IRS, HHS Creating Proposed Regulations to Close Minimum Value Plan Loophole

(November 4, 2014) A glitch in the Department of Health and Human Services’ (HHS), minimum value (MV) calculator permits certain health plans to appear to provide minimum value as defined by the Employer Mandate provision of the Affordable Care Act (ACA), when they did not contain in-patient hospital and/or physician services. The Internal Revenue Service (IRS) announced that in conjunction with HHS, it would soon be issuing proposed regulations stating that plans that do not provide in-patient hospital and/or physician services will not be considered compliant with the minimum value provision.

What Does That Mean?
If, as an employer, you planned to implement a minimum value plan that did not include in-patient hospitalization or physician services, you will have to revisit your strategy or risk the $3,000 penalty per full-time employee, who goes to the Exchange and receives a federal premium subsidy. If you have already contracted to implement this type of plan (on or before November 4, 2014) based on the information you received from the MV calculator, you will have transition relief for one year (as long as the plan starts no later than March 1, 2015), but must notify employees that the plan is not truly considered minimum value based on the proposed regulations.

The proposed regulations as stated above affect only the Minimum Value aspect of the Employer Mandate. Click here to view the IRS notice.

Click here for more information on the Employer Mandate provision.

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