NY MCO tax impact on UnitedHealthcare and Oxford clients

New York’s Managed Care Organization (MCO) tax, effective January 1, 2025, applies to providers of fully insured Commercial, Essential Plan, and Medicaid managed care plans in the state. The new tax seeks to increase federal Medicaid revenue to the state through increased matching funds from Centers for Medicare & Medicaid Services (CMS) for the taxes charged to these health plans.

What this means for UnitedHealthcare and Oxford clients
In compliance with the law, we will be paying the MCO tax based on individual UnitedHealthcare and Oxford plan enrollee counts each month. The per member per month (PMPM) amount is assessed on a calendar year basis and varies by plan type.

The tax will be accounted for in our rates, as approved by the New York Department of Financial Services, for impacted new and renewing groups beginning with December 1, 2025 effective and renewal dates. There will be no retroactive charges, and the tax will not be a line item on monthly premium invoices since it is included in our pricing methodology.

The implementation timelines and range of costs for the new tax are as follows:

• $25 – $126 PMPM for Medicaid plans, effective beginning January 1, 2026
• $7 – $13 PMPM for Essential plans, effective beginning January 1, 2026; no impact to member level premium payments; cost will be mostly covered by the federal government
• $1.50 – $2 PMPM for all other fully insured Commercial plans, effective beginning December 1, 2025 for large groups (101+) and January 1, 2026 for small groups (1-100) since 2025 small group rates were finalized in 2024

UnitedHealthcare and Oxford self-funded and level funded plans are exempt from the MCO tax.