The Health Insurance Claims Assessment Act will impose a new 1% tax on paid health care claims. This tax, which takes effect on January 1, 2012, will be paid by insurers that provide fully-insured plans, and by third party claims administrators in the case of self-funded plans. The tax is intended to help fund Michigan's Medicaid program and will be paid quarterly, beginning April 30, 2012.

While all insured Michigan residents will be impacted by this new legislation, it remains unclear how insurers will reflect the additional cost in their statements. At this time, we understand that Blue Cross Blue Shield of Michigan will include it as a line item on member bills, but other carriers may opt to build it into their rates.

The new tax applies to most health care claims, but not all. It is intended to generate $400 million in annual revenues for the state of Michigan. If the revenue collected exceeds that amount, insurers and third party administrators would receive a credit against their assessments due the next year. Barring any legislative intervention, the tax is set to expire on January 1, 2014.

Please feel free to contact our office if you have questions about this new legislation and its impact on your health coverage.

Dave Drayton has been with Lyman & Sheets since 1981, and has more than 27 years of risk management, insurance operations and sales experience. Follow Dave on Twitter @Dave_Drayton or connect with him on LinkedIn.