Employers who depended on an online government calculator forhelp may have to do some recalibration or face heavy penalties.

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At issue: the so-called skinny health plans some employers offer ascoverage to their employees. These plans offer just enoughcoverage, according to an online calculator created by thegovernment, to qualify as compliant with the mandates of thePatient Protection and Affordable Care Art.

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Or do they?

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Folks over at the U.S. Department of Health and Human Servicesand the Treasury Department have apparently been looking into plans“approved” by the calculator and have decided some of them fallshort of PPACA compliance. The agencies are mainly focused on plansthat don’t cover in-patient hospitalization or clinicianservices.

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The IRS issued an advisory this week warning employers that thefederal agencies were about to release Notice 2014-69 which would redefine which plans meet thespecs and which ones didn’t. In a public missive, the IRS said theupcoming notice “advises employers and other taxpayers thatemployer-sponsored health plans that fail to provide substantialcoverage for in-patient hospitalization services or for physicianservices do not provide minimum value” under PPACA.

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Read: ‘Skinny plans’ gain traction amongemployers

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The IRS specifically cited the online calculator for essentiallygiving false positive readings to some skinny plans.

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“The notice also advises that IRS, Treasury, and HHS areconsidering whether the continuance tables underlying the MinimumValue Calculator produce valid actuarial results for plans withthese designs.

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Employers offering plans that fail to cover in-patienthospitalization or physician services should exercise caution inrelying on the Minimum Value Calculator to demonstrate that theseplans provide minimum value for any portion of a taxable year afterpublication of final regulations.”

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Read: IRS increases 2015 FSA contribution limit

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While companies that have already signed up for such plans won’tface penalties, any companies going forward that do will facepenalties of up to $3,000 per employee per year, depending uponwhether their employees are forced to go elsewhere for healthinsurance.

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“Using the calculator, a plan could omit basic benefits butstill be ACA-compliant as long as it has equivalent actuarial valueto the lowest-level (‘bronze’) plans sold on exchanges,”wrote attorney Eric Fader of Day Pitney LLC. “The Departmentsbelieve that some of the results that can be produced by thecalculator were not intended by the ACA regulations, and said theywill propose amendments to the regulations to explicitly providethat plans that do not cover both physician services and inpatienthospital services do not provide minimum value.”

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Fader noted that the federal agencies are basically closing uploopholes that have appeared in PPACA during its rollout.

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“The guidance will be the basis of new regulations expected tobe issued on or about March 1, 2015, that will apply to all plansthat are adopted on or after November 4, 2014, or whose plan yearsbegin after March 1, 2015,” he said. “The new regulations, whichwill be effective immediately upon adoption, will also prohibitemployers that offer ‘skinny plans’ from stating or implying thattheir having offered the plan precludes their employees fromreceiving premium tax credits if they purchase coverage through anexchange.”

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Fader said there would still be a role for skinny plans in theworkplace.

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“Although they will no longer be a solution for employersseeking to avoid the $3,000 ‘affordability’ penalty by making theiremployees ineligible for premium tax credits, offering a skinnyplan should still allow an employer to avoid the separate penaltyof $2,000 per year per full-time employee for failing to offer allfull-time employees ‘minimum essential coverage,’” he said.

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Dan Cook

Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.