 (1) The division shall:
253 (a) on or before October 1 of each year, report to the Legislature's Social Services
254 Appropriations Subcommittee the number of enrollees in the expansion population and the cost
255 of providing Medicaid to the expansion population; and
256 (b) after January 1, 2017, seek approval from CMS for waivers from federal regulation
257 necessary to:
258 (i) provide Medicaid to enrollees who are in the expansion population and are below
259 100% of the federal poverty level; and
260 (ii) receive the full federal match rate under PPACA.
261 (2) The division shall amend the state Medicaid plan to cover the expansion population
262 up to 100% of the federal poverty level, and enroll individuals who are above 100% of the
263 federal poverty level into the federal marketplace if:
264 (a) the division obtains a waiver under Subsection (1)(b); or
265 (b) the cost of providing Medicaid services to the full expansion population equals or
266 exceeds the cost of providing Medicaid services only to individuals who are below 100% of the
267 federal poverty level at the state's regular federal match rate.
268 Section 13. Section 26-18c-401 is enacted to read:
270 26-18c-401. Title.
271 This part is known as "Inpatient Hospital Services Assessment."
272 Section 14. Section 26-18c-402 is enacted to read:
273 26-18c-402. Application.
274 (1) Other than for the imposition of the assessment described in this part, nothing in
275 this part shall affect the nonprofit or tax exempt status of any nonprofit charitable, religious, or
276 educational health care provider under:
277 (a) Section 501(c), as amended, of the Internal Revenue Code;
278 (b) other applicable federal law;
279 (c) any state law;
280 (d) any ad valorem property taxes;
281 (e) any sales or use taxes; or
282 (f) any other taxes, fees, or assessments, whether imposed or sought to be imposed by
283 the state or any political subdivision, county, municipality, district, authority, or any agency or
284 department thereof.
285 (2) All assessments paid under this part may be included as an allowable cost of a
286 hospital for purposes of any applicable Medicaid reimbursement formula.
287 (3) This part does not authorize a political subdivision of the state to:
288 (a) license a hospital for revenue;
289 (b) impose a tax or assessment upon a hospital; or
290 (c) impose a tax or assessment measured by the income or earnings of a hospital.
291 Section 15. Section 26-18c-403 is enacted to read:
292 26-18c-403. Definitions.
293 As used in this part:
294 (1) "Assessment" means the hospital inpatient provider assessment established by this
296 (2) "Discharges" means the number of total hospital discharges reported on:
297 (a) worksheet S-3 Part I, column 15, lines 12, 14, and 14.01 of the 2552-96 Medicare
298 cost report, or on Worksheet S-3 Part I, column 15, lines 14, 16, and 17 of the 2552-10
299 Medicare cost report, for the applicable assessment year; or
300 (b) a similar report adopted by the department by administrative rule, if the report
301 under Subsection (2)(a) is no longer available.
302 (3) "Division" means the Division of Health Care Financing of the department.
303 (4) "Hospital":
304 (a) means a privately owned:
305 (i) general acute hospital operating in the state as defined in Section 26-21-2; and
306 (ii) specialty hospital operating in the state, which shall include a privately owned
307 hospital whose inpatient admissions are predominantly:
308 (A) rehabilitation;
309 (B) psychiatric;
310 (C) chemical dependency; or
311 (D) long-term acute care services; and
312 (b) does not include:
313 (i) a residential treatment facility as defined in Section 62A-2-101;
314 (ii) a hospital owned by the federal government, including the Veterans Administration
315 Hospital; or
316 (iii) a hospital that is owned by the state government, a state agency, or a political
317 subdivision of the state, including:
318 (A) a state-owned teaching hospital; and
319 (B) the Utah State Hospital.
320 (5) "Medicare cost report" means CMS-2552-96 or CMS-2552-10, the cost report for
321 electronic filing of hospitals.
322 Section 16. Section 26-18c-404 is enacted to read:
323 26-18c-404. Assessment.
