Determining minimum value

Beginning in 2014, large employers (50 or more full-time equivalent employees) must offer qualified health coverage that is affordable and meets minimum value or be subject to a financial penalty. In order to achieve minimum value, the plan’s share of the "total allowed costs of benefits provided under the plan" must be at least 60 percent of said costs.

Three approaches to determine minimum value were proposed. They include: (1) utilize the minimum value calculator issued by the Department of Health and Human Services, similar to the actuarial value calculator; (2) utilize a series of safe-harbor checklists to determine minimum value; and (3) certification of minimum value by an actuary.

As has been noted previously, large employers and self-funded plans do not have to cover the 10 categories of essential health benefits. An analysis determined four categories of benefits that comprise the majority of group health plan spending: physician and mid-level practitioner care, hospital and emergency room services, pharmacy benefits, and lab and imaging services. Cost sharing that applies to these categories would be used in all three calculation methodologies.

Employer contributions to a health savings account would be taken into account in determining minimum value.

Minimum value calculator

The minimum value calculator will be similar in design to the actuarial value calculator, but based on continuance tables and a standard population reflecting claims data of typical self-insured employer plans. This set of continuance tables would not include claims or population data for plans that are required to provide essential health benefits. If a plan that uses the calculator offers an essential health benefit outside the parameters of the calculator, the benefit would be permitted to be added to the minimum value. Similar to the actuarial value calculator, plans would be able to input information on the benefits offered under the plan and specified cost-sharing features (e.g., deductibles, coinsurance, out-of-pocket maximum, etc.) for the four core benefit categories.

Safe-harbor checklists

Certain employer plans would be allowed to utilize safe-harbor checklists in order to determine minimum value. Each checklist would describe the cost-sharing attributes that apply to the four core categories. A plan would compare its plan’s coverage to the checklist(s) and if the terms are consistent or more generous than any of the safe-harbor checklists, the plan would be considered to meet minimum value.

Actuarial certification

If a plan contains non-standard features that are not suitable for the minimum value calculator and do not fit the safe-harbor checklists, minimum value could be determined through certification by an actuary, based on utilization, pricing tables, etc. (Non-standard features would include a quantitative limit on the number of physician visits or covered days in a hospital). An initial value using a calculator would be generated and then a certified actuary would make appropriate adjustments that account for the non-standard features. Some plans may be allowed to utilize the actuary without the use of a calculator.