PPACA: IRS Offers 3 Plan Valuation Methods

In the IRS notice, officials describe 3 approaches that could be used to determine whether an employer-sponsored plan provides minimum value.

• The U.S. Department of Health and Human Services (HHS) and the Treasury Department could provide an actuarial value calculator or a minimum value calculator. The minimum value calculator would be designed for large self-insured employers, and it would draw on the kinds of claims data that typical self-insured employer plans might produce.
• The government could provide a set of checklist-based safe harbors tailored to fit various plan designs. An employer could use the checklists without performing any calculations or hiring an actuary.
• The government could let plans with nonstandard features hire certified actuaries to certify that the plans provide the required minimum value.

“The actuarial value of a health plan is a measure of the percentage of health care costs, on average, that the plan is expected to cover,” officials say in the notice.

HHS reported in the fall that, when it applied methods similar to those described in the notice, it found that about 98% of workers in employer-sponsored group health plans are in plans with an actuarial value of at least 60%, officials say.

HHS analysts found that expenditures on 4 categories of care – physician and mid-level practitioner care; hospital and emergency room services; pharmacy benefits; and laboratory and imaging services — accounted for most of a plan’s actuarial value.

The HHS analysts said coverage of services such as rehabilitative services, durable medical equipment, acupuncture services, chiropractic services and home health services has little effect on actuarial value.

“We seek input on whether other analyses using different data or assumptions produce similar or different results,” IRS officials say.

Officials also are asking for comments on what benefits should be included in an actuarial value or minimum value calculator, and how a calculator could reflect the value of benefits such as wellness benefits; plan features that could require adjustments to actuarial value or minimum value calculator results; terms that should be included in safe harbor checklists; the types of plans that could be covered by safe harbor checklists; and standards for plans that want to get independent actuarial value certification.

Comments are due June 11.