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- Question 1, C — Minimum value is defined as having an actuarial value of 60%. Each medical health insurance plan will require an actuarial valuation to determine whether the plan is paying out at least 60% of the benefits, including co-pays. Essentially, this means that the plan pays for more than 60% of covered health care expenses.
- Question 2, False — The original deadline to publish exchange notices for employees was March 1, 2013. However, on January 24, 2013, the IRS released a notice stating that exchange notices have been pushed back until at least the fall of 2013. Individuals and employers will be able to purchase insurance on the exchange starting October 1, 2013.
- Question 3, False — While all large employers are subject to the employer mandate rules and penalties, the key determinant is whether an employee receives a tax subsidy and purchases insurance on the exchange, and that the insurance offered meets the minimum value and affordable cost requirements. An employer can refuse to offer coverage and avoid penalties if no eligible employees receive the subsidy and purchases insurance through the exchange. Likewise, employers who offer insurance that does not meet the minimum value and affordable cost provisions can also avoid a penalty if no employee receives a subsidy. It is important to note that if you do offer insurance, in order to avoid fines, the coverage offered must meet the minimum value requirement and affordable cost requirements. If those are met, eligible employees will not be able to qualify for the subsidy for purchase of insurance on the exchanges.
- Question 4, 50 — Per the PPACA, a large employer is defined as having 50 or more full-time and full-time equivalent employees. Employers will need to count not only the full-time employees, which under the new rules are employees that work 30 or more hours per week, but also add up the hours of all part-time individuals and calculate the number of full-time equivalents. This calculation would be done on a monthly basis, so employers will need to look at each month individually, add up the part-time hours, and divide by 120 to determine the number of full-time equivalents. Employers, however, are only required to offer insurance to full-time employees, and not to the equivalents.