A Michigan public employer ICHRA allowance has to fit inside whichever Public Act 152 option the board elects.
Public Act 152 gives Michigan public employers three paths: the hard cap, the 80 percent limit or, for local units, an exemption by two-thirds vote. Treasury guidance counts HRA reimbursements toward the limits, so the choice shapes the allowance.
What to settle for each option.
Hard Cap
A dollar limit per employee that is adjusted each year. Model the allowance against it.
80 Percent Limit
The employer pays no more than 80 percent of total plan costs. The allowance counts toward that total.
Exemption
Local units may exempt themselves for the next year by a two-thirds vote of the governing body.
What Counts
Treasury guidance treats HRA reimbursements as counting toward the limits. Confirm the treatment for your unit.
Who Is Covered
The act applies broadly to public employers, including local governments, libraries and authorities.
Model Before the Vote
Show the board the allowance under each option before it elects one.
Public Act 152 by the Numbers
The board is choosing among three options, and each one measures the employer share differently. Here are the dollar caps, the mechanics of each option, the penalty for getting it wrong and the legislative change that did not happen.
The three options side by side
| Option | How it is adopted | The employer limit | What it means for an ICHRA |
|---|---|---|---|
| Hard cap | Applies unless the unit elects another path | A dollar amount per enrolled person by coverage tier, indexed each year | Allowances by tier must sit at or under the tier amount, together with any other employer-paid medical spending |
| 80 percent limit | Majority vote of the governing body each year, before the coverage year begins | The employer pays no more than 80 percent of total annual costs of its medical plans | The allowance is measured against total plan costs, so the definition of total cost matters |
| Exemption | Local units only, by a two-thirds vote each year for the following year | No limit under the act while the exemption stands | The allowance is set by bargaining and budget, but the vote has to be repeated every year |
Sources: MCL 15.563 and 15.564 for the cap and the 80 percent option; Michigan Municipal League fact sheet for the annual two-thirds exemption vote. A city whose mayor is both chief executive and chief administrator also needs the mayor to approve an exemption.
The hard cap amounts
The cap is a per-person amount for three coverage tiers: single, two-person and family. The act indexes it to the medical care component of the consumer price index, and the figures below are the most recent we could source.
| Coverage tier | 2025 cap | 2026 cap | 2026 per month |
|---|---|---|---|
| Single | $7,718.26 | $7,942.09 | $661.84 |
| Two-person | $16,141.28 | $16,609.38 | $1,384.12 |
| Family | $21,049.85 | $21,660.30 | $1,805.03 |
The 2025 amounts come from the Michigan Municipal League fact sheet. The 2026 amounts come from a March 2026 school business officials presentation and should be confirmed against the Treasury notice before a board votes. The 2027 amounts were not available when this page was written.
Modeling an allowance against the cap
The test is simple arithmetic, but it has to be run for every tier the class structure creates. These allowances are illustrative and are not a recommendation.
| Coverage tier | Illustrative allowance per month | Annual allowance | 2026 cap | Room under the cap |
|---|---|---|---|---|
| Single | $550 | $6,600 | $7,942.09 | $1,342.09 |
| Two-person | $1,100 | $13,200 | $16,609.38 | $3,409.38 |
| Family | $1,500 | $18,000 | $21,660.30 | $3,660.30 |
The room under the cap has to cover everything else the unit pays toward medical benefits for the same employee, including contributions to health savings accounts and flexible spending accounts, which the act counts as part of total cost.
How the 80 percent option measures cost
Under the 80 percent option, total annual cost is the premium or illustrative rate plus employer payments for copays, deductibles and contributions to health savings accounts, flexible spending accounts or similar health accounts. Amounts the employee pays, such as copays, coinsurance and deductibles, are excluded. If a plan cost $9,000 a year, the employer could pay up to $7,200 and the employee would pay at least $1,800. Elected officials who participate must pay at least 20 percent of the plan cost. How an ICHRA allowance fits that definition is the question to put to counsel before the vote.
Source: MCL 15.564. The $9,000 plan is an illustration.
What noncompliance costs
The act has teeth. If a public employer does not comply, the State Treasurer may reduce each economic vitality incentive program payment by 10 percent, and the Department of Education may assess a 10 percent penalty on school aid payments the employer would otherwise receive. That is the reason to settle the option and document the board action before the first ICHRA notice goes out.
Source: MCL 15.569.
The 2024 bill that did not become law
House Bill 6058 would have turned the 80 percent ceiling into a floor and changed how the hard cap is indexed. It passed the House 56 to 0 on December 13, 2024 and the Senate 20 to 18 on December 20, 2024, then sat in the House until the courts ordered it sent to the Governor. It was presented and vetoed on July 10, 2026. It never became law, so the current act and the amounts above still apply. Supporters have said they intend to pursue the change again, so a unit planning a multi-year ICHRA design should keep an eye on it.
Sources: Michigan Legislature bill history for HB 6058; Michigan Association of Counties legislative update, July 10, 2026. Public Act 152 questions of law belong with the unit’s counsel.
The questions public employers ask about Public Act 152 and ICHRAs.
Does the state follow the 80 percent option?
No. Treasury guidance says the 80 percent option is not available to the state itself.
Do HRA payments count toward the caps?
Treasury guidance says HRA reimbursements count. Confirm the treatment with counsel.
Are payments in lieu of coverage counted?
Treasury guidance treats payments in lieu of coverage differently from HRA reimbursements. An ICHRA allowance is an HRA, so counsel should confirm how it is counted.
When do hard cap amounts change?
They are adjusted every year. Check the current amounts before the board votes.
Who elects the option?
The governing body of the public employer, through a vote.
Can we model all three?
Yes. We model the allowance under each option against your actual enrollment and plan costs.
Is there a page on the act itself?
Yes. See our Public Act 152 guide for employers.
General information about individual coverage HRAs, not legal or tax advice. Plan-specific questions belong with ERISA counsel and your tax advisor, and we will bring them in.
Where these details come from.
This page summarizes public guidance reviewed in October 2026. Rules change, so confirm current requirements with counsel.
CMS: Individual Coverage HRAs →
U.S. Department of Labor: Employee Benefits Security Administration →
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.