Post­ed by Lin­da Rowings

groupHealthBegin­ning in 2015, large employ­ers must offer afford­able, min­i­mum val­ue cov­er­age to their full-time employ­ees or poten­tial­ly pay a penal­ty. Some com­pa­nies have been mar­ket­ing a plan that they state sat­is­fies the min­i­mum val­ue require­ment (an actu­ar­i­al val­ue of 60%), based upon a cal­cu­la­tor pro­vid­ed by the Depart­ment of Health and Human Ser­vices (HHS), even though the plan does not cov­er inpa­tient hos­pi­tal charges. In Notice 2014–69, HHS and the IRS state that plans that do not pro­vide sub­stan­tial cov­er­age for physi­cian and inpa­tient hos­pi­tal ser­vices will not be con­sid­ered min­i­mum val­ue plans, and that the result obtained through the HHS cal­cu­la­tor should not be con­sid­ered valid since that cal­cu­la­tor was built on the assump­tion that a tra­di­tion­al plan design would be used. The agen­cies do rec­og­nize that some employ­ers have already imple­ment­ed these plans based on the cal­cu­la­tor results, and the Notice states that a lim­it­ed excep­tion will be avail­able to those employ­ers. To be able to use the exception:

  1. The employ­er must have had a bind­ing writ­ten com­mit­ment (such as a signed agree­ment) in place before Novem­ber 4, 2014, to adopt this type of a plan, or it must have begun to enroll employ­ees in this type of a plan before that date.
  2. The plan must have a plan year (gen­er­al­ly, an effec­tive date) that begins on or before March 1, 2015.
  3. The employ­er must not state or imply in any employ­ee com­mu­ni­ca­tions that avail­abil­i­ty of the plan that does not pro­vide cov­er­age for inpa­tient hos­pi­tal stays or physi­cian ser­vices will pre­vent the employ­ee from receiv­ing a pre­mi­um tax cred­it, and it must cor­rect any pre­vi­ous com­mu­ni­ca­tions to that effect (note that this may mean that a Sum­ma­ry of Ben­e­fits and Cov­er­age may need to be reissued).

Employ­ees who are offered cov­er­age under one of these “non-hos­pi­tal/non-physi­cian ser­vices plans” will be eli­gi­ble to receive a pre­mi­um tax cred­it, as long as the oth­er cri­te­ria to receive a tax cred­it are met. How­ev­er, employ­ers that can meet the lim­it­ed excep­tion will be con­sid­ered to have offered min­i­mum val­ue cov­er­age for the 2015 plan year and will not owe a penal­ty for the 2015 plan year even if the employ­ee receives a pre­mi­um tax cred­it. Begin­ning in 2016 non-hos­pi­tal/non-physi­cian ser­vices plans will not be con­sid­ered min­i­mum val­ue for any employ­ers, so employ­ers that qual­i­fy for the lim­it­ed excep­tion will be sub­ject to penal­ties on employ­ees who receive a pre­mi­um tax cred­it unless they offer more com­plete coverage.

This notice only applies to plans that claim to offer min­i­mum val­ue cov­er­age even though they do not pro­vide sig­nif­i­cant cov­er­age for inpa­tient hos­pi­tal and physi­cian ser­vices. Although some have report­ed that “skin­ny” and “MEC” plans are no longer allowed, that is not cor­rect. Plans that lim­it cov­er­age to pre­ven­tive care (often referred to as “skin­ny” or “MEC” plans) are per­mit­ted and appear to meet the cri­te­ria to be con­sid­ered “min­i­mum essen­tial cov­er­age.” Employ­ers may con­tin­ue to offer a non-hos­pi­tal/non-physi­cian ser­vices plan, and that plan like­ly will meet the require­ment to offer min­i­mum essen­tial cov­er­age, but it will not meet a require­ment to offer min­i­mum val­ue coverage.

To get the lat­est infor­ma­tion on oth­er plan designs being disallowed—such as employ­er reim­burse­ment of pre­mi­ums for indi­vid­ual cov­er­age, incen­tiviz­ing employ­ees in poor health to enroll in the mar­ket­place, and more—download UBA’s PPACA Advi­sor, “Agen­cies Dis­al­low Sev­er­al Plan Designs; Oth­er Fed­er­al Developments”.

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