Chamber Continues to Champion HICA Tax Repeal, But We Need Your Help

September 19, 2016

Later this week, the Michigan House is expected to consider legislation championed by the Michigan Chamber to repeal Michigan’s unique and uncompetitive Health Insurance Claims Assessment, or "HICA Tax.”  While it appears this legislation will receive the same bipartisan support it enjoyed in the Senate, we need your help locking in the votes to send a clear message to the Governor that this legislation is a priority for lawmakers and health insurance purchasers and deserves his support. 

The HICA Tax is a 0.75 percent tax on paid health insurance claims. It is paid by individuals and businesses alike and has added nearly $1 billion to the cost of health insurance since its enactment in 2011.

Repeal of Michigan's HICA Tax has long been a priority for the Michigan Chamber because it makes it more costly and difficult for individuals and employers to purchase health insurance. If the House approves the legislation it will return to the Senate for a concurrence vote and then advance to the Governor for his signature.  

Senate Bills 987-990 would restructure an existing Use Tax on Medicaid Managed Care Organizations (MCOs) by bringing the tax into compliance with federal law. By 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 Tax rate would drop to 0% on January 1, 2017 and be completely repeal on December 31, 2018, so long as the federal government does not disallow the new MCO Use Tax structure by withholding federal Medicaid dollars. If the new structure is disapproved before the end of 2018, the HICA Tax rate would return to the books. 

Without this legislation, Michigan law specifies that the HICA Tax will automatically revert to one percent on January 1, 2017, costing health insurance purchasers nearly $350 million annually. 

This legislation represents a golden opportunity to get the HICA Tax repealed once and for all. We hope you will contact your State Representative today to urge his or her support.

Please contact Wendy Block at wblock@michamber.com with any questions.