► Blue Alert
Important: Michigan claims tax update affecting January bills
We are continuing to provide information to our sales teams and agents to help them communicate to their individual and group customers about the new Michigan claims tax that goes into effect on Jan. 1, 2012. This communication focuses on January bills being mailed in December which will include the Michigan Claims Tax assessment.
How the Michigan Tax Assessment will appear on January bills for non-ASC group customers
BCBSM and BCN have completed all operational changes needed to include the claims tax assessment in our group and individual bills for January 2012. The assessment will appear as a separate line item on the bills. You can view samples of the bills here:
As a reminder, the tax assessment is based on a claim's tax factor applied to the monthly premium. Here are the factors:
- BCBSM fully insured (underwritten) area-rated group customers – Blue Cross will apply a single .75 percent tax factor* to the group's monthly premium.
- BCN fully insured (underwritten) group customers – BCN will apply a single .84 tax factor* to the group's monthly premium.
*Blue Cross and Blue Care Network's tax factors are based on the estimated claims tax for the entire area-rated risk pool and incorporates assumptions for residency and claims. The tax factor will be annually adjusted to accurately match the amounts charged to the taxes paid.
- Blue Cross fully insured experience-rated group customers – Because our experience-rated arrangement uses a group's own experience, Blue Cross will apply a single claim factor based on the group's percentage of Michigan membership as of July 2011.
| Percentage of outstate membership | Factor applied to premium |
| <10% | .75% |
| 10-20% | .65% |
| 21-40% | .55% |
| 41-60% | .35% |
| 61-80% | 20% |
| 80%+ | 0% |
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How the Michigan Tax Assessment will appear on January bills for ASC group customers
Blue Cross and Blue Care Network will collect 1 percent of Michigan incurred and paid claims in 2012 from the group and pay it to the state of Michigan. The following chart (PDF) explains how the tax will be billed for the following ASC billing arrangements:
- Auto accounts
- Quarterly settled
- Weekly call-ins
- Monthly invoiced (advanced deposit and monthly cap)
The assessment will appear as a separate line item on the bills. You can view samples of the bills here:
How the Michigan Tax Assessment will appear on January bills for BCBSM and BCN individual customers
Beginning Nov. 23, 2011, we're sending individual members a letter explaining the Michigan tax. There will be separate letters for BCBSM IBU members, one for BCN IBU members and one for BCBSM Medigap members. However, the only difference between the letters is the tax factor* amount, which is .75 for BCBSM IBU members, .84 for BCN IBU members and 1.35 for Medigap members. Here is a representative sample of the letter (PDF).
* The tax factor is based on the claims for the entire pool of individual members divided by total premiums. This pooled approach is an equitable way to assess the claims tax and minimize the impact of high-cost claims. The factor charged to the member will be adjusted annually to accurately match the amounts charged to the taxes paid.
The assessment will appear as a separate line item on the bills. You can view samples of the bills here:
Additional communications
We've also developed these communications:
- We'll be sending communications to some BCN groups we missed on our initial mailing about the claims tax. They will receive the same letter (PDF) and FAQ (PDF) sent out on Oct. 19, 2011
- A billing stuffer (PDF) that will be included in all January bills being mailed in December reminding group customers that their bills will now include the tax assessment.
New Tax calculator available on bcbsm.com
To help BCBSM and BCN customers estimate their tax assessment, we've created a simple tax calculator at bcbsm.com. By answering a few questions and entering their monthly billed premium, users can find out their estimated monthly and annual tax assessments.
Questions? Contact your Blues sales representative
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