Legislative Analysis
Phone: (517) 373-8080
INCREASE PUBLIC EMPLOYER HEALTH CARE
http://www.house.mi.gov/hfa
CONTRIBUTION LIMITS
Analysis available at
House Bill 6058 (H-2) as passed by the House http://www.legislature.mi.gov
Sponsor: Rep. Mai Xiong
Committee: Labor
Complete to 12-19-24
SUMMARY:
House Bill 6058 would amend the Publicly Funded Health Insurance Contribution Act to
increase the amount that public employers may pay toward employees’ medical benefit plans.
Generally speaking, the act limits the amount that public employers can pay toward employees’
medical benefit plans. Employers can choose between an inflation-adjusted capped
contribution or a maximum 80% contribution. 1 A public employer can allocate its payments
for health insurance costs among its employees and elected officials as it sees fit.
Public employer means the state of Michigan; a local unit of government or other
political subdivision of the state; an intergovernmental, metropolitan, or local
department, agency, or authority; a local political subdivision; a school district, public
school academy, or intermediate school district; a community college or junior college;
or an institution of higher education.
A local unit of government (defined in the act as a city, village, or township; a county; a
municipal electric utility system; certain public airport authorities; 2 or the Huron-Clinton
Metropolitan Authority) generally can elect to opt out of these requirements with a two-thirds
vote of its governing body, which must be extended each year. 3
House Bill 6058 would increase the capped contribution and related inflation adjustment and
would require employers to pay for at least 80% of employees’ health insurance costs.
Increase contribution cap
Currently, a public employer that offers or contributes to a health insurance plan for its
employees or elected public officials cannot pay more of the annual costs or illustrative rate of
the plan (and any reimbursements for co-pays, deductibles, or payments into health savings
accounts [HSAs], flexible spending accounts [FSAs], or similar accounts) than a total annual
amount equal to the sum of the following:
• $5,500 times the number of employees and elected officials with single-person
coverage.
1
A full analysis of the law as originally enacted can be found here: http://www.legislature.mi.gov/documents/2011-
2012/billanalysis/House/pdf/2011-HLA-0007-88186028.pdf
2
Of note, House Bill 4618 of the current legislative session would additionally allow regional airport authorities to
exempt themselves from the contribution limits. The bill was passed by the House in April 2024.
3
A mayor or a county executive that is the chief executive and chief administrator of a city or county, respectively,
must approve the exemption. Cities with a population over 600,000, effectively specific to Detroit, cannot be
exempted.
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 • $11,000 times the number of employees and officials with coverage for themselves and
one dependent.
• $15,000 times the number of employees and officials with family coverage.
These maximum payments are annually adjusted for inflation by the state treasurer based on
the change in the medical care component of the United States Consumer Price Index for the
previous year. 4
Beginning January 1, 2025, House Bill 6058 would raise the maximum amount to $8,258.54
times the number of employees and elected officials with single-person coverage, $17,271.17
times the number of employees and elected officials with coverage for themselves and one
dependent, and $22,523.34 times the number of employees and elected officials with family
coverage. This provision would not apply to employers that offer medical benefit plans based
on the federal Affordable Care Act (ACA) or any other federal- or state-sponsored plan.
For single-person and family coverage, the state treasurer would have to adjust the maximum
payment for inflation based on the change in the medical care component of the average of the
Michigan health insurance rates as approved by the Michigan Department of Insurance and
Financial Services (rather than the Consumer Price Index) or increase the amount by 3%,
whichever is greater, by April 1 of each year. For individual-plus-dependent coverage, the
adjustment would be as follows:
• 2.2 times the amount of single-person coverage for the 2026 calendar year.
• 2.3 times the amount of single-person coverage for the 2027 calendar year.
• 2.4 times the amount of single-person coverage beginning with the 2028 calendar year.
For employers who did not previously elect to instead pay a percentage of total employee health
insurance costs, the new hard caps and adjustments would not apply to employees covered by
a conflicting collective bargaining agreement or other contract until the agreement or contract
is amended. An employer’s health insurance expenditures under such an agreement or contract
would be excluded from the calculation of its 80% minimum contribution, as described below.
Establish 80% minimum contribution
As an alternative to the capped contributions, a public employer currently can instead elect to
pay up to 80% of the total annual costs of all the medical benefit plans it offers or contributes
to, including the premium or illustrative rate of the plan and all employer reimbursements of
co-pays, deductibles, and payments into HSAs, FSAs, and similar accounts.
Beginning January 1, 2025, House Bill 6058 would require all public employers to pay at least
80% of the total annual costs of all of the medical benefit plans it offers or contributes to for
its employees and public officials. (Total annual costs would not include any offers of medical
benefit plans for employees based on the ACA or another federal- or state-sponsored plan, or
any federal or state taxes.)
4
The adjustment amounts for the 2025 calendar year can be found here: https://www.michigan.gov/treasury/-
/media/Project/Websites/treasury/Uncategorized/2024/Economic-Reports-and-Notices-2024/Final-
Notice_03192024_PubEmpMedPlanLimit.pdf If House Bill 6058 were enacted, the 2025 amounts established by the
bill would override these adjustments.
