In an announcement made November 4th, the Internal Revenue Service (IRS) issued guidance indicating that “skinny plans” will not help employers avoid all of the “play or pay” penalties under the Affordable Care Act. In Notice 2014-69, the IRS states group health plans that do not offer substantial coverage for in-patient hospitalization services or for physician services (or both), do not provide the minimum value intended by the minimum value requirement. Consequently, employees covered by those plans will be eligible for premium tax credits for coverage through the Health Insurance Marketplace beginning in 2015.
The IRS, along with the Department of Health and Human Services, anticipates issuing final regulations by March 1, 2015, to provide that plans failing to provide in-patient hospitalization services or physician services do not provide minimum value. The regulations will apply to all plans (other than Pre-November 4, 2014, plans) on the date the regulations become final. There is limited grandfathering available for Pre-November 4th plans. For an employer who has entered into a binding written commitment to offer one of these Non-Hospital/Non-Physician Services Plans, or started enrolling employees in one of these plans, by November 4, 2014; then the employer will not be subject to the employer mandate penalties in 2015. However, to be eligible for this relief, the plan year must begin no later than March 1, 2015.