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CA Department of Insurance

Commissioner Jones statement on revocation of Blue Shield’s tax-exempt status

News: 2015 Press Release

For Release: March 18, 2015
Media Calls Only: 916-492-3566
Email Inquiries: cdipress@insurance.ca.gov
Commissioner Jones statement on revocation of Blue Shield’s tax-exempt status

SACRAMENTO, Calif. -Today California Insurance Commissioner Dave Jones made the following statement in response to the Franchise Tax Board's decision to revoke Blue Shield of California's tax-exempt status:

"The Franchise Tax Board decision to terminate Blue Shield's tax-exempt status confirms what I have said for years -that Blue Shield charges excessive rates and acts like a for-profit health insurer. Blue Shield is also dodging the payment of premium taxes, by taking advantage of a legal loophole that allows Blue Shield to move its health insurance products from Department of Insurance regulation to Department of Managed Health Care regulation.

The Department of Insurance collects premium taxes from all for-profit and non-profit health insurers. Blue Shield has moved most of its health insurance policies over to Department of Managed Health Care, to dodge my Department's strong consumer protection regulation and our collection of premium taxes. We need to pass AB 1434 by Assemblymember Kevin McCarty to close the loophole that allows Blue Shield to move its health insurance products to the Department of Managed Health Care to avoid the strong consumer protection oversight of the Department of Insurance and avoid paying premium taxes.

Currently, the Blue Shield loophole costs the state $100 million in premium taxes annually. As a tax-exempt company with surplus of $4.2 billion Blue Shield was able to accumulate an enormous amount of money on which it did not pay state taxes by evading the tax on the premiums it collects."



The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $289 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $394 million in claims and premiums. Please visit the Department of Insurance web site at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.HELP or 213.897.8921. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.

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