Employees confused by skinny plans may miss out on subsidies

In an effort to avoid the across-the-board penalty under the employer shared responsibility requirement, some large employers are offering “skinny” plans to their full-time employees. These plans do qualify as minimum essential coverage and therefore satisfy the 4980H(A) employer mandate requirement as well as their employees’ individual mandate requirements.

However, these “Minimum Essential Coverage” (MEC) plans do not provide comprehensive coverage, and, therefore, they fail to provide minimum value. This means that employees have the option of waiving the employer coverage and applying for a government subsidy in the individual market instead, but there seems to be some confusion among employees about this option. A new Kaiser Health News article entitled “Consumers May Miss Out On Subsidies Due To Uncertainty About Job-Based Coverage” explains that “consumers mistakenly think that having access to such coverage means they don’t qualify for subsidies if they want to buy a policy on the exchanges instead.” This could be a costly mistake.

A plan that fails to provide minimum value, as these skinny plans do, only blocks an employee from receiving a government subsidy if the employee actually signs up for the group health plan. In contrast, a plan that does provide minimum value, which means it pays at least 60% of the cost of essential benefits, would disqualify an employee from a premium tax credit if the plan is affordable.

At this time of the year, employees are in clear need of some guidance, and brokers are in need of individual leads. So here’s a tip: find a large company that offers a skinny plan, tell one of the employees that she may qualify for financial assistance in the individual market, send her to your private exchange website, and then get her to recruit her coworkers. Most employers who are offering a skinny plan are doing their best to avoid a penalty, so they’re unlikely to let you do a group meeting. However, if you can help out just one employee, that’s likely to snowball and turn into a lot more sales.

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