HHS Issues Proposed Rule To Close Hospital Coverage Loophole
The Obama administration is moving to ensure employer-sponsored health plans include hospital coverage, Kaiser Health News reports (Hancock, Kaiser Health News, 11/24).
For plans to meet the ACA's minimum coverage standard, employers must cover at least 60% of anticipated medical costs. Large employers that do not offer employees a plan that meets the ACA's minimum coverage standards are subject to potential fines of up to $3,120 per employee.
To determine whether plans meet ACA standards, employers use an online federal calculator.
However, consumer advocates have said that a glitch in HHS' minimum-value online calculator appeared to be letting companies that were enrolling employees in coverage for 2015 provide less-costly health plans with substandard coverage while avoiding penalties under the ACA. Such plans lack certain benefits, such as hospitalization coverage.
HHS and the Department of Treasury earlier this month released a notice clarifying that large employers with health plans that do not offer "substantial coverage for inpatient hospitalization services" do not comply with the ACA's minimum coverage standards. However, the agencies noted that employers that already have begun enrolling employees in plans without substantial coverage for inpatient hospitalization services or had binding contracts to offer such plans prior to Nov. 4 will receive a temporary exemption from the minimum coverage standards as long as all health plans that begin after March 1, 2015, meet the updated standards (California Healthline, 11/15).
Proposed Rule Will Close Hospital Coverage Loophole
In proposed rule issued Friday, HHS wrote that it discovered "certain group health plan designs that provide no coverage of inpatient hospital services are being promoted" (Kaiser Health News, 11/24). The proposal continued, "A plan that excludes substantial coverage for inpatient hospital and physician services is not a health plan in any meaningful sense" (Viebeck, The Hill, 11/24).
To address the issue, the proposal noted that workers at companies selling plans that do not include hospital coverage can receive federal tax credits to purchase coverage through the ACA's insurance exchanges, which are required to offer such benefits. In addition, the proposal noted that no plans offered by large employers in 2016 will be able to meet the law's minimum coverage standards without including hospital coverage (Kaiser Health News, 11/24).
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