Unconventional employer-sponsored health plans don't meet minimum value requirement

HHS, IRS and treasury will soon crack down on plans that don't cover in-patient care, substantial physician services

The Department of Health and Human Services, the treasury department and the Internal Revenue Service announced they will "shortly" propose regulations about minimum value (MV) requirements for some employer-sponsored health plans.

The departments said unconventional plan designs that do not provide coverage for in-patient hospitalization services or for those that exclude "substantial physician services" do not meet MV requirements under the Affordable Care Act.

"A plan that fails to provide substantial coverage for these services would fail to offer fundamental benefits that are nearly universally covered, and historically have been considered integral to coverage, under typical employer-sponsored group health plans," according to the announcement.

Employers will be bound by the forthcoming regulations as of Nov. 4. If employers have binding agreements dated before Nov. 4 they may be grandfathered in for the plan year. 

The departments also said that the online MV calculator does not work for these unconventional plans, so employers cannot rely on them. Rather, they must supplement the calculator with an actuarial valuation of a plan's nonstandard features. 

Under the new regulations, however, plans that don't offer in-patient care or substantial physician coverage wouldn't have that option. 

While some consultants believe it's feasible to design an employer-sponsored health plan that meets the standard MV requirements without covering hospitalization services, this was not intended under the healthcare reform law, suggests a Health Affairs blog post. These in-patient hospitalization and physicians' services are the heart of the ACA health plans.

If an employer offers an employee a plan that fails to provide MV for the required services, the employee is not eligible to obtain a tax credit for premiums. But they could enroll via the exchange for subsidized coverage.

However, it costs more for companies to drop employees' health coverage than it does to continue providing coverage.

For more:
- here's the announcement (.pdf)
- read the Health Affairs blog post

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