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 standard is one of the 10 requirements that must be met by every qualified health plan to be eligible for an exchange subsidy. It ensures the plan will cover at least 60 percent of medical costs on average and provide substantial coverage to inpatient hospitalization and physician care. This coverage will usually be included in a plan’s summary benefits and coverage (SBC).
Definitions of minimum values
The term minimum value, which is ACA-specific, means that an employer-sponsored health plan must provide adequate coverage for employees. The plan must also provide sufficient coverage to reach a threshold level called actuarial values, which are based on average medical costs.
A plan must, in essence, provide at least 60% of its actuarial worth to be eligible for a tax credit. It is a small amount but is significant because it allows employees to be covered for a cheaper price.
In math, the term "minimum" and "maximum" are used to describe the smallest and largest values of a function that can be determined in a particular domain. These terms appear a lot when it comes to mathematical analysis. Understanding what they are can help you understand their importance.
The minimum value differs in many ways from other concepts or teminology. 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. 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.
In order to qualify for the tax credit, plans that do not cover minimum essential coverage must still provide some of the essential health care benefits. It is because of the ACA, which requires everyone to have health insurance.
It's a confusing idea, but it's important to understand. If you don’t have the minimum necessary coverage, you’ll be subject to the individual responsibility tax penalty.
The Affordable Care act defines "minimum necessary coverage" as "coverage providing a minimum protection." It includes coverage such as job-based insurance, individual market policies and Medicare, Medicaid, CHIP or TRICARE.
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 will also have to offer other EHBs like dental or vision.