Internal Revenue Service (IRS) ideas about health plan benefits valuation could give self-insured plans some room to maneuver, but probably not enough room for employers to use limited-benefit plans to meet the new federal coverage standards.
Ed Fensholt, a compliance services lawyers at Lockton Benefits Group, a unit of Lockton Companies L.L.C., Kansas City, Mo., has written about the IRS benefits valuation proposal in a compliance alert.
Fensholt was responding to plan valuation guidance the IRS issued in April.
The IRS released the guidance, Notice 2012-31, to let employers, labor groups, benefits advisors and others know how it is thinking about implementing a portion of the minimum coverage rules in the Patient Protection and Affordable Care Act of 2010 (PPACA).
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Opponents of PPACA are fighting the law in court and in Congress. If PPACA takes effect on schedule and works as expected, employers with the equivalent of more than 50 full-time employees will have to provide workers with a minimum level of health coverage starting in 2014 or else pay a penalty.
An employer might have to pay a penalty of $3,000 if the IRS finds it has failed to offer a worker affordable coverage that meets minimum value standards.
To meet the minimum value standards, the coverage offered must pay 60% of the “total allowed costs” under the plan.
Benefits specialists are wondering how the the government will define what has to go into the package of “total allowed costs” at a self-insured plan, Fensholt says.