Chamber Champions HICA Tax Repeal, Bill On The Move!

May 25, 2016

Good news! Earlier today, the Senate Competitiveness Committee moved legislation that would repeal Michigan’s unique and uncompetitive Health Insurance Claims Assessment, or “HICA Tax.” The HICA Tax has added nearly $1 billion to the cost of health insurance since its enactment in 2011.

Senate Bills 987-990, introduced by Senators Horn, Stamas, MacGregor and Shirkey, would restructure an existing Use Tax on Medicaid Managed Care Organizations (MCOs) to bring the tax into compliance with federal law. The current MCO use tax has been subject to federal scrutiny and will be deemed an impermissible revenue source by the federal government beginning in January.

In restructuring the MCO Use Tax, the state can repeal the HICA Tax without any adverse impact on the state budget. Under the legislation, the HICA rate would drop to 0% on January 1, 2017 and be completely eliminated on December 31, 2018.

The HICA Tax is a 0.75% tax on paid health insurance claims. It is paid by both individuals and job providers purchasing health insurance. 

Repeal of the HICA Tax has long been a top priority of the Michigan Chamber because the HICA Tax makes it more costly and difficult for employers to purchase health insurance for their employees. Our advocacy for SBs 989-90 will have a real and positive impact on health insurance premiums in Michigan.  Our commitment to full repeal will not end until this bill is signed by the Governor. 

Please contact Wendy Block with any questions at (517) 371-7678 or wblock@michamber.com.