Non-Hospitalization/Non-Physician’s Services plans not Minimum Value

Posted December 17, 2014 Company News

Employers with self-sponsored health plans can be penalized beginning January 1, 2015 for failing to offer Minimum Value (MV) if they do not provide ample coverage for in-patient hospitalizations or physician’s services to employees, says the IRS.
The IRS will propose regulations effectively closing the legal loophole that allows employers with Non-Hospital/Non-Physician Services plan to successfully argue their plan provides MV by using the MV Calculator.
Employers should not adopt Non-Hospital/Non-Physician Services plans, because after the intended regulations are finalized in 2015, employers cannot use the MV Calculator (or actuarial certifications and valuations) to show these plans provide MV, and may be subject to an assessable payment if one or more of their full-time employees receive a premium tax credit.
Transition relief will be available for employers who entered into a binding written commitment or began enrolling employees in a Non-Hospital/Non-Physician Services plan before November 4, 2014, based on results from the MV Calculator. So long as these plan years begin no later than March 1, 2015, it is anticipated that the risk of penalization will not apply to these plans before the end of the plan year. However, when the final regulations are issued, employees under these plans will still be eligible for premium tax credits.
All employers offering Non-Hospital/Non-Physician Services plans may not state or imply in any notice to employees that the employer’s coverage prevents an employee from being eligible for a premium credit tax, or that a Non-Hospital/Non-Physician Services plan provides MV coverage. Employers who have made prior disclosures to this effect must make and distribute corrections as soon as possible.


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