New B&O tax exemption for services covered by a Qualified Washington Health Benefit Exchange health plan

Intended audience: Health care provider.

Starting Jan. 1, 2021, health care providers are exempt from business and occupation (B&O) tax on services performed for patients covered by a qualified health plan offered by a health carrier who contracts with the Washington Health Care Authority.

What is exempt?

Amounts received by a health care provider for services covered by a qualified health plan offered under RCW 41.05.410 are exempt from B&O tax. This includes:

• Reimbursements received from the qualified health plan.
• Any amounts collected from the patient as part of the patient’s cost-sharing obligation.

How do I claim the B&O tax exemption?

You must report amounts received under the appropriate B&O tax classification. These may include, but are not limited to, the following:

• Service and Other Activities.
• Service and Other Activities ($1 million or greater in prior year).
• Public or Nonprofit Hospitals (RCW 82.04.260).
• For Profit Hospitals (WAC 458-20-168).

You must then claim a deduction under Qualified Washington Health Benefit Exchange Plans equal to the amount covered by a qualified health plan.

More information

• Visit the Washington Health Benefit Exchange website for information regarding qualified health plans.
• This exemption expires Jan. 1, 2032, pursuant to the automatic expiration date established in RCW 82.32.805.
• An annual tax performance report under RCW 82.32.808 is not required for this exemption.
• Engrossed Substitute Senate Bill (ESSB) 5526, Chapter 364, Laws of 2019.
• RCW 82.04.321.

Questions?

Please call 360-705-6705.