October 02, 2025
Archived Michigan Office of Retirement Services (ORS) bulletin sent Oct. 2, 2025, at 8:42 a.m.
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's a list of frequently asked questions related to the change to member contribution rates for members with the premium subsidy benefit (the 3% healthcare 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. Review 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 Plan 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. Review 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 healthcare normal cost that members with the premium subsidy benefit formerly paid. However, the healthcare normal cost contribution floor is removed, which means the healthcare normal cost contribution for subsequent fiscal years (FY) can be less than the previous FY. The pension normal cost contribution floor is still in place.
Wages earned Sept. 14, 2025, through Sept. 27, 2025, but paid on Oct. 3, 2025, will have a record end date of Oct. 3, 2025. Do we withhold 3% for members with the premium subsidy benefit on that record?
No, don't withhold the 3% on a record with an end date on or after Oct. 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 Detail 2 records first submitted before Oct. 1, 2025, the system will calculate the 3% healthcare 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% healthcare 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. Review the employer frequently asked questions for the Michigan Public School Employees' Retirement System 3% healthcare reimbursement (Section 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 Detail 4 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.
If you have further questions, please contact ORS_Web_Reporting@Michigan.gov.
