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Agencies Say Plans Not Providing Hospitalization, Physician Services Likely Do Not Satisfy ACA Minimum Value Requirements

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November 2014

The Departments of Labor, Health and Human Services (HHS), and Treasury (collectively, the “Agencies”) issued a notice stating that they believe that group health plans that do not cover in-patient hospitalization services and/or physician services (also known as “skinny” plans) do not comply with the ACA employer mandate’s “minimum value” requirement.

Whether a plan provides minimum value for ACA purposes can be determined through use of the online MV calculator. However, the Agencies expressed concern as to whether the continuance tables underlying the MV calculator produce valid actuarial results for unconventional plan designs that exclude substantial coverage for in-patient hospitalization services. For instance, the standard population and other underlying assumptions used in developing the MV calculator are based on self-insured employer-sponsored plans, which have typically included hospitalization coverage. The Agencies also stated that designing a plan to exclude hospitalization coverage could substantially affect a plan’s covered population by discouraging enrollment by employees who have, or think they might develop, significant health issues.

The Agencies intend to propose regulations that address skinny plans’ compliance with the ACA’s minimum value requirement. Employers will not be able to rely solely on the MV calculator, the Agencies said, to determine whether a skinny plan satisfies the minimum value requirement after such regulations have been finalized. For employers that have already entered into a binding agreement to adopt a skinny plan or that have started enrolling participants into such a plan on or before November 4, 2014, the Agencies stated that they anticipate that the regulations will not apply to such employers’ skinny plans before the end of any plan year that begins before March 1, 2015.

The notice also provides that employers offering skinny plans must correct any disclosures made to employees that stated or implied that receiving an offer of coverage from a skinny plan will prevent employees from obtaining a premium tax credit for marketplace-based insurance coverage.  

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