Health Tax Replacement Passed

Liz Gullett

Oct 21, 2016

On Thursday, the Senate passed a package of bills repealing the Michigan Health Insurance Claims Assessment (HICA) tax. HICA is a tax on health insurance claims paid by both individual policy holders and businesses who offer health care insurance to employees. The tax was originally enacted to help pay the state’s portion of Medicaid, but revenue from the tax never reached the expected levels.

The package of bills would restructure the way Health Maintenance Organizations and Medicaid are funded. It would earmark income tax revenue to generate funds needed to receive federal funding for Medicaid. By utilizing the broadly collected income tax revenue, it alleviates the federal government’s previous concerns that HICA was too narrow to meet the requirements for federal funding.

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