FAQs for MPSERS 3% healthcare reimbursement (Sec. 147g)

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FAQs last updated on Feb. 26, 2025

Feb. 26, 2025: Added new FAQ - Question 6. What is the Michigan Department of Education (MDE) accounting guidance for recording Sec. 147g revenues and payments?

FAQs for MPSERS 3% healthcare reimbursement (Sec. 147g)

1. What is the Sec. 147g MPSERS 3% healthcare reimbursement?

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).
2. Does my reporting unit still need to withhold 3% healthcare contributions from these employees?

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.
3. When can my reporting unit expect the first Sec. 147g payment?

The first Sec. 147g payment will be included in the February 2025 State School Aid package.
4. What timeframe does the first Sec. 147g payment include?

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.
5. How much of the Sec. 147g funds will my reporting unit receive?

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. ORS will update you if the basis for the payment changes.
6. What is the Michigan Department of Education (MDE) accounting guidance for recording Sec. 147g revenues and payments?

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.
7. How often will my reporting unit receive Sec. 147g payments?

Payments will be included in monthly State School Aid packages beginning in February 2025. ORS will update you if this payment frequency changes.
8. When should my reporting unit start making payments to employees? Will my reporting unit have to pay employees retroactively?

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.
9. Can my reporting unit begin reimbursing employees before Sec. 147g funds are received in State School Aid packages?

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.
10. Who is eligible for reimbursement?

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, those with the Personal Healthcare Fund (PHF), or retirees who have returned to work. Since retirees no longer contribute toward healthcare, they are not eligible for the reimbursement after they are no longer active members.
11. How can I get a list of employees who are 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.
12. When does my reporting unit stop paying Sec. 147g to eligible employees?

Once the final Sec. 147g State Aid payment is disbursed, your reporting unit will pay out the final reimbursements to eligible employees.
13. An employee with 3% employee healthcare left my reporting unit in FY 2025. Does my reporting unit still reimburse that employee?

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.
14. Will employees be reimbursed for all their years of contributions?

No, Sec. 147g reimburses members with the Premium Subsidy healthcare benefit for their 3% healthcare contributions in FY 2025 only.
15. Is it a guarantee that employees will receive all of their FY 2025 3% contributions back?

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.
16. Is the Sec. 147g reimbursement reportable for retirement purposes?

The Sec. 147g healthcare reimbursement is not reportable on a Detail 2 — Wage and Service records (DTL2) record. It is reportable on a Detail 4 — DC Contribution records (DTL4) record, but only for members who were active in FY 2025. It is not reportable on a DTL2 or a DTL4 record for members who are retired or terminated at the time of the reimbursement payment.
17. Is the 3% healthcare reimbursement considered taxable income?

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.
18. The email sent on Sept. 3 mentioned that future legislation may impact how the money is to be used. Is that legislation still possible?

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.

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