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Senate Passes HICA Elimination/Replacement Bills

June 15, 2016

The Health Insurance Claims Assessment (HICA), a fee dreaded by the business community, would go away under legislation that passed the Senate Wednesday.

Instead, under SB 0987, the Senate is using income tax revenue to fund Medicaid and bringing back the use tax on Health Maintenance Organizations (HMOs), which the Centers for Medicare and Medicaid Services (CMS) said was too narrow in scope to be used to draw down the Medicaid Fund to pay for services the income tax had been covering.

The reincarnated use tax will collect money that will go into a special Health Services Fund that will fund General Fund programs and the School Aid Fund with the money the income tax had been funding. 

In large part, the package is designed to resolve federal concerns how the state meets its obligations under the Medicaid program and yet eliminate the HICA tax.

“Repeal of Michigan’s wholly unique and uncompetitive Health Insurance Claims Assessment, or ‘HICA Tax,’ has long been a priority for the Michigan Chamber because the HICA Tax makes it more costly and difficult for individuals and employers to purchase health insurance,” said Jim Holcomb, senior vice president for Business Advocacy and General Counsel for the Michigan Chamber. “We applaud the Senate for passing the legislation to bend the health insurance cost curve in the right direction.”

Both Sens. Mike Shirkey (R-Clarklake) and Ken Horn (R-Frankenmuth) urged their colleagues to move the package.

The four bills passed the Senate 34-3 and now move on to the House.

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