PA 75 and 3% Healthcare Contributions Frequently Asked Questions
What employees are affected by the 3% healthcare contributions refund?
All employees who were reported between July 2010 and September 2012, will have their healthcare contributions during that period returned to the reporting unit who originally reported the amounts for refunding.
What about healthcare contributions made between September 4, 2012 and February 1, 2013, when ORS began implementing the 2012 reform changes based on member elections? How do I know what happened to that money?
The period for which contribution refunds are due ends on September 3, 2012 because PA 300 of 2012—the law that provided members a healthcare benefit election—took effect on September 4, 2012. For the period between the law’s effective date and its implementation (9/4/2012 – 2/1/2013), healthcare contributions were deposited into the appropriate accounts, depending on the member’s election. For members who elected the Personal Healthcare Fund, contributions were deposited into their 401(k) accounts with Voya Financial® in February 2013. ORS sent a letter dated February 26, 2013 with the estimated amount of the transfer. For those who elected the Premium Subsidy option, contributions were deposited in the Retiree Healthcare Fund, to fund that benefit upon members’ retirement.
Why can’t ORS send this refund directly to the employees instead of sending it to the reporting units?
There are taxation rules for these payments that can only be implemented by the employers.
How and when will my reporting unit receive the contributions to refund to employees?
Contributions will be returned to the reporting units on January 22. The payment will come from the Michigan Department of Education (MDE). MDE will post a report to its website and refer districts to the report with a notice in their monthly State Aid Update. There are 53 reporting units that have closed, dissolved, or merged since 2010. The return of those contributions may be later than January 22 because a different methodology will be used to transfer those contributions.
When will my reporting unit receive the data on the contribution amounts to refund to the employees?
ORS provided the data regarding the contributions and interest to employers via the File Transfer Service (FTS) on January 9, 2018.
What information will ORS provide?
The data file sent to each reporting unit provides the following information for each employee reported at the reporting unit during the refund period (July 2010 – September 2012):
- Name and social security number
- Status (active member, inactive member, retired, or deceased)
- The most recent contact information that ORS has on file (postal address, email address and phone number)
- Healthcare contributions withheld during that period and interest earned on the contributions
Is interest included on these contributions?
Yes, interest will be included with the contributions when they are returned. The courts directed the administration to maintain the funds in a capital preservation escrow account, which accrues a very minimal amount of interest.
How did ORS calculate interest on the refund amounts?
To calculate interest, ORS took each member’s healthcare contributions and divided that amount by the total healthcare contributions of all members to determine the proportionate share of the interest, then multiplied that percentage by each member’s contributions to determine each member’s interest earned. Interest was credited only if it resulted in a minimum of a whole penny.
Should my reporting unit withhold contributions from the refund amounts?
No. The wages from which the contributions were calculated have already been reported and contributions already calculated at the time the wages were reported. Do not include refund amounts on DTL2 or DTL4 records and do not withhold contributions on those amounts.
What should my reporting unit do if we need to return contributions to an employee that is now deceased?
Each reporting unit will determine how to distribute the refunds in these situations.
What should my reporting unit do with contributions we receive for a retired employee?
All reporting units are responsible for refunding these contributions to employees who have retired. ORS will provide the most recent street address, email address and phone number we have on file for all retired employees with contributions on record.
What happens if my reporting unit receives contributions for an employee that has now moved/left the school district?
ORS is returning the contributions to the reporting units that originally reported the contributions for that member. This means that members who worked in multiple school districts during this period will receive multiple refunds. All reporting units are responsible for refunding these contributions to employees who have now moved or left the school district. ORS will provide the most recent address we have on file for all employees with the contribution amounts.
How did ORS calculate contributions on summer spread wages (wage codes 08 and 85) in FY 2011 and FY 2012?
In FY 2011 ORS calculated 0% for healthcare contributions on summer spread wages. In FY 2012 ORS calculated healthcare contributions on summer spread wages as follows:
- If the member's total reported wages were less than $18,000 in FY 2010, ORS calculated healthcare contributions at 1.5%.
- If the member's total reported wages were $18,000 or more in FY 2010, ORS calculated healthcare contributions at 3%.
|Total reported wages in FY 2010 (may include multiple reporting units)||Healthcare contribution rate for Summer Spread wages in FY 2011||Healthcare contribution rate for Summer Spread wages in FY 2012||Healthcare contribution rate for regular wages in FY 2011||Healthcare contribution rate for regular wages in FY 2012|
|Less than $18,000||0%||1.5%||1.5%||3%|
|$18,000 or more||0%||3%||3%||3%|
How were taxes handled?
ORS is returning the healthcare contributions that were reported at the time and has no information regarding the tax status of those contributions. Each reporting unit must determine for itself how it handled taxes at the time the contributions were made, and comply with IRS requirements regarding taxation of the refund amounts.
What if there is a discrepancy between my payroll records and the data file ORS sent my reporting unit?
The refund amounts on ORS’s data file match what was reported and contributed at the time. Here are a few possible reasons for discrepancies between ORS data and your payroll records:
- Tax withholding. If your reporting unit withheld taxes on the contributions at the time they were reported, but your payroll records show pre-tax amounts, you will see a discrepancy.
- Your payroll records used a different method to calculate summer spread wages in FY 2011 or FY2012.
Where should my reporting unit direct employees to find additional answers to question they may have?
A list of frequently asked questions for employees is available on the MPSERS member website.
Updated January 16, 2018