Public Act 15 of 2025 healthcare reimbursement FAQ

Public Act 120 of 2024 (PA 120) appropriated $181.5 million for MPSERS reporting units (RU), except universities, to reimburse active members with the premium subsidy healthcare benefit for their 3% healthcare contributions in State fiscal year (FY) 2025 (10/01/2024 – 09/30/2025).

Yes, employers must continue withholding and remitting the contributions as usual through Sept. 30, 2025. Members with the premium subsidy healthcare benefit will no longer be required to contribute 3% toward future healthcare benefits beginning Oct. 1, 2025.

The February 2025 Sec. 147g payment is to reimburse members with a premium subsidy healthcare benefit for their 3% healthcare contributions in October 2024 through February 2025.

The statute’s current language states you will receive a proportion of the total required contributions by members with the premium subsidy healthcare benefit contributed in State FY 2024. 

Sec. 147g is restricted State revenue, so Major Class 312, Suffix 0000. Regarding expenditure Function and Object, districts should account for the expense (reimbursement to employees) using their various Functions along with Object Code 2820 – Retirement Benefits (though some flexibility exists with other Object Codes if needed).Finally, similar to other Section 147’s, no Grant Code will be required on the revenue or expenditure side, though you’re welcome to separately track this internally using the fourth digit of the Object Code, the “Other” coding dimension, etc. See the February 2025 State Aid Update for more guidance on Object Code flexibility and other information.

Payments were included in monthly State School Aid packages between February and August 2025.

There is no process or frequency prescribed in PA 120. RUs can determine the manner in which they reimburse employees for their 3% healthcare contributions.

There is no process or frequency prescribed in PA 120. RUs can determine the manner in which they reimburse employees for their 3% healthcare contributions.

PA 120 states that this allocation is intended as reimbursement for active employees with the premium subsidy healthcare benefit in FY 2025. It doesn’t apply to employees who work at a university or those with the Personal Healthcare Fund (PHF). Active members with the premium subsidy benefit who retire or terminate during FY 2025 are eligible for reimbursement for contributions they made up to the date they stopped working as active members. An active member who retires and returns to work is eligible for reimbursement only for the period before they retired, since retirees no longer contribute toward healthcare.

Members with the premium subsidy benefit who retired or terminated before FY 2025 (Oct. 1, 2024) are not eligible for reimbursement.

RUs 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.

Once the final Sec. 147g State Aid payment is disbursed, your reporting unit will pay out the final reimbursements to eligible employees.

PA 120 states that this allocation is intended as reimbursement for active employees with the premium subsidy healthcare in FY 2025. You will reimburse employees based on the period they were actively making the 3% healthcare contributions.

No, Sec. 147g reimburses members with the Premium Subsidy healthcare benefit for their 3% healthcare contributions in FY 2025 only.

There is $181.5 million appropriated for FY 2024-25. Your RU will receive a proportionate amount of that allocation, based on the healthcare contributions collected from your RU. You will then reimburse employees with the amount received.

The Sec. 147g healthcare reimbursement is not reportable on a Detail 2 – Wage and Service (DTL2) record but is reportable on a Detail 4 – DC Contributions (DTL4) record, with a few exceptions:

• For members who were hired directly, retired during FY 2025, returned to work and receive the payment after retiring — report on DTL2 and DTL4 records. See the Working after retirement - employer guide.
• For members who were hired indirectly, retired in FY 2025, returned to work, and receive the payment after retiring — report on a DTL2 record only. See the Working after retirement - employer guide.
• For members who terminated employment in FY 2025 or are deceased at the time of payment — do not report on either a DTL2 or DTL4 record. See RIM sections 7.04.02: Reporting a terminated employee on a DTL4 record and 13.04: Detail 4 records - DC record type codes and status change reason codes.

A deceased employee who was actively employed in FY 2025 is eligible for reimbursement of 3% healthcare contributions made between Oct. 1, 2024, and the date they stopped working. If the payment is made after the employee has been reported on a DTL4 record as deceased, the payment is nonreportable on a DTL2 or DTL4 record.

Yes. The initial 3% healthcare contributions made by members were excluded from gross income and therefore not taxed. Reimbursement of the 3% healthcare contributions would be considered taxable income and treated as such when the reimbursement payment is made.

With Public Act 127 of 2024, it is no longer possible. PA 120 of 2024 states if the member 3% contribution is removed through legislation, the employer will retain the Sec. 147g funding for other post-employment benefit (OPEB) normal costs in FY 2025. Beginning Oct. 1, 2025, members with the premium subsidy healthcare benefit will no longer be required to contribute 3% toward future healthcare benefits. Employers will use Sec. 147g funding to reimburse members with a Premium Subsidy healthcare benefit for their required 3% healthcare contribution in FY 2025.

Yes, the reimbursement payment counts towards their earnings limit if they have returned to work for your reporting unit as a retiree.

The 147g funds that reporting units (RU) received come from the State of Michigan in compliance with PA 120. ORS, with the Michigan Department of Education, is simply administering the reimbursement process. PA 120 does not include a requirement to reimburse all 3% contributions or to use general funds to make up the difference, and the budget of FY 2026 (PA 15 of 2025) did not include a technical change to the language of Sec. 147g. You are required to reimburse eligible employees for their "actual" FY 2025 (Oct. 1, 2024 – Sept. 30, 2025) contributions, up to the amount you receive in 147g funding.

The RU that withheld the member contributions during FY 2025 (Oct. 1, 2024 – Sept. 30, 2025) is responsible for reimbursing the contributions for the timeframe the employee worked at that RU. Your RU is only responsible for reimbursing 3% healthcare contributions beginning with the first date your RU reported the wages and contributions for the eligible employee.

Reimburse through their last summer spread pay. Since summer spread wages are part of the normal active contract spread out through the summer (compared to a lump-sum payout at the end of the year), the same reporting rules apply as if they are an active member.

Subsection 3 of Section 147g allows you to keep these extra funds to offset normal costs for employees with the premium subsidy benefit.