Title
Resolution to Approve a 2026 Plan Year Exemption of the Publicly Funded Health Insurance Contribution Act, Public Act 152 (8 Votes Required)
Memorandum
Staff is requesting Council approval of a one-year exemption from Public Act 152 requirements to maintain compliance with state law and avoid potential loss of Michigan Transportation Fund distribution. Under the Act, exemption approval requires 2/3 vote of the governing body.
Beginning September 30, 2015, and annually each September 30 thereafter, local agencies must certify compliance with Section 18j(1) of Public Act 51 of 1951, MCL 247.668j(1). A local road agency must certify that is has developed an employee compensation plan for its employees as described or the local road agency must certify that medical benefits are offered to its employees or elected public official in compliance with the publicly funded health insurance contribution act, 2011 PA 152, MCL 15.561 to 15.569, or, that it does not offer medical benefits to its employees or elected public officials.
Failure to comply with certification of MCL 247.668j may result in the withholding of all or part of the distributions made to the local road agency from the Michigan Transportation Fund.
The City of Ann Arbor is unable to certify compliance of its compensation plan as described in the act; therefore, has certified compliance for Section 18j under one of the options offered under the publicly funded health insurance contribution act, 2011 PA 152, MCL 15.561 to 15.569. Public Act 152 offers three options for compliance with the requirements of the Act as follows:
• Section 3 - “Hard Caps” Option - limits a public employer’s total annual health care costs for employees based on coverage levels, as defined in the Act;
• Section 4 - “80%/20%” Option - limits a public employer’s share of total annual health care costs to not more than 80%. This option requires an annual majority vote of the governing body;
• Section 8 - “Exemption” Option - a local unit of government, as defined in the Act, may exempt itself from the requirements of the Act for the next plan year by an annual 2/3 vote of the governing body;
Preliminary projections for the 2026 benefit plan year indicate the City may exceed the allowable hard cap limits under Section 3. While final figures will not be confirmed until the plan year closes and is audited, staff recommends proactively seeking the one-year exemption to ensure uninterrupted compliance. This will be the City’s first time seeking an exemption, due to rising health care costs associated with inflation, market conditions and plan utilization; therefore, our only option for compliance is to approve the allowable one-year exemption by obtaining a 2/3 vote of the governing body which is allowable under Section 8 of the Act.
Staff have already begun working with our health insurance broker/consultant to identify possible strategies and will work with labor partners in the first part of 2026 to finalize and negotiate long-term solutions to achieve compliance.
Staff
Prepared by: Monica Boote, Director of Human Resources & Labor Relations
Marti Praschan, Chief Financial Officer
Reviewed by: Margaret Radabaugh, Deputy City Attorney
Approved by: Milton Dohoney Jr., City Administrator
Body
Whereas, Local Road agencies are required to annually certify compliance with Section 18j (1) of Public Act 51 of 1951 M, MCL 247.668j(1);
Whereas, Preliminary projections for the 2026 benefit plan year indicate the City may exceed the allowable hard cap limits of the Publicly Funded Health Insurance Contribution Act, 2011 PA, MCL 15.561 to 15.569;
Whereas, Section 8 of the Act permits the “governing body” of “a local unit of government to exempt itself from the requirements of this act for the next succeeding year;
Whereas, Failure to comply with certification may result in the withholding of all or part of the distribution s made to the local road agency from the Michigan Transportation Fund; and
Whereas, Staff have already begun working to identify strategies and will work with labor partners to finalize and negotiate long-term solutions to achieve PA 152 compliance;
RESOLVED, That the City of Ann Arbor exempts itself from the requirement of PA 152 for one year beginning January 1, 2026, and pursuant to the Act no exemption beyond December 31, 2026, is intended or implied by this resolution; and
RESOLVED, That the City Administrator be authorized to take any necessary action to implement this resolution.