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IRS Closes Minimum Value Loophole for Low-cost Employer Plans

Health Care Reform News: IRS Closes Loophole for Low-Cost Employer Plans --- via CBG BenefitsUnder the Affordable Care Act, minimum value of an employer-sponsored plan is significant for a number of purposes, including the “pay or play” rules or and laws governing exchange subsidies.

However, earlier this year, a debate arose whether employer plans with no hospital benefits should be able to avoid the “pay or play” penalty.

On November 4th, 2014, the IRS took steps to address that item. Here is a brief overview of the Notice that was issued:

  • The IRS clarified that plans that do not provide in-patient hospitalization or physician services (referred to as Non-Hospital/Non-Physician Services Plans) do not provide the minimum value intended by the Affordable Care Act.
  • Proposed regulations will be issued shortly, clarifying that a plan will not provide minimum value if it excludes substantial coverage for in-patient hospitalization services or physician services (or both).
  • An employer will not be permitted to use the minimum value calculator to demonstrate that a Non-Hospital/Non-Physician Services Plan provides minimum value. As a result, the IRS asserts that a Non-Hospital/Non-Physician Services Plan should not be adopted for the 2015 plan year.
  • For certainly employers that adopted a Non-Hospital/Non-Physician Services Plan prior to Nov. 4, 2014, the IRS did provide a level of transition relief.

I hope that you find this summary helpful.

For more information, please contact our team of Health Care Reform specialists at 877-332-6387 today.

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