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PA 152 is Michigan's Publicly Funded Health Insurance Contribution Act, enacted in 2011 — the law most people call the Michigan hard cap law or simply the insurance cap. It limits how much a public employer may contribute toward employee medical benefit plans, for coverage years beginning on or after January 1, 2012. Every covered employer complies in one of three ways: staying under the hard caps (dollar limits adjusted annually by Treasury), adopting the 80/20 cost-share alternative by annual majority vote, or opting out entirely by an annual 2/3 vote of the governing body. Get it wrong — or simply miss the annual vote — and statutory penalties follow.
The act defines "public employer" broadly (MCL 15.562): the state itself; local units of government and other political subdivisions — cities, villages, townships, and counties; any intergovernmental, metropolitan, or local department, agency, or authority; school districts under the revised school code; community and junior colleges; and institutions of higher education described in section 4 of article VIII of the state constitution — Michigan's public universities. In our experience the entities most likely to be surprised they're covered are the smallest ones — a village with three employees is just as covered as a county with three hundred. There is no small-employer exemption in the act.
| Path | What it limits | Vote required | Watch out for |
|---|---|---|---|
| Hard cap (default) | Employer contribution capped at fixed dollar amounts per employee by coverage tier, adjusted annually by Treasury. Current amounts: 2026 & 2027 hard caps | None — applies automatically | The cap covers total annual costs, not just premium — HSA funding and copay/deductible reimbursements count |
| 80/20 | Employer share capped at 80% of total annual costs, whatever the dollar amount | Annual majority vote of the governing body | The vote must happen every year — and whether 80/20 beats the hard cap depends on your numbers: hard cap vs. 80/20 |
| Opt-out | Exempts the employer from both limits for that year | Annual 2/3 (supermajority) vote of the governing body | Skip the vote and you default back under the hard cap: does the opt-out require a board resolution every year? |
Elections apply per medical benefit plan coverage year. The vote must be on the books before the coverage year it governs.
PA 152 is not a one-time decision — it's a yearly cycle. Treasury publishes the next year's caps each spring (the 2027 caps were signed March 27, 2026). Employers on the 80/20 or opt-out path must re-vote annually; employers under the hard cap should re-run the math at every renewal, because a routine premium increase can push a compliant plan over the cap without anyone changing anything. The renewal review is where compliance is won or lost.
Two real patterns we see across Michigan: a village board that has never heard of PA 152 and has been out of compliance for years without knowing it, and a township that opted out once, years ago, and doesn't realize the vote expired the following year. Both are fixable — and both are far cheaper to fix before an audit than after.
Under MCL 15.569, noncompliance carries a 10% reduction in economic vitality incentive program (EVIP) / statutory revenue sharing payments, and for school districts a 10% school aid penalty. The details, including how the penalty is applied and what it costs a typical entity: What are the penalties for violating PA 152?
EBS tracks the Treasury notice, runs the cap math against your census at every renewal, and prepares the board resolution language your vote requires. It's part of how we work as your agent — there's no fee for it.