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October 02, 2025
Michigan Office of Retirement Services sent this bulletin at 10/02/2025 08:42 AM EDT
The new state fiscal year begins Wednesday, Oct. 1, and with it comes changes to member contribution rates, per Public Act (PA) 127 of 2024. Here is a list of frequently asked questions related to the change to member contribution rates for members with the premium subsidy benefit (the 3% HCC contribution). Please review this list before submitting reports.
What is PA 127 of 2024?
Among several changes to retirement reporting, PA 127 of 2024 eliminated the 3% member contribution requirement for members with the premium subsidy healthcare benefit beginning Oct. 1, 2025. See ORS’ Summary of Public Act 127 of 2024 for details on other changes.
Which members are impacted by PA 127 of 2024?
Members who have the premium subsidy benefit are no longer required to contribute 3% toward future healthcare benefits. This includes most members with defined benefit plans and some Pension Plus members.
How can I get a list of employees who have the premium subsidy benefit?
Reporting units are expected to review their payroll records for a list of employees impacted. You may choose to use the Download Detail, which has a column (Column D) showing those with the 3% healthcare contribution. See the Reporting Instruction Manual Section 7.01.08: Using the Download Detail link.
What impact will this change have on employer contributions?
Employers will absorb the health normal cost that members with the premium subsidy benefit formerly paid. However, the health normal cost contribution floor is removed, which means the health normal cost contribution for subsequent FYs can be less than the previous FY. The pension normal cost contribution floor is still in place.
Wages earned 9/14/25 to 9/27/25 but paid on 10/3/25 will have a record end date of 10/3/25. Do we withhold 3% for members with the premium subsidy benefit on that record?
No, do not withhold the 3% on a record with an end date on or after 10/1/2025. Contributions are based on when wages are paid, not earned.
What rate should we use for adjustment records? (What rate will the system calculate)?
For adjustments to any DTL2 records first submitted before Oct. 1, 2025, the system will calculate the 3% contribution rate.
How have members been informed of the rate change?
Eligible members received an email from ORS about the rate change. Those who don’t have an email on file with ORS will receive a letter about the change.
We have been reimbursing members with the premium subsidy benefit for their 3% contribution since some time in 2025. Is this the same thing or different?
This is different. Any reimbursements your reporting unit have made to members in FY 2025 were based on PA 120 of 2024, not PA 127 of 2024. See employer FAQs for MPSERS 3% healthcare reimbursement (Sec. 147g). In short, PA 120 of 2024 required you to withhold 3% from eligible members, then reimburse it. Those payments were considered reportable on a DTL2 record.
In contrast, PA 127 of 2024 requires you to stop withholding the 3% completely, beginning Oct. 1, 2025. As a result, members’ pay will be higher and the 3% more they take home will be subject to tax in the year it was earned.
For members who received 3% reimbursements in FY 2025, the difference in their pay may not be large — the difference may be felt primarily in the tax implications.
After reviewing this email, if you have further questions, please contact ORS_Web_Reporting@michigan.gov.