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IRS Requests Comments on Minimum Value and Reporting Requirements

The Internal Revenue Service recently issued requests for comments in advance of issuing proposed regulations on health care reform reporting and minimum value requirements.

Determination of “Minimum Value” Coverage

Under the U.S. Patient Protection and Affordable Care Act (subject to repeal by the Supreme Court of the United States), beginning in 2014, certain low-income individuals will be eligible to receive a premium tax credit that can be used to purchase health coverage through a health insurance exchange.  The credit will not be available to individuals who are eligible for affordable coverage under an employer group health plan that provides “minimum value.”  Employers that do not offer affordable minimum value coverage will be assessed a penalty if any full-time employee receives the premium tax credit through an exchange.

The Internal Revenue Service (IRS) has issued Notice 2012-31 (the Notice), requesting comments on possible approaches for determining whether employer-sponsored group health plan coverage provides “minimum value.”  A plan fails to provide minimum value if the plan pays less than 60 percent of the total cost of coverage provided under the plan.  The Notice anticipates that determination of minimum value will focus on four categories of benefits and services: physician and mid-level practitioner care, hospital and emergency room services, pharmacy benefits, and laboratory and imaging services.

The Notice discusses three potential approaches to determining minimum value under consideration:

  1. Use of an actuarial value calculator (for insured small group plans) or minimum value calculator (for self-insured and insured large group plans) created by the U.S. Departments of Health and Human Services and the Treasury, which would permit an employer to enter information about the plan’s benefits, coverage and cost-sharing features to determine whether the plan provides minimum value.
  2. Creation of various design-based safe harbor checklists describing deductibles, co-pays, coinsurance, out-of-pocket maximums and other cost-sharing attributes for the four core categories of benefits and services.  A plan would be treated as providing minimum value if its cost-sharing attributes are at least as generous as one of the safe harbor options.
  3. For non-standard plan designs, determination by a certified actuary that the plan provides minimum value.

Comments are due by June 11, 2012.

Employer “Minimum Essential Coverage” Reporting Requirements

Effective January 1, 2014, employers providing health care coverage to their employees must comply with two new reporting requirements.  First, employers must annually provide information to the IRS about individuals receiving “minimum essential coverage” through the employer’s plan (including the individual’s name, address, tax identification number and the period covered under the plan) and about the employer’s coverage (including the employer’s name, address, and employer identification number and the portion of the premium paid by the employer).  Individuals participating in the plan must also be provided with an annual statement notifying them of the personal information that was reported to the IRS.

Second, employers with 50 or more full-time employees must report to the IRS each year whether they offer employees the opportunity to enroll in minimum essential coverage through an employer-sponsored group health plan, the number of full-time employees for each month during the year and information about each full-time employee covered under the plan (including name, address, tax identification number and the months enrolled in the plan).  For employers providing minimum essential coverage, the employer must also report specific information about its plan, including length of the plan’s waiting period, the months during the year when plan coverage was available, the monthly premium for the lowest cost option in each enrollment category under the plan and the employer’s share of the total cost of benefits provided under the plan.  The IRS will use this information to verify employer-sponsored coverage for purposes of the employer mandate.  Individuals whose information was reported on the employer’s information return must receive a statement showing the personal information submitted to the IRS.

The IRS has released Notice 2012-32 and Notice 2012-33, requesting comments on these two reporting requirements, including how to coordinate and minimize duplication between these overlapping requirements.  Comments for both are due by June 11, 2012. 

© 2020 McDermott Will & EmeryNational Law Review, Volume II, Number 128


About this Author


Jamie A. Weyeneth advises companies on a wide variety of employee benefits issues with a focus on health and welfare plans. She has extensive experience with the Affordable Care Act, privacy compliance under the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and continuing health coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).

Jamie counsels clients on their health and welfare plan design, administration and compliance issues. She has worked with clients to transition active and retired...