Can A Health Insurance Plan That Fails to Provide Inpatient Hospitalizaton, Provide Minimum Value?
In a recent Washington Post Article, (“Glitch in health care law allows employers to offer substandard insurance,” September 12, 2014) highlights an Affordable Care Act compliance strategy being marketed heavily (and adopted widely) in industries that traditionally did not previously offer coverage to large cohorts of variable hour and contingent workers like the staffing industry. The strategy—which is referred to commercially as a “minimum value plan” or “MVP”— involves an offer of group health plan coverage that, while similar in most respects to traditional major medical coverage, carves out inpatient hospital services.
The Washington Post article (and other commentary) engages in some hand-wringing about why these plans are inconsistent with the goals of the Act. One commentator fumed that an employer that offers these arrangements should “examine its conscience.” (Readers might recall a similar bout of hand-wringing that accompanied “skinny” plans.).
It’s time to take a breath.
Whether these plans were “intended” or whether they are consistent with Health Care Reform, is irrelevant. Under currently applicable laws and regulations, these plans appear to work as advertised. Moreover, no employer is required to do anything more than the law requires; and any employer that does, risks putting itself at a competitive disadvantage relative to those that do not. The regulators are aware of this glitch in the law, and this strategy might be short lived as the law might change.
MVP arrangements are generally offered in a suite of products and accompanying administrative services that include:
- A “Minimum Essential Coverage” or “MEC” plan (previously known as a “skinny plan”)
These plans qualify as an offer-of-coverage for purposes of the more severe of the two levels of penalties, i.e., the penalty for failing to make an offer of coverage to substantially all full-time employees. But, if the employee should go to the hospital and later receive a subsidy, you may be subject to a $3,000 fine.
- A “hospital or fixed indemnity plan”
A hospital or fixed indemnity plan is a type of plan that pays fixed amounts for specific medical services and care. These plans are structured as “excepted benefits” that are not subject to the Affordable Care Act’s insurance market reforms and other requirements when offered on a non-coordinated basis. That is, employees must be free to elect or reject this coverage independent of any other coverage they might elect or reject.
- An MVP arrangement
An MVP arrangement is a major medical plan that carves out inpatient hospital services. The goal is to reduce the aggregate premium cost of minimum value coverage so that the cost of providing coverage that is “affordable” is similarly lowered. For example, the premium cost of a traditional major medial plan offered on a fully-insured basis by a top-tier, national carrier might be, say, $500 or more. But for an MVP arrangement the cost might be $200. (MVP arrangements are generally if not universally self-funded.)
Using Staffing Service Companies – “Make sure you know if the staffing service is offering insurance to the temporary staffing employees if they are classified as a Large Employer, says Protocall Group owner Roy Fazio. “Also make sure you ask them if they are offering a MEC Plan or Full Coverage to their eligible temporary staffing employees. If they are offering a MEC Plan (Skinny Plan), this does not provide hospitalization and puts you, the employer, at a potential risk of a $3,000 penalty if the employee goes to the exchange and receives a subsidy. According to the provisions of the Affordable Care Act, the staffing industry may be considered the common law employer as in PEO’s.”
As Chairman for the national staffing trade group, ASGroup (www.asgroup.com), The Protocall Group and ASGroup became self-insured to help minimize client costs and enable us to provide full coverage insurance to our staffing employees. During the next couple of months we will offer clients educational materials about the ACA. Roy Fazio, Protocall Group.
For the latest updates on the law, which occur regularly, email firstname.lastname@example.org or call 856.667.7500 ext. 1234 to be included on our mailing list for Affordable Care Act updates as they become available. A series of whitepapers can also be downloaded on our website www.protocallgroup.com via our blog category Corporate and then Affordable Care Act.
Historical Background on the Affordable Care Act
The Patient Protection and Affordable Care Act (PPACA), commonly called The Affordable Care Act (ACA), is a United States federal statute signed into law by President Barack Obama on March 23, 2010. Together with the Health Care and Education Reconciliation Act, it represents the most significant government expansion and regulatory overhaul of the U.S. healthcare system since the passage of Medicare and Medicaid in 1965.Tags: ACA, affordable care act, Health Insurance Plans, Minimum Essential Coverake, Skinny Plans