Magellan HRSC Inc. (“Magellan”), a subsidiary of Magellan Health, Inc. (Nasdaq: MGLN), is a leading healthcare management company focused on improving quality of life and reducing costs associated with complex areas of healthcare and pharmacy coverage. Founded in 1969, Magellan employs approximately 9,700 employees at its facilities in Scottsdale, AZ. (headquarters), Glen Allen, VA., Orlando, FL., Salt Lake City, UT., St. Louis, MO., and Newport, RI. Magellan’s Rhode Island presence began in 2014 when it acquired Newport-based CDMI, a medical and pharmacy benefit management company. Magellan’s current Newport-based operations are associated with Magellan Rx Management, a full-service pharmacy benefit manager that, in addition to providing industry-standard volume-based savings, delivers value to its customers using innovative tools, including targeted clinical programs, member and provider engagement strategies, advanced analytics, and expert specialty pharmacy management capabilities. Magellan now has an estimated 88 employees in Newport.
Magellan is proposing to retain its 88 employees and expand in Rhode Island by creating at least 75 new full-time jobs for which it would receive tax credits, as well as an estimated 25 additional full-time jobs for which it would not receive tax credits. The new jobs are projected to be filled by a range of healthcare, finance, data science, and administrative professionals, including pharmacists, pharmacy technicians, data analysts, and project managers, with an anticipated median salary of $100,000 for jobs qualifying for Qualified Jobs Incentive Tax Credits. Magellan expects to hire these new employees between the fourth quarter of 2017 and 2021.
In order for a job to be eligible for incentives under the Qualified Jobs Incentive Tax Credit Program, it must earn at least the Rhode Island Median Wage which is currently $19.10 per hour.
The Commerce Corporation is recommending awarding Qualified Jobs Incentive Tax Credits to the Company.
The recommended term of the tax incentive agreement is ten years, and Magellan has indicated that it will commit to maintaining the new jobs in Rhode Island for at least the twelve years as required.
The tax credits are predicated on Magellan hiring 20 full-time employees by 2019, 40 full-time employees by 2020, and 75 full-time employees by 2021. The tax credits would not be awarded until jobs are created and generating state income tax withholdings. To receive tax credits, the company must create and maintain 100 percent of its year-1 hiring commitment as well as at least 80 percent of its hiring commitments for years 2-10.
The total credits are estimated to be worth $2.1 million over the 10-year period. The actual tax credit amount will be determined by the number and wages of the new jobs created. Magellan would also be eligible for additional tax credits if they create at least 105 jobs by 2022, 140 jobs by 2023, or 185 jobs by 2024.
Based on a third-party analysis, over the twelve-year period, Rhode Island is projected to realize a net increase of $3.9 million in personal income, sales, and business corporation taxes resulting from the new hires, as well as an increase of $10.6 million in Rhode Island’s annual GDP once the new hires are in place.
This does not include the value of the state income taxes generated over 10 years by the new incentivized jobs created by Magellan, as those income taxes will be offset by the tax credit paid to the company under the Act.