Michigan lets insurers reward employer wellness programs with premium rebates.
MCL 500.3426 allows an insurer to cut group health premiums, copays, coinsurance or deductibles when an employer’s wellness program shows measurable results. The rebate is capped at 30% of paid premiums, or 50% for tobacco cessation programs, unless the state approves more.
The law lets insurers pay for wellness results.
MCL 500.3426 sits in Michigan’s Insurance Code of 1956. It lets an insurer that delivers, issues or renews a group health policy in Michigan offer group wellness coverage.
Who It Applies To
Insurers that deliver, issue or renew a group health insurance policy in Michigan. The text is written for insurers and their policies, so a self-funded plan, which has no insurer rebate to give, works differently.
What the Insurer May Give
An appropriate rebate or reduction in premiums, reduced copayments, coinsurance or deductibles, or a combination, for taking part in a health behavior wellness, maintenance or improvement program offered by the employer.
The Ceiling
A premium rebate may not exceed 50% of paid premiums for tobacco cessation programs or 30% for other wellness programs, unless the Director approves more. A rebate is presumed appropriate unless credible data show otherwise.
The rebate is earned, not granted.
Evidence Is Required
The employer has to show demonstrated maintenance or improvement of enrollees’ health behaviors, measured by assessments of health status indicators the employer and insurer agree on.
No Guarantee It Continues
An insurer is not required to continue a wellness program or any incentive tied to it. A rebate that exists this year can be withdrawn.
The Full Menu Must Be Available
An insurer has to make available to employers all wellness coverage plans it markets to employers in Michigan. An employer can ask for the whole list, not only what was quoted.
A Michigan rebate still has to fit federal wellness rules.
The state statute is one layer. Federal health-plan rules sit on top of it.
Two Different Yardsticks
Michigan caps the insurer’s premium rebate against paid premiums. The federal HIPAA and ACA rules cap an employee’s reward under a health-contingent program at 30% of the cost of employee-only coverage, or 50% for programs designed to prevent or reduce tobacco use. A program should be checked against both.
Participation Versus Results
Federal rules separate programs that reward taking part, such as completing a health assessment, from programs that reward hitting a health goal. The percentage limits apply to the second kind, which also carries reasonable-alternative requirements.
Have Counsel Review the Design
This page is general information, not legal advice. Programs that ask health questions or collect screening data can also touch the ADA and GINA, so employment counsel should review the design before launch.
Use the statute at renewal, not after.
Ask for the Wellness Menu
At renewal, ask the carrier which wellness coverage plans it markets to Michigan employers. The statute requires those plans to be made available to employers.
Agree the Measures First
Decide with the insurer which health status indicators will count and how they will be measured before the program starts, because the rebate depends on that evidence.
Treat 30% as a Ceiling
The cap is the most a rebate may be, not a forecast of what a carrier will offer. Budget for the program you can document, and expect the incentive to be reviewed each year.
What employers ask about wellness rebates.
Does Michigan law require insurers to offer a wellness discount?
No. The statute says an insurer may offer group wellness coverage. What it does require is that an insurer make available to employers all the wellness coverage plans it markets to employers in Michigan.
How large can the rebate be?
A premium rebate may not exceed 50% of paid premiums for tobacco cessation programs or 30% of paid premiums for other wellness programs, unless the Director of the Department of Insurance and Financial Services approves a higher amount.
What does the employer have to prove?
The employer has to show demonstrated maintenance or improvement of the insureds’ or enrollees’ health behaviors, measured by assessments of agreed-upon health status indicators between the employer and the insurer.
Does this apply to self-funded plans?
The statute is written for insurers that deliver, issue or renew group health insurance policies in Michigan. A self-funded plan has no insurer policy and no insurer premium rebate, so incentives there are designed under federal rules and the plan’s own terms.
Can the insurer take the incentive away?
Yes. The statute says an insurer is not required to continue a wellness program or any incentive associated with it.
Is this legal advice?
No. This page is general information about one section of Michigan’s Insurance Code. Wellness incentives also involve federal health-plan rules and employment law, so have employment counsel review any program design.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
An independent employee benefits consulting firm. We look at the entire benefits program: cost, plan performance, risk and administration.
Switch to CFH. Unhappy with your broker? Your employees won’t notice. You will. →
Cookies on This Site
We use cookies to keep the site working properly and to understand how it is used. You can decline anything that is not essential. See our Privacy Policy for the detail.
- Essential: needed for the site to load and for you to move around it. These cannot be switched off.
- Analytics: tell us which pages get read, so we know what is worth writing more of.
- Advertising: set by third parties such as ad and social platforms to measure and target campaigns.