In 2018 Michigan passed new legislation, specifically 2018 PA 175, called the Insurance Provider Assessment Act (IPAA).
As background, this new tax replaces the prior tax through a companion act, specifically 2018 PA 173, which was known in MI as the Health Insurance Claims Assessment (HICA). The HICA tax applied to insurance providers (i.e., health insurers and third-party administrators of self-insured plans). The HICA tax was repealed retroactively as of Oct. 1, 2018, and the IPAA tax does not affect self-funded plans or their administrators, but the IPAA tax does apply to carriers. So, employers with fully insured plans in MI will have the new tax reflected in their premiums.
Employers with self-insured plans will want to confirm with their third-party administrators that the HICA tax was not assessed on paid claims on or after Oct. 1, 2018. They should also verify that their third-party administrators have complied with the final HICA tax payments and reporting obligations. The final quarterly return was due Oct. 31, 2018, and the 2018 annual return filing deadline was Feb. 28, 2019.
Instructions and guidance on the IPAA tax are available on the MI Department of Treasury’s website. Under the IPAA, special rules apply to the initial assessment. The MI Department of Treasury will notify all carriers of the total amount of the assessment, prorated for two quarters, based on the number of member months reported in 2017. This prorated assessment is payable in two equal installments due Jan. 30, 2019, and April 30, 2019. Beginning in 2019, the Department is required to notify all taxpayers of the amount of the annual assessment by June 15, which will then be payable in quarterly installments beginning July 30.
Michigan Department of Treasury IPA Website »