Bill
HB 4968
Preserves Michigan's IPA tax structure approved by CMS waiver, enabling about $650 million/year to fund Medicaid; if waiver ends, DHHS must propose a revised, compliant structure.
Status & timing
- Enacted as Public Act 25 of 2025; approved by the Governor October 7, 2025 and effective immediately (October 7, 2025).
- Amends sections 7, 11, and 17 of the Insurance Provider Assessment Act (2018 PA 175; MCL 550.1757, 550.1761, 550.1767).
Purpose / intent
- To preserve Michigan’s existing Insurance Provider Assessment (IPA) tax structure that was federally approved by CMS on December 20, 2024 (and in effect July 4, 2025), while providing a path to revise the assessment if CMS terminates that federal waiver or issues new uniformity requirements under federal law (H.R.1 / OBBBA).
Key substantive provisions
- Continuation under federal waiver: DHHS may continue the IPA tax structure as approved by CMS (Dec. 20, 2024) unless CMS end-dates the waiver. If the waiver remains ongoing, DHHS may use information in the waiver approval in lieu of making annual statutory updates.
- If waiver ends: DHHS must propose to CMS a revised IPA tax structure that complies with updated federal broad‑based and uniform requirements. Upon CMS approval of a revised structure, the Act requires an annual assessment based on "member months" reported on insurers’ annual financial statements.
- Per-member-month approach: The DHHS will set a per-member-month rate each year (same across tiers) such that total IPA revenue does not exceed total revenue due for the tax year April 1, 2024 – March 31, 2025.
- Tiered rate structure (when waiver in effect): Statutory tier rules remain — tier 1 (Medicaid contracted health plans) uses a combination of a rate set to satisfy the 42 CFR 433.68(e) statistical test (result between 1.00–1.02) and $1.20 for remaining member months; tier 2 (non‑Medicaid health insurers) $2.40 per member month; tier 3 (specialty prepaid health plans) $1.20 per member month.
- Definitions/exclusions: “Member months” defined; DIFS determines member months and excludes numerous coverages (e.g., Medicare/Medicare Advantage/Part D, standalone dental, vision, stop‑loss, ASO, short‑term limited‑duration, long‑term care, etc.).
- Administration, reporting, enforcement:
- DHHS administers the assessment (may promulgate rules); must receive member‑month data from DIFS by May 15 annually and notify insurers mid‑June of assessments.
- Quarterly payments due July 30, Oct 30, Jan 30, Apr 30.
- Treasury must notify DIFS of insurer failures to pay; DIFS Director may suspend or revoke an insurer’s certificate of authority for nonpayment and must notify legislative insurance committees within 10 days of a suspension.
- Annual report to budget director, appropriations/insurance committees, and fiscal agencies on revenue collected and administrative costs.
Affected parties & fiscal impact
- Directly affects health insurers, Medicaid managed‑care plans, and specialty prepaid health plans that are subject to the IPA.
- Enables DHHS to continue collecting approximately $650 million annually in IPA revenue (per legislative analyses), which supports Medicaid payments and draws federal matching funds (~$1.75 billion historically). The Act itself is scored as having no net state/local fiscal impact—continuation of the IPA supports the state share of Medicaid funding but depends on CMS waiver approval.
- The Act responds to federal changes (OBBBA/H.R.1) that impose uniform caps (6.0% in FY2027-28 down to 3.5% by FY2031-32) and requires DHHS to seek a waiver to preserve current IPA rates while preparing for those federal changes.
Procedural notes
- The bill was tie‑barred in earlier analyses to related revenue bills (HBs 4183, 4951, 4961); it advanced through the House (Sept. 25, 2025) and Senate (Oct. 3, 2025) and was enacted October 7, 2025 with immediate effect.
Compiled from official sources — confirm details with the bill’s official record.
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