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In American National Life Insurance Company of Texas v. Director of Revenue, American National, a Texas domiciled insurance company that sells stoploss insurance policies in Missouri to employers who maintain self-funded health benefit plans, claimed a refund for direct premium taxes specified in § 148.340. Section 148.340 provides that every insurance company not organized under the laws of Missouri shall pay a quarterly tax upon direct premiums received in the State of Missouri or on account of business done in the State of Missouri. The phrase “Direct Premium” is not defined in the statute or cases interpreting the statute. The court determined that a tax on “Direct Premiums Received” is imposed upon the consideration paid by an insured to an insurer for a contract of insurance.
American National argued that its stoploss policies are reinsurance and not subject to the direct tax under § 148.340. Citing Associated Industries of Missouri v. Angoff, American National argued that stoploss insurance cannot be included in the premiums taxed. See, 937 SW.2d 277 (Mo. App. 1996). The court rejected American National’s argument, holding that § 148.340 neither imposes a tax upon insurance, nor exempts reinsurance from tax. Rather, § 148.340 taxes “Direct Premiums Received.” The court reasoned that, in this instance, the insured is the employer and the insurer is American National. The employer does not collect any specific sums from employees for the benefit and no tax is imposed on the benefit by § 148.340 upon the employer or employees. The first premium paid and subject to tax is that paid by the employer to American National. Based on this reasoning, the Supreme Court of Missouri affirmed the decision of the Administrative Hearing Commission, finding that stoploss policy premiums are subject to the direct premium tax under § 148.340.
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