Non-hospital, non-physician services plans won’t meet ACA minimum value requirements for 2015
December 17, 2014
On Nov. 4, 2014, the federal government issued Notice 2014-69. This notice clarifies that a group health plan not covering in-patient hospitalization or physician services, or both, will not satisfy the Affordable Care Act’s minimum value requirements, regardless of the results of the minimum value calculator.
The government advises that groups should not adopt these plans, also known as “non-hospital / non-physician services plans,” for the 2015 plan year unless they qualify for the Nov. 4 safe harbor protection detailed below.
This applies to group health plans and insurance carriers who provide group health coverage.
This guidance is in response to certain group health plans and third-party administrators offering or expressing interests in offering group health plans that would carve out certain core benefits but could result in a minimum value calculator finding of minimum value.
When do these new guidelines take effect?
The guidelines were effective Nov. 4, 2014.
Is there a safe harbor option?
Employers can take advantage of a safe harbor rule if their plan year begins on or before March 1, 2015, and if at least one of these statements applies:
- They have a binding written agreement in place for a non-hospital/non-physician plan before Nov. 4, 2014.
- They already began enrolling their employees in a non-hospital/non-physician services plan before Nov. 4, 2014.
If there is no binding written agreement or the employer has not begun enrolling employees into such a plan, there is no safe harbor — regardless of when the plan year begins.
If applicable, this limited safe harbor is expected to apply only until the end of the group’s plan year.
| Scenarios for safe harbor applicability | Date | Applicable plan year | Does safe harbor apply? |
|---|---|---|---|
A group has a binding written agreement in place for a plan that does not include one or both of the following:
But coverage still meets minimum value requirements (60 percent or greater actuarial value) according to the minimum value calculator. |
Before Nov. 4, 2014 | Any plan year beginning on or before March 1, 2015 | Yes |
A group has begun enrolling members in plan that does not include one or both of the following:
But coverage still meets minimum value requirements (60 percent or greater actuarial value) according to the minimum value calculator. |
Before Nov. 4, 2014 | Any plan year beginning on or before March 1, 2015 | Yes |
A group will have a health plan that does not include one or both of the following:
But coverage still meets in minimum value requirements (60 percent or greater actuarial value) according to the minimum value calculator. |
After Nov. 4, 2014 | Not applicable | No. This group has to include benefits for the plan to satisfy minimum value requirements. |
A group will have a health plan that does not include one or both of the following:
But coverage still meets minimum value requirements (60 percent or greater actuarial value) according to the minimum value calculator. |
Not applicable | Any plan year after March 1, 2015 | No. This group has to include these benefits for the plan to satisfy minimum value requirements. |
Does this mean employees in this type of plan can be eligible for premium tax credits on the individual Marketplace?
Yes. Employees that are offered an employer’s non-hospital/non-physician services plan may still qualify for a premium tax credit, regardless of whether the plan was adopted before Nov. 4, 2014.
What if an employer has already communicated that an employee is ineligible for a premium tax credit?
An employer offering a non-hospital/non-physician services plan to an employee must not state or imply that the offer of coverage will make the employee ineligible for a premium tax credit on the individual Marketplace. If an employer has made such statements, it must correct any previous disclosures in a timely manner.
When will there be more details about this requirement?
The agencies expect to issue final regulations on or about March 1, 2015.
How does this clarification of the minimum value requirement affect the employer mandate?
Under the employer shared responsibility provision (also known as the employer mandate) in 2015, an employer with 50 or more full-time equivalent employees* is required to offer coverage to its full-time employees and their dependents or risk being penalized. The coverage has to be affordable and meet minimum value requirements. An employer may face tax penalties if it does not offer affordable coverage that meets minimum value requirements to a certain percentage of its employees.
According to the agencies, it is expected that the March 2015 final regulations, when issued, will not penalize any pre-Nov. 4 plans while they remain qualified for the safe harbor.
You can find more information on Notice 2014-69: Group Health Plans that Fail to Cover In-Patient Hospitalization Services (PDF).
The information in this document is based on preliminary review of the national health care reform legislation and is not intended to impart legal advice. The federal government continues to issue guidance on how the provisions of national health reform should be interpreted and applied. The impact of these reforms on individual situations may vary. This overview is intended as an educational tool only and does not replace a more rigorous review of the law’s applicability to individual circumstances and attendant legal counsel and should not be relied upon as legal or compliance advice. As required by US Treasury Regulations, we also inform you that any tax information contained in this communication is not intended to be used and cannot be used by any taxpayer to avoid penalties under the Internal Revenue Code.