HHS Formally Moves To Close Loophole Allowing Plans Without Hospital Benefits
By Jay Hancock
November 24, 2014 - Kaiser Health News
The Obama administration took another step to close what many see as a
health-law loophole that allows large employers to offer medical plans without
hospital coverage and bars their workers from subsidies to buy their own
insurance.
gIt has come to our attention that certain group health plan designs that
provide no coverage of inpatient hospital services are being promoted,h the
Department of Health and Human Services said in proposed rules issued late
Friday.
Under the new standard, companies with at least 50 workers gmust provide
substantial coverage of both inpatient hospital services and physician servicesh
to meet the Affordable Care Actfs threshold for a gminimum valueh of coverage,
the
agency said.
As reported
previously by Kaiser Health News, insurance analysts were surprised this
summer to learn that HHSf online calculator for determining minimum value
approved plans without inpatient benefits.
Responding to aggressive marketing by consultants, numerous lower-wage
employers had already agreed to
offer the low-cost plans for 2015 or were considering them.
Because a calculator-approved plan at work makes employees ineligible for tax
credits to buy more comprehensive insurance in the lawfs online marketplaces,
consumer advocates feared the problem would trap workers in substandard
coverage.
Large employers arenft required to offer the gessential health benefitsh such
as hospitalization, physician care and prescriptions that the law orders for
plans sold to individuals and smaller employers.
But few expected the official calculator to approve insurance without
inpatient benefits. Meeting the minimum-value standard spares employers from
penalties of up to $3,120 per worker next year.
HHS also proposed granting temporary relief to employers that have already
committed to calculator-approved plans without hospital coverage for 2015. It
also would allow workers at those companies to receive tax credits in the
marketplaces if they choose to buy insurance there instead.
For 2016, no large-employer plan will meet the minimum-value test without
inpatient benefits, HHS proposes.
gA plan that excludes substantial coverage for inpatient hospital and
physician services is not a health plan in any meaningful sense and is contrary
to the purposeh of the minimum-value standard, the agency said.
gMinimum value is minimum value,h said Timothy Jost, a consumer advocate and
Washington and Lee University law professor who welcomed the change. gNobody
ever imagined that minimum value would not include hospitalization
services.h
Calculator-tested plans lacking inpatient coverage, designed by Key
Benefit Administrators and others, have drawn strong interest from large
retailers, restaurant chains, staffing companies and other lower-wage employers
seeking to control costs, benefits consultants say. Typically the coverage costs
half as much as major-medical insurance including hospital benefits.
The American Worker Plans, an Illinois-based benefits consultant, helped
dozens of staffing firms with a total of about 20,000 employees to provide such
plans for 2015, said Jon Duczak, the companyfs senior vice president. Almost all
of them have already signed deals to offer the coverage, he said.
HHSf move to disallow the insurance gis something I do applaud,h he said. gWe
were offering a product like this [only] because our clients were asking for it.
We needed not only to satisfy our clients but to retain our business.h
Edward Lenz, senior counsel for the American Staffing Association, said the
trade group has no problem with requiring hospitalization to meet the
minimum-value standard for 2016. But it will seek more leeway for employers that
had moved to implement plans without inpatient benefits for 2015.
gMany employers were well along the roadh to committing to such plans but
delayed signing contracts after Kaiser Health News reported that the
administration might move against them, he said. Rather than punishing such
companies for their caution, HHS should allow them to temporarily offer such
coverage next year, he said.