In the Affordable Care Act, this term is used. This term refers to a standard of coverage that must be offered by a group health insurance plan. This is important as it allows you to qualify for a subsidy if the value of your employer-sponsored insurance falls below the minimum.
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. The minimum value standard is a requirement that ensures a health plan covers 60% of the average medical cost and provides substantial coverage for hospital inpatient services and physician services. This coverage is typically included in the plan's Summary of Benefits and Coverage (SBC).
Definitions of minimum value
Minimum value is a term that's specific to the ACA. It means an employer-sponsored plan has to provide employees with 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.
For a premium credit, a policy must offer at least 60 percent its actuarial amount. 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.
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 commonly used in math analysis and without understanding them, it's hard to know the meaning of these types of numerical data.
The minimum value differs in many ways from other concepts or teminology. In some cases the terms "minimum worth" and "minimum vital coverage" are confused.
This confusion is particularly common as both terms have different meanings and functions under the ACA. For example, a plan that provides minimum essential coverage is required to cover the ten essential health benefits, which are outlined in the ACA's minimum essential coverage regulations.
To be eligible for the premium tax credit, however, a plan may have to provide at least some of these ten essential benefits. Because the ACA stipulates that each individual must have health coverage.
It is important to understand this confusing concept. If you don't have a health insurance policy that meets the minimum essential coverage requirements, you will be liable for a tax penalty, which is known as the individual responsibility penalty.
According to the Affordable Care Act, "minimum coverage" is "coverage which provides a minimal level of protection." It includes coverage such as job-based insurance, individual market policies and Medicare, Medicaid, CHIP or TRICARE.
The ACA also mandates that every health plan provided by an employer offer a minimum percentage of benefits as essential healthcare benefits (EHBs). Preventive services, prescription medications and maternity care are all included. Some employers may also be required to offer additional EHBs, such as dental or vision.