324 (1) A uniform, broad based, assessment is imposed on each hospital:
325 (a) in the amount designated in Section 26-18c-407; and
326 (b) in accordance with Section 26-18c-406.
327 (2) Subject to Section 26-18c-405, the assessment imposed by this part is due and
328 payable on a quarterly basis.
329 Section 17. Section 26-18c-405 is enacted to read:
330 26-18c-405. Collection of assessment -- Deposit of revenue -- Rulemaking.
331 (1) The collecting agent for assessment imposed under Section 26-18c-404 is the
332 department. The department is vested with the administration and enforcement of this part,
333 including the right to adopt administrative rules in accordance with Title 63G, Chapter 3, Utah
334 Administrative Rulemaking Act, necessary to:
335 (a) implement and enforce the provisions of this part;
336 (b) audit records of a facility:
337 (i) that is subject to the assessment imposed by this part; and
338 (ii) does not file a Medicare cost report; and
339 (c) select a report similar to the Medicare cost report if Medicare no longer uses a
340 Medicare cost report.
341 (2) The department shall deposit assessments collected under this part in the
342 expendable special revenue fund created in Section 26-18c-409.
343 (3) The department may, by rule, extend the time for paying the assessment.
344 Section 18. Section 26-18c-406 is enacted to read:
345 26-18c-406. Quarterly notice.
346 Quarterly assessments imposed by this chapter shall be paid to the division within 15
347 business days after the original invoice date that appears on the invoice issued by the division.
348 Section 19. Section 26-18c-407 is enacted to read:
349 26-18c-407. Calculation of assessment.
350 (1) (a) An annual assessment is payable on a quarterly basis for each hospital in an
351 amount calculated at a uniform assessment rate for each hospital discharge, in accordance with
352 this section.
353 (b) The uniform assessment rate for fiscal years beginning on or after July 1, 2016,
354 shall be $17.04 per discharge.
355 (2) (a) For each state fiscal year, discharges shall be determined using the data from
356 each hospital's Medicare cost report contained in the Centers for Medicare and Medicaid
357 Services' Healthcare Cost Report Information System file, or the report's equivalent if the
358 report is replaced in the future by CMS. The hospital's discharge data will be derived as
360 (i) for state fiscal year 2017, the hospital's cost report data for the hospital's fiscal year
361 ending between July 1, 2014, and June 30, 2015;
362 (ii) for state fiscal year 2018, the hospital's cost report data for the hospital's fiscal year
363 ending between July 1, 2015, and June 30, 2016; and
364 (iii) for each subsequent state fiscal year, the hospital's cost report data for the
365 hospital's fiscal year that ended in the state fiscal year two years prior to the assessment fiscal
367 (b) If a hospital's fiscal year Medicare cost report is not contained in the Centers for
368 Medicare and Medicaid Services' Healthcare Cost Report Information System file:
369 (i) the hospital shall submit to the division a copy of the hospital's Medicare cost report
370 applicable to the assessment year; and
371 (ii) the division shall determine the hospital's discharges.
372 (c) If a hospital is not certified by the Medicare program and is not required to file a
373 Medicare cost report:
374 (i) the hospital shall submit to the division its applicable fiscal year discharges with
375 supporting documentation;
376 (ii) the division shall determine the hospital's discharges from the information
377 submitted under Subsection (2)(c)(i); and
378 (iii) the failure to submit discharge information shall result in an audit of the hospital's
379 records and a penalty equal to 5% of the calculated assessment.
380 (3) Except as provided in Subsection (4), if a hospital is owned by an organization that
381 owns more than one hospital in the state:
382 (a) the assessment for each hospital shall be separately calculated by the department;
384 (b) each separate hospital shall pay the assessment imposed by this chapter.
385 (4) Notwithstanding the requirement of Subsection (3), if multiple hospitals use the
386 same Medicaid provider number:
387 (a) the department shall calculate the assessment in the aggregate for the hospitals
388 using the same Medicaid provider number; and
389 (b) the hospitals may pay the assessment in the aggregate.
