Effective Jan. 1, a 1 percent tax will be applicable to all health insurance claims made in Michigan by Michigan residents. Dental and vision claims are subject to the tax, as are nearly all medical-related claims.

This new tax is expected to generate $400 million in revenues for the state. It replaces the current 6 percent use tax applied to Medicaid managed care plan services, and its proceeds will ensure the state receives federal dollars to support the state’s Medicaid program. Health insurance carriers in Michigan, and self-funded health care plans, must file quarterly tax returns and pay this tax.

Of course, insurers will pass the tax back to the people who pay the premiums: group health plans or individual subscribers. Blue Cross Blue Shield of Michigan and BCS Life will begin applying a 0.75 percent factor to plans as a line item on each premium statements. VSP, which provides vision insurance to MDA members, is formulating its response to the Michigan claims tax.

Some things are exempt from the health care claims tax. They include:

• Services Michigan residents receive outside the state
• Cost-sharing requirements, such as deductibles, co-pays and coinsurance
• Reimbursements under a flexible spending account, health savings account, Medicare Advantage savings account or other health reimbursement arrangement as allowed by the federal law
• Medicare, Medicare Advantage, Medicare Part D claims
• Workers’ Compensation and long-term care claims