Federal Employees Health Benefits Program

The State of West Virginia
State Tax Department
Commissioner's Office
1206 Quarrier Street
Charleston, West Virginia 25301

Attention: Rebecca M. Craig, State Tax Commissioner

Dear Ms. Craig:

This is to advise you that the Federal Employees Health Benefits Act (FEHBA) provision at 5 U.S.C. § 8909(f) does not preempt the West Virginia Health Care Provider Tax Act of 1993 pursuant to a ruling of the United States Court of Appeals for the Fourth Circuit, United States v. West Virginia, 339 F.3d 212 (4th Cir. 2003). We will evaluate whether 5 U.S.C. § 8909(f) preempts taxes in other states in the Fourth Circuit in accordance with the rationale set forth in that opinion.

The West Virginia Health Care Provider Tax Act of 1993, W. Va. Code § 11-27 et seq., imposes a tax of 1.75% to 5.5% of the gross receipts of various categories of health care providers in West Virginia. Health care providers in the State may pass the economic costs of the tax to FEHB carriers as a result of the Court of Appeals ruling. We have instructed FEHB carriers to pay the tax as part of the providers' billed charges. Health care providers in West Virginia should include gross receipts attributable to their FEHB enrollee population when calculating their payments to the Department of Tax and Revenue for the State of West Virginia.

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