The IRS re-proposed and withdrew its prior guidance on determining minimum value for health care reform purposes.
The Affordable Care Act requires an applicable large employer to provide affordable coverage that meets minimum value. If an employer’s plan does not provide minimum value or is not affordable, and if a full-time employee receives a tax credit to purchase coverage on the Exchange, the employer may be responsible for a “pay or play” penalty.
Prior regulations held that a plan provides minimum value if its share of the allowed cost of benefits is at least 60%. Later guidance modified the regulations by stating that if a plan fails to provide substantial coverage for inpatient hospitalization and physician services, the plan will not be considered to provide minimum value even if it does cover 60% of the cost of benefits.
The new rules re-state the two rounds of prior guidance and hold that an employer plan provides minimum value only if the plan’s share of the total allowed cost of benefits provided to an employee is at least 60% and if the plan substantially covers inpatient hospital and physician services. The re-proposed regulations ask for comments on what should be considered “substantial coverage”.
