Qualified Health Coverage (QHC) Letters: What Michigan Employers Need to Know

7 min read

Why Your HR Team Keeps Getting Asked for This Letter

The document that proves it comes from the health plan — which means the request lands on HR, usually at the least convenient moment, and usually from an employee who has been told they need it by a deadline.

It is a benefits administration task rather than an auto insurance question, and it is entirely manageable once you know whether your plan qualifies and who produces the paperwork.

See also: Improving Health. Controlling Costs. Delivering Results., our approach for employers who want cost to move between renewals.

The Two Tests

Coverage is qualified health coverage under MCL 500.3107d if it meets both of these:

1. It does not exclude or limit coverage for injuries related to motor vehicle accidents. Most group medical plans satisfy this without anyone having thought about it. A plan containing such an exclusion does not qualify, regardless of how good it is otherwise.
2. Its annual individual deductible is at or below the published threshold. For July 1, 2026 through June 30, 2027 that figure is $6,579.00, set by DIFS Bulletin 2026-08-INS. It is reviewed annually and held level from the previous period.

Two details matter in practice. The deductible test is measured per individual, not per family. And where a plan offers more than one option, DIFS guidance has been that if at least one individual deductible sits at or below the threshold, the coverage qualifies.

Who Produces the Letter

Plan Type	Who Issues the Documentation	What HR Should Do
Fully insured group plan	The carrier	Direct employees to the carrier, and keep the request route documented so the same question does not reach you fresh each time
Self-funded or level-funded plan	The employer or its third-party administrator	Agree in advance who produces it and how quickly — there is no carrier to fall back on
Medicare Parts A and B	Qualifies for the opt-out	Proof of enrollment; no employer letter needed
Medicaid	Cannot opt out; can choose the $50,000 level	Proof of enrollment; no employer letter needed

The self-funded position deserves a note. A private employer sponsoring a self-funded ERISA plan is not legally bound by the DIFS bulletin, because ERISA preempts state insurance regulation of those plans. That is a correct legal answer and a useless practical one: the employee still needs the document, and you are the only party who can produce it. Nearly every self-funded employer provides it voluntarily, and the sensible time to arrange that with your administrator is before the first request arrives. Reference-based pricing is another lever for self-funded plans: it ties hospital payments to a multiple of Medicare rates.

What Goes In It

• The names and dates of birth of every person covered under the plan.
• A statement that the coverage is qualified health coverage, or that it meets both tests.
• Enough identifying detail — plan or group number, effective dates — for the document to be matched to the person presenting it.

DIFS publishes a sample letter, and following its structure avoids arguments about whether a document is sufficient. There is no requirement to invent your own format.

The Plan Design Angle Worth Raising Before Renewal

This is the part that concerns us more than the paperwork. The deductible threshold is a live constraint on plan design that almost never comes up when deductibles are being discussed.

An employer moving to a higher-deductible plan to control premium can cross the threshold without anyone noticing, and the consequence is not felt until an employee discovers their coverage no longer serves this purpose. Because the test is per individual, a plan can look reasonable on a family basis and still fail.

It is a single check at renewal: does at least one individual deductible option sit at or below the current figure? If you would like that built into your renewal review alongside the rest of your compliance calendar, that is work we do.

Questions We Get

What is qualified health coverage in Michigan?

Qualified health coverage, or QHC, is health coverage that meets two conditions under MCL 500.3107d: it does not exclude or limit coverage for injuries arising from motor vehicle accidents, and it has an annual individual deductible at or below a threshold set each year by the Department of Insurance and Financial Services. Michigan residents use it to document their health coverage when making auto insurance elections.

What is the QHC deductible limit?

$6,579.00 for the period July 1, 2026 through June 30, 2027, set by DIFS Bulletin 2026-08-INS. The figure is reviewed annually and stayed level from the prior period. It is measured per individual, not per family.

Who issues a QHC letter?

For a fully insured group plan, the carrier issues it. Employees should request it from the carrier, though HR is usually the first place they ask. For a self-funded plan there is no carrier to produce it, so the employer or its third-party administrator does.

Does a self-funded plan have to provide QHC documentation?

A private employer sponsoring a self-funded ERISA plan is not bound by the DIFS bulletin, because ERISA preempts it. That is a legal answer rather than a practical one — employees still need the documentation, and the employer is the only party able to produce it. Most self-funded employers provide it voluntarily.

What must a QHC letter contain?

The names and dates of birth of everyone covered under the plan, and a statement that the coverage either is qualified health coverage or meets both tests — no motor vehicle accident exclusion, and a deductible at or below the threshold. DIFS publishes a sample letter employers and carriers can follow.

Does Medicare count as qualified health coverage?

Medicare Parts A and B together qualify a person for the full opt-out, with proof of enrollment rather than a letter from an employer. That matters for Medicare-eligible employees who stay on a group plan, because they may have more than one route to documenting coverage. Medicaid works differently: Medicaid enrollees cannot opt out of auto medical coverage entirely, but can choose the $50,000 level.

What if our plan deductible is above the QHC limit?

Then the plan does not meet the test and employees cannot use it for that purpose. This is worth knowing before renewal rather than after, because it is a plan design consequence that rarely gets raised when deductibles are being set.

Related reading: Employer Adoption Assistance Programs

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For the full picture of what the Michigan auto choice gains and gives up, see Michigan Auto Insurance: What Opting Out Gains and Gives Up.

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