We’ve all heard about employers offering skinny plans, also known as Minimum Essential Coverage or MEC plans, as a strategy to avoid the across-the-board $2,000 penalty on most of their full-time employees for failing to offer group health coverage next year. These skinny plans, while considered minimum essential coverage, do not provide minimum value and do not block employees from obtaining subsidized coverage in the individual market unless they actually sign up for the group plan.
Recently, though, a new strategy has emerged: Minimum Value plans that don’t provide coverage for hospitalization. These plans, unlike the MEC plans, would block employees and their family members from qualifying for a premium tax credit as long as they’re considered affordable, and it’s unlikely that they would be unaffordable for employees since the price is only about half that of regular, more comprehensive plans.
The reason these plans have emerged as an option is because someone was smart enough to run the numbers on the HHS calculator tool and realized that the calculator is apparently flawed: it says that plans without hospitalization but with rich outpatient services like doctor visits and ER do, in fact, provide minimum value. This revelation has led many restaurants, retailers, and other companies that have not historically provided coverage to their hourly workers to make plans to offer these “minimum value” plans to their employees next year.
A new report by Kaiser Health News, however, says that the administration is making moves to close this loophole – it’s just a matter of timing. With the elections coming up, Treasury knows that an announcement could be a “political hot potato.”
For brokers who sell individual plans, this may be good news because, if these plans are not classified as “minimum value,” then tens of thousands of employees and their family members may still qualify for a subsidy. It’s an issue brokers should watch closely, especially if they have a way to reach employees in the sorts of companies that are considering this approach.