Health Care Law Blog

Michigan's Tax on Paid Health Care Claims is Upheld

The United States Court of Appeals for the Sixth Circuit has upheld Michigan’s tax on paid health care claims in an opinion published on August 4.  The decision has very significant implications for the State of Michigan, which uses the revenues to partially fund the Medicaid program, and for employers, group health plans, and third-party administrators, which are subject to the tax.

The Health Insurance Claims Assessment Act was challenged by an organization representing self-insured group health plans and third-party administrators.  The group plans and TPAs argued that the Act was preempted by ERISA.  The federal appeals court held:

• Imposing the tax and related reporting obligations on group health plans and third-party administrators does not affect the decisions by employers and plans about who is eligible and what benefits are covered. 
• The administrative obligations under the act (e.g., record-keeping, filing returns, determining beneficiary residency) do not interfere with uniform plan administration.
• The tax on claims does not result in ERISA preemption even though it increased the costs paid by insurers and plans.

Richard Kraus from Foster, Swift, Collins & Smith, P.C. represented a number of organizations supporting the Act, including the Michigan Health and Hospital Association, Michigan State Medical Society, Small Business Association of Michigan, Michigan Osteopathic Association,  Health Care Association of Michigan, and Michigan County Health Plan Association.

Categories: 6th Circuit Court of Appeals, Tax