IRS Issues Proposed Rule Clarifying Health Plan Minimum Value Determinations

The Internal Revenue Service has released a proposed rule that provides some guidance on what constitutes minimum value (MV) of an employer-sponsored health plan under the Affordable Care Act (ACA) for purposes of eligibility for a premium tax credit. Under the ACA's pay-or-play employer responsibility provisions, an employer with 50 or more employees will be subject to a penalty if any employee receives a premium tax credit to purchase health insurance through the future health insurance exchanges. Individuals are not, however, entitled to receive a premium tax credit if they are eligible to receive employer-provided coverage that is affordable and provides MV.

As outlined in final regulations issued in February, a plan will be deemed to provide MV if the percentage of the total allowed costs of benefits provided under the plan is no less than 60 percent. In order to determine whether a plan provides minimum value, an employer-sponsored plan may use the MV calculator