Minimum Value
A health insurance plan standard requiring coverage to pay at least 60% of the total allowed costs for covered benefits. Plans meeting minimum value provide substantial coverage for medical care and meet employer shared responsibility requirements under the Affordable Care Act.
Example
“The company's health plan meets minimum value requirements by covering 62% of expected medical costs, satisfying their obligation to provide adequate employee coverage.”
Memory Tip
Remember '60% MV' - Minimum Value means the plan pays at least 60% of Medical expenses.
Why It Matters
Minimum value requirements protect employees from inadequate health plans and help employers avoid penalties under the employer mandate. Plans meeting this standard provide meaningful financial protection against medical expenses.
Common Misconception
Many employers think minimum value only applies to premium costs or deductibles, but it actually measures the percentage of total medical expenses the plan covers across all benefits. A plan can have low premiums but fail minimum value if cost-sharing is too high.
In Practice
Tech company XYZ offers a health plan with a $2,500 deductible and 80% coinsurance after deductible. An actuarial analysis shows this plan covers 65% of expected medical costs for a standard population, exceeding the 60% minimum value threshold. An employee with $10,000 in medical bills would pay $2,500 deductible plus $1,500 coinsurance (20% of remaining $7,500), while the plan covers $6,000 or 60% of total costs.
Etymology
Created by the Affordable Care Act to establish a quantifiable standard for adequate health insurance, using actuarial calculations to determine if plans provide sufficient financial protection.
Common Misspellings
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