390 Section 20. Section 26-18c-408 is enacted to read:
391 26-18c-408. Penalties and interest.
392 (1) A facility that fails to pay any assessment or file a return as required under this part,
393 within the time required by this part, shall pay, in addition to the assessment, penalties and
394 interest established by the department.
395 (2) (a) Consistent with Subsection (2)(b), the department shall adopt rules in
396 accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, which establish
397 reasonable penalties and interest for the violations described in Subsection (1).
398 (b) If a hospital fails to timely pay the full amount of a quarterly assessment, the
399 department shall add to the assessment:
400 (i) a penalty equal to 5% of the quarterly amount not paid on or before the due date;
402 (ii) on the last day of each quarter after the due date until the assessed amount and the
403 penalty imposed under Subsection (2)(b)(i) are paid in full, an additional 5% penalty on:
404 (A) any unpaid quarterly assessment; and
405 (B) any unpaid penalty assessment.
406 (c) Upon making a record of its actions, and upon reasonable cause shown, the division
407 may waive, reduce, or compromise any of the penalties imposed under this part.
408 Section 21. Section 26-18c-409 is enacted to read:
409 26-18c-409. Medicaid Expansion Fund.
410 (1) There is created an expendable special revenue fund known as the Medicaid
411 Expansion Fund.
412 (2) The fund consists of:
413 (a) taxes collected under this part;
414 (b) taxes collected from the taxation of an electronic smoking device under Section
416 (c) savings attributable to Utah Medicaid Expansion;
417 (d) preferred drug list savings appropriated to the fund under Subsection 26-18-2.4(4);
418 (e) gifts, grants, donations, or any other conveyance of money that may be made to the
419 fund from private sources; and
420 (f) additional amounts as appropriated by the Legislature.
421 (3) (a) The fund shall earn interest.
422 (b) All interest earned on fund money shall be deposited into the fund.
423 (4) (a) A state agency administering the provisions of this chapter may use money from
424 the fund to pay the costs of administering Utah Medicaid Expansion not otherwise paid for
425 with federal funds or other revenue sources.
426 (b) Money in the fund may not be used for any other purpose.
427 Section 22. Section 59-14-102 is amended to read:
428 59-14-102. Definitions.
429 As used in this chapter:
430 (1) "Cigarette" means a roll for smoking made wholly or in part of tobacco:
431 (a) regardless of:
432 (i) the size of the roll;
433 (ii) the shape of the roll; or
434 (iii) whether the tobacco is:
435 (A) flavored;
436 (B) adulterated; or
437 (C) mixed with any other ingredient; and
438 (b) if the wrapper or cover of the roll is made of paper or any other substance or
439 material except tobacco.
440 (2) "Cigarette rolling machine" means a device or machine that has the capability to
441 produce at least 150 cigarettes in less than 30 minutes.
442 (3) "Cigarette rolling machine operator" means a person who:
443 (a) (i) controls, leases, owns, possesses, or otherwise has available for use a cigarette
444 rolling machine; and
445 (ii) makes the cigarette rolling machine available for use by another person to produce
446 a cigarette; or
447 (b) offers for sale, at retail, a cigarette produced from the cigarette rolling machine.
448 (4) "Consumer" means a person that is not required:
449 (a) under Section 59-14-201 to obtain a license under Section 59-14-202; or
450 (b) under Section 59-14-301 to obtain a license under Section 59-14-202.
451 (5) "Counterfeit cigarette" means:
452 (a) a cigarette that has a false manufacturing label; or
453 (b) a package of cigarettes bearing a counterfeit tax stamp.
454 (6) "Importer" means a person who imports into the United States, either directly or
455 indirectly, a finished cigarette for sale or distribution.
