Newport health-care firm seeks $2.1M in state tax credits

Sept. 05--Magellan Health, an Arizona-based health care management company with about 86 employees in its Newport location, is seeking up to $2.1 million in Qualified Jobs tax credits from the Rhode Island Commerce Corporation, Commerce Secretary Stefan Pryor said.

If the corporation approves the credits, the company has pledged to more than double its local workforce, Pryor said. The firm could use the credits to offset its corporate tax liability.

The Commerce Corporation is poised to consider the request for state incentives at a 5 p.m. meeting Tuesday, after the corporation's investment committee last week voted to recommend the full board approve the request, Pryor said. Two of three investment committee members attended and voted for approval, Pryor said: Bernard V. Buonanno III, of Providence, and Michael F. McNally, of Barrington.

Although Magellan Health expects to hire another 100 employees here over the next three years, only 75 of those jobs would be eligible for tax credits, Pryor said. That's because the program allows companies to earn tax credits after they create jobs that pay no less than the state's median hourly wage. Not all the new jobs will meet that salary requirement, Pryor said.

The company helps customers manage complex health-care subjects, including pharmacy benefits, pharmaceutical research, health-care finance and data analytics. Its customers include managed-care organizations, health plans, employers, labor unions and governmental agencies, Pryor said. The firm would hire health care, finance, data science and administrative employees here, he said.

The publicly-traded company reported net revenue last year of $4.8 billion, an increase of 5.2 percent over 2015, which Magellan reported was primarily due to the impact of new businesses and acquisitions, and partially offset by contract terminations.

Qualified Jobs credits are paid one year at a time, but don't kick in until new employees have worked a full year and have paid personal income taxes that exceed the credit. Magellan is seeking credits that would be paid out over 10 years, and they've pledged to keep jobs here 12 years, Pryor said.

Since Gov. Gina Raimondo's administration created this incentive program in her first year in office, 2015, the Corporation has pledged up to $40.2 million in tax credits to 17 companies. In return, those companies have pledged to create up to 1,933 jobs.

The Commerce Corporation has estimated the new Magellan jobs would generate $6 million in corporate, sales and personal income taxes over the next 12 years, Pryor said.

"This is the 18th company landing or expanding in Rhode Island with support from our incentive program," Pryor said. "We are pleased that Magellan, a company with choices, is choosing to expand its workforce right here in Rhode Island."

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