How does an employer determine whether the coverage it offers provides minimum value under the Affordable Care Act (ACA)?

Author: Brian G. Muse, LeClairRyan

Beginning in 2015, an employer may be subject to a penalty if the coverage it offers does not meet the affordability and minimum value (MV) requirements under the ACA. An employer-sponsored group health plan provides MV if at least one employee health insurance option covers at least 60 percent of the total allowed costs for benefits expected to be incurred under the plan. An employer-sponsored health plan may use one of three options to determine whether the coverage it offers provides MV:

  1. An MV calculator* that allows an employer to input information for a plan's cost-sharing features into an online calculator;
  2. A safe-harbor checklist that provides an array of design-based safe harbors in the form of checklists to determine whether a plan provides MV; or
  3. Certification of nonstandard features by an actuary.

*According to a November 2014 IRS notice, the MV calculator may not accurately determine whether a plan that fails to provide substantial coverage for in-patient hospitalization and/or physician services offers MV. See Health Plans Lacking Hospitalization Services Fail ACA's Minimum Value Requirement.