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Final Minimum Value Regulations

On December 18, 2015, the Internal Revenue Service (IRS) released final regulations for determining whether employer sponsored plans provide minimum value.  A health plan meets the minimum value standard if both of these apply: (1) the plan is designed to pay at least 60% of the total cost of medical services for a standard population; and (2) the plan benefits include substantial coverage of physician and inpatient hospital services.  This applies to plans that must comply with the employer mandate. These final regulations adopted clarifications to align with prior guidance.

The guidance was effective as of December 18, 2015, but applies to taxable plan years ending after December 31, 2013.

The following clarifications were outlined in the final regulations:

  • Active employees who are offered continuation coverage may be eligible for a premium tax credit if the coverage is not affordable and does not provide minimum value.

  • The following chart summarizes the clarifications that were made related to how affordability and minimum value are determined: 

Factors that Impact Affordability and Minimum Value DeterminationClarification in Final Regulations
Definition of Modified Adjusted Gross Income Household income includes a child’s gross income only if the child’s income is included on the income tax return of the parents(s).
Wellness Program Incentives Wellness incentives unrelated to tobacco use are treated as unearned when determining affordability, while incentives related to tobacco use are treated as earned in determining affordability.
Health Reimbursement Accounts (HRA)
  • Amounts made available under an HRA reduce an employee’s required contribution for coverage if the HRA would have been integrated with eligible employer sponsored coverage had the employee enrolled in the plan. In that case, the HRA amounts will count toward providing minimum value.
  • An HRA is taken into account in determining affordability and minimum value only if the HRA and eligible employer sponsored coverage are offered by the same employer.
  • HRA contributions are taken into account for affordability only (and not minimum value)  if the employee can use the HRA contributions to pay for:

                  1. plan premiums only or

                  2. cost sharing or

                  3. benefits not covered by the plan in addition to premiums


  • Employer contributions to an HRA reduce an employee’s required contribution only if the amount is determinable within a reasonable time before the employee must decide whether to enroll.
Employee’s Required Contribution under a Cafeteria Plan

An employee’s required contribution is reduced by the employer contributions under a cafeteria plan if the employer contribution:


           1. may not be taken as a taxable benefit,

           2. may be used to pay for minimal essential coverage, and 

           3. may be used only to pay for medical care


If you have any questions, please contact your client solutions team.


This content is being provided as an informational tool. It is believed to be accurate at the time of posting and is subject to change. It is recommended that plans consult with their own experts or counsel to review all applicable federal and state legal requirements that may apply to their group health plan. By providing this information, Meritain Health is not exercising discretionary authority or assuming a plan fiduciary role, nor is Meritain Health providing legal advice.