House Fiscal Agency HB 6058 (H-2) as passed by the House Page 2 of 5
 The 80% floor would not apply to employees covered by a conflicting collective bargaining
agreement or other contract until the contract’s stated expiration date or the date the contract
is renewed. An employer’s health insurance expenditures under such an agreement or contract
would be excluded from calculation of its 80% minimum payment.
A collective bargaining agreement or other contract executed on or after January 1, 2025, could
not include terms that are inconsistent with the 80% minimum employer contribution.
MCL 15.563 et seq. (amended); MCL 15.563a and 15.564a (proposed)
BRIEF DISCUSSION:
According to committee testimony, public employees typically accept a lower salary in
comparison to the private sector in exchange for better benefits. However, the cost of health
care premiums has far outpaced the act’s hard cap provisions, even when adjusted for inflation,
and public employees are spending a large portion of their salary on health care as a result.
Reportedly, when public sector wages and benefits cannot keep up with these costs, employees
will leave their jobs to join the private sector. This issue particularly impacts public school
employees, since school districts are not subject to the opt-out provisions of the Publicly
Funded Health Insurance Contribution Act that are available to other local governments.
Supporters of House Bill 6058 argue that reform to the Publicly Funded Health Insurance
Contribution Act is necessary to better support public employers and to address staffing
shortages. They believe that, even if the bill cannot fix the problem of skyrocketing health care
costs, it is a step in the right direction to ensure that the act’s hard cap keeps up with inflation.
Supporters argue that many local governments want to contribute more to their employees’
health care and have the funding to do so, but they are unable to under current law. HB 6058
would allow those employers and employee unions to negotiate for a better solution that would
provide immediate relief for those facing health care cost increases in 2025, and local
bargaining units will compromise as necessary to ensure municipal budget stability.
Opponents of the bill agree that Publicly Funded Health Insurance Contribution Act reform is
necessary to reflect the current cost of health care but believe that House Bill 6058 takes the
wrong approach. While some are supportive of the provisions to reset the hard cap, opponents
worry that the bill would further restrict local governments’ already limited financial resources,
which would exacerbate staffing shortages rather than address them. Opponents also note that
local governments that want to negotiate with their employees currently can use the act’s opt-
out provision.
FISCAL IMPACT:
House Bill 6058 would increase current public employer contribution hard caps and change
the 80% contribution cap to an 80% employer contribution floor on medical benefit plans,
which could result in increased costs for an applicable public employer under the bill. That
said, the provisions of the bill would not require a public employer to implement higher
contributions based on current contribution levels.
For calendar year 2025, for medical benefit coverage for state employees, the state pays, per
employee participant, $7,335 annually for single person coverage, $16,504 annually for
House Fiscal Agency HB 6058 (H-2) as passed by the House Page 3 of 5
 individual and spouse coverage, $12,836 annually for individual and dependent coverage, and
$22,006 annually for family coverage. These contributions reflect an 80% contribution for the
state and a 20% contribution for the employee. Instead of being caps as under current law,
these would represent a contribution floor for the state under the bill.
The current published hard caps on public employer contributions for calendar year 2025 per
employee participant are $7,718 annually for single person coverage, $16,141 annually for
individual and spouse or individual and dependent coverage, and $21,049 for family coverage.
The bill would increase these hard caps to $8,259 annually for single person coverage, $17,271
annually for individual and spouse or individual and dependent coverage, and $22,523 for
family coverage.
Based on data from the current medical benefit plans offered by the state to employees and
current participation, it is anticipated that for every one percentage point increase in the
employer contribution rate, costs would increase by approximately $5.0 to $7.0 million
annually. Of that amount, roughly 50% of the cost would be realized by the state’s general
fund. The remaining cost would be associated with employee compensation costs funded by
federal or state restricted funding sources. Changes in employee participation trends and
employee counts would directly affect the cost estimate. But, as noted above, the bill would
not require any contribution changes based on current rates.
Information on medical benefit plan costs and contributions made by employees and employers
toward those costs for local governments, school districts, community colleges, and public
universities are not available. Therefore, no estimates can be provided as to the amount of costs
those entities would incur if they were to raise contribution rates from current levels. For
context, to the extent that a contract or agreement was tied to existing published hard caps, the
new hard caps under the provisions of the bill represent a 7.0% increase.
POSITIONS:
Representatives of the following entities testified in support of the bill (12-5-24):
• Michigan Education Association
• Michigan Nurses Association
• Michigan Professional Firefighters Union
The following entities indicated support for the bill (12-5-24):
• AFSCME
• AFT-MI
• Dearborn Firefighters
• IBEW Michigan State Conference
• Great Lakes Water Authority
• Michigan AFL-CIO
• SEIU Michigan
• SEIU 517M
• United Food and Commercial Workers Local 876
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 Representatives of the following entities testified in opposition to the bill (12-5-24):
• Michigan Association of Counties
• Michigan Municipal League
The following entities indicated opposition to the bill (12-5-24):
• Detroit Chamber
• Michigan Townships Association
• National Federation of Independent Business
• St. Clair County
• Small Business Association of Michigan
• Southeast Michigan Council of Governments
Legislative Analyst: Holly Kuhn
Fiscal Analyst: Ben Gielczyk
■ This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their
deliberations and does not constitute an official statement of legislative intent.
House Fiscal Agency HB 6058 (H-2) as passed by the House Page 5 of 5


Statutes affected:
House Introduced Bill: 15.563, 15.564