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ACA: Hospitalization-Free Policies Do Not Provide Minimum Value

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By Phil Cohen

Healthcare plans without hospitalization coverage will no longer be considered to provide “minimum value” under the ACA.

The Department of Health and Human Services’ minimum value calculator has, until this week, qualified employer plans without inpatient coverage as providing minimum value. However, the IRS contends that those results are based on plans that “historically have included coverage” that is missing from the policies in question.

Brokers have marketed these slimmer policies to staffing agencies and other small businesses as a way to reduce their costs: inpatient-free policies feature premiums as much as 50 percent lower than full-coverage policies. Many of those businesses have already accepted proposals for plans to begin January 1, 2015. Unfortunately, the minimum value calculator mistakenly verified that such plans would pay for at least 60 percent of covered services – the “minimum value” referenced.

The IRS has ruled that those plans do not meet the minimum value requirement, which would allow employees to seek subsidized care on the federal exchanges and put employers at risk of being assessed the associated $3,000-per-employee penalty.

To ease the transition for employers that have already purchased healthcare for 2015, the Obama administration announced that those employers would not face penalties for substandard coverage as long as the policy was purchased or agreed upon prior to November 4 and is scheduled to take effect before March 1. In addition, the IRS will be monitoring employer compliance on a month-to-month basis that will give employers time to obtain ACA-compliant healthcare.

Advocates for the staffing industry are urging the federal government to provide employees who are offered substandard policies with subsidies to purchase “alternative insurance” that provides greater coverage.

The IRS is expected to work with the Departments of Treasury and Health and Human Services to draft final rules regarding minimum value policies in the coming months.

Staffing agencies will no longer have access to the minimum value loophole to lower the cost of providing healthcare. Fortunately, healthcare staffing factoring offers another way for staffing agencies to control their costs and solidify their cash flow. Contact PRN Funding today to learn more about healthcare staffing factoring and get started.

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Phil Cohen

About the author

Philip Cohen is the founder and President of PRN Funding, LLC. PRN Funding is an extraordinarily focused niche player in healthcare funding. With years of…... Read More

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