On March 27, 2026, the Michigan Department of Treasury notified all public employers of the “hard cap” contribution limits under the Publicly Funded Health Insurance Contribution Act (PA 152) for medical benefit plans renewing on or after January 1, 2027. The 2026 cap amounts were increased by 3.0%. The adjustment is based on the change in the medical care component of the Consumer Price Index for the previous 12-month period.
For medical benefit plan coverage years beginning on or after January 1, 2027, a public employer may contribute up to the following amounts toward a medical benefit plan:
- $8,108.35 multiplied by the number of employees with single-person coverage;
- $17,107.66 multiplied by the number of employees with individual-and-spouse coverage or individual-plus-1-nonspouse-dependent coverage; and
- $22,310.11 multiplied by the number of employees with family coverage.
As school officials return to the bargaining table, it is essential they understand the implications of these hard caps. When a school uses hard caps for PA 152 compliance, it should consider negotiating the specific hard-cap dollar amounts directly into the collective bargaining agreement (“CBA”). Doing so effectively “locks in” a school’s financial insurance obligation for the upcoming medical benefit plan year.
This strategy is particularly prudent given uncertainty concerning House Bill 6058 (HB 6058), which would increase PA 152 hard caps if it becomes law. If HB 6058 becomes law, schools that incorporated specific hard‑cap amounts into their CBAs would potentially remain subject to those hard-cap amounts rather than the higher HB 6058 hard caps.
Alternatively, school officials may consider negotiating a “local cap” on any subsequent hard-cap increases. Under this approach, a school would continue to pay the legislatively established hard caps, but employer contributions under future statutory amendments would be limited to a negotiated percentage – usually not to exceed 3% in any given year. This option is more employee friendly as it attempts to address annual inflationary pressure; however, it still provides a school with some cost predictability.
If you have any questions regarding the hard caps or need further guidance on incorporating PA 152 language into your CBAs, please contact your Thrun labor attorney.