Update: Michigan claims tax affecting January bills
BCBSM and BCN have completed all adjustments required to include the claims tax assessment in group and individual bills for January 2012. The Health Insurance Claims Assessment Act (HICAA) was signed into law on September 20, 2011 and will assess a one percent health care claims tax on all paid health insurance claims in Michigan. This alert addresses January bills that will include the Michigan Claims Tax assessment.
How the Michigan Tax Assessment will appear on January bills
Non-ASC group customers:
The tax assessment is based on a claim’s tax factor applied to the monthly premium.
- BCBSM fully insured (underwritten) area-rated group customers–Blue Cross will apply a single .75 percent tax factor* to the group’s monthly premium
- BCN full insured (underwritten) group customers–BCN will apply a single .84 percent tax factor* to the group’s monthly premiums.
*Tax factors are based on the estimated claims tax for the entire area-rated risk pool and incorporated assumptions for residency and claims. It will be annually adjusted to accurately match the amounts charge to the taxes paid.
- Blue Cross fully insured experience-rated group customers- Because experience-rated arrangements use a group’s own experience, Blue Cross will apply a single claim factor based on the group’s percentage of Michigan membership as of July 2011.
Percentage of outstate membership Factor applied to premium
<10% .75%
10-20% .65%
21-40% .55%
41-60% .35%
61-80% .20%
80%+ 0%
The tax will appear as a separate line item on the bills. Samples of the bills are below:
- BCN group (PDF)
- BCBSM group
- Local billed (PDF)
- MOS billed (PDF)
- NASCO billed (PDF)
ASC group customers:
BCBSM and BCN will collect 1% of Michigan incurred and paid claims in 2012 from the group and pay it to the state of Michigan. The attached chart explains how the tax will be billed for the following ASC billing arrangements:
- Auto accounts
- Quarterly settled
- Weekly call-ins
- Monthly invoiced (advanced deposit and monthly cap)
The tax assessment will appear as a separate line item on the bills. Samples of the bills are provided below:
- ASC payment schedule
- Local (PDF)
- NASCO (PDF)
- Local ASC groups (monthly invoice) (PDF)
- MOS ASC Groups (monthly invoice)—In Development
- NASCO ASC groups (monthly invoice) (PDF)
Individual customers:
Beginning Nov. 23, 2011, BCBSM and BCN are sending individual members a letter explaining the Michigan tax. The tax factor* will be different for BCBSM and BCN IBU and Medigap members.
- .75% BCBSM IBU
- .84% BCN IBU
- 1.35% Medigap
*The tax factor is based on claims for the entire pool of individual members divided by total premiums. This is an equitable way to assess the claims tax and minimize the impact of high-cost claims. The factor charged will be adjusted annually to accurately match the amounts charged to the taxes paid.
The tax assessment will appear as a separate line item on the bills. Samples of the bills are provided below:
Tax Calculator available on bcbsm.com
To help you estimate your tax assessment, BCBSM/BCN has created a simple tax calculator at bcbsm.com.
Additional Communications
AFG Blues Alert-New MI Claims Tax 10/4/2011
This alert was sent to all AFG clients that are BCBSM/BCN members via email. Please contact your dedicated AFG Account Manager with questions or concerns.
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