Referral with a Med plan!? I'm correct aren't I?
- Thread starter SamIam
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She has employer coverage?
Minimum essential coverage versus minimum value
The terms minimum essential coverage and minimum value both stem from the ACA, and are sometimes conflated. But they mean two different things. Minimum essential coverage, as described above, is coverage that satisfies the ACA’s individual mandate.
Minimum value, on the other hand, is a measure of whether a plan offered by a large employer provides adequate coverage. In order to provide minimum value, an employer-sponsored plan must
A large employer’s plan has to be both affordable and provide minimum value. If it’s not, and at least one employee obtains subsidized coverage in the exchange in lieu of the employer’s plan, the employer will be on the hook for the ACA’s employer mandate penalty.
Some employer-sponsored plans provide minimum essential coverage but are actually skimpy plans
Large employers are subject to the ACA’s employer mandate, which requires them to offer coverage to their full-time employees. The penalty for non-compliance is still in effect — only the individual mandate penalty was repealed. But there are two different penalty types under the employer mandate:
Employer-sponsored coverage is, by default, considered minimum essential coverage. And small group health plans effective in 2014 or later are fully compliant with the ACA. But the waters can be murkier for large group plans. Most of them are robust, offering solid coverage that often exceeds the level of coverage people tend to purchase in the individual market.
But some large employers opt for skimpy plans that do not provide minimum value, knowing that they can dodge the (potentially larger) penalty they’d incur if they didn’t offer coverage at all. Employees who are offered these plans don’t always realize that the coverage is skimpy, and may not realize they’re eligible for a premium subsidy in the exchange (and if an employer’s coverage drops below the minimum value and/or affordability requirements mid-year, covered employees are eligible for a special enrollment period during which they can enroll in a plan through the exchange, with subsidies if they’re eligible based on income).
The terms minimum essential coverage and minimum value both stem from the ACA, and are sometimes conflated. But they mean two different things. Minimum essential coverage, as described above, is coverage that satisfies the ACA’s individual mandate.
Minimum value, on the other hand, is a measure of whether a plan offered by a large employer provides adequate coverage. In order to provide minimum value, an employer-sponsored plan must
- cover at least 60 percent of the average medical costs across a standard population (ie, similar to a bronze plan in the individual and small group market), and
- provide “substantial coverage” for inpatient care and physician treatment.
A large employer’s plan has to be both affordable and provide minimum value. If it’s not, and at least one employee obtains subsidized coverage in the exchange in lieu of the employer’s plan, the employer will be on the hook for the ACA’s employer mandate penalty.
Some employer-sponsored plans provide minimum essential coverage but are actually skimpy plans
Large employers are subject to the ACA’s employer mandate, which requires them to offer coverage to their full-time employees. The penalty for non-compliance is still in effect — only the individual mandate penalty was repealed. But there are two different penalty types under the employer mandate:
- One is for employers that simply don’t offer coverage to at least 95 percent of their full-time employees. In 2020, this penalty is calculated as $2,570 per full-time employee (minus the first 30 employees), and it’s triggered if even one full-time employee qualifies for a premium subsidy in the exchange (for 2021, HHS has proposed a penalty amount of $2,700).
- The other is for employers that do offer coverage, but it’s either unaffordable or does not provide minimum value. Unaffordable, in 2020, is defined as the employee’s share of the premium (for self-only coverage on the least-expensive plan the employer offers) being more than 9.78 percent of the employee’s household income (this will increase to 9.83 percent in 2021). Minimum value, as noted above, is defined as covering at least 60 percent of costs for a standard population and providing “substantial coverage” for inpatient and physician care. The penalty, in this case (in 2020), is the lesser of $3,860 per full-time employee receiving a subsidy in the exchange, OR $2,570 per full-time employee, minus the first 30 employees (for 2021, HHS has proposed adjusting these amounts to $4,060 and $2,700, respectively).
Employer-sponsored coverage is, by default, considered minimum essential coverage. And small group health plans effective in 2014 or later are fully compliant with the ACA. But the waters can be murkier for large group plans. Most of them are robust, offering solid coverage that often exceeds the level of coverage people tend to purchase in the individual market.
But some large employers opt for skimpy plans that do not provide minimum value, knowing that they can dodge the (potentially larger) penalty they’d incur if they didn’t offer coverage at all. Employees who are offered these plans don’t always realize that the coverage is skimpy, and may not realize they’re eligible for a premium subsidy in the exchange (and if an employer’s coverage drops below the minimum value and/or affordability requirements mid-year, covered employees are eligible for a special enrollment period during which they can enroll in a plan through the exchange, with subsidies if they’re eligible based on income).
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