The Small Business Association of Michigan vehemently opposes efforts currently underway to increase health insurance costs for Michigan businesses and consumers by expanding the newly-enacted Health Insurance Claims (HICA) Tax and urge a “NO” vote on Senate Bill 335 sponsored by Senator Roger Kahn (R-Saginaw).
SB 335 would vastly expand the HICA Tax from a one percent tax on paid health insurance claims to a variable rate tax, whereby unelected Treasury officials will determine the tax rate in order to collect enough revenue to meet the Medicaid “base need” plus the medical rate of inflation.
HICA was passed in 2011 as a replacement for the HMO Use Tax, which was the subject of federal scrutiny. The revenue from the HICA Tax is used to meet federal match requirements to fund Michigan’s Medicaid program. While this tax has been in place less than one year, it has not met revenue expectations. Data has not been analyzed to determine why the HICA Tax is collecting less than projected and it is unclear whether the state has done due diligence in collecting the current tax from all taxpayers.
SB 335 would provide for a completely uncapped, unlimited and unpredictable tax rate. Businesses cannot operate in a state where there is no certainty in their tax obligations. Currently, businesses provide healthcare to employees on a voluntary basis. Increasing taxes on healthcare claims is a disincentive to providing healthcare.
Take action now! For questions, contact Mike Marzano.