Health insurance plans that do not include hospital benefits fail to meet employers’ obligations under the Affordable Care Act and will leave companies that provide such insurance vulnerable to fines of $3000 a year for every worker covered by such a plan, the Centers for Medicare & Medicaid Services (CMS) announced last week.

But in recognition that some employers had arranged such coverage well in advance, the federal government is permitting companies that committed to such plans by November 4 to use them for the next year, after which they must be replaced.  In addition, employees who seek to compensate for that shortcoming in their coverage by purchasing supplemental insurance will be eligible for tax credits based on their income.

cmsSuch plans have been favored by many companies that employ large numbers of low-wage workers.

In a regulation issued last week, CMS wrote about health insurance without hospital benefits that

A plan that excludes substantial coverage for inpatient hospital and physician services is not a health plan in any meaningful sense and is contrary to the purpose of the MV [minimum value] requirement to ensure that an employer-sponsored plan, while not required to cover all EHB [essential health benefits], nonetheless must offer coverage with minimum value at least roughly comparable to that of a bronze plan offered on an Exchange.

For a closer look at the new regulation, why it was issued, and what it means for employers and their workers, see this Kaiser Health News article.  Find the regulation announcing the policy here.