Employer Plan Cost Sharing Rules and a Minimum Value Calculator are Released

The IRS and the Department of Health and Human Services (HHS) have released a preliminary version of an employer plan minimum value (MV) calculator. The MV calculator is designed to assist employers in determining whether an employer-sponsored health plan meets minimum value requirements contained in the Affordable Care Act (ACA).

Background

To satisfy the minimum value requirement under the ACA an employer plan’s share of the “total allowed costs of benefits provided under the plan” must equal or exceed 60%. If an employer’s plan does not meet the minimum value requirement, employees may qualify for subsidized individual health insurance purchased through a public exchange, exposing large employers to possible penalties under the ACA shared responsibility rules.

Methods Employer May Use to Determine Minimum Value

Regulatory guidance defines three methods for an employer to determine if a plan meets the ACA minimum value requirements.

• Use of the minimum value (MV) calculator developed by HHS and the IRS. The calculator will permit an employer-sponsored plan to enter information about the plan’s benefits, coverage of services, and cost-sharing terms to determine whether the plan provides minimum value.
• Use of a design-based safe harbor based on checklists developed by HHS and the IRS. This method will provide a way to ascertain that employer-sponsored plans provide minimum value without the need to perform any calculations or obtain the assistance of an actuary. As of February 22, 2013, the proposed “checklist” and guidance have not yet been released.
• For plans with nonstandard features that preclude the use of the MV calculator, an employer can rely on an appropriate certification by a certified actuary, in accordance with prescribed continuance tables, recognized actuarial standards, and other regulatory conditions.

Using the Calculator

The MV calculator, instructions for use, and details on underlying assumptions, can be found at the CMS Center for Consumer Information & Insurance Oversight (CCIIO) regulations page at  www.cciio.cms.gov/resources/regulations. The current version of the MV calculator is described as preliminary, and the agencies are taking comments regarding its use. However, it is expected that changes to the calculator will be minimal and are not likely to affect significantly the results for the majority of employer-sponsored plans.

For more information, please contact your Parker, Smith & Feek Benefits Team

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