American Benefits Council
Benefits Byte


November 4, 2014

The Benefits Byte is the American Benefits Council’s regular e-mail and online newsletter for members only, providing timely reports on legislative, regulatory and judicial developments, along with updates on the Council’s activities in support of employer-sponsored benefit plans.

The Benefits Byte is published by the American Benefits Council, based on staff reports and edited by Jason Hammersla, Council director of communications. Contact information for Council staff related to specific topics can be found at the end of each story.

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IRS Guidance Clarifies Treatment of Certain Health Coverage in Wake of MV Calculator Glitch

The U.S. departments of Health and Human Services (HHS) and Treasury issued guidance on November 4 to address the recently identified glitch in the HHS minimum value (MV) calculator, which is intended to be used to determine whether an employer-sponsored plan provides 60 percent minimum value within the meaning of the Patient Protection and Affordable Care Act (PPACA).

According to the departments, the online MV calculator is improperly qualifying certain group health plan benefit designs that do not provide coverage for in-patient hospitalization services. “It has been suggested that these and other effects resulting from excluding substantial coverage of in-patient hospitalization services may not be adequately taken into account by the MV Calculator and its underlying continuance tables. Similar concerns have been raised regarding the possibility of using the MV calculator to demonstrate that an unconventional plan design that excludes substantial coverage of physician services provides minimum value.”

Internal Revenue Service (IRS) Notice 2014-69, issued on behalf of Treasury and HHS, reiterates the departments’ view that “plans that fail to provide substantial coverage for in-patient hospitalization services or for physician services (or for both) … do not provide the minimum value intended by the minimum value requirement.” [emphasis added].

According to Notice 2014-69, the departments will shortly propose regulations formally stating this position with the intent of making the regulations applicable in 2015. The notice provides relief, however, for employers that have entered into a binding written commitment to adopt, or have begun enrolling employees in, a Non-Hospital/Non-Physician Services Plan prior to November 4, 2014, based on the employer’s reliance on the results of use of the MV Calculator. The notice also clarifies that, pending issuance of final regulations, an employee will not be required to treat a “Non-Hospital/Non-Physician Services Plan” as providing minimum value for purposes of an employee’s eligibility for a premium tax credit, regardless of whether the plan is a “Pre-November 4, 2014 Non-Hospital/Non-Physician Services Plan.” An employer that offers such a plan, including a “Pre-November 4, 2014” plan, will be subject to certain disclosure requirements.

For more information, contact Kathryn Wilber, senior counsel, health policy, at (202) 289-6700.

The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.

Notice: the information contained herein is general in nature. It is not, and should not be construed as, accounting, consulting, legal or tax advice or opinion provided by the American Benefits Council or any of its employees. As required by the IRS, we inform you that any information contained herein was not intended or written to be used or referred to, and cannot be used or referred to (i) for the purpose of avoiding penalties under the Internal Revenue Code, or (ii) in promoting, marketing or recommending to another party any transaction or matter addressed herein (and any attachment).