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Employer plans without hospitalization benefits – when  keeping the plan is permitted for now

If you have a client implementing a minimum value plan with no hospitalization for 2015, the important initial questions are to be answered based on the facts prior to November 4th:
 
•    Is the plan year as of November 4th between January 1 – March 1?   

•    Has the client either:
o    already signed a written agreement to adopt a minimum value plan with no hospitalization, or
o    already begun enrollments in the option (no need that enrollments be finalized).
 
If so, any final regulations will not take effect until their next plan year.  

If these requirements are not met, then it is too late to adopt a plan option without hospitalization.  For example, if the plan is not adopted in writing and enrollments begin next week, it is too late.  By the way, we do not have any guidance on when an enrollment is considered to have begun, but presumably it means an offer has been made to one or more eligible employees.

Disclosure obligations

Any employees offered minimum value without hospitalization and no other option that satisfies employer mandate requirements (bronze/minimum value and affordable)  can still obtain a subsidy on the exchange potentially exposing the employer to the $3,000 penalty.  Any communication to the contrary must be corrected and a new communication by any of these employers is now strongly recommended.  It might say the following, based on the agency guidance just released:
 
We are offering you a health plan option called ___ (in fact you may have enrolled or may in the process of enrolling).  This plan option does not provide hospitalization.  Federal law requires a specific disclosure to the effect that this offer of coverage under the ______________ does not preclude you from obtaining a premium tax credit, if otherwise eligible.  Please consider this a correction per federal requirements of any prior disclosures that stated or implied that the offer of the ________ would preclude an otherwise tax-credit-eligible employee from obtaining a premium tax credit.
 
Here sample wording to use instead of the above disclosure if the facts are different, and the employer also offers a richer plan option (alongside the option with no hospitalization) which actually does offer hospitalization, is affordable, and which satisfies bronze/minimum value:  
 
We are offering you a health plan option called ___ (in fact you may have enrolled or may in the process of enrolling).  This plan option does not provide hospitalization.  We also offer you another plan with hospitalization.  That option is affordable and provides bronze/minimum value so the offer of this other plan option will or may preclude you from obtaining a premium tax credit.
 
 
Excerpts from today’s agency announcement:
 
However, solely in the case of an employer that has entered into a binding written commitment to adopt, or has 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 Minimum Value Calculator (a Pre-November 4, 2014 Non-Hospital/Non-Physician Services Plan), the Departments anticipate that final regulations, when issued, will not be applicable for purposes of Code section 4980H with respect to the plan before the end of the plan year (as in effect under the terms of the plan on November 3, 2014) if that plan year begins no later than March 1, 2015.
 
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 under Code section 36B, regardless of whether the plan is a Pre-November 4, 2014 Non-Hospital/Non-Physician Services Plan.
 
It is anticipated that the proposed changes to regulations will be finalized in 2015 and will apply to plans other than Pre-November 4, 2014 Non-Hospital/Non-Physician Services Plans on the date they become final rather than being delayed to the end of 2015 or the end of the 2015 plan year. As a result, a Non-Hospital/Non-Physician Services Plan (other than a Pre-November 4, 2014 Non-Hospital/Non-Physician Services Plan) should not be adopted for the 2015 plan year. (As noted above, it is anticipated that the proposed changes to regulations, when finalized, will not apply to Pre-November 4, 2014 Non-Hospital/Non-Physician Services Plans until after the end of the plan year beginning no later than March 1, 2015. The Departments anticipate that final rulemaking will be completed on or about that date.)
 
An employer that offers a Non-Hospital/Non-Physician Services Plan (including a Pre-November 4, 2014 Non-Hospital/Non-Physician Services Plan) to an employee (1) must not state or imply in any disclosure that the offer of coverage under the Non-Hospital/Non-Physician Services Plan precludes an employee from obtaining a premium tax credit, if otherwise eligible, and (2) must timely correct any prior disclosures that stated or implied that the offer of the Non-Hospital/Non-Physician Services Plan would preclude an otherwise tax-credit-eligible employee from obtaining a premium tax credit. Without such a corrective disclosure, a statement (for example, in a summary of benefits and coverage) that a Non-Hospital/Non-Physician Services Plan provides minimum value will be considered to imply that the offer of such a plan precludes employees from obtaining a premium tax credit. However, an employer that also offers an employee another plan that is not a Non-Hospital/Non/-Physician Services Plan and that is affordable and provides Minimum Value is permitted to advise the employee that the offer of this other plan will or may preclude the employee from obtaining a premium tax credit.

Minimum Value vs Minimum Essential Coverage (MEC)

As a reminder, a minimum value plan is not synonymous with Minimum Essential Coverage (MEC or skinny plan) as these are two distinct plan designs.  This Notice has no bearing on the offering of a MEC plan.  More specifically, the MEC provision is embedded in the PPACA statute and regulators won't be directly empowered to change the skinny MEC strategy.  (In  sharp contrast to what they can do with the calculator and Minimum Value measurement.)