Officially closing what had been called a "surprising loophole" in Affordable Care Act compliance, the Obama administration blocked health plans without hospital benefits that many large employers of low-wage workers had maintained fulfills their obligations under Obamacare.
In this post Kaiser Health News reports nearly half of the 1,600 employer members of the American Staffing Association had either committed to offer, or were considering offering, such "minimum value" plans before federal regulators stated they would move against them.
Ed Lenz, Senior Counsel for the ASA, said some staffing firms did adopt such coverage, but "most did not."
The Department of Health and Human Services (HHS) announced in a final ruling, a health plan without hospital benefits is "is not a health plan in any meaningful sense."
Under the Act, plans must have a so-called "minimum value," covering around 60% of the costs of benefits, on average. However, some of those plans did not include in-patient hospitalizations as a covered benefit for workers.
"Plans that fail to provide substantial coverage of in-patient hospitalization services or for physician services (or both) . . . do not provide the minimum value intended by the minimum value requirement," stated the HHS.
Employees offered such plans would have been ineligible for tax credits to buy more comprehensive coverage in the law’s online marketplaces.
The agency did decide to allow such plans for this year though, but only if employers had signed contracts by November 4.
However, it also granted relief to workers offered such coverage, saying they may receive tax credits according to their income to buy more comprehensive insurance in the online exchanges. Ordinarily, employees offered coverage qualifying as minimum value aren’t eligible for the subsidies.
The Calculator Controversy
Here's where the compliance loophole opened up.
When employers were looking to "certify" a plan as minimum value, they plugged all of its components — benefits, deductibles and so forth — into the official Affordable Care Act calculator.
The "calculator" is actually an online spreadsheet to determine whether an offering meets the 60% threshold, and it caused lots of confusion and consternation among employers when it gave "passing scores" to plans with no inpatient hospital coverage.
But the HHS said ignore the calculator; large-employer plans must pay for substantial amounts of hospital care no matter what.
“What remains a mystery is whether the calculator was at fault,” says Alden J. Bianchi, the practice group leader of the Employee Benefits & Executive Compensation Practice for law firm Mintz Levin.
Kaiser Health News says even with its allowance for companies that had signed contracts by Nov. 4, HHS stopped short of employer pleas for more flexibility.
Several industry groups had asked for the ability to temporarily offer plans without hospital benefits if companies had made substantial preparations to do so, but simply hadn’t signed a deal.
For employers that planned to offer such coverage, but hadn’t pulled the trigger by Nov. 4, “this is very disruptive news,” Bianchi said. He added that he has several clients in this position.