Michigan Governor Vetoes Bill That Would End Tax on Self-Insured Employers

October 28, 2016

Motivated by funding concerns for the state’s Medicaid program, Governor Rick Snyder (R-MI) vetoed a complicated package of bills that would have ended the state's tax on the health care claims of self-insured employers.  The package of bills would have accelerated the sunset date for Michigan's Health Insurance Claims Assessment (HICA), which imposes a one percent tax on the health care claims of self-insured employers, from July 1, 2020 to December 31, 2018, and reestablished the six-percent use tax on the state's Medicaid managed care organizations.  According to Gov. Snyder, "I am very concerned that the federal government would not recognize this tax structure as an eligible Medicaid matching fund source, putting at risk federal funding for critical state health programs and leaving our state budget out of balance."  The tax on self-insured employers, which the Sixth Circuit Court of Appeals upheld in July 2016 as not being preempted by ERISA, was originally scheduled to sunset in 2013, but has been extended twice, and is now scheduled to sunset July 31, 2020.  In his official veto letter, Gov. Snyder said he supports finding a solution on the state’s Medicaid matching requirements and looks forward to working with the Legislature on the issue.