Legislature Passes Tax Sunset Extension

Liz Gullett

Feb 26, 2016

This week, the Senate passed and the House concurred in a bill extending the sunset on the Health Insurance Claims Assessment (HICA) through 2020. When the House passed their version of HB 5105 in December, it included a sunset extension through 2025. However, the sole change the Senate made to the bill was to shorten the extension to 2020.

HICA is a percentage-based tax on paid health claims, with exceptions for Medicare, Veterans Administration, and fee-for-service Medicaid. The tax was enacted in 2011 and took effect on January 1, 2012. Originally, the tax was set to sunset on January 1, 2014, but in 2013 the legislature extended the sunset to January 1, 2018. HICA revenue is used for state match dollars for federal Medicaid funding.

The bill will be presented to Governor Rick Snyder for final approval.

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