Minimum Value (MV)

If you’re a small business owner or HR manager evaluating health plans, Minimum Value (MV) is one of those technical terms that turns out to matter a great deal. It is a specific ACA standard that determines whether the coverage you offer is considered adequate, and for larger employers it directly affects penalty exposure. Here is what it means and why it belongs on your radar.

What Is Minimum Value?

The Standard

An employer-sponsored health plan provides Minimum Value if it pays at least 60% of the total allowed cost of benefits expected to be incurred under the plan, and it provides substantial coverage of both inpatient hospitalization and physician services. The rule is set out in Treasury Regulation §1.36B-6.

That second requirement is not a technicality. A plan that reaches the 60% actuarial threshold but does not provide substantial coverage of inpatient hospitalization and physician services does not provide Minimum Value. Federal guidance explains that plans omitting those core services can leave employees with inadequate coverage while also affecting their eligibility for Marketplace premium tax credits.

Minimum Value Is Not the Same as Minimum Essential Coverage

These two terms get confused constantly, so it is worth separating them:

• Minimum Essential Coverage (MEC) is about the type of coverage. It asks whether the arrangement counts as real health coverage at all.
• Minimum Value (MV) is about the richness of coverage. It asks whether the plan pays enough of the expected cost.

A plan can be MEC without providing Minimum Value. Both concepts show up in ACA compliance, but they answer different questions.

Why Minimum Value Matters

For Applicable Large Employers

If you have 50 or more full-time equivalent employees, you are an applicable large employer (ALE) and subject to the ACA employer mandate. Offering coverage that is affordable but does not provide Minimum Value leaves you exposed to a penalty under IRC §4980H(b) for any full-time employee who receives a premium tax credit on the Marketplace. For 2026, the adjusted annual §4980H(b) amount is $5,010 per affected employee.

In other words, offering coverage is not sufficient on its own. The coverage has to be both affordable and meet Minimum Value to fully protect against the mandate penalty.

For Employees

Minimum Value also determines Marketplace subsidy eligibility. An employee offered employer coverage that is both affordable and provides Minimum Value generally cannot claim a premium tax credit. If the offer fails either test, the employee may be eligible for subsidized Marketplace coverage instead.

How Minimum Value Is Determined

Employers generally do not calculate this by hand. Minimum Value is typically established through one of the following:

• The MV Calculator published by HHS and the IRS
• A safe harbor plan design published in regulatory guidance
• An actuarial certification for plans with nonstandard features

For a fully insured plan, the carrier will normally tell you whether the plan provides Minimum Value. For self-funded or level-funded arrangements, confirm it directly with your TPA or actuary rather than assuming.

Minimum Value and ICHRA

ICHRA works differently from a traditional group plan here, and the distinction trips people up.

With an ICHRA, the employee obtains the underlying individual insurance policy, while the ICHRA itself remains an employer-sponsored, self-insured group health plan. For employer shared-responsibility reporting, an affordable ICHRA is treated as providing Minimum Value. Affordability compares the employee’s required contribution for the applicable lowest-cost self-only silver plan, after the ICHRA allowance, with the indexed percentage of household income. For plan years beginning in 2026, that percentage is 9.96%.

So for ALEs using ICHRA, the practical compliance work shifts from proving Minimum Value on a group plan to setting an allowance that clears the affordability test. Our guide on ICHRA affordability rules walks through that calculation.

How SimplyHRA Helps

SimplyHRA is built for employers who want to offer meaningful coverage without managing a group plan’s actuarial mechanics. The platform verifies that employees are enrolled in qualifying individual coverage, tracks allowance amounts against current-year affordability thresholds, and keeps audit-ready documentation of both. You set the budget; we handle the compliance plumbing.

If you are trying to work out whether your current offer clears the ACA bar, schedule a free consultation and we will review it with you.

Frequently Asked Questions

What percentage must a plan cover to meet Minimum Value?

At least 60% of the total allowed cost of benefits expected to be incurred under the plan. The plan must also provide substantial coverage of inpatient hospitalization and physician services.

Is Minimum Value the same as a bronze plan?

They are related but not identical. The 60% threshold corresponds roughly to bronze-level actuarial value on the individual market, but Minimum Value is a specific employer-plan standard under Treas. Reg. §1.36B-6, including the inpatient and physician services requirement.

Does a plan without hospitalization coverage ever meet Minimum Value?

No. A plan that excludes substantial inpatient hospitalization coverage does not provide Minimum Value, even if it otherwise reaches the 60% threshold.

Do small employers need to worry about Minimum Value?

Employers with fewer than 50 full-time equivalent employees are not subject to the ACA employer mandate, so the §4980H penalty exposure does not apply. Minimum Value can still matter for employees’ Marketplace subsidy eligibility.

Does an ICHRA have to provide Minimum Value?

An ICHRA is treated as providing Minimum Value when it is affordable. For Applicable Large Employers, affordability is tested using the applicable lowest-cost self-only silver-plan premium minus the ICHRA allowance; for plan years beginning in 2026, the indexed percentage is 9.96%.