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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

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Best Lawyers® 2021

Congratulations to the attorneys of the Health Care practice group at Foster Swift Collins & Smith, PC for their inclusion in the Best Lawyers in America 2021 edition. Firm-wide, 44 lawyers were listed. Best Lawyers lists are compiled based on an exhaustive peer-review evaluation and as lawyers are not required or allowed to pay a fee to be listed; inclusion in Best Lawyers is considered a singular honor. Health Care practice group members listed in Best Lawyers are as follows:

To see the full list of Foster Swift attorneys listed in Best Lawyers 2021, click here.