The Department of Treasury and the Internal Revenue Service (IRS) April 30 issued proposed regulations related to the minimum value of eligible employer-sponsored plans and other rules regarding the premium tax credit. 

Under the Patient Protection and Affordable Care Act (PPACA), employers are required to provide coverage to their full-time employees that is both “affordable” and meets “minimum value,” or face penalties for full-time employees that qualify for tax credits through health insurance exchanges. Under the IRS code, a plan will not be considered to have met the minimum value requirement if “the plan’s share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs.”

In previous comments submitted by ABC as part of the Employers for Flexibility in Health Care (E-Flex) coalition, concerns were raised about how employer spending on employee wellness programs will be treated under the affordability test.  In the comments, the E-FLEX Coalition “urged the Administration to issue regulations that take into account these important health initiatives and base the affordability test on the employee’s premium share after taking into account wellness incentives allowed under federal law.”

ABC is disappointed that under the April 30 regulations employers that offer wellness programs and premium pricing differentials to incentivize participation must assume that employees will fail to comply with the programs when calculating the minimum value.

“Wellness programs are one of the few areas in which employers can actually impact the underlying cost of care for their employees,” said ABC Senior Director of Sales Sam Melamed. “In yet another example of onerous regulations stemming from PPACA, these new regulations make wellness plans and the premium pricing differentials used to incentivize adoption less attractive for employers.”
Starting in 2014, whether a plan provides minimum value will be relevant to eligibility for the premium tax credit and application of the employer shared responsibility payment. 

In addition, Washington Council Ernst & Young has released a legislative alert with information related to the proposed regulations on minimum value and the Department of Health and Human Services final applications for health insurance. 

For an overview of PPACA regulations, Ernst & Young has provided a reference guide, “The Affordable Care Act: Summary of Employer Requirements.”

The Minimum Value calculator may be found here:
http://cciio.cms.gov/resources/regulations/index.html

For more information on minimum value, read the Feb. 25, 2013 and May 9, 2012 Newsline article.