Minimum Value

Example

“The company's health plan met minimum value requirements by covering 65% of expected medical costs, allowing employees to avoid marketplace premium tax credits.”

Memory Tip

Remember '60% rule' - Minimum Value means the plan must pay at least 60% of medical costs to have real VALUE.

Why It Matters

Employees with access to minimum value employer coverage generally cannot receive premium tax credits in the health insurance marketplace, making this standard crucial for determining eligibility for government assistance. It ensures employer plans provide meaningful financial protection rather than token coverage.

Common Misconception

Many believe that minimum value only applies to individual employee coverage, but it actually must extend to the entire family if family coverage is offered. People also confuse minimum value (60% cost coverage) with minimum essential coverage (basic plan requirements), which are separate standards with different purposes.

In Practice

TechCorp offers a health plan with a $1,500 deductible, 80% coinsurance after deductible, and a $5,000 out-of-pocket maximum. Using the IRS minimum value calculator, this plan covers 68% of expected medical costs for a standard population, exceeding the 60% minimum value threshold. As a result, TechCorp's employees earning less than $52,000 annually cannot receive marketplace premium tax credits, even if the employer plan costs $400 per month for family coverage, because the employer has met its minimum value obligation.

Etymology

Established with the Affordable Care Act in 2010, the term combines 'minimum' (least acceptable) with 'value' (worth or benefit provided) to set employer plan adequacy standards.

Common Misspellings

Related Terms

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See Also