What Is Minimum Value Standard Health Insurance?
Learn about Minimum Value health insurance, the ACA standard defining essential coverage. Understand its impact on plans and your eligibility.
Minimum Value (MV) is a standard under the Affordable Care Act (ACA) that defines a baseline for health insurance coverage quality. This standard is important for both employers who offer health plans and individuals seeking coverage. It ensures health plans provide financial protection and access to care. Understanding MV helps businesses and individuals navigate healthcare options and compliance.
Understanding Minimum Value
A health plan meets the Minimum Value standard if it covers at least 60% of the total allowed costs of benefits provided under the plan. This 60% is an actuarial value, which means it represents an average percentage of costs a plan expects to cover for a standard population. The remaining costs are typically covered by the enrollee through deductibles, copayments, and coinsurance.
The Internal Revenue Service (IRS) and the Department of Health and Human Services (HHS) provide guidance and tools to determine if a plan meets this standard. Employers can use an official Minimum Value Calculator to input plan details and assess MV status. For plans with non-standard features, an actuarial certification may be required to confirm MV criteria.
Key Coverage Elements for Minimum Value
While the 60% actuarial value is a component, a health plan must also provide substantial coverage for specific service categories to meet the Minimum Value standard. This ensures essential healthcare needs are addressed.
MV-compliant plans include coverage for important areas. These encompass outpatient emergency room services, laboratory and imaging services, and prescription drugs. Preventive care and mental health and substance use disorder services are also included. Plans meeting the MV standard must not impose annual limits on essential health benefits.
Employer and Individual Implications
The Minimum Value standard has consequences for employers and individuals under the Affordable Care Act. Applicable Large Employers (ALEs), those with 50 or more full-time equivalent employees, must offer MV-compliant and affordable health coverage for compliance with employer shared responsibility provisions. If an ALE fails to offer such coverage and a full-time employee receives a premium tax credit through a Health Insurance Marketplace, the employer may face IRS penalties.
For individuals, an employer-sponsored plan providing Minimum Value coverage and considered affordable affects eligibility for premium tax credits to purchase coverage on the Health Insurance Marketplace. If an individual is offered an employer plan that satisfies both MV and affordability, they become ineligible for these marketplace subsidies. This is true even if the individual chooses not to enroll. Affordability is determined if the employee’s contribution for self-only coverage does not exceed 9.02% of their household income for 2025.