456 (7) "Indian tribal entity" means a federally recognized Indian tribe, tribal entity, or any
457 other person doing business as a distributor or retailer of cigarettes on tribal lands located in the
459 (8) "Little cigar" means a roll for smoking:
460 (a) made wholly or in part of tobacco;
461 (b) that uses an integrated cellulose acetate filter or other similar filter; and
462 (c) that is wrapped in a substance:
463 (i) containing tobacco; and
464 (ii) that is not exclusively natural leaf tobacco.
465 (9) (a) Except as provided in Subsection (9)(b), "manufacturer" means a person who
466 manufactures, fabricates, assembles, processes, or labels a finished cigarette.
467 (b) "Manufacturer" does not include a cigarette rolling machine operator.
468 (10) "Moist snuff" means tobacco that:
469 (a) is finely:
470 (i) cut;
471 (ii) ground; or
472 (iii) powdered;
473 (b) has at least 45% moisture content, as determined by the commission by rule made
474 in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act;
475 (c) is not intended to be:
476 (i) smoked; or
477 (ii) placed in the nasal cavity; and
478 (d) except for single-use pouches of loose tobacco, is not packaged, produced, sold, or
479 distributed in single-use units, including:
480 (i) tablets;
481 (ii) lozenges;
482 (iii) strips;
483 (iv) sticks; or
484 (v) packages containing multiple single-use units.
485 (11) "Nicotine" means a poisonous volatile alkaloid derived from tobacco.
486 (12) "Nontherapeutic nicotine inhaler" means a nicotine inhaler that is not approved for
487 nicotine replacement therapy by the United States Federal Drug Administration.
489 (a) sells or distributes a cigarette to a consumer in the state; or
490 (b) intends to sell or distribute a cigarette to a consumer in the state.
492 evidences payment of the tax on cigarettes required by Section 59-14-205.
494 (b) "Tobacco product" includes:
495 (i) a cigarette produced from a cigarette rolling machine;
496 (ii) a little cigar; or
497 (iii) moist snuff.
498 (c) "Tobacco product" does not include a cigarette.
500 recognized Indian tribe.
501 Section 23. Section 59-14-403 is amended to read:
502 59-14-403. Duplicate invoice requirements -- Failure to comply -- Penalties.
504 cigarette products, as defined in Section 59-14-802, or non-therapeutic nicotine inhalers who
506 the product is delivered through a wholesaler or distributor in this state, or by drop shipment or
507 otherwise, shall mail or deliver a duplicate invoice of all those purchases or receipts to the
508 commission within 10 days after receipt of the commodities if requested by the commission.
509 Failure to furnish duplicate invoices or receipts as requested is subject to the penalties provided
510 under Section 59-1-401.
511 Section 24. Section 59-14-802 is amended to read:
512 59-14-802. Definitions.
513 As used in this part:
514 (1) "Cigarette" means the same as that term is defined in Section 59-14-102.
515 (2) (a) "Electronic cigarette" means:
516 (i) an electronic device used to deliver or capable of delivering vapor containing
517 nicotine to an individual's respiratory system;
518 (ii) a component of the device described in Subsection (2)(a)(i); or
519 (iii) an accessory sold in the same package as the device described in Subsection
521 (b) "Electronic cigarette" includes an e-cigarette as defined in Section 26-38-2.
522 (c) "Electronic cigarette" does not include a battery or battery charger that is sold
523 separately from the electronic cigarette.
524 (3) "Electronic cigarette product" means an electronic cigarette or an electronic
525 cigarette substance.
526 (4) "Electronic cigarette substance" means any substance, including liquid containing
527 nicotine, used or intended for use in an electronic cigarette.
528 (5) "Enforcing agency" means the Department of Health, a county health department,
529 or a local health department, when enforcing:
530 (a) Title 26, Chapter 42, Civil Penalties for Tobacco Sales to Underage Persons; or
531 (b) Title 26, Chapter 57, Electronic Cigarette Regulation Act.
532 (6) "Licensee" means a person that holds a valid license to sell electronic cigarette
534 (7) "License to sell an electronic cigarette product" means a license issued by the
535 commission under [
536 Section 25. Section 59-14-803 is amended to read:
537 59-14-803. License to sell an electronic cigarette product or nicotine inhaler.
