Frequently Asked Questions for Sponsors of Self-Insured Health Plans

What is “Minimum Essential Coverage” (“MEC”)?
MEC is the standard for determining if an individual’s health coverage satisfies the requirement under the Patient Protection and Affordable Care (“ACA”) for individuals to obtain health coverage.

Does the self-insured plan offered to my employees meet the MEC standard?
Yes. MEC is defined very broadly under the ACA. The definition includes any employer-sponsored health plan.

What is “Minimum Value” (“MV”)?
MV refers to “the plan’s share of the total allowed costs of benefits provided under the plan.” In order for a plan to provide MV, it must cover at least 60 percent of the allowed costs for any covered Essential Health Benefits (“EHBs”).

What are EHBs?
As defined in the ACA, EHBs are the ten categories of benefits that small group employers must cover as part of their health care plans. The ten categories are:

• Ambulatory services, such as doctor’s visits and outpatient services
• Emergency services
• Hospitalization
• Maternity and newborn care
• Mental health and substance use disorder services
• Prescription drugs
• Rehabilitative and habilitative services
• Laboratory services
• Preventive and wellness services and chronic disease management
• Pediatric services, including oral and vision care

As a large group employer, is my company required to offer coverage for all EHBs?
No, the ACA does not require large group employers to offer coverage for all ten categories of EHBs. However, those are the categories that are examined to determine if a plan provides MV.

How do I determine if my company’s plan provides MV?
There are three ways to determine MV:

• Use the MV calculator developed by the Department of Health and Human Services (“HHS”). You can find the MV calculator at http://www.cms.gov/cciio/index.html.
• Use of the safe harbors for plan designs. The following plan designs are automatically deemed to provide MV:
  • $3,500 integrated medical/pharmacy deductible, 80 percent plan cost-sharing and $6,000 maximum out-of-pocket for member cost-sharing (MOOP)
  • $4,500 integrated medical/pharmacy deductible, 70 percent plan cost-sharing, $6,400 MOOP, and $500 employer contribution to a health savings account
  • $3,500 medical deductible, $0 drug deductible, 60 percent plan medical cost-sharing, 75 percent plan pharmacy cost-sharing, $6,400 MOOP, and drug copays of $10/$20/$50 with 75 percent coinsurance for specialty drugs
• Provide an actuarial certification from a member of the American Academy of Actuaries. This option is available for plans with nonstandard features that cannot use the MV calculator

Do I have to inform HNE if my company’s plan provides MV? If so, why?
Yes, after you have made a determination of whether your company’s plan provides MV, you must send an acknowledgment to HNE in writing, either in the form of a letter or an email, stating whether your company’s plan provides MV. HNE needs this information in order to prepare the Summary of Benefits and Coverages (SBC) for your plans. It is a new requirement for 2014 to disclose this information on the SBC.

My company contributes to a Health Savings Account (HSA) on behalf of our employees. How does this affect the MV of our plan?
Amounts contributed by an employer for the current plan year to an HSA are included in determining the level of the plan’s cost-sharing.

My company contributes to a Health Reimbursement Account (HRA) on behalf of our employees. How does this affect the MV of our plan?
Amounts that are newly made available in an HRA will count for purposes of MV in the same manner as HSA contributions if those amounts can only be used for cost-sharing and not for the payment of premiums. If the amounts newly made available can be used for the payment of premiums (or for both the payment of premiums and for employee cost-sharing), the contribution will be used to determine the affordability of the plan.

My company’s plan has reduced cost-sharing for employees who participate in our nondiscriminatory wellness program. How does this affect the MV of our plan?
Reduced employee cost-sharing for participation in a nondiscriminatory wellness program will not be taken into account in determining the level of the plan’s cost-sharing. For consistency and ease of administration, the MV calculation is done assuming that all employees fail to satisfy the requirements of the wellness program.

My company’s wellness program is designed to prevent or reduce tobacco use. Do the rules differ for this type of wellness program?
Yes. Consistent with other provisions of the ACA, reduced cost-sharing for participation in a wellness program designed to prevent or reduce tobacco use will be taken into account in determining the level of the plan’s cost-sharing. The plan may assume that all employees satisfy the requirements of the wellness program designed to prevent or reduce tobacco use.
If you have additional questions or need a referral to an actuary, please contact your HNE Account Representative.