September 20, 2011—Governor Rick Snyder signed new legislation—The Health Insurance Claims Assessment Act (HICAA) into law on September 20, 2011. The HICAA tax will assess a one percent health care claims tax on all paid health insurance claims in Michigan and replaces the existing six percent use tax applied to Medicaid health claims. It will be paid by health insurers beginning January 1, 2012. The tax impacts Michigan fully insured and self-insured plans, and is expected to raise $400 million annually. The law was enacted in an effort to address potential short fall in Medicaid funding, and will expire at the end of 2013.
All Michigan insurers and HMOs regulated by the Insurance Code are required by law to file a quarterly tax return and pay this tax. Carriers are required to develop an equitable way to capture this tax assessment from employers and individuals that purchase health insurance.
Categories of claims exempt from tax:
- Health FSA, HRA, HSA or Archer MSA
- Claims under Federal Employee Health Benefit Plan and other federal programs like Medicare Part D and TRICARE.
- Claims paid for non-Michigan residents, even if care is provided in Michigan.
- Claims paid to non-Michigan providers, even if care is provided to a Michigan resident.
- Workers compensation claims.
- Health-related claims for auto, home, long-term care and disability income insurance.
- Out-of-pocket medical expenses (e.g. copayments and deductibles)
Blue Cross Blue Shield of Michigan and HAP have both provided a list of FAQs in regards to the new legislation and how it will impact their customers.
We will continue to keep you updated as more information becomes available.
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