In 2012, Michigan implemented two-year, 1 percent tax on health claims to ensure it qualified for federal Medicaid funding. At the time, annual revenue from the tax was capped at $400 million.
However, the lack of revenue threatened the state’s federal Medicaid funding. So the tax was extended to 2017 and lowered to 0.75 percent. In addition, Michigan implemented a 6 percent use tax on Medicaid plans, which is also due to expire at the end of 2017.
In December, the House voted to continue the health claims tax until 2025. But after a recent vote from the Senate, the tax — which is expected to rise to 1 percent in 2017 — will only continue until July 2020.
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