In the Affordable Care Act this term is called Minimum Value. It's a term used to describe the level of coverage a group plan must provide. This term helps you qualify to receive a subsidy on the exchange if you have employer-sponsored health coverage that does not meet minimum values.
Minimum Value Standard
The minimum value standard is one of the 10 requirements that must be met by every qualified health plan to be eligible for an exchange subsidy. It is designed to ensure that plans cover at least 60% average medical expenses and offer substantial coverage of inpatient hospital and physician services. This coverage is usually included in a plan's summary of benefits and coverage (SBC).
Minimum value definitions
The term minimum value, which is ACA-specific, means that an employer-sponsored health plan must provide adequate coverage for employees. The plan also has to cover enough employees so that they meet a certain threshold, known as the actuarial level, which is based upon the average cost for medical services.
In essence, the plan must cover at least 60 per cent of its actuarial values in order to qualify. This amount is relatively small, but it is important because it allows the employee to receive coverage at a lower cost.
The term "minimum", or "maximum", is used in mathematics to describe the lowest and highest values of a mathematical function that are determined within a domain. These terms are used a lot in mathematical analysis, and it can be hard to understand the significance of this type of numerical data without understanding what they mean.
Another important thing to understand about minimum value is that it is different from other related concepts and teminology. Sometimes, "minimum value", "minimum necessary coverage" or "minimum cover" are used interchangeably.
This confusion is particularly common as both terms have different meanings and functions under the ACA. The minimum essential coverage regulations of the ACA require that a plan providing minimum essential protection must include the ten health benefits outlined by the ACA.
A plan that does not provide the minimum essential coverage will still need to cover some or all of the 10 essential health benefits to qualify for a tax credit. The ACA mandates that everyone has health insurance.
It's confusing, but important to know. If you don’t have the minimum necessary coverage, you’ll be subject to the individual responsibility tax penalty.
According to the Affordable Care Act, "minimum coverage" is "coverage which provides a minimal level of protection." The Affordable Care Act defines "minimum essential coverage" as "coverage that provides a minimum level of protection."
The ACA mandates that any employer-sponsored health plan must provide at least a percentage of the benefits it offers as essential health benefits. These include things like prescription drugs, maternity services and preventive care. Some employers might also be required by law to provide EHBs for additional services, like vision and dental.