Insurance: health benefits; excluding federal excepted benefits from a health insurance policy; provide for, the official text

Act No. 53

Public Acts of 2026

Approved by the Governor

July 21, 2026

Filed with the Secretary of State

July 23, 2026

EFFECTIVE
DATE: July 23, 2026

state of michigan

103rd Legislature

Regular session of 2026

Introduced by Reps. Harris and B. Carter

ENROLLED HOUSE BILL No. 4207

AN ACT to amend 1956 PA 218,
entitled “An act to revise, consolidate, and classify the laws relating to the
insurance and surety business; to regulate the incorporation or formation of
domestic insurance and surety companies and associations and the admission of
foreign and alien companies and associations; to provide their rights, powers,
and immunities and to prescribe the conditions on which companies and
associations organized, existing, or authorized under this act may exercise
their powers; to provide the rights, powers, and immunities and to prescribe
the conditions on which other persons, firms, corporations, associations, risk
retention groups, and purchasing groups engaged in an insurance or surety
business may exercise their powers; to provide for the imposition of a
privilege fee on domestic insurance companies and associations and the state
accident fund; to provide for the imposition of a tax on the business of
foreign and alien companies and associations; to provide for the imposition of
a tax on risk retention groups and purchasing groups; to provide for the
imposition of a tax on the business of surplus line agents; to provide for the
imposition of regulatory fees on certain insurers; to provide for assessment
fees on certain health maintenance organizations; to modify tort liability
arising out of certain accidents; to provide for limited actions with respect
to that modified tort liability and to prescribe certain procedures for
maintaining those actions; to require security for losses arising out of
certain accidents; to provide for the continued availability and affordability
of automobile insurance and homeowners insurance in this state and to
facilitate the purchase of that insurance by all residents of this state at
fair and reasonable rates; to provide for certain reporting with respect to
insurance and with respect to certain claims against uninsured or self-insured
persons; to prescribe duties for certain state departments and officers with
respect to that reporting; to provide for certain assessments; to establish and
continue certain state insurance funds; to modify and clarify the status,
rights, powers, duties, and operations of the nonprofit malpractice insurance
fund; to provide for the departmental supervision and regulation of the
insurance and surety business within this state; to provide for regulation over
worker’s compensation self-insurers; to provide for the conservation,
rehabilitation, or liquidation of unsound or insolvent insurers; to provide for
the protection of policyholders, claimants, and creditors of unsound or
insolvent insurers; to provide for associations of insurers to protect
policyholders and claimants in the event of insurer insolvencies; to prescribe
educational requirements for insurance agents and solicitors; to provide for
the regulation of multiple employer welfare arrangements; to create an
automobile theft prevention authority to reduce the number of automobile thefts
in this state; to prescribe the powers and duties of the automobile theft
prevention authority; to provide certain powers and duties upon certain
officials, departments, and authorities of this state; to provide for an
appropriation; to repeal acts and parts of acts; and to provide penalties for
the violation of this act,” by amending section 3701 (MCL 500.3701), as amended
by 2016 PA 276.

The People of the State of
Michigan enact:

Sec.
3701. As used in this chapter:

(a) “Actuarial certification” means a written statement by a
member of the American Academy of Actuaries or another individual acceptable to
the director that a small employer carrier is in compliance with section 3705,
based on the individual’s examination, including a review of the appropriate
records and the actuarial assumptions and methods used by the carrier in
establishing premiums for applicable health benefit plans.

(b) “Affiliation period” means a period of time required by a
small employer carrier that must expire before health coverage becomes
effective.

(c) “Base premium” means the lowest premium charged for a
rating period under a rating system by a small employer carrier to small
employers for a health benefit plan in a geographic area.

(d) “Carrier” means a person that provides health benefits,
coverage, or insurance in this state. Carrier includes a health insurance
company authorized to do business in this state, a health maintenance
organization, a multiple employer welfare arrangement, or any other person
providing a plan of health benefits, coverage, or insurance subject to state
insurance regulation.

(e) “COBRA” means the consolidated omnibus budget
reconciliation act of 1985, Public Law 99-272.

(f) “Commercial carrier” means a small employer carrier other
than a health maintenance organization.

(g) “Creditable coverage” means, with respect to an
individual, health benefits, coverage, or insurance provided under any of the
following:

(i) A group health plan.

(ii) A health benefit plan.

(iii) Part A or part B of subchapter XVIII of
the social security act, 42 USC 1395c to 1395w-6.

(iv) Subchapter XIX of the social security
act, 42 USC 1396 to 1396w-6, other than coverage consisting solely of benefits
under 42 USC 1396t.

(v) 10 USC 1071 to 1110b. For purposes of
coverage under 10 USC 1071 to 1110b, “uniformed services” means the armed
forces and the commissioned corps of the National Oceanic and Atmospheric
Administration and of the Public Health Service.

