Health Care Reform: IRS Requests Comments on Proposed Rule on “Minimum Value” Health Coverage
The IRS is seeking feedback on a proposed rule that provides guidance on “minimum value” coverage under the Affordable Care Act (ACA). The Internal Revenue Code (IRC) provides that health plans that do not cover at least 60 percent of the cost of benefits generally fail to provide minimum value. Individuals who do not qualify for affordable employer-sponsored coverage can generally receive a premium tax credit under the ACA; employers may also face “pay or play” taxes if a full-time employee receives a premium tax credit. In the proposed rule, the IRS clarified that employer-sponsored self-insured and insured large group plans need not cover every category of essential health benefits in order to conform to the minimum value standard. Minimum value coverage would instead be measured based on anticipated spending for a standard plan population.
The guidance also provides that all amounts contributed by employers to health savings accounts (HSA) would be taken into account in determining the plan’s share of costs for purposes of determining minimum value, and would be treated as amounts available for first-dollar coverage. In addition, amounts newly made available under a health reimbursement arrangement that is integrated with an eligible employer-sponsored for the current plan year would count for purposes of minimum value in the same manner if the amounts may be used only for cost-sharing and may not be used to pay insurance premiums. For employer-sponsored plans that charge higher premiums for tobacco users than non-tobacco users, affordability under the proposed rules would be determined based on the premium that is charged to non-tobacco users or tobacco users who completed a related wellness program.
The IRS and HHS have released calculators to determine whether a plan provides minimum value. The calculators may be used to measure standard plan features (unless a safe harbor applied), but the minimum value percentage may be adjusted based on an actuarial analysis of plan features that are outside the parameters of the calculators. The proposed guidance would take effect for taxable years ending after December 31, 2013 and may be used for taxable years ending before January 1, 2015. Comments on the proposed guidance are due by July 2, 2013.