Mintz Levin Issues “A Primer on ‘Low-Cost’ Group Health Plans”

Alden Bianchi of Mintz Levin recently published a new article on low-cost group health plans. The following is an excerpt from the article:

“A May 10 Wall Street Journal article, “Employers Eye Bare-Bones Health Plans Under New Law”, highlighted a compliance strategy to minimize employer exposure for assessable payments under the employer shared responsibility provisions of the Affordable Care Act (the “Act”). The strategy calls for an employer to make an offer of health care coverage under a “low-cost” (or “skinny”) plan as a way to avoid the potentially very costly penalty for failing to make an offer of coverage to at least 95% of the employer’s full-time employees. As the name implies, a low-cost plan neither covers nor costs much. A low-cost plan might, for example, cover just first-dollar preventive care and provide a wellness benefit.

Although the low-cost plan concept is not new, the WSJ’s article has, for the first time, called widespread attention to it. In so doing, it has ignited a contentious debate. On one side are those who claim that low-cost plans are patently abusive and will shortly be banned altogether; on the other are those who claim that these plans are a panacea. Neither side is correct. Far from being abusive, low-cost plans fit squarely into the Act’s statutory scheme; and far from being a panacea, they leave adopting employers exposed to penalties that, while for the most part, are not as severe as those that apply where no coverage is offered, can still be significant.”

To read the entire article, click here.