MMA shared the most recent updates with members of the MMA’s Committees on Tax and Health Care as well as the MMA Government Affairs Committee.

As outlined in this analysis of the proposal, the proposed Insurance Provider Assessment (IPA) tax would be applied to commercial policies on a per-member-per-month (PMPM) basis at a flat rate of $2.40 per member per month.

“Michigan manufacturers continue to suffer under the anti-competitive burden of the HICA tax — a tax unique to our state,” said Delaney McKinley, MMA senior director of government affairs and membership. “This proposal will carry out one of MMA’s top legislative priorities in the elimination of the HICA tax while continuing to drive down the cost of health care for employers across Michigan.”

Since MMA’s conference call outlining this proposal on 4/13/18, additional details have been revealed to include:

• The proposed IPA tax would essentially apply to all markets that are currently taxed by HICA, except self-insured groups. That includes HMOs, PPOs, POS plans, EPOs, supplemental plans and dental plans. Please note: we have received feedback that current HICA loads for dental policies are significantly less than $2.40 PMPM, so we are working to exempt dental altogether or have a special rate apply that relates proportionally to current liability.
• Health insurers would be taxed on a quarterly basis based on member month information provided in their annual financial statement filed with the Department of Insurance and Financial Services the prior year. This tax assessment will unquestionably be passed on to the health care purchaser.
• Legislation is being drafted in the Senate that would ensure a strong trigger to eliminate the HICA tax as soon as the IPA tax goes into effect. While the Snyder Administration has proposed that the HICA merely be “paused” until its sunset on July 1, 2020, our Senate champions agree that we must take the HICA tax off the books as soon as the IPA takes effect.
• Senate staff has devised a structure for the IPA that would allow for modification to ensure that the tax meets the federally required statistical model when populations change, but won’t require a vote of the Legislature or cede power to the Executive Branch. While commercial rates will be set by statute, Medicaid rates will be set annually by the state in an amount sufficient to achieve the required result of the federal statistical test. Employers will have certainty in their rates and we won’t have the risk of resetting rates every few years.

The Snyder Administration intends to move legislation implementing the proposed new tax along with the budget process that is currently taking place in Lansing. Keeping with that timing, legislative passage could occur by mid-June and MMA will keep members updated on developments.

You can be among the first to learn about critical legislative and regulatory policy changes by joining one or more MMA Policy Committees. Learn more online.

This article originally appeared in the 4/24/18 issue of MFG Voice.

Contact Delaney McKinley

Senior Director of Government Affairs and Membership
Call 517-487-8530
E-mail mckinley@mimfg.org