02 Sep IRS New Requirement for Hospital and Physician Services Coverage
This morning I was reading an article posted in the Journal of Accountancy and felt it had some news that might be beneficial to my clients and blog readers.
The IRS added a requirement that employer-sponsored health plan benefits must include substantial coverage of inpatient hospital and physician services for the plan to count as providing minimum value. The requirement was issued in proposed regulations on Tuesday (REG-143800-14). –
The IRS explained that the reason for the change was that allowing plans that fail to provide substantial coverage of inpatient hospital or physician services to be treated as providing minimum value would adversely affect employees (particularly those with significant health problems) who may find this coverage insufficient, by denying them the premium tax credit for coverage they purchased through an exchange, while at the same time allowing the employer to avoid the Sec. 4980H employer shared-responsibility payment. Employer-sponsored health plans that omit critical benefits that individuals in poor health use disproportionately would likely enroll far fewer of these individuals. This would drive down employer costs at the expense of those in poor health who are discouraged from enrolling.
The new rule would apply to plan years beginning after Nov. 3, 2014.