Blue Cross Blue Shield of Michigan is buying M-Care.
University of Michigan regents approved the sale today. M-Care is the insurance business of the school's health system.
The deal calls for Detroit-based Blue Cross to pay $240 million for M-Care.
Officials expect the sale to be finalized later this year or early 2007. It must be approved by state and federal regulators.
Officials say M-Care members will see their current benefits after the sale with the option to renew for 2007.