Blue Cross and Blue Shield just got a big tax break from the federal government but it doesn’t mean the savings will trickle down to customers in the form of a refund or a rate cut. Instead, it means the state’s biggest health insurer won’t raise premiums quite as much next year.
The Durham-based company plans to pass on the tax cut savings in its next rate request, expected to be filed in June.
“While premiums may still go up, they will go up by a lesser amount than they otherwise would have,” said company spokesman Austin Vevurka. “That is because we will be able to use future tax savings to lessen future premium increases.”
In the meantime, Blue Cross said it would start sharing the savings – $40 million this year – immediately with Triangle nonprofits and employees. The company plans to make about $50 million in grants to area nonprofits and will also award one-time $1,000 bonuses to its 4,700 non-officer employees. The bonuses are in addition to whatever performance bonuses staff will receive at year’s end.
Blue Cross is among many businesses deciding how to distribute the largesse of the federal tax cut, which was signed into law by President Donald Trump in December. The law reduces the corporate income tax from 35 percent to 21 percent, among other provisions.
Utility companies in the state, including Duke Energy and PSNC Energy, are also deciding how to share the money. That decision is up to the N.C. Utilities Commission, which will decide whether to use tax savings to offset future rate increases or to credit customers now.
In Blue Cross’s case, the decision will be up to the N.C. Department of Insurance.
Vevurka said customer savings in 2019 would depend on the company’s tax savings that year, when the tax cut will be passed along to customers in their health insurance rates. Customers will start seeing the benfits as early as Oct. 1.
“Every dollar we don’t pay in taxes is a dollar we don’t have to build in to premiums,” Vevurka said.
Blue Cross said the $50 million in community grants will focus on four social health issues: the opioid epidemic, early childhood development, social determinants of health, and primary care. The grants come from tax savings and from $10 million the insurer is pitching in. Last year, Blue Cross donated $12 million to community organizations.
The groups selected for the grants are TROSA, a Durham-based organization on substance abuse issues that will expand its work across the state; Prevent Child Abuse North Carolina, in Raleigh; InterAct, to create a new Family Justice Center in Raleigh; UNC Chapel Hill’s Medicine Department of Allied Health Sciences; and Duke Healthy Community programs.