As large employers look ahead to 2014, the “pay or play” penalties under the Affordable Care Act (ACA) certainly require attention. To avoid these penalties, companies must provide health care coverage to their full-time employees (and dependents) that is affordable and provides minimum value.
In this article, we’re going to provide insight into “minimum value” requirement.
The Minimum Value Definition
According to the ACA, an employer-sponsored plan provides minimum value if the percentage of the total allowed costs of benefits provided under the plan is no less than 60 percent.
The Department of Health and Human Services (HHS) has released three approaches that companies can take to determine if the coverage they provide meets the minimum value requirement.
Option 1: MV Calculator
The HHS has released an MV Calculator. This resource allows employers to enter information about their health plan’s benefits, coverage of services, and cost-sharing terms. The results provided by the calculator will help the employer to determine whether their plan provides minimum value.
Option 2: Safe Harbor Checklists
While they have not been issued yet, HHS and the IRS have indicated that they will provide safe harbor checklists. These resources will enable employers to compare them against their plans’ coverage.
If an employer’s plans are consistent with or better than any of the safe harbor checklists, the plan would be viewed as providing minimum value.
Option 3: Actuarial Certification
As a third option, employers may seek certification by an actuary to determine their plan’s minimum value. This final option is only available when one of the other methodologies is not applicable to the employer-sponsored plan.
I hope that you find this breakdown of the available options helpful as you seek to understand how the “Pay or Play” rules impact your business.
For more information, please visit the Health Care Reform Resource Center today.