Michigan lawmakers approve 1% tax on health care claims

LANSING, Mich.—A new 1% tax would be assessed on paid health care claims under legislation approved by Michigan lawmakers.

The tax would be paid starting Jan. 1, 2012, by insurers offering fully insured plans and by third-party claims administrators in the case of self-funded plans.

The tax, which is intended to help fund the state's Medicaid program, would be paid quarterly starting April 30, 2012.

Exemptions

Certain plans would be exempt from the tax, including Medicare Advantage plans, Medicare prescription drug plans and plans covering federal employees. In addition, the tax would not be assessed on services provided in Michigan to non-Michigan residents.

The tax is intended to generate $400 million in annual revenues for the state. If the revenue collected exceeds that amount, insurers and TPAs would receive a credit against their assessments due the next year.

Michigan Gov. Rick Snyder is expected to sign the measure into law, which state lawmakers approved on Wednesday.

Other states that have similar taxes include Maine, which is phasing out its tax, Massachusetts and New York.