Regulators Require Hospitalization Coverage

The Department of Health and Human Services (HHS) and the Internal Revenue Service (IRS) issued a Notice this morning requiring all employer-sponsored health plans to cover in-patient hospitalization services and physician services in order to be considered providing “minimum value” (MV) under the Affordable Care Act (ACA). Large employers that do not offer MV plans that are affordable to their full-time employees may be subject to a penalty under the ACA.

The Notice says this requirement will not apply to employers that have entered into agreements or have begun enrolling employees in, plans that do not provide hospitalization and/or physician services prior to Nov. 4, 2014. Such employers do have an obligation to inform employees enrolled in such plans that they may be eligible for a premium tax credit, however, if the employer did not also offer employees affordable MV plans that cover hospitalization and physician services.

Notice 2014-69 is an announcement that regulators plan on proposing regulations requiring plans to cover hospitalization and physician services in order to provide MV. Employers will not be penalized for not complying with these new requirements for any months prior to those regulations being finalized. In other words, employers have a window of time now where plans that were considered MV prior to today’s developments can be amended to cover hospitalization/physician services beginning no later than the date on which the regulations become final without incurring any ACA penalties.

Todays announcement has been anticipated for some time. The direct impact will be felt by employers considering inclusion of “skinny plans” or “MEC” plans to their benefit offerings.

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About Christopher Johnson

Christopher manages the consulting services department of J.W.Terrill providing regulatory, analytical, technical and wellness support to clients.

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