560 (1) A manufacturer or distributor of an electronic cigarette product or nontheraputic
561 inhaler, who is responsible for the collection of tax on an electronic cigarette product or
562 nontheraputic inhaler under this chapter, and a retailer of an electronic cigarette product or
563 nontheraputic inhaler:
564 (a) shall register with the commission;
565 (b) shall be licensed by the commission under Part 2, Cigarettes; and
566 (c) is subject to the requirements, procedures, and penalties described in Part 2,
568 (2) A fee may not be charged for registration and licensing of a manufacturer, jobber,
569 distributor, or retailer of an electronic cigarette product or nontheraputic inhaler in addition to
570 the cigarette license if such a license is required.
571 (3) The commission shall require any manufacturer, wholesaler, retailer, or any other
572 person subject to this section, and who is responsible for the collection of tax on an electronic
573 cigarette product or nontheraputic inhaler under this chapter, to post a bond as a prerequisite to
574 registering. The bond shall be in a form and an amount determined by the commission. If the
575 bond is required under Section 59-14-201, the bond may be a combination, the minimum
576 amount of which shall be $1,000.
578 Subsection [
579 (a) Title 26, Chapter 42, Civil Penalties for Tobacco Sales to Underage Persons; or
580 (b) Title 26, Chapter 57, Electronic Cigarette Regulation Act.
582 product or nontheraputic nicotine inhaler under Subsection [
583 issue a license to sell an electronic cigarette product or nontheraputic nicotine inhaler, a license
584 to sell cigarettes under Section 59-14-201, or a license to sell tobacco under Section 59-14-301
585 to the person until one year after:
586 (a) the day on which the time for filing an appeal of the revocation ends, as determined
587 by the enforcing agency; or
588 (b) if the person appeals the enforcing agency's decision to revoke the license to sell an
589 electronic cigarette product, the day on which the enforcing agency's decision to uphold the
590 revocation is final.
592 commission shall also revoke the person's license to sell cigarettes under Section 59-14-201, if
593 any, and the person's license to sell tobacco under Section 59-14-301, if any.
599 Section 26. Section 59-14-804 is enacted to read:
600 59-14-804. Taxation of electronic cigarette product and nicotine inhalers.
601 (1) As used in this section:
602 (a) "Manufacturer's sales price" means the amount the manufacturer of an electronic
603 cigarette product or nontheraputic nicotine inhaler charges after subtracting a discount.
604 (b) "Manufacturer's sales price" includes an original Utah destination freight charge,
605 regardless of:
606 (i) whether the electronic cigarette product or nontheraputic nicotine inhaler is shipped
607 f.o.b. origin or f.o.b. destination; or
608 (ii) who pays the original Utah destination freight charge.
609 (2) There is levied a tax upon the sale, use, or storage of an electronic cigarette product
610 or nontheraputic nicotine inhaler in the state.
611 (3) The tax levied under Subsection (2) shall be paid by the manufacturer, jobber,
612 distributor, wholesaler, retailer, user, or consumer.
613 (4) For an electronic cigarette product or nontheraputic nicotine inhaler, the rate of the
614 tax under this section is .86 multiplied by the manufacturer's sales price.
615 (5) The proceeds from the tax imposed by this section shall be deposited into the
616 Medicaid Expansion Fund created in Section 26-18c-409.
617 Section 27. Effective date.
618 (1) Except as provided in Subsection (2), this bill takes effect on May 10, 2016.
619 (2) The actions affecting the following sections take effect on July 1, 2016:
620 (a) Title 26, Chapter 18c, Part 4, Inpatient Hospital Services Assessment;
621 (b) Section 59-14-102;
622 (c) Section 59-14-403;
623 (d) Section 59-14-802;
624 (e) Section 59-14-803; and
625 (f) Section 59-14-804.
Legislative Review Note
Office of Legislative Research and General Counsel