November 12, 2014
The Department of Health and Human Services (HHS) and the Internal Revenue Service (IRS) are working together to “put the brakes” on efforts by some companies to move away from the original intent of the ACA.
These companies are moving to offer minimal-coverage health plans to employees, by taking advantage of the ways in which regulations have been written. The online “Minimum Value (MV) Calculator” developed by HHS has failed to protect against such minimal plans.
Most large companies have historically offered “good” group plans to employees, and can adjust to requirements for plans that are similar to the Qualified Health Plans (QHPs) that are being sold on the Health Benefit Exchanges.
But some employers—particularly those that have not previously offered group health coverage—are struggling to find alternatives that will be lower cost but also avoid penalties for not meeting ACA requirements.
More recently, moves have been made in the insurance market to offer low-cost “skinny” plans that cover preventive care but not much else.
These plans have been advertised as meeting ACA requirements, even without basic hospital or physician coverage. (For more, see ACA and Legal Practices posting #15).
Similarly, some insurance companies have offered individual plans on the same model. (For more, see ACA and Legal Practices posting #16).
On November 4, HHS and the IRS announced a counter-attack on the move toward minimal-coverage plans. They released a Notice (#2014-69) that addressed such plans.
HHS reported that the online MV Calculator was based on “typical self-insured employer-sponsored plans,” which historically included inpatient hospital care and physician services as “fundamental benefits” that were “considered integral to coverage”.
HHS then stated that “Non-Hospital Service” or “Non-Physician Service” plans did not meet the ACA requirements, and that new regulations were to follow.
Companies that were already signed up for such plans could wait a year before transferring to an acceptable plan, but had to inform employees that they could still apply for a QHP plan through an Exchange.
Thus, when confronted with the marketing of minimal plans, HHS and the IRS found that such plans were not consistent with the intent of the ACA, for coverage by “good” health insurance.
A magazine quote captured the essence of the situation: “ The earlier version of the Calculator didn’t live up to the spirit and letter of the ACA….” (in an article by Bob Herman, citing Chip Kahn, CEO of the Federation of American Hospitals, at www.modernhealthcare.com ).
Attorneys should be prepared for ongoing challenges to the ACA requirements by some insurance companies, individuals, and employers, and for responses by HHS and the IRS that seek to keep ACA implementation mostly consistent with the original intent of the law.
In a similar way, ongoing negotiations between HHS and the states over the expanded Medicaid program also continue to struggle with issues related to the original intent of the law. And the Supreme Court has now agreed to rule on whether the providing of Exchange subsidies through the federal Exchange is in keeping with the ACA intent.
More information about implementation of the Affordable Care Act and associated legal practice issues may be found in recent books on the ACA and on the health care system, other postings to this blog, and on the ACA Blog, also written by the author of this series.