Arizona Revised Statutes

Ariz. Rev. Stat. § 36-2905 (2026)

Removal of medicaid special exemption for payments to contractors; civil penalty

✓ current as of May 2026

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36-2905. Removal of medicaid special exemption for payments to contractors; civil penalty

A. Notwithstanding any other law, beginning on October 1, 2003, each contractor shall pay to the director of the department of insurance and financial institutions a tax equal to two percent of the total capitation, including reinsurance, and any other reimbursement paid to the contractor by the administration for persons eligible pursuant to section 36-2901, paragraph 6, subdivisions (a) and (g) and article 4 of this chapter. The tax shall be paid in four payments pursuant to subsection C of this section and deposited in the state general fund pursuant to sections 35-146 and 35-147.

B. The contractor shall not deduct any disallowance or penalty imposed by the administration pursuant to this chapter from the financial information submitted to the director of the department of insurance and financial institutions.

C. Each contractor shall file the estimated tax and documentation with the director of the department of insurance and financial institutions on a form prescribed by the director of the department of insurance and financial institutions to pay the estimated tax. A contractor shall make estimated tax payments to the director of the department of insurance and financial institutions for deposit in the state general fund pursuant to sections 35-146 and 35-147. The tax payments are due on or before September 15, December 15, March 15 and June 15 of each year. The amount of the payments shall be an estimate of the tax due for the quarter that ends in the month that payment is due.

D. On or before April 1, 2004 and annually on or before April 1 thereafter, the director of the department of insurance and financial institutions shall use data provided by the administration to reconcile the amount paid by each contractor pursuant to this section with the actual amount of title XIX and title XXI reimbursement made by the administration to the contractor in the preceding calendar year. If there is a discrepancy in the two amounts, the director of the department of insurance and financial institutions shall notify the contractor of the difference, provide a notice of right of appeal and bill the contractor for the unpaid amount of the premium tax or, if there is an overpayment, the director of the department of insurance and financial institutions shall either refund the amount of the overpayment to the contractor or issue a credit for the amount of the overpayment that the contractor can apply against future tax obligations prescribed by this section.

E. A contractor that fails to file an estimated payment or pay an unpaid premium tax as prescribed by this section is subject to a civil penalty equal to the greater of $25 or five percent of the amount due and is subject to interest on the amount due at the rate of one percent per month from the date the amount was due.

F. From and after December 31, 2017, the director of the department of insurance and financial institutions may require that reports and payments under this section be submitted electronically. If the director requires electronic submission, the director shall include on the department of insurance and financial institution's official website a list of one or more acceptable methods by which a contractor must submit reports and payments.

Notes of Decisions

Cited in 4 cases, 1992–1996 · leading case: Cochise Cnty. v. Arizona Health Care Cost Containment Sys., 825 P.2d 968 (Ariz. Ct. App. 1992).

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Cochise Cnty. v. Arizona Health Care Cost Containment Sys., 825 P.2d 968 (Ariz. Ct. App. 1992). · cites it 4× “A.R.S. § 36-2905(A). As authorized by the statute, the director of AHCCCS promulgated, in accordance with the Administrative Procedure Act *445 (APA), A.”

Arizona Health Care Cost Containment Sys. Admin. v. Carondelet Health Sys., 935 P.2d 844 (Ariz. Ct. App. 1996). · cites it 3× “”) § 36-2905(B). Each became eligible for AHCCCS through a “spend down” process in which incurred medical bills are subtracted from the patient’s income until it meets the qualification limitations.”

Cochise Cnty. v. Kirschner, 830 P.2d 470 (Ariz. Ct. App. 1992). · cites it 2× “A.R.S. § 36-2905(E). Finally, grievances can arise because of AHCCCS’s obligation to monitor counties’ eligibility certifications.”

Maricopa Cnty. v. Arizona Health Care Cost Containment Sys., 880 P.2d 728 (Ariz. Ct. App. 1994). · cites it 6× “The Boswell court relied upon the notions of reasonableness, common sense and justice in ruling that the critical issue was whether the patient incurred sufficient expenses to satisfy the “spend-down” requirement, rather than whether the patient actually paid for those expenses.”

— Ariz. Rev. Stat. § 36-2905(A) — 1 case

Cochise Cnty. v. Arizona Health Care Cost Containment Sys., 825 P.2d 968 (Ariz. Ct. App. 1992). “A.R.S. § 36-2905(A). As authorized by the statute, the director of AHCCCS promulgated, in accordance with the Administrative Procedure Act *445 (APA), A.”

— Ariz. Rev. Stat. § 36-2905(B) — 1 case

Arizona Health Care Cost Containment Sys. Admin. v. Carondelet Health Sys., 935 P.2d 844 (Ariz. Ct. App. 1996). “”) § 36-2905(B). Each became eligible for AHCCCS through a “spend down” process in which incurred medical bills are subtracted from the patient’s income until it meets the qualification limitations.”

— Ariz. Rev. Stat. § 36-2905(E) — 1 case

Cochise Cnty. v. Kirschner, 830 P.2d 470 (Ariz. Ct. App. 1992). “A.R.S. § 36-2905(E). Finally, grievances can arise because of AHCCCS’s obligation to monitor counties’ eligibility certifications.”

— Ariz. Rev. Stat. § 36-2905(E)(l) — 2 cases

Maricopa Cnty. v. Arizona Health Care Cost Containment Sys., 880 P.2d 728 (Ariz. Ct. App. 1994). “The Boswell court relied upon the notions of reasonableness, common sense and justice in ruling that the critical issue was whether the patient incurred sufficient expenses to satisfy the “spend-down” requirement, rather than whether the patient actually paid for those expenses.”

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