In the Affordable Care Act this term is called Minimum Value. The term is used to refer to the coverage standards that a health plan for a large group must meet. This term is important because it helps you qualify for a subsidy in the exchange if your employer-sponsored health insurance doesn't meet minimum value.
Minimum Value Standard
The minimum value requirement is one out of 10 requirements which must be met for a qualified health insurance plan to be eligible for a subsidy. This standard ensures that the plan offers coverage of at least 60% for average medical costs, and substantial coverage for physician and inpatient hospital services. This coverage is usually included in a plan's summary of benefits and coverage (SBC).
Definitions of minimum value
The minimum value term, which is ACA specific, refers to an employer-sponsored healthcare plan that must provide adequate coverage. The plan's coverage must be sufficient to meet a specific threshold called the actuarial cost, based off the average price of medical services.
In essence, the plan must cover at least 60 per cent of its actuarial values in order to qualify. This is a relatively low amount, but it is a significant one because it allows employees to get covered at a lower price than they might otherwise have had to pay.
In math, "minimum" or "maximum", are terms used to indicate the smallest and biggest values that a function can have in a given 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.
Understanding that minimum values are different from related concepts is also important. In some cases, the terms "minimum value" and "minimum essential coverage" are often confused with each other.
This confusion is especially common because both of these terms have different functions and definitions under the ACA. In order to meet the minimum essential requirements, a health plan must provide coverage for the ten core benefits outlined in the ACA regulations.
However, a plan that doesn't provide minimum essential coverage may still have to cover at least some of the ten essential health benefits in order to be considered eligible for a premium tax credit. This is due to the ACA's requirement that all individuals have health insurance.
It's a confusing idea, but it's important to understand. If you don't meet the minimum coverage requirements for health insurance, you may be subject to a tax, also known as an individual responsibility penalty.
The Affordable Health Care Act defines "minimum-essential coverage" as a "coverage that offers a minimum degree of protection." This includes job-based health insurance, individual market policies, Medicare, Medicaid, CHIP, TRICARE and certain other coverage.
The ACA requires that all health plans offered by employers must include at least a certain percent of their benefits as Essential Health Benefits (EHBs). These include things like prescription drugs, maternity services and preventive care. Some employers are required to provide additional EHBs such as vision or dental care.