(vi) A medical care program of the Indian
Health Service or of a tribal organization.

(vii) A state health benefits risk pool.

(viii) A health plan offered under 5 USC 8901
to 8914.

(ix) A public health plan.

(x) A health benefit plan under 22 USC 2504.

(h) “Eligible employee” means an employee who works on a
full-time basis with a normal workweek of 30 or more hours. Eligible employee
includes an employee who works on a full-time basis with a normal workweek of
17.5 to 30 hours, if an employer so chooses and if this eligibility criterion
is applied uniformly among all of the employer’s employees and without regard
to health status-related factors.

(i) “Full-time employees”
means the term as calculated in 26 USC 4980H(c)(4), including application of
the special rules for determining group size as defined in 26 USC 4980H(c)(2)
and the specification that full-time equivalents are treated as full-time
employees for purposes of determining group size, as described in 26 USC 4980H(c)(2)(e).

(j) “Geographic area” means an area in this state that
includes not less than 1 entire county, is established by a carrier under
section 3705, and is used for adjusting premiums for a health benefit plan
subject to this chapter. In addition, if the geographic area includes 1 entire
county and additional counties or portions of counties, the counties or
portions of counties must be contiguous with at least 1 other county or portion
of another county in that geographic area.

(k) “Group health plan” means an employee welfare benefit
plan as defined in section 3(1) of subtitle A of title I of the employee
retirement income security act of 1974, Public Law 93-406, 29 USC 1002, to the
extent that the plan provides medical care, including items and services paid
for as medical care to employees or their dependents as defined under the terms
of the plan directly or through insurance, reimbursement, or otherwise. As used
in this chapter, all of the following apply to the term group health plan:

(i) Any plan, fund, or program that would
not be, but for 42 USC 300gg-21(d), an employee welfare benefit plan and that
is established or maintained by a partnership, to the extent that the plan,
fund, or program provides medical care, including items and services paid for
as medical care, to present or former partners in the partnership, or to their
dependents, as defined under the terms of the plan, fund, or program, directly
or through insurance, reimbursement or otherwise, is, subject to subparagraph (ii), an employee welfare benefit plan that is a group health
plan.

(ii) The term “employer” also includes the
partnership in relation to any partner.

(iii) The term “participant” also includes an
individual who is, or may become, eligible to receive a benefit under the plan,
or the individual’s beneficiary who is, or may become, eligible to receive a
benefit under the plan. For a group health plan maintained by a partnership,
the individual is a partner in relation to the partnership and for a group
health plan maintained by a self-employed individual, under which 1 or more
employees are participants, the individual is the self-employed individual.

(l) “Health benefit plan” or “plan” means an
expense-incurred hospital, medical, or surgical policy or certificate, or
health maintenance organization contract. Health benefit plan does not include
coverage only for excepted benefits as described in 42 USC 300gg-91.

(m) “Index rate” means the arithmetic average during a rating
period of the base premium and the highest premium charged per employee for
each health benefit plan offered by each small employer carrier to small
employers and sole proprietors in a geographic area.

(n) “Premium” means all money paid by a small employer,
eligible employees, or eligible persons as a condition of receiving coverage
from a small employer carrier, including any fees or other contributions
associated with the health benefit plan.

(o) “Public health plan” means a plan established or
maintained by a state, county, or other political subdivision of a state that
provides health insurance coverage to individuals enrolled in the plan.

(p) “Rating period” means the calendar period for which
premiums established by a small employer carrier are assumed to be in effect,
as determined by the small employer carrier.

(q) “Small employer” means a person actively engaged in
business that, on at least 50% of its working days during the preceding and
current calendar years, employed not fewer than 2 and not more than 50 eligible
employees. Beginning January 1, 2018, “small employer” means a person engaged
in business that, during the preceding calendar year, employed an average of at
least 1 but not more than 50 full-time employees and that employs at least 1
employee on the first day of the plan year. In determining the number of full-time
equivalent employees, persons that are affiliated with each other or that are
eligible to file a combined tax return for state taxation purposes are
considered 1 employer.

(r) “Small employer carrier” means a carrier that offers
health benefit plans covering the employees of a small employer.

(s) “Waiting period” means, with respect to a health benefit
plan and an individual who is a potential enrollee in the plan, the period that
must pass with respect to the individual before the individual is eligible to
be covered for benefits under the terms of the plan. For purposes of
calculating periods of creditable coverage under this chapter, a waiting period
is not considered as a gap in coverage.

Enacting section
1. This amendatory act does not take effect unless House Bill No. 4208 of the
103rd Legislature is enacted into law.

This act is ordered to take
immediate effect.

Clerk of the House of
Representatives

Secretary of the Senate

Approved___________________________________________

____________________________________________________

Governor