Under the ACA, not all health coverage is considered adequate. To meet employer mandate standards, a plan must provide Minimum Value (MV) – meaning it pays at least 60% of total allowed costs for Essential Health Benefits (EHBs). Federal rules allow for limited de minimis variation (±2% for most metal tiers; -4%/+2% for Bronze).
Determination
MV status is verified using HHS/IRS actuarial value calculators or safe harbor plan designs. For fully insured plans, this is performed by the carrier. For level-funded or self-funded plans, employers must work with their TPA, ASO, or actuary — and obtain an actuarial certification if not using a safe harbor design.
Market Differences
- Small Group & Individual: Metal-tiered plans (Bronze, Silver, Gold, Platinum) automatically satisfy MV. The plan’s Summary of Benefits and Coverage (SBC) explicitly states whether the plan meets MV.
- Fully Insured Large Group: Carriers determine whether the plan meets MV. SBCs may be issued but are not always consistently provided.
- Level-Funded or Self-Funded: Employers must work with their TPA, ASO, or actuary to validate MV, typically through actuarial value calculations or safe harbor designs.
Not MV
- Limited-benefit or “MEC-only” plans (“skinny” plans) – sometimes offered by ALEs as partial compliance strategies, but they do not satisfy MV requirements or the full ACA employer mandate.
- Any coverage that fails the 60% actuarial value threshold
Employer Impact
To avoid the 4980H(b) “unaffordable/inadequate coverage” penalty, Applicable Large Employers (ALEs) must offer plans that are both:
- Affordable (employee contribution ≤ IRS affordability threshold), and
- Minimum Value (60%+ coverage of EHB costs).