The Internal Revenue Service (IRS) has drafted the regulations it intends to use to keep self-insured employers from offering workers “very skinny” major medical plans.
In a proposed revision of an existing regulation, Minimum Value of Eligible Employer-Sponsored Health Plans (RIN 1545-BM85), the IRS declares that an employer-sponsored plan provides “minimum value” only if the plan pays at least 60 percent of the total allowed costs of the benefits provided, and only if the plan “provides substantial coverage of in-patient hospital services and physician services.”
“Comments are requested on rules for determining whether a plan provides ‘substantial coverage’ of in-patient hospital and physician services,” officials say in a preamble to the proposed regulation revision.
The draft is set to appear in the Federal Register Tuesday.
In January, the U.S. Department of Health and Human Services (HHS) released final regulations forbidding employers from adding skinny major plans after November 2014. HHS also refused to let employee access to existing skinny plans keep those employees from qualifying to get Patient Protection and Affordable Care Act (PPACA) exchange plan premium tax credits.
The IRS says it developed the new minimum value regulation revision to put the HHS regulation into effect.
PPACA now requires many individuals with incomes over a certain level to have “minimum essential coverage” (MEC) or face the possibility of having to pay an “individual shared responsibility” penalty. Workers can avoid having to pay the penalty by saying they have employer-sponsored group health coverage with a minimum value.
PPACA also requires employers to offer full-time, permanent workers affordable coverage with a minimum value to avoid having to pay “employer shared responsibility” penalties.
An employer may have to pay a $2,000-per-full-time-equivalent penalty if it fails to provide any coverage, and at least one full-time employee gets a PPACA exchange plan premium tax credit.