3.1 Michigan Health Insurance Policy Requirements

Regulatory Structure and the Free Look

The Department of Insurance and Financial Services (DIFS) regulates accident and health (A&H) insurance sold in Michigan. The exam expects you to know which authority governs each market segment, because that determines what consumer protections apply.

A common trap: self-funded plans are exempt from state mandates because ERISA preempts state law. So a self-insured employer in Michigan need not cover a state-mandated benefit such as autism services—only fully insured plans must.

Michigan requires a 10-day free look period on individual A&H policies. During this window the policyowner may return the policy for a full refund of premium paid, no questions asked.

• The period begins when the policy is delivered, not when the application is signed.
• It applies to individual health policies (not group certificates).
• Returning the policy voids it from inception—the insurer treats it as never issued.

Worked example: A consumer receives her individual major-medical policy on June 1. She has until June 11 (10 days after delivery) to mail it back for a complete refund. If she cancels on day 15, she is past the free look and the insurer may instead apply the policy's standard cancellation/refund terms.

The Health Insurance Marketplace

Michigan does not operate its own state exchange. Residents enroll through the federally facilitated marketplace at Healthcare.gov. Exam writers love to offer fictional names ("Covered Michigan," "MIHealthMarketplace")—reject them.

• Open enrollment is the annual window to buy or change individual coverage.
• A Special Enrollment Period (SEP) is triggered by qualifying life events—marriage, birth/adoption, loss of other coverage, or a permanent move.
• Advance Premium Tax Credits (APTC) lower monthly premiums based on household income.
• Cost-Sharing Reductions (CSRs) lower deductibles and copays but apply only to Silver-tier plans.

Metal Tiers (Actuarial Value)

Actuarial value is the share of total covered costs the plan pays on average—not the percentage any one person pays. A Bronze enrollee still pays the full deductible before coverage kicks in.

The 10 Essential Health Benefits

Every ACA-compliant individual and small-group plan in Michigan must cover all ten Essential Health Benefits (EHBs):

1. Ambulatory (outpatient) patient services
2. Emergency services
3. Hospitalization
4. Maternity and newborn care
5. Mental health and substance use disorder services
6. Prescription drugs
7. Rehabilitative and habilitative services and devices
8. Laboratory services
9. Preventive/wellness services and chronic disease management
10. Pediatric services, including oral and vision care

Preventive services (immunizations, recommended screenings, well-woman visits) must be covered at $0 cost-sharing when delivered in-network—no deductible, no copay.

Michigan State Mandates

Michigan adds mandates on top of EHBs for fully insured plans:

Mental Health Parity

Under federal parity law and Michigan rules, financial requirements and treatment limits for mental health and substance use disorder benefits cannot be more restrictive than those for medical/surgical benefits. An insurer cannot charge a higher copay for a therapy visit than for a comparable medical office visit, nor cap therapy visits while leaving medical visits uncapped.

Pre-Existing Condition Protections

The ACA reshaped Michigan's individual and small-group markets:

Trap to avoid: These ACA protections apply to individual and small-group coverage. Medicare Supplement (Medigap) follows a different rule set—outside its own open enrollment window, a Medigap insurer may still underwrite and impose a pre-existing condition waiting period (covered in 3.2). Do not blur the two markets on the exam.

Continuation Coverage: COBRA and Michigan Mini-COBRA

When group coverage ends, two laws may let an employee keep it temporarily:

Under COBRA (Consolidated Omnibus Budget Reconciliation Act), a qualified beneficiary who loses coverage from a job loss or reduction in hours may continue the same group plan for 18 months, extended to 29 months for disability and 36 months for events such as divorce or a dependent aging out. The former employee pays the full premium plus up to a 2% administrative charge.

Trap: COBRA's 20-employee threshold means very small employers are exempt from federal COBRA; that is precisely the gap Michigan continuation rules and ACA marketplace SEPs are meant to fill. Loss of group coverage is itself a qualifying event that opens a marketplace Special Enrollment Period, so a worker leaving a job has parallel paths: continue under COBRA, or enroll in an individual marketplace plan within the SEP window.