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Michigan Claims Tax

December 13, 2011


As you are probably already aware, this fall the Michigan Legislature approved a new 1% claims tax.  This new tax applies to pretty much every health insurance claim that you, your employees and family members file, beginning on Jan. 1, 2012.  

As a result, beginning in the first quarter of 2012, Blue Cross and Blue Shield of Michigan and Blue Care Network will collect this tax via an added amount on your customer’s health insurance invoice.  This new amount will be separately identified and the amount will either equate to .75% of premium for BCBSM or .84% of premium for BCN.  

and the new Michigan Claims Tax

your customers have someone taking advantage of continuation of benefits
offered via COBRA, you may be wondering how this new tax will impact those
companies and individuals.   The first thing you need to
understand is that the law does not preclude the employer from passing along
this new tax to their employees.  As a result, we will be contacting
each company that we are administering COBRA benefits for and ask them the
following question:

you intend to pass this tax along to your employees? 

they do, then they can also pass the tax along to those individuals taking
advantage of COBRA continuation of coverage.  If they do not, due to
non-discrimination laws and COBRA regulations, they may not pass the tax

couple of additional things you need to be aware of:

  • COBRA regulations prohibit increasing premiums for
    COBRA beneficiaries more than one time per year.  As a result,
    if your customer elects to pass the tax along, it cannot be done until the
    group’s normal premium renewal month.
  • For those companies taking advantage of COBRA
    administrative services from Small Business Administrative Services, we
    will take care of all communications to the company and the COBRA
  • We will be contacting your customers taking advantage
    of our COBRA administrative services starting this month with a general
    overview of this new tax and its impact on COBRA. 
  • Additionally, we will be communicating with all of our
    customers with a January renewal with the specific question regarding
    their intentions regarding the tax.  If they elect to pass the tax along
    to their employees and COBRA beneficiaries, then we will also be
    communicating this information to those COBRA beneficiaries via an insert
    in their monthly premium reminder.

you have any questions, please contact SBAM’s COBRA Administration department at (800) 362-5461.

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